<pre>

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(MARK ONE)
 [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 For the fiscal year ended September 30, 2005     OR

 [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
      For the transition period from __________ to __________

                         Commission File Number 33-3560D

                               CONECTISYS CORPORATION
                 (Name of small business issuer in its charter)

           COLORADO                                           84-1017107
-------------------------------                            ----------------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                  24730 AVENUE TIBBITTS, SUITE 130, VALENCIA, CALIFORNIA 91355
                    (Address of principal executive offices)

                              (661) 295-6763
                 Issuer's telephone number (including area code)

         Securities registered under Section 12(b) of the Exchange Act:
          Title of each class      Name of each exchange on which registered
                None                                   None

            Securities registered under Section 12(g) of the Exchange Act:
                           Common Stock, no par value
                                (Title of Class)
                             ____________________

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES |X|  NO |   |

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES |X|  NO |   |

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. |  |

The registrant's revenues for the twelve months ended September 30, 2005 were
$0 (zero).

As of January 23, 2006, the aggregate market value of the common equity held by
nonaffiliates of the registrant was approximately $2.7 million. The number of
shares outstanding of the registrant's only class of common stock was
8,945,816,280 on January 23, 2006.

Transitional Small Business Disclosure Format (check one):  YES |   |  NO |X|

DOCUMENTS INCORPORATED BY REFERENCE: None.
-------------------------------------------------------------------------------
                                      PART I

ITEM 1. DESCRIPTION OF BUSINESS.

Company Overview

    We were incorporated in Colorado on February 2, 1986 under the name Coastal
Financial Corp. On December 5, 1994, Coastal Financial Corp. changed its name
to BDR Industries, Inc. which changed its name on October 16, 1995, to
ConectiSys Corporation.

    Since 1995, we have been engaged in the development of a low-cost automatic
meter reading, or AMR, solution. We have developed a low-cost AMR solution that
includes a proprietary system employing specialized hardware and software that
will allow for residential and commercial applications. Our proprietary system
is called H-Net[TM], which is a trademark of ConectiSys. Our H-Net[TM] system is
currently comprised of two principal components: our H-Net[TM] 5.0 product,
which itself is comprised of circuitry and a radio transmitter, and our H-
Net[TM] BaseStation. Our H-Net[TM] 5.0 product is a component that is designed
to be part of a digital energy meter to read and wirelessly transmit meter data
to our H- Net[TM] BaseStation. Our H-Net[TM] BaseStation is designed to receive
and relay the meter data over standard phone lines to a central location where
the data is compiled and utilized.

    We are continuing the development of our H-Net[TM] system. Our recent
development efforts have focused on redesigning our H-Net[TM] circuitry from a
three-board circuit to a two-board circuit. This redesign was completed in
November 2005 and testing of our new H-Net[TM] circuitry has begun. We
anticipate that production units with this new circuitry will be available by
March 2006. We redesigned our H-Net[TM] circuitry to respond to redesigns of
meter products by meter manufacturers. These redesigns by meter manufacturers
were directed at reducing costs and resulted in reduced available space for
integration of circuitry from third-party technology providers such as
ConectiSys.

    In August 2004, we submitted to the FCC our H-Net[TM] 5.0 product for
approval for commercialization and sale and received FCC certification for this
product in December 2004. In December 2004, we submitted to the FCC our H-
Net[TM] BaseStation for approval for commercialization and sale and received
FCC certification for this product in March 2005. Concurrently with the
development of our H-Net[TM] BaseStation, which is a single-channel design, we
have been developing an eight-channel H-Net[TM] BaseStation.  Our eight-
channel H-Net[TM] BaseStation is designed to communicate with up to 7,500 H-
Net[TM] 5.0 product installations per network due to its multiple channel
design and to deliver real-time energy consumption data at low-cost. In July
2005, we submitted to the FCC our eight-channel H-Net[TM] BaseStation product
for approval for commercialization and sale and received FCC certification for
this product in January 2006.

    We have not yet sold any H-Net[TM] systems. However, we are actively
pursuing sales of our H-Net[TM] systems with meter manufacturers and other
companies in the energy industry. We have no history of revenues and have
incurred significant losses since the beginning of the development of our H-
Net[TM] system. We have significant accumulated and working capital deficits.
As a result of our financial condition, our independent auditors have issued a
report questioning our ability to continue as a going concern.

Industry Overview

    Over the past several years, the AMR industry has undergone tremendous
growth. Many factors have contributed to this growth, including:

<page>2

    o a surge in demand for wireless data transmission services that increase
      the efficiency of meter reading service companies;

    o mandates by federal and state regulators requiring that the energy
      industry utilize automatic meter reading technologies and read meters
      with increased frequency;

    o an apparent nation-wide trend toward deregulation of the energy industry,
      which may enable a large number of new energy service providers to enter
      the market who will require easily obtainable, accurate and comprehensive
      data regarding their customers' energy usage; and

    o a growing preference among commercial, industrial and governmental
      enterprises for automation of remote data acquisition and collection
      activities through wired and wireless communications technologies.

    Although the need for a comprehensive, low-cost AMR solution has become
widespread, a viable solution remains unmet for many reasons, including the
following:

    o the high cost of hardware and installation of traditional wireless data
      collection processes employing technologies similar to cellular or other
      wireless data transmission towers;

    o the failure of existing AMR systems to satisfy the mandates imposed by
      government regulations concerning the collection and transmission of
      data; and

    o the failure of existing AMR systems to provide true two-way data
      communications, as a result of which those systems are less accurate and
      do not provide increases in efficiency allowed by two-way data
      communications systems.

    Responding to the growing demand for communications services and increased
competitive pressures, businesses and government organizations that rely
heavily on information technology are devoting significant resources to the
evaluation and purchase of data transmission products.

    We estimate that there are approximately 125 million energy meters in the
United States, approximately 12.5 million of which are located in California.
Our goal is to achieve sufficient proliferation of our H-Net[TM] system so that
it is installed in one percent of the energy meters in the United States or ten
percent of the energy meters in the State of California. Initially, we intend
our principal efforts to be focused on the deployment of our H-Net[TM] system
in the State of California.

Our Strategy

    We have strived to develop expertise relating to AMR systems and products.
Our goal is to become a leading provider of products and services relating to
data acquisition from remote locations and data collection at centralized
locations. Our business strategy to achieve this goal includes the following
elements:

    o Develop strategic relationships.  We have explored and intend to continue
      to explore the possibility of entering into strategic relationships with
      manufacturers of energy meters, utility companies, energy providers and
      others in order to promote the adoption of our H-Net[TM] system within
      the energy and AMR industries.

    o Establish outsource manufacturing for full-scale commercial production.
      We have the means of outsourcing small-scale production of the products
      employed in our H-Net[TM] system. We intend to continue the cost-
      reduction phase of our H-Net[TM] system's development and in doing so, we

<page>3

      intend to examine various manufacturing alternatives, including strategic
      relationships with manufacturers of energy meters and third-party
      manufacturing of the products employed in our H-Net[TM] system for use in
      energy meters.

    o Build market share for our products.  We intend to establish ourselves as
      the source for comprehensive, low-cost AMR solutions and plan to focus on
      building our own market share for our H-Net[TM] system and further
      develop our H-Net[TM] system where market demand is identified. We also
      plan to develop new products and enhancements to meet or exceed the
      evolving requirements of both centralized and remote applications of our
      technologies.

    o Intensify our marketing activities.  As funds become available, we intend
      to invest in a comprehensive targeted, product-specific marketing program
      to raise awareness of ConectiSys and our H-Net[TM] system and in order to
      attract customers.

    o Continue to develop wireless products.  We intend to continue to invest
      in research and development of wireless products to meet the needs of the
      AMR industry. We believe that the expertise that we have developed in
      creating our existing H-Net[TM] system will enable us to enhance our
      products, develop new products and services and respond to emerging
      technologies in a cost-effective and timely manner.

Our H-Net[TM] System

    Our H-Net[TM] system is designed to enable users to remotely read
electronic energy usage meters without the necessity of someone traveling to
and physically reading the meter. The predominant method of reading electronic
meters is for an individual to travel to the site of the meter and make a
record of the data compiled by that meter, either manually as a notation in a
log book or electronically by inputting the data into a handheld or other
electronic data retention device. In the case of a log book, the information is
then typically recorded manually into a centralized database for energy usage
tracking and billing purposes. In the case of a electronic data retention
device, the information is typically downloaded to a centralized database for
these purposes. Residential meters are customarily read on a monthly basis,
allowing only a limited ability to track energy usage fluctuations over periods
of less than one month. In addition, physical reading of meters is accompanied
by the problem of reader error, causing inefficiencies resulting from necessary
corrective procedures. Our H-Net[TM] system is designed to provide continuous
meter- reading capabilities, address the inefficiencies that accompany physical
meter reading and provide additional benefits to its users.

    We believe that the anticipated deployment costs of our H-Net[TM] system
are small compared to other AMR products because there are no cellular or other
telecommunications or wireless towers to erect or expensive hardware
infrastructure to install.  We anticipate that all field installations and
deployment programs of our H-Net[TM] system will be administered by United
Telemetry Company, one of our two wholly-owned subsidiaries. The data collected
by H-Net[TM]-equipped meters will be transmitted over the unlicensed ISM 900
MHz radio frequency band. Our H-Net[TM] system allows for high-density data
transmissions, which we believe makes it ideal for metropolitan and other
crowded areas where a large amount of data would normally be collected.

  H-Net[TM]-Equipped Meters

    Our H-Net[TM] system is comprised of the following three principal
components that operate together to provide what we believe to be a
comprehensive, low-cost AMR solution:  H-Net[TM]-equipped meters, base stations
and a network operating center. The first component of our H- Net[TM] system is
an electronic meter put into service at a residence that is equipped with a
circuit board that contains a memory module, microprocessor and a two-way radio
transmission and receiver device that operates in the ISM 900 MHz radio

<page>4

frequency band. This circuit board may also be retrofitted to some existing
meters. We refer to each energy meter equipped with this circuit board and that
is connected to our AMR network as an H-Net[TM]-equipped meter or a "node."
With the installation of each H-Net[TM]-equipped meter, the existing installed
H-Net[TM]-equipped meters self-configure by transmitting configuration data to
other H-Net[TM]- equipped meters and receiving configuration data from other H-
Net[TM]- equipped meters.

  Base Stations

    Our AMR network, when it is operational, will be partially comprised of
these H-Net[TM]-equipped meters, each communicating to another with the final
communication of data in a given communication cycle being transmitted to the
second component of our H-Net[TM] system, a base station. We anticipate that a
base station will be housed in a small metal box, no larger than the size of a
shoe box, that contains a memory module, microprocessor, radio transmission and
receiver device and a modem. The node and base station configuration is similar
to a hub and spoke configuration, but rather than direct communication among
each of the nodes and the base station, numerous nodes will communicate with
one another in a web configuration with some nodes sending final transmission
to the base station of the data collected by many other nodes. The base station
is designed to receive data transmissions from various nodes in its local
network and use its modem to place a local telephone call and transmit the data
it has collected to the third component of our H-Net[TM] system, our network
operating center. We anticipate that the base stations will deliver energy
meter data four times an hour, twenty-four hours a day to our network operating
center.

  Network Operating Center

    We plan to use a computer center located at our main office facility to
store the information gathered from the H-Net[TM]-equipped meters. We call this
computer center our network operating center.  We have designed our network
operating center to support up to 250,000 H-Net[TM]-equipped meters. We
anticipate that our network operating center will be the central control center
for our entire AMR network and will operate in a large geographic area. We plan
to use the network operating center to archive all data for future use and as a
protective measure against data loss or corruption. After the data archival
process, we expect that the network operating center will handle uploading of
the data to the Internet where it can be accessed by users directly and also
downloaded through an interpreter software program into a utility company's or
energy service provider's database. We anticipate that our network operating
center will be administered by our wholly-owned subsidiary,
eEnergyServices.com, Inc.

  The H-Net[TM] Network

    The H-Net[TM] network, once deployed, will be comprised of our network
operating center and local networks, which in turn are each comprised of a base
station and H-Net[TM]-equipped meters. Each H-Net[TM]-equipped meter can
communicate with other H-Net[TM]-equipped meters that are up to a distance of
approximately one-quarter mile away. We plan to install a base station for
every H-Net[TM]-equipped meter area.  Our base stations are designed to receive
data transmissions from up to 7,500 H-Net[TM]-equipped meters. We have designed
our system so that a base station can transmit the accumulated data it has
received from the H-Net[TM]-equipped meters in its local network by telephone
every fifteen minutes by using its modem to communicate with our network
operating center. Once the data from the H- Net[TM]-equipped meters arrives
from the base stations at the network operating center, the data can be
assembled into various formats for billing customers as well as for management
of energy purchasing and energy conservation programs.

    Our H-Net[TM] system has certain limitations inherent in each local
network, each of which is comprised of H-Net[TM]-equipped meters and a base
station. Each local network has the following principal limitations:

<page>5

    o it can consist of a maximum of 7,500 H-Net[TM]-equipped meters;

    o each H-Net[TM]-equipped meter must be within approximately one-quarter
      mile of another H-Net[TM]-equipped meter in the same local network; and

    o the maximum radius of a local network is five miles.

    In addition to the limitations described above, our H-Net[TM]-equipped
meters transmit data using the ISM 900 MHz radio frequency band, which is an
unlicensed frequency band. Because this frequency band is regulated, the H-
Net[TM] system requires FCC approval for compliance and sales. In August 2004,
we submitted to the FCC our H-Net[TM] 5.0 product for approval for
commercialization and sale and received FCC certification for this product in
December 2004. In December 2004, we submitted to the FCC our H-Net[TM]
BaseStation for approval for commercialization and sale and received FCC
certification for this product in March 2005. In July 2005, we submitted to the
FCC our eight-channel H-Net[TM] BaseStation product for approval for
commercialization and sale and received FCC certification for this product in
January 2006.

  H-Net[TM] Services

    We plan to offer a wide variety of services to utility companies and energy
service providers in addition to reading their customers' energy meters. We
anticipate that these services will include energy management, data storage and
archiving, and the provision of near real-time energy usage data in order to
evaluate energy consumption and determine cost savings procedures. We plan to
provide complete billing and accounting transaction services to utility
companies and energy providers as well as to end-users of energy.

    Our H-Net[TM] system employs new technology developed to allow utility
companies and energy service providers to have a wireless network of
intelligent meters, with each meter communicating with another and passing data
back and forth, allowing near real-time energy consumption data to be
collected. We believe that energy service providers will have an opportunity to
save money by efficiently collecting accurate energy usage profiles and using
this near real-time energy usage data to competitively bid for energy in the
newly deregulated energy markets.

    Our H-Net[TM] system has been designed so that an energy service provider
can determine exactly how much electric power a metropolitan area, a
neighborhood, or even an individual residence is using. Energy users who have
H-Net[TM]-equipped meters will have the ability to check their energy
consumption and billing rates in near real-time by obtaining this information
over the Internet, which we believe will promote energy conservation.

H-Net[TM] Product Development and Pilot Programs

    Our product development efforts are directed toward developing an AMR
solution in the form of our H-Net[TM] system. We believe that our existing
expertise in data transmission devices provides us with a strong technology
base to pursue this objective. Our product development efforts focus on the
following principles:

    o Development of New Products and Technology. We plan to assess domestic
      and international market trends, with the focus of developing new
      products designed to meet emerging market demands. In developing new
      products, we plan to attempt to combine our existing technology base with
      new technologies to provide a broader range of automation and data
      communications and data acquisition solutions to end users.

<page>6

    o Improvement of Existing Technology. We seek to expand the features and
      functionality of our existing H-Net[TM] system technology through
      modifications and enhancements to meet the changing needs of the
      marketplace. We are reviewing the design of our products to determine
      areas of potential cost savings or enhanced product quality and
      reliability.

    We believe our future success will depend, in part, upon our ability to
expand and enhance the features of our H-Net[TM] system and to develop and
introduce new products designed to meet changing customer needs on a cost-
effective and timely basis. Consequently, failure by us to respond on a timely
basis to technological developments, changes in industry standards or customer
requirements, or any significant delay in product development or introduction,
could have a material adverse effect on our business and results of operations.
We cannot assure you that we will respond effectively to technological changes
or new product announcements by others or that we will be able to successfully
develop and market new products or product enhancements.

    Beginning in 2000, we successfully launched and completed H-Net[TM] pilot
test programs at various locations in southern California. In 2004, we began a
pilot program in Los Angeles County, California with the cooperation of
Southern California Edison. Our H-Net[TM] meters for this program were
installed by Southern California Edison in May 2004 and the pilot program
recorded real-time meter data seamlessly and error-free. In 2005, we began a
pilot program in the City of Valencia resulting in twenty- five new direct
access commercial and residential clients. We are expanding this pilot program
and expect that it will continue to grow with additional commercial and
residential clients.

    We are in the process of evaluating meter manufacturers as potential
business partners regarding the implementation of the H-Net[TM] system into
their meters.

    We are actively pursuing and planning other field testing programs with
various utility companies and energy service providers across the country.
However, we expect that future field testing programs will be in conjunction
with the first stages of sales or licensing of our H-Net[TM] system to utility
companies, energy service providers and other parties.

The H-Net[TM] Wireless Network Vision

    We have designed and will continue to design our H-Net[TM] system to
deliver a comprehensive and robust AMR solution that enables the realization of
substantial efficiencies in the remote meter reading and centralized data
collection contexts and that provides numerous features and services. In
addition to its many other planned features and services, we are designing our
H-Net[TM] system to:

    o constantly monitor an end-user's energy meter and gather meter data and
      display it on the Internet in fifteen-minute intervals, twenty-four hours
      a day;

    o allow the end-user to access an information link on the Internet taking
      them directly to the energy usage data transmitted by their H-Net[TM]-
      equipped meter;

    o provide utility companies, and energy service providers with reliable and
      accurate electricity usage records;

    o enable a utility company or an energy service provider to supply to end-
      users over the Internet information and special incentive offers
      regarding the use of energy at off-peak times, thereby improving energy
      conservation during critical peak periods. Other innovative offers may
      also be implemented such as pre-payment plans and direct purchases of
      additional energy over the Internet;

<page>7

    o allow an end-user to pay his or her energy bills over the Internet, at a
      very low administrative cost to the utility company and reduce billing
      delays;

    o allow the monitoring of energy usage levels to ensure that utility
      companies and energy service providers are aware of any delivery
      problems, including power outages and energy thefts;

    o provide utility companies with the ability of two-way communications to
      that they may determine which of their customers do not have power
      without the aid of customer service phone calls, thereby allowing service
      crews to be dispatched more efficiently. By using our H-Net[TM] system,
      we believe that utility companies will be in a position to know precisely
      when each end-user's service is restored and the exact duration of a
      power outage;

    o enhance safety and convenience by allowing the remote delivery and
      termination of electricity, with all billing transactions completely
      automated. We plan to design our H-Net[TM] system to allow end-users to
      request over the Internet the delivery of electricity;

    o allow the distribution of electricity more efficiently and inexpensively
      with energy usage and other vital data informing each decision through
      the entire energy supply channel. We believe that by using our H-Net[TM]
      system, energy purchasers can make precise forecasts of purchasing
      requirements, eliminating much of the over- and under-purchasing of
      energy that contributes to volatile wholesale energy prices;

    o allow end-users who are preparing to terminate or switch energy service
      providers to use the Internet to inform the current energy service
      provider of the change. At a precise time, selected by the end-user, our
      H-Net[TM] system has the ability to read the end-user's H-Net[TM]-
      equipped meter, pass the information to the current energy service
      provider's system to produce a final bill, and disconnect the end-user's
      electricity. In the case of a change in an energy service provider, the
      data from an H-Net[TM]- equipped meter can automatically be routed to a
      new energy service provider; and

    o enable lower energy costs as a result of its efficiencies, quicker
      transactions with less paperwork and reduced potential for error. Lower
      energy and transaction costs will assist the transition to an open,
      competitive market for energy.

Government Regulation

    Our H-Net[TM] system is designed to comply with a significant number of
industry standards and regulations, some of which are evolving as new
technologies are deployed. In the United States, our H-Net[TM] system must
comply with various regulations defined by the FCC, and Underwriters
Laboratories, or other nationally-recognized test laboratories, as well as
industry standards.

    The regulatory approval process can be time-consuming and can require the
expenditure of substantial resources. The failure of our H-Net[TM] system to
comply, or delays in compliance, with the various existing and evolving
standards could negatively impact our ability to sell or license our H- Net[TM]
system. Government regulations regarding the manufacture, sale and
implementation of products and systems similar to our H-Net[TM] system and
other data communications devices are subject to future change. We cannot
predict what impact, if any, such changes may have upon our business.

    In August 2004, we submitted to the FCC our H-Net[TM] 5.0 product for
approval for commercialization and sale and received FCC certification for this
product in December 2004. In December 2004, we submitted to the FCC our H-
Net[TM] BaseStation for approval for commercialization and sale and received

<page>8

FCC certification for this product in March 2005. In July 2005, we submitted to
the FCC our eight-channel H-Net[TM] BaseStation product for approval for
commercialization and sale and received FCC certification for this product in
January 2006.

    We do not anticipate that any government regulations will hamper our
efforts to deploy our H-Net[TM] system. Rather, the restructuring of the energy
market in the United States has required the reading of energy meters much more
frequently than the current practice of once a month, thus making the physical
meter reading techniques currently in use inadequate. Our H-Net[TM] system is
designed to meet various government regulations mandating frequent meter
readings and we are attempting to position ourselves so that we will be a
beneficiary of these mandates.

Operations

    During the initial design and engineering phases for our H-Net[TM] system,
we maintained low overhead costs and we plan to continue to do so until
manufacturing and sales of our H-Net[TM] system are underway.  We plan to hire
additional personnel as needed during the coming year, including managerial,
clerical, administration, sales, marketing, and customer service personnel.

    We plan to lease suitable office facilities for our operations within the
Southern California area.  We plan to initially utilize existing manufacturers
to produce our products and will therefore likely not have a short-term need to
lease or build manufacturing facilities.  We intend to operate not principally
as a manufacturer of products, but as a provider of comprehensive, cost-
effective AMR solutions, and we plan to outsource manufacturing of the hardware
employed in our H-Net[TM] system in order to achieve the highest cost-
efficiencies.

Anticipated Revenues and Marketing

    Our H-Net[TM] system is designed to be a comprehensive, cost-effective AMR
solution and an alternative to other AMR technologies and physical reading of
meters. Our H-Net[TM] system is capable of providing meter data every fifteen
minutes, twenty-four hours a day and nearly 3,000 times per month. We estimate
that physical readings of a meter cost approximately $1.00 per reading. Our H-
Net[TM] system is designed to meet the relatively low cost of physical meter
reading while providing nearly 3,000 times more readings per month. We believe
that the base cost to operate a fully-deployed H- Net[TM] system is
approximately $.20 per meter per month, or approximately $.0000667 per reading.

    We plan to license our H-Net[TM]  system technology to meter manufacturers
so that they may incorporate it into their meters. We plan on deriving a small
royalty per meter sold for every H-Net[TM]-equipped meter. We anticipate that
the predominant source of any future revenues will be through recurring monthly
service charges for reading, archiving and supplying data from H-Net[TM]-
equipped meters and from providing other services described in more detail
above. However, despite our belief of the cost-effectiveness and significant
advantages of our H-Net[TM] system over physical meter reading practices and
other AMR technologies, there can be no assurances that the market we intend to
target will adopt or accept our H-Net[TM] system or that we will earn any
significant revenues. See "Risk Factors."

    We have developed a marketing plan that was formulated to help us achieve
the following objectives:

    o acquisition and retention of strategic beta test placement locations for
H-Net[TM]-equipped meters;

<page>9

    o formation of synergistic partnerships with energy service providers,
      utilities companies and internet service providers, including joint
      ventures, license arrangements and strategic alliances;

    o participation in H-Net[TM]-equipped meter manufacturing partnerships and
      acquisition of Internet commerce sponsorship;

    o promotion of unique features and specialized services of our H-Net[TM]
      system; and

    o creation of industry awareness by implementing a public relations and
      marketing campaign along with establishing a relationship with regulatory
      agencies of the State of California and other states in an attempt to
      facilitate a long-term solution for the nation's energy needs.

    The current principal target of our marketing and sales efforts is the
utility and energy service provider industries. These industries consist of a
wide variety of organizations that use data communications in an automated
process application, such as utilities and energy management companies.
Responding to deregulation and other major changes taking place within the
industry, electric power utility companies have become leading advocates in
promoting the implementation of automation and technological advancement as a
means of achieving cost savings as they enter the competitive arena. Utility
companies are automating numerous distinct processes within their operating
systems. Our H Net[TM] system is designed for and is expected to be sold for
use in:

    o the AMR context, which is intended primarily to eliminate the expense and
      inefficiencies of human meter readers and also is intended to provide
      data archival and delivery services as well as additional value-added
      services for the end-user; and

    o distribution automation, which is the remote monitoring and control of
      power distribution networks. These control systems are often referred to
      as SCADA systems. SCADA is an acronym for Supervisory Control and Data
      Acquisition.

    If sufficient funds are not available for full deployment of our H-Net[TM]
system, it is our intention to license our H-Net[TM] technology to various
sectors of the energy industry, including meter manufacturers for integration
into their meters. We also may license our software and software systems for
archival of the data transmitted by H-Net[TM]-equipped meters to various
utility companies and energy service providers. Under this scenario, we would
also supply support and technical assistance to these various sectors of the
energy industry while collecting revenues solely in the form of fees for
licensing and support and technical assistance. We expect any revenue from this
alternate strategy to be far less than our active participation in the
collecting and archiving of meter data and the ancillary services described in
greater detail above.

Competition

    Many companies have developed data transmission products designed to meet
the growing demand for AMR solutions. We anticipate that our H-Net[TM] system
will compete on the basis of features, price, quality, reliability, name
recognition, product breadth and technical support and service. We believe that
we generally will be competitive in each of these areas. However, many of our
existing and potential competitors have significantly more financial,
engineering, product development, manufacturing and marketing resources than we
have. We cannot assure you that our competitors will not introduce comparable
or superior products incorporating more advanced technology at lower prices, or
that other changes in market conditions or technology will not adversely affect
our ability to compete successfully in the future. We perceive the following
companies as being the principal competition to our AMR solution in the form of
our H-Net[TM] system:

<page>10

    Itron Inc.              Itron provides and has installed AMR systems
                            worldwide. Itron provides "drive-by" automated
                            meter reading equipment.

    CellNet Data Systems    CellNet provides fixed-network wireless AMR systems
                            and has installed systems in Kansas City,
                            Minneapolis, San Francisco, Indianapolis, and
                            through Puget Sound Power.  CellNet has technology
                            alliances with the major energy meter manufacturers
                            and was recently acquired by Schlumberger.

    Schlumberger Ltd.       Schlumberger's Resource Management Systems Division
                            has deployed meter reading systems that include
                            hand- held meter reading devices. Schlumberger
                            recently acquired CellNet and Metricom.

    Hunt Technologies, Inc. Hunt provides power line carrier AMR systems with
                            capabilities including substation switching. The
                            market niche for Hunt's AMR systems is rural
                            electric cooperatives.

    Metricom Corporation    Metricom provides wireless communication networks
                            with fixed-wireless networks installed in the San
                            Francisco Bay Area, Seattle, Washington, D.C., and
                            at universities. Metricom and Whisper
                            Communications, Inc. have formed an alliance to
                            provide AMR systems.  Their AMR systems are
                            installed at KN Energy and Pacific Gas & Electric
                            Company. Metricom recently was acquired by
                            Schlumberger.

    We believe that we will be the only company able to collect data
transmitted from H-Net[TM]-equipped meters, thereby ensuring our competitive
advantage once we are able to achieve sufficient proliferation of our H-
Net[TM]-equipped meters.

Customers

    We do not currently have revenue-generating customers. We have not yet sold
any H-Net[TM] systems. However, we are actively pursuing sales of our H-
Net[TM] systems with meter manufacturers and other companies in the energy
industry. We anticipate that once we commercially produce and install our H-
Net[TM] system, our customers will include energy meter manufacturers, energy
service providers, utility companies and end-users of energy.

Intellectual Property

    We currently rely on a combination of contractual rights, copyrights,
trademarks and trade secrets to protect our proprietary rights. However,
although our H-Net[TM] system and its constituent components could benefit from
patent protection, we have chosen to retain the proprietary rights associated
with our H-Net[TM] system predominantly as trade secrets. Although we currently
rely to a great extent on trade secret protection for much of our technology,
we cannot assure you that our means of protecting our proprietary rights will
be adequate or that our competitors will not independently develop comparable
or superior technologies or obtain unauthorized access to our proprietary
technology.

    We own, license or have otherwise obtained the right to use certain
technologies incorporated in our H-Net[TM] system. We may receive infringement
claims from third parties relating to our products and technologies. In those
cases, we intend to investigate the validity of the claims and, if we believe
the claims have merit, to respond through licensing or other appropriate
actions. To the extent claims relate to technology included in components

<page>11

purchased from third-party vendors for incorporation into our products, we
would forward those claims to the appropriate vendor. If we or our component
manufacturers are unable to license or otherwise provide any necessary
technology on a cost-effective basis, we could be prohibited from marketing
products containing that technology, incur substantial costs in redesigning
products incorporating that technology, or incur substantial costs defending
any legal action taken against us.

Employees

    We have three full time employees and a six person advisory board. Our
employees are involved in executive, corporate administration, operations, and
sales and marketing functions. We also use the services of outside consultants
and experts on many of our projects to help reduce costs. We consider our
relations with our employees to be good. None of our employees is represented
by a labor union.

ITEM 2. DESCRIPTION OF PROPERTY.

    Our principal center of operations is located at 24730 Avenue Tibbitts,
Suite 130, Valencia, California 91355.  This 1,000 square foot space is leased
for approximately $1,260 per month.

    We have entered into a new three-year lease for property located at 24307
Magic Mountain Parkway, Suite 41, Valencia, California 91355. This new location
will be available to us on February 1, 2006 and will serve as our new principal
center of operations. This 1,100 square foot space will be leased for
approximately $2,200 per month.

    We believe that our facilities are adequate for our needs for the near
future.

ITEM 3. LEGAL PROCEEDINGS.

    We are not a party to any material pending legal proceedings. We are
subject to legal proceedings, claims and litigation arising in the ordinary
course of business. While the amounts claimed may be substantial, the ultimate
liability cannot presently be determined because of considerable uncertainties
that exist. Therefore, it is possible the outcome of such legal proceedings,
claims and litigation could have a material effect on quarterly or annual
operating results or cash flows when resolved in a future period. However,
based on facts currently available, management believes such matters will not
have a material adverse effect on our financial position, results of operations
or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    In connection with the special meeting of stockholders held on August 10,
2005, the holders of shares of our common stock as of June 27, 2005 were asked:

    PROPOSAL 1.  To elect three directors to our board of directors;

    PROPOSAL 2.  To consider and vote upon a proposal to approve an amendment
to our Articles of Incorporation to increase our authorized shares of common
stock from 7.5 billion shares to 15 billion shares; and

    PROPOSAL 3.  To ratify the selection of Hurley & Company as our independent
certified public accountants to audit the financial statements of ConectiSys
for the year ending September 30, 2005.

<page>12

    Each of the three proposals described above is described more particularly
in our definitive proxy statement filed with the Securities and Exchange
Commission on June 24, 2005 pursuant to Section 14(a) of the Securities
Exchange Act of 1934 and was approved by our stockholders by the votes set
forth below:
<table>
    PROPOSAL 1:

                         Class A Preferred Stock         Common Stock
                         -----------------------  -------------------------
                          For        Against            For         Withheld
                         -------   -----------     -------------  -----------
                         <C>       <C>             <C>            <C>
Robert A. Spigno           --           --         3,283,693,519  185,790,324
Lawrence Muirhead          --           --         3,320,363,611  149,120,232
Melissa McGough            --           --         3,338,572,643  130,911,200

PROPOSAL 2:
                           Class A Preferred Stock              Common Stock
                         ---------------------------- -----------------------------------
                          For      Against   Abstain     For          Withheld    Abstain
                         -----   --------- ---------- -------------  ----------- ----------
                          --         --         --    2,944,058,184  517,674,803  7,750,856

PROPOSAL 3:
                         Class A Preferred Stock              Common Stock
                         ---------------------------- -----------------------------------
                          For      Against   Abstain     For         Withheld     Abstain
                         -----   --------- ---------- ------------- ----------- ----------
                           --        --         --    3,364,552,652  36,735,913 66,758,078
</table>
<page>13

                                      PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

    The following table shows the high and low closing bid prices of our common
stock for the periods presented, as obtained from Pink Sheets LLC, a research
service that compiles quote information reported on the National Association of
Securities Dealers composite feed or other qualified interdealer quotation
medium. The quotations listed below reflect interdealer prices, without retail
mark-up, mark-down or commissions, and may not represent actual transactions.
Our common stock trades on the OTC Bulletin Board(R) under the symbol "CNES."

                                                         Price Range
                                                         -----------
                                                        High      Low
                                                      --------  --------
Year Ended September 30, 2004:

  First Quarter (October 1 - December 31)............$  0.0069  $ 0.0022
  Second Quarter (January 1 - March 30)..............   0.0055    0.0023
  Third Quarter (April 1 - June 30)..................   0.0047    0.0012
  Fourth Quarter (July 1 - September 30).............   0.0013    0.0005

Year Ended September 30, 2005:

  First Quarter..................................... $  0.0095  $ 0.0006
  Second Quarter....................................    0.0066    0.0015
  Third Quarter.....................................    0.0020    0.0005
  Fourth Quarter....................................    0.0006    0.0002

    As of January 23, 2006, we had 8,945,816,280 shares of common stock
outstanding and held of record by approximately 800 shareholders, and the high
and low sale prices of a share of our common stock on the OTC Bulletin Board on
that date were $.0003 and $.0002, respectively. Within the holders of record of
our common stock are depositories such as Cede & Co. that hold shares of stock
for brokerage firms which, in turn, hold shares of stock for beneficial owners.

    We have never paid cash dividends on our common stock and do not currently
intend to pay cash dividends on our common stock in the foreseeable future. We
are restricted from paying dividends on our common stock under state law, and
the terms of our secured convertible debentures. We currently anticipate that
we will retain any earnings for use in the continued development of our
business.

Recent Sales of Unregistered Securities

    In October 2004, we issued an aggregate of 62,139,237 shares of common
stock to four accredited investors upon conversion of an aggregate of
approximately $14,500 in principal and related interest on our convertible
debentures.

    In November 2004, we issued 23,500,000 shares of common stock to a creditor
in consideration for a reduction in debt in the amount of $10,500.

    In November 2004, we issued 5,300,000 shares of common stock valued at
$53,000 to a consultant for services rendered.

<page>14

    In November 2004, we issued an aggregate of 83,488,963 shares of common
stock to four accredited investors upon conversion of an aggregate of
approximately $20,500 in principal and related interest on our convertible
debentures.

    In December 2004, we issued 20,000,000 shares of common stock valued at
$20,000 to a consultant for services rendered.

    In December 2004, we issued an aggregate of 354,840,153 shares of common
stock to four accredited investors upon conversion of an aggregate of $147,200
in principal and related interest on our convertible debentures.

    In January 2005, we issued 4,000,000 shares of common stock in a private
offering to one accredited investor in exchange for $5,000 in cash.

    In January 2005, we issued an aggregate of 388,199,753 shares of common
stock to four accredited investors upon conversion of an aggregate of $297,404
in principal plus related interest on our convertible debentures.

    In February 2005, we issued an aggregate of 259,976,989 shares of common
stock to four accredited investors upon conversion of an aggregate of $232,500
in principal plus related interest on our convertible debentures.

    In March 2005, we issued an aggregate of 1,199,630,444 shares of common
stock to four accredited investors upon conversion of an aggregate of
$1,072,020 in principal plus related interest on our convertible debentures.

    In March 2005, we issued an aggregate of 271,500,000 shares of common stock
valued at $278,862 to four consultants as compensation for services rendered.

    In March 2005, we issued an aggregate of 41,000,000 shares of common stock
in exchange for the cancellation of $41,000 of debt.

    On March 17, 2005, we issued 8% callable secured convertible notes in an
aggregate principal amount of up to $1.4 million in a private offering to four
accredited investors. The investors, if certain conversion limitations are
disregarded, are beneficial owners of 5% or more of our outstanding shares of
common stock. The debentures initially were convertible into shares of common
stock at the lesser of $.005 per share and 40% of the average of the lowest
three intraday trading prices of a share of common stock during the 20 trading
days immediately preceding conversion. The debentures were accompanied by
warrants to purchase up to an aggregate of up to 2,800,000 shares of common
stock at a per share exercise price equal to $.002.

    In April 2005, we issued 30,000,000 shares of common stock valued at
$25,000 to a consultant for services rendered.

    In April 2005, we issued an aggregate of 693,701,433 shares of common stock
to four accredited investors upon conversion of an aggregate of $310,980 in
principal plus related interest on our convertible debentures.

    In May 2005, we issued an aggregate of 450,700,284 shares of common stock
to four accredited investors upon conversion of an aggregate of $140,400 in
principal plus related interest on our convertible debentures.

<page>15

    In June 2005, we issued an aggregate of 85,315,620 shares of common stock
to three accredited investors upon conversion of an aggregate of $20,400 in
principal on our convertible debentures.

    In July 2005, we issued an aggregate of 540,000,000 shares of common stock
to four accredited investors upon conversion of an aggregate of $96,000 in
principal on our convertible debentures.

    In July 2005, we issued an aggregate of 252,000,000 shares of common stock
valued at $91,200 to two consultants as compensation for services rendered.

    In August 2005, we issued an aggregate of 1,452,400,000 shares of common
stock to four accredited investors upon conversion of an aggregate of $174,288
in principal plus related interest on our convertible debentures.

    In September 2005, we issued an aggregate of 40,000,000 shares of common
stock to four accredited investors upon conversion of an aggregate of $3,200 in
principal plus related interest on our convertible debentures.

    Exemption from the registration provisions of the Securities Act of 1933
for the transactions described above is claimed under Section 4(2) of the
Securities Act of 1933, among others, on the basis that such transactions did
not involve any public offering and the purchasers were sophisticated with
access to the kind of information registration would provide.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

    The following discussion and analysis should be read in conjunction with
our consolidated financial statements and notes and the information included
under the caption "Risk Factors" included elsewhere in this document. Except
for historical information, the following discussion contains forward-looking
statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions and our current beliefs
regarding revenues we might earn if we are successful in implementing our
business strategies. See "Special Note Regarding Forward-Looking Statements"
for further information regarding forward-looking statements. Our actual
results may differ materially from the results discussed in the forward-looking
statements as a result of a number of factors, many of which are beyond our
control, including those factors discussed under "Risk Factors" and other
headings in this document, which could, among other things, cause the price of
our common stock to fluctuate substantially.

Overview

    Since 1995, we have been engaged in the development of a low-cost automatic
meter reading, or AMR, solution. We have developed a low-cost AMR solution that
includes a proprietary system employing specialized hardware and software that
will allow for residential and commercial applications. Our proprietary system
is called H-Net[TM], which is a trademark of ConectiSys. Our H-Net[TM] system
is currently comprised of two principal components: our H-Net[TM] 5.0 product,
which itself is comprised of circuitry and a radio transmitter, and our H-
Net[TM] BaseStation. Our H-Net[TM] 5.0 product is a component that is designed
to be part of a digital energy meter to read and wirelessly transmit meter data
to our H- Net[TM] BaseStation. Our H-Net[TM] BaseStation is designed to receive
and relay the meter data over standard phone lines to a central location where
the data is compiled and utilized.

    We are continuing the development of our H-Net[TM] system. Our recent
development efforts have focused on redesigning our H-Net[TM] circuitry from a
three-board circuit to a two-board circuit. This redesign was completed in
November 2005 and testing of our new H-Net[TM] circuitry has begun. We
anticipate that production units with this new circuitry will be available by
March 2006. We redesigned our H-Net[TM] circuitry to respond to redesigns of
meter products by

<page>16

meter manufacturers. These redesigns by meter manufacturers were directed at
reducing costs and resulted in reduced available space for integration of
circuitry from third-party technology providers such as ConectiSys.

    In August 2004, we submitted to the FCC our H-Net[TM] 5.0 product for
approval for commercialization and sale and received FCC certification for this
product in December 2004. In December 2004, we submitted to the FCC our H-
Net[TM] BaseStation for approval for commercialization and sale and received
FCC certification for this product in March 2005. Concurrently with the
development of our H-Net[TM] BaseStation, which is a single-channel design, we
have been developing an eight-channel H-Net[TM] BaseStation.  Our eight-channel
H-Net[TM] BaseStation is designed to communicate with up to 7,500 H- Net[TM]
5.0 product installations per network due to its multiple channel design and to
deliver real-time energy consumption data at low-cost. In July 2005, we
submitted to the FCC our eight-channel H-Net[TM] BaseStation product for
approval for commercialization and sale and received FCC certification for this
product in January 2006.

    We have not yet sold any H-Net[TM] systems. However, we are actively
pursuing sales of our H-Net[TM] systems with meter manufacturers and other
companies in the energy industry. We have no history of revenues and have
incurred significant losses since the beginning of the development of our H-
Net[TM] system. We have a significant accumulated deficit and a deficiency in
working capital. As a result of our financial condition, our independent
auditors have issued a report questioning our ability to continue as a going
concern.

Critical Accounting Policies and Estimates

    We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our financial
statements.

    The following discussion and analysis is based upon our financial
statements, which have been prepared using accounting principles generally
accepted in the United States of America.  The preparation of our financial
statements requires management to make estimates and assumptions that affect
the reported amounts of revenue and expenses, and assets and liabilities,
during the periods reported.  Estimates are used when accounting for certain
items such as depreciation, likelihood of realization of certain assets,
employee compensation programs and valuation of intangible assets.  We base our
estimates on historical experience and other assumptions that we believe are
reasonable under the circumstances. Actual results may differ from our
estimates.

Going Concern Assumption

    We have based our financial statements on the assumption of our operations
continuing as a going concern.  As a result, we continue to depreciate fixed
assets and show certain debts as long-term.  As of September 30, 2005, we had a
deficiency in working capital of approximately $2.8 million and had incurred
continual net losses since our return to the development stage in fiscal 1994
of approximately $32.0 million, which raise substantial doubt about our ability
to continue as a going concern.  Our plans for correcting these deficiencies
include the future sales and licensing of our products and technologies, and
the raising of capital through the issuance of common stock and from continued
officer advances, which are expected to help provide us with the liquidity
necessary to meet operating expenses.  An investor group has advanced us an
aggregate amount of approximately $4.7 million.  During the fiscal year ended
September 30, 2005, the same investor group agreed to advance us up to an
additional $1.4 million in gross proceeds.  In fiscal 2005, we received $1.4
million in gross proceeds in connection with this financing.  Over the longer-
term, we plan to achieve profitability through our operations from the sale and
licensing of our H-Net [TM] automatic meter-reading system.  Our consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of the recorded asset amounts or the amounts

<page>17

and classification of liabilities that might be necessary should we be unable
to continue our existence.

Stock-Based Compensation

    Our compensation of consultants and employees with our capital stock is
recorded and/or disclosed at estimated market value.  The volatile nature of
the price of our common stock causes wide disparities in certain valuations.

    Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-based Compensation," establishes a fair value method of accounting
for stock-based compensation plans and for transactions in which an entity
acquires goods or services from non-employees in exchange for equity
instruments.  We adopted this accounting standard on January 1, 1996. SFAS No.
123 also encourages, but does not require, companies to record compensation
cost for stock-based employee compensation.  We have chosen to account for
stock-based compensation utilizing the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."  Accordingly, compensation cost for stock options is measured as
the excess, if any, of the fair market value of our common stock at the date of
grant over the amount an employee must pay to acquire the stock.  Also, in
accordance with SFAS No. 123, we have provided footnote disclosures in our
financial statements with respect to stock-based employee compensation.  The
cost of stock-based compensation is measured at the grant date on the value of
the award, and this cost is then recognized as compensation expense over the
service period.  The value of the stock-based award is determined using a
pricing model whereby compensation cost is the excess of the fair market value
of the stock as determined by the model at the grant date or other measurement
date over the amount an employee must pay to acquire the stock.

    Shares of our common stock issued in exchange for goods or services are
valued at the cost of the goods or services received or at the market value of
the shares issued, depending on the ability to estimate the value of the goods
or services received.

Comparison of Results of Operations for the Fiscal Years Ended September 30,
2005 and 2004

    We did not generate any revenues for the fiscal years ended September 30,
2005 and September 30, 2004. Cost of sales for fiscal 2005 was $245,427 as
compared to $95,879 for fiscal 2004, representing an increase of $149,548, or
156%. This increase in cost of sales primarily was due to an increase in
production of models and prototypes of our H-Net[TM] products that are used for
sales and marketing purposes.

    General and administrative expenses increased by $216,676, or 15%, to
$1,676,520 for fiscal 2005 as compared to $1,459,844 for fiscal 2004. This
increase in general and administrative expenses primarily was due to increased
legal and accounting fees.

    Interest expense decreased by $807,907, or 32%, to $1,715,198 during fiscal
2005 as compared to $2,523,105 for fiscal 2004. This decrease in interest
expense primarily was due to a decrease in net borrowings under our convertible
debentures and other debt during fiscal 2005.

    Net loss for fiscal 2005 decreased by $1,096,144, or 26%, to $3,132,683 as
compared to a net loss of $4,228,827 for fiscal 2004. The decrease in net loss
was primarily due to the decrease in interest expense as described above and
$504,462 in debt forgiveness income recognized in fiscal 2005 as compared to a
$150,000 legal settlement expense incurred in fiscal 2004. These amounts were
partially offset by increased general and administrative expenses as described
above.

<page>18

Liquidity and Capital Resources

    During the twelve months ended September 30, 2005, we financed our
operations solely through private placements of securities. We are actively
pursuing sales of our H-Net[TM] systems with meter manufacturers and other
companies in the energy industry. However, we have not yet sold any H- Net[TM]
systems. We have no history of revenues and have incurred significant losses
since the beginning of the development of our H-Net[TM] system. We have
significant accumulated and working capital deficits. As a result of our
financial condition, our independent auditors have issued a report questioning
our ability to continue as a going concern. Our consolidated financial
statements as of and for the years ended September 30, 2005 and 2004 have been
prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.

    As of September 30, 2005, we had a working capital deficit of approximately
$2.8 million and an accumulated deficit of approximately $32.7 million. As of
that date, we had approximately $519,000 in cash and cash equivalents. We had
accounts payable and accrued compensation expenses of approximately $2.0
million. We had other current liabilities, including amounts due to officers,
accrued interest, notes payable and current portion of long term debt of
approximately $1.5 million, including debts incurred prior to the beginning of
fiscal year 2005. To the extent convertible debentures or promissory notes that
we have issued are converted into shares of common stock, we will not be
obligated to repay the converted amounts.

    Cash used in our operating activities totaled approximately $1.3 million
for both the twelve months ended September 30, 2005 and the twelve months ended
September 30, 2004. Cash used in our investing activities totaled approximately
$34,000 for the twelve months ended September 30, 2005 as compared to
approximately $8,000 for the twelve months ended September 30, 2004.

    Cash provided by our financing activities totaled approximately $1.3
million for the twelve months ended September 30, 2005 as compared to
approximately $1.9 million for the twelve months ended September 30, 2004. We
raised all of the cash provided by financing activities during the twelve
months ended September 30, 2005 from the issuance of common stock, convertible
debentures and/or promissory notes.

    As of the following dates, we were in default in the repayment of principal
and interest in the corresponding amounts set forth below on our secured
convertible debentures due as of those dates:

                              Principal              Current
                              Amount($)             Principal
        Default Date       at Default Date          Amount($)
       ------------        ---------------        --------------
        December 3, 2004          50,000               18,001
        December 31, 2004         50,000               50,000
        February 18, 2005         50,000               50,000
        March 4, 2005            250,000              239,200
                           -------------         ------------
                  Total:       $ 500,000          $   357,201
                           =============          ===========
    As of January 23, 2006, each of these defaults, other than with respect to
payment of principal amounts which have been paid subsequent to the
corresponding default date, was continuing and we were in payment default under
convertible debentures in the aggregate principal amount of approximately
$357,201 plus related interest on those debentures. As of that date, we also
were in default under our obligations to register for resale shares of our
common stock underlying certain of our outstanding convertible debentures and

<page>19

notes. In addition, as of that date, we also were in default under our
obligations to make quarterly interest payments under all of our outstanding
convertible debentures and notes issued prior to our convertible notes issued
in March 2005. As of that date, we owed accrued and unpaid interest on our
convertible debentures and notes in an aggregate amount of approximately
$257,000 net of approximately $105,000 of prepaid interest.  As of January 23,
2006, as a result of the above defaults, the holders of our secured convertible
debentures and notes were entitled to pursue their rights to foreclose upon
their security interest in all of our assets. However, as of that date, other
than the receipt of a notice of default, we were not aware of any action taken
by the holders of our secured convertible debentures and notes to pursue such
rights, and as of that date we also were not aware of any other legal or
similar action taken by those holders to enforce their rights or as a result of
our defaults under those secured convertible debentures and notes.

    We plan to register for resale with the Securities and Exchange Commission
a portion of the shares of common stock underlying the convertible debentures
and notes under which we are in default and expect that the convertible
debentures and notes ultimately will be converted into shares of our common
stock and that we therefore will not be obligated to repay the outstanding
principal and accrued and unpaid interest amounts on those debentures and
notes.

    As of January 23, 2006, we had issued the following secured convertible
debentures and notes, which provide for interest at the rate of 12% per annum,
except for the notes issued in March 2005, which provide for interest at the
rate of 8% per annum, and warrants to purchase common stock to various
accredited inventors in connection with debenture and note offering
transactions:

<table>
                        Original      Net           Remaining     Accrued and       Warrants
                        Principal  Proceeds to       Principal       Unpaid        Issued in
Issuance Date          Amount ($) ConectiSys ($)(1)  Amount ($)     Interest ($)(2) Offering(#)
---------------        ---------- ----------------- ----------    ---------------- -----------
<C>                    <C>        <C>               <C>           <C>              <C>
March 29, 2002...      $ 300,000   $    225,000     $      -      $    27,300             -
May 10, 2002.....        150,000        125,000            -           36,000             -
June 17, 2002....        300,000        238,000            -           72,000             -
November 27, 2002        200,000        144,000            -              -         1,000,000
March 3, 2003....        150,000        100,000            -           27,700         750,000
May 12, 2003.....        150,000        100,000            -           36,000         750,000
November 25, 2003        100,000         76,000            -           24,000         500,000
December 3, 2003          50,000         31,000         18,001         12,300         250,000
December 31, 2003         50,000         44,000         50,000         12,400         250,000
February 18, 2004         50,000         35,000         50,000         11,600         250,000
March 4, 2004....        250,000        203,000        239,200         56,000       1,250,000
April 19, 2004...        250,000        165,000            -              -           750,000
June 30, 2004....        625,000        452,000            -              -         1,875,000
September 9, 2004        625,000        482,000            -              -         1,875,000
March 17, 2005         1,400,000      1,148,000       1,120,561        46,700       2,800,000
                       -----------    -----------   ------------     ----------    ----------
              Total:  $4,650,000     $3,568,000      $1,477,762      $362,000      12,300,000
</table>
    __________________

    (1) Amounts are approximate and represent net proceeds after deducting
        expenses incurred in connection with the offering as well as expenses
        for legal fees incurred in connection with preparation of reports and
        statements filed with the Securities and Exchange Commission.
    (2) Amounts are approximate and represent accrued and unpaid interest
        outstanding as of January 23, 2006. The total amount of accrued and
        unpaid interest does not account for approximately $105,000 of
        outstanding pre-paid interest.

    Each of the above outstanding secured convertible debentures or notes,
except for the convertible notes issued in March 2005, are due one year
following their respective issuance dates.  The convertible notes issued in

<page>20

March 2005 are due two years following their issuance dates. The conversion
price of our secured convertible debentures is the lower of 40% of the average
of the three lowest intra-day trading prices of a share of our common stock on
the OTC Bulletin Board during the twenty trading days immediately preceding the
conversion date, and either (a) $.06 for the March, May and June 2002
convertible debentures, (b) $.01 for the November 2002, March and May 2003
convertible debentures, or (c) $.005 for the November and December 2003 and the
February, March, April, June and September 2004 convertible debentures and the
March 2005 convertible notes. As of January 23, 2006, the applicable conversion
price was approximately $.00008 per share.

    Our continued operations are dependent on securing additional sources of
liquidity through debt and/or equity financing.

    As indicated above, our consolidated financial statements as of and for the
years ended September 30, 2005 and 2004 have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. As discussed in this report and
in Note 1 to our consolidated financial statements for the years ended
September 30, 2005 and 2004 included in this report, we have suffered recurring
losses from operations and at September 30, 2005 had substantial net capital
and working capital deficiencies. These factors, among others, raised
substantial doubt about our ability to continue as a going concern and led our
independent certified public accountants to modify their unqualified report to
include an explanatory paragraph related to our ability to continue as a going
concern. The consolidated financial statements included in this document do not
include any adjustments that might result from the outcome of this uncertainty.

    We have been, and currently are, working toward identifying and obtaining
new sources of financing. Our current convertible debenture and note investors
have provided us with an aggregate of approximately $4.7 million in financing
to date. No assurances can be given that they will provide any additional
financing in the future. Our current secured convertible debenture and note
financing documents contain notice and right of first refusal provisions and
the grant of a security interest in substantially all of our assets in favor of
the convertible debenture and note investors, all of which provisions will
restrict our ability to obtain debt and/or equity financing from any investor
other than our current investors.

    Any future financing that we may obtain may cause significant dilution to
existing stockholders. Any debt financing or other financing of securities
senior to common stock that we are able to obtain will likely include financial
and other covenants that will restrict our flexibility. At a minimum, we expect
these covenants to include restrictions on our ability to pay dividends on our
common stock. Any failure to comply with these covenants would have a material
adverse effect on our business, prospects, financial condition, results of
operations and cash flows.

    If adequate funds are not available, we may be required to delay, scale
back or eliminate portions of our operations and product and service
development efforts or to obtain funds through arrangements with strategic
partners or others that may require us to relinquish rights to certain of our
technologies or potential products or other assets. Accordingly, the inability
to obtain such financing could result in a significant loss of ownership and/or
control of our proprietary technology and other important assets and could also
adversely affect our ability to fund our continued operations and our product
and service development efforts that historically have contributed
significantly to our competitiveness.

Effect of Inflation

    Inflation did not have any significant effect on our operations during the
twelve months ended September 30, 2005.  Further, inflation is not expected to
have any significant effect on our future operations.

<page>21

Impact of New Accounting Pronouncements

    The Financial Accounting Standards Board, or FASB, has established new
accounting pronouncements.  We do not expect the adoption of these
pronouncements to have a material impact on our financial position, results of
operations or cash flows.

    In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections," which will require entities that voluntarily make a change in
accounting principle to apply that change retroactively to prior periods'
financial statements unless this would be impracticable.  SFAS No. 154
supersedes Accounting Principles Board Opinion No. 20, "Accounting Changes"
("APB No. 20"), which previously required that most voluntary changes in
accounting principle be recognized by including in the current period's net
income the cumulative effect of changing to the new accounting principle. SFAS
No. 154 also makes a distinction between "retrospective application" of an
accounting principle and the "restatement" of financial statements to reflect
the correction of an error.  Another significant change in practice under SFAS
No. 154 will be that if an entity changes its method of depreciation,
amortization, or depletion for long-lived, non-financial assets, the change
must be accounted for as a change in accounting estimate.  Under APB No. 20,
such a change would have been reported as a change in accounting principle.
SFAS No. 154 applies to accounting changes and error corrections that are made
in fiscal years beginning after December 15, 2005. The provisions of SFAS No.
154 did not affect our consolidated financial statements.

    In December 2004, the FASB issued SFAS No. 123 (Revised), "Share-Based
Payment" (SFAS No. 123R").  SFAS No. 123R is a revision of SFAS No. 123,
"Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 125,
"Accounting for Stock issued to Employees," and its related implementation
guidelines.  This Statement establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services.  It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the
entity's equity instruments or that may be settled by the issuance of those
equity instruments.  This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based
payment transactions.  Public entities are now required to measure liabilities
incurred to employees in share-based payment transactions at fair value.
Nonpublic entities may elect to continue to measure their liabilities to
employees incurred in share-based payment transactions at their intrinsic
value. This Statement does not change the accounting guidance for share-based
payment transactions with parties other than employees provided in SFAS No. 123
as originally issued and EITF Issue No. 96-18, "Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with selling, goods or Services."  This Statement is effective for
public entities that file as small business issuers as of the beginning of the
first interim or annual reporting period that begins after December 15, 2005.
The provisions of SFAS No. 123R are not expected to have a material impact on
our consolidated financial statements.

    In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
Assets - an amendment of APB Opinion No. 29."  SFAS No. 153 eliminates the
exception to account for non-monetary exchanges of similar productive assets at
carrying value and replaces it with a general exception for exchanges of non-
monetary assets that do not have commercial substance; otherwise, the exchange
principal of fair value applies.  A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange.  SFAS No. 153 is effective for non-
monetary exchanges occurring in fiscal periods beginning after June 15, 2005.
The provisions of SFAS No. 153 are not expected to have a material impact on
our consolidated financial statements.

<page>22


Risk Factors

    An investment in our common stock involves a high degree of risk. In
addition to the other information in this report, you should carefully consider
the following risk factors before deciding to invest in shares of our common
stock. If any of the following risks actually materializes, it is likely that
our business, financial condition and operating results would be harmed. As a
result, the trading price of our common stock could decline, and you could lose
part or all of your investment.

                         Risks Related to Our Business

    Our default on the repayment of the convertible debentures or notes held by
    certain security holders could have a material and adverse effect on our
    business, prospects, results of operations or financial condition.

    Unpaid principal and accrued and unpaid interest on our convertible
debentures and notes becomes immediately due and payable from one to two years
from their dates of issuance, depending on the debenture or note, or earlier in
the event of a default. The events of default under the convertible debentures
and notes are similar to those customary for convertible debt securities,
including breaches of material terms, failure to pay amounts owed, delisting of
our common stock from the OTC Bulletin Board or failure to comply with the
conditions of listing on the OTC Bulletin Board.

    As of January 23, 2006, we were in payment default under convertible
debentures in the aggregate principal amount of approximately $357,201 plus
related interest on those debentures. As of that date, we also were in default
under our obligations to register for resale shares of our common stock
underlying certain of our outstanding convertible debenture. In addition, as of
that date, we also were in default under our obligations to make quarterly
interest payments under all of our outstanding convertible debentures issued
prior to our convertible notes issued in March 2005. As of January 23, 2006, we
owed principal and accrued and unpaid interest on our convertible debentures
and notes in an aggregate amount of approximately $1,735,000 net of
approximately $105,000 of prepaid interest.

    As of January 23, 2006, as a result of the above defaults, the holders of
our secured convertible debentures and notes were entitled to pursue their
rights to foreclose upon their security interest in all of our assets. In the
event that the holders of our secured convertible debentures and notes
foreclose upon their security interest in all of our assets, we could lose all
of our assets, including our intellectual property and other technology
associated with our H-Net[TM] system, which would have a material and adverse
effect on our business, prospects, results of operations and financial
condition. In addition, the holders of our secured convertible debentures and
notes were entitled to demand immediate repayment of the outstanding principal
amounts of the debentures and notes and any accrued and unpaid interest. The
cash required to repay such amounts would likely have to be taken from our
working capital. Since we rely on our working capital to sustain our day to day
operations and the development of our H- Net[TM] system, a default on the
convertible debentures or notes could have a material and adverse effect on our
business, prospects, results of operations or financial condition.

    We have no history of revenues, have incurred significant losses, expect
    continued losses and may never achieve profitability. If we continue to
    incur losses, we may have to curtail our operations, which may prevent us
    from successfully deploying our H-Net[TM] wireless meter reading system.

    We have no history of revenues, have not been profitable and expect
continued losses. Historically, we have relied upon cash from financing
activities to fund all of the cash requirements of our activities and have
incurred significant losses and experienced negative cash flow. As of September
30, 2005, we had an accumulated deficit of approximately $32.7 million. For our
fiscal year ended September 30, 2005, we incurred a net loss of approximately
$3.1 million and for our fiscal year ended September 30, 2004, we incurred a

<page>23

net loss of approximately $4.2 million. We cannot predict when we will become
profitable or if we ever will become profitable, and we may continue to incur
losses for an indeterminate period of time and may never achieve or sustain
profitability. An extended period of losses and negative cash flow may prevent
us from successfully deploying our H-Net[TM] wireless meter reading system, or
our H-Net[TM] system, and operating or expanding our business. As a result of
our financial condition, our independent auditors have issued a report
questioning our ability to continue as a going concern.

    Our significant losses have resulted principally from costs incurred in
connection with the development of our H-Net[TM] system and from costs
associated with our administrative activities. We expect our operating expenses
to dramatically increase as a result of our planned deployment of our H-Net[TM]
system.  Since we have only recently completed the development of our H-Net[TM]
system, have no operating history and no existing sources of revenues, we
cannot assure you that our business will ever become profitable or that we will
ever generate sufficient revenues to meet our expenses and support our planned
activities. Even if we are able to achieve profitability, we may be unable to
sustain or increase our profitability on a quarterly or annual basis.

    Our independent auditors have issued a report questioning our ability to
    continue as a going concern. This report may impair our ability to raise
    additional financing and adversely affect the price of our common stock.

    The report of our independent auditors contained in our financial
statements for the years ended September 30, 2005 and 2004 includes a paragraph
that explains that we have incurred substantial losses and have a working
capital deficit. This report raises substantial doubt about our ability to
continue as a going concern. Reports of independent auditors questioning a
company's ability to continue as a going concern are generally viewed
unfavorably by analysts and investors. This report may make it difficult for us
to raise additional debt or equity financing necessary to continue the
development and deployment of our H-Net[TM] system. We urge potential investors
to review this report before making a decision to invest in ConectiSys.

    Without substantial additional financing, we may be unable to achieve the
    objectives of our current business strategy, which could force us to delay,
    curtail or eliminate our product and service development programs.

    We require additional financing to produce cost-reduced hardware for our H-
Net[TM] system capable of large-scale manufacturing and to complete the
development of our H-Net[TM] system.  We also require additional funding to
obtain and implement contracts and joint venture agreements with meter
manufacturers. If we are unable to obtain this financing, we could be forced to
delay, curtail or eliminate certain product and service development programs or
entirely abandon our planned deployment of our H- Net[TM] system. In addition,
our inability to obtain financing could have such a material adverse effect on
our business, prospects, results of operations or financial condition, that we
may be forced to restructure, file for bankruptcy, sell assets or cease
operations entirely, any of which could jeopardize an investment in our common
stock.

    We need and may be unable to obtain additional financing on satisfactory
    terms, which may require us to accept financing on burdensome terms that
    may cause substantial dilution to our shareholders and impose onerous
    financial restrictions on our business.

    We require additional financing. Deteriorating global economic conditions
may cause prolonged declines in investor confidence in and accessibility to
capital markets. Future financing may not be available on a timely basis, in
sufficient amounts or on terms acceptable to us. This financing will likely

<page>24

dilute existing shareholders' equity. Any debt financing or other financing of
securities senior to our common stock will likely include financial and other
covenants that will restrict our flexibility. At a minimum, we expect these
covenants to include restrictions on our ability to pay dividends on our common
stock. Any failure to comply with these covenants would have a material adverse
effect on our business, prospects, financial condition and results of
operations because we could lose any then-existing sources of financing and our
ability to secure new sources of financing may be impaired.

    We are subject to an injunction imposed by a federal court for violating
    the federal securities laws, which may make it more difficult to raise
    financing.

    In 1997, the Securities and Exchange Commission filed suit in the United
States District Court in the Central District of California against ConectiSys
and another individual seeking permanent injunctions and civil penalties based
on alleged violations of Sections 5(a), 5(c) and 17(a)(1)-(3) of the Securities
Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-
5 thereunder in connection with the sale of common stock of ConectiSys in 1996.
In March 1999, we agreed with the Securities and Exchange Commission to the
terms of a settlement of its litigation against us. Under the terms of that
settlement, we dismissed our then-pending appeal of a judgment against us in
favor of the Securities and Exchange Commission and accepted a permanent
injunction against us prohibiting actions that would violate federal securities
laws in connection with the offer, purchase or sale of securities. The
Securities and Exchange Commission agreed to waive a requirement of the
judgment under appeal that we disgorge $175,000 of proceeds from the sale of
our common stock due to our inability to pay this amount. On March 9, 1999, an
amended final judgment of permanent injunction and other relief memorializing
these agreements was entered in connection with the execution by us of a
consent to entry of injunction. An injunction of this nature is viewed
unfavorably by analysts and investors and may make it more difficult for us to
raise additional debt or equity financing necessary to run our business.

    We rely heavily on our management, and the loss of their services could
    materially and adversely affect our business.

    Our success is highly dependent upon the continued services of key members
of our management, including our Chairman of the Board and Chief Executive
Officer, Robert A. Spigno, and our Chief Technology Officer, Lawrence Muirhead.
The loss of Messrs. Spigno or Muirhead or one or more other key members of
management could have a material adverse effect on us because each of these
individuals has experience and skills upon which we draw heavily in our day-to-
day operations, strategic planning or research and development activities. The
development and operation of our H-Net[TM] system is largely dependent upon the
skills and efforts of Mr. Muirhead. Although we have entered into employment
agreements with Messrs. Spigno and Muirhead, we cannot assure the continued
services of these key members of our management team. We do not maintain key-
man life insurance policies on any member of management.

    We have very limited operating experience; therefore, regardless of the
    viability or market acceptance of our H-Net[TM] system, we may be unable to
    achieve profitability or realize our other business goals.

    Our H-Net[TM] system is the result of a new venture. We have been engaged
in research and development of automatic meter reading technologies since 1995,
and we have only recently completed limited pilot programs for our first and
only products embodied in our H-Net[TM] automatic meter reading system. We have
generated no operating revenues from our H-Net[TM] system and have not
commenced any of the widespread marketing and other functions that we
anticipate will be required for successful deployment of our H-Net[TM] system.
Deployment of our H-Net[TM] system will involve large-scale cost-reduction
manufacturing runs for the production of the components employed in our
H-Net[TM] system.  Our success will depend in large part on our ability to deal

<page>25

with the problems, expenses and delays frequently associated with bringing a
new product to market. Because we have little experience in the deployment and
operational aspects of automatic meter reading technologies, we may be unable
to successfully deploy and operate our H-Net[TM] system even if our H-Net[TM]
system proves to be a viable automatic meter reading solution and achieves
market acceptance. Consequently, we may be unable to achieve profitability or
realize our other business goals.

    Our failure to attract and retain key personnel could adversely affect our
    business, financial condition and results of operations.

    Our future success is dependent in part on our ability to attract and
retain certain key personnel. We currently have few employees and need to
attract additional skilled technical, clerical and managerial personnel in all
areas of our business. The competition for such individuals is intense. There
can be no assurance that we will be able to retain our existing personnel or
attract additional qualified personnel in the future. If we are unable to
attract and retain key personnel, our business, financial condition and results
of operations could be adversely affected.

    Many companies with greater resources and operating experience are
    developing technology similar to that employed in our H-Net[TM] system.
    These companies could successfully compete with us and negatively affect
    the deployment of our H-Net[TM] system and our opportunity to achieve
    revenues and/or profitability.

    We anticipate significant competition with our H-Net[TM] system from many
companies. Our H-Net[TM] system is designed to compete with companies such as
those that offer meter reading services utilizing modem and telephone line
communications or drive-by data collection capabilities. Our H-Net[TM] system
may compete with numerous companies, including Schlumberger Ltd., Itron, Inc.,
CellNet Data Systems, Hunt Technologies and Metricom Corporation, each of which
has significantly more resources and operational and product development
experience than we do.  Some of our potential customers, namely, meter
manufacturers and utility companies, may decide to develop their own products
or service offerings that directly compete with our H-Net[TM] system. Although
we believe that our H-Net[TM] system will be competitive in the marketplace, we
cannot assure you that these or other companies with greater experience and
greater resources than ConectiSys will not negatively affect our business
prospects and impair our ability to achieve revenues and/or profitability.

    We are targeting a new and evolving market and we cannot be certain that
    our business strategy will be successful.

    The automation of utility meter reading and data distribution is a
relatively new and rapidly changing market. We cannot accurately predict the
size of this market or its potential growth. Our system is one possible
solution for AMR and data distribution. It has not been adopted as an industry
standard and it may not be adopted on a broad scale. Competing systems have
been and likely will continue to be selected by utilities and other potential
clients. Participants in the utility industry have historically been cautious
and deliberate in making decisions concerning the adoption of new technology.
This process, which can take up to several years to complete, may include the
formation of evaluation committees, a review of different technical options,
technology trials, equipment testing and certification, performance and cost
justifications, regulatory review, one or more requests for vendor quotes and
proposals, budgetary approvals and other steps. Only a limited number of
utilities have made a commitment to purchase our products to date.
Consequently, if our H-Net[TM] system as an AMR solution is unsuccessful and we
are unable to enter into AMR or data distribution contracts on terms favorable
to us, our business, results of operations and financial condition could be
materially and adversely affected.

    The new and evolving nature of the market that we intend to target makes an
accurate evaluation of our business prospects and the formulation of a viable
business strategy very difficult. Accordingly, our business strategy may be

<page>26

faulty or even obsolete and as a result, we may not properly plan for or
address many obstacles to success, including the following:

    o the timing and necessity of substantial expenditures for the development
      and deployment of our H-Net[TM] system;
    o the failure to strategically position ourselves in relation to joint
      venture or strategic partners, and potential and actual competitors;
    o the failure of our H-Net[TM] system to satisfy the needs of the market
      that we intend to target and the resulting lack of widespread or adequate
      acceptance of our H-Net[TM] system; and
    o the difficulties in managing rapid growth of operations and personnel.

    Our failure to manage growth effectively could impair our business.

    We do not currently have revenue-generating operations but our strategy
envisions a period of rapid growth that may impose a significant burden on our
administrative and operational resources. Our ability to effectively manage
growth will require us to substantially expand the capabilities of our
administrative and operational resources and to attract, train, manage and
retain qualified engineers, technicians, salespersons and other personnel.
There can be no assurance that we will be able to do so. If we are unable to
successfully manage our growth, our business, prospects, results of operations
and financial condition could be materially and adversely affected.

    Because we believe that proprietary rights are material to our success,
    misappropriation of those rights or claims of infringement or legal actions
    related to intellectual property could adversely impact our financial
    condition.

    We currently rely on a combination of contractual rights, copyrights,
trademarks and trade secrets to protect our proprietary rights. However,
although our H-Net[TM] system and its constituent components could benefit from
patent protection, we have chosen to retain the proprietary rights associated
with our H-Net[TM] system predominantly as trade secrets. Although we currently
rely to a great extent on trade secret protection for much of our technology,
we cannot assure you that our means of protecting our proprietary rights will
be adequate or that our competitors will not independently develop comparable
or superior technologies or obtain unauthorized access to our proprietary
technology.

    We own, license or have otherwise obtained the right to use certain
technologies incorporated in our H-Net[TM] system. We may receive infringement
claims from third parties relating to our products and technologies. In those
cases, we intend to investigate the validity of the claims and, if we believe
the claims have merit, to respond through licensing or other appropriate
actions. To the extent claims relate to technology included in components
purchased from third-party vendors for incorporation into our products, we
would forward those claims to the appropriate vendor. If we or our component
manufacturers are unable to license or otherwise provide any necessary
technology on a cost-effective basis, we could be prohibited from marketing
products containing that technology, incur substantial costs in redesigning
products incorporating that technology, or incur substantial costs defending
any legal action taken against us.

                      Risks Related to Our Common Stock

    Shares of our common stock eligible or to become eligible for public sale
    could adversely affect our stock price and make it difficult for us to
    raise additional capital through sales of equity securities.

    As of January 23, 2006, we had outstanding 8,945,816,280 shares of common
stock, of which approximately 1,904,500,000 shares were restricted under the
Securities Act of 1933. As of that date, we also had outstanding options,

<page>27

warrants, convertible debentures and notes and preferred stock that were
exercisable for or convertible into approximately 22,069,000,000 shares of
common stock, approximately 21,699,000,000 of which are covered by registration
rights. Sales of a substantial number of shares of our common stock in the
public market, or the perception that sales could occur, could adversely affect
the market price of our common stock. Any adverse effect on the market price of
our common stock could make it difficult for us to raise additional capital
through sales of equity securities at a time and at a price that we deem
appropriate.

    Conversion or exercise of our outstanding derivative securities could
    substantially dilute your investment because the conversion and exercise
    prices of those securities and/or the number of shares of common stock
    issuable upon conversion or exercise of those securities are subject to
    adjustment.

    We have issued various debentures, notes and warrants that are convertible
or exercisable at prices that are subject to adjustment due to a variety of
factors, including fluctuations in the market price of our common stock and the
issuance of securities at an exercise or conversion price less than the then-
current exercise or conversion price of those debentures, notes or warrants. As
of January 23, 2006, the closing price of a share of our common stock on the
OTC Bulletin Board was $.0003. On that date, our debentures, notes and warrants
outstanding with adjustable conversion and/or exercise prices were convertible
or exercisable into approximately 21,699,000,000 shares of our common stock.
The number of shares of common stock that these adjustable securities
ultimately may be converted into or exercised for could prove to be greater
than this amount if the market price of our common stock declines. You could,
therefore, experience substantial dilution of your investment as a result of
the conversion or exercise of our outstanding derivative securities.

    The applicable conversion price of our debentures and notes issued to
certain security holders is variable and does not have a lower-limit, therefore
the dilutive effect to our existing security holders is theoretically
limitless. However, because the variable conversion price of these debentures
and notes has an upper limit, an increase in the trading price of a share of
our common stock will result in a limited benefit to existing security holders
with respect to the conversion of these debentures and notes. The following
table sets forth the number of shares issuable upon conversion of the aggregate
principal and all accrued and unpaid interest on our convertible debentures and
notes issued to certain security holders and outstanding as of January 23,
2006, which amount was approximately $1,735,000, net of prepaid interest, and
is based upon the indicated hypothetical trading prices:



                                         Approximate         Percentage
Hypothetical       Conversion           Number of Shares    of Company's
Trading Price      Price (1)              Issuable(2)       Common Stock (3)
-------------     -----------------    -----------------   ---------------
   $.0008             $.00032           5,421,875,000            38%
   $.0004             $.00016          10,843,750,000            55%
   $.0002             $.00008          21,687,500,000            71%
   $.0001             $.00004          43,375,000,000            83%
    _______________

    (1) The conversion price of our debentures and notes is the lower of 40% of
        the average of the three lowest intraday trading prices of a share of
        our common stock on the OTC Bulletin Board during the twenty trading
        days immediately preceding the conversion date, and either (a) $.06 for
        the March, May and June 2002 convertible debentures, (b) $.01 for the
        March and May 2003 convertible debentures, or (c) $.005 for the
        November and December 2003, and the February and March 2004 convertible
        debentures and the March 2005 convertible notes. As of January 23,
        2006, the applicable conversion price was approximately $.00008.

<page>28

    (2) Our current authorized capital allows us to issue a maximum of 15
        billion shares of common stock.
    (3) Amounts are based on 8,945,816,280 shares of our common stock
        outstanding as of January 23, 2006 plus the corresponding number of
        shares issuable. Each of the holders of our convertible debentures and
        notes may not convert our debentures or notes into more than 4.9% of
        our then- outstanding common stock; however, the holders may waive the
        4.9% limitation, thus allowing the conversion of their debentures or
        notes into a number of shares of common stock in excess of 4.9% of our
        then-outstanding common stock.

    The holders of certain of our convertible debentures and notes may elect to
receive payment for accrued and unpaid interest on our debentures and notes in
shares of our common stock based on the conversion price and on the same terms
described above with respect to conversions of the principal portion of these
debentures and notes. As a result of conversions of the principal or interest
portion of our convertible debentures and notes and related sales of our common
stock by the holders of our convertible debentures and notes, the market price
of our common stock could be depressed, thereby resulting in a significant
increase in the number of shares issuable upon conversion of the principal and
interest portions of these debentures and notes. You could, therefore,
experience substantial dilution of your investment as a result of the
conversion of the principal or interest portions of our convertible debentures
and notes.

    If our security holders engage in short sales of our common stock,
    including sales of shares to be issued upon conversion or exercise of
    derivative securities, the price of our common stock may decline.

    Selling short is a technique used by a shareholder to take advantage of an
anticipated decline in the price of a security. A significant number of short
sales or a large volume of other sales within a relatively short period of time
can create downward pressure on the market price of a security. The decrease in
market price would allow holders of our derivative securities that have
conversion or exercise prices based upon a discount on the market price of our
common stock to convert or exercise their derivative securities into or for an
increased number of shares of our common stock. Further sales of common stock
issued upon conversion or exercise of our derivative securities could cause
even greater declines in the price of our common stock due to the number of
additional shares available in the market, which could encourage short sales
that could further undermine the value of our common stock. You could,
therefore, experience a decline in the value of your investment as a result of
short sales of our common stock.

    Our current financing arrangements could prevent our common stock from
    being listed on Nasdaq or other principal markets.

    Nasdaq and other principal markets require that, to be eligible for
inclusion in the stock market, a company's common stock have a specified
minimum bid price per share. Convertible debenture and convertible note
financings, especially those with variable conversion prices with low or no
low-price limits, characteristically exert downward pressure on the market for
a company's common stock. This pressure, if applied against the market for our
common stock, may prevent our common stock from being listed on Nasdaq or other
principal markets.

<page>29

    Our common stock price is subject to significant volatility, which could
    result in substantial losses for investors and in litigation against us.

    The stock market as a whole and individual stocks historically have
experienced extreme price and volume fluctuations, which often have been
unrelated to the performance of the related corporations. During the twelve
months ended September 30, 2005, the high and low closing bid prices of our
common stock were $.0095 and $.0002, respectively. The market price of our
common stock may exhibit significant fluctuations in the future response to
various factors, many of which are beyond our control and which include:

    o variations in our quarterly operating results, which variations could
      result from, among other things, changes in the needs of one or more of
      our customers;
    o changes in market valuations of similar companies and stock market price
      and volume fluctuations generally;
    o economic conditions specific to the industries in which we operate;
    o announcements by us or our competitors of new or enhanced products,
      technologies or services or significant contracts, acquisitions,
      strategic relationships, joint ventures or capital commitments;
    o regulatory developments;
    o additions or departures of key personnel; and
    o future sales of our common stock or other debt or equity securities.

    If our operating results in future quarters fall below the expectations of
market makers, securities analysts and investors, the price of our common stock
likely will decline, perhaps substantially. In the past, securities class
action litigation often has been brought against a company following periods of
volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management's attention and resources.
Consequently, the price at which you purchase shares of our common stock may
not be indicative of the price that will prevail in the trading market. You may
be unable to sell your shares of common stock at or above your purchase price,
which may result in substantial losses to you.

    Because we are subject to the "Penny Stock" rules, the level of trading
    activity in our stock may be reduced.

    Broker-dealer practices in connection with transactions in "penny stocks"
are regulated by penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on Nasdaq). The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and,
if the broker-dealer is the sole market maker, the broker-dealer must disclose
this fact and the broker-dealer's presumed control over the market, and monthly
account statements showing the market value of each penny stock held in the
customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors" must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules, and investors in our common stock may find it difficult to
sell their shares.

<page>30

    Because our stock is not listed on a national securities exchange, you may
    find it difficult to dispose of or obtain quotations for our common stock.

    Our common stock trades under the symbol "CNES" on the OTC Bulletin Board.
Because our stock trades on the OTC Bulletin Board rather than on a national
securities exchange, you may find it difficult to either dispose of, or to
obtain quotations as to the price of, our common stock.

    Our preferred stock may delay or prevent a takeover of ConectiSys, possibly
    preventing you from obtaining higher stock prices for your shares.

    Our board of directors has the authority to issue up to 50,000,000 shares
of preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights of those shares, without any further vote
or action by our shareholders. Of these shares, 1,000,000 shares have been
designated as Class A Preferred Stock and 1,000,000 shares have been designated
as Class B Preferred Stock. The rights of the holders of our common stock are
subject to the rights of the holders of our outstanding preferred stock and
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that we may issue in the future. The issuance of
preferred stock, while providing desired flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of our
outstanding voting stock, which would delay, defer or prevent a change in
control of ConectiSys. Furthermore, preferred stock may have other rights,
including economic rights senior to the common stock, and, as a result, the
issuance of preferred stock could adversely affect the market value of our
common stock.

           SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    This report contains forward-looking statements, including among others:

    o our product development activities;
    o our business strategy for establishing a presence in the AMR market;
    o anticipated trends in our financial condition and results of operations;
      and
    o our ability to distinguish ourselves from our current and future
      competitors.

    You can identify forward-looking statements generally by the use of
    forward-looking terminology such as "believe," "expect," "may," "will,"
    "should," "could," "seek," "estimate," "continue," "anticipate," "intend,"
    "future," "plan" or variations of those terms and other similar
    expressions, including their use in the negative, or in discussions of
    strategies, opportunities, plans or intentions. You should not place undue
    reliance on these forward-looking statements, which speak only as to our
    expectations as of the date of this report. These forward-looking
    statements are subject to a number of risks and uncertainties, including
    those identified under "Risk Factors" and elsewhere in this report. In
    addition, these forward-looking statements necessarily depend upon
    assumptions, estimates and expectations that may prove to be incorrect.
    Although we believe that the assumptions, estimates and expectations
    reflected in these forward-looking statements are reasonable, actual
    conditions in the AMR industry, and actual conditions and results in our
    business, could differ materially from those expressed or implied in these
    forward-looking statements. In addition, none of the events anticipated in
    the forward-looking statements may actually occur and we cannot assure you
    that we will achieve our plans, intentions or expectations. Any of these
    different outcomes could cause the price of our common stock to decline
    substantially. Except as required by law, we undertake no duty to update
    any forward-looking statement after the date of this report, either to
    conform any statement to reflect actual results or to reflect the
    occurrence of unanticipated events.

<page>31

ITEM 7. FINANCIAL STATEMENTS.

    Our consolidated financial statements are filed with and begin on page F-1
of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES.

    None.

ITEM 8A.  CONTROLS AND PROCEDURES.

    Our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively) have
concluded, based on their evaluation as of September 30, 2005 (the "Evaluation
Date"), that the design and operation of our "disclosure controls and
procedures" (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) are effective to ensure that information
required to be disclosed by us in the reports filed or submitted by us under
the Exchange Act is accumulated, recorded, processed, summarized and reported
to our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding whether
or not disclosure is required.

    During the fiscal year ended September 30, 2005, there were no changes in
our "internal controls over financial reporting" (as defined in Rule 13a-15(f)
under the Exchange Act) that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting.

ITEM 8B.  OTHER INFORMATION.

    None.

<page>32

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors and Executive Officers

    The directors and executive officers of ConectiSys and their ages,
positions, business experience and education as of January 23, 2006 are as
follows:

         Name             Age             Position
         ----             ---             --------
Robert A. Spigno(1)(2)..  51    Chairman of the Board, Chief
                                 Executive Officer and Director

Lawrence Muirhead(1)(2).  46    Chief Technology Officer and Director

Patricia A. Spigno......  48    Acting Chief Financial Officer,
                                 Treasurer and Secretary

Melissa McGough (1).....  29    Director
    _______________
    (1) Member of Stock Option Committee.
    (2) Member of Nominating Committee.

Business Experience

Directors

    Robert A. Spigno has served as our Chief Executive Officer, Chairman of the
Board and as a member of our board of directors since August 1995. Prior to
that time, Mr. Spigno was President, for more than a decade, of S.W. Carver
Corp., a company founded by he and his former wife, Patricia A. Spigno, that
was a commercial builder of residential homes. Mr. Spigno has over 25 years of
experience in executive management and majority ownership of several privately
held companies.

    Lawrence Muirhead has served as our Chief Technical Officer and as a member
of our board of directors since October 1997. Prior to that time, Mr. Muirhead
worked for TRW. Mr. Muirhead has over 18 years of engineering and research and
development experience in the aerospace industry, including over 13 years of
experience with TRW, where helped lead new product development and deployment.
Mr. Muirhead holds a B.S. degree in physics and a B.A. degree in mathematics
from the University of California, Santa Barbara, and holds an M.S. degree in
physics from the California Institute of Technology.

    Melissa McGough has served as a member of our board of directors since
November 1999. Ms. McGough was also our Corporate Administrator from December
1998 until March 2005. Her responsibilities as Corporate Administrator included
public relations and management of our daily office activities. Prior to that
time, Ms McGough was a student.

Executive Officer

    Patricia A. Spigno served as our Chief Financial Officer, Treasurer and
Secretary from August 1995 to August 2005 and was a member of our board of
directors from August 1995 until October 1997. She resigned as our Chief
Financial Officer, Treasurer and Secretary in August 2005 but is currently our

<page>33

Acting Chief Financial Officer, Treasurer and Secretary and is expected to
remain in this position until her successor is appointed by our board of
directors. Prior to August 1995, Ms. Spigno was Chief Financial Officer and the
head of administration of S.W. Carver Corp., a company founded by her and her
former husband, Robert A. Spigno. Ms. Spigno has over 22 years of experience in
accounting and asset management.

    All directors hold office until the next annual meeting of shareholders and
until their respective successors are elected or until their earlier death,
resignation or removal. Each officer of ConectiSys serves at the discretion of
the board of directors. Robert A. Spigno and Patricia A. Spigno were formerly
husband and wife. There are no other family relationships between or among any
other directors, director nominees or executive officers of ConectiSys.

  Advisors to Our Board of Directors

    Rodney W. Lighthipe has served as an advisor to our board of directors
since April 2001. Mr. Lighthipe also served as our President from September
2000 until his resignation in September 2001. Prior to that time, Mr. Lighthipe
served as Director of Research for San Diego Gas & Electric from 1992 until
1996 and was responsible for the development and deployment of new
technologies. Mr. Lighthipe was Research Manager for Southern California Edison
from 1980 to 1987 and organized an international consortium of companies for
the design, construction and operation of the world's largest coal gasification
plant.  Mr. Lighthipe was also Power Contracts Manager for Southern California
Edison from 1974 until 1980 during which he opened new transmission paths
throughout the Western United States and Canada for the purchase and sale of
bulk electric power. Some of Mr. Lighthipe's major projects included the
installation of photovoltaics in remote areas and the launch of a "smart card"
project employing residential telephone systems. Mr. Lighthipe has also acted
as a consulting engineer in the energy and telecommunications industries and
served two tours of duty in Vietnam as a Lieutenant in the United States Navy.

    Dr. Hugo Pomrehn has served as an advisor to our board of directors since
April 2001. On June 28, 1992, Dr. Pomrehn was nominated by former President
George Bush to serve as the Under Secretary of Energy, and was confirmed by the
United States Senate for that position on September 29, 1992. As Under
Secretary to Admiral James Watkins, Dr. Pomrehn was the third-ranking official
at the U.S. Department of Energy, which employed approximately 170,000
personnel and had an annual budget of $20 billion. Dr. Pomrehn's professional
career covers a broad spectrum of involvement with energy and environmental
technologies. He has been engaged in engineering and management consulting in
the energy and nuclear fields for more than 30 years and was a Vice President
of the Bechtel Corporation.

    Aaron R. Sokol has served as an advisor to our board of directors since
April 2001. Mr. Sokol is a Vice President at Deutsche Bank Alex Brown where his
responsibilities include providing innovative and customized solutions to
clients in order to preserve and enhance their wealth. He is also responsible
for new business development as well as global financial advisory services for
existing and prospective clients. Mr. Sokol joined Deutsche Bank Alex Brown
from Los Angeles-based Scudder Kemper Investments, Inc. Mr. Sokol has also
served as an Assistant Vice President at First Chicago Capital Markets, Inc.,
and prior to that, worked in the corporate finance department at Nations Bank
Capital Markets, Inc. Mr. Sokol holds a J.D. degree from Boston University
School of Law and a M.B.A. in Finance and New Venture Management from the
University of Southern California.

    Larry W. Siler has served as an advisor to our board of directors since
April 2001. Mr. Siler is currently Manager of Fuel Transportation for Edison
Mission Energy in Chicago, Illinois. Mr. Siler was the Coal Supply
Superintendent for Commonwealth Edison Company in Chicago from 1988 until 1999.
From 1986 until 1988 Mr. Siler was a management and engineering consultant in
Austin, Texas. He also held positions as the Fuels Manager, Engineering

<page>34

Supervisor, Staff Engineer and Fuels Engineer for the Lower Colorado River
Authority from 1973 until 1986.

    Tod O'Connor has served as an advisor to our board of directors since April
2001. Mr. O'Connor was Director of Government Relations for two Edison
International Inc. subsidiaries, Southern California Edison RD&D Department and
Edison Technology Solutions from 1993 until 1999. Mr. O'Connor also was
employed by Pacific Enterprises and its subsidiary, Southern California Gas Co.
from 1989 until 1993, and MARC Associates' Status Group in Washington, D.C.
from 1988 until 1989. Mr. O'Connor was a Legislative Aide in the United States
House of Representatives where he advised House Speaker Thomas P. (Tip) O'Neill
on pending legislation and proposed federal regulations, as well as the
Democratic Steering and Policy Committee from 1980 until 1981. Mr. O'Connor is
currently President of O'Connor Consulting Services, Inc. in Woodland Hills,
California. Mr. O'Connor holds a L.L.M. degree in labor law from Georgetown
University Law Center, Washington, D.C., and a J.D. degree from Suffolk
University Law School.

    Dr. Fredric Brauner was appointed to serve as an advisor to our board of
directors in October 2003. Dr. Brauner is a doctor of medicine, specializing in
dermatology.  He graduated from the University of Vienna and became a doctor in
1977. Dr. Brauner, took over his father's practice in 1983 at the University
Clinic of Dermatology in Vienna. Dr. Brauner is a key investor in ConectiSys
and is leading our efforts to expand our H-Net(TM) system to fit the European
marketplace.

Section 16(a) Beneficial Ownership Reporting Compliance

    Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who beneficially own more than 10% of a
registered class of our common stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission.
These officers, directors and stockholders are required by the Securities and
Exchange Commission regulations to furnish us with copies of all such reports
that they file.

    Based solely upon a review of copies of these reports furnished to us
during 2005 and thereafter, or written representations received by us from
reporting persons that no other reports were required, we believe that all
Section 16(a) filing requirements applicable to our reporting persons during
2005 were complied with, except as described below.

    The following individuals did not timely file the following numbers of
Forms 4 to report the following numbers of transactions: Mr. Robert Spigno - 1
report, 1 transaction; and Ms. Patricia Spigno - 1 report, 1 transaction.

  Board Committees

    Our board of directors has a Stock Option Committee and a Nominating
Committee. Our board of directors does not have an Audit Committee. In the
absence of an Audit Committee, the entire board of directors intends to satisfy
the duties of that committee.

    Stock Option Committee. Our Stock Option Committee makes recommendations to
our board of directors concerning incentive compensation for employees and
consultants of ConectiSys and selects the persons entitled to receive options
under our stock option plans and establishes the number of shares, exercise
price, vesting period and other terms of the options granted under those plans.
The Stock Option Committee currently consists of Robert A. Spigno, Lawrence
Muirhead and Melissa McGough. During fiscal 2005, the Stock Option Committee
held one meeting and did not take action by written consent on any occasion. No
executive officer of ConectiSys has served as a director or member of the
compensation committee of any other entity whose executive officers served as a
director of ConectiSys.

<page>35

    Audit Committee. We do not currently have an Audit Committee. In addition,
having no Audit Committee, we do not have an Audit Committee financial expert.
As a small, development-stage company, it has been exceedingly difficult for us
to attract an independent member of our board of directors, who would qualify
as an Audit Committee financial expert, to serve as the sole member of the
Audit Committee of our board of directors. We plan to form an Audit Committee
consisting solely of one or more independent members of our board of directors,
at least one of whom will qualify as an Audit Committee financial expert under
the rules and regulations of the Securities and Exchange Commission, once we
are able to identify and attract a satisfactory candidate.

    Nominating Committee. Our Nominating Committee currently consists of two
directors, Mr. Robert A. Spigno, who serves as Chairman, and Mr. Lawrence
Muirhead, neither of whom is "independent" under the rules and regulations of
the Securities and Exchange Commission or under the current Nasdaq listing
standards. We intend to reconstitute our Nominating Committee with one or more
independent members of our board of directors once we are able to identify and
attract a satisfactory candidate.

    Our Nominating Committee assists our board of directors in the selection of
nominees for election to the board. The committee determines the required
selection criteria and qualifications of director nominees based upon the needs
of ConectiSys at the time nominees are considered and recommends candidates to
be nominated for election to the board. The Nominating Committee was
constituted, and our board of directors adopted a written charter for the
Nominating Committee, in June 2004. A copy of the current charter is available
on our website at http://www.conectisys.com under the headings "Investor
Relations" and "Corporate Governance."  During fiscal 2005, our Nominating
Committee held one meeting and did not take action by written consent on any
occasion. Our Nominating Committee considered and nominated candidates for
directorship in connection with our 2005 annual meeting. No candidates for
director nominations were submitted to our board of directors by any
shareholder in connection with the election of directors at our 2005 annual
meeting.

  Codes of Ethics

    Our board of directors has adopted a Code of Business Conduct and Ethics
that applies to all of our directors, officers and employees and an additional
Code of Business Ethics that applies to our Chief Executive Officer and our
Senior Financial Officers.

    The Code of Ethics, as applied to our principal financial officers,
constitutes our "code of ethics" within the meaning of Section 406 of the
Sarbanes-Oxley Act of 2002 and would also constitute our "code of conduct"
within the meaning of the listing standards of Nasdaq.

    We intend to satisfy the disclosure requirement under Item 10 of Form 8-K
relating to amendments to or waivers from provision of these codes that relate
to one or more of the items set forth in Item 406(b) of Regulation S-K, by
describing on our Internet website, within five business days following the
date of a waiver or a substantive amendment, the date of the waiver or
amendment, the nature of the amendment or waiver, and the name of the person to
whom the waiver was granted.

    Information on our Internet website is not, and shall not be deemed to be,
a part of this report or incorporated into any other filings we make with the
Securities and Exchange Commission.

Compensation Committee Interlocks and Insider Participation

    No member of our board of directors has a relationship that would
constitute an interlocking relationship with executive officers and directors
of another entity.

<page>36

ITEM 10.  EXECUTIVE COMPENSATION.

Compensation of Executive Officers

    The Summary Compensation Table below provides information concerning the
annual and long-term compensation for services in all capacities as an employee
of ConectiSys of our Chief Executive Officer, our Chief Technology Officer and
our Chief Financial Officer, or the named executives, during the years ended
September 30, 2005, 2004 and 2003. There were no other executive officers whose
annual salary and bonus compensation exceeded $100,000 during the year ended
September 30, 2005.
<table>
                                   SUMMARY COMPENSATION TABLE

                                                             Long-Term
                                                            Compensation
                                                            ------------
                                                              Awards
                                                            ------------
                                Annual Compensation          Securities
     Name and                                                Underlying      All Other
     Principal Position       Year     Salary($) Bonus($)(1)  Options(#)   Compensation ($)
     -------------------      -------  --------- ----------- ------------  ----------------
     <C>                      <C>      <C>       <C>         <C>           <C>
     Robert A. Spigno,        2005     $160,000  $80,000        --               --
     Chief Executive Officer  2004     $160,000  $80,000        --               --
                              2003     $160,000  $80,000        --               --

     Lawrence Muirhead,       2005     $150,000    --           --               --
     Chief Technology Officer 2004     $150,000    --           --               --
                              2003     $150,000    --           --               --

     Patricia A. Spigno,      2005     $ 80,000  $40,000        --               --
     Chief Financial Officer  2004     $ 80,000  $40,000        --               --
     and Secretary            2003     $ 80,000  $40,000        --               --
     _____________

    (1) Amounts represent bonus earned, but deferred and recorded on the books
        and records of ConectiSys as accrued compensation. Amounts are payable
        in common stock of ConectiSys based on a conversion price equivalent to
        50% of the average of the closing bid and asked prices of a share of
        ConectiSys common stock for the 30 days prior to the end of the year in
        which such bonus was earned. Although our agreements with Robert Spigno
        and with Patricia Spigno provide that the conversion price is to be
        equal to 50% of the average of the closing bid and asked prices of a
        share of our common stock for the 30 days prior to the end of the
        calendar year, Mr. Spigno and Ms. Spigno both voluntarily relinquished
        their right to receive shares for 2005, 2004 and 2003 based on this
        conversion price in favor of a conversion price equal to approximately
        100% of the average of the closing bid and asked prices of a share of
        our common stock for the 30 days prior to the end of the applicable
        calendar year.
</table>
Stock Option Grants in 2005

    In fiscal 2005, no options or stock appreciation rights were granted to the
named executives.

<page>37

Option Exercises and Fiscal Year-End Values

    The following table sets forth the number of shares acquired and value
realized upon exercise of options during the fiscal year ended September 30,
2005 and the number of exercisable and unexercisable in-the-money stock options
and their values at September 30, 2005 for the named executives. An option is
"in-the-money" if the fair market value for the underlying securities exceeds
the exercise price of the option.

<table>
                                    Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

                                                              Number of Securities Underlying      Value ($)of Unexercised
                                Shares                               Unexercised Options           In-the-Money Options at
                                Acquired on     Value                September 30, 2005             September 30, 2005 (1)
     Name                       Exercise       Realized ($)   Exercisable(#) Unexercisable(#)    Exercisable    Unexercisable
     ---------------------      ------------    ------------   -------------- ----------------  --------------  ----------------
     <C>                        <C>             <C>            <C>            <C>               <C>             <C>
     Robert A. Spigno              ---             ---          6,443,654          ---               ---             ---
     Lawrence Muirhead             ---             ---             ---             ---               ---             ---
     Patricia Spigno               ---             ---           500,000           ---               ---             ---
  _______________
    (1) The closing sale price of our common stock on the OTC Bulletin Board(R)
        as of September 30, 2005 was $.0003.
</table>
Long-Term Incentive Plan Awards

    In fiscal 2005, no awards were given to named executives under long-term
incentive plans.

Compensation of Directors

    Our directors do not receive any compensation in their capacity as members
of the board of directors, but may be reimbursed for reasonable expenses
incurred in connection with attendance of meetings of the board of directors.

    The advisors to our board of directors each initially received 250,000
shares of common stock as compensation for their advisory services. No
additional compensation has been paid and any future compensation will be in
the discretion of our board of directors.

Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

    In October 1995, our board of directors set the compensation for Robert A.
Spigno, our Chairman of the Board and Chief Executive Officer. Mr. Spigno has
executed an employment agreement with ConectiSys effective October 2, 1995, as
amended by employment agreement amendments effective July 24, 1996, August 11,
1997, September 1, 1999 and March 27, 2000 that provide for annual salary of
$160,000 and a bonus of 50% of Mr. Spigno's annual salary, with the bonus
payable in common stock of ConectiSys.

    In August 1998, our board of directors set the compensation for Lawrence
Muirhead, our Chief Technology Officer. Mr. Muirhead has executed an employment
agreement with ConectiSys effective August 1, 1998, that provides for annual
salary compensation of $150,000. On November 22, 1999, Mr. Muirhead was granted
an option initially expiring December 31, 2002 to purchase up to 2,000,000
shares of common stock at an exercise price of $.50 per share, which was the
closing price of a share of our common stock on that date. This option vests
upon the achievement of certain specified performance criteria. On January 6,
2003, we extended the expiration date of this option to December 31, 2004.

<page>38

    In October 1995, our board of directors set the compensation for Patricia
A. Spigno, our Chief Financial Officer and Secretary. Ms. Spigno has executed
an employment agreement with ConectiSys effective October 2, 1996, as amended
by employment agreement amendments effective July 24, 1996, September 1, 1999
and March 27, 2000 that provide for annual salary of $80,000 and a bonus of 50%
of Ms. Spigno's annual salary, with the bonus payable in common stock of
ConectiSys.

Report on Repricing of Options and SARs

    No adjustments to or amendments of the exercise price of stock options or
stock appreciation rights previously awarded to the named executives occurred
in fiscal 2005.

Indemnification of Directors and Officers

    The Colorado Business Corporation Act, or CBCA, requires that each director
discharge his duties to ConectiSys in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and in a manner that he reasonably believes to be in the best interests of
ConectiSys. Generally, a director will not be liable to ConectiSys or its
shareholders, for any action he takes or omits to take as a director if, in
connection with such action or omission, he performed the duties of his
position in compliance with the standards described above.

    Our Articles of Incorporation provide that ConectiSys may indemnify any
director or officer of ConectiSys to the full extent permitted by Colorado law.
Under the CBCA, except for the situation described below, a corporation may
indemnify a person made a party to a proceeding because the person is or was a
director against liability incurred in the proceeding if:

      o the person conducted himself in good faith;

      o the person reasonably believed, in the case of conduct in an official
        capacity with ConectiSys, that his conduct was in the best interests of
        ConectiSys and, in all other cases, that his conduct was at least not
        opposed to the best interests of ConectiSys; and

      o in the case of any criminal proceeding, the person had no reasonable
        cause to believe his conduct was unlawful.

    Under the CBCA, ConectiSys may not indemnify a director as described above:

      o in connection with a proceeding by or in the right of ConectiSys, in
        which the director was adjudged liable to ConectiSys; or

      o in connection with any other proceeding charging that the director
        derived an improper personal benefit, whether or not involving action
        in an official capacity, in which proceeding the director was adjudged
        liable on the basis that he derived an improper personal benefit.

    Under the CBCA, ConectiSys is required to indemnify any director who is
wholly successful on the merits or otherwise, in the defense of any proceeding
to which the director was a party because the person is or was a director,
against reasonable expenses incurred by him in connection with the proceeding.

    To the extent indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
ConectiSys under the above provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission such indemnification

<page>39

is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS.


    The following table sets forth, as of January 23, 2006, certain information
with respect to (i) each director of our company, (ii) the named executives,
and (iii) all directors and executive officers of our company as a group, and
(iv) each person known to our company to be the beneficial owner of more than
5% of our common stock. The information with respect to each person specified
is as supplied or confirmed by such person or based upon statements filed with
the Commission.

<table>
Name and Address of             Title of        Amount and Nature of
of Beneficial Owner (1)          Class         Beneficial Ownership(2)     Percent of Class
--------------------------     ---------       -------------------------   ------------------
<C>                             <C>             <C>                          <C>
Robert A. Spigno                Common               346,994,314(3)                3.74%
                                Class A Preferred        450,020(4)              100.00%
                                Class B Preferred        500,000(5)               50.00%

Patricia A. Spigno              Common                25,624,601(6)                 *

Lawrence Muirhead               Common                   971,393                    *

Melissa McGough                 Common                   354,138                    *

All directors and executive
officers as a group
(4 persons)                     Common               373,944,446(7)                 4.02%
                                Class A Preferred        450,020(4)               100.00%
                                Class B Preferred        500,000(5)                50.00%
</table>
   _______________
   * Less than 1.00%

  (1) The address of each director and executive officer named in this table is
      c/o ConectiSys Corporation, 24730 Avenue Tibbitts, Suite 130, Valencia,
      California 91355. Mr. Spigno and Mr. Muirhead are directors and executive
      officers of ConectiSys. Ms. McGough is a director of ConectiSys. Ms.
      Spigno is Acting Chief Financial Officer, Treasurer and Secretary of
      ConectiSys.

  (2) Based upon information furnished to us by the directors and executive
      officers or obtained from our stock transfer books showing 8,945,816,280
      shares of common stock outstanding as of January 23, 2006. Beneficial
      ownership is determined in accordance with the rules of the Securities
      and Exchange Commission and generally includes voting or investment power
      with respect to securities. Except as indicated by footnote, and subject
      to community property laws where applicable, the persons named in the
      table above have sole voting and investment power with respect to all
      shares of common stock shown as beneficially owned by them. Shares of
      common stock subject to options currently exercisable, or exercisable
      within 60 days after January 23, 2006, are deemed to be outstanding in
      calculating the percentage ownership of a person or group but are not
      deemed to be outstanding as to any other person or group.

  (3) Includes (i) 4,992,556 shares held directly, (ii) 1,443,654 shares
      underlying options, (iii) 5,000,000 shares issuable upon conversion of
      Class B Preferred Stock, and (iv) 335,558,104 shares issuable in

<page>40

      connection with payment of annual bonuses for calendar years 2002 through
      2005. Mr. Spigno holds an option to purchase up to 500,000 shares of
      Class B Preferred Stock.

  (4) Includes (i) 215,865 shares held directly, and (ii) 234,155 shares
      underlying an option to purchase Class A Preferred Stock.

  (5) Represents an option to purchase up to 500,000 shares of Class B
      Preferred Stock.

  (6) Includes (i) 1,923,863 shares held directly, (ii) 500,000 shares
  underlying options, and (iii) 23,200,738 shares issuable in connection with
  payment of annual bonuses for calendar years 2002 through 2004.

  (7) Includes (i) 8,241,950 shares held directly, (ii) 1,943,654 shares
  underlying options, (iii) 5,000,000 shares issuable upon conversion of Class
  B Preferred Stock, and (iv) 358,758,842 shares issuable in connection with
  payment of annual bonuses for calendar years 2002 through 2005. Mr. Spigno
  holds an option to purchase up to 500,000 shares of Class B Preferred Stock.

Equity Compensation Plan Information

    The following table gives information about our common stock that may be
issued upon the exercise of options, warrants and rights under our Amended Non-
Qualified Stock Option and Stock Bonus Plan as well as stock options, warrants
and rights issued outside of any formal plan as of September 30, 2005.

                    Number of Securities     Weighted Average    Number of
                  to be Issued Upon Exercise Exercise Price of   Securities
                  of Outstanding Options,    Outstanding         Remaining
                        Warrants           Options, Warrants    Available for
Plan Category         and Rights(1)            and Rights      Future Issuance
------------------- --------------------   ------------------ -----------------
Equity compensation
plans approved by
security holders         N/A                     N/A                   N/A

Equity compensation
plans not approved
by security holders  1,943,654(2)               $0.38                  N/A

Total                1,943,654                  $0.38                  N/A
  _______________
 (1)  Number of shares is subject to adjustment for changes in capitalization
      for stock splits, stock dividends and similar events.

 (2)  Represents 1,943,654 shares of common stock underlying stock options,
      warrants and rights issued under our Amended Non-Qualified Stock Option
      and Stock Bonus Plan and no shares of common stock underlying stock
      options, warrants and rights issued outside of any formal plan.

    Our Amended Non-Qualified Stock Option and Stock Bonus Plan permits grants
of stock bonuses and non-qualified stock options. Vesting periods under our
Amended Non-Qualified Stock Option and Stock Bonus Plan vary from person to
person, and options under the plan are exercisable subject to certain standard
conditions.

<page>41

Stock Option Plans

General

    Our Amended Non-Qualified Stock Option and Stock Bonus Plan, including the
Non-Qualified Stock Option and Stock Bonus Plans it amends, or the Plan, was
adopted and approved by our board of directors effective as of September 11,
2001. The Plan, is designed to enable us to grant compensation and offer an
incentive-based compensation system to consultants who do business with
ConectiSys. The Plan provides for the grant of nonqualified stock options. As
of January 23, 2006, options to purchase a total of 1,943,654 shares of common
stock were outstanding under the Plan, and, as no option may be granted under
the Plan after January 31, 2006, our board of directors does not consider any
options to purchase shares of common stock currently available for issuance
under the Plan.

    We filed registration statements on Forms S-8 on December 6, 1999,
September 22, 2000 and September 21, 2001 covering the shares of common stock
subject to the Plan.

  Shares Subject to the Plan

    A total of 5,000,000 shares of common stock are authorized for issuance
under the Plan. Any shares of common stock that are subject to an award but are
not used because the terms and conditions of the award are not met, or any
shares that are used by participants to pay all or part of the purchase price
of any option, may again be used for awards under the Plan.

  Administration

    The Plan is administered by a committee of not less than three persons
appointed by the board of directors, each of whom must be a director of
ConectiSys. The board of directors also may act as the committee at any time or
from time to time.

    The committee is empowered to select those eligible persons to whom stock
and options shall be granted under the Plan, to determine the time or times at
which each option shall be granted and the number of shares to be subject to
each option, and to fix the time and manner in which each such option may be
exercised, including the exercise price and option period, and other terms and
conditions of such options, all subject to the terms and conditions of the
Plan. The committee has sole discretion to interpret and administer the Plan,
and its decisions regarding the Plan are final.

    The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time and from time to time by the board of
directors. The board of directors may not materially impair any outstanding
options without the express consent of the optionee. No option may be granted
under the Plan after January 31, 2006.

  Option Terms

    Options granted under the Plan must have an exercise price of not less than
85% of the fair market value of the common stock on the date the option is
granted.

    Options may be exercised during a period of time fixed by the committee
except that no option may be exercised more than five years after the date of
grant. In the discretion of the committee, payment of the purchase price for
the shares of stock acquired through the exercise of an option may be made in
cash, shares of our common stock or a combination of cash and shares of our
common stock.

<page>42

Federal Income Tax Consequences

    Holders of non-qualified options do not realize income as a result of a
grant of the option, but normally realize compensation income upon exercise of
a non-qualified option to the extent that the fair market value of the shares
of common stock on the date of exercise of the non-qualified option exceeds the
exercise price paid. ConectiSys will be required to withhold taxes on ordinary
income realized by an optionee upon the exercise of an option under the Plan.

    In the case of an optionee subject to the "short-swing" profit recapture
provisions of Section 16(b) of the Exchange Act, the optionee realizes income
only upon the lapse of the six-month period under Section 16(b), unless the
optionee elects to recognize income immediately upon exercise of his or her
option.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    In October 1995, our board of directors set the compensation for Robert A.
Spigno, our Chairman of the Board and Chief Executive Officer. Mr. Spigno has
executed an employment agreement with ConectiSys effective October 2, 1995, as
amended by employment agreement amendments effective July 24, 1996, August 11,
1997, September 1, 1999 and March 27, 2000 that provide for annual salary of
$160,000 and a bonus of 50% of Mr. Spigno's annual salary, with the bonus
payable in common stock of ConectiSys.

    In August 1998, our board of directors set the compensation for Lawrence
Muirhead, our Chief Technology Officer. Mr. Muirhead has executed an employment
agreement with ConectiSys effective August 1, 1998, that provides for annual
salary compensation of $150,000. On November 22, 1999, Mr. Muirhead was granted
an option initially expiring December 31, 2002 to purchase up to 2,000,000
shares of common stock at an exercise price of $.50 per share, which was the
closing price of a share of our common stock on that date. This option vests
upon the achievement of certain specified performance criteria. On January 6,
2003, we extended the expiration date of this option to December 31, 2004.

    In October 1995, our board of directors set the compensation for Patricia
A. Spigno, our Chief Financial Officer and Secretary. Ms. Spigno has executed
an employment agreement with ConectiSys effective October 2, 1996, as amended
by employment agreement amendments effective July 24, 1996, September 1, 1999
and March 27, 2000 that provide for annual salary of $80,000 and a bonus of 50%
of Ms. Spigno's annual salary, with the bonus payable in common stock of
ConectiSys.

    On September 1, 2002, we executed a promissory note due September 1, 2003
in favor of Robert Spigno in the principal amount of $87,100 representing
amounts borrowed from Mr. Spigno prior to that date.  On September 1, 2003 we
executed a replacement promissory note in favor of Mr. Spigno in the amount of
$36,000.  As of September 30, 2004, approximately $12,000 of principal and
accrued and unpaid interest under this note remained outstanding. During fiscal
2005, we borrowed various amounts from time to time from Mr. Spigno and as of
January 23, 2006, no principal or accrued and unpaid interest under this note
remained outstanding. Under the note, any outstanding principal and accrued and
unpaid interest is due on demand and any outstanding principal accrues interest
at an annual rate of 18%.

    On October 1, 2002, we owed Patricia A. Spigno approximately $8,140
resulting from cash advances, other borrowings and related accrued interest. On
September 1, 2003 we executed a replacement promissory note in favor of Ms.
Spigno in the amount of $50,000.  We borrowed additional funds from Ms. Spigno
resulting in approximately $49,000 owed to Ms. Spigno as of September 30, 2004.
During fiscal 2005, we borrowed various amounts from time to time from Ms.
Spigno and as of January 23, 2006, no principal or accrued and unpaid interest
under this note remained outstanding. Under the note, any outstanding principal

<page>43

and accrued and unpaid interest is due on demand and any outstanding principal
accrues interest at an annual rate of 18%.

    On December 10, 2003, Mr. Spigno exercised a portion of an option to
purchase 15,845 shares of Class A Preferred Stock for $1.00 per share, which
was the estimated value on that date.

    Effective December 31, 2003, Robert Spigno earned bonus compensation under
his employment arrangement with ConectiSys in the amount of $80,000 payable in
common stock of ConectiSys based on a conversion price equal to 50% of the
average of the closing bid and asked prices of a share of our common stock for
the 30 days prior to December 31, 2003. Although our agreement with Mr. Spigno
provides that the conversion price is to be equal to 50% of the average of the
closing bid and asked prices of a share of our common stock for the 30 days
prior to December 31, 2003, Mr. Spigno voluntarily relinquished his right to
receive shares for 2003 based on this conversion price in favor of a conversion
price equal to 100% of the average of the closing bid and asked prices of a
share of our common stock for the 30 days prior to December 31, 2003. The
number of shares of common stock of ConectiSys issuable in connection with this
bonus is 15,094,340.

    Effective December 31, 2003, Patricia Spigno earned bonus compensation
under her employment arrangement with ConectiSys in the amount of $40,000
payable in common stock of ConectiSys based on a conversion price equal to 50%
of the average of the closing bid and asked prices of a share of our common
stock for the 30 days prior to December 31, 2003. Although our agreement with
Ms. Spigno provides that the conversion price is to be equal to 50% of the
average of the closing bid and asked prices of a share of our common stock for
the 30 days prior to December 31, 2003, Ms. Spigno voluntarily relinquished her
right to receive shares for 2003 based on this conversion price in favor of a
conversion price equal to 100% of the average of the closing bid and asked
prices of a share of our common stock for the 30 days prior to December 31,
2003. The number of shares of common stock of ConectiSys issuable in connection
with this bonus is 7,547,170.

    On January 6, 2004, we repriced Robert Spigno's fully-vested option to
purchase up to 500,000 shares of Class B Preferred Stock from an exercise price
of $0.50 per share to an exercise price of $.05 per share. The exercise price
of $.05 per share equates to $.005 per share of common stock if the Class B
Preferred Stock were converted, which was in excess of the price of our common
stock on that date. This option was granted on September 11, 2001 and vested
immediately with an initial exercise price of $2.50 per share which equaled
$.25 per share of common stock if the Class B Preferred Stock were converted,
which was the price of our common stock on that date. On June 28, 2002 this
option was repriced from an exercise price of $2.50 per share to an exercise
price of $.50 per share, which was in excess of the price of our common stock
on that date. This option expires on November 1, 2009.

    Effective December 31, 2004, Robert Spigno earned bonus compensation under
his employment arrangement with ConectiSys in the amount of $80,000 payable in
common stock of ConectiSys based on a conversion price equal to 50% of the
average of the closing bid and asked prices of a share of our common stock for
the 30 days prior to December 31, 2004. Although our agreement with Mr. Spigno
provides that the conversion price is to be equal to 50% of the average of the
closing bid and asked prices of a share of our common stock for the 30 days
prior to December 31, 2004, Mr. Spigno voluntarily relinquished his right to
receive shares for 2004 based on this conversion price in favor of a conversion
price equal to 100% of the average of the closing bid and asked prices of a
share of our common stock for the 30 days prior to December 31, 2004. The
number of shares of common stock of ConectiSys issuable in connection with this
bonus is 27,586,207.

    Effective December 31, 2004, Patricia Spigno earned bonus compensation
under her employment arrangement with ConectiSys in the amount of $40,000
payable in common stock of ConectiSys based on a conversion price equal to 50%
of the average of the closing bid and asked prices of a share of our common

<page>44

stock for the 30 days prior to December 31, 2004. Although our agreement with
Ms. Spigno provides that the conversion price is to be equal to 50% of the
average of the closing bid and asked prices of a share of our common stock for
the 30 days prior to December 31, 2004, Ms. Spigno voluntarily relinquished her
right to receive shares for 2004 based on this conversion price in favor of a
conversion price equal to 100% of the average of the closing bid and asked
prices of a share of our common stock for the 30 days prior to December 31,
2004. The number of shares of common stock of ConectiSys issuable in connection
with this bonus is 13,793,103.

    Effective December 31, 2005, Robert Spigno earned bonus compensation under
his employment arrangement with ConectiSys in the amount of $80,000 payable in
common stock of ConectiSys based on a conversion price equal to 50% of the
average of the closing bid and asked prices of a share of our common stock for
the 30 days prior to December 31, 2005. Although our agreement with Mr. Spigno
provides that the conversion price is to be equal to 50% of the average of the
closing bid and asked prices of a share of our common stock for the 30 days
prior to December 31, 2005, Mr. Spigno voluntarily relinquished his right to
receive shares for 2005 based on this conversion price in favor of a conversion
price equal to 100% of the average of the closing bid and asked prices of a
share of our common stock for the 30 days prior to December 31, 2005. The
number of shares of common stock of ConectiSys issuable in connection with this
bonus is 289,156,627.

    We are or have been a party to various employment, consulting and
compensation arrangements with related parties, as more particularly described
above under the headings "Employment Contracts and Termination of Employment
and Change-in-Control Arrangements," "Compensation of Executive Officers" and
"Compensation of Directors."

ITEM 13.  EXHIBITS.

    Reference is made to the Index to Exhibits that follows the consolidated
financial statements contained in this report.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

    The following table shows the fees paid or accrued by ConectiSys
Corporation for the audit and other services provided by Hurley & Company for
the fiscal years shown.

                              2005            2004
                            --------        --------
    Audit Fees              $27,200         $22,200
    Audit - Related Fees    $10,200         $ 3,500
    Tax Fees                $   --          $   --
    All Other Fees              --              --
                            --------        --------
    Total                   $37,400         $25,700
                            =======         =======

    The Audit - Related Fees shown above all related to work performed in
connection with the issuance of Consents of Independent Registered Public
Accounting Firm included in Registration Statements on Forms SB-2 and S-8 and
the review thereof by Hurley & Company.

    We do not have an Audit Committee. Our Board of Directors approved the
Audit Fees for fiscal 2005, but none of the other fees for 2005 were
specifically approved by our Board of Directors. Our Board of Directors
approved the Audit Fees for fiscal 2004, but none of the other fees for 2004
were specifically approved by our Board of Directors.

<page>45

                     CONECTISYS CORPORATION
             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                   Page
                                                                   ----

Consolidated Financial Statements As Of And For The Years Ended
---------------------------------------------------------------
     September 30, 2005 and 2004
     --------------------------
Report of Independent Registered Public Accounting Firm.............F-1

Consolidated Balance Sheet as of September 30, 2005.................F-3

Consolidated Statements of Operations for the Years
     Ended September 30, 2005 and 2004..............................F-5

Consolidated Statements of Changes in Shareholders' Equity (Deficit)
     for the Cumulative Period from December 1, 1990 (Inception)
     Through September 30, 2005.....................................F-6

Consolidated Statements of Cash Flows for the Years Ended September
     30, 2005 and 2004 and the Cumulative Period from December 1,
     1990(Inception) Through September 30, 2005.....................F-16

Notes to Consolidated Financial Statements..........................F-19

<page>46

          REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          --------------------------------------------------------
Board of Directors
Conectisys Corporation and Subsidiaries
Valencia, California

We have audited the accompanying consolidated balance sheet of Conectisys
Corporation and Subsidiaries (a development stage company) (the "Company") as
of September 30, 2005, and the related consolidated statements of operations,
changes in shareholders' equity (deficit), and cash flows for the years ended
September 30, 2005 and 2004, and the cumulative period from December 1, 1990
(inception of development stage) through September 30, 2005, except that we did
not audit these financial statements for the period December 1, 1990 (inception
of development stage) through November 30, 1997; these financial statements
were audited by other auditors, whose reports dated March 6, 1998 (for the
period December 1, 1994 through November 30, 1997) and January 9, 1995 (for the
period December 1, 1990 (inception of development stage) through November 30,
1994), respectively, expressed a going concern uncertainty.  These consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Conectisys Corporation and Subsidiaries as of September 30, 2005, and the
results of their operations and their cash flows for the years ended September
30, 2005 and 2004, and the cumulative period from December 1, 1990 (inception
of development stage) through September 30, 2005, in conformity with accounting
principles generally accepted in the United States of America.

<page>F-1

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, the Company has suffered recurring
losses from operations and has a deficiency in working capital at September 30,
2005.  These matters raise substantial doubt about its ability to continue as a
going concern.  Management's plans concerning these matters are also described
in Note 2.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




                                         Hurley & Company


Granada Hills, California
December 30, 2005

<page>F-2

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED BALANCE SHEET
September 30, 2005


Assets
Current assets
  Cash and cash equivalents                                $          518,765
  Prepaid expenses                                                    154,184
                                                            -----------------
Total current assets                                                  672,949

Property and equipment, net of accumulated
  depreciation of $339,330                                             39,257

Other assets
  License and technology, net of accumulated
    amortization of $421,478                                                0
  Loan fees, net of accumulated
    amortization of $474,353                                           45,202
                                                            -----------------

Total assets                                               $          757,408
                                                            =================


The accompanying notes are an integral part of these consolidated
financial statements.

<page>F-3

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED BALANCE SHEET
September 30, 2005


Liabilities and shareholders' equity
Current liabilities
  Accounts payable                                         $          316,217
  Accrued compensation                                              1,683,191
  Due to officers                                                         385
  Accrued interest payable                                            212,924
  Other current liabilities                                            38,003
  Notes payable and current potion of
    long-term debt                                                  1,231,048
                                                            -----------------
Total current liabilities                                           3,481,768

Long-term debt, net of current                                      1,590,521
                                                            -----------------
Total liabilities                                                   5,072,289

Commitments and contingencies                                               0

Shareholders' equity
Preferred stock - Class A, $1.00 par value;
  1,000,000 shares authorized, 215,865 shares
  issued and outstanding                                              215,865
Convertible preferred stock - Class B, $1.00
  par value; 1,000,000 shares authorized,
  -0- shares issued and outstanding                                         0
Common stock - 15,000,000,000 shares authorized,
  no par value; 7,388,864,998 shares issued
  and outstanding                                                  26,669,088
Additional paid-in capital:
  Convertible preferred stock - Class B $1.00 par
    value, 1,000,000 stock options exercisable                        100,000
  Common stock, no par value 14,243,654 stock
    options and warrants exercisable                                1,366,714

Accumulated gain (deficit) during development stage               (32,666,548)
                                                            -----------------
Total shareholders' equity (deficit)                               (4,314,881)
                                                            -----------------
Total liabilities and shareholders' equity                 $          757,408
                                                            =================

The accompanying notes are an integral part of these consolidated
financial statements.

<page>F-4

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended September 30, 2005 and 2004
      And the Cumulative Period
From December 31, 1990 (Inception) Through September 30, 2005
<table>
                                                                                  Dec. 1, 1990
                                                                                   (Inception)
                                                                                     Period
                                             Year Ended         Year Ended           Through
                                            September 30,      September 30,      September 30,
                                                2005               2004               2005
                                        <C>                <C>                <C>
Revenues                                $                0 $                0 $          517,460

Cost of goods sold                                 245,427             95,879          1,131,369
                                         -----------------  -----------------  -----------------
Gross profit (loss)                               (245,427)           (95,879)          (613,909)

General and administrative expenses              1,676,520          1,459,844         21,678,148
Bad debt expense                                         0                  0          1,680,522
Write-off of intangible assets                           0                  0          1,299,861
                                         -----------------  -----------------  -----------------
Loss from operations                            (1,921,947)        (1,555,723)       (25,272,440)

Other income (expenses)
  Forgiveness of debt                              504,462                  0            504,462
  Settled damages                                        0           (150,000)          (125,000)
  Other income                                           0                  0             12,072
  Interest income                                        0                  1            102,924
  Interest expense                              (1,715,198)        (2,523,105)        (6,873,324)
  Minority interest                                      0                  0             62,500
                                         -----------------  -----------------  -----------------
Net loss                                $       (3,132,683)$       (4,228,827)$      (31,588,806)
                                         =================  =================  =================

Weighted average shares outstanding          3,713,202,999        795,809,759

Net loss per share                                   (0.00)             (0.01)

</table>
The accompanying notes are an integral part of these consolidated
financial statements.

<page>F-5

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September
30, 2005

<table>

                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A           No Par Value          Paid-in  Subscript.  Development      Equity
                                  Shares    Value    Shares       Value      Capital  Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
                               <C>       <C>        <C>        <C>         <C>        <C>        <C>          <C>
Balance,
 December 1, 1990
(re-entry
  development stage)                 -   $      -       10,609 $ 1,042,140 $      -   $      -   $ (1,042,140)$       -

Shares issued in exchange for:
 Cash, May 31, 1993                  -          -        1,000       1,000        -          -            -         1,000
 Capital contribution,
  May 31, 1993                       -          -        2,000         515        -          -            -           515
 Services, March 26, 1993            -          -        2,000         500        -          -            -           500
 Services, March 26, 1993            -          -        1,200         600        -          -            -           600
Net loss for the year                -          -          -           -          -          -         (5,459)     (5,459)
                               --------- ----------  --------- ----------- ---------- ------------ ---------- -----------
Balance,
 November 30, 1993                   -          -       16,809   1,044,755        -          -     (1,047,599)     (2,844)

Shares issued in exchange for:
 Services, May 1, 1994               -          -        2,400       3,000        -          -            -         3,000
 Cash, September 1, 1994             -          -       17,771      23,655        -          -            -        23,655
 Services, September 15, 1994        -          -        8,700      11,614        -          -            -        11,614
 Cash, September 26, 1994            -          -        3,000      15,000        -          -            -        15,000
 Cash, October 6, 1994            16,345     16,345        -           -          -          -            -        16,345
 Cash, September and October,
  1994                               -          -        1,320      33,000        -          -            -        33,000
Net loss for the year                -          -          -           -          -          -        (32,544)    (32,544)
                               --------- ----------  --------- ----------- ---------- ------------ ---------- -----------
Balance,
 November 30, 1994                16,345     16,345     50,000   1,131,024        -          -     (1,080,143)     67,226



The accompanying notes are an integral part of these consolidated financial statements.

<page>F-6

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock       Additional    Stock     During the  Shareholders'
                                     Class A           No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value    Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Shares issued in exchange for:
 Cash, February 13, 1995             -   $      -        1,160 $   232,000 $      -   $      -   $        -   $   232,000
 Debt repayment, February 13,
  1995                               -          -        2,040     408,000        -          -            -       408,000
 Debt repayment, February 20,
  1995                               -          -        4,778     477,810        -          -            -       477,810
 Acquisition of assets, CIPI
  February, 1995                     -          -       28,750   1,950,000        -          -            -     1,950,000
 Acquisition of assets, April 5,
  1995                               -          -       15,000         -          -          -            -           -
 Cash and services, April and
  May 1995                           -          -       16,000     800,000        -          -            -       800,000
 Cash, June 1, 1995                  -          -          500      30,000        -          -            -        30,000
 Acquisition of assets and
  services, September 26, 1995       -          -        4,000     200,000        -          -            -       200,000
 Cash, September 28, 1995            -          -           41       3,000        -          -            -         3,000
 Acquisition of assets,
  September 1995                     -          -       35,000   1,750,000        -          -            -     1,750,000
 Return of assets, CIPI
  September, 1995                    -          -      (27,700) (1,950,000)       -          -            -    (1,950,000)
Net loss for the year                -          -          -           -          -          -     (2,293,867) (2,293,867)
                               ---------  ----------- -------- -----------   -------- ------------ ---------- -----------
Balance,
 November 30, 1995                16,345     16,345    129,569   5,031,834        -          -     (3,374,010)  1,674,169

Shares issued in exchange for:
 Cash, February, 1996                -          -        1,389     152,779        -          -            -       152,779
 Debt repayment, February 1996       -          -       10,000     612,000        -          -            -       612,000
 Services, February, 1996            -          -        3,160     205,892        -          -            -       205,892
 Cash, March, 1996                   -          -          179      25,000        -          -            -        25,000



The accompanying notes are an integral part of these consolidated financial statements.

<page>F-7

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A           No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value    Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Shares returned and canceled,
  March, 1996                        -   $      -      (15,000)$       -   $      -   $      -   $        -   $       -
 Services, April, 1996               -          -           13       2,069        -          -            -         2,069
 Services, September, 1996         4,155      4,155        586      36,317        -          -            -        40,472
 Services, October, 1996             -          -        6,540     327,000        -          -            -       327,000
 Debt repayment, November, 1996      -          -        2,350      64,330        -          -            -        64,330
Net loss for the year                -          -          -           -          -          -     (2,238,933) (2,238,933)
                               --------- ---------- ---------- -----------  ---------- --------- ------------ -----------
Balance,
 November 30, 1996                20,500     20,500    138,786   6,457,221        -          -     (5,612,943)    864,778

Shares issued in exchange for:
 Services, March, 1997               -          -          228       6,879        -          -            -         6,879
 Services, April, 1997               -          -          800      13,120        -          -            -        13,120
 Services, July, 1997                -          -        1,500      16,200        -          -            -        16,200
 Cash, July, 1997                    -          -       15,000     300,000        -          -            -       300,000
 Services, August, 1997              -          -        5,958      56,000        -          -            -        56,000
Adjustment for partial shares due
 to reverse stock split (1:20)       -          -          113         -          -          -            -           -
 Services, October, 1997             -          -    1,469,666     587,865        -          -            -       587,865
 Debt repayment, October, 1997       -          -    1,540,267     620,507        -          -            -       620,507
 Cash, October, 1997                 -          -    1,500,000     281,250        -          -            -       281,250
 Services, November, 1997            -          -        4,950      10,538        -          -            -        10,538
Net loss for the year                -          -          -           -          -          -     (2,739,268) (2,739,268)
                               --------- ---------- ---------- ----------- ---------- ----------  ----------- -----------
Balance,
 November 30, 1997                20,500     20,500  4,677,268   8,349,580        -          -     (8,352,211)     17,869


The accompanying notes are an integral part of these consolidated financial statements.

<page>F-8

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A           No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value    Shares       Value    Capital    Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Shares issued in exchange for:
 Services, December, 1997
  through November, 1998             -   $      -    2,551,610 $ 2,338,264 $      -   $      -            -   $ 2,338,264
 Debt repayment, April, 1998
  through September, 1998            -          -      250,000     129,960        -          -            -       129,960
 Cash, January, 1998 through
  July, 1998                         -          -    4,833,334   1,139,218        -          -            -     1,139,218
 Acquisition of assets,
  July, 1998                         -          -      300,000     421,478        -          -            -       421,478
 Acquisition of remaining 20%
  minority interest in
  subsidiary, July, 1998             -          -       50,000      59,247        -          -            -        59,247
 Services, November, 1998         60,000     60,000        -           -          -          -            -        60,000
Net loss for the year                -          -          -           -          -          -     (4,928,682) (4,928,682)
                               --------- ---------- ---------- ----------- ---------- ------------ ---------- -----------
Balance,
 November 30, 1998                80,500     80,500 12,662,212  12,437,747        -          -    (13,280,893)   (762,646)

Shares issued in exchange for:
 Shares returned and canceled,
  December, 1998                     -          -   (1,350,000)   (814,536)       -          -            -      (814,536)
 Services, December, 1998
  through September, 1999            -          -      560,029     349,454    150,000        -            -       499,454
 Cash, December, 1998
  through September, 1999            -          -    1,155,800     129,537        -          -            -       129,537
 Debt repayment, Sept., 1999      39,520     39,520    960,321     197,500    100,000        -            -       337,020
Net loss for the period              -          -          -           -          -          -     (1,323,831) (1,323,831)
                               --------- ---------- ---------- -----------   -------- ------------ ---------- -----------
Balance,
 September 30, 1999              120,020    120,020 13,988,362  12,299,702    250,000        -    (14,604,724) (1,935,002)



The accompanying notes are an integral part of these consolidated financial statements.

<page>F-9

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A           No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value    Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Shares re-acquired and
  canceled, October, 1999            -   $      -      (17,500)$   (12,000)$      -   $      -   $        -   $   (12,000)
Shares issued in exchange for:
 Services, October, 1999 through
  September, 2000, valued from
  $0.25 to $0.80 per share           -          -    2,405,469     990,949        -          -            -       990,949
 Retainers, debt and accrued
  liabilities, October, 1999
  through September, 2000, valued
  from $0.25 to $1.57 per share      -          -    2,799,579   1,171,638        -          -            -     1,171,638
 Cash, October, 1999 through
  September, 2000, with subscription
  prices ranging from $0.25 to
  $0.66 per share                    -          -    2,295,482     839,425        -      (15,450)         -       823,975
Issuance of 563,500 consultant
  stock options, March, 2000,
  at an exercise price of $2.00
  per share                          -          -          -           -      214,130        -            -       214,130
Reduction of exercise prices
  on 2,600,000 officer and employee
  common stock options, March, 2000,
  to $0.38 and approximately $0.39
  per share                          -          -          -           -    1,113,610        -                  1,113,610
Exercise of 2,056,346 common and
  20,000 preferred officer stock
  options, May, 2000, with
  common stock strike prices
  ranging from $0.15 to approx.
  $0.39 per share, in exchange
  for officer debt                20,000     20,000  2,056,346     897,707   (407,735)       -            -       509,972
Issuance of 500,000 consultant
  stock options, September, 2000,
  with floating exercise prices
  set at 15% below current market    -          -          -           -       65,000        -            -        65,000
Net loss for the year                -          -          -           -          -          -     (3,812,140) (3,812,140)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Balance,
 September 30, 2000              140,020    140,020 23,527,738  16,187,421  1,235,005    (15,450) (18,416,864) (  869,868)

The accompanying notes are an integral part of these consolidated financial statements.

<page>F-10

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A           No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value    Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Shares issued in exchange for:
 Services, October, 2000 through
  September, 2001, valued from
  $0.11 to $0.40 per share           -   $      -    3,471,007 $   572,790 $      -   $      -   $        -   $   572,790
 Retainers, debt and accrued
  liabilities, October, 2000
  through September, 2001, valued
  from $0.11 to $0.43 per share      -          -    3,688,989     487,121        -          -            -       487,121
 Cash, October, 2000 through
  March, 2001, with subscription
  prices ranging from $0.075 to
  $0.083 per share                   -          -    1,045,500      78,787        -          -            -        78,787
Collection of stock subscription
  receivable, October, 2000,
  on 61,800 shares                   -          -          -           -          -       15,450          -        15,450
Exercise of 400,000 common
  stock options, January, 2001,
  at a strike price of $0.085 per
  share, in exchange for debt        -          -      400,000      86,000    (52,000)       -            -        34,000
Issuance of 1,000,000 common
  stock warrants, April, 2001,
  at an exercise price of $0.192
  per share, in conjunction with
  $300,000 principal value of
  8% convertible debt                -          -          -           -       77,228        -            -        77,228
Issuance of 2,000,000 consultant
  stock options, September, 2001,
  at a strike price of $0.13 per
  share                              -          -          -           -      115,000        -            -       115,000
Beneficial conversion option,
  April, 2001 through September,
  2001, pertaining to $300,000
  principal value and accrued
  interest on 8% convertible debt    -          -          -           -      155,027        -            -       155,027
Net loss for the year                -          -          -           -          -          -     (2,154,567) (2,154,567)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Balance,
 September 30, 2001              140,020    140,020 32,133,234  17,412,119  1,530,260        -    (20,571,431) (1,489,032)

The accompanying notes are an integral part of these consolidated financial statements.

<page>F-11

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                   Deficit
                                                                                                 Accumulated       Total
                                  Preferred Stock      Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A           No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value    Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------

Shares issued in exchange for:
 Services, October, 2001 through
  September, 2002, valued from
  $0.02 to $0.25 per share           -   $      -    2,180,000 $   179,916 $      -   $      -   $        -   $   179,916
 Debt and accrued liabilities,
  October, 2001 through September,
  2002, with common shares
  valued from $0.01 to $0.15 per
  share and preferred A shares
  valued at $1.00 per share       60,000    60,000  10,948,077     428,563        -          -            -       488,563
 Cash, October, 2001 through
  September, 2001, with prices
  ranging from $0.01 to $0.083
  per share                          -          -    5,833,334     200,000        -          -            -       200,000
Exercise of 550,000 common stock
  options by a consultant at a
  strike price of $0.13 per share,
  in exchange for debt               -          -      550,000     103,125    (31,625)       -            -        71,500
Issuance of 3,750,000 warrants,
  April, 2002 through June, 2002,
  at an exercise price of $0.045
  per share, in conjunction with
  $750,000 principal value of 12%
  convertible debt                   -          -          -           -      100,087        -            -       100,087
Beneficial conversion option,
  April 2002, through June, 2002,
  pertaining to $750,000 principal
  value of 12% convertible debt      -          -          -           -      649,913        -            -       649,913
Conversion of $93,130 principal
  value of 12% convertible debt
  along with $6,916 accrued
  interest, net of $69,233
  convertible debt discount          -          -   12,667,178     111,515    (80,702)       -            -        30,813
Net loss for the year                -          -          -           -          -          -     (2,346,732) (2,346,732)
                               --------- ---------- ---------- ----------- ---------- ---------- ------------ -----------
Balance,
 September 30, 2002              200,020    200,020 64,311,823  18,435,238  2,167,933 $      -    (22,918,163) (2,114,972)

The accompanying notes are an integral part of these consolidated financial statements.

<page>F-12

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                    Deficit
                                                                                                  Accumulated       Total
                                  Preferred Stock       Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A            No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value     Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ----------  ---------- ----------- ---------- ---------- ------------ -----------

Shares issued in exchange for:
 Services, October, 2002 through
  July, 2003, valued from
  $0.0012 to $0.0100 share           -   $      -    31,500,000 $   134,000 $      -   $      -   $        -   $   134,000
 Debt and accrued liabilities,
  October, 2002 through September,
  2003, valued from $0.0010 to
  $0.0512 per share, including
  transfer of $155,027
  beneficial conversion option                      162,134,748     704,774   (155,027)       -            -       549,747
 Cash, November, 2002 through
  September, 2003, with prices
  ranging from $0.0010 to $0.100
  per share                          -          -   128,500,000     180,000        -          -            -       180,000
Issuance of 2,500,000 warrants,
  November, 2002 through May, 2003,
  at an exercise price of $0.005
  per share, in conjunction with
  $500,000 principal value of 12%
  convertible debt                   -          -           -           -        9,816        -            -         9,816
Beneficial conversion option,
  November, 2002, through May, 2003,
  pertaining to $500,000 principal
  value of 12% convertible debt      -          -           -           -      490,184        -            -       490,184
Conversion of $193,665 principal
  value of 12% convertible debt
  along with $34,355 accrued
  interest, net of $52,340
  convertible debt discount          -          -   103,778,301     353,525   (177,845)       -            -       175,680
Net loss for the year                -          -           -           -          -          -     (2,386,875) (2,386,875)
                               --------- ---------- ----------- ----------- ---------- ---------- ------------ -----------
Balance,
 September 30, 2003              200,020 $  200,020 490,224,872 $19,807,537 $2,335,061 $      -   $(25,305,038)$(2,962,420)
                               ========= ========== =========== =========== ========== ========== ============ ===========
The accompanying notes are an integral part of these consolidated financial statements.
<page>F-13

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                                                                                                    Deficit
                                                                                                  Accumulated       Total
                                  Preferred Stock       Common Stock        Additional   Stock     During the  Shareholders'
                                     Class A            No Par Value         Paid-in   Subscript. Development      Equity
                                  Shares    Value     Shares       Value     Capital   Receivable    Stage        (Deficit)
                               --------- ----------  ---------- ----------- ---------- ---------- ------------ -----------
Shares issued in exchange for:
Services, October 2003 through
  August 2004 valued from
  $0.0008 to $0.0026 per share       0   $       0   57,300,000 $    78,400 $         0 $        0 $        0  $     78,400
Issuance of 7,000,000 warrants
 November 2003 through
 September 2004 at exercise
 Prices ranging from $0.002 to
 $0.005 per share, in
 conjunction with $2,000,000
 principal value of 12%
 convertible debt                    0              0            0            0    9,447         0          0         9,447
Debt and accrued liabilities
  December 2003 with
  preferred stock class A
  valued at $1.00 per share     15,845 A       15,845            0            0        0         0          0        15,845
Debt and accrued liabilities
  November 2003 to September
  2004 with common shares
  valued from $0.001 to $0.0025
  per share                          0              0  156,625,000      163,575        0         0          0       163,575
Cash, November 2003 through
  March 2004 with prices of
  approximately $0.0010              0              0   74,670,000       75,000        0         0          0        75,000
  per share
Re-characterization of beneficial
  conversion option as derivative
  conversion option , October 2003
  pertaining to $963,205 of
  convertible debt at
  September 30, 2003                 0              0            0            0     (881,550)     0         0      (881,550)
Conversion of $218,115 principal
  value of 12% convertible debt
  $327,172 of derivative
  conversion option
  along with $49,008 accrued
  interest, net of $28,571
  convertible debt discount          0         0  352,352,250      565,724                0               0      565,724
Net loss for the year                0         0            0            0         0      0      (4,228,827)  (4,228,827)
                             --------- ---------- -----------  ----------- ---------- ---------- ------------ -----------
Balance, September 30, 2004  215,865   $  215,865 1,131,172,122$20,690,236 $1,462,958 $        0 $(29,533,865)$(7,164,806)
                             ========= ========== =========== =========== ========== ========== ============ ===========
The accompanying notes are an integral part of these consolidated financial statements.
<page>14
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period from December 1, 1990 (Inception) Through September 30, 2005


                              Preferred Stock       Common Stock              Additional  Stock                    Total
                              Class A and B         No Par Value                Paid in Subscription Accumulated Shareholders'
                                Shares      Value      Shares        Value      Capital   Receivable  Deficit   Equity (Deficit)
                             ----------  ---------- -------------  ----------- ---------- ---------- ------------ -----------
Shares issued in exchange for:
Cash, January 2005 with a price
  of $0.00125 per share               0           0    4,000,000         5,000        0            0             0       5,000
Debt, accrued liabilities
  and prepaid retainer
  October 2004 to September
  2005 with common shares
  valued from approximately
  $0.0004 to $0.0010 per share        0           0  591,300,000       473,362         0            0             0     473,362
Services, December 2004 through
  August 2005 valued from
  $0.0006 to $0.0010 per share        0           0   52,000,000        46,200         0            0             0      46,200
Issuance of 2,800,000 warrants
 November 2004 through
 September 2005 at an exercise
 price of $0.0039 per share, in
 conjunction with $1,400,000
 principle value of 12%
 convertible debt                     0           0            0             0        3,756          0             0      3,756
Conversion of $2,529,378 principal
  value of convertible debt,
  $3,794,067 of derivative
  conversion option
  along with $104,410 accrued
  interest, net of $973,565
  convertible debt discount           0           0 5,610,392,876    5,454,290                       0             0   5,454,290
Net loss for the year                 0           0             0            0           0           0    (3,132,683) (3,132,683)
                             ----------  ---------- -------------  -----------  -----------  ----------  ------------ -----------
Balance, September 30, 2005     215,865 $   215,865 7,388,864,998 $ 26,669,088  $  1,466,714 $         0 $(32,666,548)$(4,314,881)
                             ==========  ========== =============  ===========   ===========  ==========  ============   ===========

The accompanying notes are an integral part of these consolidated financial statements.
</table>
<page>F-15

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2005 and 2004
      And the Cumulative Period
From December 31, 1990 (Inception) Through September 30, 2005
<table>

                                                                                  Dec. 1, 1990
                                                                                   (Inception)
                                             Year Ended         Year Ended           Through
                                            September 30,      September 30,      September 30,
                                                2005               2004               2005

                                        <C>                    <C>                 <C>
Operating activities
  Net loss                              $       (3,132,683)$       (4,228,827)$      (31,588,806)
    Adjustments to reconcile net loss
      to net cash used in
      operating activities:
        Provision for bad debt                           0                  0          1,422,401
        Depreciation and amortization               17,770             17,007          1,728,930
        Stock issued for services                   46,200             78,400          7,645,373
        Stock issued for interest                        0                               535,591
        Settlements                                      0                  0            (25,000)
        Minority interest                                0                  0            (62,500)
        Intangibles                                      0                  0          1,299,861
        Amortization of loan fees
          and note discounts                       835,863            770,739          3,047,140
        Mark-to-market of derivative
          conversion option                        703,756          1,572,705          2,276,461
        Forgiveness of debt                       (504,462)                 0           (504,462)
Changes in operating assets and liabilities
  (Increase) decrease in assets
    Accounts receivable                                  0                  0             (4,201)
    Prepaid expenses                               105,185           (176,967)           110,564
    Interest receivable                                  0                  0            (95,700)
  Increase (decrease) in liabilities
    Accounts payable                               350,834            116,108          1,384,343
    Accrued compensation                           274,946            360,461          2,855,199
    Due to officers                                (75,656)           (37,168)           631,146
    Other current liabilities                      105,737            206,870            861,765
                                          ----------------   ----------------   ----------------
      Total adjustments                          1,860,173          2,908,154         23,106,911
                                          ----------------   ----------------   ----------------

Net cash used in operating activities           (1,272,510)        (1,320,672)        (8,481,895)

The accompanying notes are an integral part of these consolidated financial statements.

<page>F-16

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2005 and 2004
      And the Cumulative Period
From December 31, 1990 (Inception) Through September 30, 2005


                                                                                  Dec. 1, 1990
                                                                                   (Inception)
                                             Year Ended         Year Ended           Through
                                            September 30,      September 30,      September 30,
                                                2005               2004               2005


Investing activities
  Collection of notes receivable        $                0 $                0 $                0
  Increase in notes receivable                           0                  0         (1,322,500)
  Cost of license & technology                           0                  0            (94,057)
  Purchase of equipment                            (33,671)            (7,888)          (245,405)
                                          ----------------   ----------------   ----------------
Net cash used in investing activities              (33,671)            (7,888)        (1,661,962)


Financing activities
  Common stock issued for cash                       5,000             75,000          3,492,172
  Stock warrants                                     3,756              9,447            200,334
  Preferred stock issued for cash                                           0             16,345
  Proceeds from stock purchase                           0                  0            281,250
  Loan fees                                        (42,368)          (213,843)          (559,555)
  Proceeds from debts
    Related party                                        0                  0            206,544
    Other                                        1,411,014          2,073,218          7,647,275
  Payments on debt
    Related party                                                           0            (53,172)
    Other                                         (102,500)           (67,500)          (604,536)
  Decrease in subscription receivable                    0                  0             35,450
  Contributed capital                                    0                  0                515
                                          ----------------   ----------------   ----------------
Net cash provided by financing activities        1,274,902          1,876,322         10,662,622

Net increase (decrease) in cash                    (31,279)           547,762            518,765

Cash beginning of period                           550,044              2,282                  0
                                          ----------------   ----------------   ----------------

Cash end of period                       $         518,765  $         550,044  $         518,765
                                          ================   ================   ================

The accompanying notes are an integral part of these consolidated financial statements.

<page>F-17

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2005 and 2004
      And the Cumulative Period
From December 31, 1990 (Inception) Through September 30, 2005


                                                                                  Dec. 1, 1990
                                                                                   (Inception)
                                             Year Ended         Year Ended           Through
                                            September 30,      September 30,      September 30,
                                                2005               2004               2005


Cash paid during the year for
  Interest                                          81,123            105,000            699,490
  Taxes                                                  0              6,400             14,450

Non-cash investing and financing activities
  Common stock issued for
    Note receivable                                      0                  0            281,250
    Prepaids                                        82,402                  0            264,748
    PP&E                                                 0                  0            130,931
    Deposit                                              0                  0                  0
    License & technology                                 0                  0          2,191,478
    Minority interest                                    0                  0             59,247
    Repayment of debt                            5,587,240            729,300         11,888,207
    Service & interest                             258,010                  0          5,207,202
  Preferred stock issued for
    Services                                                           15,845             75,845
    Repayment of debt                                    0                  0            119,520
  Preferred stock options issued for
    Repayment of debt                                    0                  0            100,000

  Re-characterize beneficial
    conversion option as debt                            0            881,550            881,550

The accompanying notes are an integral part of these consolidated financial statements.
</table>
<page>F-18

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

Note 1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Conectisys Corporation (formerly Coastal Financial Corp.)(the "Company") was
incorporated under the laws of Colorado on February 3, 1986, to analyze and
invest in business opportunities as they may occur. The Company is a
development-stage entity developing automatic meter reading technologies and
products for remote reading of electronic energy meters located in residential
structures.

On July 15, 1998, United Telemetry Company, Inc. was incorporated in the State
of Nevada as a wholly-owned subsidiary of the Company.

On January 11, 2000, a new Nevada corporation, eEnergyServices.com, Inc., was
formed as a wholly-owned subsidiary of the Company, which, as yet, has no net
assets and has not commenced operations.

Basis of presentation

The accompanying consolidated financial statements include the accounts and
transactions of Conectisys Corporation, its wholly-owned subsidiaries
TechniLink, Inc., eEnergyServices.com, Inc., and United Telemetry Company,
Inc., and its 80% owned subsidiary PrimeLink, Inc.  All material intercompany
transactions and balances have been eliminated in the accompanying
consolidated financial statements.  Certain prior period balances have been
reclassified to conform to the current year's presentation.

The Company returned to the development stage in accordance with SFAS No. 7 on
December 1, 1990 and during the fiscal year ended November 30, 1995.  The
Company has completed two mergers and is in the process of developing its
technology and product lines.

Use of estimates

The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual results could
differ from those estimates.

Fair value of financial instruments

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires that the Company disclose estimated
fair values for its financial instruments.  The following summary presents a
description of the methodologies and assumptions used to determine such
amounts.

Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial instrument;
they are subjective in nature and involve uncertainties, matters of judgment
and, therefore, cannot be determined with precision.  These estimates do not
reflect any premium or discount that could result from offering for sale at
one time the Company's entire holdings of a particular instrument.  Changes in
assumptions could significantly affect the estimates.

<page>F-19

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

Note 1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)

Since the fair value is estimated at September 30, 2005, the amounts that will
actually be realized or paid at settlement of the instruments could be
significantly different.  The carrying amount of cash and cash equivalents is
assumed to be the fair value because of the liquidity of these instruments.
Accounts payable, accrued compensation, due to/from officer, accrued interest,
other current liabilities, and notes payable approximate fair value because of
the short maturity of these instruments.  Also, market rates of interest apply
on all officer advances and short-term promissory notes.  Long-term debt is
recorded at face value because the principal amount is convertible into common
stock.

Fiscal year

Effective December 1, 1998, the Company changed its fiscal year-end from
November 30 to September 30.

Research and development costs

The Company has been engaged in researching, engineering, and developing its
H-Net(TM) technologies since August 1995, and did not generate any revenue
during the past fiscal year.  The Company hopes to complete additional large-
scale cost reduction runs for the production and subsequent sale of the H-Net
(TM)system in 2005.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and on deposit and highly
liquid debt instruments with original maturities of three months or less.  All
funds on deposit are with one financial institution.

Property and equipment

Property and equipment are stated at cost.  Depreciation is computed on
property and equipment using the straight-line method over the expected useful
lives of the assets, which are generally three years for computer software,
five years for vehicles and office equipment, and seven years for furniture
and fixtures.

Technology

Deferred technology costs include capitalized product development and product
improvement costs incurred after achieving technological feasibility and are
amortized over a period of five years.  At September 30, 2005, no deferred
technology costs were recognized.

<page>F-20

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

Note 1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)

Accounting for stock-based compensation

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-based Compensation," establishes a fair value method of accounting for
stock-based compensation plans and for transactions in which an entity acquires
goods or services   from non-employees in exchange for equity instruments.  The
Company adopted this accounting standard on January 1, 1996. SFAS No. 123 also
encourages, but does not require, companies to record compensation cost for
stock-based employee compensation.  The Company has chosen to account for
stock-based compensation utilizing the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."  Accordingly, compensation cost for stock options is measured as
the excess, if any, of the fair market price of the Company's stock at the date
of grant over the amount an employee must pay to acquire the stock.  Also, in
accordance with SFAS No. 123, the Company has provided footnote disclosures
with respect to stock-based employee compensation.  The cost of stock-based
compensation is measured at the grant date on the value of the award, and this
cost is then recognized as compensation expense over the service period.  The
value of the stock-based award is determined using a pricing model whereby
compensation cost is the excess of the fair market value of the stock as
determined by the model at the grant date or other measurement date over the
amount an employee must pay to acquire the stock.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123," effective for fiscal years ending after December 15, 2002, which
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation.  The
adoption of SFAS No. 148 did not have a material impact on the Company's
consolidated financial statements, as the adoption of this standard did not
require the Company to change, and the Company did not change, to the fair
value based method of accounting for stock-based compensation.

Net loss per common share - basic and diluted

Net loss per common share - diluted is based on the weighted average number of
common and common equivalent shares outstanding for the periods presented.
Common equivalent shares representing the common shares that would be issued
on exercise of convertible securities and outstanding stock options and
warrants reduced by the number of shares which could be purchased from the
related exercise proceeds are not included since their effect would be anti-
dilutive.

<page>F-21

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

Note 1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


As of September 30, 2005, the Company had 7,388,864,998 shares of common stock
outstanding.  If all of the Company's unexpired stock warrants and options
(including contingent issuances) were exercised, and all the principal value
and accrued interest on its outstanding convertible debentures were converted,
the Company's incremental common shares (not included in the denominator of
diluted earnings (loss) per share because of their anti-dilutive nature) would
be as follows:

Class B preferred stock options                   10,000,000
Convertible note holder - common stock warrants   12,300,000
Common stock options - officers                    1,943,654
                                              --------------
Subtotal                                          24,243,654

Accrued officer compensation ($440,000),
convertible into common stock                    358,758,842

Convertible note holder principal value
($1,615,712), accrued interest ($212,924)
assumed converted into common stock at
$0.00008 per share                            22,857,950,000
                                              --------------
Total potential common stock equivalents      23,240,952,496

The following table illustrates the effect on net loss if we had
applied the fair value recognition provisions of SFAS No. 123 to
stock-based compensation:

                                       Year Ended          Year Ended
                                        09/30/2005          09/30/2004
                                   ------------------  ------------------
        Net loss, as reported      $    (3,132,683)    $    (4,228,827)

        Add:    Total stock-based
        compensation expense included
        in net loss, as reported                -                   -

        Deduct: Total stock-based
        compensation expense
        determined under fair value based
        method for all awards, net of
        related tax effects                     -                   -
                                    --------------     ---------------
        Pro forma net loss         $    (3,132,683)    $   (4,228,827)

<page>F-22

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

Note 1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock issued for non-cash consideration

Shares of the Company's no par value common stock issued in exchange for goods
or services are valued at the cost of the goods or services received or at the
market value of the shares issued, depending on the ability to estimate the
value of the goods or services received.

Income taxes

The Company files a consolidated federal income tax return.  The Company has
adopted SFAS No. 109, which requires the Company to recognize deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's consolidated financial statements or tax
returns.  Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying amounts and
tax basis of assets using the enacted rates in effect in the years in which the
differences are expected to reverse.  The Company has recognized a valuation
allowance covering 100% of the net deferred tax assets (primarily tax benefits
from net operating loss carryforwards), because it is more likely than not that
the tax benefits attributable to the deferred tax assets will not be realized
in the future.

Advertising Costs

The Company expenses advertising cost in the year incurred. Such costs amounted
to $16,824 and $7,447 for the years ended September 30, 2005 and 2004
respectively.

Recently issued accounting pronouncements

In November 2004, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS
No. 151 clarifies the accounting for abnormal amounts of idle facility expense,
freight, handling costs and wasted materials.  SFAS No. 151 is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005.
The initial application of SFAS No. 151 will have no impact on the Company's
financial position or results of operations.

In December 2004, the FASB issued SFAS 123(R), "Share-Based Payment," which
addresses the accounting for employee stock options.  SFAS 123(R) revises the
disclosure provisions of SFAS 123 and supersedes APB 25.  SFAS 123(R) requires
that the cost of all employee stock options, as well as other equity-based
compensation arrangements, be reflected in financial statements based on the
estimated fair value of the awards. In March 2005, the Securities & Exchange
Commission (the "SEC") issued Staff Accounting Bulletin No. 107, "Share-Based
Payment," which summarizes the views of the SEC staff regarding the interaction
between SFAS 123(R) and certain SEC rules and regulations, and is intended to
assist in the initial implementation.  SFAS(R) is effective for all companies
that file as small business issuers as of the beginning of the first interim or
annual reporting period that begins after December 15, 2005.  The Company is
currently evaluating the provisions of SFAS 123(R) and its effect on its
financial statements.  The Company does not expect the adoption of this
statements to have a material impact on its financial statements.

In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary Assets,
an amendment of APB 29, Accounting for Nonmonetary Transactions."  This
statement's amendments are based on the principle that exchanges of nonmonetary
assets should be measured based on the fair value of the assets exchanged.
Further, SFAS 153 eliminates the narrow exception for nonmonetary exchanges of
similar productive assets and replaces it with a broader exception for
exchanges of nonmonetary assets that do not have commercial substance.
Provisions of this statement are effective for fiscal periods beginning after
June 15, 2005.  The Company does not expect the adoption of this statement to
have a material impact on its financial statements.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations"("FIN 47"), which is an interpretation
of SFAS 143, "Accounting for Asset Retirement Obligations."  FIN 47 clarifies
terminology within SFAS 143 and requires an entry to recognize a liability for
the fair value of a conditional asset retirement obligation when incurred if
the liability's fair value can be reasonably estimated.  FIN 47 is effective
for fiscal years ending after December 15, 2005.  The Company does not expect
the adoption of this statement to have a material impact on its financial
statements.

In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections," which will require entities that voluntarily make a change in
accounting principle to apply that change retroactively to prior periods'
financial statements unless this would be impracticable. SFAS No. 154
supersedes Accounting Principles Board Opinion No. 20, "Accounting Changes"
("APB No. 20"), which previously required that most voluntary changes in
accounting principle be recognized by including in the current period's net
income the cumulative effect of changing to the new accounting principle.  SFAS
No. 154 also makes a distinction between "retrospective application" of an
accounting principle and the "restatement" of financial statements to reflect
the correcetion of an error.  Another significant change in practice under SFAS
No. 154 will be that if an entity changes its method of depreciation,
amortization, or depletion for long-lived, non-financial assets, the change
must be accounted for as a change in accounting principle.  SFAS No. 154
applies to accounting changes and error corrections that are made in fiscal
years beginning after December 15, 2005.  The provisions of SFAS No. 154 are
not expected to affect the Company's consolidated financial statements.

<page>F-23

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 2. GOING CONCERN UNCERTAINTY

As of September 30, 2005, the Company had a deficiency in working capital of
approximately $2,800,000 and had incurred continual net losses since its return
to the development stage in fiscal 1996, of approximately $32,000,000, which
raise substantial doubt about the Company's ability to continue as a going
concern.

Management's plans for correcting these deficiencies include the future sales
and licensing of the Company's products and technologies, the raising of
capital through the issuance of common stock and from continued officer
advances, which are expected to help provide the Company with the liquidity
necessary to meet operating expenses.  An investor group had previously
advanced the Company an aggregate amount of $3,250,000 through fourteen similar
funding tranches occurring in April 2002, May 2002, June 2002, November 2002,
March 2003, May 2003, November 2003, December 2003, December 2003, February
2004, March 2004, April 2004, June 2004 and September 2004.  During the year
ended September 30, 2005, the same investor group advanced the Company an
additional $1,400,000. The Company received $158,033 in March 2005,
$108,733 in April 2005, $543,665 in June 2005 and $589,569 in September 2005,
including certain fees payable, in connection with this
additional financing.  Over the longer term, the Company plans to
achieve profitability through its operations from the sale and licensing
of its H-Net(TM) automatic meter-reading system.  The accompanying
consolidated financial statements do not include any adjustments
relating to the recoverability and classification of the recorded asset amounts
or the amounts and classification of liabilities that might be necessary should
the Company be unable to continue in existence.

NOTE 3. RELATED PARTY TRANSACTIONS

The officers of the Company have continually advanced funds to the Company.
These advances have generally been in the form of revolving short-term
promissory notes at an annual interest rate of 18% (see Note 8 below).

NOTE 4.   PREPAID EXPENSES AND DEPOSITS

The Company has accrued a prepaid expense of $80,000 as a staying bonus for
its Chief Executive Officer as per his employment contract (see NOTE 13).
The staying bonus is being amortized over the calendar year 2005.  For the
calendar year ended December 31, 2005, $60,000 of this expense was amortized
as officer salaries with a balance of $20,000 at September 30, 2005.

In connection with the convertible debenture financing obtained in April 2004,
June 2004 and September 2004, the Company prepaid $30,000, $75,000 and $75,000
dollars in interest, respectively (see NOTE 10).  The prepaid interest is being
amortized over a one year period.  For the year ended September 30, 2004,
$13,562, $19,110 and $4,520 were amortized, respectively, related to this
prepaid interest for a total of $37,192. The balances at September 30, 2004
were $16,438, $55,890 and $70,480 for total prepaid interest of $142,808.
During the year ended September 30, 2005, an additional $6,264, $33,190 and
$37,343 were amortized, respectively, related to this prepaid interest for a
total of $76,797.  The balances at September 30, 2005 tentatively were $10,174,
$22,700 and $33,137 for a total prepaid interest of $66,011.  As of
September 30, 2005, the Company had converted all convertible debentures
relating to the $10,174, $22,700 and $33,137 prepaid balances.  These amounts
are being applied to the remaining accrued and unpaid interest on other
debentures. In March 2005, April 2005, May 2005 and September 2005, the Company
prepaid $1,033, $1,033, $5,165 and $36,665 respectively for a total of $43,896
in interest in connection with the convertible debenture financing.  These
amount were either fully amortized or are being applied against the accrued
interest liability.  As a result, there is no prepaid interest included in
prepaid expenses.

<page>F-24

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 4.   PREPAID EXPENSES AND DEPOSITS(continued)

The balance of the September 2004 retainer in the amount of $4,159 to a law
firm in connection with a suit brought forth by Devon Investment Advisors Ltd.
has been fully applied to invoices.

Included in prepaid expenses is $20,000 in an escrow account designated for key
man life insurance.  Also included are prepaid retainers to a consultant for
$82,402 and a law firm for $31,782.

As of September 30, 2005, the balance in prepaid expenses was $154,184.

NOTE 5.    PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2005 consisted of the following:


Office equipment                             $   323,525
Furniture and fixtures                            19,700
Vehicles                                          35,362
                                             -----------
Total cost                                       378,587
Accumulated depreciation                        (339,330)
                                             -----------
Net book value                               $    39,257
                                             ===========

NOTE 6.    LICENSE RIGHTS AND TECHNOLOGY

License rights and technology at September 30, 2005 consisted of the following:

      License rights                            $   421,478
      Accumulated amortization                     (421,478)
                                                 -----------
        Net book value                          $       -
                                                 ===========

NOTE 7.   LOAN FEES

In February 2002, the Company received $340,000 in short-term financing from
an investment group through the issuance of a promissory note maturing on May
15, 2002 and accruing interest at an annual rate of 18%.  Included in the loan
was $40,000 in fees, consisting specifically of a $30,000 finder's fee and a
$10,000 legal fee.  These loan fees were fully amortized at September 30,
2002, with the balances written-off at September 30, 2005 as a result of a
legal settlement.

In March through June 2002, the Company received $750,000 from an accredited
investor group in exchange for 12% convertible debentures, convertible at the
lesser of $0.06 per share and 50% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  The convertible debentures were accompanied
by 3,750,000 common stock warrants, exercisable over a three year period at the
lesser of $0.045 per share and the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion. Loan fees associated with these loans
amounted to $147,500, of which $90,000 represented finder's fees and $57,500
represented legal costs.  These loan fees were fully amortized at September 30,
2003.

<page>F-25

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 7.   LOAN FEES (continued)

In November 2002 through May 2003, the Company received another $500,000 from
the above accredited investor group in exchange for 12% convertible
debentures, convertible at the lesser of $0.01 per share and 50% of the
average of the lowest three intra-day trading prices of a share of common
stock during the 20 trading days immediately preceding conversion.  The
convertible debentures were accompanied by 2,500,000 common stock warrants,
exercisable over a seven-year period at $0.005 per share. Loan fees
associated with these loans amounted to $83,069, consisting of $66,069 in
finder's fees and $17,000 in legal costs.  Amortization of these fees over
the pro-rata portion of the one-year term of the loans amounted to $55,173
through September 30, 2003.  Total amortization of all loan fees
during the year ended September 30, 2003 amounted to $144,276, including
$89,103 attributable to the unamortized balance at September 30, 2002.  The
unamortized balance of the loan fees at September 30, 2003 was $27,896.

In October 2003, the variable conversion price of the 12% convertible
debentures issued from March through June 2002 and from November 2002 through
May 2003 was reduced from 50% to 40% of the average of the lowest three intra-
day trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.

In November 2003 through December 2003, the Company received another $200,000
from the above accredited investor group in exchange for 12% convertible
debentures, convertible at the lesser of $0.005 per share and 40% of the
average of the lowest three intra-day trading prices of a share of common stock
during the 20 trading days immediately preceding conversion.  The convertible
debentures were accompanied by 1,500,000 common stock warrants, exercisable
over a seven-year period at $0.005 per share. Loan fees associated with these
loans amounted to $33,778, consisting of $18,778 in finder's fees and $15,000
in legal costs.

In February 2004 and March 2004, the Company received another $300,000 from the
above accredited investor group in exchange for 12% convertible debentures,
convertible at the lesser of $0.005 per share and 40% of the average of the
lowest three intra-day trading prices of a share of common stock during the 20
trading days immediately preceding conversion.  The convertible debentures were
accompanied by 1,500,000 common stock warrants, exercisable over a seven-year
period at $0.002 per share. Loan fees associated with these loans amounted to
$42,335, consisting of $35,335 in finder's fees and $7,000 in legal costs.

In April 2004, the Company received another $250,000 from the above accredited
investor group in exchange for 12% convertible debentures, convertible at the
lesser of $0.005 per share and 40% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  The convertible debentures were accompanied
by 750,000 common stock warrants, exercisable over a seven-year period at
$0.002 per share. Loan fees associated with these loans amounted to $36,624,
consisting of $21,624 in finder's fees and $15,000 in legal costs.  The Company
also prepaid $30,000 in interest.

In June 2004, the Company received another $625,000 from the above accredited
investor group in exchange for 12% convertible debentures, convertible at the
lesser of $0.005 per share and 40% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  The convertible debentures were accompanied
by 1,875,000 common stock warrants, exercisable over a seven-year period at
$0.002 per share. Loan fees associated with these loans amounted to $52,653,
consisting of $47,653 in finder's fees and $5,000 in legal costs.  The Company
also prepaid $75,000 in interest.

<page>F-26

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 7.   LOAN FEES (continued)

In September 2004, the Company received another $625,000 from the above
accredited investor group in exchange for 12% convertible debentures,
convertible at the lesser of $0.005 per share and 40% of the average of the
lowest three intra-day trading prices of a share of common stock during the 20
trading days immediately preceding conversion.  The convertible debentures were
accompanied by 1,875,000 common stock warrants, exercisable over a seven-year
period at $0.002 per share. Loan fees associated with these loans amounted to
$48,453, consisting of $46,953 in finder's fees and $1,500 in legal costs.  The
Company also prepaid $75,000 in interest.

Total new loan fees during the year ended September 30, 2004 amounted to
$213,843.

Total amortization on the one- and two-year lives of all loan fees amounted to
$97,034 during the year ended September 30, 2004, leaving an unamortized
balance at September 30, 2004 of $144,705.  During the year ended September 30,
2005, total amortization of loan fees amounted to $129,505, leaving an
unamortized balance of $15,200.

In March 2005, the Company received another $158,033 from the above accredited
investor group in exchange for 8% convertible debentures, convertible at the
lesser of $0.005 per share and 40% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  The convertible debentures were accompanied
by 316,066 common stock warrants, exercisable over a five-year period at
$0.0039 per share. Loan fees associated with these loans amounted to $9,000 in
finder's fees and $5,000 in legal costs.  The Company also paid $1,033 in
prepaid interest.

In April 2005, the Company received another $108,733 from the above accredited
investor group in exchange for 8% convertible debentures, convertible at the
lesser of $0.005 per share and 40% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  The convertible debentures were accompanied
by 217,466 common stock warrants, exercisable over a five-year period at
$0.0039 per share. Loan fees associated with these loans amounted to $2,000 in
finder's fees.  The Company also paid $1,033 in prepaid interest.

In May 2005, the Company received another $543,665 from the above accredited
investor group in exchange for 8% convertible debentures, convertible at the
lesser of $0.005 per share and 40% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  The convertible debentures were accompanied
by 1,087,330 common stock warrants, exercisable over a five-year period at
$0.0039 per share. Loan fees associated with these loans amounted to $10,000,
in finder's fees.  The Company also paid $5,165 in prepaid interest.

In June of 2005, the Company incurred an additional $6,368 in finder fees in
connection with a prior issuance of convertible debt from the above accredited
investor group.

In September 2005, the Company received another $589,569 from the above
accredited investor group in exchange for 8% convertible debentures,
convertible at the lesser of $0.005 per share and 40% of the average of the
lowest three intra-day trading prices of a share of common stock during the 20
trading days immediately preceding conversion.  The convertible debentures were
accompanied by 1,179,138 common stock warrants, exercisable over a five-year
period at $0.0039 per share. Loan fees associated with these loans amounted to
$10,000, in finder's fees.  The Company also paid $36,665 in prepaid interest.

Total new loan fees during the year ended September 30, 2005 amounted to
$42,368. During the year ended September 30, 2005, total amortization of
current year's loan fees amounted to $12,366, leaving an unamortized balance of
$30,002.

Total unamortized loan fees at September 30, 2005 is $45,202.

<page>F-27

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 8.    DUE TO/FROM OFFICERS

At September 30, 2001, a revolving promissory note agreement for $56,880 was
drawn up, due on demand, at an annual interest rate of 18%, for unpaid
cumulative advances (plus interest) made by the Company's CEO.  During the year
ended September 30, 2002, cash advances of $31,500 were made. Additionally, the
loan account was increased by $120,875, representing the value of 2,361,814
restricted shares of the Company's common stock held by the CEO, which were
used as collateral and transferred to a note holder in June of 2002 to
partially cover a $300,000 debt, and by $16,202, representing the value of
794,857 restricted shares of the Company's common stock held by the CEO, which
were pledged to and sold by a convertible note holder on a Company obligation
in default.  Repayments of debt by the Company amounted to $144,806 and accrued
interest amounted to $6,913 during the year ended September 30, 2002, resulting
in a loan balance due the CEO at September 30, 2002 of $87,564.  During the
year ended September 30, 2003, additional cash advances totaling $37,869 were
made, along with $37,423, representing another 1,835,885 restricted shares of
the Company's common stock pledged and sold by the above note holder.
Repayments of debt by the Company amounted to $136,009, including re-issuance
of 2,361,814 restricted shares of the Company's common stock valued at $120,875
that had been transferred to a note holder during the previous fiscal year.
Accrued interest during the year ended September 30, 2003 was $10,073, bringing
the loan balance due the CEO at September 30, 2003 to $36,920.   During the
year ended September 30, 2004, the Company repaid $32,673.  Accrued interest of
$3,558 during the period brought the loan balance due the CEO at September 30,
2004 to $7,805.  During the year ended September 30, 2005, the Company
repaid $45,715 including accrued interest during the period of $212 creating
a balance due from officer of $37,698 which has been applied to accrued
compensation due to the CEO.  There is no amount due to the CEO at September
30, 2005.

At September 30, 2001, a promissory note agreement for $25,874 was drawn up,
due on demand, at an annual interest rate of 18 percent, for cumulative
advances (plus interest) made by the Company's Secretary/Treasurer.  The
Secretary/Treasurer had also borrowed on a personal credit card for the
Company's behalf in the amount of $18,455, bringing the total obligation due
the Secretary/Treasurer at September 30, 2001 to $44,329.  During the year
ended September 30, 2002, the personal credit card balance was virtually paid-
off.  Additional loan advances were $19,500, loan repayments were $39,500, and
accrued interest was $2,269 during the year ended September 30, 2002, bringing
the aggregate loan balance due the Secretary/Treasurer at September 30, 2002 to
$8,143.  During the year ended September 30, 2003, additional cash advances of
$37,500 were made, and accrued interest was $6,522, resulting in a loan balance
due the Secretary/Treasurer at September 30, 2003 of $52,165. During the year
ended September 30, 2004, the Company repaid $25,655 and received an additional
$666 from the Treasurer.  Accrued interest amounted to $8,077 during the period
bringing the loan balance due the Secretary at September 30, 2004 to $35,253.
During the year ended September 30, 2005, the Company repaid $37,962.
Accrued interest during the period amounted to $3,094, bringing the loan balance
at September 30, 2005 to $385.  The loan balance at September 30, 2005 is
due on demand and continues to accrue interest at the rate of 18% per
year.

<page>F-28

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 8.    DUE TO/FROM OFFICERS (continued)

During the period May through September 2002, the Company's Chief Technical
Officer advanced the Company $32,946, corresponding to 684,407 restricted
shares of the Company's common stock held by the officer, which were pledged to
and sold by a convertible note holder on a Company obligation in default.
Accrued interest at the annual rate of 18% was $1,831 through the end of the
fiscal year, bringing the total loan amount to $34,777 at September 30, 2002.
In November 2002, the Company re-issued the 684,407 restricted shares to the
Chief Technical Officer (valued at $32,946) that had been pledged to and sold
by the convertible note holder during the previous fiscal year.  Accrued
interest amounted to $1,205 during the year ended September 30, 2003, resulting
in a loan balance of $3,036 as of that date.  During the year ended September
30, 2004, the Company repaid $15,623.  During the year ended September 30,
2004, accrued interest amounted to $294, which brought the tentative balance
due from the Chief Technical Officer to $12,293. This amount has been applied
against the accrued compensation owed the Chief Technical Officer,
resulting in a net amount due to/from the officer at September 30, 2005 of $0.

The aggregate amount due officers at September 30, 2005 was $385 and interest
expense on the officer loans amounted to $3,306 for the year ended September
30, 2005.

As of September 30, 2005, the Company owed its officers $1,683,191 in accrued
compensation.  Of this amount, $360,000 was attributable to aggregate staying
bonuses payable to the President and Secretary/Treasurer of the Company as of
December 31, 2004.  An additional $80,000 payable to the President on
January 1, 2006 is being amortized over the 2005 calendar year.
The staying bonuses are to be compensated for with the Company's common stock,
valued at the average bid and ask price for the stock for the 30 days prior
to each respective year-end issuance date.  The total common stock to be issued
as staying bonuses amounted to 358,758,842 at September 30, 2005, including
289,156,627 shares to settle the upcoming January 1, 2006 stating bonus.

<page>F-29

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE

Notes payable at September 30, 2005 consisted of the following:

Convertible Debentures - secured by substantially all the assets of
the Company

     Convertible Debenture #1

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 29, 2003 at an annual interest
      rate of 12%                                         $    0

     Accrued interest of $7,075 and principal
      on Convertible Debenture convertible
      into approximately 88,437,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    7,075  $     7,075
                                                         -------
     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on March 29, 2003 at an annual interest
      rate of 12%                                        $     0

     Accrued interest of $7,075 and principal
      on Convertible Debenture convertible
      into approximately 88,437,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    7,075        7,075
                                                         -------

<page>F-30

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Note payable to AJW/New Millennium
      Offshore, Ltd. (Convertible Debenture)
      due on March 29, 2003 at an annual
      interest rate of 12%                                $    0

     Accrued interest of $8,136 and principal
      on Convertible Debenture convertible
      into approximately 101,700,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    8,136  $    8,136
                                                         -------
     Note payable to Pegasus Capital Partners,
      LLC (Convertible Debenture) due on
      March 29, 2003 at an annual interest
      rate of 12%                                         $    0

     Accrued interest of $4,975 and principal
      on Convertible Debenture convertible
      into approximately 62,187,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     4,975  $   4,975
                                                          -------
     Convertible Debenture #2

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      May 10, 2003 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $9,600 and principal
      on Convertible Debenture convertible
      into approximately 120,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     9,600  $   9,600
                                                         --------

<page>F-31

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on  May 10, 2003 at an annual
      interest rate of 12%                                $     0

     Accrued interest of $9,600 and principal
      on Convertible Debenture convertible
      into approximately 120,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     9,600  $     9,600
                                                          -------
     Note payable to AJW/New Millennium
      Offshore, Ltd. (Convertible Debenture)
      due on May 10, 2003 at an annual
      interest rate of 12%                               $     0

     Accrued interest of $10,800 and principal
      on Convertible Debenture convertible
      into approximately 135,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    10,800  $   10,800
                                                          -------

     Note payable to Pegasus Capital Partners,
      LLC (Convertible Debenture) due on
      May 10, 2003 at an annual
      interest rate of 12%                                $     0

     Accrued interest of $6,000 and principal
      on Convertible Debenture convertible
      into approximately 75,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     6,000  $   6,000
                                                          -------

<page>F-32

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #3

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      June 17, 2003 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $19,200 and principal
      on Convertible Debenture convertible
      into approximately 240,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    19,200  $   19,200
                                                         --------

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on  June 17, 2003 at an annual
      interest rate of 12%                                $     0

     Accrued interest of $19,200 and principal
      on Convertible Debenture convertible
      into approximately 240,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    19,200 $   19,200
                                                          -------

     Note payable to AJW/New Millennium
      Offshore, Ltd. (Convertible Debenture)
      due on June 17, 2003 at an annual
      interest rate of 12%                                $     0

<page>F-33

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

      Accrued interest of $21,600 and principal
      on Convertible Debenture convertible
      into approximately 270,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    21,600  $   21,600
                                                         --------

     Note payable to Pegasus Capital Partners,
      LLC (Convertible Debenture) due on
      June 17, 2003 at an annual
      interest rate of 12%                                $     0

     Accrued interest of $12,000 and principal
      on Convertible Debenture convertible
      into approximately 150,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    12,000  $   12,000
                                                         --------
     Convertible Debenture #5

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 3, 2004 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $9,240 and principal
      on Convertible Debenture convertible
      into approximately 115,500,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     9,240  $    9,240
                                                          -------

<page>F-34

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      March 3, 2004 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $9,240 and principal
      on Convertible Debenture convertible
      into approximately 115,500,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     9,240  $    9,240
                                                          -------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 3, 2004 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $9,240 and principal
      on Convertible Debenture convertible
      into approximately 115,500,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     9,240       9,240
                                                          -------

<page>F-35

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #6

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      May 12, 2004 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $12,000 and principal
      on Convertible Debenture convertible
      into approximately 150,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    12,000  $   12,000
                                                          -------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      May 12, 2004 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $12,000 and principal
      on Convertible Debenture convertible
      into approximately 150,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    12,000  $   12,000
                                                          -------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      May 12, 2004 at an annual interest
      rate of 12%                                         $     0

     Accrued interest of $12,000 and principal
      on Convertible Debenture convertible
      into approximately 150,000,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    12,000  $   12,000
                                                         --------
<page>F-36

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #7

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      November 25, 2004 at an annual interest
      rate of 12%                                         $33,334

     Accrued interest of $7,408 and principal
      on Convertible Debenture convertible
      into approximately 509,275,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     7,408  $   40,742
                                                         --------
     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      November 25, 2004 at an annual interest
      rate of 12%                                         $33,333

      Accrued interest of $7,408 and principal
      on Convertible Debenture convertible
      into approximately 509,262,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     7,408  $   40,741
                                                         --------
     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      November 25, 2004 at an annual interest
      rate of 12%                                         $33,333

     Accrued interest of $7,409 and principal
      on Convertible Debenture convertible
      into approximately 509,275,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     7,409  $   40,742
                                                         --------
<page>F-37

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #8

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      December 3, 2004 at an annual interest
      rate of 12%                                         $16,667

     Accrued interest of $3,660 and principal
      on Convertible Debenture convertible
      into approximately 254,087,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,660  $   20,327
                                                         --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      December 3, 2004 at an annual interest
      rate of 12%                                         $16,667

     Accrued interest of $3,660 and principal
      on Convertible Debenture convertible
      into approximately 254,087,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,660 $   20,327
                                                         --------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      December 3, 2004 at an annual interest
      rate of 12%                                         $16,666

     Accrued interest of $3,661 and principal
      on Convertible Debenture convertible
      into approximately 254,087,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,661  $   20,327
                                                         --------

<page>F-38

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #9

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      December 31, 2004 at an annual interest
      rate of 12%                                         $16,667

     Accrued interest of $3,507 and principal
      on Convertible Debenture convertible
      into approximately 252,175,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,507  $   20,174
                                                        --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      December 31, 2004 at an annual interest
      rate of 12%                                         $16,667

     Accrued interest of $3,507 and principal
      on Convertible Debenture convertible
      into approximately 252,175,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,507  $   20,174
                                                         --------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      December 31, 2004 at an annual interest
      rate of 12%                                         $16,666

     Accrued interest of $3,507 and principal
      on Convertible Debenture convertible
      into approximately 252,162,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,507  $  20,173
                                                         --------

<page>F-39

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #10

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      February 18, 2005 at an annual interest
      rate of 12%                                         $16,666

     Accrued interest of $3,239 and principal
      on Convertible Debenture convertible
      into approximately 248,812,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,239  $  19,905
                                                         --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      February 18, 2005 at an annual interest
      rate of 12%                                         $16,667

     Accrued interest of $3,238 and principal
      on Convertible Debenture convertible
      into approximately 248,812,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,238 $   19,905
                                                         --------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      February 18, 2005 at an annual interest
      rate of 12%                                         $16,667

     Accrued interest of $3,238 and principal
      on Convertible Debenture convertible
      into approximately 248,812,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,238  $  19,905
                                                         --------
<page>F-40

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #11

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 4, 2005 at an annual interest
      rate of 12%                                         $79,734

     Accrued interest of $15,646 and principal
      on Convertible Debenture convertible
      into approximately 1,192,250,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    15,646  $  95,380
                                                         --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      March 4, 2005 at an annual interest
      rate of 12%                                         $79,733

     Accrued interest of $15,646 and principal
      on Convertible Debenture convertible
      into approximately 1,192,237,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    15,646  $  95,379
                                                         --------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 4, 2005 at an annual interest
      rate of 12%                                         $79,733

     Accrued interest of $15,646 and principal
      on Convertible Debenture convertible
      into approximately 1,192,237,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                    15,646  $  95,379
                                                         --------
<page>F-41

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #12

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8%  with one year
      interest prepaid                                   $ 25,285

     Accrued interest of $1,097 and principal
      on Convertible Debenture convertible
      into approximately 329,775,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     1,097  $  26,382
                                                         --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $ 71,115

     Accrued interest of $3,086 and principal
      on Convertible Debenture convertible
      into approximately 927,512,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,086  $  74,201
                                                         --------
     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $ 58,472

     Accrued interest of $2,538 and principal
      on Convertible Debenture convertible
      into approximately 762,625,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     2,538  $  61,010
                                                         --------

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on March 17, 2007 at an annual
      interest rate of 8% with one year
      interest prepaid                                     $3,161

     Accrued interest of $137 and principal
      on Convertible Debenture convertible
      into approximately 41,225,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                       137  $   3,298
                                                         --------
<page>F-42

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #13

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8%  with one year
      interest prepaid                                   $ 17,397

     Accrued interest of $625 and principal
      on Convertible Debenture convertible
      into approximately 225,275,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                       625  $  18,022
                                                         --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $ 48,930

     Accrued interest of $1,759 and principal
      on Convertible Debenture convertible
      into approximately 633,612,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     1,759  $  50,689
                                                         --------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                  $ 40,231

     Accrued interest of $1,446 and principal
      on Convertible Debenture convertible
      into approximately 520,962,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     1,446  $  41,677
                                                         --------

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on March 17, 2007 at an annual
      interest rate of 8% with one year
      interest prepaid                                   $  2,175

     Accrued interest of $78 and principal
      on Convertible Debenture convertible
      into approximately 28,162,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                        78  $   2,253
                                                         --------
<page>F-43

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #14

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8%  with one year
      interest prepaid                                   $ 43,228

     Accrued interest of $1,241 and principal
      on Convertible Debenture convertible
      into approximately 555,862,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     1,241  $  44,469
                                                         --------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $121,580

     Accrued interest of $3,491 and principal
      on Convertible Debenture convertible
      into approximately 1,563,387,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     3,491  $ 125,071
                                                         --------
     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $ 99,965

     Accrued interest of $2,870 and principal
      on Convertible Debenture convertible
      into approximately 1,285,437,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                     2,870  $ 102,835
                                                         --------

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on March 17, 2007 at an annual
      interest rate of 8% with one year
      interest prepaid                                   $  5,404

     Accrued interest of $155 and principal
      on Convertible Debenture convertible
      into approximately 69,487,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                       155  $   5,559
                                                         --------
<page>F-44

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #16

     Note payable to AJW Partners,
      LLC (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $ 94,331

     Accrued interest of $21 and principal
      on Convertible Debenture convertible
      into approximately 1,179,400,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                        21  $  94,352
                                                         --------

     Note payable to AJW Offshore, LTD
      Partners II, LLC (Convertible Debenture)
      due on March 17, 2007 at an annual
      interest rate of 8% with one year
      interest prepaid                                  $265,306

     Accrued interest of $58 and principal
      on Convertible Debenture convertible
      into approximately 3,317,050,000
      shares of common stock at the price
      of $0.00008 at September 30, 2005                        58  $ 265,364
                                                         --------
     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 17, 2007 at an annual interest
      rate of 8% with one year
      interest prepaid                                   $218,141

     Accrued interest of $48 and principal
      on Convertible Debenture convertible
      into approximately 2,727,362,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                        48  $ 218,189
                                                         --------

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on March 17, 2007 at an annual
      interest rate of 8% with one year
      interest prepaid                                   $ 11,791

     Accrued interest of $2 and principal
      on Convertible Debenture convertible
      into approximately 147,412,500
      shares of common stock at the price
      of $0.00008 at September 30, 2005                         2  $  11,793
                                                         --------
<page>F-45

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

Subtotal of all Convertible Debentures                            1,933,725

    Less reclassified accrued interest                         $   (212,924)
    Less prepaid interest offset                                   (105,089)
                                                               ------------
    Subtotal principal value                                      1,615,712
    Derivative conversion option - 150 percent of principal       2,423,568
    Less unamortized note discount                               (1,225,759)
                                                                -----------
Net carrying value of
  Convertible Debentures                                       $  2,813,521


      Convertible note payable to Laurus Master Fund, Ltd.,
      unsecured, with interest payable at an annual rate
      of 8%, conversion premium of 25% based on current
      market price of the Company's common stock (as defined),
      initially due October 12, 2001 and extended to
      December 1, 2001.  Currently in default.                        8,048
                                                                -----------
     Total notes payable                                        $ 2,821,569

        Current portion                                           1,231,048
                                                                -----------
        Long-term portion                                       $ 1,590,521
                                                                ===========

On April 12, 2001, the Company received $300,000 in proceeds from Laurus
Master Fund, Ltd. ("Laurus") and issued a $300,000 principal value 8%
convertible note due on October 12, 2001, along with 1,000,000 common stock
warrants, exercisable at $0.192 per share over a four-year period.  $77,228 of
the proceeds was allocated to the cost of the warrants, with the remaining
$222,772 allocated to the cost of the debt instrument, based on the relative
fair market values of the note and the warrants at the date of issuance.

A convertible note discount of $77,228 was also recognized, which was
effectively fully amortized at September 30, 2002 as interest expense.

The note was convertible (at the option of the holder) into common stock at the
lesser of 80% of the average of the 3-lowest closing bid prices during the 30
trading days prior to the closing date (April 12, 2001) or 80% of the average
of the 3-lowest closing bid prices during the 30 trading days prior to the
conversion date (assumed to be September 30, 2002).  At April 12, 2001, the
note was convertible into approximately 2,181,500 common shares at an exercise
price of approximately $0.1021 per share, and at September 30, 2002, the note
was convertible into approximately 20,189,875 common shares at an exercise
price of approximately $0.0064 per share. In either instance, the fair value
of the debt instrument (due to the 80% pricing advantage) was $375,000 (a 25%
premium on the principal value), resulting in a further convertible debt
discount of $152,228, representing the difference between the note's fair
value of $375,000 and the allocated proceeds at issuance of $222,772.  This
discount was also fully amortized at September 30, 2001.

<page>F-46

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 9.    NOTES PAYABLE (continued)

A corresponding $152,228 credit was made to additional paid-in capital for the
conversion benefit option, i.e., the intrinsic value of the matured debt
instrument. Interest accrued at 8% on the $300,000 note principal through
September 30, 2002 was $17,168. For presentation purposes, this interest was
added to the principal value of the note at the year-end balance sheet date.
The holder can also convert the accrued interest into common stock at a 25%
premium ($4,292), bringing the total conversion benefit
option to $155,027.  Total amortization of interest on the discounted
convertible note during the year ended September 30, 2001 (including $32,775
in loan fees associated with the transaction) amounted to $265,030.

The maturity date on the $300,000 principal value 8% convertible note,
initially October 12, 2001, was extended to December 1, 2001.  Because of the
inherent conversion benefit feature, the aggregate note with accrued interest,
totaling $311,194 at September 30, 2001, was classified as a long-term
liability.

The Company was unable to pay-off the note at maturity.  However, after
receiving bridge financing from another investment group in February 2002, the
Company subsequently repaid $150,000 of the obligation, as the note holder
elected to not convert the debt to shares.  Consequently, the note holder sold
1,479,264 of the 4,773,208 shares of the Company's common stock that had been
pledged by officers of the Company as collateral, resulting in net proceeds of
$49,148.  Adding accrued interest of $17,168 at an annual rate of 8%, brought
the loan balance at September 30, 2002 to $129,214.  During the year ended
September 30, 2003, the note holder sold the remaining 3,293,944 pledged shares
for net proceeds of $67,144.  The note holder elected to convert essentially
all the remaining debt for common stock of the Company, receiving 26,000,000
newly issued Company shares valued at $58,400, and bringing the tentative
liability down to $3,670.  Accrued interest amounted to $3,183, resulting in a
total liability to the note holder at September 30, 2003 of $6,851.  For the
years ended September 30, 2005 and 2004, accrued interest amounted to $617 and
$580, respectively, resulting in a
balance of $8,048 at September 30, 2005. In connection with the pay-down of the
debt, the $155,027 beneficial conversion option noted above was reduced to zero
through transference to common stock.

In February 2002, the Company borrowed $340,000 from Mercator Momentum
Fund ("Mercator"). This loan from Mercator was a short-term loan due May 15,
2002 and accrued interest at an annual rate of 18%. The loan was secured by
shares of the Company's common stock. In April and May of 2002, the Company
paid Mercator an aggregate of $100,000.  On June 14, 2002 Mercator transferred
collateral in the form of 5,861,814 shares of common stock to its name
because the Company was in default on the balance of the loan.

Thereafter, on June 21, 2002, Mercator filed an action against the Company,
Robert A. Spigno and Patricia A. Spigno in the Superior Court of California,
County of Los Angeles (Case No. BC276283) for breach of promissory note,
foreclosure of security interests, fraud and deceit. Mr. Spigno is the Chairman
of the Board and a director of the Company and is also the Company's Chief
Executive Officer.  Ms. Spigno is the Company's Secretary and Chief Financial
Officer. On July 3, 2002, Mercator filed a first amended complaint in the
Superior Court of California, County of Los Angeles (Case No. BC276283), adding
a claim of common count for money lent.  In March 2004, the Company settled its
suit with Mercator for $150,000.

<page>F-47

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 10. SECURED CONVERTIBLE DEBENTURES

In order to provide working capital and financing for the Company's continued
research and development efforts as of March 29, 2002, the Company entered
into a securities purchase agreement and related agreements with four
accredited investors (the "Purchasers") for the purchase of up to $750,000 of
the Company's 12% Convertible Debentures due one year from their date of
issuance. The Company granted the holders of the debentures a continuing
security interest in all of the Company's assets to secure the Company's
obligations under the debentures and related agreements. The debentures bear
interest at a rate of 12% per annum, payable quarterly in common stock or cash
at the option of the Purchasers.

On March 29, 2002 the Company issued an aggregate of $300,000 of 12%
convertible debentures in a private offering to four accredited investors.
Three of the investors, if certain conversion limitations are disregarded, are
beneficial owners of 5% or more of the company's outstanding shares of common
stock. The debentures initially were convertible into shares of common stock
at the lesser of $.06 per share and 50% of the average of the lowest three
intra-day trading prices of a share of common stock during the 20 trading days
immediately preceding conversion. In October 2003, the conversion rate was
changed from 50% to 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  The debentures were accompanied by warrants
to purchase up to an aggregate of 1,500,000 shares of common stock at a per
share exercise price equal to the lesser of $.045 and the average of the
lowest three intra-day trading prices during the 20 trading days immediately
preceding an exercise.

On May 10, 2002 the Company issued an aggregate of $150,000 of 12% convertible
debentures in a private offering to four accredited investors. Three of the
investors, if certain conversion limitations are disregarded, are beneficial
owners of 5% or more of the Company's outstanding shares of common stock. The
debentures initially were convertible into shares of common stock at the
lesser of $.06 per share and 50% of the average of the lowest three intra-day
trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  In October 2003, the conversion rate was
changed from 50% to 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  The debentures were accompanied by warrants
to purchase up to an aggregate of 750,000 shares of common stock at a per
share exercise price equal to the lesser of $.045 and the average of the
lowest three intra-day trading prices during the 20 trading days immediately
preceding an exercise.

On June 17, 2002 the Company issued an aggregate of $300,000 of 12%
convertible debentures in a private offering to four accredited investors.
Three of the investors, if certain conversion limitations are disregarded, are
beneficial owners of 5% or more of the company's outstanding shares of common
stock. The debentures initially were convertible into shares of common stock
at the lesser of $.06 per share and 50% of the average of the lowest three
intra-day trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  In October 2003, the conversion rate was
changed from 50% to 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  The debentures were accompanied by warrants
to purchase up to an aggregate of 1,500,000 shares of common stock at a per
share exercise price equal to the lesser of $.045 and the average of the
lowest three intra-day trading prices during the 20 trading days immediately
preceding an exercise.

<page>F-48

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

The Company entered into another securities purchase agreement plus related
agreements with three accredited investors on November 27, 2002 (essentially
the same re-organized investor group delineated above) for the purchase of up
to $500,000 of the Company's 12% Convertible Debentures due one year from
their date of issuance. The Company granted the holders of the debentures a
continuing security interest in all of the Company's assets to secure the
Company's obligations under the debentures and related agreements. The
debentures bear interest at a rate of 12% per annum, payable quarterly in
common stock or cash at the option of the Purchasers.

On November 27, 2002 the Company issued an aggregate of $200,000 of 12%
convertible debentures in a private offering to three accredited investors
who, if certain conversion limitations are disregarded, would be deemed
beneficial owners of 5% or more of the Company's outstanding shares of common
stock. The debentures initially were convertible into shares of common stock
at the lesser of $.01 per share and 50% of the average of the lowest three
intra-day trading prices of a share of common stock during the 20 trading days
immediately preceding conversion.  In October 2003, the conversion rate was
changed from 50% to 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  The debentures were accompanied by warrants
to purchase up to an aggregate of 1,000,000 shares of common stock at a per
share exercise price equal to $.005.

On March 3, 2003 the Company issued an aggregate of $150,000 of 12% convertible
debentures in a private offering to three accredited investors.  The
debentures initially were convertible into shares of common stock at the lesser
of $.01 per share and 50% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  In October 2003, the conversion rate was changed from
50% to 40% of the average of the lowest three intra-day trading prices of a
share of common stock during the 20 trading days immediately preceding
conversion.  The debentures were accompanied by warrants to purchase up to an
aggregate of 750,000 shares of common stock at a per share exercise price equal
to $.005.

On May 12, 2003 the Company issued an aggregate of $150,000 of 12% convertible
debentures in a private offering to three accredited investors.  The
debentures initially were convertible into shares of common stock at the lesser
of $.01 per share and 50% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  In October 2003, the conversion rate was changed from
50% to 40% of the average of the lowest three intra-day trading prices of a
share of common stock during the 20 trading days immediately preceding
conversion.  The debentures were accompanied by warrants to purchase up to an
aggregate of 750,000 shares of common stock at a per share exercise price equal
to $.005.

On November 25, 2003 the Company issued an aggregate of $100,000 of 12%
convertible debentures in a private offering to three accredited investors.
The debentures were convertible into shares of common stock at the lesser of
$.005 per share and 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.   The debentures were accompanied by warrants to purchase
up to an aggregate of 500,000 shares of common stock at a per share exercise
price equal to $.005.

<page>F-49

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

On December 3, 2003 the Company issued an aggregate of $50,000 of 12%
convertible debentures in a private offering to three accredited investors.
The debentures were convertible into shares of common stock at the lesser of
$.005 per share and 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion. The debentures were accompanied by warrants to purchase
up to an aggregate of 250,000 shares of common stock at a per share exercise
price equal to $.005.

On December 31, 2003 the Company issued an aggregate of $50,000 of 12%
convertible debentures in a private offering to three accredited investors.
The debentures were convertible into shares of common stock at the lesser of
$.005 per share and 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion. The debentures were accompanied by warrants to purchase
up to an aggregate of 250,000 shares of common stock at a per share exercise
price equal to $.005.

On February 18, 2004 the Company issued an aggregate of $50,000 of 12%
convertible debentures in a private offering to three accredited investors.
The debentures were convertible into shares of common stock at the lesser of
$.005 per share and 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion. The debentures were accompanied by warrants to purchase
up to an aggregate of 250,000 shares of common stock at a per share exercise
price equal to $.005.

On March 4, 2004 the Company issued an aggregate of $250,000 of 12% convertible
debentures in a private offering to three accredited investors.  The
debentures were convertible into shares of common stock at the lesser of $.005
per share and 40% of the average of the lowest three intra-day trading prices
of a share of common stock during the 20 trading days immediately preceding
conversion. The debentures were accompanied by warrants to purchase up to an
aggregate of 1,250,000 shares of common stock at a per share exercise price
equal to $.005.

On April 19, 2004, the Company issued an aggregate of $250,000 of 12%
convertible debentures in a private offering to four accredited investors.
The Company prepaid one year's interest of $30,000 upon receipt of the funds.
The debentures were convertible into shares of common stock at the lesser of
$.005 per share and 40% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion. The debentures were accompanied by warrants to purchase
up to an aggregate of 750,000 shares of common stock at a per share exercise
price equal to $.002.

On June 30, 2004 the Company issued an aggregate of $625,000 of 12% convertible
debentures in a private offering to four accredited investors.  The
Company prepaid one year's interest of $75,000 upon receipt of the funds.  The
debentures were convertible into shares of common stock at the lesser of $.005
per share and 40% of the average of the lowest three intra-day trading prices
of a share of common stock during the 20 trading days immediately preceding
conversion. The debentures were accompanied by warrants to purchase up to an
aggregate of 1,875,000 shares of common stock at a per share exercise price
equal to $.002.

<page>F-50

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

On September 9, 2004 the Company issued an aggregate of $625,000 of 12%
convertible debentures in a private offering to four accredited investors. The
Company prepaid one year's interest of $75,000 upon receipt of the funds. The
debentures were convertible into shares of common stock at the lesser of $.005
per share and 40% of the average of the lowest three intra-day trading prices
of a share of common stock during the 20 trading days immediately preceding
conversion. The debentures were accompanied by warrants to purchase up to an
aggregate of 1,875,000 shares of common stock at a per share exercise price
equal to $.002.

On March 17, 2005 the Company issued an aggregate of $158,033 of 8% convertible
debentures in a private offering to the four accredited investors. The Company
prepaid $1,033 in interest upon receipt of the funds. The debentures were
convertible into shares of common stock at the lesser of $.005 per share and
40% of the average of the lowest three intra-day trading prices of a share of
common stock during the 20 trading days immediately preceding conversion. The
debentures were accompanied by warrants to purchase up to an aggregate of
316,066 shares of common stock at a per share exercise price equal to $.0039.

On April 20, 2005 the Company issued an aggregate of $108,733 of 8% convertible
debentures in a private offering to the four accredited investors. The Company
prepaid $1,033 in interest upon receipt of the funds. The debentures were
convertible into shares of common stock at the lesser of $.005 per share and
40% of the average of the lowest three intra-day trading prices of a share of
common stock during the 20 trading days immediately preceding conversion. The
debentures were accompanied by warrants to purchase up to an aggregate of
217,466 shares of common stock at a per share exercise price equal to $.0039.

On May 23, 2005 the Company issued an aggregate of $543,665 of 8% convertible
debentures in a private offering to the four accredited investors. The Company
prepaid $5,165 in interest upon receipt of the funds. The debentures were
convertible into shares of common stock at the lesser of $.005 per share and
40% of the average of the lowest three intra-day trading prices of a share of
common stock during the 20 trading days immediately preceding conversion. The
debentures were accompanied by warrants to purchase up to an aggregate of
1,087,330 shares of common stock at a per share exercise price equal to $.0039.

On September 30, 2005 the Company issued an aggregate of $589,569 of 8%
convertible debentures in a private offering to the four accredited investors.
The Company prepaid $36,665 in interest upon receipt of the funds. The
debentures were convertible into shares of common stock at the lesser of $.005
per share and 40% of the average of the lowest three intra-day trading prices
of a share of common stock during the 20 trading days immediately preceding
conversion. The debentures were accompanied by warrants to purchase up to an
aggregate of 1,179,138 shares of common stock at a per share exercise price
equal to $.0039.

The Company's convertible debentures and related warrants contain anti-
dilution provisions whereby, if the Company issues common stock or securities
convertible into or exercisable for common stock at a price less than the
conversion or exercise prices of the debentures or warrants, the conversion and
exercise prices of the debentures and/or warrants shall be adjusted as
stipulated in the agreements governing such debentures and warrants.

<page>F-51

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

As part of the recording of the convertible debt transactions, a beneficial
conversion option was recognized, along with a corresponding convertible debt
discount.  The fair value of the debt instruments issued totaling $1,750,000 in
principal value was $3,500,000 in aggregate, representing a 100% premium on the
principal value (due to the 100% pricing advantage) and making the beneficial
conversion option $1,637,735 at the inception of the loans ($1,750,000 proceeds
less $112,265 allocated to the issuance of the 8,750,000 related warrants).  In
October 2003, the conversion option was increased to 150% from 100% which
resulted in an increase of $563,257 in the conversion interest and a
corresponding expense in the current period.  Due to the nature of the debt
instrument and its repayment terms, the beneficial conversion option has been
re-characterized as derivative conversion option and reclassified as additional
debt.  In connection with the issuance of an additional $2,000,000 of
convertible debt during the year ended September 30, 2004, the derivative
conversion option was increased by $3,000,000.  During the year ended September
30, 2005, the derivative conversion interest was increased by $2,800,000 in
connection with the issuance of an additional $1,400,000 of debt.

During the fiscal year ended September 30, 2002, the Company issued 12,667,178
shares of common stock in connection with  interest payments and upon
conversion of an aggregate $93,130 of principal and $6,916 of related interest
on the Company's convertible debentures. A corresponding pro-rata reduction of
$80,702 to the beneficial conversion option was made.  During the fiscal year
ended September 30, 2003, the Company issued another 103,778,301 shares of
common stock in connection with the conversion of another $193,665 of principal
and $34,355 of accrued interest on the Company's convertible debentures,
resulting in a convertible debt principal balance at September 30, 2003 of
$963,205 (net of an aggregate of $286,795 in debt conversions through that
date).  A corresponding pro-rata reduction of $177,845 was made to the
beneficial conversion option during the fiscal year ended September 30, 2003
(an aggregate of $258,547 since the inception of the loans), bringing the
beneficial conversion option balance at September 30, 2003 to $881,550. In
October 2003, the conversion option was increased to 150% from 100% resulting
in an increase of $563,257 and a re-characterization of the conversion option
as additional debt.

During the year ended September 30, 2004, the Company issued an additional
$2,000,000 of 12% convertible debentures.  Also, the Company issued 352,352,250
shares of common stock in connection with the conversion of another $218,115 of
principal and $49,008 of accrued interest on the Company's convertible
debentures, resulting in a convertible debt principal balance at September 30,
2004 of $2,745,090 (net of an aggregate of $504,910 in debt conversions through
that date).  In connection with the issuance of the additional $2,000,000
convertible debt, the Company recorded a corresponding derivative conversion
option of $3,000,000.  A corresponding pro-rata reduction of $327,172 was made
to the derivative conversion option during the year ended September 30, 2004
(an aggregate of $613,967 since the inception of the loans), bringing the
derivative conversion option balance at September 30, 2005 to $4,117,635.

During the year ended September 30, 2005, the Company issued an additional
$1,400,000 of 8% convertible debentures.  Also, the Company issued
5,610,392,876 shares of common stock in connection with the conversion of
$2,529,378 of principal and $104,410 of accrued interest on the Company's
convertible debentures, resulting in a convertible debt principal balance at
September 30, 2005 of $1,615,712 (net of an aggregate of $3,034,288 in debt
conversions through that date).  A corresponding pro-rata reduction of
$3,794,067 was made to the derivative conversion option during the year ended
September 30, 2005 (an aggregate of $4,408,034 since the inception of the
loans), bringing the derivative conversion option balance at September 30, 2005
to $2,423,568.

<page>F-52

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

The aggregate note discount of $4,650,000 is being amortized over the one-year
and two-year lives of the respective debt instruments.  Of this amount,
$279,115 was amortized during the fiscal year ended September 30, 2002,
$653,720 was amortized during the year ended September 30, 2003, $673,705 was
amortized during the year ended September 30, 2004 and $973,565 was amortized
during the year ended September 30, 2005, while $69,233 in convertible bond
discount was transferred to equity upon conversion of $93,130 in debt principal
during the fiscal year ended September 30, 2002, $52,340 in convertible bond
discount was transferred to equity upon conversion of $193,665 of debt
principal during the fiscal year ended September 30, 2003, $28,571 in
convertible bond discount was transferred to equity upon conversion of $218,115
of debt principal during the year ended September 30, 2004 and $973,565 in
convertible bond discount was transferred to equity upon conversion of
$2,529,378 of debt principal during the year ended September 30, 2005,
resulting in an unamortized convertible debt discount balance of $1,225,759 at
September 30, 2005.

As of September 30, 2005, the Company was indebted for an aggregate of
$1,828,636 including $1,615,712 of principal and $212,924 of accrued interest,
net of prepaid interest of $105,089, on these convertible debentures. To the
extent debentures issued by the Company are converted into shares of common
stock, the Company will not be obligated to repay the amounts converted.

NOTE 11.  SHAREHOLDERS' EQUITY (DEFICIT)

The Company's authorized capital stock consists of 15,000,000,000 shares of
common stock, no par value per share and 50,000,000 shares of preferred stock,
$1.00 par value per share. On August 10, 2005, the Board of Directors and
stockholders approved an increase in the amount of common shares from
7,500,000,000 to 15,000,000,000. Of the 50,000,000 authorized shares of
preferred stock, 1,000,000 shares have been designated as Class A Preferred
Stock and 1,000,000 shares have been designated as Class B Preferred Stock, and
the remaining 48,000,000 shares are undesignated. As of September 30, 2005,
there were 7,388,864,998 shares of the Company's common stock outstanding held
by approximately 800 holders of record and 215,865 shares of the Company's
Class A Preferred Stock outstanding held by one holder of record and no shares
of Class B Preferred Stock outstanding.

Each share of Class A Preferred Stock is entitled to 100 votes per share on all
matters presented to the Company's shareholders for action. The Class A
Preferred Stock does not have any liquidation preference, additional voting
rights, conversion rights, anti-dilution rights or any other preferential
rights.

Each share of Class B Preferred Stock is convertible into 10 shares of the
Company's common stock. The Class B Preferred Stock does not have any
liquidation preference, voting rights, other conversion rights, anti-dilution
rights or any other preferential rights.

In March 2005, the Company issued 4,000,000 shares of common stock for $5,000
in cash.

During October 2004 through September 2005, the Company issued 591,300,000
shares of its restricted common stock to several consultants for retainers,
reduction of debt and accrued liabilities of $473,362.

During December 2004 through August 2005, the Company issued 52,000,000 shares
of its restricted common stock to several consultants for services rendered
having a value of $46,200.

During March 2005 through September 2005, the Company received $1,400,000 in
exchange for 8% convertible debentures.  The debentures were accompanied by
2,800,000 common stock warrants, exercisable over a five year period at $0.0039
per share.  The common stock warrants were valued at $3,756.

<page>F-53

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS September 30, 2005

NOTE 11.  SHAREHOLDERS' EQUITY (DEFICIT)(continued)

During October 2004 through September 2005, the Company issued 5,610,392,876
shares of common stock in connection with the conversion of $2,529,378 of
principal, %3,794,067 of derivative conversion option and $104,410 of accrued
interest, net of $973,565 in convertible debt discount, for total of conversion
$5,454,290 on the Company's convertible debentures.

NOTE 12.  INCOME TAXES

Deferred income taxes consisted of the following at September 30, 2005:

      Deferred tax asset, benefit
      of net operating loss
      carryforward                               $ 10,600,000
        Valuation allowance                       (10,600,000)
                                                  -----------
        Net deferred taxes                       $       -
                                                  ===========

The valuation allowance offsets the net deferred tax asset, since it is more
likely than not that it would not be recovered.  During the year ended
September 30, 2005, the deferred tax asset and valuation allowance were both
increased by $1,000,000.

The Company has approximately $26,600,000 in both federal and California net
operating loss carryforwards.  The federal net operating loss carryforwards
expire as follows: $2,700,000 in the year 2012, $5,300,000 in 2018, $1,200,000
in 2019, $3,500,000 in 2020, $2,300,000 in 2021, $2,200,000 in 2022, $2,100,000
in 2023, $4,200,000 in 2024 and $3,100,000 in 2025.  The California net
operating loss carryforwards expire as follows: $2,700,000 in the year 2004,
$5,300,000 in 2005, $1,200,000 in 2006, $3,500,000 in 2007, $2,300,000 in 2013,
$8,500,000 in 2014 and $3,100,000 in 2015.

<page>F-54

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004

NOTE 13.        COMMITMENTS AND CONTINGENCIES

Employment agreements

The Company has entered into three employment agreements with key individuals,
the terms of the agreements are as follows:

1)      The CEO (and President) of the Company entered into an agreement dated
October 2, 1995 (which was subsequently amended September 1, 1997, September 1,
1999, and March 27, 2000) for a period of five years to April 1, 2005 and
extended to April 1, 2006 and he is entitled to receive a base salary of
$160,000 per year.  The employee shall further receive a bonus, paid at year-
end, equal to 50% of the employee's salary, for continued employment.  The
staying bonus will be compensated for with the Company's restricted common
stock.  He is also granted an option to purchase up to 2,000,000 shares of the
Company's restricted common stock at a price equal to 50% of the average market
value for the prior 30 trading days before exercise.  On March 27, 2000, the
exercise price was adjusted to a flat $0.3864 per share, with an expiration
date of December 2, 2003, which, in turn, has subsequently been extended to
December 2, 2005.

2)      The Secretary and Treasurer of the Company entered into an Agreement
dated October 2, 1995 (which was subsequently amended September 1, 1997,
September 1, 1999, and March 27, 2000), for a period of five years (extended
through April 1, 2005), and she is entitled to receive a base salary of $80,000
per year.  The employee shall further receive a bonus, paid at year- end, equal
to 50% of the employee's salary, for continued employment.  The staying bonus
shall be compensated for with the Company's restricted common stock.  She is
also granted an option to purchase up to 500,000 shares of the Company's
restricted common stock at a price equal to 60% of the average market value for
the prior 180 trading days before exercise.  On March 27, 2000, the exercise
price was adjusted to a flat $0.38 per share, with an expiration date of
December 31, 2004, which was subsequently extended to December 2, 2005.  The
employment agreement with the Secretary/Treasurer was not extended beyond April
1, 2005, so she was not entitled to the bonus for continued employment for
calendar year 2005.  The Secretary/Treasurer continues to act as
Secretary/Treasurer on a consulting basis.

<page>F-55

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 13.        COMMITMENTS AND CONTINGENCIES (continued)

Employment agreements (continued)

3)      The Chief Technical Officer of the Company entered into an agreement
dated August 1, 1998 for an initial term of three years (extended through
August 1, 2003 and again through January 19, 2009), and he is entitled to
receive a base salary of $150,000 per year, with a minimum of $90,000 to be
paid annually in cash and the balance paid (at the option of the Company) in
cash or restricted common stock under rule 144.  The employee shall receive a
hire-on bonus of $75,000 worth of the Company's restricted common stock under
rule 144, at one-half market price.  The employee shall further receive
performance bonuses (paid in restricted common stock, as above) upon successful
completion of specific milestones pertaining to the implementation and
deployment of certain software (up to $862,500).  If substantially all
performance milestones are met, he is also granted an option to purchase up to
500,000 shares of the Company's restricted common stock at a price equal to 60%
of the average market value at the date of purchase.  As of September 30, 2005,
none of the aforementioned milestones had been successfully completed.

Litigation

There have been two recent legal proceedings in which the Company has been a
party:

In February 2002, the Company borrowed $340,000 from the Mercator Momentum Fund
("Mercator") in order to make an initial $100,000 payment to Laurus Master
Fund, Ltd. and to fund continuing development of the Company's H- Net(TM)
system. This loan from Mercator was a short-term loan due May 15, 2002 and
accrues interest at an annual rate of 18%. The loan was secured by shares of
the Company's common stock. As of June 13, 2002, the Company owed Mercator
approximately $243,000 of principal and accrued and unpaid interest under this
loan and was in default in the repayment of this debt.

<page>F-56

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 13.        COMMITMENTS AND CONTINGENCIES (continued)

Litigation (continued)

On June 14, 2002, Mercator transferred collateral in the form of 5,861,814
shares of the Company's common stock into its name as a result of the Company's
default on Mercator's loan. Of the 5,861,814 shares of common stock transferred
into the name of Mercator 3,500,000 shares of the Company's common stock were
issued and pledged as collateral by the Company in February 2002, and 2,361,814
shares of the Company's common stock were issued and pledged as collateral by
Robert Spigno, the Company's Chief Executive Officer, in February 2002.

On June 21, 2002 Mercator filed an action against Conectisys Corporation,
Robert A. Spigno and Patricia A. Spigno in the Superior Court of California,
County of Los Angeles (Case No. BC276283) for breach of promissory note,
foreclosure of security interests and fraud and deceit. Mr. Spigno is the
Chairman of the Board and a director of the Company and is also the Company's
Chief Executive Officer.  Ms. Spigno is the Company's Secretary and Chief
Financial Officer. On July 3, 2002, Mercator filed a first amended complaint in
the Superior Court of California, County of Los Angeles (Case No. BC276283)
adding a claim for common count for money lent. In March 2004, the Company
settled its suit with Mercator for $150,000.

On or about August 18, 2004, Devon Investment Advisors, Ltd., or plaintiff,
filed a Complaint in the Arapahoe County District Court of the State of
Colorado against ConectiSys Corporation. The complaint seeks repayment of
amounts allegedly loaned, plus interest and applicable attorneys' fees.  On
June 21, 2005, the Company was granted summary judgment to dismiss the suit.
The Company submitted affirmative evidence demonstrating the statute of
limitations had passed for recovery of the debt.  Thus, the Company has
recognized a forgiveness of debt of $504,462 for the year ended September 30,
2005.

<page>F-57

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 13.        COMMITMENTS AND CONTINGENCIES (continued)

Litigation (continued)

The Company, during its normal course of business, may be subject from time to
time to disputes and to legal proceedings against it.  Both counsel and
management do not expect that the ultimate outcome of any current claims will
have a material adverse effect on the Company's financial statements.

<page>F-58

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 14.  FORM S-8 FILINGS

In December 2004, the Company filed a registration statement on Form S-8
covering 20,000,000 shares issued to an independent consultant valued at
$20,000.

In April 2005, the Company filed a registration statement on Form S-8
covering 30,000,000 shares issued to an independent consultant valued at
$25,000.

NOTE 15.        STOCK OPTIONS AND WARRANTS

During the fiscal year ended September 30, 1999, the Company issued to a note
holder options to purchase 500,000 shares of the   Company's Class B preferred
stock at an exercise price of $5.00 per share.  As consideration, the Company
reduced its debt to the note holder by $50,000 and received an extension of
time to pay-off its promissory note.  The Company also issued to its CEO
options to purchase another 500,000 shares of the Company's Class B preferred
stock at an exercise price of $5.00 per share in exchange for a reduction in
debt of $50,000.  Total consideration received on the above issued options, as
evidenced by debt reduction, was $100,000.  These options can be exercised
through November 1, 2002 and can also be converted into common stock at the
rate of 10 common shares for each Class B preferred share.  In September 2001,
the exercise price on the Class B preferred stock options was adjusted to
$2.50 per share and the exercise period extended to November 1, 2005. In June
2002, the exercise price on the Class B preferred stock options was adjusted to
$0.50 per share. In January 2004, the exercise price on the Class B preferred
stock options was adjusted to $0.05 per share and the exercise period extended
to November 1, 2009.

The Company's CEO currently owns 215,865 shares of the Company's Class A
preferred stock, of which 15,845 shares were purchased during the year ended
September 30, 2004, and has options to purchase another 234,155 shares for
$1.00 per share through November 1, 2005, which has been extended to November
1, 2009.

The Company has granted various common stock options and warrants to employees
and consultants.  Generally, the options and warrants were granted at
approximately the fair market value of the Company's common stock at the date
of grant and vested immediately, except that when restricted rule 144 common
stock was issued, the options and warrants were granted at an average discount
to market of 50% (ranging from between 20% to 75%).

<page>F-59

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 15.        STOCK OPTIONS AND WARRANTS (continued)

The Company accounts for stock-based compensation under the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25.  Accordingly,
compensation expense for common stock options and warrants issued to employees
for services have been recorded as the difference between the intrinsic value
of those services as measured by the (discounted) market value of the common
stock at the date of grant and the exercise price, with pro forma disclosure
of the excess market value as required by FASB No. 123.  No common stock
options or warrants were granted to employees (including officers) and
directors of the Company during the years ended September 30, 2005 or 2004.

All common stock options and warrants issued to consultants and other non-
employees have been recorded at the fair value of the services rendered and
equivalent to the market value (as discounted, if applicable) of the equity
instruments received as per SFAS No. 123.   The market value was determined by
utilizing an averaging convention of between 5 to 30 days of the closing price
of the Company's common shares as traded on the OTC Bulletin Board (stock
symbol CNES) through the grant date and applying certain mathematical
assumptions as required under the Black-Scholes model.  Such assumptions were
generally the same as those mentioned above when making fair value disclosures
for the issuance of officer and employee stock options.  These included the
risk-free annual rate of return, which ranged from 5% to 6% during the years
ended September 30, 2005 and 2004, and stock volatility, which is now estimated
to be 190%.

At September 30, 2002, the Company had an aggregate of 8,807,154 common stock
options and a total of 1,000,000 Class B preferred stock options recorded as
additional paid-in capital at a value of $1,443,695.  Of the common stock
options and warrants, 2,043,654 had been issued to officers and employees and
the remaining 6,763,500 had been issued to consultants and investors.

In November 2002 through May 2003, 2,500,000 seven-year common stock warrants
were issued to an accredited investor group in connection with a $500,000 12%
convertible debenture financing arrangement (see Note 10 above).  The
allocated cost of these warrants amounted to $9,816, resulting in a recorded
balance of stock options and warrants exercisable at September 30, 2003 of
$1,453,511 (including $100,000 attributable to 1,000,000 Class B preferred
stock options noted above).

As of September 30, 2003, the Company had an additional 4,852,205 common stock
options that had been granted to consultants and investors at exercise prices
ranging from $0.50 to $2.00 per share, expiring from November 1, 2003 through
January 16, 2005.  Because these strike prices were substantially above the
market price of the Company's common stock, no value was attributed to these
options at the time of grant.  During the year ended September 30, 2004,
4,352,205 of these non-valued options expired, leaving a balance at September
30, 2004 of 500,000 options, exercisable at $1.00 per share and expiring
January 16, 2005.  The Company also granted a contingent issuance
to its Chief Technical Officer of 2,000,000 common stock options exercisable
at $0.50 per share and expiring December 31, 2004, which will not vest until
certain milestones have been attained.  These respective common stock options
and contingent issuances have been excluded from the summarized table below.

<page>F-60

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 15.        STOCK OPTIONS AND WARRANTS (continued)

In November 2003 through December 2003, 1,000,000 seven-year common stock
warrants were issued to an accredited investor group in connection with a
$200,000 12% convertible debenture financing arrangement (see Note 10 above).
The allocated cost of these warrants amounted to $945.

In February 2004 and March 2004, 1,500,000 seven-year common stock warrants
were issued to an accredited investor group in connection with a $300,000 12%
convertible debenture financing arrangement (see Note 10 above).  The
allocated cost of these warrants amounted to $1,417.

In April 2004, 750,000 seven-year common stock warrants
were issued to an accredited investor group in connection with a $250,000 12%
convertible debenture financing arrangement (see Note 10 above).  The
allocated cost of these warrants amounted to $1,181.

In June 2004, 1,875,000 seven-year common stock warrants
were issued to an accredited investor group in connection with a $625,000 12%
convertible debenture financing arrangement (see Note 10 above).  The
allocated cost of these warrants amounted to $2,952.

In September 2004, 1,875,000 seven-year common stock warrants
were issued to an accredited investor group in connection with a $625,000 12%
convertible debenture financing arrangement (see Note 10 above).  The
allocated cost of these warrants amounted to $2,952, resulting in a recorded
balance of stock options and warrants exercisable at September 30, 2004 of
$1,462,958 (including $100,000 attributable to 1,000,000 Class B preferred
stock options noted above).

In March through September 2005, 2,800,000 five-year common stock warrants
were issued to an accredited investor group in connection with a $1,400,000 8%
convertible debenture financing arrangement (see NOTE 10 above).  The
allocated cost of these warrants amounted to $3,756, resulting in a recorded
balance of stock options and warrants exercisable at September 30, 2005 of
$1,466,714 (including $100,000 attributable to 1,000,000 Class B preferred
stock options noted above).

During the year ended September 30, 2005, the 500,000 non-valued common stock
options and the 2,000,000 contingently issuable common stock options noted
above both expired.  In addition, 6,300,000 previously-valued common stock
options and warrants expired, consisting of 4,750,000 warrants issued to
convertible note holders at exercise prices ranging from $0.045 to $0.192 per
share,  1,450,000 common stock options issued to a consultant at an exercise
price of $0.13 per share, and 100,000 common stock options issued to a director
at an exercise price of $0.38 per share.

The common stock option activity during the fiscal year ended September 30,
2005 and 2004 is summarized as follows:

                                         Common Stock   Weighted
                                            Options      Average
                                              and       Exercise
                                            Warrants      Price
                                          ----------    --------
Balance outstanding, October 1, 2003      11,307,154       $.204

  Granted                                  7,000,000        .003

  Expired                                   (563,500)       2.00
                                          ----------       -----
Balance outstanding, September 30, 2004   17,743,654       $.068

  Granted                                  2,800,000        .004

  Expired                                 (6,300,000)       .048
                                          ----------       -----
Balance outstanding, September 30, 2005   14,243,654        .056
                                          ==========       =====

<page>F-61

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005

NOTE 15.        STOCK OPTIONS AND WARRANTS (continued)

The following table summarizes information about common stock options at
September 30, 2005:

                                 Outstanding             Exercisable
                            Weighted    Weighted               Weighted
   Range of       Common    Average      Average      Common    Average
   Exercise        Stock      Life      Exercise       Stock   Exercise
    Prices       Options    (Months)      Price       Options    Price
---------------  ---------  -------     --------    ----------  -------
$ .380 - $ .380    500,000        2     $   .380       500,000  $  .380
$ .386 - $ .386  1,443,654        2     $   .386     1,443,654  $  .386
$ .002 - $ .002  2,500,000       52     $   .005     2,500,000  $  .005
$ .002 - $ .002    500,000       62     $   .005       500,000  $  .005
$ .002 - $ .002    250,000       62     $   .005       250,000  $  .005
$ .002 - $ .005    250,000       62     $   .005       250,000  $  .005
$ .002 - $ .005    250,000       63     $   .005       250,000  $  .005
$ .002 - $ .005  1,250,000       65     $   .005     1,250,000  $  .005
$ .002 - $ .005    750,000       67     $   .002       750,000  $  .002
$ .002 - $ .005  1,875,000       69     $   .002     1,875,000  $  .002
$ .002 - $ .005  1,875,000       71     $   .002     1,875,000  $  .002
$ .004 - $ .004    316,066       54     $   .004       316,066  $  .004
$ .004 - $ .004    217,466       54     $   .004       217,466  $  .004
$ .004 - $ .004  1,087,330       54     $   .004     1,087,330  $  .004
$ .004 - $ .004  1,179,138       54     $   .004     1,179,138  $  .004


$ .001 - $0.386 14,243,654       53     $   .056    14,243,654  $  .056
=============== ==========       ==     ========    ==========  =======

NOTE 16.       SUBSEQUENT EVENTS

Subsequent to September 30, 2005, the Company issued approximately 570,000,000
shares of common stock through December 21, 2005 in exchange for reduction of
approximately $60,000 in principal and  approximately $90,000 in derivative
conversion option, totaling approximately $150,000 in convertible debt.

Subsequent to September 30, 2005, the Company signed a three year lease
agreement to relocate its corporate office.

<page>F-62

                         INDEX TO EXHIBITS
Exhibit
Number             Description
-------            -----------
3.1                Articles of Incorporation of the Registrant (4)

3.2                Articles of Amendment to the Articles of Incorporation of
                   the Registrant filed November 7, 1994 (4)

3.3                Articles of Amendment to the Articles of Incorporation of
                   the Registrant filed December 5, 1994 (6)

3.4                Articles of Amendment to the Articles of Incorporation of
                   the Registrant filed October 16, 1995 (4)

3.5                Articles of Amendment to the Articles of Incorporation of
                   the Registrant filed April 18, 2003 (9)

3.6                Articles of Amendment to the Articles of Incorporation of
                   the Registrant filed August 3, 2004 (14)

3.7                Articles of Amendment to the Articles of Incorporation of
                   the Registrant filed August 12, 2005 (*)

3.8                Bylaws of the Registrant (4)

10.1               Employment Agreement dated October 2, 1995 between the
                   Registrant and Robert Spigno (#) (4)

10.2               Amendment to Employment Agreement dated July 24, 1996
                   between the Registrant and Robert Spigno (#) (4)

10.3               Amendment to Employment Agreement dated August 11, 1997
                   between the Registrant and Robert Spigno (#) (4)

10.4               Amendment to Employment Agreement dated September 1, 1999
                   between the Registrant and Robert Spigno (#) (4)

10.5               Amendment to Employment Agreement dated March 27, 2000
                   between the Registrant and Robert Spigno (#) (4)

10.6               Employment Agreement dated August 1, 1998 between the
                   Registrant and Lawrence Muirhead (#) (2)

10.7               Employment Agreement dated October 2, 1995 between the
                   Registrant and Patricia Spigno (#) (4)

10.8               Amendment to Employment Agreement dated July 24, 1996
                   between the Registrant and Patricia Spigno (#) (4)

<page>1

10.9               Amendment to Employment Agreement dated September 1, 1999
                   between the Registrant and Patricia Spigno (#) (4)

10.10              Amendment to Employment Agreement dated March 27, 2000
                   between the Registrant and Patricia Spigno (#) (4)

10.11              ConectiSys Corporation Non-Qualified Stock Option and Stock
                   Bonus Plan effective November 22, 1999 (2)

10.12              Amended Non-Qualified Stock Option and Stock Bonus Plan
                   effective September 11, 2000 (3)

10.13              Amended Non-Qualified Stock Option and Stock Bonus Plan
                   effective September 11, 2001 (1)

10.14              Securities Purchase Agreement dated as of March 29, 2002 by
                   and between the Registrant and the purchasers named therein
                   (4)

10.15              Form of Common Stock Purchase Warrant dated as of March 29,
                   2002 (4)

10.16              Registration Rights Agreement dated as of March 29, 2002 by
                   and between the Registrant and the investors named therein
                   (4)

10.17              Security Agreement dated as of March 29, 2002 between the
                   Registrant and the secured parties named therein (4)

10.18             Form of Secured Convertible Debenture due May 10, 2003 (5)

10.19             Form of Secured Convertible Debenture due June 17, 2003 (7)

10.20             Securities Purchase Agreement dated as of November 27, 2002
                  by and between the Registrant and the purchasers named
                  therein (8)

10.21             Form of Common Stock Purchase Warrant dated as of November
                  27, 2002 (8)

10.22             Registration Rights Agreement dated as of November 27, 2002
                  by and between the Registrant and the investors named therein
                  (8)

10.23             Security Agreement dated as of November 27, 2002 between the
                  Registrant and the secured parties named therein (8)

10.24             Intellectual Property Security Agreement dated as of November
                  27, 2002 between the Registrant and the secured parties named
                  therein (8)

10.25             Form of Secured Convertible Debenture due March 3, 2004 (9)

10.26             Form of Common Stock Purchase Warrant dated as of March 3,
                  2003 (9)

10.27             Form of Secured Convertible Debenture due May 12, 2004 (10)

10.28             Form of Common Stock Purchase Warrant dated as of May 12,
                  2003 (10)

<page>2

10.29             Promissory Note dated September 1, 2003 made by the
                  Registrant in favor of Robert Spigno (#) (13)

10.30             Promissory Note dated September 1, 2003 made by the
                  Registrant in favor of Patricia Spigno (#) (13)

10.31             Promissory Note dated September 1, 2003 made by the
                  Registrant in favor of Black Dog Ranch, LLC (13)

10.32             Letter Agreement dated October 3, 2003 between the Registrant
                  and the parties named therein (11)

10.33             Securities Purchase Agreement dated as of November 25, 2003
                  by and between the Registrant and the purchasers named
                  therein (11)

10.34             Form of Secured Convertible Debenture due November 25, 2004
                  (11)

10.35             Form of Common Stock Purchase Warrant dated as of November
                  25, 2003 (11)

10.36             Registration Rights Agreement dated as of November 25, 2003
                  by and between the Registrant and the investors named therein
                  (11)

10.37             Security Agreement dated as of November 25, 2003 between the
                  Registrant and the secured parties named therein (11)

10.38             Intellectual Property Security Agreement dated as of November
                  25, 2003 between the Registrant and the secured parties named
                  therein (11)

10.39             Form of Secured Convertible Debenture due December 3, 2004
                  (11)

10.40             Form of Common Stock Purchase Warrant dated as of December 3,
                  2003 (11)

10.41             Form of Secured Convertible Debenture due December 31, 2004
                  (11)

10.42             Form of Common Stock Purchase Warrant dated as of December
                  31, 2003 (11)

10.43             Form of Secured Convertible Debenture due February 18, 2005
                  (12)

10.44             Form of Common Stock Purchase Warrant dated as of February
                  18, 2004 (12)

10.45             Amendment No. 1 to Securities Purchase Agreement dated as of
                  March 4, 2004 by and between the Registrant and the persons
                  named therein (13)

10.46             Form of Secured Convertible Debenture due March 4, 2005 (12)

10.47             Form of Common Stock Purchase Warrant dated as of March 4,
                  2004 (12)

10.48             Securities Purchase Agreement dated as of April 19, 2004 by
                  and between the Registrant and the purchasers named therein
                  (13)

10.49             Form of Common Stock Purchase Warrant dated as of April 19,
                  2004 (13)

<page>3

10.50             Registration Rights Agreement dated as of April 19, 2004 by
                  and between the Registrant and the investors named therein
                  (13)

10.51             Security Agreement dated as of April 19, 2004 between the
                  Registrant and the secured parties named therein (13)

10.52             Intellectual Property Security Agreement dated as of April
                  19, 2004 between the Registrant and the secured parties named
                  therein (13)

10.53             Form of Common Stock Purchase Warrant dated as of June 30,
                  2004 (14)

10.54             Form of Common Stock Purchase Warrant dated as of September
                  9, 2004 (15)

10.55             Securities Purchase Agreement dated as of March 17, 2005 by
                  and between the Registrant and the purchasers named therein
                  (16)

10.56             Form of Callable Secured Convertible Note due March 17, 2007
                  (16)

10.57             Form of Stock Purchase Warrant dated as of March 17, 2005
                  (16)

10.58             Registration Rights Agreement dated as of March 17, 2005 by
                  and between the Registrant and the investors named therein
                  (16)

10.59             Security Agreement dated as of March 17, 2005 between the
                  Registrant and the secured parties named therein (16)

10.60             Intellectual Property Security Agreement dated as of March
                  17, 2005 between the Registrant and the secured parties named
                  therein (16)

21.1              Subsidiaries of the Registrant (4)

23.1              Consent of Independent Registered Public Accounting Firm (*)

31.1              Certifications Required by Rule 13a-14(a) of the Securities
                  Exchange Act of 1934, as amended, as Adopted Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002 (*)

32.1              Certification of Chief Executive Officer and Chief Financial
                  Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*)
_________________

(*)   Filed herewith.

(#)   Management contract or compensatory plan, contract or arrangement
      required to be filed as an exhibit.

(1)   Filed as an exhibit to the Registrant's Form S-8 filed with the
      Securities and Exchange Commission on September 21, 2001 (Registration
      No. 333- 69832) and incorporated herein by reference.

(2)   Filed as an exhibit to the Registrant's Form S-8 filed with the
      Securities and Exchange Commission on December 6, 1999 (Registration No.
      333- 92181) and incorporated herein by reference.

<page>4

(3)   Filed as an exhibit to the Registrant's Form S-8 filed with the
      Securities and Exchange Commission on September 22, 2000 (Registration
      No. 333- 46456) and incorporated herein by reference.

(4)   Filed as an exhibit to the Registrant's Form SB-2 filed with the
      Securities and Exchange Commission on April 26, 2002 (Registration No.
      333- 87062) and incorporated herein by reference.

(5)   Filed as an exhibit to the Registrant's Form 10-QSB for the quarter ended
      March 31, 2002 and incorporated herein by reference.

(6)   Filed as an exhibit to the Registrant's Form SB-2/A No. 1 filed with the
      Securities and Exchange Commission on June 6, 2002 (Registration No. 333-
      87062) and incorporated herein by reference.

(7)   Filed as an exhibit to the Registrant's Form 10-QSB for the quarter ended
      June 30, 2002 and incorporated herein by reference.

(8)   Filed as an exhibit to the Registrant's Form 10-KSB for the fiscal year
      ended September 30, 2002 and incorporated herein by reference.

(9)   Filed as an exhibit to the Registrant's Form SB-2/A No. 1 filed with the
      Securities and Exchange Commission on May 2, 2003 (Registration No. 333-
      102781) and incorporated herein by reference.

(10)  Filed as an exhibit to the Registrant's Form 10-QSB for the quarter ended
      June 30, 2003 and incorporated herein by reference.

(11)  Filed as an exhibit to the Registrant's Form 10-KSB for the year ended
      September 30, 2003 and incorporated herein by reference.

(12)  Filed as an exhibit to the Registrant's Form 10-QSB for the quarter ended
      December 31, 2003 and incorporated herein by reference.

(13)  Filed as an exhibit to the Registrant's Form SB-2 filed with the
      Securities and Exchange Commission on June 25, 2004 (Registration No.
      333- 116895) and incorporated herein by reference.

(14)  Filed as an exhibit to the Registrant's Form 10-QSB for the quarter ended
      June 30, 2004 and incorporated herein by reference.

(15)  Filed as an exhibit to the Registrant's Form 10-KSB for the year ended
      September 30, 2004 and incorporated herein by reference.

(16)  Filed as an exhibit to the Registrant's Form 8-K filed with the
      Securities and Exchange Commission on March 21, 2005 and incorporated
      herein by reference.


<page>5

                           SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized as of the 24th day of January, 2006.



                                        CONECTISYS CORPORATION



                                    By: /S/ ROBERT A. SPIGNO
                                        ------------------------------
                                        Robert A. Spigno
                                        Chief Executive Officer (Principal
                                        Executive Officer) and Chairman of the
                                        Board

    In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and as of
the dates indicated.
<table>
Name                                   Title                                  Date
--------------------        --------------------------------------      ------------------
<C>                         <C>                                         <C>
/S/ROBERT A. SPIGNO         Chairman of the Board, Chief                January 24, 2006
-------------------         Executive Officer (Principal Executive
Robert A. Spigno            Officer) and Director


/S/PATRICIA SPIGNO          Acting Chief Financial Officer,             January 24, 2006
------------------          Treasurer and Secretary (Principal
Patricia Spigno             Financial and Accounting Officer)


/S/ LAWRENCE MUIRHEAD       Chief Technology Officer and Director       January 24, 2006
---------------------
Lawrence Muirhead


/S/MELISSA MCGOUGH          Director                                    January 24, 2006
---------------------
Melissa McGough
</table>

<page>6

                             EXHIBITS FILED WITH THIS REPORT

Exhibit
Number   Description
-------  --------------------------

  3.7     Articles of Amendment to the Articles of Incorporation of the
          Registrant filed August 12, 2005

  23.1    Consent of Independent Registered Public Accounting Firm

  31.1    Certifications Required by Rule 13a-14(a) of the Securities Exchange
          Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
          Sarbanes- Oxley Act of 2002

  32.1    Certification of Chief Executive Officer and Chief Financial Officer
          Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
          906 of the Sarbanes-Oxley Act of 2002