<pre>
INDEPENDENT AUDITORS' REPORT




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, 2001, and the related consolidated statements of operations,
changes in shareholders' equity (deficit), and cash flows for the years ended
September 30, 2001 and 2000, and the cumulative period from December 1, 1990
(inception of development stage) through September 30, 2001, 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 generally
accepted in the United States of America.  Those standards require that we plan
and perform the audit 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, 2001, and the
results of their operations and their cash flows for the years ended September
30, 2001 and 2000, and the cumulative period from December 1, 1990 (inception
of development stage) through September 30, 2001, in conformity with accounting
principles generally accepted in the United States of America.

                                    1


The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company has suffered recurring
losses from operations and has a deficiency in working capital at September 30,
2001.  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 1.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




                                         Hurley & Company


Granada Hills, California
December 4, 2001

2

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED BALANCE SHEET
September 30, 2001

ASSETS

Current assets:
Cash and cash equivalents                       $     6,111
     Prepaid expenses and depo                       48,800
                                                 -----------
Total current assets                                 54,911

Property and equipment, net of
     accumulated depreciation of $253,064            71,961

Other assets:
License rights and technology, net of
  accumulated amortization of $421,478                  -
     Debt issuance costs, net of
       accumulated amortization of $32,775              -
                                                  -----------

     Total assets                                 $ 126,872

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

3
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED BALANCE SHEET (continued)
September 30, 2001


LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
  Accounts payable                                   $    100,758
  Accrued compensation                                    541,179
  Due to officers                                         101,209
  Accrued interest                                        171,955
  Other current liabilities                                 5,239
  Notes payable and
    current portion of long-term debt                     384,370
                                                     ------------
Total current liabilities                               1,304,710

Long-term debt, net of current portion                    311,194

Commitments and contingencies                                 -

SHAREHOLDERS' DEFICIT:

Preferred stock - Class A, $1.00 par value;
  1,000,000 shares authorized, 140,020
  shares issued and outstanding                           140,020
Convertible preferred stock - Class B,
  $1.00 par value; 1,000,000 shares
  authorized, -0- shares issued and outstanding               -
Common stock, no par value; 250,000,000
  shares authorized, 32,133,234
  shares issued and outstanding                        17,412,119
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;
    5,607,154 stock options exercisable                 1,275,233
  Beneficial conversion option, debt instrument           155,027
Deficit accumulated during the development stage      (20,571,431)
                                                      ------------
Total shareholders' deficit                            (1,489,032)
                                                      ------------
Total liabilities and
 shareholders' deficit                                $    126,872
                                                      ============
The accompanying notes are an integral part of these consolidated financial
statements.

4
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended September 30, 2001 and 2000,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2001

                               Year          Year      Dec. 1, 1990
                              Ended         Ended       (Inception)
                          September 30, September 30,     Through
                               2001          2000     Sept. 30, 2001
                           -----------   -----------  --------------
Net revenues               $       -     $       -      $    517,460

Cost of sales                   37,930       110,466         567,721
                           -----------   -----------  --------------
Gross loss                (37,930)     (110,466)        (50,261)

Operating expenses:
 General and administrative  1,779,420     3,622,561      15,360,473
 Bad debt expense                  -             -         1,680,522
                           -----------   -----------  --------------
Loss from operations        (1,817,350)   (3,733,027)    (17,091,256)

Other income (expense):
 Settled damages                   -             -            25,000
 Other income                      -          12,072          12,072
 Interest income                     3             3         102,921
 Interest expense             (337,220)      (91,188)     (1,305,065)
 Write-off of
  intangible assets                -             -        (1,299,861)
 Minority interest                 -             -            62,500
                           -----------   -----------  --------------
Net loss                   $(2,154,567)  $(3,812,140) $  (19,493,689)
                           ===========   ===========  ==============


Weighted average number
 of shares outstanding -
 basic and diluted          27,201,207    17,948,218

Net loss per share -
 basic and diluted         $     (.08)   $     (.21)
                           ===========   ===========

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

5
<table>
CONECTISYS CORORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2001


                                                                                                   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.

6
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2001


                                                                                                   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.

7
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2001


                                                                                                   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.

8
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2001


                                                                                                   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.

9
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2001

                                                                                                   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.

10
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2001

                                                                                                   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                -          -    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 consultant
  stock options, 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.
11
</table>
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2001 and 2000,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2001

                                Year         Year         Dec. 1, 1990
                                Ended       Ended         (Inception)
                           September 30, September 30,       Through
                                2001         2000        Sept. 30, 2001
                            -----------  ------------    -------------
Cash flows from operating
 activities:
  Net loss                  $(2,154,567) $ (3,812,140)    $(19,493,689)

Adjustments to reconcile
 net loss to net cash used
 in operating activities:
  Stock issued for services     687,790     2,371,689        7,206,857
  Stock issued for interest         -             -            535,591
  Provision for bad debt
   write-offs                       -             -          1,422,401
  Minority interest                 -             -            (62,500)
  Settled damages                   -             -            (25,000)
  Write-off of intangible
    assets                          -             -          1,299,861
  Depreciation and
    amortization of property     32,077        86,701        1,642,665
  Amortization of debt issuance
    costs and note discount     265,030           -            265,030
  Changes in:
   Accounts receivable              -             -             (4,201)
   Accrued interest
    receivable                      -             -            (95,700)
   Prepaid exp. and deposits    158,546       (18,000)         133,546
   Accounts payable              65,961       (16,305)         311,997
   Accrued compensation         402,823       286,835        1,639,563
   Due to officers               26,209       154,683          736,085
   Accrued interest and
    other current liabilities    24,199        12,676          395,765
                            -----------  ------------    -------------
Total adjustments        1,662,635     2,878,279       15,401,960
                       -----------  ------------    -------------
Net cash used in
 operating activities     (491,932)     (933,861)      (4,091,729)
                       -----------  ------------    -------------
The accompanying notes are an integral part of these consolidated financial
statements.

12
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2001 and 2000,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2001

                                Year         Year         Dec. 1, 1990
                               Ended        Ended          (Inception)
                           September 30, September 30,        Through
                                2001         2000        Sept. 30, 2001
                            -----------  ------------    -------------
Cash flows from investing
 activities:
  Issuance of
   notes receivable         $       -    $        -      $ (1,322,500)
  Costs of license rights
   and technology                  -             -            (94,057)
  Purchase of equipment        (10,734)      (44,933)        (191,843)
                            -----------   -----------    -------------
Net cash used in
 investing activities          (10,734)      (44,933)      (1,608,400)
                            -----------   -----------    -------------
Cash flows from financing
 activities:
  Common stock issuance          78,787       823,975        3,032,172
  Stock warrant issuance         77,228           -             77,228
  Preferred stock issuance          -             -             16,345
  Proceeds from debt, other     386,399       182,000        2,239,090
  Debt issuance costs from
   debt, other                  (32,775)          -            (32,775)
  Proceeds from debt, related       -             -            206,544
  Proceeds from stock purchase      -             -            281,250
  Payments on debt, other       (50,000)      (20,497)         (96,407)
  Payments on debt, related         -             -            (53,172)
  Decrease in stock
   subscription receivable       15,450           -             35,450
  Contributed capital               -             -                515
                            -----------   -----------    -------------
Net cash provided by
  financing activities          475,089       985,478        5,706,240
                            -----------   -----------    -------------
Net increase (decrease) in
  cash and cash equivalents     (27,577)        6,684            6,111

Cash and cash equivalents
  at beginning of period         33,688        27,004              -
                           ------------   -----------    -------------
Cash and cash equivalents
  at end of period         $      6,111   $    33,688    $       6,111
                           ============   ===========    =============
The accompanying notes are an integral part of these consolidated financial
statements.

13
 CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2001 and 2000,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2001

                                Year         Year         Dec. 1, 1990
                               Ended        Ended          (Inception)
                           September 30, September 30,        Through
                                2001         2000        Sept. 30, 2001
                            -----------   -----------    -------------
Supplemental disclosures of
  cash flow information:

  Cash paid for interest    $    33,864   $    45,020    $     209,801
                            ===========   ===========    =============

  Cash paid for income taxes$       800   $     1,600    $       4,050
                             ===========   ===========    =============

Non-cash investing and financing activities:

  Common stock issued
   in exchange for:
    Note receivable         $       -     $       -      $     281,250
    Prepaid expenses        $    48,800   $   133,546    $     182,346
    Property and equipment  $       -     $       -      $     130,931
    Licenses and technology $       -     $       -      $   2,191,478
    Acquisition of remaining
     minority interest in
     subsidiary             $       -     $       -      $      59,247
    Repayment of debt and
     interest               $   472,321   $ 1,548,064    $   3,825,180
    Services and interest   $       -     $       -      $   4,949,192
  Preferred stock issued
   in exchange for:
    Services                $       -     $       -      $      60,000
    Repayment of debt       $       -     $    20,000    $      59,520
  Preferred stock options
   issued in exchange for:
    Repayment of debt       $       -     $       -      $     100,000


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

14
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

Note 1. 	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	Organization

Conectisys Corporation (the "Company") was incorporated under the laws of
Colorado on February 3, 1986, to analyze and invest in business opportunities
as they may occur.

In September 1995, the Company acquired 80% of the outstanding stock of
TechniLink, Inc., a California corporation, and 80% of the outstanding stock of
PrimeLink, Inc., a Kansas corporation, in exchange for an aggregate of 10,000
shares of the Company's common stock.  The acquisitions were accounted for as
purchases.  At the date of acquisition, both PrimeLink and TechniLink were
start-up companies with no material operating activity.

The acquisitions of these companies occurred in connection with the signing of
license agreements (see Note 11 below), whereby the Company issued a total of
35,000 shares of common stock and assumed a loan of $400,000 to acquire the
licenses and the Corporations.  The only major asset acquired from PrimeLink
and TechniLink was the license and technology.  The aggregate transactions were
valued at $1,750,000 (the fair market value of common stock issued) and
recorded in licenses and technology on the balance sheet.

TechniLink has developed the Cube 2001 series for the monitoring and
controlling of various devices in the petroleum and gas industry.  PrimeLink
has developed a product line that uses cutting edge communications to assist in
the monitoring of meters for utility companies and the petroleum industry.
This technology, while eliminating the need for a meter reader, is more
significant in enabling the utility companies to utilize energy conservation
and, in the case of power companies, re-routing of electrical power to areas
where it is needed.  The devices are also in use in vending machines to monitor
sales and functions of the vending machine without the physical inspection
usually needed.

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

On July 22, 1998, the Company acquired the remaining 20% interest In
TechniLink, Inc. for 50,000 shares of the Company's common
15
 CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

 Organization (continued)

Stock, valued at $59,247.

On January 11, 2000, a new Nevada corporation, eEnergyServices.com, Inc., was
formed, which has no net assets and which has not, as yet, commenced
operations.  PrimeLink, Inc. and TechniLink, Inc. are in the process of winding
down.  Upon dissolution, their assets will be distributed to Conectisys
Corporation.  PrimeLink, Inc. will do its future business in California as
United Telemetry Company.

Basis of presentation and going concern uncertainty

The accompanying consolidated financial statements include the accounts and
transactions of Conectisys Corporation, its wholly-owned subsidiaries
TechniLink, Inc., United Telemetry Company, Inc., eEnergyServices.com, 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 in the accompanying
consolidated financial statements 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.

As of September 30, 2001, the Company had a deficiency in working capital of
approximately $1,250,000, and had incurred continual net losses since its
return to the development stage ($2.2 million in 1996, $2.7 million in 1997,
$4.9 million in 1998,  $1.3 million in 1999 (ten months), $3.6 million in 2000,
and $2.2 million in 2001, 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
of the Company's newly licensed products and the raising of capital through the
issuance of common stock and from continued officer advances, which will help
provide the Company with the liquidity necessary to retire its outstanding debt
and meet operating expenses.  The Company has recently received a commitment of
up to $15,000,000 from an investor group through the establishment of an equity
line of credit (see Note 14(a)).  The
16
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

Basis of presentation and going concern uncertainty (continued)

equity line will be implemented once an SB-2 Registration Statement for shares
to be resold by the investor group has been declared effective by the SEC.  In
the longer term, the Company plans to achieve profitability through the
operations of its subsidiaries.  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.

Use of estimates

The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles necessarily 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.

Since the fair value is estimated at September 30, 2001, 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 officer, acurred interest, other

17
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

Fair value of financial instruments (continued)

current liabilities, and notes payable approximate fair value because of the
short maturity of these instruments.  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
HNet technologies since August 1995, and has recently begun deployment of a
pilot project, which did not generate any revenue during the past fiscal year.
Although still a development stage company, the Company plans to engage large-
scale cost reduction runs for the production and subsequent sale of the HNet
System in 2002.

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 five years for vehicles and office
equipment and seven years for furniture and fixtures.

Licensing agreements

The costs of acquiring license rights are capitalized and amortized over the
shorter of the estimated useful life of the license or the term of the license
agreement.  The licenses are being amortized over a period of five years.
During the year ended November 30, 1998, the Company acquired additional
license rights in the amount of $421,478 from TechniLink.  Although the
 18
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

Licensing agreements (continued)

license remains viable, the Company currently lacks the resources to develop
and market it.  Accordingly, during the ten month period ended September 30,
1999, the Company accelerated amortization on this asset by writing it down to
its net realizable value of $40,000, incurring a charge of $283,133. The
balance was fully amortized at September 30, 2000.

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, 2001, no deferred
technology costs were recognized.

Impairment of long-lived assets

	Statement of Financial Accounting Standards No. 121, "Accounting for
	the Impairment of Long-lived Assets and for Long-lived Assets to be
	Disposed Of" (SFAS No. 121) issued by the Financial Accounting
	Standards Board (FASB) has been effective for financial statements for
	fiscal years beginning after December 15, 1995.  The standard
	established new guidelines regarding when impairment losses on long-
	lived assets, which include plant and equipment, certain identifiable
	intangible assets and goodwill, should be recognized and how impairment
	losses should be measured.  The Company wrote-off the balance of the
	carrying value of older licenses and deferred technology during the
	year ended November 30, 1998, as a consequence of persistent
	competitive pressure.  The expense incurred was $632,257.

Accounting for stock-based compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
based Compensation" (SFAS No. 123) 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
19
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

Accounting for stock-based compensation (continued)

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.

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 income tax return.  The Company has adopted
Statement of Financial Accounting Standards ("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.


20
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


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.

New Accounting Pronouncements

Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income," (SFAS No. 130) issued by the FASB is effective for financial
statements with fiscal years beginning after December 15, 1997.  SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements.  The
adoption of SFAS No. 130 did not have a material effect on the Company's
financial position or its results of operations.  Statement of Financial
Accounting Standard No. 131, "Disclosure About Segments of an Enterprise and
Related Information," (SFAS No. 131) issued by the FASB is effective for
financial statements with fiscal years beginning after December 15, 1997.  SFAS
No. 131 requires that public companies report certain information about
operating segments, products, services and geographical areas in which they
operate and their major customers.  Adoption of SFAS No. 131 did not have an
effect on the Company's financial position or its results of operations;
however, additional disclosures may have to be made in the future relating to
the above items. Statement of Financial Accounting Standard No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits," SFAS
No. 132) issued by the FASB is also effective for financial statements with
fiscal years beginning after December 15, 1997.  It revises employers'
disclosure requirements for pensions and other postretirement benefits and
eliminates certain disclosures that are no longer as useful as they were when
SFAS No. 87, SFAS No. 88, and SFAS No. 106 were issued.  Adoption of SFAS No.
132 did not have an effect on the Company's financial position or results of
operations.

 21
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


New accounting pronouncements

The Financial Accounting Standards Board has established the following new
pronouncements, none of which have (will) materially affect the Company: SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities
(effective for years beginning after June 15, 2000)," SFAS No. 134, "Accounting
for Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise - an amendment of SFAS No.
65 (effective for fiscal quarters beginning after December 15, 1998)," SFAS No.
135, "Rescission of SFAS No. 75 and Technical Corrections (effective for fiscal
years ending after December 15, 1999)," SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of SFAS No. 133 - an amendment of SFAS No. 133 (effective June 1999)," SFAS No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of SFAS No. 133 (effective for fiscal years beginning
after June 15, 2000)," SFAS No. 139, "Rescission of SFAS No. 53 and amendments
to SFAS No. 63, 89, and 121 (effective for fiscal years beginning after
December 15, 2000)," SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a replacement of SFAS No.
125 (effective for certain disclosures for fiscal years ending after December
15, 2000)," SFAS No. 141, "Business Combinations," which eliminates the
pooling-of-interests method for business combinations initiated after June 30,
2001, SFAS No. 142, "Goodwill and Other Intangible Assets" (effective for
fiscal years beginning after March 15, 2001), which enhances disclosure for
these assets subsequent to their acquisition, SFAS No. 143, "Accounting for
Asset Retirement Obligations," which is effective for financial statements
issued for fiscal years beginning after June 15, 2002, and SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (effective for
financial statements issued for fiscal years beginning after December 15, 2001,
and interim periods within those fiscal years), which supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" and provides guidance for estimating the recoverability of
the carrying amount of these assets through a probability-weighted cash flow
approach.

22
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 2.	RELATED PARTY TRANSACTIONS

The Company previously leased office space in Agua Dulce, California from S.W.
Carver Corporation, a company owned by a major shareholder of the Company.  The
lease was for a period of one year, renewable annually in April at the option
of the lessee.  Effective April, 1998, the monthly rent was increased from
$2,000 to $2,500.  Around September 1, 2000, the lease was terminated due to
the sale of the building.  At that time the Company moved certain property and
equipment to its Valencia locations.  Rent expense for the year ended September
30, 2000 was $27,500.

NOTE 3.    PREPAID EXPENSES AND DEPOSITS

During the year ended September 30, 2000, the Company issued 462,487 shares of
its common stock as retainers for consulting services ($128,611) and accounting
fees ($4,935).  In addition, the Company recorded the unearned portion of an
engineering contract ($25,000) as a prepaid asset, bringing the total prepaid
expense balance at September 30, 2000 to $158,546.  All these prepaid assets
were expensed during the year ended September 30, 2001.  Another 386,584 shares
of common stock (valued at $43,800) were issued to a consultant as a retainer
at September 30, 2001, for cash payments that were subsequently made by the
consultant to other vendors in October 2001.  An attorney was paid a retainer
in September 2001 for services not yet rendered, bringing the total prepaid
expense balance at September 30, 2001 to $48,800.


NOTE 4.    PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2001 consisted of the following:


Office equipment                             $   273,054
Furniture and fixtures                            16,609
Vehicles                                          35,362
                                             -----------
Total cost                                       325,025
Accumulated depreciation                        (253,064)
                                             -----------
Net book value                               $    71,961
                                             ===========
23
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

NOTE 5.    LICENSE RIGHTS AND TECHNOLOGY

License rights and technology at September 30, 2001 consisted of the following:

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

NOTE 6.   DEBT ISSUANCE COSTS

In April 2001, the Company received proceeds of $300,000 from an investor in
return for a six-month 8% convertible note and 1,000,000 common stock warrants,
exercisable at $0.192 per share over a four-year period.  Debt issuance costs
on this transaction amounted to $32,775, and consisted of $24,000 in finder's
fees, $8,000 in legal fees, a $750 escrow agent fee, and a $25 bank wire fee.
These debt issuance costs were fully amortized as interest expense at September
30,2001.

NOTE 7.    DUE TO OFFICERS

At September 30, 2000, the Company's CEO had made cumulative advances to the
Company of $75,000.  On October 1, 2000, these advances were rolled into a
revolving promissory note, due on demand, at an annual interest rate of 18%.
During the year ended September 30, 2001, additional advances were made in the
amount of $20,000 and note repayments totaled $50,000.  Accrued interest was
determined to be $11,880, bringing the loan balance at September 30, 2001 to
$56,880.  A new promissory note agreement for this amount was drawn up at the
close of business on September 30, 2001, expiring September 1, 2002.  Interest
expense (at 10%) on advances made to the Company by the CEO for the year ended
September 30, 2000 amounted to $21,766, including $10,583 associated with the
assumption of a promissory note due S.W. Carver, which was paid-off in May
2000.  The Company's Secretary/Treasurer advanced the Company approximately
$61,945 during the year ended September 30, 2001, under a separate revolving
promissory note agreement effective October 1, 2000.  The note is a demand
note, which accrues interest at an annual rate of 18%.  Total repayments of the
note amounted to $40,681.  Accrued interest was $4,610 during the year ended
September 30, 2001, bringing the loan balance at year-end to $25,874.  A new
promissory note agreement for this amount was drawn up at the close of business
on September 30, 2001, expiring September 1, 2002.  The Secretary/Treasurer
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.  The total amount due both officers at September
30, 2001 was $101,209.
24
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 8.    NOTES PAYABLE

Notes payable at September 30, 2001 consisted of the following:

      Note payable to Devon Investment Advisors,
      unsecured, due on demand, interest payable
      at an annual rate of 10%                                $241,824

     Note payable to Black Dog Ranch LLC,
      unsecured, due on demand, including interest
      at an annual rate of 18%, expiring
      September 1, 2002                                        142,546

	Note payable to Laurus Master Fund, Ltd.,
      secured by 4,773,208 shares of common stock
      beneficially owned by officers, convertible
      into approximately 3,041,363 shares of common
      stock at the current market price ($0.1233
      at September 30, 2001), with interest payable
      at an annual rate of 8%, initially due
      October 12, 2001, extended to  December 1, 2001            $300,000

      Accrued interest on note payable to Laurus
      Fund, Ltd., secured by 4,773,208 shares of
      common stock beneficially owned by officers,
      convertible into approximately 113,483 shares
      of common stock at the current market price
      ($0.1233 at September 30, 2001)                      11,194  311,194
	                                                  -------- --------
	Total notes payable                                        695,564
	Current portion                                           (384,370)
                                                                   --------
	Long-term portion                                         $ 311,194
                                                                  =========

The maturity of long-term debt at September 30, 2001 was as follows:

	Year ended September 30, 2002                             $ 384,370
	                               Thereafter                   311,194
                                                                  ---------
          Total notes payable                                     $ 695,564
                                                                  =========
25
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 8.    NOTES PAYABLE (continued)

On April 12, 2001, the Company received $300,000 in proceeds from an investor
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 (in accordance with Accounting Principles
Board Opinion No. 14).  A convertible note discount of $77,228 was also
recognized, which was effectively fully amortized at September 30, 2001 as
interest expense.

The note is 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, 2001).  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, 2001, the note
was convertible into approximately 3,041,363 common shares at an exercise price
of approximately $0.0732 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.

A corresponding $152,228 credit was also 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, 2001 was $11,194; for presentation purposes, this 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
($2,799), 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 debt issuance costs associated
with the transaction) amounted to $265,030.
26
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 8.    NOTES PAYABLE (continued)

The maturity date on the $300,000 principal value 8% convertible note,
initially October 12, 2001, has been 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, has been classified as a
long-term liability.


NOTE 9.	SHAREHOLDERS' EQUITY (DEFICIT)

The Company is authorized to issue 50,000,000 shares of $1.00 par value
preferred stock, no liquidation preference.  One million of the preferred
shares are designated as Class A preferred shares which have super voting power
wherein each share receives 100 votes and has anti-dilution rights.  One
million of the preferred shares are designated as Class B preferred shares,
which have conversion rights wherein each share may be converted into ten
shares of common stock.

In October 1999, the Company re-acquired and canceled 17,500 common shares from
the former president of PrimiLink, in return for a $12,000 consulting
agreement.

During the months October 1999 through March 2000, the Company issued a total
of 241,200 shares of its common stock valued at $52,919 in a private placement.
In conjunction with this and previous issuances, certain shareholders received
warrants to purchase 506,500 shares of common stock at $2.00 per share through
November 1, 2001.

During the period October 1999 through September 2000, the Company issued a
total of 2,612,796 shares of its common stock to various consultants for
services rendered and to be rendered (retainer of $128,611) totaling
$1,051,932.

In November 1999, the Company received cash of $66,927 to pay the balance due
on an old subscription for 300,000 shares of the Company's common stock.

In November 1999 through September 2000, the Company issued 240,000 shares of
its common stock to its outside accountant for services rendered and to be
rendered (retainer of $4,935) in the amount of $130,000.
27
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

NOTE 9.	SHAREHOLDERS' EQUITY (DEFICIT) (continued)

In December 1999 and February 2000, the Company issued 879,309 shares of its
common stock to current and former officers for accrued compensation in the
amount of $419,747.

In December 1999, the Company issued an additional 19,804 shares of its common
stock valued at $7,195 (net of 6,283 canceled shares valued at $10,805) in full
settlement of a vendor dispute.

In February and March 2000, a consultant exercised 250,000 common stock options
at $125,000 ($0.50 per share)

In March 2000, the Company issued 20,000 shares of its common stock for $16,000
in legal services.

In March 2000, the Company issued 500,672 shares of its common stock in
subscriptions and private placements totaling $195,000.

In March 2000, the Company issued 135,000 shares of its common stock to an
officer for $89,042 in cash.

In March 2000, the Company issued 563,500 common stock options to a consultant
valued at $214,130.

In March 2000, the Company adjusted the exercise price on 2,600,000 common
stock options previously issued to two officers and an employee, resulting in
an increase in compensation expense of $1,113,610.

In April 2000 through September 2000, the Company issued 1,019,800 shares of
its common stock through cash subscriptions totaling $242,450, for which
$15,450 (representing 61,800 shares) had not yet been collected as of September
30, 2000.

During April 2000 through September 2000, an additional 242,560 shares of the
Company's common stock were issued in a private placement totaling $68,087.  In
conjunction with these and previous issuances, certain shareholders received
warrants to purchase 446,305 shares of the Company's common stock at $2.00 per
share through September 1, 2002.

28
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 9.	SHAREHOLDERS' EQUITY (DEFICIT) (continued)

In May 2000, the Company's CEO exercised 2,056,346 common stock options and
20,000 Class A Preferred stock options in exchange for debt and accrued
compensation aggregating $509,972.  $407,735 was transferred from stock options
exercisable to common stock as a result of this transaction.

In June 2000, a note holder converted $200,000 principal value of debt into
800,000 shares of the Company's common stock (at $0.25 per share).

In August and September 2000, three officers and an employee received 539,389
shares of the Company's common stock as payment for $229,693 of accrued
compensation.

In September 2000, old liabilities of $108,020 were transferred to
shareholders' equity (deficit) in recognition of additional capital.

In September 2000, the Company issued 500,000 common stock options to a
consultant valued at $65,000 (representing a floating exercise price that was
15% below the current market price of the Company's common stock).

In October 2000 through April 2001, the Company issued 250,000 common shares to
two consultants for investor relations services valued at $67,500.

In October 2000 and April 2001, the Company issued 229,388 restricted common
shares to a consultant for prior year's services of $19,200 and current year's
services of $22,080.

During the months of October 2000, April 2001, and July 2001, officers of the
Company were issued a total of 3,764,249 restricted common shares for accrued
compensation of $300,291 and current year's compensation of $160,927.

In November 2000, the Company issued 50,000 restricted common shares valued at
$20,000 to its outside accountant for services rendered.

In December 2000, the Company issued 10,000 shares of common stock to a
consultant for prior year's accrued services of $4,330.
29
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 9.	SHAREHOLDERS' EQUITY (DEFICIT) (continued)

In January 2001, a consultant exercised 400,000 common stock options at $0.085
each; the $34,000 in exercise proceeds were applied against an outstanding note
payable due the consultant.  In connection with this transaction, $52,000 of
additional paid-in capital (recorded as stock options exercisable) was
reclassified to common stock.

In January 2001, an investor purchased 1,000,000 shares of the Company's
restricted common stock for $75,000.

In January 2001, a note holder converted $75,000 principal value of debt for
300,000 restricted shares of the Company's common stock.

In March 2001, 45,500 shares of the Company's common stock were issued to
investors in a private placement for $3,787 in cash.  The shareholders also
received 45,500 common stock warrants, exercisable through March 3, 2003 at
$2.00 per share.

In April 2001, the Company issued 1,000,000 common stock warrants, along with
$300,000 principal value 8% convertible debt.  Of the $300,000 in proceeds,
$77,228 was allocated to the cost of the warrants, which are exercisable at
$0.192 per share over a four-year period.  The balance of the proceeds
($222,772) was allocated to the cost of the debt instrument.

In April 2001, the Company recognized the conversion benefit option on the
$300,000 principal value 8% convertible debt noted above.  The conversion
benefit option was recorded at its intrinsic value of $152,228, representing
the difference between the fair market value of the debt instrument ($375,000)
and the recorded initial cost ($222,772).  At the date of issuance, the
conversion benefit option was based on the conversion of the debt into
2,181,500 common shares.

In April 2001, the Company issued 50,000 restricted shares each (a total of
150,000 shares) as bonuses to a director and two consultants, valued at
$16,982.

In April 2001, the Company issued 50,000 restricted shares of the Company's
common stock to a consultant for services valued at $5,846.
30
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

NOTE 9.	SHAREHOLDERS' EQUITY (DEFICIT) (continued)

In April 2001, the Company issued in aggregate 400,000 restricted shares of the
Company's common stock (100,000 shares each) to four members of its advisory
board for consulting services rendered totaling $46,772.

In June 2001 through September 2001, the Company issued 1,177,012 common shares
to a consultant for services totaling $232,683.

In September 2001, the Company issued the above consultant another 779,347
shares of the Company's common stock valued at $$88,300, of which $44,500
pertained to vendor payables advanced by the consultant, with the balance of
$43,800 being a retainer.  The consultant was also issued 2,000,000 common
stock options, exercisable at $0.13 each over four years and valued at
$115,000.

In September 2001, the Company recognized an additional conversion benefit
option of $2,799, corresponding to a 25% premium on $11,194 in accrued interest
on $300,000 principal value 8% convertible debt.

NOTE 10.  INCOME TAXES

Deferred income taxes consisted of the following at September 30, 2001:

      Deferred tax asset, benefit
      of net operating loss
      carryforward                                $ 6,000,000
	Valuation allowance                        (6,000,000)
                                                   -----------
	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.

The Company has approximately $15,100,000 in respective 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, and $2,400,000 in 2021.  The California net
operating loss carryforwards expire as follows: $2,700,000 in the year 2002,
$5,300,000 in 2003, $1,200,000 in 2004, $3,500,000 in 2005, and $2,400,000 in
2006.
31
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 11.	COMMITMENTS AND CONTINGENCIES

Employment agreements

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

1)	The CEO of the Company entered into an agreement dated October 2, 1995
(which was subsequently amended September 1, 1997 and September 1, 1999) for a
period of five years (to September 1, 2002), 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.  These stock options are fully
vested and irrevocable as of the commencement of the agreement, except in the
event the employee refuses to carry out the reasonable and lawful directions of
the employer or engages in proven fraud or dishonesty in the performance of his
duties, in which case the stock options are automatically revoked upon
discovery.

2)    The former Acting President of the Company entered into an agreement
dated September 11, 2000 for a period of six months through March 11, 2001.
On March 1, 2001 the agreement was extended through September 30, 2001.  He is
entitled to receive a base salary (consulting fees) of $120,000 per year, of
which 50% shall be paid in cash and 50% shall be paid in restricted common
stock at a rate equal to 50% of the average market closing price for the last 5
trading days of each quarter.  He shall be issued 100,000 shares of restricted
common stock as a hiring bonus, at a per share price of $0.28415, equivalent to
50% of the average market closing price for the prior 30 trading days before
the agreement date.  He shall further receive performance bonuses (paid in
restricted common stock) upon successful completion of specific milestones
pertaining to the implementation and deployment of the HNET System.  The
incentive package could net him up to
32
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

NOTE 11.	COMMITMENTS AND CONTINGENCIES (continued)

Employment agreements (continued)

650,000 shares of restricted common stock.  As of September 30, 2001, none of
these milestones were met.  He is also granted an option through March 11, 2001
to purchase up to 100,000 shares of the Company's restricted common stock at a
price of $0.38 per share.  This option has since expired.

3)	  The Secretary and Treasurer of the Company entered into an Agreement
dated October 2, 1995 (which was subsequently amended September 1, 1997 and
September 1, 1999), for a period of three years (extended through September 1,
2003), 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.

4)	  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 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, 2001, none of the aforementioned
milestones had been successfully completed.
33
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 11.	COMMITMENTS AND CONTINGENCIES (continued)

License agreements

The Company has entered into license agreements with the former Presidents of
both PrimeLink and TechniLink.  The license agreements were entered into on
September 20, 1995, in connection with the acquisition of PrimeLink and
TechniLink (see Note 1 above), and are for a period of five years.  As
consideration for these license agreements, the Company issued each licensee
12,500 shares of its restricted common stock and will pay each licensee a
royalty of 5% of net sales of the applicable product.  In addition, in the
event of the sale or merger of TechniLink or PrimeLink, a royalty sum of 20% of
the sales price of the license shall be paid to the licensee; the sales price
shall not be less than $1,500,000.  The licenses were valued at the fair market
value of the stock issued to obtain the licenses.  In 1997, there was a
separation agreement between the President of PrimeLink and the Company,
whereby the President of PrimeLink agreed to forfeit royalty rights and return
all shares of the Company's common stock obtained pursuant to the license
agreement for a $12,000 settlement.

Litigation

There has been one recent legal proceeding in which the Company has been a
party:

The case was brought by Southern Arizona Graphic Associates, Inc. (the
"Plaintiff") against Conectisys Corporation (the "Defendant"), before the
Superior Court of the State of Arizona, County of Pima, Case # 333852.  The
claim was for goods, printing services, and funds advanced by the Plaintiff.
On December 8, 1999, the Company's Board of Directors approved the issuance of
26,087 shares of the Company's common stock valued at $18,000 in full
settlement of the defendant's claim.  The matter was subsequently dismissed
with prejudice.

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.

34
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 12.	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.

The Company's CEO currently owns 140,020 shares of the Company's Class A
preferred stock, of which 20,000 shares were purchased during the year ended
September 30, 2000, and has options to purchase another 9,980 shares for $1.00
per share through December 1, 2001.

The Company accounts for stock-based compensation under the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25.  No common
stock options or warrants were issued to officers and directors of the Company
during the year ended September 30, 2001.  During the year ended September 30,
2000, the Company issued 100,000 common stock options to its acting president
at an exercise price of $0.38 per share, exercisable over a six-month period.
As the exercise price approximated the market price of the common stock on the
date of grant, no compensation cost was recorded in the financial statements.
These common stock options expired on March 11, 2001.  Had compensation cost
for stock options granted during the year ended September 30, 2000 been
determined based on the fair value at the grant dates consistent with the
method of FASB Statement No. 123 (utilizing the Black-Scholes model, assuming a
risk-free annual rate of return of 6% and a volatility factor of 50%), the
Company's net loss would have increased by $25,000.


35
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 12.	STOCK OPTIONS AND WARANTS (continued)

The pro forma effect on the net loss for the year ended September 30, 2000 is
indicated below:

                               As Reported          Pro Forma
                               -----------         -----------
Net loss                       $(3,812,140)        $(3,837,140)

Net loss per share -
 basic and diluted                   $(.21)              $(.21)

Total compensation expense recognized during the year ended September 30, 2000
in connection with options and warrants issued to officers and employees and
granted at exercise prices below fair market value was $1,113,610, attributable
to a reduction in exercise prices on 2,600,000 common stock options, as
described below.

In February 2000, the Company's Board of Directors approved the issuance of a
performance bonus award option of 250,000 shares of common stock to a
consultant under the Company's Non-qualified Stock Option Plan at an exercise
price of $0.50 per share (the approximate market value of the common stock).
These options were all exercised by March 2000.  In March 2000, for services
rendered, the Company issued 563,500 common stock options to a consultant at an
exercise price of $2.00 per share, exercisable over an approximate three-year
period.  In September 2000, the Company also issued 500,000 common stock
options to another consultant at an exercise price set at 15% below the current
market value of the Company's common stock, exercisable over a twelve-month
period.  Under the Black-Scholes model (assuming the same risk-free interest
and volatility factors as noted above), the above stock options were recorded
at a value of $214,130 and $65,000, respectively.

On March 27, 2000, the Company fixed the exercise prices of 2,600,000 common
stock options previously issued at (higher) floating exercise prices to the
Company's CEO, the Company's secretary, and the employee, resulting in an
additional compensation cost of approximately $1,113,610, increasing the total
common stock options exercisable by the same amount.  In May 2000, the
Company's CEO exercised 2,056,346 common stock options,

36
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

NOTE 12.	STOCK OPTIONS AND WARRANTS (continued)

resulting in the transfer of $407,735 of common stock options exercisable to
common stock.  Adding in the value of 1,163,500 common stock options
corresponding to consultant issuances in March 2000 and September 2000 in the
amount of $279,130 (as noted above) brought the balance of common stock options
exercisable at September 30, 2000 to $1,135,005.  The total balance of stock
options exercisable at September 30, 2000 was $1,235,005, including $100,000
attributable to the Company's Class B preferred stock.

In January 2001, a consultant exercised 400,000 of the 500,000 common stock
options that had been issued in September 2000, at an exercise price of $0.085
per share.  The $34,000 proceeds were applied to an outstanding note due the
consultant.  Additionally, $52,000 of additional paid-in capital (recorded as
stock options exercisable) was reclassified to common stock.  The remaining
100,000 common stock options expired in September 2001.

In March 2001, 45,500 common stock warrants were issued to common stock
subscribers, exercisable at $2.00 per share through March 3, 2003.  These
warrants had no material value upon issuance.

In April 2001, 1,000,000 common stock warrants were issued to an investor in
conjunction with a $300,000 principal value 8% convertible note.  The warrants
are exercisable at $0.192 per share over a four-year period, and were valued at
$77,228 (see Note 8 above).

In September 2001, 2,000,000 common stock options were issued to a consultant.
The options are exercisable at $0.13 per share over a four-year period and were
valued under the Black-Scholes model (assuming a 50% volatility factor and a 5%
risk-free rate of return) at $115,000.

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 market
discount of 50% (ranging from between 20% to 75%).  Compensation expense for
options and warrants issued to employees for services

37
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001

NOTE 12.	STOCK OPTIONS (continued)

were 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 in accordance with APB Opinion No. 25, with pro
forma disclosure of the excess market value as required by FASB No. 123.  All
options and warrants issued to consultants and other non-employees were
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 FASB 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 over-the-counter bulletin board (stock
symbol CNES) through the grant date and applying certain mathematical
assumptions as required under the Black-Scholes model.  Such assumptions,
pertaining to the risk-free annual rate of return and stock volatility, were
generally the same as those mentioned above when making fair value disclosures
for the issuance of officer and employee stock options, except that the risk-
free annual rate of return during the latter half of fiscal 2001 was assumed to
be 5% (rather than 6%) due to the general decline of interest rates occurring
throughout the economy and the world.

The common stock option activity during the fiscal years ended September 30,
2001 and September 30, 2000 was as follows:

                                       Common Stock
                                          Options     Weighted
                                            and        Average
                                          Warrants      Price
                                        ----------    --------
     Balance outstanding, October 1, 1999     3,600,000    $    .64
      Granted                                 1,913,500         .86
      Exercised                              (2,306,346)        .27
                                             ----------    --------
     Balance outstanding, September 30, 2000  3,207,154         .69

      Granted                                 3,000,000         .15
      Exercised                                (400,000)        .09
      Expired                                  (200,000)        .23
                                             ----------    --------
     Balance outstanding, September 30, 2001  5,607,154    $    .42
                                             ==========    ========

38
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 12.	STOCK OPTIONS AND WARRANTS (continued)

The following table summarizes information about common stock options at
September 30, 2001:

                          Outstanding                  Exercisable
                           Weighted    Weighted               Weighted
   Range of      Common    Average      Average      Common    Average
   Exercise       Stock      Life      Exercise       Stock   Exercise
    Prices      Options    (Months)      Price       Options    Price
-------------   ---------   -------     -------      --------- -------
$2.00 - $2.00     563,500        17     $  2.00        563,500 $  2.00
$ .39 - $ .39   1,443,654        26     $   .39      1,443,654 $   .39
$ .38 - $ .38     100,000        39     $   .38        100,000 $   .38
$ .19 - $ .19   1,000,000        42     $   .19      1,000,000 $   .19
$ .13 - $ .13   2,000,000        47     $   .13      2,000,000 $   .13
$ .38 - $ .38     500,000        51     $   .38        500,000 $   .38

$ .13 - $2.00   5,607,154        38     $   .42      5,607,154 $   .42
=============   =========        ==     =======      ========= =======


     The above tables exclude 995,055 warrants exercisable at $2.00 per share,
     which have nominal value and which were issued to certain stock
     subscription investors.  Of these warrants, 503,250 expire November 1,
     2001, 446,305 expire September 1, 2002, and 45,500 expire March 3, 2003.
     Another 465,050 common stock warrants were approved for issuance in
     September 2001 pursuant to a stock purchase agreement that was not yet
     effective at year-end.  The tables also exclude a contingent issuance to
     the Company's Chief Technical Officer of 2,000,000 common stock options
     exercisable at $0.50 per share and expiring December 31, 2002.  These
     common stock options will not vest until certain milestones have been
     attained.

39
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 13.	FORM S-8 FILINGS

In December 1999, the Company filed a Form S-8 registration statement for the
Conectisys Corporation Non-Qualified Stock Option and Stock Bonus Plan (the
"Plan").  The purpose of the Plan is to compensate independent consultants of
the Company through the granting of non-qualified stock options (as described
in Sections 83 and 41 of the Internal Revenue Code).  Shares of stock covered
by stock options and stock bonuses consist of 1,000,000 shares of the common
stock of the Company.  The entire registration has been filled.  750,000 shares
were issued to consultants for services rendered in the amount of $323,725 and
250,000 shares were issued at $0.50 per share pursuant to a Performance Award
Option to a consultant.  The entire 250,000 share option was exercised in
February 2000, resulting in a $125,000 cash inflow to the Company.

In September 2000, the Company filed another S-8 registration statement,
amending its Non-Qualified Stock Option and Stock Bonus Plan for independent
consultants to the Company.  The Amended Plan authorizes the issuance of an
additional 1,000,000 shares of common stock.  The purpose of the Amended Plan
is to further compensate independent consultants of the Company through the
granting of non-qualified stock options (as described in Sections 83 and 421 of
the Internal Revenue Code).  Through September 30, 2000, 500,000 shares under
the Amended Plan were issued as retainers on ongoing consulting contracts,
valued at $142,075.  In January 2001, 400,000 shares were issued upon the
exercise of stock options at $0.085, resulting in proceeds of $34,000.  In
March 2001, the remaining 100,000 shares were issued to a consultant for
services in the amount of $30,000.

In September 2001, the Company filed another S-8 registration statement,
amending its Non-Qualified Stock Option and Stock Bonus Plan for independent
consultants to the Company and authorizing the issuance of an additional
3,000,000 shares of common stock. 1,000,000 of these shares were issued to a
consultant as a retainer in September 2001, valued at $113,300.  Another
1,200,000 in retainer shares were issued to the consultant subsequent to year-
end, leaving an unissued balance of 800,000 common shares.

40
CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001


NOTE 14.	SUBSEQUENT EVENTS

(a)	The Company has a financing commitment of up to $15,000,000 from a
group consisting of 3 investors ($5,000,000 each).  The commitment, under an
equity line of credit agreement, will become effective once a registration
statement has been filed with the Securities and Exchange Commission with
respect to the resale of securities to be issued under the agreement.  Per the
arrangement, covering a 36-month period, the investors will periodically
purchase shares of common stock of the Company for cash in amounts determined
by a formula involving average daily price and volume.  The entire 3-year
commitment will be divided into segments of 22 consecutive trading days each,
increased by 1 trading day (up to 5 trading days) for each low volume day, as
described below.  Shares "put" to the investors for each segmented period will
generally range in value from a minimum investment amount of $250,000 to a
maximum investment amount of $500,000.  However, for each low volume day of
less than 100,000 shares, 1/22 of the investor amount will be withdrawn
(reduced) by the investor.  When such reductions occur, the tentative $250,000
minimum investment amount will not apply.  The total number of shares "put" to
each investor shall not exceed 9.99% of the aggregate outstanding common shares
of the Company, unless this limitation is specifically waived by the investor.

(b)  Subsequent to September 30, 2001, a consultant advanced the Company an
additional $104,000 at an annual interest rate of 18% under an existing
revolving note agreement.  The money was used to help fund operations.

(c)	The Company has filed corporate certificates of dissolution with the
California Secretary of State for its 80%-owned subsidiary PrimeLink, Inc. and
its wholly-owned subsidiary TechniLink, Inc.  These will become effective when
valid tax clearance certificates have been issued by the Franchise Tax Board.
Upon dissolution, the assets of the dissolved subsidiaries will be distributed
to the parent corporation.

41