<pre>

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

                                   FORM 10-KSB

(MARK ONE)
 [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 For the fiscal year ended September 30, 2003     OR

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

                         Commission File Number 33-3560D

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

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

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

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

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

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

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

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

The registrant's revenues for the twelve months ended September 30, 2003 were
$0 (zero).

As of February 5, 2004, the aggregate market value of the common equity held
by nonaffiliates of the registrant was approximately $3,455,000. The number of
shares outstanding of the registrant's only class of common stock was
727,978,328 on February 5, 2004.

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

DOCUMENTS INCORPORATED BY REFERENCE: None.

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                                    PART I

ITEM 1.	DESCRIPTION OF BUSINESS.

Company Overview

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

	Since 1995, we have been engaged in the development of a low-cost
automatic meter reading, or AMR, solution. We have developed a low-cost AMR
solution that includes a proprietary system employing specialized hardware and
software that will allow for residential and commercial applications. Our
proprietary system is called H-Net(TM), which is a trademark of ConectiSys.

	We are currently in a cost-reduction phase of the development of our
H-Net(TM) system and have completed the development for commercial production
of our H- Net(TM) 4.0 wireless meter reading product. We have not yet sold any
H- Net(TM) systems and we do not expect any significant sales of our H-Net(TM)
systems until third or fourth quarter fiscal 2004. Accordingly, we have not
earned any significant revenues from the sale of H-Net(TM) systems. We have no
history of revenues and have incurred significant losses since the beginning
of the development of our H-Net(TM) system. We have a significant accumulated
deficit and negative working capital. As a result of our financial condition,
our independent auditors have issued an opinion questioning our ability to
continue as a going concern.

Industry Overview

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

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

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

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

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

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

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

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

o	the failure of existing AMR systems to provide true two-way data
	communications, a result of which those systems are less accurate and

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	do not provide increases in efficiency allowed by two-way data
	communications systems.

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

	According to the Annual Electricity Utility Report for 2000 of the
Energy Information Administration, which compiles official energy statistics
from the United States government, there are approximately 125 million energy
meters in the United States, approximately 12.5 million of which are located
in California. Our goal is to achieve sufficient proliferation of our H-Net(TM)
system so that it is installed in one percent of the energy meters in the
United States or ten percent of the energy meters in the State of California.
Initially, we intend our principal efforts to be focused on the deployment of
our H-Net(TM) system in the State of California.

Our Strategy

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

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

o	Establish outsource manufacturing for full-scale commercial
	production.  We have the means of outsourcing small-scale production
	of the products employed in our H-Net(TM) system. We intend to continue
	the cost- reduction phase of our H-Net(TM) system's development and in
	doing so, we intend to examine various manufacturing alternatives,
	including strategic relationships with manufacturers of energy meters
	and third-party manufacturing of the products employed in our H-Net(TM)
	system for use in energy meters.

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

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

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

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Our H-Net(TM) System

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

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

   H-Net(TM)-Equipped Meters

Our H-Net(TM) system is comprised of the following three principal components
that operate together to provide what we believe to be a comprehensive, low-
cost AMR solution:  H-Net(TM)-equipped meters, base stations and a network
operating center. The first component of our H-Net(TM) system is an electronic
meter put into service at a residence that is equipped with a circuit board
that contains a memory module, microprocessor and a two-way radio transmission
and receiver device that operates in the ISM 900 MHz radio frequency band.
This circuit board may also be retrofitted to some existing meters. We refer
to each energy meter equipped with this circuit board and that is connected to
our AMR network as an H-Net(TM)-equipped meter or a "node." With the
installation of each H-Net(TM)-equipped meter, the existing installed H-
Net(TM)-equipped meters self-configure by transmitting configuration data to
other H-Net(TM)-equipped meters and receiving configuration data from other H-
Net(TM)-equipped meters.

   Base Stations

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

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base stations will deliver energy meter data four times an hour, twenty-four
hours a day to our network operating center.

   Network Operating Center

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

   The H-Net(TM) Network

	The H-Net(TM) network, once deployed, will be comprised of our network
operating center and local networks, which in turn are each comprised of a
base station and H-Net(TM)-equipped meters. Each H-Net(TM)-equipped meter can
communicate with other H-Net(TM)-equipped meters that are up to a distance of
approximately one- quarter mile away. We plan to install a base station for
every H-Net(TM)-equipped meter area.  Our base stations are designed to
receive data transmissions from up to 20,000 H-Net(TM)-equipped meters. We
have designed our system so that a base station can transmit the accumulated
data it has received from the H- Net(TM)-equipped meters in its local network
by telephone every fifteen minutes by using its modem to communicate with our
network operating center. Once the data from the H-Net(TM)-equipped meters
arrives from the base stations at the network operating center, the data can
be assembled into various formats for billing customers as well as for
management of energy purchasing and energy conservation programs.

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

	o	it can consist of a maximum of 20,000 H-Net(TM)-equipped
	 	meters;

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

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

	In addition to the limitations described above, our H-Net(TM)-equipped
meters transmit data using the ISM 900 MHz radio frequency band, which is an
unlicensed frequency band. Because this frequency band is regulated the
H-Net(TM) meter system will require FCC approval for compliance and sales.

   H-Net(TM) Services

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

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utility companies and energy providers as well as to end-users of energy.

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

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

H-Net(TM) Product Development and Pilot Programs

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

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

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

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

	On February 15, 2000, we successfully launched our H-Net(TM) pilot
test program in Los Angeles, California. Although this initial pilot program
was small, it was a working model of our first-generation H-Net(TM) system
that demonstrated the capabilities of our H-Net(TM) system as an AMR solution.
This initial pilot program demonstrated the technology of our H-Net(TM)
system, which remotely acquires near real-time data from an energy meter,
processes this data to show energy usage and cost, and can display this
information on the Internet.

	In September 2000, we successfully launched a second pilot test
program for which we developed a portable wireless network capable of
demonstrating our H- Net(TM) system anywhere in the country.

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	Based upon the success of our early-generation H-Net(TM) systems in
our first two pilot test programs in demonstrating our H-Net(TM) system as a
viable means of remotely reading energy meters and collecting the resulting
data, we successfully launched a third pilot test program in September 2001.

	We are currently running a small residential pilot program of five
meters in Orange County, California with the cooperation of Southern
California Edison. Our H-Net(TM) meters were installed by Southern California
Edison in July 2003 and the pilot program has been recording real-time meter
data seamlessly and error-free for the past seven months. These working meters
can be viewed on our website at http://www.conectisys.com. We have also
initiated another commercial pilot project with Southern California Edison
that we anticipate will begin in the second or third quarters of fiscal 2004.
In addition, we are still actively pursuing and planning other field testing
programs with various other utility companies and energy service providers
across the country.

	We are in the process of evaluating with Lyndis & Gyr, a meter
manufacture, a potential business partnership regarding the implementation of
the H-Net(TM) system into its meters. We have used Lyndis & Gyr meters in all
of our pilot programs and continue to do so in our existing pilot programs.

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

The H-Net(TM) Wireless Network Vision

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

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

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

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

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

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

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

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

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

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

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

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

Government Regulation

	Our H-Net(TM) system is designed to comply with a significant number
of industry standards and regulations, some of which are evolving as new
technologies are deployed. In the United States, our H-Net(TM) system must
comply with various regulations defined by the United States Federal
Communications Commission, or FCC, and Underwriters Laboratories, or other
nationally-recognized test laboratories, as well as industry standards. The
regulatory approval process can be time-consuming and can require the
expenditure of substantial resources. We cannot assure you that the FCC will
grant the requisite approvals for our H-Net(TM) system on a timely basis, or
at all. The failure of our H-Net(TM) system to comply, or delays in
compliance, with the various existing and evolving standards could negatively
impact our ability to proliferate our H-Net(TM) system. Government regulations
regarding the manufacture, sale and implementation of products and systems
similar to our H- Net(TM) system and other data communications devices are
subject to future change. We cannot predict what impact, if any, such changes
may have upon our business.

	We do not anticipate that any government regulations will hamper our
efforts to deploy our H-Net(TM) system. Rather, the restructuring of the
energy market in the United States has required the reading of energy meters
much more frequently than the current practice of once a month, thus making
the physical meter reading techniques currently in use inadequate. Our H-
Net(TM) system is designed to meet various government regulations mandating
frequent meter readings and we are attempting to position ourselves so that we
will be a beneficiary of these mandates. We believe that if we are able to
preserve our relationship with the University of California, Irvine, as a
result of its high-profile Advanced Power and Energy Program, we may be
provided with a significant opportunity to secure government recognition of

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our H-Net(TM) system, and we hope that we can position our H-Net(TM) system to
be referred to in government regulations, or informally, as the standard in
the AMR industry.

Operations

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

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

Anticipated Revenues and Marketing

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

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

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

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

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

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

	o	promotion of unique features and specialized services of our

<page>9

		H-Net(TM) system; and

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

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

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

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

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

Competition

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

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

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

<page>10

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

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

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

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

Customers

	We do not currently have revenue-generating customers because we have
only recently completed the development of our H-Net(TM) system for commercial
production and are currently in a cost-reduction phase of development. We
anticipate that once we commercially produce and install our H-Net(TM) system,
our customers will include energy meter manufacturers, energy service
providers, utility companies and end-users of energy.

Intellectual Property

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

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

Employees

<page>11

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

ITEM 2.	DESCRIPTION OF PROPERTY.

	Our principal center of operations is located at 24730 Avenue
Tibbitts, Suite 130, Valencia, California 91355.  This 1,000 square foot space
is leased for approximately $1,260 per month. We believe that our facilities
are adequate for our needs for the near future.

ITEM 3.	LEGAL PROCEEDINGS.

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

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

	On June 21, 2002, Mercator Momentum Fund filed an action against
ConectiSys Corporation, Robert A. Spigno and Patricia A. Spigno in the
Superior Court of California, County of Los Angeles (Case No. BC276283) for
breach of promissory note, foreclosure of security interests and fraud and
deceit. Mr. Spigno is the Chairman of the Board and a director of our company
and is also our Chief Executive Officer.  Ms. Spigno is our Secretary and
Chief Financial Officer. On July 3, 2002, Mercator Momentum Fund filed a first
amended complaint in the Superior Court of California, County of Los Angeles
(Case No. BC276283) adding a claim for common count for money lent. Mercator
Momentum Fund seeks damages of approximately $243,000 plus approximately $66
in interest per day commencing June 21, 2002 and other compensatory and
punitive damages of unspecified amount. The complaint relates to the loan in
February 2002 from Mercator Momentum Fund of $340,000, as more particularly
described above.

	We believe that Mercator Momentum Fund's claims are without merit
because, among other factors, we have affirmative defenses to those claims,
including usury and the satisfaction of amounts owed under loan from Mercator
Momentum Fund as a result of the enforcement by Mercator Momentum Fund of its
security interest in shares of our common stock. We intend to vigorously
defend against these claims and to pursue appropriate counterclaims against
Mercator Momentum Fund. A trial date in the case has been set for March 1,
2004.

	Due to the size of the amount owed to Mercator Momentum Fund and our
poor financial condition, an adverse decision in the litigation against us
could have a materially negative impact on our financial condition and
business prospects, including the deployment of our H- Net(TM) system.

	In 1997, the Securities and Exchange Commission filed suit in the
United States District Court in the Central District of California against
ConectiSys and other individuals seeking permanent injunctions against all

<page>12

defendants and civil penalties from those individuals based on alleged
violations of Sections 5(a), 5(c) and 17(a)(1)-(3) of the Securities Act of
1933, Sections 15(c) and 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder in connection with the sale of common stock of ConectiSys in
1995 and 1996. Specifically, the Securities and Exchange Commission alleged
that a fraudulent scheme was orchestrated and directed by ConectiSys and the
other defendants to engage in the sale and distribution of unregistered shares
of the common stock of ConectiSys by creating the appearance of an active
trading market for the stock of ConectiSys and artificially inflating the
price of its shares. After the conduct of a trial of this matter without a
jury, the court found in favor of the Securities and Exchange Commission on
the claim that ConectiSys violated Sections 5(a), 5(c), and 17(a) of the
Securities Act of 1933. ConectiSys was not found to have violated section
10(b), 10(b-5), or 15(c) of the Securities Exchange Act of 1934. We were
subsequently ordered to disgorge proceeds totaling $175,000, but appealed the
judgment against us in favor of the Securities and Exchange Commission.

	In March 1999, we agreed with the Securities and Exchange Commission
to the terms of a settlement of its litigation against us. Under the terms of
that settlement, we dismissed our then-pending appeal of a judgment against us
in favor of the Securities and Exchange Commission and accepted a permanent
injunction against us prohibiting actions that would violate federal
securities laws in connection with the offer, purchase or sale of securities.
The Securities and Exchange Commission agreed to waive a requirement of the
judgment under appeal that we disgorge $175,000 of proceeds from the sale of
our common stock due to our inability to pay this amount. On March 9, 1999, an
amended final judgment of permanent injunction and other relief memorializing
these agreements was entered in connection with the execution by us of a
consent to entry of injunction. An injunction of this nature is viewed
unfavorably by analysts and investors and may make it more difficult for us to
raise additional debt or equity financing necessary to run our business.

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

	During the quarter ended September 30, 2003, no matters were submitted
to a vote of the holders of our securities.

                              PART II

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

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

<page>13
                                                        Price Range
                                                       -------------
                                                        High    Low
                                                        ----    ---
Year Ended September 30, 2002:
        First Quarter (October 1 - December 31).... $   0.19   $ 0.095
        Second Quarter (January 1 - March 30)......     0.105    0.07
        Third Quarter (April 1 - June 30)..........     0.10     0.016
        Fourth Quarter (July 1 - September 30).....     0.036    0.007

Year Ended September 30, 2003
        First Quarter..............................  $  0.018   $0.008
        Second Quarter.............................     0.012    0.003
        Third Quarter..............................     0.007    0.0025
        Fourth Quarter.............................     0.0075   0.0025

Year Ending September 30, 2004
	Fisrt Quarter..............................  $  0.0069  $0.0022

	As of February 5, 2004, we had 727,978,328 shares of common stock
outstanding and held of record by approximately 725 shareholders, and the high
and low sale prices of a share of our common stock on the OTC Bulletin Board(R)
on that date were $.005 and $.0045, respectively. Within the holders of record
of our common stock are depositories such as Cede & Co. that hold shares of
stock for brokerage firms which, in turn, hold shares of stock for beneficial
owners.

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

	Our authorized capital stock consists of 1,000,000,000 shares of
common stock, no par value per share, and 50,000,000 shares of preferred
stock, $1.00 par value per share. Of the 50,000,000 authorized shares of
preferred stock, 1,000,000 shares have been designated as Class A Preferred
Stock, or Class A Preferred, 1,000,000 shares have been designated as Class B
Preferred Stock, or Class B Preferred, and the remaining 48,000,000 shares are
undesignated. As of February 5, 2004, there were 727,978,328 shares of common
stock outstanding held by approximately 725 shareholders of record and 215,865
shares of Class A Preferred outstanding held by one holder of record and no
shares of Class B Preferred outstanding. The following is a summary
description of our capital
stock.

   Common Stock

	The holders of outstanding shares of our common stock are entitled to
receive dividends out of assets legally available at times and in amounts as
the board of directors may from time to time determine, subordinate to any
preferences that may be granted to the holders of preferred stock. Holders of
common stock are entitled to one vote per share on all matters on which the
holders of common stock are entitled to vote.

	The common stock is not entitled to preemptive rights and may not be
redeemed or converted. Upon our liquidation, dissolution or winding up, the
assets legally available for distribution to our shareholders are divided
among the holders of the common stock in proportion to the number of shares of
common stock held by each of them, after payment of all of our debts and

<page>14

liabilities and fulfillment of the rights of any outstanding class or series
of preferred stock that has priority to distributed assets. The rights of
holders of common stock are subordinate to those of holders of any series of
preferred stock.

   Preferred Stock

	Preferred stock may be issued from time to time in one or more series,
and our board of directors, without action by the holders of common stock, may
fix or alter the voting rights, redemption provisions, dividend rights,
dividend rates, claims to our assets superior to those of holders of our
common stock, conversion rights and any other rights, preferences, privileges
and restrictions of any wholly unissued series of preferred stock. The board
of directors, without shareholder approval, can issue shares of preferred
stock with rights that could adversely affect the rights of the holders of
common stock. The issuance of shares of preferred stock could adversely affect
the voting power of the holders of common stock and could have the effect of
making it more difficult for a third party to acquire, or could discourage or
delay a third party from acquiring, a majority of our outstanding common
stock.

   Class A Preferred

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

   Class B Preferred

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

   Transfer Agent and Registrar

	The transfer agent and registrar for our common stock is Signature
Stock Transfer, Inc. Its telephone number is (972) 788-4193.

ITEM 6.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

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

Overview

	Since 1995, we have been engaged in the development of a low-cost
automatic meter reading, or AMR, solution. We have developed a low-cost AMR
solution that includes a proprietary system employing specialized hardware and

<page>15

software that will allow for residential and commercial applications. Our
proprietary system is called H-Net(TM), which is a trademark of ConectiSys.

	We are currently in a cost-reduction phase of the development of our
H-Net(TM) system and have completed the development for commercial production
of our H- Net(TM) 4.0 wireless meter reading product. We have not yet sold any
H-Net(TM) systems and we do not expect any significant sales of our H-Net(TM)
systems until third or fourth quarter fiscal 2004. Accordingly, we have not
earned any significant revenues from the sale of H-Net(TM) systems. We have no
history of revenues and have incurred significant losses since the beginning
of the development of our H-Net(TM) system. We have a significant accumulated
deficit and negative working capital. As a result of our financial condition,
our independent auditors have issued an opinion questioning our ability to
continue as a going concern.

Critical Accounting Policies and Estimates

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

	We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our financial
statements.  We have based our financial statements on the assumption of our
operations continuing as a going concern.  As a result, we continue to
depreciate fixed assets and show certain debts as long-term.  We have written-
off the value of technology in prior periods because the realization of that
value was doubtful.  Our compensation of consultants and employees with our
capital stock is recorded at estimated market value.  The volatile nature of
the price of our common stock causes wide disparities in certain valuations.

Comparison of Results of Operations for the Fiscal Years Ended September 30,
2003 and 2002

	We did not generate any revenues for the fiscal years ended September
30, 2003 and September 30, 2002. Cost of sales for fiscal 2003 was $148,675 as
compared to $73,667 for fiscal 2002, an increase of $75,008 or 102%. This
increase in cost of sales primarily was due to an increase in production of
models and prototypes of our H-Net(TM) products that are used for sales and
marketing purposes.

	General and administrative expenses decreased by $436,002 or 24% to
$1,372,655 for fiscal 2003 as compared to $1,808,657 for fiscal 2002. This
decrease in general and administrative expenses primarily was due to a
substantial decrease in consulting fees paid to outside consultants.

	Interest expense increased by $401,136 or 86% to $865,546 during
fiscal 2003 as compared to $464,410 for fiscal 2002. This increase in interest
expense primarily was due to an increase in borrowings under our convertible
debentures and other promissory notes during fiscal 2003.

	Net loss for fiscal 2003 increased by $40,143 or 2% to $2,386,875 as
compared to a net loss of $2,346,732 for fiscal 2002. The decrease in general
and administrative expenses described above were substantially offset by the
significant in interest expense also described above.

<page>16

Liquidity and Capital Resources

	During the twelve months ended September 30, 2002 we financed our
operations solely through private placements of securities. Because we have
only recently completed the development of our H-Net(TM) system for commercial
production and are in a cost-reduction phase of development, we have never
generated any revenue from operations. Our consolidated financial statements
as of and for the years ended September 30, 2003 and 2002 have been prepared
on a going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business.

	As of September 30, 2003, we had negative working capital of
approximately $2,895,000 and an accumulated deficit of approximately
$2,962,000. As of that date, we had approximately $2,300 in cash and cash
equivalents. We had accounts payable and accrued compensation expenses of
approximately $1,388,000 We had other liabilities, including amounts due to
officers, accrued interest, notes and current portion of long term debt of
approximately $1,537,000, including those issued prior to the beginning of
fiscal year 2003. To the extent convertible debentures or promissory notes
that we have issued are converted into shares of common stock, we will not be
obligated to repay the converted amounts.

	Cash used in our operating activities totaled approximately $785,000
for the twelve months ended September 30, 2003 as compared to approximately
$1,012,000 for the twelve months ended September 30, 2002. Cash used in our
investing activities for the twelve months ended September 30, 2003 and
September 30, 2002 was $5,300 and $6,700, respectively.

	Cash provided by our financing activities totaled $738,000 for the
twelve months ended September 30, 2003 as compared to $1,067,000 for the
twelve months ended September 30, 2002. We raised all of the cash provided by
financing activities during the twelve months ended September 30, 2003 from
the issuance of common stock, convertible debentures and/or promissory notes.

	As of March 29, 2003, we were in default in the repayment of principal
of approximately $114,000 plus related interest on our secured convertible
debentures due March 29, 2003; as of May 10, 2003, we were in default in the
repayment of principal of approximately $150,000 plus related interest on our
secured convertible debentures due May 10, 2003; as of June 17, 2003, we were
in default in the repayment of principal of approximately $300,000 plus
related interest on our secured convertible debentures due June 17, 2003; and
as of November 27, 2003 we were in default in the repayment of principal of
approximately $200,000 plus related interest on our secured convertible
debentures due November 27, 2003. As of February 5, 2004, each of these
defaults was continuing and we were in default under convertible debentures in
the aggregate principal amount of approximately $764,000 plus related interest
on those debentures. As of February 5, 2004, we also were in default under our
obligations to register for resale shares of our common stock underlying
certain of our outstanding convertible debentures. In addition, as of February
5, 2004, we also were in default under our obligations to make quarterly
interest payments under all of our outstanding convertible debentures issued
prior to December 31, 2003. As of February 5, 2004, as a result of the above
defaults, the holders of our secured convertible debentures were entitled to
pursue their rights to foreclose upon their security interest in all of our
assets.

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

	In February 2002, we borrowed $340,000 from the Mercator Momentum Fund
in order to make the initial $100,000 payment under our settlement arrangement
with Laurus and to fund continuing development of our H-NetTM system. This
loan from the Mercator Momentum Fund is a short-term loan due May 15, 2002 and

<page>17

accrues interest an annual rate of 18%. The loan was secured by shares of our
common stock. As of June 13, 2002, we owed Mercator Momentum Fund
approximately $243,000 of principal and accrued and unpaid interest under this
loan and were in default in the repayment of this debt.

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

	On June 21, 2002, Mercator Momentum Fund filed an action against
ConectiSys Corporation, Robert A. Spigno and Patricia A. Spigno in the
Superior Court of California, County of Los Angeles (Case No. BC276283) for
breach of promissory note, foreclosure of security interests and fraud and
deceit. Mr. Spigno is the Chairman of the Board and a director of our company
and is also our Chief Executive Officer.  Ms. Spigno is our Secretary and
Chief Financial Officer. On July 3, 2002, Mercator Momentum Fund filed a first
amended complaint in the Superior Court of California, County of Los Angeles
(Case No. BC276283) adding a claim for common count for money lent. Mercator
Momentum Fund seeks damages of approximately $243,000 plus approximately $66
in interest per day commencing June 21, 2002 and other compensatory and
punitive damages of unspecified amount. The complaint relates to the loan in
February 2002 from Mercator Momentum Fund of $340,000, as more particularly
described above.

	We believe that Mercator Momentum Fund's claims are without merit
because, among other factors, we have affirmative defenses to those claims,
including usury and the satisfaction of amounts owed under loan from Mercator
Momentum Fund as a result of the enforcement by Mercator Momentum Fund of its
security interest in shares of our common stock. We intend to vigorously
defend against these claims and to pursue appropriate counterclaims against
Mercator Momentum Fund. A trial date in the case has been set for March 1,
2004.

	Due to the size of the amount owed to Mercator Momentum Fund and our
poor financial condition, an adverse decision in the litigation against us
could have a materially negative impact on our financial condition and
business prospects, including the deployment of our H- Net(TM) system.

	In April 2001, we issued an 8% Convertible Note to Laurus Master Fund,
Ltd., or Laurus, in the principal amount of $300,000. We have been unable to
repay the amounts owed under this note and we have failed to satisfy our
obligation to register for resale the shares of common stock underlying this
note. On February 15, 2002, and as amended on April 2, 2002, we agreed to
terms with Laurus regarding our obligations under this note. Under the terms
of this agreement, we paid to Laurus $100,000 in cash on February 19, 2002 and
$50,000 in cash on April 5, 2002. However, we have not met all the terms of
the February 15, 2002 agreement, as well as, the original terms under the
April 2001 Convertible Note. We are currently working with Laurus to pay down
the remaining balance of the original April 2001 Convertible Note. As of
September 30, 2003, approximately $6,850 of principal and accrued and unpaid
interest under the original note remained outstanding. As of February 5, 2004,
approximately $7,000 of principal and accrued and unpaid interest under this
note remained outstanding.

	In March 2002, we issued $300,000 of our secured convertible
debentures to four accredited investors in the first stage of a three-stage
offering. The secured convertible debentures were due March 29, 2003 and
provide for interest at the rate of 12% per annum. The secured convertible
debentures were accompanied by warrants to purchase up to an aggregate of
1,500,000 shares of common stock. The net proceeds of that offering, after
payment of related expenses, were approximately $225,000. As of February 5,

<page>18

2004, an aggregate of $113,590 of principal plus related accrued and unpaid
interest relating to the debentures issued in March 2002 remained outstanding.

	In May 2002, we issued $150,000 of our secured convertible debentures
to four accredited investors in the second stage of a three-stage offering.
The secured convertible debentures were due May 10, 2003 and provide for
interest at the rate of 12% per annum. The secured convertible debentures were
accompanied by warrants to purchase up to an aggregate of 750,000 shares of
common stock. The net proceeds of that offering, after payment of related
expenses, were approximately $140,000. As of February 5, 2004, an aggregate of
$150,000 of principal plus related accrued and unpaid interest relating to the
debentures issued in May 2002 remained outstanding.

	In June 2002, we issued $300,000 of our secured convertible debentures
to four accredited investors in the third stage of a three-stage offering. The
secured convertible debentures were due June 17, 2003 and provide for interest
at the rate of 12% per annum. The secured convertible debentures were
accompanied by warrants to purchase up to an aggregate of 1,500,000 shares of
common stock. The net proceeds of that offering, after payment of related
expenses, were approximately $237,500. As of February 5, 2004, an aggregate of
$300,000 of principal plus related accrued and unpaid interest relating to the
debentures issued in June 2002 remained outstanding.

	In November 2002, we issued $200,000 of our secured convertible
debentures to three accredited investors in the first stage of a three-stage
offering. The secured convertible debentures were due November 27, 2003 and
provide for interest at the rate of 12% per annum. The secured convertible
debentures were accompanied by warrants to purchase up to an aggregate of
1,000,000 shares of common stock. The net proceeds of that offering, after
payment of related expenses, were approximately $145,000. As of February 5,
2004, an aggregate of approximately $7,350 of principal plus related accrued
and unpaid interest relating to the debentures issued in November 2002
remained outstanding.

	In March 2003, we issued $150,000 of our secured convertible
debentures to three accredited investors in the second stage of a three-stage
offering. The secured convertible debentures are due March 3, 2004 and provide
for interest at the rate of 12% per annum. The secured convertible debentures
were accompanied by warrants to purchase up to an aggregate of 750,000 shares
of common stock. The net proceeds of that offering, after payment of related
expenses, were approximately $100,000. As of February 5, 2004, an aggregate of
$150,000 of principal plus related accrued and unpaid interest relating to the
debentures issued in March 2003 remained outstanding.

	In May 2003, we issued $150,000 of our secured convertible debentures
to three accredited investors in the second stage of a three-stage offering.
The secured convertible debentures are due May 12, 2004 and provide for
interest at the rate of 12% per annum. The secured convertible debentures were
accompanied by warrants to purchase up to an aggregate of 750,000 shares of
common stock. The net proceeds of that offering, after payment of related
expenses, were approximately $100,000. As of February 5, 2004, an aggregate of
$150,000 of principal plus related accrued and unpaid interest relating to the
debentures issued in May 2003 remained outstanding.

	In November 2003, we issued $100,000 of our secured convertible
debentures to three accredited investors in the first stage of a five-stage
offering. The secured convertible debentures are due November 25, 2004 and
provide for interest at the rate of 12% per annum. The secured convertible
debentures were accompanied by warrants to purchase up to an aggregate of
500,000 shares of common stock. The net proceeds of that offering, after
payment of related expenses, were approximately $75,000. The investors may
purchase an aggregate of an additional $200,000 of our secured convertible
debentures and warrants to purchase up to 1,000,000 shares of common stock
through an investment of $50,000 in each of the four months subsequent to
November 2003. As of February 5, 2004, an aggregate of  approximately $100,000

<page>19

of principal plus related accrued and unpaid interest relating to the
debentures issued in November 2003 remained outstanding.

	On December 3, 2003, we issued $50,000 of our secured convertible
debentures to three accredited investors in the second stage of a five-stage
offering. The secured convertible debentures are due December 3, 2004 and
provide for interest at the rate of 12% per annum. The secured convertible
debentures were accompanied by warrants to purchase up to an aggregate of
250,000 shares of common stock. The net proceeds of that offering, after
payment of related expenses, were approximately $31,000. As of February 5,
2004, an aggregate of $50,000 of principal plus related accrued and unpaid
interest relating to the debentures issued on December 3, 2003 remained
outstanding.

	On December 31, 2003, we issued $50,000 of our secured convertible
debentures to three accredited investors in the third stage of a five-stage
offering. The secured convertible debentures are due December 31, 2004 and
provide for interest at the rate of 12% per annum. The secured convertible
debentures were accompanied by warrants to purchase up to an aggregate of
250,000 shares of common stock. The net proceeds of that offering, after
payment of related expenses, were approximately $39,000. As of February 5,
2004, an aggregate of $50,000 of principal plus related accrued and unpaid
interest relating to the debentures issued on December 31, 2003 remained
outstanding.

	As of February 5, 2004, we had a loan outstanding and due on demand in
an amount equal to approximately $8,800. This loan accrues interest at an
annual rate of 18% and was made by Robert Spigno, our President and Chief
Executive Officer and a member of our board of directors. As of that date we
also had a loan outstanding and due on demand in an amount equal to
approximately $56,300. This loan accrues interest at an annual rate of 18% and
was made by Patricia Spigno, our Chief Financial Officer and Secretary.

	As of February 5, 2004, we had a promissory note outstanding and due
September 1, 2004, payable in the approximate amount of $178,860. This note
bears interest at an annual rate of 18%.

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

	As indicated above, our consolidated financial statements as of and
for the years ended September 30, 2003 and 2002 have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. As discussed in this document
and in Note 1 to our consolidated financial statements for the years ended
September 30, 2003 and 2002, we have suffered recurring losses from operations
and at September 30, 2003 had net capital and working capital deficiencies.
These factors, among others, raised substantial doubt about our ability to
continue as a going concern and led our independent certified public
accountants to modify their unqualified opinion to include an explanatory
paragraph related to our ability to continue as a going concern. The
consolidated financial statements included in this document do not include any
adjustments that might result from the outcome of this uncertainty.

	We have been, and currently are, working toward identifying and
obtaining new sources of financing. Deteriorating global economic conditions
may cause prolonged declines in investor confidence in and accessibility to
capital markets. Further, our current secured convertible debenture financing
documents contain notice and right of first refusal provisions and the grant
of a security interest in substantially all of our assets in favor of the
convertible debenture investors, all of which provisions will restrict our
ability to obtain debt and/or equity financing.

	Any future financing that we may obtain may cause significant dilution
to existing stockholders. Any debt financing or other financing of securities
senior to common stock that we are able to obtain will likely include

<page>20

financial and other covenants that will restrict our flexibility. At a
minimum, we expect these covenants to include restrictions on our ability to
pay dividends on our common stock. Any failure to comply with these covenants
would have a material adverse effect on our business, prospects, financial
condition, results of operations and cash flows.

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

	We have not yet sold any H-Net(TM) systems and we do not expect any
significant sales of our H-Net(TM) systems until third or fourth quarter
fiscal 2004. We believe that if we are successful in deploying our H-Net(TM)
system, we will begin to generate revenues from our business activities.

Risk Factors

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

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

	We have no history of revenues, have not been profitable and expect
continued losses. Historically, we have relied upon cash from financing
activities to fund all of the cash requirements of our activities and have
incurred significant losses and experienced negative cash flow. As of
September 30, 2003, we had an accumulated deficit of approximately $2,962,000.
For our fiscal year ended September 30, 2003, we incurred a net loss of
approximately $2,387,000 and for our fiscal year ended September 30, 2002, we
incurred a net loss of approximately $2,347,000. We cannot predict when we
will become profitable or if we ever will become profitable, and we may
continue to incur losses for an indeterminate period of time and may never
achieve or sustain profitability. An extended period of losses and negative
cash flow may prevent us from successfully deploying our H-Net(TM) wireless
meter reading system, or our H-Net(TM) system, and operating or expanding our
business. As a result of our financial condition, our independent auditors
have issued an opinion questioning our ability to continue as a going concern.

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

<page>21

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

	The report of our independent auditors contained in our financial
statements for the years ended September 30, 2003 and 2002 includes a
paragraph that explains that we have incurred substantial losses and have a
working capital deficit. This report raises substantial doubt about our
ability to continue as a going concern. Reports of independent auditors
questioning a company's ability to continue as a going concern are generally
viewed unfavorably by analysts and investors. This report may make it
difficult for us to raise additional debt or equity financing necessary to
continue the development and deployment of our H-Net(TM) system. We urge
potential investors to review this report before making a decision to invest
in ConectiSys.

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

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

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

	We require additional financing. Deteriorating global economic
conditions may cause prolonged declines in investor confidence in and
accessibility to capital markets. Future financing may not be available on a
timely basis, in sufficient amounts or on terms acceptable to us. This
financing may also dilute existing shareholders' equity. Any debt financing or
other financing of securities senior to our common stock will likely include
financial and other covenants that will restrict our flexibility. At a
minimum, we expect these covenants to include restrictions on our ability to
pay dividends on our common stock. Any failure to comply with these covenants
would have a material adverse effect on our business, prospects, financial
condition and results of operations because we could lose any then-existing
sources of financing and our ability to secure new sources of financing may be
impaired.

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

	In 1997, the Securities and Exchange Commission filed suit in the
United States District Court in the Central District of California against
ConectiSys and another individual seeking permanent injunctions and civil
penalties based on alleged violations of Sections 5(a), 5(c) and 17(a)(1)-(3)
of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 thereunder in connection with the sale of common stock of
ConectiSys in 1996. In March 1999, we agreed with the Securities and Exchange
Commission to the terms of a settlement of its litigation against us. Under
the terms of that settlement, we dismissed our then-pending appeal of a
judgment against us in favor of the Securities and Exchange Commission and
accepted a permanent injunction against us prohibiting actions that would
violate federal securities laws in connection with the offer, purchase or sale

<page>22

of securities. The Securities and Exchange Commission agreed to waive a
requirement of the judgment under appeal that we disgorge $175,000 of proceeds
from the sale of our common stock due to our inability to pay this amount. On
March 9, 1999, an amended final judgment of permanent injunction and other
relief memorializing these agreements was entered in connection with the
execution by us of a consent to entry of injunction. An injunction of this
nature is viewed unfavorably by analysts and investors and may make it more
difficult for us to raise additional debt or equity financing necessary to run
our business.

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

	Unpaid principal and accrued and unpaid interest on our convertible
debentures becomes immediately due and payable one year from their date of
issuance, or earlier in the event of a default. The events of default under
the convertible debentures are similar to those customary for convertible debt
securities, including breaches of material terms, failure to pay amounts owed,
delisting of our common stock from the OTC Bulletin Board(R) or failure to
comply with the conditions of listing on the OTC Bulletin Board(R). If we
default on our obligations under the convertible debentures, we may be
required to immediately repay the outstanding principal amounts of the
debentures and any accrued and unpaid interest. The cash required to repay
such amounts would likely have to be taken from our working capital. Since we
rely on our working capital to sustain our day to day operations and the
development of our H-Net(TM) system, a default on the convertible debentures
could have a material and adverse effect on our business, prospects, results
of operations or financial condition.

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

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

	We have a limited operating history of approximately eight years and
	very limited operating experience; therefore, regardless of the
	viability or market acceptance of our H-Net(TM) system, we may be
	unable to achieve profitability or realize our other business goals.

	Our H-Net(TM) system is the result of a new venture. We have been
engaged in research and development of automatic meter reading technologies
since 1995, and we have only recently completed limited pilot programs for our
first and only product, our H-Net(TM) automatic meter reading system. We have
generated no operating revenues from our H-Net(TM) system and have not
commenced any of the widespread marketing and other functions that we
anticipate will be required for successful deployment of our H-Net(TM) system.
Deployment of our H- Net(TM) system will involve large-scale cost-reduction
manufacturing runs for the production of the components employed in our H-
Net(TM) system.  Our success will depend in large part on our ability to deal
with the problems, expenses and delays frequently associated with bringing a
new product to market. Because we have little experience in the deployment and
operational aspects of automatic meter reading technologies, we may be unable
to successfully deploy and operate our H-Net(TM) system even if our H-Net(TM)
system proves to be a viable automatic meter reading solution and achieves

<page>23

market acceptance. Consequently, we may be unable to achieve profitability or
realize our other business goals.

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

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

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

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

	The new and evolving nature of the market that we intend to target
makes an accurate evaluation of our business prospects and the formulation of
a viable business strategy very difficult. Accordingly, our business strategy
may be faulty or even obsolete and as a result, we may not properly plan for
or address many obstacles to success, including the following:

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

<page>24

	Our failure to manage growth effectively could impair our business.

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

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

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

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

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

	As of February 5, 2004, we had outstanding 727,978,328 shares of
common stock, of which all but approximately 530,000,000 shares were
unrestricted under the Securities Act of 1933. As of February 5, 2004, we also
had outstanding options, warrants, promissory notes, convertible debentures
and preferred stock that were exercisable for or convertible into
approximately 818,000,000 shares of common stock, approximately 795,000,000 of
which are covered by registration rights. Sales of a substantial number of
shares of our common stock in the public market, or the perception that sales
could occur, could adversely affect the market price of our common stock. Any
adverse effect on the market price of our common stock could make it difficult
for us to raise additional capital through sales of equity securities at a
time and at a price that we deem appropriate.

<page>25

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

	We have issued various notes, debentures and warrants that are
convertible or exercisable at prices that are subject to adjustment due to a
variety of factors, including fluctuations in the market price of our common
stock and the issuance of securities at an exercise or conversion price less
than the then-current exercise or conversion price of those notes, debentures
or warrants. As of February 5, 2004, the closing price of a share of our
common stock on the OTC Bulletin Board(R) was $.0048. On that date, our notes,
debentures and warrants outstanding with adjustable conversion and/or exercise
prices were convertible or exercisable into approximately 798,000,000 shares
of our common stock. The number of shares of common stock that these
adjustable securities ultimately may be converted into or exercised for could
prove to be greater than this amount if the market price of our common stock
declines. You could, therefore, experience substantial dilution of your
investment as a result of the conversion or exercise of our outstanding
derivative securities.

	The applicable conversion price of our debentures and a convertible
promissory note issued to certain security holders is variable and does not
have a lower-limit, therefore the dilutive effect to our existing security
holders is theoretically limitless. However, because the variable conversion
price of these debentures and convertible promissory note has an upper limit,
an increase in the trading price of a share of our common stock will result in
a limited benefit to existing security holders with respect to the conversion
of these debentures and the convertible promissory note. The following table
sets forth the number of shares issuable upon conversion of the principal
portion of the debentures and the convertible promissory note issued to
certain security holders and outstanding as of February 5, 2004, based upon
the indicated hypothetical trading prices:


                                         Approximate         Percentage
Hypothetical       Conversion           Number of Shares    of Company's
Trading Price      Price (1)              Issuable(2)       Common Stock (3)
-------------     -----------------    -----------------   ---------------
   $.0100             $.004             268,000,000            26.9%
   $.0075             $.003             357,000,000            32.9%
   $.0050             $.002             536,000,000            42.4%
   $.0025             $.001           1,071,000,000            59.5%
_______________

	(1)	The conversion price of our debentures and the convertible
		promissory note is the lower of 40% of the average of the
		three lowest intraday trading prices of a share of our common
		stock on the OTC Bulletin Board(R) during the twenty trading
		days immediately preceding the conversion date, and either (a)
		$.06 for the March, May and June 2002 convertible debentures,
		(b) $.01 for the November 2002, March and May 2003 convertible
		debentures, or (c) $.005 for the November and December 2003
		convertible debentures. As of February 5, 2004, the applicable
		conversion price was $.00155.

	(2)	Our current authorized capital allows us to issue a maximum of
	        1,000,000,000 shares of common stock.

	(3)	Amounts are based on 727,978,328 shares of our common stock
		outstanding as of February 5, 2004 plus the corresponding
		number of shares issuable. Each of the holders of our
		convertible debentures may not convert our debentures into
		more than 4.9% of our then-outstanding common stock; however,
		the holders may waive the 4.9% limitation, thus allowing the

<page>26

		conversion of their debentures into a number of shares of
		common stock in excess of 4.9% of our then-outstanding common
		stock.

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

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

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

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

	Nasdaq and other principal markets require that, to be eligible for
inclusion in the stock market, a company's common stock have a specified
minimum bid price per share. Convertible debenture financings, especially
those with variable conversion prices with low or no low-price limits,
characteristically exert downward pressure on the market for a company's
common stock. This pressure, if applied against the market for our common
stock, may prevent our common stock from being listed on Nasdaq or other
principal markets, but we do not currently satisfy various other listing
requirements and thus are not in a position to have our common stock listed on
any of those markets.

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

	The stock market as a whole and individual stocks historically have
experienced extreme price and volume fluctuations, which often have been
unrelated to the performance of the related corporations. During the three
months ended September 30, 2003, the high and low closing bid prices of our
common stock were $.0069 and $.0022, respectively. The market price of our
common stock may exhibit significant fluctuations in the future response to
various factors, many of which are beyond our control and which include:

<page>27


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

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

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

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

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

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

<page>28


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

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

	Certain provisions of our articles of incorporation and bylaws allow
	concentration of voting power in one individual, which may, among
	other things, delay or frustrate the removal of incumbent directors or
	a takeover attempt, even if such events may be beneficial to our
	shareholders.

	Provisions of our articles of incorporation and bylaws may delay or
frustrate the removal of incumbent directors and may prevent or delay a
merger, tender offer or proxy contest involving ConectiSys that is not
approved by our board of directors, even if those events may be beneficial to
the interests of our shareholders. For example, as of February 5, 2004, Robert
A. Spigno, our Chairman of the Board and Chief Executive Officer, was the
holder of 215,865 shares of our Class A Preferred Stock. As of that date, Mr.
Spigno also held an option, exercisable at $1.00 per share until its
expiration on December 1, 2005, to purchase up to 234,155 additional shares of
our Class A Preferred Stock. Under our articles of incorporation, each share
of Class A Preferred Stock is entitled to 100 votes per share on all matters
presented to our shareholders for action. Consequently, Mr. Spigno may have
sufficient voting power to control the outcome of all corporate matters
submitted to the vote of our common shareholders. Those matters could include
the election of directors, changes in the size and composition of the board of
directors, and mergers and other business combinations involving ConectiSys.
In addition, through his control of the board of directors and voting power,
Mr. Spigno may be able to control certain decisions, including decisions
regarding the qualification and appointment of officers, dividend policy,
access to capital (including borrowing from third-party lenders and the
issuance of additional equity securities), and the acquisition or disposition
of assets by ConectiSys. Also, the concentration of voting power in the hands
of Mr. Spigno could have the effect of delaying or preventing a change in
control of ConectiSys, even if the change in control would benefit our
shareholders, and may adversely affect the market price of our common stock.

          SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

	o	our product development activities;

	o	our business strategy for establishing a presence in the AMR
		market;

	o	anticipated trends in our financial condition and results of
		operations; and

	o	our ability to distinguish ourselves from our current and
		future competitors.

	You can identify forward-looking statements generally by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"intends," "plans," "should," "could," "seeks," "pro forma," "anticipates,"

<page>29

"estimates," "continues," or other variations thereof, including their use in
the negative, or by discussions of strategies, opportunities, plans or
intentions. You may find these forward-looking statements under the captions
"Risk Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and "Description of Business," as well as captions
elsewhere in this report. A number of factors could cause results to differ
materially from those anticipated by forward-looking statements, including
those discussed under "Risk Factors" and "Description of Business."

	These forward-looking statements necessarily depend upon assumptions
and estimates that may prove to be incorrect. Although we believe that the
assumptions and estimates reflected in the forward-looking statements are
reasonable, we cannot guarantee that we will achieve our plans, intentions or
expectations. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in
significant ways from any future results expressed or implied by the forward-
looking statements.

ITEM 7.	FINANCIAL STATEMENTS.

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

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

	None.

<page>30

                               PART III

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

Directors and Executive Officers

	The directors and executive officers of ConectiSys and their ages,
positions, business experience and education as of February 5, 2004 are as
follows:



         Name	        Age	Position

Robert A. Spigno (1)	49	Chairman of the Board, Chief
                                Executive Officer and Director

Lawrence Muirhead (1)	44	Chief Technology Officer and Director

Patricia A. Spigno	46	Chief Financial Officer, Treasurer and
                                Secretary

Melissa McGough (1)	27	Corporate Administrator and Director
_______________

   (1)	Member of Stock Option Committee.

Business Experience

   Directors

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

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

	Melissa McGough has served as a member of our board of directors since
November 1999. Ms. McGough has also been an employee since December 1998 and
whose current responsibilities include public relations and management of our
daily office activities. Prior to that time, Ms McGough was a student.

   Executive Officer

	Patricia A. Spigno has served as our Chief Financial Officer and
Secretary since August 1995 and as a member of our board of directors from
August 1995 until October 1997. Prior to that time, Ms. Spigno was Chief
Financial Officer and the head of administration of S.W. Carver Corp., a
company founded by her and her former husband, Robert A. Spigno. Ms. Spigno

<page>31

has over 22 years of experience in accounting and asset management.

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

   Advisors to Our Board of Directors

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

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

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

	Larry W. Siler has served as an advisor to our board of directors
since April 2001. Mr. Siler is currently Manager of Fuel Transportation for
Edison Mission Energy in Chicago, Illinois. Mr. Siler was the Coal Supply
Superintendent for Commonwealth Edison Company in Chicago from 1988 until
1999. From 1986 until 1988 Mr. Siler was a management and engineering
consultant in Austin, Texas. He also held positions as the Fuels Manager,
Engineering Supervisor, Staff Engineer and Fuels Engineer for the Lower
Colorado River Authority from 1973 until 1986.

<page>32

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

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

Section 16(a) Beneficial Ownership Reporting Compliance

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

	Based solely upon a review of copies of these reports furnished to us
during 2003 and thereafter, or written representations received by us from
reporting persons that no other reports were required, we believe that all
Section 16(a) filing requirements applicable to our reporting persons during
2003 were complied with, except as described below.

	The following individuals neglected to prepare and timely file the
following numbers of Forms 4 to report the following numbers of transactions:
Mr. Robert Spigno - 2 reports, 2 transactions; Mr. Lawrence Muirhead - 1
report, 1 transaction; and Melissa McGough - 1 report, 1 transaction.

<page>33

ITEM 10.	EXECUTIVE COMPENSATION.

Compensation of Executive Officers

	The Summary Compensation Table below provides information concerning
the annual and long-term compensation for services in all capacities to
ConectiSys of our Chief Executive Officer, our Chief Technology Officer and
our Chief Financial Officer, or the named executives, during the years ended
September 30, 2003, 2002 and 2001. There were no other executive officers
whose annual salary and bonus compensation exceeded $100,000 during the year
ended September 30, 2003.

<Table>

                                   SUMMARY COMPENSATION TABLE

                                                             Long-Term
                                                            Compensation
                                                            ------------
                                                              Awards
                                                            ------------
                                Annual Compensation          Securities
     Name and                                                Underlying      All Other
     Principal Position       Year     Salary($) Bonus($)(1)  Options(#)   Compensation ($)
     -------------------      -------  --------- ----------- ------------  ----------------
     <C>                      <C>      <C>       <C>         <C>           <C>
     Robert A. Spigno,        2003     $160,000  $80,000        --               --
     Chief Executive Officer  2002     $160,000  $80,000        --               --
                              2001     $160,000  $80,000      6,453,634          --

     Lawrence Muirhead,       2003     $150,000    --           --               --
     Chief Technology Officer 2002     $150,000    --           --               --
                              2001     $150,000    --         2,000,000          --

     Patricia A. Spigno,      2003     $ 80,000  $40,000        --               --
     Chief Financial Officer  2002     $ 80,000  $40,000        --               --
     and Secretary            2001     $ 80,000  $40,000       500,000           --
_______________

	(1)	Amounts represent bonus earned, but deferred and recorded on
		the books and records of ConectiSys as accrued compensation.
		Amounts are payable in common stock of ConectiSys based on a
		conversion price equivalent to 50% of the average closing bid
		and ask prices of a share of ConectiSys common stock for the
		30 days prior to the end of the year in which such bonus was
		earned.
</table>
Stock Option Grants in 2003

	In fiscal 2003, no options or stock appreciation rights were granted
to the named executives.

<page>34

Option Exercises and Fiscal Year-End Values

	The following table sets forth the number of shares acquired and value
realized upon exercise of options during the fiscal year ended September 30,
2003 and the number of exercisable and unexercisable in- the-money stock
options and their values at September 30, 2003 for the named executives. An
option is "in-the-money" if the fair market value for the underlying
securities exceeds the exercise price of the option.

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

                                                              Number of Securities Underlying      Value ($)of Unexercised
                                Shares                               Unexercised Options           In-the-Money Options at
                                Acquired on     Value                September 30, 2002             September 30, 2002 (1)
     Name                       Exercise       Realized ($)   Exercisable(#) Unexercisable(#)    Exercisable    Unexercisable
     ---------------------      ------------    ------------   -------------- ----------------  --------------  ----------------
     <C>                        <C>             <C>            <C>            <C>               <C>             <C>
     Robert A. Spigno              ---             ---          6,453,634          ---               ---             ---
     Lawrence Muirhead             ---             ---             ---          2,000,000            ---             ---
     Patricia Spigno               ---             ---           500,000           ---               ---             ---
	_______________
	(1)	The closing sale price of our common stock on the OTC Bulletin Board(R) as of September 30, 2003 was $.0044.

</table>

Long-Term Incentive Plan Awards

	In fiscal 2003, no awards were given to named executives under long-
	term incentive plans.

Compensation of Directors

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

	The advisors to our board of directors each receive 250,000 shares of
common stock as annual compensation for their advisory services.

Repricing of Options and SARs

	Except as specified below, no adjustments to or repricing of stock
options or stock appreciation rights previously awarded to the named
executives occurred in fiscal 2003.

	On December 30, 2003, we repriced Robert Spigno's fully-vested option
to purchase up to 500,000 shares of Class B Preferred Stock from $.50 per
share to $.05 per share.

ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

	The following table sets forth, as of February 5, 2004, certain
information with respect to (i) each director of our company, (ii) the named
executives, and (iii) all directors and executive officers of our company as a
group, and (iv) each person known to our company to be the beneficial owner of
more than 5% of our common stock. The information with respect to each person
specified is as supplied or confirmed by such person or based upon statements
filed with the Commission.

<page>35
<Table>
Name and Address of             Title of        Amount and Nature of
of Beneficial Owner (1)(2)        Class         Beneficial Ownership(2)     Percent of Class)
--------------------------     ---------       -------------------------   ------------------
<C>                             <C>             <C>                          <C>
Robert A. Spigno                Common                31,123,164(3)                4.16%
                                Class A Preferred        450,020(4)              100.00%
                                Class B Preferred        500,000(5)              100.00%

Patricia A. Spigno              Common                12,267,340(6)                1.66%

Lawrence Muirhead               Common                   971,393                    *

Melissa McGough                 Common                   454,138(7)                 *

All directors and executive
officers as a group
(4 persons)                     Common                44,816,035(8)                 5.92%
                                Class A Preferred        450,020(4)               100.00%
                                Class B Preferred        500,000(5)               100.00%
	_______________
	*	Less than 1.00%

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

	(2)	Beneficial ownership is determined in accordance with the
		rules of the Securities and Exchange Commission and generally
		includes voting or investment power with respect to
		securities. Except as indicated by footnote, and subject to
		community property laws where applicable, the persons named in
		the table above have sole voting and investment power with
		respect to all shares of common stock shown as beneficially
		owned by them. Shares of common stock subject to options
		currently exercisable, or exercisable within 60 days after
		February 5, 2004, are deemed to be outstanding in calculating
		the percentage ownership of a person or group but are not
		deemed to be outstanding as to any other person or group.

	(3)	Includes 1,443,654 shares underlying options and 5,000,000
		shares issuable upon conversion of Class B Preferred Stock.
		Mr. Spigno holds an option to purchase Class B Preferred
		Stock. Also includes 19,686,954 shares issuable in connection
		with payment of annual bonuses for fiscal years 2000 through
		2003.

	(4)	Includes an option to purchase up to 234,155 shares of Class A
		Preferred Stock.

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

	(6)	Includes 500,000 shares underlying options. Also includes
		9,843,477 shares issuable in connection with payment of annual
		bonuses for fiscal years 2000 through 2003.

	(7)	Includes 100,000 shares underlying options.

	(8)	Includes 2,043,654 shares underlying options and 5,000,000
		shares issuable upon conversion of Class B Preferred Stock.
		Also includes 29,530,431 shares issuable in connection with
		payment of annual bonuses for fiscal years 2000 through 2003.
</table>
<page>36

Equity Compensation Plan Information

	The following table gives information about our common stock that may
be issued upon the exercise of options, warrants and rights under our Amended
Non-Qualified Stock Option and Stock Bonus Plan as well as stock options,
warrants and rights issued outside of any formal plan as of September 30,
2003.

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

Equity compensation
plans not approved
by security holders  8,807,154(2)               $0.28                  N/A

Total                8,807,154                  $0.28                  N/A
	_______________
	(1)	Number of shares is subject to adjustment for changes in
		capitalization for stock splits, stock dividends and similar
		events.

	(2)	Represents 5,000,000 shares of common stock underlying stock
		options, warrants and rights issued under our Amended Non-
		Qualified Stock Option and Stock Bonus Plan and 3,807,154
		shares of common stock underlying stock options, warrants and
		rights issued outside of any formal plan.

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

ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

	In October 1995, our board of directors set the compensation for
Robert A. Spigno, our Chairman of the Board and Chief Executive Officer. Mr.
Spigno has executed an employment agreement with ConectiSys effective October
2, 1995, as amended by employment agreement amendments effective July 24,
1996, August 11, 1997, September 1, 1999 and March 27, 2000 that provide for
annual salary of $160,000 and a performance bonus of up to 50% of Mr. Spigno's
annual salary. On March 27, 2000, Mr. Spigno was granted a fully-vested five-
year option to purchase up to 2,000,000 shares of common stock at an exercise
price of $.3864 per share, which was 50% of the closing price of a share of
our common stock on that date. On September 30, 1999, Mr. Spigno was granted a
fully-vested three-year option to purchase up to 500,000 shares of Class B
Preferred Stock at an exercise price of $5.00 per share, which is $.50 per
share of common stock on an as-converted basis, which was the closing price of
a share of our common stock on that date. On September 11, 2001, the
expiration date of this option was extended to November 1, 2004 and the
exercise price per share was reduced to $2.50 per share, which is $.25 per
share of common stock on an as- converted basis, which was the closing price
of a share of our common stock on that date. On October 21, 2001 Mr. Spigno
was granted a fully-vested three- year option to purchase up to 310,000 shares
of Class A Preferred Stock at an exercise price of $1.00 per share, which was
the estimated value of the Class A Preferred Stock on that date. On June 28,
2002, we repriced Mr. Spigno's fully-vested option to purchase up to 500,000
shares of Class B Preferred Stock from an exercise price of $2.50 per share to
an exercise price of $.50 per share. The exercise price of $.50 per share
equates to $.05 per share of common stock if the Class B Preferred Stock were

<page>37

converted, which was in excess of the price of our common stock on that date.

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

	In October 1995, our board of directors set the compensation for
Patricia A. Spigno, our Chief Financial Officer and Secretary. Ms. Spigno has
executed an employment agreement with ConectiSys effective October 2, 1996, as
amended by employment agreement amendments effective July 24, 1996, September
1, 1999 and March 27, 2000 that provide for annual salary of $80,000 and a
performance bonus of up to 50% of Ms. Spigno's annual salary. On March 27,
2000, Ms. Spigno was granted a fully-vested two-year option to purchase up to
500,000 shares of common stock at an exercise price of $.38 per share, which
was 50% of the closing price of a share of our common stock on that date.

	At September 30, 2000, Robert Spigno had made cumulative cash advances
to ConectiSys of $75,000.  On October 1, 2000, these advances were
memorialized in a revolving promissory note, executed by ConectiSys in favor
of Mr. Spigno, due on demand, at an annual interest rate of 18%.  During the
year ended September 30, 2001, additional cash advances were made by Mr.
Spigno under this note in the amount of $20,000 and we repaid an aggregate of
$50,000 to Mr. Spigno on this note.  As of September 30, 2001, total accrued
and unpaid interest was $11,880, resulting in a $56,880 balance under the
note.  On September 30, 2001, we executed a new promissory note due September
1, 2002 initially in that amount.  For the year ended September 30, 2000, we
incurred interest expenses in the amount of $21,766, including $10,583
associated with the assumption by Mr. Spigno of a promissory note due S.W.
Carver Corporation, which was repaid in May 2000. On September 1, 2002, we
executed a new promissory note due September 1, 2003 initially in the
aggregate amounts owed to Mr. Spigno as of that date.  As of September 30,
2003, approximately $36,920 of principal and accrued and unpaid interest under
the original note remained outstanding to Mr. Spigno. As of February 5, 2004,
approximately $8,800 of principal and accrued and unpaid interest under this
note remained outstanding. The loan balance is currently due on demand and
continues to accrue interest at the annual rate of 18%.

	At September 30, 2000, Patricia Spigno had made cumulative cash
advances to ConectiSys of $61,945,  under a revolving promissory note
effective October 1, 2000, executed by ConectiSys in favor of Ms. Spigno, due
on demand, at an annual interest rate of 18%.  During the year ended September
30, 2001, we repaid an aggregate of $40,681 to Ms. Spigno on this note.  As of
September 30, 2001, total accrued and unpaid interest was $4,610, resulting in
a $25,874 balance under the note.  On September 30, 2001, we executed a new
promissory note due September 1, 2002 initially in that amount.  Ms. Spigno
also borrowed on a personal credit card for our benefit in the amount of
$18,455, bringing our total obligation due Ms. Spigno at September 30, 2001 to
$44,329. During the year ended September 30, 2002, additional loan advances
from Ms. Spigno were $19,500 and accrued interest was $2,269 and we repaid
$39,500, resulting in an aggregate loan balance due at September 30, 2002 of
$8,143. The aggregate amount due Ms. Spigno under these arrangements as of
September 30, 2003 was $52,165. As of February 5, 2004, approximately $56,295
of principal and accrued and unpaid interest under this note remained
outstanding. The loan balance is currently due on demand and continues to
accrue interest at the annual rate of 18%.

<page>38

	On March 27, 2000, Robert Spigno was granted a fully-vested five-year
option to purchase up to 2,000,000 shares of common stock at an exercise price
of $.3864 per share, which was 50% of the closing price of a share of our
common stock on that date.

	On March 27, 2000, Patricia Spigno was granted a fully-vested two-year
option to purchase up to 500,000 shares of common stock at an exercise price
of $.38 per share, which was 50% of the closing price of a share of our common
stock on that date.

	On May 22, 2000, we issued 2,056,346 shares of common stock and 20,000
shares of Class A Preferred Stock to Robert Spigno upon the exercise of
options in exchange for an aggregate exercise price of $509,972 represented by
the cancellation of debt and accrued compensation.

	On July 31, 2000 we issued 34,857 shares of common stock valued at
$10,962 to Robert Spigno as compensation for services rendered.

	On July 31, 2000 we issued 89,886 shares of common stock valued at
$28,269 to Lawrence Muirhead as compensation for services rendered.

	On July 31, 2000 we issued 9,157 shares of common stock valued at
$2,880 to Melissa McGough as compensation for services rendered.

	On July 31, 2000 we issued 357,968 shares of common stock valued at
$112,581 to Patricia Spigno as compensation for services rendered.

	On September 28, 2000 we issued 47,521 shares of common stock valued
at $75,083 to Lawrence Muirhead as a hiring bonus that was due Mr. Muirhead
but that had not yet been paid.

	On October 30, 2000 we issued 67,959 shares of common stock valued at
$14,815 to Robert Spigno as compensation for services rendered.

	On October 30, 2000 we issued 60,868 shares of common stock valued at
$13,269 to Lawrence Muirhead as compensation for services rendered.

	On October 30, 2000 we issued 12,950 shares of common stock valued at
$2,823 to Patricia Spigno as compensation for services rendered.

	On April 23, 2001 we issued 2,293,855 shares of common stock valued at
$247,102 to Robert Spigno as compensation for services rendered.

	On April 23, 2001 we issued 226,118 shares of common stock valued at
$30,450 to Lawrence Muirhead as compensation for services rendered.

<page>39

	On April 23, 2001 we issued 333,343 shares of common stock valued at
$45,000 to our then president, Rodney Lighthipe as compensation for services
rendered.

	On April 23, 2001 we issued 50,000 shares of common stock valued at
$5,290 to Melissa McGough as a bonus.

	On April 23, 2001 we issued 452,954 shares of common stock valued at
$48,943 to Patricia Spigno as compensation for services rendered.

	On July 20, 2001 we issued 79,651 shares of common stock valued at
$14,815 to Robert Spigno as compensation for services rendered.

	On July 20, 2001 we issued 89,946 shares of common stock valued at
$16,729 to Lawrence Muirhead as compensation for services rendered.

	On July 20, 2001 we issued 120,968 shares of common stock valued at
$22,500 to our then president, Rodney Lighthipe as compensation for services
rendered.

	On July 20, 2001 we issued 25,637 shares of common stock valued at
$4,768 to Patricia Spigno as compensation for services rendered.

	On September 11, 2001, Robert Spigno was granted a fully-vested option
to purchase up to 500,000 shares of Class B Preferred Stock at an exercise
price of $2.50 per share. This equates to $.25 per share of common stock if
the Class B Preferred Stock were converted, which was the price of our common
stock on that date.

	On October 21, 2001, Mr. Spigno was granted a fully-vested option to
purchase up to 310,000 shares of Class A Preferred Stock at an exercise price
of $1.00 per share, which was the estimated value on that date.

	On December 19, 2001, Mr. Spigno exercised a portion of an option to
purchase 60,000 shares of Class A Preferred Stock for $1.00 per share, which
was the estimated value on that date.

	In June 2002, Laurus Master Fund transferred into its name 519,865
shares of our common stock pledged by Lawrence Muirhead as security for a loan
made by Laurus to us in April 2001 in the original principal amount of
$300,000.

	In June 2002, Mercator Momentum Fund transferred into its name
2,361,814 shares of our common stock pledged by Robert Spigno as security for
a loan made by Mercator to us in February 2002 in the original principal
amount of $340,000.

	On June 28, 2002, we repriced Robert Spigno's fully-vested option to
purchase up to 500,000 shares of Class B Preferred Stock from an exercise
price of $2.50 per share to an exercise price of $.50 per share. The exercise
price of $.50 per share equates to $.05 per share of common stock if the Class
B Preferred Stock were converted, which was in excess of the price of our
common stock on that date.

	In July 2002, Laurus Master Fund transferred into its name 47,521
shares of our common stock pledged by Lawrence Muirhead as security for a loan
made by Laurus to us in April 2001 in the original principal amount of
$300,000.

	In August 2002, Laurus Master Fund transferred into its name 294,857
shares of our common stock pledged by Robert Spigno as security for a loan
made by Laurus to us in April 2001 in the original principal amount of
$300,000.

	In September 2002, Laurus Master Fund transferred into its name
117,021 shares of our common stock pledged by Lawrence Muirhead as security
for a loan made by Laurus to us in April 2001 in the original principal amount
of $300,000.

<page>40

	In September 2002, Laurus Master Fund transferred into its name
500,000 shares of our common stock pledged by Robert Spigno as security for a
loan made by Laurus to us in April 2001 in the original principal amount of
$300,000.

	In October 2002, Laurus Master Fund transferred into its name 279,539
shares of our common stock pledged by Robert Spigno as security for a loan
made by Laurus to us in April 2001 in the original principal amount of
$300,000.

	In October 2002, Laurus Master Fund transferred into its name
1,458,059 shares of our common stock pledged by Patricia Spigno as security
for a loan made by Laurus to us in April 2001 in the original principal amount
of $300,000.

	In November 2002, Laurus Master Fund transferred into its name
1,556,346 shares of our common stock pledged by Robert Spigno as security for
a loan made by Laurus to us in April 2001 in the original principal amount of
$300,000.

	In November 2002, we issued 636,886 shares of common stock to Lawrence
Muirhead to reimburse him for 636,886 shares pledged by him as security for a
loan made by Laurus Master Fund to us in April 2001 in the original principal
amount of $300,000, which pledged shares were transferred by Laurus into its
name in connection with a default on that loan.

	In November 2002, we issued 2,630,742 shares of common stock to Robert
Spigno to reimburse him for 2,630,742 shares pledged by him as security for a
loan made by Laurus Master Fund to us in April 2001 in the original principal
amount of $300,000, which pledged shares were transferred by Laurus into its
name in connection with a default on that loan.

	In November 2002, we issued 1,458,059 shares of common stock to
Patricia Spigno to reimburse her for 1,458,059 shares pledged by her as
security for a loan made by Laurus Master Fund to us in April 2001 in the
original principal amount of $300,000, which pledged shares were transferred
by Laurus into its name in connection with a default on that loan.

	On December 12, 2002, we issued 250,000 shares of common stock valued
at $1,250 to Melissa McGough as bonus compensation.

	In January 2003, we issued 2,361,814 shares of common stock to Robert
Spigno to reimburse him for 2,361,814 shares pledged by him as security for a
loan made by Mercator Momentum Fund to us in February 2002 in the original
principal amount of $340,000, which pledged shares were transferred by
Mercator into its name in connection with a default on that loan.

	In January 2003, we issued 47,521 shares of common stock to Lawrence
Muirhead to reimburse him for 47,521 shares pledged by him as security for a
loan made by Laurus Master Fund to us in April 2001 in the original principal
amount of $300,000, which pledged shares were transferred by Laurus into its
name in connection with a default on that loan.

	On January 6, 2003, we extended to December 31, 2004, the expiration
date of an option granted to Mr. Muirhead on November 22, 1999 that initially
expired December 31, 2002, to purchase up to 2,000,000 shares of common stock
at an exercise price of $.50 per share, which was the closing price of a share
of our common stock on the date of grant. This option vests upon the
achievement of certain specified performance criteria.

	On January 6, 2003, we extended to December 31, 2004, the expiration
date of an option granted to Mr. Spigno on November 22, 1999 that initially
expired December 31, 2002, to purchase up to 500,000 shares of common stock at
an exercise price of $.15 per share, which was 50% of the closing price of a
share of our common stock on the date of grant. This option vested
immediately.

<page>41

	On January 6, 2003, we extended to December 31, 2004, the expiration
date of an option granted to Ms. McGough on September 1, 1999 that initially
expired December 31, 2002, to purchase up to 100,000 shares of common stock at
an exercise price of $.38 per share, which was 50% of the closing price of a
share of our common stock on the date of grant. This option vested
immediately.

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

	On January 6, 2004, we repriced Robert Spigno's fully-vested option to
purchase up to 500,000 shares of Class B Preferred Stock from an exercise
price of $0.50 per share to an exercise price of $.05 per share. The exercise
price of $.05 per share equates to $.005 per share of common stock if the
Class B Preferred Stock were converted, which was in excess of the price of
our common stock on that date.

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

ITEM 13.	EXHIBITS AND REPORTS ON FORM 8-K.

(a)	Exhibits.

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

(b)	Reports on Form 8-K.

	During the quarter ended September 30, 2003, the Registrant did not
file any current reports on Form 8-K.

ITEM 14.	CONTROLS AND PROCEDURES.

	Our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively) have
concluded, based on their evaluations as of September 30, 2003 and February
10, 2004 ("Evaluation Dates"), that the design and operation of our
"disclosure controls and procedures" (as defined in Rules 13a- 14(c) and 15d-
14(c) under the Securities Exchange Act of 1934, as amended ("Exchange Act"))
are effective to ensure that information required to be disclosed by us in the
reports filed or submitted by us under the Exchange Act is accumulated,
recorded, processed, summarized and reported to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding whether or not disclosure is required.

	There were no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to
the Evaluation Date, nor were there any significant deficiencies or material
weaknesses in our internal controls.  As a result, no corrective actions were
required or undertaken.

<page>42

                           CONECTISYS CORPORATION

                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                        Page
                                                                        ----
Consolidated Financial Statements As Of And For The Years Ended
     September 30, 2003 and 2002

Report of Independent Certified Public Accountants......................F-1-2

Consolidated Balance Sheet for the Year Ended September 30, 2003........F-3-4

Consolidated Statements of Operations for the Years
     Ended September 30, 2003 and 2002..................................F-5

Consolidated Statements of Shareholders' Equity (Deficit)
   for the Years Ended September 30, 2003 and 2002......................F-6-12

Consolidated Statements of Cash Flows for the Years Ended
     September 30, 2003 and 2002........................................F-13-15

Notes to Consolidated Financial Statements for the Years Ended
     September 30, 2003 and 2002........................................F-16-52


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, 2003, and the related consolidated statements of operations,
changes in shareholders' equity (deficit), and cash flows for the years ended
September 30, 2003 and 2002, and the cumulative period from December 1, 1990
(inception of development stage) through September 30, 2003, 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 audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation.  We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Conectisys Corporation and Subsidiaries as of September 30, 2003, and the
results of their operations and their cash flows for the years ended September
30, 2003 and 2002, and the cumulative period from December 1, 1990 (inception
of development stage) through September 30, 2003, in conformity with
accounting principles generally accepted in the United States of America.

<page>F-1


The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, the Company has suffered recurring
losses from operations and has a deficiency in working capital at September
30, 2003.  These matters raise substantial doubt about its ability to continue
as a going concern.  Management's plans concerning these matters are also
described in Note 2.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

                                         Hurley & Company


Granada Hills, California
January 6, 2004

<page>F-2

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED BALANCE SHEET September 30, 2003




ASSETS

Current assets:
Cash and cash equivalents                            $     2,282
     Debt issuance costs - current, net of
       accumulated amortization of $275,448               27,896
                                                     -----------
Total current assets                                      30,178

Property and equipment, net of
     accumulated depreciation of $304,553                 32,476

Other assets:
License rights and technology, net of
  accumulated amortization of $421,4     78                  -
                                                     -----------

     Total assets                                    $    62,654
                                                     ===========


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

<page>F-3

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED BALANCE SHEET (continued)
September 30, 2003


LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
  Accounts payable                                   $    274,746
  Accrued compensation                                  1,113,620
  Due to officers                                          92,121
  Accrued interest                                        339,965
  Other current liabilities                                14,410
  Notes payable and
    current portion of long-term debt                   1,090,597
                                                     ------------
Total current liabilities                               2,925,459

Long-term debt, net of current portion                     99,615

Commitments and contingencies                                 -

SHAREHOLDERS' DEFICIT:

Preferred stock - Class A, $1.00 par value;
  1,000,000 shares authorized, 200,020
  shares issued and outstanding                           200,020
Convertible preferred stock - Class B,
  no par value; 1,000,000 shares
  authorized, -0- shares issued and outstanding               -
Common stock, no par value; 1,000,000,000
  shares authorized, 490,224,872
  shares issued and outstanding                        19,807,537
Additional paid-in capital:
  Convertible preferred stock - Class B, no
    par value; 1,000,000 stock options exercisable        100,000
  Common stock, no par value;
    11,307,154 stock options and warrants exercisable   1,353,511
  Beneficial conversion option, debt instruments          881,550
Deficit accumulated during the development stage      (25,305,038)
                                                     ------------
Total shareholders' deficit                            (2,962,420)
                                                     ------------
Total liabilities and
 shareholders' deficit                               $     62,654
                                                     ============

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

<page>F-4

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended September 30, 2003 and 2002,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2003

                               Year          Year      Dec. 1, 1990
                              Ended         Ended       (Inception)
                          September 30, September 30,     Through
                               2003          2002     Sept. 30, 2003
                           -----------   -----------  --------------
Net revenues               $       -     $       -    $      517,460

Cost of sales                  148,675        73,667         790,063
                           -----------   -----------  --------------
Gross loss                    (148,675)      (73,667)       (272,603)

Operating expenses:
 General and administrative  1,372,655     1,808,657      18,541,785
 Bad debt expense                  -             -         1,680,522
                           -----------   -----------  --------------
Loss from operations        (1,521,330)   (1,882,324)    (20,494,910)

Other income (expense):
 Settled damages                   -             -            25,000
 Other income                      -             -            12,072
 Interest income                     1             2         102,924
 Interest expense             (865,546)     (464,410)     (2,635,021)
 Write-off of
  intangible assets                -             -        (1,299,861)
 Minority interest                 -             -            62,500
                           -----------   -----------  --------------
Net loss                   $(2,386,875)  $(2,346,732) $  (24,227,296)
                           ===========   ===========  ==============


Weighted average number
 of shares outstanding -
 basic and diluted         237,357,973    39,976,138

Net loss per share -
 basic and diluted         $      (.01)  $      (.06)
                           ===========   ===========


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

<page>F-5

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, 2003
<table>

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

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

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



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

<page>F-6

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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



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

<page>F-7

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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


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

<page>F-8

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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



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

<page>F-9

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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

<page>F-10

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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

<page>F-11

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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

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

<page>F-12

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Cumulative Period December 1, 1990 (Inception) Through September 30, 2003


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

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



The accompanying notes are an integral part of these consolidated financial statements.
</table>
<page>F-13

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2003 and 2002,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2003

                                Year         Year         Dec. 1, 1990
                                Ended       Ended         (Inception)
                           September 30, September 30,       Through
                                2003         2002        Sept. 30, 2003
                            -----------  ------------    -------------
Cash flows from operating
 activities:
  Net loss                  $(2,386,875) $ (2,346,732)    $(24,227,296)

Adjustments to reconcile
 net loss to net cash used
 in operating activities:
  Stock issued for services     134,000       179,916        7,520,773
  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     24,180        27,309        1,694,154
  Amortization of debt issuance
    costs and note discount     797,996       377,512        1,440,538
  Changes in:
   Accounts receivable              -             -             (4,201)
   Accrued interest
    receivable                      -             -            (95,700)
   Prepaid exp. and deposits        -          48,800          182,346
   Accounts payable             297,153       308,251          917,401
   Accrued compensation         185,770       394,459        2,219,792
   Due to officers               70,179       (62,293)         743,971
   Accrued interest and
    other current liabilities    92,314        61,078          549,157
                            -----------  ------------    -------------
Total adjustments        1,601,592     1,335,032       18,338,584
                       -----------  ------------    -------------
Net cash used in
 operating activities     (785,283)   (1,011,700)      (5,888,712)
                       -----------  ------------    -------------
The accompanying notes are an integral part of these consolidated financial
statements.

<page>F-14

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2003 and 2002,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2003

                                Year         Year         Dec. 1, 1990
                               Ended        Ended          (Inception)
                           September 30, September 30,        Through
                                2003         2002        Sept. 30, 2003
                            -----------  ------------    -------------
Cash flows from investing
 activities:
  Issuance of
   notes receivable         $       -    $        -     $  (1,322,500)
  Costs of license rights
   and technology                   -             -           (94,057)
  Purchase of equipment         (5,317)       (6,687)        (203,847)
                            -----------   -----------    -------------
Net cash used in
 investing activities           (5,317)       (6,687)      (1,620,404)
                            -----------   -----------    -------------
Cash flows from financing
 activities:
  Common stock issuance         180,000       200,000        3,412,172
  Stock warrant issuance          9,816       100,087          187,131
  Preferred stock issuance          -             -             16,345
  Proceeds from debt, other     679,163     1,244,790        4,163,043
  Debt issuance costs from
   debt, other                  (83,069)     (187,500)        (303,344)
  Proceeds from debt, related       -             -            206,544
  Proceeds from stock purchase      -             -            281,250
  Payments on debt, other       (48,129)     (290,000)        (434,536)
  Payments on debt, related         -             -            (53,172)
  Decrease in stock
   subscription receivable          -             -             35,450
  Contributed capital               -             -                515
                            -----------   -----------    -------------
Net cash provided by
  financing activities          737,781     1,067,377        7,511,398
                            -----------   -----------    -------------
Net increase (decrease) in
  cash and cash equivalents     (52,819)       48,990            2,282

Cash and cash equivalents
  at beginning of period         55,101         6,111              -
                           ------------   -----------    -------------
Cash and cash equivalents
  at end of period         $      2,282   $    55,101    $       2,282
                           ============   ===========    =============

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

<page>F-15

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2003 and 2002,
and the Cumulative Period
From December 1, 1990 (Inception) Through September 30, 2003

                                Year         Year         Dec. 1, 1990
                               Ended        Ended          (Inception)
                           September 30, September 30,        Through
                                2003         2002        Sept. 30, 2003
                            -----------   -----------    -------------
Supplemental disclosures of
  cash flow information:

  Cash paid for interest    $    50,979   $   127,868    $     388,648
                            ===========   ===========    =============

  Cash paid for income taxes$     3,200   $       800    $       8,050
                             ===========   ===========    =============

Non-cash investing and financing activities:

  Common stock issued
   in exchange for:
    Note receivable         $       -     $       -      $     281,250
    Prepaid expenses        $       -     $       -      $     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               $ 1,215,611   $   530,876    $   5,571,667
    Accrued services
     and interest           $       -     $       -      $   4,949,192
  Preferred stock issued
   in exchange for:
    Accrued services        $       -     $       -      $      60,000
    Repayment of debt       $       -     $    60,000    $     119,520
  Preferred stock options
   issued in exchange for:
    Repayment of debt       $       -     $       -      $     100,000


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

<page>F-16

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Note 1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

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

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

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

Basis of presentation

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

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

<page>F-17

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Use of estimates

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

Fair value of financial instruments

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

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

Since the fair value is estimated at September 30, 2003, 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, accrued interest,
other current liabilities, and notes payable approximate fair value because of
the short maturity of these instruments.  Also, market rates of interest apply
on all officer advances and short-term promissory notes.  Long-term debt is
recorded at face value because the principal amount is convertible into common
stock.

Fiscal year

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

<page>F-18

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Research and development costs

The Company has been engaged in researching, engineering, and developing its
H-Net(TM) technologies since August 1995, and did not generate any revenue
during the past fiscal year.  The Company hopes to complete additional large-
scale cost reduction runs for the production and subsequent sale of the H-Net
TM system in 2004.

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.

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 company's current licenses have been 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 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.

Property and equipment

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

Technology

Deferred technology costs include capitalized product development and product
improvement costs incurred after achieving technological feasibility and are
amortized over a period of five years.  At September 30, 2003, no deferred
technology costs were recognized.

<page>F-19

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

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 Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees."  Accordingly, compensation cost for stock
options is measured as the excess, if any, of the fair market price of the
Company's stock at the date of grant over the amount an employee must pay to
acquire the stock.  Also, in accordance with SFAS No. 123, the Company has
provided footnote disclosures with respect to stock-based employee
compensation.  The cost of stock-based compensation is measured at the grant
date on the value of the award, and this cost is then recognized as
compensation expense over the service period.  The value of the stock-based
award is determined using a pricing model whereby compensation cost is the
excess of the fair market value of the stock as determined by the model at the
grant date or other measurement date over the amount an employee must pay to
acquire the stock.

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

<page>F-20

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Stock issued for non-cash consideration

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

Income taxes

The Company files a consolidated federal income tax return.  The Company has
adopted 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.

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.

As of September 30, 2003, the Company had 490,224,872 shares of common stock
outstanding.  If all the Company's unexpired stock warrants and options
(including contingent issuances) were exercised, and all the principal value
and accrued interest on its outstanding convertible debentures were converted,
the Company's incremental common shares (not included in the denominator of
diluted earnings (loss) per share because of their anti-dilutive nature) would
be as follows:

<page>F-21

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Net loss per common share - basic and diluted (continued)

Class B preferred stock options                   10,000,000
Convertible note holder common stock warrants      6,250,000
Common stock warrants - other                      3,215,705
Common stock options - officers                    4,043,654
Common stock options - other                       4,650,000
                                                    -----------
Subtotal                                          28,159,359

Accrued officer compensation ($360,000),
assumed converted into common stock at
prices ranging from $0.0215 to $0.2250
per share                                          6,888,922

Convertible note holder principal value
($963,205) and accrued interest ($119,645),
assumed converted into common stock at
$0.002 per share                                 541,425,000
                                                    -----------
Total potential common stock equivalents         576,473,281


If all currently outstanding potential common stock equivalents were
exercised, the Company would receive proceeds of approximately $11,060,000.

Recently issued accounting pronouncements

In April 2002, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 145, "Rescission of SFAS No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections," effective for financial
statements issued after May 25, 2002, which effectively amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency involving sale-
leaseback transactions and also gives clarity to other existing authoritative
pronouncements.  The adoption of SFAS No. 145 did not have a material effect
on the company's consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," effective for exit or disposal activities
after December 15, 2002, which addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging
Issue Task Force

<page>F-22

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Recently issued accounting pronouncements (continued)

(EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring."  The adoption of the provisions of this SFAS did not have
a material impact on the Company's consolidated financial statements.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions - an amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9," applicable for acquisitions on or after October 1,
2002, which generally removes acquisitions of financial institutions from the
scope of both Statement 72 and Interpretation 9 and requires that those
transactions be accounted for in accordance with FASB Statements No. 141,
Business Combinations, and No. 142, "Goodwill and Other Intangible Assets,"
and amends FASB Statement No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," to include in its scope certain long-term customer-
relationship intangible assets of financial institutions.  The adoption of
SFAS No. 147 did not have a material impact on the Company's consolidated
financial statements.

In January 2003, the FASB issued FASB Interpretation ("FIN") No. 46,
"Consolidation of Variable Interest Entities."  FIN No. 46 clarified the
application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," and applies immediately to any variable interest entities created
after January 31, 2003 and to variable interest entities in which an interest
is obtained after that date.  The Company holds no interest in variable
interest entities.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities."  SFAS No. 149 clarifies the
accounting and reporting for derivative instruments, including certain
derivative instruments imbedded in other contracts and for hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities."  In particular, SFAS No. 149 clarifies under what circumstances a
contract with an initial net investment met the characteristic of a derivative
as described in SFAS No. 133.  SFAS No. 149 also clarifies when a derivative
contains a financing component.  SFAS No. 149 is generally effective for
derivative instruments entered

<page>F-23

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Recently issued accounting pronouncements (continued)

into or modified after June 30, 2003, and for hedging relationships designated
after June 30, 2003.  The Company holds no derivative instruments and does not
engage in hedging activities.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity."  SFAS No.
150 requires certain financial instruments that have both equity and liability
characteristics to be classified as a liability on the balance sheet.  SFAS
No. 150 is effective for the first interim period beginning after June 15,
2003.  The adoption of SFAS No. 150 did not have a material impact on the
Company's consolidated financial statements.


NOTE 2. GOING CONCERN UNCERTAINTY

As of September 30, 2003, the Company had a deficiency in working capital of
approximately $2,900,000, and had incurred continual net losses since its
return to the development stage in fiscal 1996 of almost $22,000,000, which
raise substantial doubt about the Company's ability to continue as a going
concern.

Management's plans for correcting these deficiencies include the future sales
and licensing of the Company's products and technologies, the raising of
capital through the issuance of common stock and from continued officer
advances, which will help provide the Company with the liquidity necessary to
meet operating expenses.  Subsequent to the end of fiscal year 2003, the
Company has received $200,000 in funding from an accredited investor group,
through the issuance of 12% convertible debt, along with 1,000,000 detachable
stock warrants (see Note 16(b)).  This same investor group had previously
advanced the Company an aggregate amount of $1,250,000 through six similar
funding tranches occurring in April 2002, May 2002, June 2002, November 2002,
March 2003, and May 2003.  Over the longer term, the Company plans to achieve
profitability through its operations from the sale and licensing of its H-Net
automatic meter-reading system.  The accompanying consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of the recorded asset amounts or the amounts and classification
of liabilities that might be necessary should the Company be unable to
continue in existence.

<page>F-24

CONECTISYS CORPORATION AND SUBSIDIARIES (A
Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 3. RELATED PARTY TRANSACTIONS

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

NOTE 4.   PREPAID EXPENSES AND DEPOSITS

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.  These costs were
fully expensed during the year ended September 30, 2002.

NOTE 5.    PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2003 consisted of the following:


Office equipment                             $   285,058
Furniture and fixtures                            16,609
Vehicles                                          35,362
                                             -----------
Total cost                                       337,029
Accumulated depreciation                        (304,553)
                                             -----------
Net book value                               $    32,476
                                             ===========

NOTE 6.    LICENSE RIGHTS AND TECHNOLOGY

License rights and technology at September 30, 2003 consisted of the following:

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

<page>F-25

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 7.   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, and $775 in other costs.
These debt issuance costs were fully amortized at September 30, 2001.

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

In March through June 2002, the Company received $750,000 from an accredited
investor group in exchange for 12% convertible debt, along with 3,750,000
common stock warrants, exercisable over a four-year period at the lesser of
$0.045 per share and 50% of the average of the lowest three intra-day trading
prices of a share of common stock during the 20 trading days immediately
preceding conversion.  Debt issuance costs associated with these loans
amounted to $147,500, of which $90,000 represented finder's fees and $57,500
represented legal costs.  Amortization of these fees over the pro-rata portion
of the one-year term of the loans amounted to $58,397 through September 30,
2002, leaving an unamortized balance of $89,103 at September 30, 2002.  Total
amortization of all debt issuance costs during the year ended September 30,
2002 amounted to $98,397.

In November 2002 through May 2003, the Company received another $500,000 from
the above accredited investor group in exchange for 12% convertible debt,
along with 2,500,000 common stock warrants, exercisable over a seven-year
period at the lesser of $0.005 per share and 50% of the average of the lowest
three intra-day trading prices of a share of common stock during the 20
trading days immediately preceding conversion.  Debt issuance costs associated
with these loans amounted to $83,069, consisting of $66,069 in finder's fees
and $17,000 in legal costs.  Amortization of these costs over the pro-rata
portion of the one-year term of the loans

<page>F-26

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 7.   DEBT ISSUANCE COSTS (continued)

amounted to $55,173 through September 30, 2003.  Total amortization of all
debt issuance costs during the year ended September 30, 2003 amounted to
$144,276, including $89,103 attributable to the unamortized balance at
September 30, 2002.  The unamortized balance of the debt issuance costs at
September 30, 2003 was $27,896.


NOTE 8.    DUE TO OFFICERS

At September 30, 2001, a revolving promissory note agreement for $56,880 was
drawn up, due on demand, at an annual interest rate of 18%, for unpaid
cumulative advances (plus interest) made by the Company's CEO.  During the
year ended September 30, 2002, cash advances of $31,500 were made.
Additionally, the loan account was increased by $120,875, representing the
value of 2,361,814 restricted shares of the Company's common stock held by the
CEO, which were used as collateral and transferred to a note holder in June of
2002 to partially cover a $300,000 debt, and by $16,202, representing the
value of 794,857 restricted shares of the Company's common stock held by the
CEO, which were pledged to and sold by a convertible note holder on a Company
obligation in default.  Repayments of debt by the Company amounted to $144,806
and accrued interest amounted to $6,913 during the year ended September 30,
2002, resulting in a loan balance due the CEO at September 30, 2002 of
$87,564.  During the year ended September 30, 2003, additional cash advances
totaling $37,869 were made, along with $37,423, representing another 1,835,885
restricted shares of the Company's common stock pledged and sold by the above
note holder.  Repayments of debt by the Company amounted to $136,009,
including re-issuance of 2,361,814 restricted shares of the Company's common
stock valued at $120,875 that had been transferred to a note holder during the
previous fiscal year.  Accrued interest during the year ended September 30,
2003 was $10,073, bringing the loan balance due the CEO at September 30, 2003
to $36,920.   The loan balance at September 30, 2003 is currently due on
demand and continues to accrue interest at the rate of 18% per year.

<page>F-27

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 8.    DUE TO OFFICERS (continued)

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

During the period May through September 2002, the Company's Chief Technical
Officer advanced the Company $32,946, corresponding to 684,407 restricted
shares of the Company's common stock held by the officer, which were pledged
to and sold by a convertible note holder on a Company obligation in default.
Accrued interest at the annual rate of 18% was $1,831 through the end of the
fiscal year, bringing the total loan amount to $34,777 at September 30, 2002.
In November 2002, the Company re-issued the 684,407 restricted shares to the
Chief Technical Officer (valued at $32,946) that had been pledged to and sold
by the convertible note holder during the previous fiscal year.  Accrued
interest amounted to $1,205 during the year ended September 30, 2003,
resulting in a loan balance of $3,036 as of that date.  The loan balance at
September 30, 2003 is currently due on demand and continues to accrue interest
at the rate of 18% per year.

The aggregate amount due officers at September 30, 2003 and 2002 was $92,121
and $130,484, respectively, and interest expense on the officer loans amounted
to $17,800 and $11,013 for the years ended September 30, 2003 and 2002,
respectively.

<page>F-28

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 8.    DUE TO OFFICERS (continued)

As of September 30, 2003, the Company owed its officers $1,113,620 in accrued
compensation.  Of this amount, $360,000 was attributable to aggregate staying
bonuses payable to the President and Secretary/Treasurer of the Company.  The
staying bonuses are to be compensated for with Conectisys Corp. restricted
stock, valued at the average bid and ask price for the stock for the 30 days
prior to each respective year-end issuance date.  The total common stock to be
issued as staying bonuses amounted to 6,888,922 shares at September 30, 2003.

NOTE 9.    NOTES PAYABLE

Notes payable at September 30, 2003 consisted of the following:

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

        Convertible Debenture #1

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 29, 2003 at an annual interest
      rate of 12%                                  $29,480

     Accrued interest of $5,340 and principal
      on Convertible Debenture convertible
      into approximately 17,410,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                5,340  $    34,820
                                                   -------
     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on March 29, 2003 at an annual interest
      rate of 12%                                   29,480

     Accrued interest of $5,340 and principal
      on Convertible Debenture convertible
      into approximately 17,410,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                5,340       34,820
                                                    -------
<page>F-29

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

     Note payable to AJW/New Millennium
      Offshore, Ltd. (Convertible Debenture)
      due on March 29, 2003 at an annual
      interest rate of 12%                         $33,900

     Accrued interest of $6,141 and principal
      on Convertible Debenture convertible
      into approximately 20,020,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                6,141  $    40,041
                                                   -------
     Note payable to Pegasus Capital Partners,
      LLC (Convertible Debenture) due on
      March 29, 2003 at an annual interest
      rate of 12%                                   20,730

     Accrued interest of $3,756 and principal
      on Convertible Debenture convertible
      into approximately 12,243,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                3,756       24,486
                                                   -------
     Convertible Debenture #2

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      May 10, 2003 at an annual interest
      rate of 12%                                    40,000

     Accrued interest of $6,694 and principal
      on Convertible Debenture convertible
      into approximately 23,347,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                6,694       46,694
                                                   --------

<page>F-30

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on  May 10, 2003 at an annual
      interest rate of 12%                         $40,000

     Accrued interest of $6,694 and principal
      on Convertible Debenture convertible
      into approximately 23,347,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                6,694  $    46,694
                                                   -------
     Note payable to AJW/New Millennium
      Offshore, Ltd. (Convertible Debenture)
      due on May 10, 2003 at an annual
      interest rate of 12%                          45,000

     Accrued interest of $7,530 and principal
      on Convertible Debenture convertible
      into approximately 26,265,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                 7,530      52,530
                                                    -------

     Note payable to Pegasus Capital Partners,
      LLC (Convertible Debenture) due on
      May 10, 2003 at an annual
      interest rate of 12%                           25,000

     Accrued interest of $4,183 and principal
      on Convertible Debenture convertible
      into approximately 14,591,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 4,183      29,183
                                                    -------

     Convertible Debenture #3

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      June 17, 2003 at an annual interest
      rate of 12%                                     80,000

<page>F-31

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

     Accrued interest of $12,388 and principal
      on Convertible Debenture convertible
      into approximately 46,194,000
      shares of common stock at the price
      of $0.002 at September 30, 2003               $12,388 $    92,388
                                                    -------

     Note payable to New Millennium Capital
      Partners II, LLC (Convertible Debenture)
      due on  June 17, 2003 at an annual
      interest rate of 12%                           80,000

     Accrued interest of $12,388 and principal
      on Convertible Debenture convertible
      into approximately 46,194,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                12,388      92,388
                                                    -------

     Note payable to AJW/New Millennium
      Offshore, Ltd. (Convertible Debenture)
      due on June 17, 2003 at an annual
      interest rate of 12%                           90,000

     Accrued interest of $13,936 and principal
      on Convertible Debenture convertible
      into approximately 51,968,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                13,936     103,936
                                                   --------

     Note payable to Pegasus Capital Partners,
      LLC (Convertible Debenture) due on
      June 17, 2003 at an annual
      interest rate of 12%                           50,000

     Accrued interest of $7,743 and principal
      on Convertible Debenture convertible
      into approximately 28,871,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 7,743      57,743
                                                   --------
<page>F-32

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #4

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      November 27, 2003 at an annual interest
      rate of 12%                                   $33,204

     Accrued interest of $3,351 and principal
      on Convertible Debenture convertible
      into approximately 18,277,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 3,351 $    36,555
                                                    -------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      November 27, 2003 at an annual interest
      rate of 12%                                    33,204

     Accrued interest of $3,351 and principal
      on Convertible Debenture convertible
      into approximately 18,277,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 3,351      36,555
                                                    -------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      November 27, 2003 at an annual interest
      rate of 12%                                    33,207

     Accrued interest of $3,352 and principal
      on Convertible Debenture convertible
      into approximately 18,279,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 3,352      36,559
                                                    -------

<page>F-33

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #5

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      March 3, 2004 at an annual interest
      rate of 12%                                   $50,000

     Accrued interest of $3,485 and principal
      on Convertible Debenture convertible
      into approximately 26,742,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 3,485  $   53,485
                                                    -------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      March 3, 2004 at an annual interest
      rate of 12%                                    50,000

     Accrued interest of $3,485 and principal
      on Convertible Debenture convertible
      into approximately 26,742,500
      shares of common stock at the price
      of $0.002 at September 30, 2003                 3,485      53,485
                                                    -------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      March 3, 2004 at an annual interest
      rate of 12%                                    50,000

     Accrued interest of $3,485 and principal
      on Convertible Debenture convertible
      into approximately 26,742,500
      shares of common stock at the price
 of $0.002 at September 30, 2003                      3,485      53,485
                                                    -------


<page>F-34

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

     Convertible Debenture #6

     Note payable to AJW Partners, LLC
      (Convertible Debenture) due on
      May 12, 2004 at an annual interest
      rate of 12%                                   $50,000

     Accrued interest of $2,334 and principal
      on Convertible Debenture convertible
      into approximately 26,167,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                 2,334 $    52,334
                                                    -------

     Note payable to AJW Offshore, Ltd.
      (Convertible Debenture) due on
      May 12, 2004 at an annual interest
      rate of 12%                                    50,000

     Accrued interest of $2,334 and principal
      on Convertible Debenture convertible
      into approximately 26,167,000
      shares of common stock at the price
      of $0.002 at September 30, 2003                 2,334      52,334
                                                    -------

     Note payable to AJW Qualified Partners,
      LLC (Convertible Debenture) due on
      May 12, 2004 at an annual interest
      rate of 12%                                    50.000

     Accrued interest of $2,335 and principal
      on Convertible Debenture convertible
      into approximately 26,167,500
      shares of common stock at the price
 of $0.002 at September 30, 2003                2,335      52,335
                                              ------- -----------
Subtotal of all Registered Convertible Debentures       1,082,850

<page>F-35

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

    Less reclassified accrued interest              $   (119,645)
                                                    ------------
    Subtotal principal value                             963,205
    Less unamortized note discount                      (195,592)
                                                     -----------
Net carrying value of
  Registered Convertible Debentures                 $    767,613

      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%.                                173,924

        Convertible note payable to Laurus Master Fund, Ltd.,
      unsecured, with interest payable at an annual rate
      of 8%, conversion premium of 25% based on current
      market price of the Company's common stock (as defined),
      initially due October 12, 2001 and extended to
      December 1, 2001.  Currently in default.                   6,851
                                                           -----------
     Total notes payable                                   $ 1,190,212
        Current porti                                       (1,090,597)
                                                           -----------
        Long-term porn                                     $    99,615
                                                           ===========
<page>F-36

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 9.    NOTES PAYABLE (continued)

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

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

The note 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, 2002).  At April 12, 2001, the
note was convertible into approximately 2,181,500 common shares at an exercise
price of approximately $0.1021 per share, and at September 30, 2002, the note
was convertible into approximately 20,189,875 common shares at an exercise
price of approximately $0.0064 per share. In either instance, the fair value
of the debt instrument (due to the 80% pricing advantage) was $375,000 (a 25%
premium on the principal value), resulting in a further convertible debt
discount of $152,228, representing the difference between the note's fair
value of $375,000 and the allocated proceeds at issuance of $222,772.  This
discount was also fully amortized at September 30, 2001.

A corresponding $152,228 credit was made to additional paid-in capital for the
conversion benefit option, i.e., the intrinsic value of the matured debt
instrument. Interest accrued at 8% on the $300,000 note principal through
September 30, 2002 was $17,168; for presentation purposes, this interest was
added to the principal value of the note at the year-end balance sheet date.
The holder can also convert the accrued interest into common stock at a 25%
premium ($4,292), bringing the total conversion benefit

<page>F-37

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 9.    NOTES PAYABLE (continued)

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.

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

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

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

<page>F-38

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

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

Mercator seeks damages of approximately $243,000 plus approximately $66 in
interest per day commencing June 21, 2002 and other compensatory and punitive
damages of unspecified amount. The Company believes that Mercator's claims are
without merit because, among other factors, they have affirmative defenses to
those claims, including usury and the satisfaction of amounts owed under loan
from Mercator as a result of the enforcement by Mercator of its security
interest in shares of common stock. The Company intends to vigorously defend
against these claims and to pursue appropriate counterclaims against Mercator.
The Court is tentatively scheduled to hear the matter on March 1, 2004.


NOTE 10. SECURED CONVERTIBLE DEBENTURES

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

<page>F-39

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

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

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

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

<page>F-40

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

lowest three intra-day trading prices during the 20 trading days immediately
preceding an exercise.

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

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

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

<page>F-41

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

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

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

As part of the recording of the convertible debt transactions, a beneficial
conversion option was recognized, along with a corresponding convertible debt
discount.  The fair value of the twenty-one debt instruments issued totaling
$1,250,000 in principal value was $2,500,000 in aggregate, representing a 100%
premium on the principal value (due to the 100% pricing advantage) and making
the beneficial conversion option $1,140,097 at the inception of the loans
($1,250,000 proceeds less $109,903 allocated to the issuance of the 6,250,000
related warrants).

During the fiscal year ended September 30, 2002, the Company issued 12,667,178
shares of common stock in connection with  interest payments and upon
conversion of an aggregate $93,130 of principal and $6,916 of related interest
on the Company's convertible debentures. A corresponding pro-rata reduction of
$80,702 to the beneficial conversion option was made.  During the fiscal year
ended September 30, 2003, the Company issued another 103,778,301 shares of
common stock in connection with the conversion of another $193,665 of
principal and $34,355 of accrued interest on the Company's convertible
debentures,

<page>F-42

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 10. SECURED CONVERTIBLE DEBENTURES (continued)

resulting in a convertible debt principal balance at September 30, 2003 of
$963,205 (net of an aggregate of $286,795 in debt conversions through that
date).  A corresponding pro-rata reduction of $177,845 was made to the
beneficial conversion option during the fiscal year ended September 30, 2003
(an aggregate of $258,547 since the inception of the loans), bringing the
beneficial conversion option balance at September 30, 2003 to $881,550.

The aggregate note discount of $1,250,000 is being amortized over the one-year
lives of the respective debt instruments.  Of this amount, $279,115 was
amortized during the fiscal year ended September 30, 2002 and another $653,720
during the year ended September 30, 2003, while $69,233 in convertible bond
discount was transferred to equity upon conversion of $93,130 in debt
principal during the fiscal year ended September 30, 2002 plus another $52,340
upon conversion of $193,665 of debt principal during the fiscal year ended
September 30, 2003, resulting in an unamortized convertible debt discount
balance of $195,592 at September 30, 2003.

As of September 30, 2003, the Company was indebted for an aggregate of
$1,082,850, including $963,205 of principal and $119,645 of accrued interest
on these convertible debentures. To the extent debentures issued by the
Company are converted into shares of common stock, the Company will not be
obligated to repay the converted amounts.  Of the remaining principal amount
at September 30, 2003, $99,615 has been classified as long-term, based upon
additional principal conversions made subsequent to the end of the fiscal
year.

<page>F-43

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 11.        SHAREHOLDERS' EQUITY (DEFICIT)

The Company's authorized capital stock consists of 1,000,000,000 shares of
common stock, no par value per share, and 50,000,000 shares of preferred
stock, $1.00 par value per share. Of the 50,000,000 authorized shares of
preferred stock, 1,000,000 shares have been designated as Class A Preferred
Stock and 1,000,000 shares have been designated as Class B Preferred Stock,
and the remaining 48,000,000 shares are undesignated. As of September 30,
2003, there were 490,224,872 shares of the Company's common stock outstanding
held by approximately 750 holders of record and 200,020 shares of the
Company's Class A Preferred Stock outstanding held by one holder of record and
no shares of Class B Preferred Stock outstanding.

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

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

During the months October 2001 through January 2002, the Company issued a
total of 2,333,334 shares of its restricted common stock for cash of $145,000
in private placements.  In conjunction with these stock issuances, the Company
issued 700,000 common stock warrants at an exercise price of $1.00 per share,
expiring November 2003 through January 2005.

During the period October 2001 through September 2002, the Company issued
5,300,000 shares of its common stock (of which 4,100,000 shares were
restricted) to a consultant in exchange for accrued consulting services of
$203,566.  In September 2002, 1,000,000 common stock options were also issued
to the consultant at an exercise price of $0.50 until September 2004.  The
common stock options were not recorded in the financial statements, as they
had nominal value.


<page>F-44

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

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

In October 2001 through November 2001, the Company issued 60,000 shares of its
Class A preferred stock to its CEO for a $60,000 reduction of debt.  An
additional 109,980 of Class A preferred stock options were issued to the CEO
at an exercise price per share of $1.00 through November 2005.

In December 2001 and January 2002, the Company issued 500,000 shares of its
restricted common stock to a consultant in exchange for media services
rendered in the amount of $87,500.

In December 2001 and January 2002, a consultant exercised 550,000 common stock
options at $0.13 per share in exchange for debt of $71,500.  As part of the
transaction, $31,625 in stock options exercisable was transferred to common
stock.

In January 2002, the Company issued 192,100 common stock warrants to investors
at an exercise price of $2.00 per share, expiring in September 2004.

During the months February 2002 through August 2002, the Company issued
1,680,000 shares of its common stock (including 50,000 restricted shares) in
exchange for $85,500 in consulting services.

During the months March 2002 through June 2002, the Company issued 3,750,000
in three-year common stock warrants as part of a $750,000 12% convertible debt
issuance, exercisable at the lower of $0.045 and 50% of the market price of
the common stock (as defined) through the date of exercise.  The warrants were
recorded at $100,087 and the debt at $649,913, based upon the relative fair
values of each, and a beneficial conversion option for an additional $649,913
was also recognized.

In May 2002 and June 2002, the Company issued a total of 500,000 shares of its
restricted common stock for cash of $25,000 (net of $25,000 in fees) in
private placements.  In conjunction with these issuances, the Company issued
500,000 common stock options at an exercise price of $0.50 per share, expiring
April 2004 through June 2004.  The common stock options were not recorded in
the financial statements, as they had nominal value.

<page>F-45

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

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

In May 2002, the Company issued 100,000 shares of its restricted common stock
to an engineering consultant in exchange for $5,000 in accrued services.

In June 2002 through September 2002, the Company issued 12,667,178 of its
common shares to an investor group in exchange for $93,130 in convertible debt
and $6,916 in interest (considered services).  In conjunction with these
transactions, $80,702 of the Company's beneficial conversion option was also
transferred to common stock, and $69,233 in convertible note discounts was
applied against common stock as a result of debt conversion.

In June 2002, the Company issued 48,077 shares of its common stock to its
former Acting President for $7,788 in accrued compensation. In June 2002, the
Company issued 3,500,000 shares of its common stock valued at $179,125 in
partial settlement of a $300,000 note.

In June 2002, the Company issued 1,000,000 restricted common shares to an
outside accountant in exchange for $30,000 in accrued services rendered.

In September 2002, the Company issued 4,000,000 shares of its restricted
common stock to a consultant/investor for $30,000 in cash and reduction of
debt of $10,000.  1,000,000 common stock options were also issued to the
consultant at an exercise price of $0.50 until September 2004.  The common
stock options were not recorded in the financial statements, as they had
nominal value.

During the months October 2002 through July 2003, the Company issued
15,000,000 shares of its restricted common stock to a consultant in exchange
for promotional services valued at $65,000.

During the months October 2002 through September 2003, the Company issued
119,630,468 shares of its restricted common stock to a consultant for debt
reduction of $162,500 and accrued fees of $91,305.

During the months October 2002 through September 2003, the Company issued
103,778,301 of its common shares to an investor group in exchange for $193,665
principal value of convertible debt and $34,355 in accrued interest.  In
conjunction with these transactions, $177,845 of the Company's beneficial
conversion

<page>F-46

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

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

option was also transferred to common stock, and $52,340 in convertible note
discounts was applied against common stock as a result of debt conversion.

During the months November 2002 through May 2003, the Company issued
14,500,000 shares of its restricted common stock to consultants in exchange
for media services rendered of $49,000.

During the months November 2002 through September 2003, the Company issued
128,500,000 shares of its restricted common stock for cash of $180,000 in
private placements.

During the months November 2002 through May 2003, the Company issued 2,500,000
in seven-year common stock warrants as part of a %500,000 12% convertible debt
issuance, exercisable at the lower of $0.01 and 50% of the market price of the
common stock (as defined) through the date of exercise.  The warrants were
recorded at $9,816 and the debt at $490,184, based upon the relative fair
values of each, and a beneficial conversion option for an additional $490,184
was also recognized.

During the months November 2002 through January 2003, the Company issued
4,504,280 shares of its restricted common stock to its corporate officers in
exchange for a net reduction of debt of $183,542.

During the months December 2002 through September 2003, the Company issued
26,000,000 shares of its common stock to a convertible note holder in exchange
for $58,400 in debt reduction.  In conjunction with these transactions, the
Company transferred a beneficial conversion option valued at $155,027 to
common stock.

In December 2002 and January 2003, the Company issued its advisory board
members 1,250,000 shares of its restricted common stock in exchange for
$12,500 in services.

In December 2002, the Company issued 750,000 shares of its restricted common
stock to staff consultants as a $7,500 bonus.

<page>F-47

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 11.        SHAREHOLDERS' EQUITY (DEFICIT) (continued

In January 2003, the Company received back 1,000,000 restricted common shares
held by a former director as collateral on a $75,000 loan and re-issued the
shares as interest (valued at $9,000).  The $75,000 loan (previously recorded
as an addition to capital) was paid-off by and recorded as a new loan to the
Company's CEO and Secretary/Treasurer.

In May 2003, the Company issued 12,000,000 shares of its restricted common
stock to an outside accountant in exchange for $120,000 in accrued services
rendered.


NOTE 12.  INCOME TAXES

Deferred income taxes consisted of the following at September 30, 2003:

      Deferred tax asset, benefit
      of net operating loss
      carryforward                                $ 7,800,000
        Valuation allowance                        (7,800,000)
                                                  -----------
        Net deferred taxes                       $       -
                                                  ===========

The valuation allowance offsets the net deferred tax asset, since it is more
likely than not that it would not be recovered.  During the year ended
September 30, 2003, the deferred tax asset and valuation allowance were both
increased by $900,000.

The Company has approximately $19,400,000 in both federal and California net
operating loss carryforwards.  The federal net operating loss carryforwards
expire as follows: $2,700,000 in the year 2012, $5,300,000 in 2018, $1,200,000
in 2019, $3,500,000 in 2020, $2,400,000 in 2021, $2,300,000 in 2022, and
$2,000,000 in 2023.  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, $2,400,000 in 2006,  $2,300,000 in 2007, and $2,000,000 in
2008.  The latest federal and California corporate income tax returns filed by
the Company were for the tax year ended November 30, 2000.

<page>F-48

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 13.        COMMITMENTS AND CONTINGENCIES

Employment agreements

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

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

2)      The Secretary and Treasurer of the Company entered into an Agreement
dated October 2, 1995 (which was subsequently amended September 1, 1997,
September 1, 1999, and March 27, 2000), for a period of five years (extended
through April 1, 2005), and she is entitled to receive a base salary of
$80,000 per year.  The employee shall further receive a bonus, paid at year-
end, equal to 50% of the employee's salary, for continued employment.  The
staying bonus shall be compensated for with the Company's restricted common
stock.  She is also granted an option to purchase up to 500,000 shares of the
Company's restricted common stock at a price equal to 60% of the average
market value for the prior 180 trading days before exercise.  On March 27,
2000, the exercise price was adjusted to a flat $0.38 per share, with an
expiration date of December 31, 2004.

<page>F-49

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 13.        COMMITMENTS AND CONTINGENCIES (continued)

Employment agreements (continued)

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

Litigation

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

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

<page>F-50

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 13.        COMMITMENTS AND CONTINGENCIES (continued)

Litigation (continued)

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

On June 21, 2002 Mercator filed an action against Conectisys Corporation,
Robert A. Spigno and Patricia A. Spigno in the Superior Court of California,
County of Los Angeles (Case No. BC276283) for breach of promissory note,
foreclosure of security interests and fraud and deceit. Mr. Spigno is the
Chairman of the Board and a director of the Company and is also the Company's
Chief Executive Officer.  Ms. Spigno is the Company's Secretary and Chief
Financial Officer. On July 3, 2002, Mercator filed a first amended complaint
in the Superior Court of California, County of Los Angeles (Case No. BC276283)
adding a claim for common count for money lent. Mercator seeks damages of
approximately $243,000 plus approximately $66 in interest per day commencing
June 21, 2002 and other compensatory and punitive damages of unspecified
amount. The Company believes that Mercator's claims are without merit because,
among other factors, they have affirmative defenses to those claims, including
usury and the satisfaction of amounts owed under loan from Mercator Momentum
Fund as a result of the enforcement by Mercator of its security interest in
shares of common stock. The Company intends to vigorously defend against these
claims and to pursue appropriate counterclaims against Mercator.  The Court is
tentatively scheduled to hear the matter on March 1, 2004.

<page>F-51

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 13.        COMMITMENTS AND CONTINGENCIES (continued)

Litigation (continued)

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


NOTE 14.        FORM S-8 FILINGS

In October 2002, March 2003, and July 2003, the Company filed registration
statements on Forms S-8 covering an aggregate of 15,000,000 shares issued to
an independent consultant to the Company, which authorized the re-sale of the
15,000,000 shares of common stock valued at $65,000.


NOTE 15.        STOCK OPTIONS AND WARRANTS

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

The Company's CEO currently owns 200,020 shares of the Company's Class A
preferred stock, of which 60,000 shares were purchased during the year ended
September 30, 2002, and has options to purchase another 250,000 shares for
$1.00 per share through November 1, 2005.

<page>F-52

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 15.        STOCK OPTIONS AND WARRANTS (continued)

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%).

The Company accounts for stock-based compensation under the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25.  Accordingly,
compensation expense for common stock options and warrants issued to employees
for services have been recorded as the difference between the intrinsic value
of those services as measured by the (discounted) market value of the common
stock at the date of grant and the exercise price, with pro forma disclosure
of the excess market value as required by FASB No. 123.  No common stock
options or warrants wee granted to employees (including officers) and
directors of the Company during the years ended September 30, 2003 or 2002.

All common stock options and warrants issued to consultants and other non-
employees have been recorded at the fair value of the services rendered and
equivalent to the market value (as discounted, if applicable) of the equity
instruments received as per 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 and subsequent was assumed to be 5% (rather than 6%) due to the
general decline of interest rates occurring throughout the economy and the
world.

At September 30, 2001, the Company had an aggregate of 5,607,154 common stock
options and a total of 1,000,000 Class B preferred stock options recorded as
additional paid-in capital at a value of $1,375,233.  Of the common stock
options and warrants, 2,043,654

<page>F-53

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003


NOTE 15.        STOCK OPTIONS (continued)

had been issued to officers and employees and the remaining 3,563,500 had been
issued to consultants and investors.

In December 2001 and January 2002, a consultant exercised 550,000 common stock
options, applying the $71,500 cost of exercise against an outstanding note
payable.  Stock options exercisable were also reduced and transferred to
common stock in the amount of $31,625.

In March 2002 trough June 2002, 3,750,000 three-year common stock warrants
were issued to an accredited investor group in connection with a $750,000 12%
convertible debenture financing arrangement (see Note 10 above).  The
allocated cost of these warrants amounted to $100,087, so that the total stock
options and warrants exercisable at September 30, 2002 became $1,443,695.

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

As of September 30, 2003, the Company had an additional 4,852,205 common stock
options that had been granted to consultants and investors at exercise prices
ranging from $0.50 to $2.00 per share, expiring from November 1, 2003 through
January 16, 2005.  Because these strike prices were substantially above the
market price of the Company's common stock, no value was attributed to these
options at the time of grant.  The Company also granted a contingent issuance
to its Chief Technical Officer of 2,000,000 common stock options exercisable
at $0.50 per share and expiring December 31, 2004, which will note vest until
certain milestones have been attained.  These respective common stock options
and contingent issuances have been excluded from the summarized table below.

<page>F-54

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

NOTE 15.        STOCK OPTIONS AND WARRANTS (continued)

The common stock option activity during the fiscal years ended September 30,
2003 and September 30, 2002 is summarized as follows:

                                         Common Stock   Weighted
                                            Options      Average
                                              and       Exercise
                                            Warrants      Price
                                          ----------    --------
Balance outstanding, October 1, 2001       5,607,154       $.420

 Granted                                   3,750,000        .050
 Exercised                                  (550,000)       .130
                                          ----------
Balance outstanding, September 30, 2002    8,807,154        .280

 Granted                                   2,500,000        .010
                                          ----------
Balance outstanding, September 30, 2003   11,307,154       $.204
                                          ==========       =====


The following table summarizes information about common stock options at
September 30, 2003:

                                 Outstanding             Exercisable
                            Weighted    Weighted               Weighted
   Range of       Common    Average      Average      Common    Average
   Exercise        Stock      Life      Exercise       Stock   Exercise
    Prices       Options    (Months)      Price       Options    Price
---------------  ---------  -------     --------    ----------  -------
$2.000 - $2.000    563,500       11     $  2.000       563,500  $ 2.000
$ .380 - $ .380    100,000       15     $   .380       100,000  $  .380
$ .192 - $ .192  1,000,000        6     $   .192     1,000,000  $  .190
$ .050 - $ .050  3,750,000       19     $   .002     3,750,000  $  .050
$ .130 - $ .130  1,450,000       23     $   .130     1,450,000  $  .130
$ .386 - $ .386  1,443,654       26     $   .386     1,443,654  $  .386
$ .380 - $ .380    500,000       26     $   .380       500,000  $  .380
& .002 - $ .002  2,500,000       76     $   .002     2,500,000  $  .002

$ .002 - $2.000 11,307,154       33     $   .204    11,307,154  $  .204
=============== ==========       ==     ========    ==========  =======

<page>F-55

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

 NOTE 16.       SUBSEQUENT EVENTS

(a)     In November 2003, the Company filed a registration statement on Form
S-8 covering 12,000,000 shares issued to an independent consultant,
authorizing the re-sale of the 12,000,000 shares of common stock valued at
$25,000.

(b)     During the months of October 2003 through December 2003, the Company
received funding of another $200,000 (net proceeds of $138,722) from an
investor group in exchange for one-year 12% convertible debt and 1,000,000
common stock warrants, with such warrants exercisable at $0.005 per share over
a seven-year period.

During the subsequent period October 1, 2003 through January 8, 2004, this
same investor group also converted approximately $92,000 of debt principal
along with accrued    interest into 84,651,456 shares of the Company's common
stock.  Effective October 2003, as an inducement for    this investor group's
continued funding of the Company's operations, the Company agreed to allow
prospective conversions of issued convertible debt instruments into freely-
trading shares of the Company's common stock at the lower of 40% (from 50%
previously) of the average of the three lowest intra-day trading prices of a
share of the Company's common stock on the OTC Bulletin Board during the
twenty trading days immediately preceding the conversion date, and either (a)
$.06 for the March, May, and June 2002 convertible debentures, or (b) $.01 for
the November 2002, March and May 2003 convertible debentures.  The effect on
the Company's future operations would be a charge to earnings of approximately
$500,000 (including accrued interest).

(c)     Through January 8, 2004, in addition to the common share issuances
described in Notes 16(a) and 16(b) above, the Company has issued restricted
common stock in the aggregate of 116,400,000 shares, valued at approximately
$118,500.  Of the aggregate amount, 65,100,000 shares were issued to a
consultant as debt reduction of $65,100, 50,000,000 shares were issued in a
private placement for $50,000 in cash, and 1,300,000 shares were issued to a
consultant for services rendered of $3,400.  In addition, 15,845 Class A
preferred stock options were exercised by the Company's CEO at $1.00 per share
against a reduction of accrued compensation of $15,845.

<page>F-56

CONECTISYS CORPORATION AND SUBSIDIARIES (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

 NOTE 16.       SUBSEQUENT EVENTS (continued)

(d)     As of January 1, 2004, the President and Secretary/Treasurer of the
Company had earned additional annual staying bonuses of $80,000 and $40,000,
respectively, payable in restricted shares of the Company's common stock.
Based upon the average bid and ask price of the Company's common stock during
the prior 30 days of trading of approximately $0.0053 per share, this equates
to the issuance of 22,641,509 shares of common stock to satisfy the additional
liability.

<page>F-57

                              INDEX TO EXHIBITS

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

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

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

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

3.5	Bylaws of the Registrant (4)

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

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

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

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

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

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

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

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

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

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

10.11	Agreement dated August 3, 2001 between the Registrant and Radio Design
	Group (1)

<page>43


10.12	Letter of Understanding dated July 24, 2001 between the Registrant and
	Dr. Scott Samuelsen as director of the Advanced Power and Energy
	Program, University of California, Irvine (4)

10.13	Convertible Note dated April 12, 2001 made by the Registrant in favor
	of Laurus Master Fund, Ltd. (4)

10.14	Promissory Note Subscription Agreement dated April 12, 2001 between
	the Registrant and Laurus Master Fund, Ltd. (4)

10.15	Security Agreement dated April 12, 2001 between the Registrant and
	Laurus Master Fund, Ltd. (4)

10.16	Letter Agreement dated September 26, 2001 between the Registrant and
	Laurus Master Fund, Ltd. (4)

10.17	Letter Agreement dated April 2, 2002 between the Registrant and Laurus
	Master Fund, Ltd. (4)

10.18	Promissory Note dated September 1, 2001 made by the Registrant in
	favor of Robert Spigno (#) (4)

10.19	Promissory Note dated September 1, 2001 made by the Registrant in
	favor of Black Dog Ranch, LLC (4)

10.20	Promissory Note dated February 15, 2002 made by the Registrant in
	favor of Mercator Momentum Fund, LP (4)

10.21	ConectiSys Corporation Non-Qualified Stock Option and Stock Bonus Plan
	(2)

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

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

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

10.25	Form of Secured Convertible Debenture due March 29, 2003 (4)

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

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

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

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

10.30	Form of Common Stock Purchase Warrant dated as of May 10, 2002 (5)

<page>44


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

10.32	Form of Common Stock Purchase Warrant dated as of June 17, 2002 (7)

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

10.34	Form of Secured Convertible Debenture due November 27, 2003 (8)

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

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

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

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

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

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

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

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

10.43	Letter of Amendment dated October 3, 2003 between Registrant and
        parties named therein.

10.44	Securities Purchase Agreement dated as of November 25, 2003 by and
	between the Registrant and the purchasers named therein

10.45	Form of Secured Convertible Debenture due November 25, 2004

10.46	Form of Common Stock Purchase Warrant dated as of November 25, 2003

10.47	Registration Rights Agreement dated as of November 25, 2003 by and
	between the Registrant and the investors named therein

10.48	Security Agreement dated as of November 25, 2003 between the
	Registrant and the secured parties named therein

10.49	Intellectual Property Security Agreement dated as of November 25, 2003
	between the Registrant and the secured parties named therein

10.50	Form of Secured Convertible Debenture due December 3, 2004

10.51	Form of Common Stock Purchase Warrant dated as of December 3, 2003

10.52	Form of Secured Convertible Debenture due December 31, 2004

<page>45

10.53	Form of Common Stock Purchase Warrant dated as of December 31, 2003

21.1	Subsidiaries of the Registrant (4)

31.1	Certifications Required by Rule 13a-14(a) of the Securities Exchange
	Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
	Sarbanes- Oxley Act of 2002

32.1	Certification of Chief Executive Officer and Chief Financial Officer
	Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
	of the Sarbanes-Oxley Act of 2002

_________________

(#)	Management contract or compensatory plan, contract or arrangement
	required to be filed as an exhibit.

(1)	Filed as an exhibit to the Registrant's Form S-8 filed with the
	Securities and Exchange Commission on September 21, 2001 (Registration
	No. 333-69832) and incorporated herein by reference.

(2)	Filed as an exhibit to the Registrant's Form S-8 filed with the
	Securities and Exchange Commission on December 6, 1999 (Registration
	No. 333- 92181) and incorporated herein by reference.

(3)	Filed as an exhibit to the Registrant's Form S-8 filed with the
	Securities and Exchange Commission on September 22, 2000 (Registration
	No. 333-46456) and incorporated herein by reference.

(4)	Filed as an exhibit to the Registrant's Form SB-2 filed with the
	Securities and Exchange Commission on April 26, 2002 (Registration No.
	333- 87062) and incorporated herein by reference.

(5)	Filed as an exhibit to the Registrant's Form 10-QSB for the quarter
	ended March 31, 2002 and incorporated herein by reference.

(6)	Filed as an exhibit to the Registrant's Form SB-2/A No. 1 filed with
	the Securities and Exchange Commission on June 6, 2002 (Registration
	No. 333- 87062) and incorporated herein by reference.

(7)	Filed as an exhibit to the Registrant's Form 10-QSB for the quarter
	ended June 30, 2002 and incorporated herein by reference.

(8)	Filed as an exhibit to the Registrant's Form 10-KSB for the fiscal
	year ended September 30, 2002 and incorporated herein by reference.

(9)	Filed as an exhibit to the Registrant's Form SB-2/A No. 1 filed with
	the Securities and Exchange Commission on May 2, 2003 (Registration
	No. 333- 102781) and incorporated herein by reference.

(10)	Filed as an exhibit to the Registrant's Form 10-QSB for the quarter
	ended June 30, 2003 and incorporated herein by reference.

<page>46

                                   SIGNATURES

	In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized as of the 12th day of February, 2004.

                                               CONECTISYS CORPORATION

                                               By: /S/ ROBERT A. SPIGNO
                                               ----------------------------
                                               Robert A. Spigno
                                               Chief Executive Officer
                                               (Principal Executive Officer)
                                               and Chairman of the Board

        In accordance with the Exchange Act, this report has been signed by
the following persons on behalf of the Registrant and in the capacities and
as of the dates indicated.

Name                         Title                       Date
---------------------   ----------------------------    -------------------

/S/ ROBERT A. SPIGNO    Chairman of the Board,           February 12, 2004
ROBERT A. SPIGNO        Chief Executive Officer
                        (principal executive officer)
                        and Director


/S/PATRICIA A. SPIGNO   Chief Financial Officer,         February 12, 2004
PATRICIA A. SPIGNO      Treasurer and Secretary
                        (Principal Financial and
                         Accounting Officer)



/S/LAWRENCE MUIRHEAD    Chief Technology Officer and     February 12, 2004
LAWRENCE MUIRHEAD       Director



/S/MELISSA McGOUGH      Corporate Administrator and      February 12, 2004
MELISSA McGOUGH         Director

<page>47

                          EXHIBITS FILED WITH THIS REPORT

Exhibit
Number	Description
------  -------------------------------------------------------------------
10.43	Letter of Amendment dated October 3, 2003 between Registrant and
        parties named therein.

10.44	Securities Purchase Agreement dated as of November 25, 2003 by and
	between the Registrant and the purchasers named therein

10.45	Form of Secured Convertible Debenture due November 25, 2004

10.46	Form of Common Stock Purchase Warrant dated as of November 25, 2003

10.47	Registration Rights Agreement dated as of November 25, 2003 by and
	between the Registrant and the investors named therein

10.48	Security Agreement dated as of November 25, 2003 between the
	Registrant and the secured parties named therein

10.49	Intellectual Property Security Agreement dated as of November 25, 2003
	between the Registrant and the secured parties named therein

10.50	Form of Secured Convertible Debenture due December 3, 2004

10.51	Form of Common Stock Purchase Warrant dated as of December 3, 2003

10.52	Form of Secured Convertible Debenture due December 31, 2004

10.53	Form of Common Stock Purchase Warrant dated as of December 31, 2003

31.1	Certifications Required by Rule 13a-14(a) of the Securities Exchange
	Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
	Sarbanes- Oxley Act of 2002

32.1	Certification of Chief Executive Officer and Chief Financial Officer
	Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
	of the Sarbanes-Oxley Act of 2002