UNITED STATES

                        SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)
     [X]     QUARTERLY  REPORT  UNDER  SECTION  13  OR  15(d)  OF  THE
          SECURITIES  EXCHANGE  ACT  OF  1934

          FOR  THE  QUARTERLY  PERIOD  ENDED:  June  30,  2004

          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 _000-50373__


                   SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                     ---------------------------------------
                      (Exact name of small business issuer
                          as specified in its charter)


            DELAWARE                                            80-0025175
 ------------------------------                            --------------------
  (State  or  other  jurisdiction                             (IRS  Employer
of  incorporation or organization)                          Identification No.)


                               91 HILL AVENUE NW,
                        FORT WALTON BEACH, FLORIDA 32548
                    (Address of principal executive offices)
                                   (Zip Code)


                    Issuer's telephone number (850) 796-0909


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

As  of  June  30,  2004  there were 40,069,300 shares of the registrant's common
stock,  par  value  $0.0001,  issued  and  outstanding.

Transitional  Small  Business  Disclosure  Format  (check  one):
Yes  [  ]    No  [X]


<PAGE>
                  SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                  JNUE 30, 2004 QUARTERLY REPORT ON FORM 10-QSB


                                TABLE OF CONTENTS

Special Note Regarding Forward Looking Statements                           3

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheet as of June 30, 2004(unaudited)          4

         Consolidated Statements of Operations for the three months ended
         June, 2004 and 2003 (unaudited)                                    5

         Consolidated Statements of Operations for the six months ended
         June, 2004 and 2003 (unaudited)                                    6

         Consolidated Statements of Changes in Stockholders'
         Equity for the six months ended June 30, 2004 (unaudited)          7

         Consolidated Statements of Cash Flows for the six months ended
         June, 2004 and 2003 (unaudited)                                    8

         Notes to Consolidated Financial Statements (unaudited)             9

Item 2.  Management's Discussion and Analysis or Plan of Operations        18

Item 3.  Controls and Procedures                                           25

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                 26

Item 2.  Changes in Securities                                             28

Item 3.  Defaults Upon Senior Securities                                   29

Item 4.  Submission of Matters to a Vote of Security Holders               29

Item 5.  Other Information                                                 29

Item 6.  Exhibits and Reports on Form 8-K                                  29


                                        2
<PAGE>
                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     To  the  extent  that the information presented in this Quarterly Report on
Form  10-QSB  for  the  quarter  ended  June  30,  2004,  discusses  financial
projections,  information  or  expectations  about  our  products or markets, or
otherwise  makes  statements  about  future  events,  such  statements  are
forward-looking.  We  are making these forward-looking statements in reliance on
the  safe  harbor  provisions of the Private Securities Litigation Reform Act of
1995.  Although  we  believe  that  the  expectations  reflected  in  these
forward-looking  statements  are  based  on  reasonable assumptions, there are a
number  of  risks  and  uncertainties  that could cause actual results to differ
materially  from such forward-looking statements.  These risks and uncertainties
are  described,  among  other  places in this Quarterly Report, in "Management's
Discussion  and  Analysis  or  Plan  of  Operations."

     In  addition,  we  disclaim  any  obligations to update any forward-looking
statements  to  reflect events or circumstances after the date of this Quarterly
Report.  When  considering  such  forward-looking statements, you should keep in
mind  the  risks  referenced  above  and the other cautionary statements in this
Quarterly  Report.


                                        3
<PAGE>
                   SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                           Consolidated Balance Sheet
                               As of June 30, 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                               <C>
                                     ASSETS

Current assets:
  Cash and equivalents                                            $  6,049,442
  Investments                                                       22,543,386
  Receivables                                                        2,898,269
  Inventories                                                          372,610
  Prepaid expenses                                                     239,256
                                                                  -------------
  Total current assets                                              32,102,963
                                                                  -------------

Property and equipment, net                                          2,042,653
Deferred tax asset                                                      40,034
Cash surrender value of life insurance                                  38,665
Other assets and deposits                                               40,358
                                                                  -------------

TOTAL ASSETS                                                      $ 34,264,673
                                                                  =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                $    744,877
  Accrued expenses                                                     927,138
  Notes payable                                                      1,702,981
                                                                  -------------
  Total current liabilities                                          3,374,996
                                                                  -------------

Total liabilities                                                    3,374,996
                                                                  -------------

Stockholders' equity:
  Preferred stock, $0.0001 par value; 20,000,000 shares
    authorized, none issued                                                  -
  Common stock, $0.0001 par value; 80,000,000 shares authorized,
    40,069,300 issued and outstanding                                    4,007
  Additional paid-in capital                                        72,104,521
  Accumulated comprehensive income                                      13,781
  Accumulated deficit                                              (41,232,632)
                                                                  -------------

Total stockholders' equity                                          30,889,677
                                                                  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 34,264,673
                                                                  =============
</TABLE>

See accompanying notes to the consolidated financial statements.


                                        4
<PAGE>
                   SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                      Consolidated Statements of Operations
                For the three months ended June 30, 2004 and 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       2004         2003
                                                   ------------  ----------
<S>                                                <C>           <C>
Revenues                                             3,418,747   3,443,361

Cost of Revenues                                     3,054,924   3,011,137
                                                   ------------  ----------

Gross Profit                                           363,823     432,224

Operating Expenses                                  27,053,790     275,170
Impairment Loss                                              -     145,974
                                                   ------------  ----------

Income (loss) from operations                      (26,689,967)     11,080

Other Income (expense)                                       -
  Interest Income                                       25,845          52
  Building Rent                                         49,561      45,351
  Other Income and Expense                              (2,871)     (4,118)
  Interest Expense                                     (64,052)    (80,365)
  Penalties                                                (31)     (2,587)
                                                   ------------  ----------

Total other income (expense)                             8,452     (41,667)
                                                   ------------  ----------

Loss before provision for income taxes             (26,681,515)    (30,587)
Income tax benefit                                           -           -
                                                   ------------  ----------

Net loss                                           (26,681,515)    (30,587)

Unrealized gain on available for sale securities        13,781           -
                                                   ------------  ----------

Total comprehensive loss                           (26,667,734)    (30,587)
                                                   ============  ==========

Weighted average common shares outstanding:
  Basic and diluted                                 36,795,363           -
                                                   ============  ==========

Loss per share:
  Basic and diluted                                       (.72)          -
                                                   ============  ==========
</TABLE>

See accompanying notes to the consolidated financial statements.


                                        5
<PAGE>
                   SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                      Consolidated Statements of Operations
                 For the six months ended June 30, 2004 and 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                   <C>            <C>
                                                           2004          2003
                                                      -------------  ------------

Revenues                                              $  7,015,325   $ 6,716,390

Cost of revenues                                        (6,329,305)   (6,053,574)
                                                      -------------  ------------

Gross profit                                               686,020       662,816

Operating expenses                                      41,005,374       439,640
Impairment Loss                                                  -       145,974
                                                      -------------  ------------

Income (loss) from operations                          (40,319,354)       77,202

Other income and expense:
  Interest income                                           26,210             -
  Building rent                                             99,121        90,702
  Other income                                               1,985       (19,164)
  Interest expense                                        (127,903)     (149,145)
  Other expenses                                            (3,912)            -
                                                      -------------  ------------

  Total other income (expense)                              (4,499)      (77,607)

Net loss before provision for income taxes             (40,323,853)         (405)

Income tax benefit                                          61,330             -
                                                      -------------  ------------

Net loss                                               (40,262,523)         (405)

Unrealized gain on available for sale securities            13,781             -
                                                      -------------  ------------

Total comprehensive loss                              $(40,248,742)  $      (405)
                                                      =============  ============

Weighted average common shares outstanding              27,505,843             -
                                                      =============  ============

Basic and diluted loss per share                      $      (1.46)            -
                                                      =============  ============
</TABLE>

See accompanying notes to the consolidated financial statements.


                                        6
<PAGE>
<TABLE>
<CAPTION>
                                      SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                              Consolidated Statements of Changes in Stockholders' Equity
                                        For the six months ended June 30, 2004
                                                      (Unaudited)

                                 Common Stock                                 Accumulated
                                 -------------  -------------
                                    Shares                                   Comprehensive    Accumulated
                                  Outstanding      Amount         APIC          Income          Deficit        Total
                                 -------------  -------------  -----------  ---------------  -------------  -----------
<S>                              <C>            <C>            <C>          <C>              <C>            <C>
Balance at January 1, 2004         18,851,000   $      1,885   $    79,426                   $   (970,108)  $  (888,797)

Stock options issued
  for consulting services                                  -    37,258,300                                   37,258,300

Exercise of stock options          21,178,300          2,118    37,095,567                                   37,097,685

Stock subscription receivable                                   (2,520,126)                                  (2,520,126)

Stock options issued under
employee stock option plan to a
consultant                                                         125,358                                      125,358

Exercise of stock options              40,000              4        65,996                                       66,000

Unrealized gain on investments                                                      13,781                       13,781

Net loss                                                                                      (40,262,524)  (40,262,524)
                                 -------------  -------------  -----------  ---------------  -------------  -----------

Balances at June 30, 2004          40,069,300   $      4,007   $72,104,521  $       13,781   $(41,232,632)  $30,889,677
                                 =============  =============  ===========  ===============  =============  ===========
</TABLE>

See accompanying notes to the consolidated financial statements.


                                        7
<PAGE>
                   SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP.
                      Consolidated Statements of Cash Flows
                 For the six months ended June 30, 2004 and 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 2004          2003
                                                                             -------------  ----------
<S>                                                                          <C>            <C>
Cash flows from operating activities:
  Net income (loss)                                                          $(40,262,523)  $    (405)
  Adjustments to reconcile net income (loss) to net cash flows
    from operating activities:
    Impairment Loss                                                                           145,974
    Deferred taxes                                                                (28,594)
    Depreciation and amortization                                                  72,083      39,603
    Amortization of investment bond premium                                         8,496
    Accrued interest payable due to related parties                                 9,792           -
    Issuance of common stock options to related party
         for consulting services                                               37,258,300           -
    Issuance of common stock options under employee stock option plan             125,358
    Investor relations expenses paid by a related party                         2,057,500           -
  (Increase) decrease in:
    Receivables                                                                (1,170,385)    272,470
    Inventories                                                                  (250,218)     62,572
    Prepaid expenses                                                             (220,533)    (67,527)
    Other assets                                                                  (26,999)      1,000
  Increase (decrease) in:
    Accounts payable                                                             (525,982)   (338,790)
    Accrued expenses                                                              368,557    (180,122)
    Contract deposits                                                             (50,000)    (30,788)
    Deferred revenues                                                             (36,967)          -
                                                                             -------------  ----------
      Net cash flows used in operating activities                              (2,672,115)    (96,013)
                                                                             -------------  ----------

Cash flows from investing activities:
  Net purchases of available for sale investments                             (22,538,101)
  Purchase of property and equipment                                             (109,993)    (20,395)
                                                                             -------------  ----------
      Net cash used in investing activities                                   (22,648,094)    (20,395)
                                                                             -------------  ----------

Cash flows from financing activities:
  Principal payments on notes payable and lines of credit                        (753,318)   (272,011)
  Net repayment on bank line of credit                                                  -      16,479
  Repayment of short term debt                                                   (307,726)          -
  Repayments on advances from related parties                                     (52,500)          -
  Advances from related parties                                                   672,551       2,863
  Proceeds from the exercise of stock options                                  31,113,685           -
                                                                             -------------  ----------
      Net cash provided by (used in) financing activities                      30,672,692    (252,669)
                                                                             -------------  ----------

Net increase (decrease) in cash                                                 5,352,483    (369,077)

Cash at beginning of  period                                                      696,959     633,909
                                                                             -------------  ----------

Cash at end of  period                                                       $  6,049,442   $ 264,832
                                                                             =============  ==========

Supplemental disclosures of cash flow information:
    Cash paid during the quarter for:
    Interest                                                                 $    127,903   $ 149,393
                                                                             =============  ==========

Supplemental schedule of non-cash financing and investing activities:
  Reduction in due to related party in lieu of cash payment
    for exercise of stock options.                                           $  3,529,873   $       -
                                                                             =============  ==========

  Unrealized gain on available for sale securities                           $     13,781   $       -
                                                                             =============  ==========
</TABLE>

See accompanying notes to the consolidated financial statements.


                                        8
<PAGE>
                 Notes to the Consolidated Financial Statements
              Three and Six Months ended June 30, 2004 (Unaudited)

1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

(A)     Organization  and  Nature  of  Business
Silva  Bay  International,  Inc., a Delaware corporation, was formed in 1998 for
the  purpose  of  locating and recovering rare and valuable aircraft.  Silva Bay
International,  Inc.  had no operations and no revenue from inception in 1998 to
the  time  of  the  acquisition  of Spectrum Sciences & Software, Inc. in April,
2003.

Spectrum  Sciences  & Software, Inc. was incorporated in the State of Florida on
October  8,  1982.  Headquartered in Fort Walton Beach, Florida, the Company has
three  reportable segments - management services, manufacturing, and engineering
and  information  technology  services.  Management  services  include providing
engineering,  technical,  and  operational services in the area of defense range
management  specializing  in  bombing  and  gunnery training range operation and
maintenance.  Manufacturing  operations  include  the design and construction of
munitions  ground  support equipment and containers for the shipping and storage
of munitions and equipment. The Company's engineering and information technology
services  segment  consists of the sale of computer software developed to assist
in  hazard  management  and  weapons  impact  analysis.

On  April  2,  2003,  Silva Bay International, Inc. acquired Spectrum Sciences &
Software, Inc., a Florida corporation, in exchange for the issuance of 2,500,000
shares  of common stock (taking into account the forward two for one stock split
of  April  9, 2003) (see Note 3).  Spectrum Sciences & Software, Inc. is now the
wholly  owned  subsidiary  of  Silva  Bay  International, Inc. (now collectively
referred  to  as  the  "Company").

On  April  8,  2003,  Silva Bay International, Inc. changed its name to Spectrum
Sciences  & Software Holdings Corp.  On April 9, 2003, the Company effectuated a
two  for  one  forward  split  of  its  common  stock.  On November 4, 2003, the
Company's  registration  statement as a reporting company under the Exchange Act
became  effective.

The  Company's  contracts  are  primarily  fixed price contracts with the United
States Department of Defense (DOD). During the three months and six months ended
June  30,  2004, 99% of the Company's revenues were derived from such contracts.

(B)     Income  Taxes
The  Company accounts for income taxes utilizing the asset and liability method.
This  approach  requires  the recognition of deferred tax assets and liabilities
for  the  expected future tax consequences attributable to temporary differences
between  the  financial  statement  carrying  amounts  of  existing  assets  and
liabilities  and  their  respective  tax bases and operating loss and tax credit
carryforwards.  Deferred  tax  assets and liabilities are measured using enacted
tax  rates  expected  to  apply  to  taxable  income in the years in which those
temporary  differences  are  expected to be recovered or settled.  The effect on
deferred  tax  assets  and liabilities of a change in tax rates is recognized in
income  in  the  period that includes the enacted date. Valuation allowances are
established  when necessary to reduce deferred tax assets to the amount expected
to  be  realized.


                                        9
<PAGE>
1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED:

(B)     Income  Taxes,  Continued
The  Company  currently  has  a  net operating loss carryforward of $40,300,000,
which  would equate to a deferred tax asset of approximately $16,000,000 at June
30,  2004.  The  Company  has  not  recorded  that  federal  tax  benefit in the
accompanying  financial  statements,  as  management  does  not  have sufficient
information  to estimate when or to the extent to which the Company will realize
the  tax  benefit.

(C)     Earnings  (Loss)  Per  Share
The  Company  reports its earnings (loss) per share in accordance with Financial
Accounting  Standards  Board  (FASB)  Statement  No.  128, "Earnings Per Share."
Statement  No. 128 requires the presentation of basic and diluted loss per share
on  the  face of the statement of operations. Net income (loss) per common share
is  computed by dividing the net income (loss) by the weighted average number of
common  shares  outstanding for the period. Diluted net income (loss) per common
share  reflects  the  potential  dilution that could occur if stock options were
exercised.

The weighted average number of common shares outstanding for computing basic and
diluted  net  income  (loss)  per common share for the six months ended June 30,
2004  was  27,505,843.

(D)  Financial  Instruments
The  Company  considers  all  highly  liquid interest-earning investments with a
maturity of three months or less at the date of purchase to be cash equivalents.
All  cash  and investments are classified as available for sale and are recorded
at  market  value using the specific identification method; unrealized gains and
losses  are  reflected  in  Other  Comprehensive  Income  ("OCI").

Investments  consist  of  debt  instruments.  Debt  securities are classified as
available  for sale and are recorded at market using the specific identification
method.  Unrealized  gains  and  losses  (excluding  other-than-temporary
impairments)  are  reflected  in  OCI.


                                       10
<PAGE>
1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED:

2.     BASIS  OF  PRESENTATION

The  accompanying  unaudited consolidated financial statements for the three and
six  month periods ended June 30, 2004 and 2003 have been prepared in accordance
with  accounting  principles  generally accepted in the United States of America
for  interim  financial information and pursuant to the rules and regulations of
the  Securities  and  Exchange Commission for Form 10-QSB.  Accordingly, they do
not  include all the information and footnotes required by accounting principles
generally  accepted  in  the  United  States  of  America for complete financial
statements.  In  the  opinion  of  management,  the  accompanying  unaudited
consolidated  financial  statements  contain all adjustments, consisting only of
normal  recurring  accruals, considered necessary for a fair presentation of the
Company's  financial  position,  results  of  operations, and cash flows for the
periods  presented.

The  results  of operations for the interim periods ended June 30, 2004 and 2003
are  not necessarily indicative of the results to be expected for the full year.
These  interim  consolidated  financial statements should be read in conjunction
with  the  December  31,  2003  consolidated  financial  statements.


                                       11
<PAGE>
3.     ACQUISITION  OF  SPECTRUM  SCIENCES  &  SOFTWARE,  INC.:

On  April  3,  2003, Spectrum Sciences & Software Holdings Corp. (formerly Silva
Bay International, Inc.) entered into an amended and restated agreement and plan
of  merger  with  Spectrum Sciences & Software, Inc., pursuant to which Spectrum
Sciences  &  Software, Inc. became Spectrum Sciences & Software Holdings Corp.'s
wholly  owned  subsidiary.  As  part  of this agreement, 2,500,000 shares of the
Company's  common  stock  were  issued  to Donal Myrick, the sole stockholder of
Spectrum  Sciences  &  Software,  Inc.

The  acquisition  was  accounted  for  under  the purchase method of accounting;
accordingly,  the purchase price has been allocated to reflect the fair value of
assets  and  liabilities  acquired  at  the  date  of  acquisition.  Due  to the
composition  of  the majority of the governing body and senior management of the
Company  being the same as Spectrum Sciences & Software, Inc. prior to the April
3,  2003  acquisition,  Spectrum Sciences & Software, Inc. has been deemed to be
the  accounting  acquirer  (a  reverse  acquisition).

The  financial  statements  of  the  Company prior to April 3, 2003 are those of
Spectrum  Sciences  &  Software,  Inc.  The results of operation of the acquired
business  have  been  included  in  the  accompanying  consolidated  financial
statements  from  the  date  of  acquisition.


4.     CASH  AND  INVESTMENTS:

Cash  and   investments  consist  of  the following at June 30, 2004:

<TABLE>
<CAPTION>
                                                    Unrealized  Unrealized  Recorded
                                       Cost Basis     Gains       Losses     Basis
                                        ----------  ----------  ----------  -----------
<S>                                    <C>          <C>         <C>         <C>
June 30, 2004

Cash and equivalents:
Cash                                   $ 1,572,445  $        -    $      -  $ 1,572,445
Money market mutual funds                4,476,997           -           -    4,476,997
                                        ----------  ----------  ----------  -----------
Cash and equivalents                     6,049,442           -           -    6,049,442
                                        ----------  ----------  ----------  -----------

Investments:
Certificate of deposit                     500,000                              500,000
U.S. government and agency securities   21,927,654      13,781           -   21,941,435
Bond premium, net of amortization          101,951           -           -      101,951
                                        ----------  ----------  ----------  -----------
Total, investments                     $22,529,605  $   13,781    $      -  $22,543,386
                                        ==========  ==========  ==========  ===========
</TABLE>

5.     RECEIVABLES:

Receivables,  which  are  primarily  comprised of amounts due to the Company for
work  performed  on contracts directly related to the U.S. Department of Defense
and  through  U.S. Department of Defense contractors, consisted of the following
at  June  30,  2004:

Contracts  -  billed                    $     2,591,838
Contracts  -  unbilled                          298,355
Other  receivables                                8,076
                                        ---------------
                                        $     2,898,269
                                        ===============


                                       12
<PAGE>
6.     INVENTORIES:

Inventories are valued at the lower of cost or market.  Cost is determined using
the first-in, first-out method.  The major components of inventories at June 30,
2004  are  summarized  as  follows:

Raw  materials,  net  of  reserve               $     113,888
Work  in  process                                     258,722
                                                -------------
Total  inventories                                    372,610
                                                =============

7.     PROPERTY  AND  EQUIPMENT:

Property  and  equipment  at  June  30,  2004  is  summarized  as  follows:

Land                                            $     175,000
Buildings  and  improvements                        1,633,520
Furniture  and  fixtures                               28,721
Equipment                                             990,787
Vehicles                                               55,390
Investment  property                                  220,900
                                                -------------
                                                    3,104,318
Less  accumulated  depreciation                    (1,061,665)
                                                -------------
Property  and  equipment,  net                  $   2,042,653
                                                =============

8.     ACCRUED  EXPENSES:

The  major  components  of  accrued expenses at June 30, 2004 are summarized as
follows:

Accrued  salaries  and  related  benefits       $     764,409
Payroll  related  taxes                                17,457
Accrued  vacation  and  sick leave                    116,976
Accrued  interest  payable                             11,965
Accrued  property  taxes                               16,331
                                                -------------
Total  accrued  expenses                        $     927,138
                                                =============

9.     LONG  TERM  DEBT:

Long  term  debt  at  June  30,  2004  consists  of  the  following:
<TABLE>
<CAPTION>
<S>                                                                                <C>
Note  payable  to  a  bank,  due  in  monthly installments of $14,870, including
interest  at  8.50%.  Final  balloon  payment  of  $1,476,298 due April 1, 2005,
collateralized  by  real  estate  and a personal guarantee of the former Company
President.                                                                         $     1,514,491

Note  payable  to  a  bank,  due  in  monthly  installments of $1,588, including
interest at 8.75%.  Final Balloon payment due April 1, 2005, collateralized by a
condominium  and  a  personal  guarantee  of  the  former  Company  President.             188,490
                                                                                   ----------------
                                                                                         1,702,981
Less  current  portion                                                                  (1,702,981)
                                                                                   ----------------
Total  long-term  debt                                                             $             -
                                                                                   ================
</TABLE>


                                       13
<PAGE>
10.  RELATED  PARTY  TRANSACTIONS:

Transactions  related  to  BG  Capital  Group  Limited,  Endeavor Group, LLC and
--------------------------------------------------------------------------------
Related  Stockholder
--------------------
The  Company  was  provided  management  consulting services by Endeavor Capital
Group, LLC, which is owned by one of the stockholders of the Company.  The terms
of the original consulting agreement between Endeavor Capital Group, LLC and the
Company  was  from March 1, 2003, to March 1, 2004.  Consulting fees of $4,000 a
month  for  January  and  February, 2004 and expenses of $15,106 are reported as
consulting  fees  in  the  accompanying  financial  statements.

On  March 11, 2004, the Company entered into a new consulting agreement with the
stockholder.  The  term  of  the  agreement  was  for a one year period, and the
stockholder  is  tasked  with  bringing  to the Company's attention potential or
actual  opportunities  which  meet its business objectives or logical extensions
thereof, alert the Company to new or emerging high potential forms of production
and distribution, comment on corporate development, identify respective suitable
merger  or  acquisition  candidates  and  related  due  diligence and other such
planning  and  development  services  as  shall  be  requested  by  the Company.

On March 11, 2004, as a result of execution of the new consulting agreement, the
stockholder  received  options  to  purchase  9,000,000  shares of the Company's
common  stock  at  a  per  share  exercise price equal to the lesser of $1.65 or
the  fair  market  value  at  the  time  of  exercise.  In  accordance with FASB
Statement No. 123, Accounting for Stock-based Compensation, the Company recorded
consulting  expense  of  $11,418,038  in the first quarter of 2004, based on the
fair  value  of  the  stock options at the date of grant using the Black-Scholes
pricing  model.

On  April  16,  2004,  the  Company and the stockholder amended and restated the
March 11, 2004, consulting agreement. The amended agreement extended the term of
the  contract  to April 19, 2006, and contains an exclusivity provision. As part
of  that  agreement, the stockholder was issued options to acquire an additional
9,000,000  shares  of  common  stock  at a per share exercise price equal to the
lesser  of  $1.95  or  60%  of  the closing price on the day preceding notice to
exercise.  In  addition, the stockholder was issued options to acquire 5,000,000
shares  of  common  stock at an exercise price equal to the lesser of a $1.65 or
the  fair  market  value  at the time of exercise as a result of his role in the
Inland Fabricators LLC (IFAB) transaction which is further described in Part II,
Item  1  of  this filing. In accordance with FASB Statement No. 123, the Company
recorded  consulting expense of $25,840,262 in the second quarter of 2004, based
on  the  fair  value  of  the  stock  options  at  the  date  of grant using the
Black-Scholes pricing model. The total options granted to the stockholder during
the  six  months  ended  June  30,  2004,  were  23,000,000.


                                       14
<PAGE>
10.  RELATED  PARTY  TRANSACTIONS,  Continued

Transactions  related  to  BG  Capital  Group  Limited,  Endeavor Group, LLC and
--------------------------------------------------------------------------------
Related  Stockholder,  Continued
--------------------
The stockholder exercised 21,178,300 options during the first six months of 2004
with  an  aggregate  exercise  price  of  $37,097,685.  The  Company  received
$31,047,685  of  cash  from  the  stockholder  and converted outstanding debt of
$3,529,873  owed  to  the  stockholder and related companies in lieu of cash for
exercise  of  these  options.  The  Company  owed  the  stockholder  $792,030 at
December 31, 2003.  The stockholder had advanced the Company $672,551 during the
first four months of 2004 to pay operating expenses, and the Company had accrued
interest  of  $7,792 on two interest-bearing notes in the first quarter of 2004.
In  addition,  the  stockholder  paid  for  certain  investor relations expenses
totaling  $2,065,000  during the first quarter of 2004 on behalf of the Company.
During  the second quarter of 2004 the Company reversed $7,500 of those expenses
bringing  the total investor relations expense paid by the stockholder on behalf
of  the Company to $2,057,500.  As a result of these transactions the Company is
owed $2,520,126 by the stockholder at June 30, 2004 which amount has been netted
against  stockholder  equity.

These  transactions  are  summarized  in  the  following  table:

<TABLE>
<CAPTION>
<S>                                                                                     <C>
Amount owed to stockholder & related entities at December 31, 2003                      $   792,030

Advances by stockholder during January through April, 2004, to pay operating expenses       672,552

Interest accrued on outstanding notes payable                                                 7,792

Investor relations expenses paid by stockholder                                           2,057,500

Stock exercise - executed for debt on March 12, 2004                                     (1,485,000)

Stock exercise - executed for debt on March 19, 2004                                     (1,650,000)

Stock exercise -  executed April 15, 2004, for which no payment was received
                                                                                         (1,815,000)

Stock exercise - partially executed for debt on April 16, 2004                           (1,100,000)
                                                                                        ------------
Total                                                                                   $(2,520,126)
                                                                                        ============
</TABLE>

On  April  28, 2004, the Company was informed the SEC was conducting an informal
inquiry into the Company as further described in Part II, Item 5 of this filing.
As  a  result  of  this  inquiry,  on  May  4,  2004,  the Company suspended the
consulting  agreement  with  this  stockholder.

Transactions  related  to  the  spouse  of  the  President  of  the  Company
----------------------------------------------------------------------------
The  Company  in  the second quarter of 2004 repaid $52,500 to the spouse of the
President  of  the  Company.  $50,000  was  funds  advanced  to  cover operating
expenses  in  2003  and  $2,500  represented  interest.


                                       15
<PAGE>
11.  STOCK  OPTION  PLAN:

On  March  11,  2004,  the  board  of  directors  approved  and  adopted  a 2004
Non-Statutory  Stock  Option  Plan  for  10,000,000 shares of common stock to be
granted  to  employees,  non-employee  Directors, consultants and advisors.  The
vesting and terms of all of the options are determined by the Board of Directors
and  may vary by optionee; however, the term may be no longer than 10 years from
the  date  of  grant.  On  April  16,  2004,  the Board of Directors amended and
restated  the  stock  option  plan  by  increasing  the  number  of  shares from
10,000,000  to  30,000,000.

As  of  June  30,  2004,  23,000,000  options  were  granted  to  a non-employee
stockholder who provided consulting services to the Company as described in Note
10.  FASB  Statement  No. 123, Accounting for Stock-based Compensation, requires
these  options  be  valued at fair value at the date of grant. The fair value of
the  first 9,000,000 options issued was estimated at the date of grant using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions:  risk-free  interest  rate  of  1%;  no dividend yields; volatility
factors  of  the  expected  market  price  of  our  common stock of 0.62; and an
expected  life  of  the  options of 2 years. This generates a price of $1.27 per
option  at the date of grant, which was March 11, 2004. As a result, $11,418,038
of consulting expense and additional paid-in capital was recorded at the date of
grant.  The  fair value of the remaining 14,000,000 options issued was estimated
at  the  date  of  grant  using  the Black-Scholes option pricing model with the
following  weighted-average  assumptions:  risk-free  interest  rate  of  1%; no
dividend  yields;  volatility factors of the expected market price of our common
stock  of 0.67; and an expected life of the options of 2 years. This generates a
price  of  $1.85 per option at the date of grant, which was April 20, 2004. As a
result,  $25,840,261  of  consulting  expense and additional paid-in capital was
recorded  at  the  date  of  grant.

On  April  20,  2004,  the  Company  awarded  677,500  stock  options to certain
employees,  consultants,  officers  and  directors  for  services  rendered. The
Company  applied the intrinsic value method of recognition and measurement under
Accounting  Principles  Board Opinion No. 25 (APB No. 25), "Accounting for Stock
Issued  to Employees," to 602,500 stock options. As such no compensation expense
related  to  602,500 employee stock options at the date of grant is reflected in
net  income.

The remaining 75,000 options were issued to an individual who is a consultant to
the company. On April 28, 2004, that consultant exercised 40,000 options and the
company  received  $66,000 of cash at exercise. These options were valued at the
fair  market  value  at the date of grant in accordance with FASB statement 123,
Accounting  for  Stock  Compensation. The fair value of these options issued was
estimated at the date of grant using the Black-Scholes option pricing model with
the  following  weighted  average  assumptions:  risk  free interest rate 1%; no
dividend  yields;  volatility factors of the expected market price of our common
stock  of  .67; and an expected life of the option of one year. This generates a
price  of  $1.67  per  option  at  the  date  of grant. As a result, $125,358 of
consulting  expense  and additional paid in capital were recorded at the date of
grant.

12.  SEGMENT  INFORMATION:

Segment  information  has been presented on a basis consistent with how business
activities  are  reported  internally  to  management.  Management  evaluates
operating  profit  by segment taking into account direct costs of each segment's
products  and  services  as well as an allocation of indirect corporate overhead
costs.  The  Company  has  three  operating  segments  -  management  services,
manufacturing,  and engineering and information technology.  Management services
include  providing  engineering, technical, and operational services in the area
of  defense  range management specializing in bombing and gunnery training range
operation  and  maintenance.  Manufacturing  operations  include  the design and


                                       16
<PAGE>
construction  of  munitions  ground  support  equipment  and  containers for the
shipping  and storage of munitions and equipment.  The Company's engineering and
information  technology  segment  consists  of  the  sale  of  computer software
developed  to  assist  in  hazard  management  and  weapons  impact  analysis.

The following is a summary of certain financial information related to the three
segments  during  the  six  months  ended  June  30,  2004,  and  2003:

<TABLE>
<CAPTION>
                                                           Six months June 30
                                                            2004          2003
                                                        -------------  -----------
<S>                                                     <C>            <C>
Total revenues by segment
  Management Services                                   $  5,006,801   $4,637,617
  Engineering and Information Technology                     767,903      763,981
  Manufacturing                                            1,240,621    1,314,792
                                                        -------------  -----------
    Total Revenues                                      $  7,015,325   $6,716,390
                                                        =============  ===========
Operating profit (loss) by segment
  Management Services                                   $     45,008   $  172,388
  Engineering and Information Technology                     429,728      315,180
  Manufacturing                                              211,284      175,248
  Operating Expenses not allocable to segments           (41,005,374)    (439,640)
  Impairment Loss                                                        (145,974)
  Interest income (expense) net                             (101,693)    (149,145)
  Other income (expense), net                                 97,194       71,538
                                                        -------------  -----------
  Net loss before provision for income taxes             (40,323,853)        (405)
                                                        =============  ===========
</TABLE>

During the six months ended June 30, 2004 and 2003, all of the Company's revenue
was generated in the United States of America (USA). As of June 30, 2004, all of
the  Company's  long-lived  assets  are  located  in  the  USA.

13.  Commitments  and  Contingencies:

On  March  31, 2004, the Company signed a letter of intent to acquire all of the
issued and outstanding membership interests of Inland Fabricators, LLC (IFAB) as
further  described  in Part II, Item 1 of this filing.  The letter of intent was
not  binding  and  the  transaction was subject to the execution of a definitive
acquisition  agreement  by  both  parties.

On  May  6,  2004,  the Company provided guarantees in the amount of $500,000 to
secure  an  Irrevocable  Letter of Credit(LOC) in favor of a major international
construction  firm.  The  LOC  provided  the necessary performance guarantee for
IFAB  under a previously negotiated Purchase Order with that major international
construction firm.  No draws on the LOC have been made as of June 30, 2004.  The
LOC  expires  May,  2005.


                                       17
<PAGE>
On May 6, 2004, a creditor group filed a suit against IFAB for certain sums owed
to  the  creditor  group  by  IFAB  as a successor to Thomas Inland Marine, LLC,
Pipeworks,  Inc.,  Pipeworks  Reserve,  Inc.  and  Pipeworks  Venezuela.

The  Company  also has a $25,000 deposit with IFAB at June 30, 2004, in relation
to  the  letter  of intent.  The letter of intent expired on June 30, 2004.  The
Board  of Directors and company management are considering the expiration of the
letter  of  intent,  the structure of the offer and the impact of the outcome of
Inland's  pending  litigation.  The  status of negotiations with IFAB is further
described  in  Part  II,  Item  1  of  this  filing.

Robert  Genovese,  the  stockholder  described  in  Note  10 to the accompanying
financial  statements,  has submitted an additional $903,711 of expenses related
to investor relations services paid by him or related companies on behalf of the
Company.  However,  the  Company  has  not  been  provided  adequate  support
documentation  such  as  invoices,  contracts,  examples  of work performed, and
cancelled  checks  to support these expenses.  In addition, legal concerns exist
with  regard  to  these  expenses  based  on  language in the revised consulting
agreement  and  the  SEC  informal inquiry.  This matter is further discussed in
Part  II,  Item  1.

ITEM  2.       MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

You  should  read  the following discussion and analysis in conjunction with the
unaudited  financial  statements  (and  notes  thereto)  and  other  financial
information  of  our  company  appearing  elsewhere  in  this  report.

COMPARISON  OF  THREE  MONTHS  ENDED  JUNE  30,  2004  AND  JUNE  30,  2003

Consolidated  Overview:

<TABLE>
<CAPTION>
                      For the three months ended June 30
                --------------------------------------------
                          2004                 2003
                -------------------  -----------------------
<S>             <C>          <C>     <C>          <C>
Revenue         $ 3,418,747  100.0%  $ 3,443,361  100.0%
Cost of Revenue   3,054,924   89.4%    3,011,137   87.4%
                -----------  ------  -----------  ------

Gross Profit    $   363,823   10.6%  $   432,224   12.6%
                ===========  ======  ===========  ======
</TABLE>

Overall,  sales  for the three-months ended June 30, 2004 decreased by less than
1% compared to the same period in 2003, primarily as a result of decreased sales
in  the  manufacturing  segment,  offset  by  slight  increases  in sales in the
management  services  and  engineering  and  information  technology  services
segments.  Gross  profit  as  a  percentage  of  sales was 10.6% for the 3 month
period  ended  June  30,  2004,  compared  to  12.6%  for the prior year period,
primarily as a result of decrease in gross profit in the management services and
manufacturing  segment,  offset  by  an  increase  in gross profit margin of the
engineering  and  information  technology  services  segment.

With the closeout of our Management Services contract at Gila Bend and the Barry
M.  Goldwater Bombing Range (BMGR), scheduled for September 30, 2004 the Company
will  experience  a  drop  in  revenue  (and  associated costs) that will not be
immediately  replaced.   The  Gila Bend contract represents 69% of the company's
revenues  and  6.5%  of  its  gross  profit.  Overall company profit margins are
expected  to  increase  based on the other two profitable segments.  The company
will  continue  to  look  for business opportunities for our Management Services
group;  however,  the thrust will be for contracts with sufficient profitability
to  support  the  effort  of  securing and managing the higher revenue projects.

Spectrum  management  has spent the last quarter positioning the company for the
future.  The  company  has  secured  additional  manufacturing  space  via  a
lease/purchase  agreement for a building adjacent to our corporate headquarters.
This  increased  capacity  has  added  a  metal  treatment  capability  that the
manufacturing  division  did  not  previously  possess.  The company is actively
performing  treatment on its own products (reducing overall costs of production)
and  using the excess capacity to support local manufacturing concerns including
several large defense contractors in the area.  Our ultimate goal is to have the
metal  treatment  capability  revenues  supporting  the  costs of the additional
building.  With  this new facility, we have increased our manufacturing space by
33,000  square  feet.  With this increased capacity we are positioning ourselves
for  performance  on  several  large  multi-year  manufacturing contracts we are
pursuing.


                                       18
<PAGE>
Our  Engineering  and  Information  Technology  Division  is receiving the first
increment of new development efforts which are a direct result of the Safe Range
Users Conference that Spectrum hosted for the Department of Defense earlier this
year.  We  expect  further  incremental  contract  awards  as  a  result of that
conference.  These  awards  will  assure  the  next generation of the Safe Range
program's  use in the Department of Defense over the coming years.  The division
continues  to  market  it's  Safe  Borders  concept  to  appropriate  government
agencies.  Please  see  extended discussion of the status of Safe Borders in the
six  months  ending  analysis  section.

Management  Services

<TABLE>
<CAPTION>
                     For the three months ended June 30
               --------------------------------------------
                          2004                2003
               ------------  ------  ----------  ----------
<S>            <C>           <C>     <C>         <C>
Revenue        $  2,365,770  100.0%   2,344,517  100.0%
Cost of Revenue   2,338,308   98.8%   2,254,082   96.1%
               ------------  ------  ----------  ------

Gross Profit   $     27,462    1.2%  $   90,435    3.9%
               ============  ======  ==========  ======
</TABLE>

Sales  in  the  Management  Services division increased approximately 1% for the
three-month  period ended June 30, 2004 compared to 2003.  However, gross profit
declined  by  approximately  69%  due  to  increased expenses.  The increases in
revenue  and  expense  are  primarily due to scheduled increases in reimbursable
labor  cost  under  the Service Contract Act and collective bargaining agreement
for  Spectrum's  largest  subcontractor,  Washington  Group  International.  In
addition,  revenues  and gross profit margins were adversely affected due to the
way  the Company's largest range management contract was originally bid in 1999,
in that the fifth and final option year of the contract was bid at overall lower
rates  in  order  to  be  successful  in  the  contract award process.  This bid
strategy  is  no  longer  employed  by  the  company.

The Gila Bend contract represents 69% of the company's revenue and approximately
6.5%  of  the  company's  profit.   The  loss  of  this  contract  will  have  a
significant  impact  on  the  company's  revenue  that may not be immediately be
replaced.  However,  the  impact  of  the loss of profits to the company will be
minimal.  The  company  has  determined  to pursue more Operations & Maintenance
contracts that are  of the Cost Plus Fixed Fee type in the future, versus a Firm
Fixed  Price  contract  such  as  the  Gila  Bend  contract.

Engineering  and  Information  Technology  Services

<TABLE>
<CAPTION>
                For the three months ended  June 30
               ------------------------------------
                 2004     2003
               --------  ------  ---------  -------
<S>            <C>       <C>     <C>        <C>
Revenue        $447,813  100.0%  $ 434,628  100.0%
Cost of Revenue 169,877   37.9%    210,656   48.5%
               --------  ------  ---------  ------

Gross Profit   $277,936   62.1%  $ 223,972   51.5%
               ========  ======  =========  ======
</TABLE>


                                       19
<PAGE>
Sales  in  the Engineering and Information Technology Services segment increased
3.0  %  for  the  three month period ended June 30, 2004 as compared to the same
period  in  2003.

Gross profit as a percent of sales was 62.1%, an increase of 24%.  This increase
in  gross  profit  was  due  to  reductions  of  excess  management salary costs
associated  with  the  departure  of  Donald  Garrison,  Vice President, and the
restructuring  of  workflow and software production in the division.  Please see
the six month ending  M D & A section for greater discussion of Safe Borders and
other  marketing  activities  of  the  division.


Manufacturing  Segment

<TABLE>
<CAPTION>
               For the three months ended June 30,
               ----------------------------------
                      2004              2003
               --------  ------  --------  ------
<S>            <C>       <C>     <C>       <C>
Revenue        $605,164  100.0%  $664,216  100.0%
Cost of Revenue 546,739   90.3%   546,399   82.3%
               --------  ------  --------  ------

Gross Profit   $ 58,425    9.7%  $117,817   17.7%
               ========  ======  ========  ======
</TABLE>

Sales  in  the  Manufacturing segment decreased 8.8 % for the three-month period
ended  June 30, 2004 as compared to the same period in 2003.  The minor decrease
in  sales  is  a  direct  result  of  programmed pursuit and acquisition of more
profitable  engineering  and  prototype work.  This focus effectively offset the
sales  decrease  while using the excess production capacity to perform long-term
developmental  work,  much of which is proprietary to Spectrum.  During the same
period several Air Force and Navy multi-year, high margin contracts were awarded
to  the  company  which  will  contribute  to  revenue  in  future  periods.

Gross  profit  fell  $59,392  for  the three-month period ended June 30, 2004 as
compared  to  the same period in 2003.  The superior performance by the division
in  the  second  quarter  of 2003 was based on specific repetitive contract work
that  the  division  expects  to  secure  more  of  in  the  near  future.

The  division  has  made a business development shift from job-type work to more
long  term  (multi-year)  and  advanced prototyping efforts.  Our rapid response
capabilities  permit  us to accept and complete engineering design and prototype
manufacture  of components required to complete on-going U.S. Air Force armament
systems  test  and  development  programs.   In  addition,  improvements  to
manufacturing  processes and procedures were implemented which have enhanced and
streamlined  our  production  efforts.  These  improvements  have  produced cost
efficiencies  in  overhead  labor,  purchasing, inventory management and overall
manufactured  deliverables  which  will  be  reflected  in the results of future
periods.  Excess  production  capacity  has  been  used  to  perform  long-term
developmental  work,  much  of  which  is  proprietary  to  Spectrum.


Operating  Expenses

<TABLE>
<CAPTION>
                           June 30, 2004   June 30, 2003   Increase
                           --------------  --------------  ---------
<S>                        <C>             <C>             <C>
Selling, general and
  administrative expenses  $   27,053,790  $      275,170    9,731%
                           ==============  ==============  =========
</TABLE>


                                       20
<PAGE>
Selling, general and administrative expenses Selling, general and administrative
("SG&A")  expenses  increased  9,731%  for the three-month period ended June 30,
2004,  as  compared  to  the  same  period  in  2003.

During  the  quarter  ended  June  30,  2004, there was $25,965,620 recorded for
stock-based  consulting  compensation.  The  impact  caused  an  expense  to the
Company;  however,  the  grant  of the options also increased additional paid-in
capital  by $25,965,620.  In addition, the Company recorded $101,348 of investor
relations expenses and $531,108 of legal and professional fees during the second
quarter  of 2004.  The significant increase in legal fees is associated with the
company's  legal  consultations and actions taken to respond to the SEC informal
inquiry.

These  types  of  expenses  were not present in the quarter ended June 30, 2003.

Other  Income  and  Expenses

Interest  income and expense, net - Net interest expense was $38,207 and $80,313
for  the  three-month  period  ended  June 30, 2004 and 2003, respectively.  The
reduction  of  $42,106  is  due to the decrease of all principal balances due on
debt  with  SouthTrust  Bank and other vendors, except that debt associated with
the  real  estate,  and  the significant interest income of $25,845 that was not
present  in  the  quarter  ended  June  30,  2003.

Other  income  and  expense,  net - Net other income was $46,659 and $38,646 for
the  three-month period ended June 30, 2004 and 2003, respectively. The increase
of  $8,013  is  attributed  primarily  to  an increase in rental income from L-3
Communications  in  2004.


COMPARISON  OF  SIX  MONTHS  ENDED  JUNE  30,  2004  AND  JUNE  30,  2003

Consolidated  Overview:

<TABLE>
<CAPTION>
                    For the six months ended June 30
               -----------------------------------------
                         2004                 2003
               -----------  ------  -----------  -------
<S>            <C>          <C>     <C>          <C>
Revenue        $ 7,015,325  100.0%  $ 6,716,390  100.0%
Cost of Revenue  6,329,305   90.2%    6,053,574   90.1
               -----------  ------  -----------  ------

Gross Profit   $   686,020    9.8%  $   662,816    9.9%
               ===========  ======  ===========  ======
</TABLE>

Overall, sales for the six-months ended June 30, 2004 increased by 4.5% compared
to  the  same  period  in  2003  due  to  increased  marketing  activity and the
Management  Services  segment's growth of 7.9%.  Gross profit as a percentage of
sales  remained  fairly  constant at 9.8 % for the 6 month period ended June 30,
2004.  The  increases  in  revenue  are  primarily due to scheduled increases in
reimbursable  labor  cost  under  the  Service  Contract  Act  in the management
services  division.


                                       21
<PAGE>
Management  Services

<TABLE>
<CAPTION>
                    For the six months ended June 30,
               ------------------------------------------
                          2004                  2003
               ------------  ------  ------------  ------
<S>            <C>           <C>     <C>           <C>
Revenue        $  5,006,801  100.0%     4,637,617  100.0%
Cost of Revenue   4,961,793   99.1%     4,465,229   96.3%
               ------------  ------  ------------  ------

Gross Profit   $     45,008    0.9%  $    172,388    3.7%
               ============  ======  ============  ======
</TABLE>

Sales  in  the  Management  Services  segment increased approximately 7.9% while
expenses  increased  11.1% for the six-month period ended June 30, 2004 compared
to  2003.  In addition, the establishment of the collective bargaining agreement
for  the  fire  department  which  is  run  by Spectrum's largest subcontractor,
Washington  Group  International,  has  increased  costs  for  the  period.

Engineering  and  Information  Technology  Services

<TABLE>
<CAPTION>
                For the six months ended  June 30,
               -----------------------------------
                      2004               2003
               --------  ------  ---------  ------
<S>            <C>       <C>     <C>        <C>
Revenue        $767,903  100.0%  $ 763,981  100.0%
Cost of Revenue 338,175   44.0%    448,801   58.7%
               --------  ------  ---------  ------

Gross Margin   $429,728   56.0%  $ 315,180   41.3%
               ========  ======  =========  ======
</TABLE>

Sales  in  the  Engineering and Information Technology Services segment remained
constant  for  the  period ended June 30, 2004 as compared to the same period in
2003.

Second  quarter  revenues  accelerated and made up the deficit recorded in first
quarter revenues, which resulted in the flattening of the revenues year to date.
Second  quarter  revenue  increases were attributable to a ramp up in production
and  delivery  of  software  enhancements  and modifications as demand for these
products  continues  to increase.  Divisional revenues are projected to increase
even  more  over the next quarter as Government "fall out" funding is identified
to  fund  "unfunded"  requirements  generated at the Safe Range Users Conference
held  in  May  and  as  software  license  sales  are  realized

Gross  profit  as  a  percent  of sales was 56%, an increase of more than 36% as
compared  to  the  same  period  in  2003.  This  increase  in  gross  profit is
attributable  to  the  elimination  of excess management salary costs associated
with  the departure of Donald Garrison, Vice President, and the restructuring of
workflow and software production in the division.  The segment also continues to
enjoy  high  profit  margin  potential  of  firm-fixed  priced contracts used to
procure  required  software  products.  In  addition, costs of revenues produced
continues  to decline as consultant staff are converted to company employees and
strict  financial  management  processes  are  put  in  place.


                                       22
<PAGE>
Marketing  and  Status  of  Safe  Borders
-----------------------------------------

As  of  the  end of second quarter, 2004, we have developed a core capability in
three  (3)  of  the  five  (5)  basic  modules  for our Safe Borders product, as
designed.  The  three  modules  with  core  capabilities  are  the: 1) Detection
Analyses  module,  2)  Sensor  Planning module, and 3) Airborne Mission Planning
module.  The  core  capabilities  in  the three developed modules are robust and
functionally  effective  in  their  current  state.  The functionality, as built
today,  could  be  used  by  a  mission  planner  to perform detection analysis,
sensor  planning  or  airborne  mission  planning.

To date, Safe Borders represents approximately 10,000 Lines of Code (LOC). It is
designed  and developed as an object oriented (OO) application and is written in
Delphi's  development  environment.  By  comparison Safe Range represents 70,000
LOC  (structured), but this must be qualified by the fact that Safe Range is not
an  OO  application.  By  being written as an OO application, much efficiency is
realized  in  the  OO  LOC  metric.  Object  oriented  applications (OO) provide
numerous  other  benefits.

Safe Borders is being designed as a component-based application framework.  This
will  allow  custom applications to be built quickly, providing a rapid response
to  new  user  requirement  and/or  changing  user  requirements.

At  the beginning of the program in 2003, Safe Borders had limited functionality
(or  proof-of-concept)  prototypes.  These prototypes were used to elicit market
reaction  and market requirements.  Today, we have a fairly robust demonstration
product,  as  well  as  supporting collateral, web site and customer lead lists.

Promising  third  quarter  activities  include  delivering  a  Safe  Borders
presentation/demonstration  at  a  joint  meeting  of  the  Customs  and  Border
Protection  (CBP),  Applied Technology Division and the Immigrations and Customs
Enforcement,  Office  of  Air  and  Marine Interdiction, C2ISR (Command, Control
Intelligence  Surveillance  Reconnaissance)  section  at  the  invitation of the
Acting  Assistant Commissioner, CBP.  In addition, Spectrum will be attending an
Industry  Days  function  (by  specific  invitation) conducted by the U.S. Coast
Guard  (USCG),  Deepwater Program, August 31 - September 2, 2004.  The Deepwater
Program  is  the  USCG's  multi-billion  dollar program to replace all ships and
aircraft  (to  include  Unmanned Aerial Vehicles - UAVs) over the next 10 years.

Manufacturing  Segment

<TABLE>
<CAPTION>
                  For the six months ended June 30,
               --------------------------------------
                        2004                2003
               ----------  ------  ----------  ------
<S>            <C>         <C>     <C>         <C>
Revenue        $1,240,621  100.0%  $1,314,792  100.0
Cost of Revenue 1,029,337   81.9%   1,139,544   86.7%
               ----------  ------  ----------  ------

Gross Profit   $  211,284   18.1%  $  175,248   13.3%
               ==========  ======  ==========  ======
</TABLE>

Sales in the Manufacturing segment decreased 5.6% for the six-month period ended
June  30,  2004  as  compared  to  the  same  period  in 2003.  We are currently
producing  several  First  Articles  items,  such  as specialized containers and
aircraft  maintenance  stands.  We  have  also  been qualified on numerous First
Article  Acceptance  Tests.  A  First  Article  item  is  similar to a prototype
developed  under  an awarded contract and must be approved by the customer prior
to  full  production.  An Acceptance Test is a verification of our manufacturing
and  quality control procedures to ensure that the product being delivered meets


                                       23
<PAGE>
all  customer  requirements  and specifications.  Once full production begins on
these  items;  notably  the  Advanced  Medium  Range Air-to-Air Missile (AMRAAM)
container  and the AMRAAM component containers, among others, sales are expected
to  increase.

Gross  profits  improved  significantly  by  20.5%  during  this  same six-month
reporting  period  based  primarily  on  a  conscious  business  decision  to
continuously  improve  every facet of our manufacturing processes.  While subtly
shifting  to  the  pursuit  of  more  profitable  longer-term  contracts,  other
improvements  were  implemented;  such as "In-Time Manufacturing", and processes
were  revised to further enhance the quality, efficiency, and cost-effectiveness
of  our  operations.  All  manufacturing personnel completed a 16-hour course of
instruction  on Lean Manufacturing and Quality Principles during June, funded by
the  State of Florida.  Spectrum continues to apply judicious cost reduction and
sound  fiscal  management  practices  necessary  to reduce overall expense while
ensuring  delivery  and  quality  standards  are  maintained

The  shift  in  marketing  emphasis  to  the  acquisition  of substantially more
profitable  prototype  manufacturing  efforts requires a great deal of recurring
engineering  and  rapid  manufacturing  support.  Coupled  with  the  pursuit of
prototype  and  developmental  work,  business  development  personnel  are
concentrating  on  long-term,  multi-year  type  contract  vehicles,  which will
provide  a  smoother  workflow while at the same time providing opportunities to
accept  variable  quick-reaction/rapid  response  workload.

In  June,  the  manufacturing  division  expanded into a new facility at 97 Hill
Avenue  adjacent  to  the  corporate  headquarters at 91 Hill Avenue.  This move
increases  our  entire manufacturing space by 33,000 square feet.  It adds a new
capability  for  a  full metal treatment line and doubles our painting capacity.

<TABLE>
<CAPTION>
<S>                        <C>             <C>             <C>
                           June 30, 2004   June 30, 2003   Increase
                           --------------  --------------  ---------
Selling, general and
  administrative expenses  $   41,005,374  $      439,640     9,227%
                           ==============  ==============  =========
</TABLE>

Selling,  general  and  administrative  expenses  -  Selling,  general  and
administrative ("SG&A") expenses increased 9,227% for the six-month period ended
June  30,  2004,  as  compared  to  the  same  period  in  2003.

During  the  quarter  ended  June  30,  2004, there was $25,965,620 recorded for
stock-based  consulting  compensation.  In the quarter ended March 31, 2004, the
company previously recorded $11,418,038 for stock-based consulting compensation.
The  impact  caused an expense to the Company; however, the grant of the options
year-to-date  also  increased  additional  paid-in  capital  by $37,161,563.  In
addition,  the  Company recorded $2,266,545 of investor relations expenses as of
June  30,  2004. These expenses were not present in the same quarter ended 2003.


                                       24
<PAGE>
The  Company  had increased legal costs of $420,840, accounting fees of $104,131
and  director's  fees  and expenses of $45,445 year to date.  All of these costs
are  associated  with  the  public  filings  with  the  Securities  and Exchange
Commission,  the costs of management of a public company and the response to the
SEC  informal  inquiry.

These  types  of  expenses  were not present in the quarter ended June 30, 2003.

Other  Income  and  Expenses

Interest  income  and  expense,  net  -  Net  interest  expense was $101,693 and
$149,145  for  the  six-month period ended June 30, 2004 and 2003, respectively.
The reduction of $47,452, or a reduction of 31.8%, is due to the decrease of all
principal balances eliminated except the debt on the real estate, as well as the
increased  interest  income  earned  on the funds held in near-term investments.
Other income and expense, net - Net other income was $97,194 and $71,538 for the
six-month  period  ended June 30, 2004 and 2003, respectively.  The increase  of
other income in the amount of $25,656 is attributed primarily to the decrease of
monthly  expenses  associated with corporate consultants for 2004 as compared to
the  same  period  in  2003.

Capital  and  liquidity

During  the  six  months  ending  June  30,  2004 cash and equivalents increased
$5,352,483,  as  compared  to  December  31,  2003.  At  June 30, 2004, cash and
equivalents  totaled  $6,049,442, as compared with $264,832 at June 30, 2003. As
of  June  30,  2004,  the Company had $22,543,386 in certificates of deposit and
short-term  government-backed  securities  as  a result investing funds received
from  the  exercise  of  stock  options  by  Robert  Genovese.

At  June  30,  2004,  working  capital  was $28,727,967, as compared to negative
working  capital  of  <$1,182,912>  at  December  31,  2003.

At  June 30, 2004, the current ratio was 9.52, as compared to a ratio of 0.68 at
December  31,  2003.

ITEM  3.     CONTROLS  AND  PROCEDURES

Our  principal  executive  and financial officers evaluated the effectiveness of
our  disclosure  controls and procedures in place as of June 30, 2004.  Based on
this  evaluation,  our principal executive and financial officers concluded that
our controls and procedures are effective in providing reasonable assurance that
the  information  required  to  be  disclosed  in  our  reports  filed  with the
Securities  and  Exchange  Commission  is  accurate  and  complete  and has been
recorded,  processed, summarized and reported in a timely manner.  Subsequent to
the  date of this evaluation, there have not been any significant changes in our
internal controls over financial reporting that have materially affected, or are
reasonably  likely  to  affect,  our internal controls over financial reporting.

Consistent  with  Section  10A(i)(2)  of the Securities Exchange Act of 1934, as
added  by  Section  202  of  the  Sarbanes-Oxley Act of 2002, we are required to
disclose  the  non-audit  services  approved  by  our  Board  of Directors to be
performed  by  Tedder,  James,  Worden  & Associates, P.A. our external auditor.
Non-audit  services  are  defined  as  services  other  than  those  provided in
connection  with an audit or a review of our financial statements.  Our Board of
Directors  currently  has not approved the engagement of Tedder, James, Worden &
Associates,  P.A.  to  perform any non-audit services in 2004.


                                       25
<PAGE>
                           PART II - OTHER INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS

Harassment  Suit
----------------

In  December  2002,  three  Spectrum  Sciences and Software, Inc. employees each
filed  complaints  for  violation  of  civil rights, discrimination, harassment,
hostile  work  environment  and retaliation in the United States District Court,
District of Arizona.  The case numbers for these complaints are: CIV '02 2621PHX
MHM;  CIV '02 2619 PHX DKD; and CIV '02 2620 PHX FJM.  In January 2003, Spectrum
filed  answers  to  all three complaints, denying all allegations of wrongdoing.
All  three  plaintiffs  are  claiming "undue stress and anxiety" from Spectrum's
actions.  There  are  no  damage  amounts  specified in any of the actions.  The
plaintiffs  are  requesting  the  following:  Compensatory damages, plus special
incidental  damages in such a sum as may be proven at trial; punitive damages in
such  a  sum  as  may  be proven at trial; for cost for the suit; for attorney's
fees; and for other such relief as the Court deems just and proper.  The Company
intends  to  vigorously  defend its position.  The cases have progressed through
the  establishment of a case management plan with the courts and a consolidation
of all the cases into a single action.  Plaintiff and Defendant Depositions were
taken  and additional discovery is continuing.  It is anticipated that the final
pretrial  conference  will  be scheduled during the first two weeks of September
2004.  The  Company  currently does not know what the outcome of this litigation
will  be.


Section  16  (b)  Claim
-----------------------

On  July  16,  2004,  a complaint was filed in the United States District Court,
Southern  District  of  Florida  by  Todd  Augenbaum  [Plaintiff] against Robert
Genovese,  Endeavor  Capital  Group,  LLC,  BG  Capital Group, Ltd, and Spectrum
Sciences and Software Holdings Corp.  The suit alleges that Mr. Genovese and his
affiliated  companies beneficially owned more than 10% of the outstanding common
stock  of Spectrum and that Mr. Genovese acted as an officer and director of the
Company.  Based  on  these  assertions,  the suit claims that Mr. Genovese was a
statutory  insider  of  Spectrum, and as such, is presumed to have had access to
material  non-public  information concerning the Company's operations and future
business  prospects, and is therefore subject to the provisions of Section 16(b)
of the Exchange Act.  The action was brought by the Plaintiff in order to obtain
a  recovery  for  the  Company  of  short-swing  profits  alleged  to  have been
unlawfully  obtained  by  Mr.  Genovese through the purchase and sale of Company
securities.  The  Company  is  a  nominal  defendant  in  the  action and has no
liability  for  the  claims  asserted therein against the other defendants.  The
Company  is investigating and analyzing the allegations and issues raised by the
action.  The  Company's  answer or other pleading responsive to the complaint is
currently due August 26, 2004.  The Company cannot currently make any prediction
of  what  the  outcome  of  the  litigation  will  be.



                                       26
<PAGE>
Inland  Fabricators
-------------------

On  March  31, 2004, Spectrum Sciences & Software Holdings Corp. (the "Company")
offered  a  Letter  of Intent (LOI) to acquire all of the issued and outstanding
membership  interests  (the  "Members")  of  Inland  Fabricators, LLC, a Limited
Liability  Company  organized  under  the  laws  of  Louisiana  ("IFAB"), or its
nominees  or assignees, or acquire IFAB by merger with a subsidiary of Acquiror.
The  LOI  was not binding, and the transaction would be subject to the execution
of  a  definitive  acquisition  agreement by both parties.  The Letter of Intent
expired  on  June  30,  2004.  The  Spectrum  Board  of  Directors  and  company
management  are  considering  this  and  the  restructuring  of  a  new  offer.

Under the March 31 LOI, if the acquisition went forward, the Company would issue
shares  of  its common stock to the Members in consideration for their interests
in  IFAB.  As  the  transaction was proposed in the LOI, the Company would place
4,000,000 shares of common stock in escrow and the shares would be released from
escrow  in  amounts  and  from  time to time as based on an agreed formula.  The
Board  of  Directors  is  reconsidering  the  structure  of  this  offer.

On  May  6,  2004,  the Company provided guarantees in the amount of $500,000 to
secure an Irrevocable Letter of Credit ("LOC") in favor of a major international
construction  firm.  The  LOC  provided  the necessary performance guarantee for
IFAB  under a previously negotiated Purchase Order with that major international
construction  firm.

On  May 6, 2004, a Creditors Group consisting of Modern Valve, Inc., Thomas Pipe
& Steel, LLC, Radnor Alloys, Inc., Portable Machine Works, Inc., Analytic Stress
Relieving,  Inc.  and  Custom  Blast Services, Inc. filed suit no. 519924 in the
19th  Judicial  District  court,  Parish of East Baton Rouge, State of Louisiana
against  various  individuals and Members of IFAB.  Spectrum Sciences & Software
Holdings  Corporation was not named as a party to the suit, however, mention was
made  of  Spectrum's  LOI  for the proposed purchase of Inland Fabricators. LLC.
The  suit  alleges  amongst other issues that IFAB as successor to Thomas Inland
Marine  LLC,  Pipeworks,  Inc., Pipeworks Reserve, Inc., and Pipeworks Venezuela
owes  certain sums to the Creditor Group based on debt incurred by Thomas Inland
Marine  and  Pipeworks  et  al.  Due  diligence  is  continuing on the potential
acquisition  and  the  potential outcome of the Creditors suit and its impact on
the  potential  transaction  is  undetermined  at  this  time


Contract  for  Operations  and  Maintenance of the Gila Bend Air Force Auxiliary
--------------------------------------------------------------------------------
Field  (AFAF)  and  the  Barry  M.  Goldwater  Range  (BMGR)
------------------------------------------------------------

The  Company  is  the  current contractor providing services to the Air Force at
Gila  Bend  AFAF  and the BMGR (Barry m. Goldwater Bombing Range).  The contract
runs  through  September  30, 2004.  The Government solicited for a new contract
under  Solicitation  F02604-03-R0041.  As  the  incumbent  contractor,  Spectrum
submitted a bid for continued services for the five year period starting October
1,  2004.  On  July  21, 2004, Spectrum was notified via certified mail that the
contract  had  been awarded to another firm.  On July 26, 2004, Spectrum filed a
protest  with  the  General  Counsel,  Government  Accountability  Office  (GAO)
asserting  that  the  source selection was materially flawed and that Spectrum's
proposal was not properly evaluated in accordance with the criteria set forth in
the  solicitation.  On  August  10, 2004, Spectrum was notified that the GAO had
dismissed  the  protest  and  Spectrum  management has determined not to request
reconsideration  by  the GAO at this time.  Spectrum's contract at Gila Bend and
the  BMGR  will  end  on  September  30, 2004.  The company does not foresee any
significant  costs  associated  with  closing  out  this  contract.


                                       27
<PAGE>
ITEM  2.     CHANGES  IN  SECURITIES

Robert  Genovese  was  awarded  options to purchase 9,000,000 shares of Spectrum
stock  on  March  11, 2004.  As of March 31, 2004, Mr. Genovese filed Notices of
Exercise  for  2,800,000  options.  Those shares had an exercise price of $1.65.
The  first  exercise  was  on  March  12,  2004 for 900,000 shares.  The company
elected  to  convert  debt  in  lieu of cash for approximately $1,485,000.  This
first exercise completely eliminated all past non-investor relations debt to Mr.
Genovese.  The  second  Notice  of  Exercise  was  on March 15, 2004 for 900,000
shares.  The  company  received  $1,485,000  in cash from Mr. Genovese for those
shares.  On  March 19, 2004, Mr. Genovese presented the company with a Notice of
Exercise  for 1,000,000 shares.  This third exercise of shares was paid for by a
second  debt  conversion  of $1,650,000 by Mr. Genovese for his company Endeavor
Capital.  This  $1,650,000  in  debt  to Endeavor Capital Corp. is debt directly
related  to all invoices presented to Spectrum by Endeavor Capital Corp. for its
work  performed  in  the  area  of  investor  relations  and  publicity.

On  April  16, 2004, the Company and Mr. Genovese amended and restated the March
11,  2004,  consulting agreement. The amended agreement extended the term of the
contract  to  April  19, 2006, and contains an exclusivity provision. As part of
that  agreement,  the  stockholder  was  issued options to acquire an additional
9,000,000  shares  of  common  stock  at a per share exercise price equal to the
lesser  of  $1.95  or  60%  of  the closing price on the day preceding notice to
exercise.  In  addition, the stockholder was issued options to acquire 5,000,000
shares  of  common  stock at an exercise price equal to the lesser of a $1.65 or
the  fair  market  value  at the time of exercise as a result of his role in the
Inland Fabricators LLC (IFAB) transaction which is further described in Part II,
Item  1  of  this filing. In accordance with FASB Statement No. 123, the Company
recorded  consulting expense of $25,840,262 in the second quarter of 2004, based
on  the  fair  value  of  the  stock  options  at  the  date  of grant using the
Black-Scholes pricing model. The total options granted to the stockholder during
the  six  months  ended  June  30,  2004,  were  23,000,000.

The stockholder exercised 21,178,300 options during the first six months of 2004
with  an  aggregate  exercise  price  of  $37,097,685.  The  Company  received
$31,047,685  of  cash  from  the  stockholder  and converted outstanding debt of
$3,529,873  owed  to  the  stockholder and related companies in lieu of cash for
exercise  of  these  options.  The  Company  owed  the  stockholder  $792,030 at
December 31, 2003.  The stockholder had advanced the Company $672,551 during the
first four months of 2004 to pay operating expenses, and the Company had accrued
interest  of  $7,792 on two interest-bearing notes in the first quarter of 2004.
In  addition,  the  stockholder  paid  for  certain  investor relations expenses
totaling  $2,065,000  during the first quarter of 2004 on behalf of the Company.
During  the second quarter of 2004 the Company reversed $7,500 of those expenses
bringing  the total investor relations expense paid by the stockholder on behalf
of  the Company to $2,057,500.  As a result of these transactions the Company is
owed  $2,520,126  by  the  stockholder  at  June 30, 2004.  This amount has been
presented  as a component of additional paid in capital since it is considered a
stock  subscription  receivable  at  June  30,  2004.


                                       28
<PAGE>
ITEM  3.     DEFAULTS  IN  SENIOR  SECURITIES

Not  applicable.


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

Not  applicable.

ITEM  5.     OTHER  INFORMATION

On  April  28, 2004, Spectrum Sciences & Software Holdings Corp. was informed by
the  Securities and Exchange Commission (SEC), Division of Enforcement that they
were  conducting an informal inquiry into the Company.  In conjunction with that
inquiry,  the  SEC has requested the Company to voluntarily provide the SEC with
the  documents  and  information they requested.  More specifically, the SEC has
requested,  among  other  things:
-    All  documents  concerning  Robert  Genovese ("Genovese"), Endeavor Capital
     Group  Ltd.,  and  B.G.  Capital  Group  Ltd.;
-    All  documents  concerning  any purchase or sales of the Company's stock by
     Genovese,  Endeavor,  B.G.  Capital,  or  any  Company officer, director or
     manager,  or  any  related  party;
-    All  documents  concerning  stock  options in the Company held by Genovese,
     Endeavor,  B.G  Capital,  or  any  other  related  persons  or  parties;
-    All  documents  concerning press releases or public announcements issued by
     the  Company;
-    All  documents  concerning  statements  made  by  the Company to securities
     analysts  or  in  the  media;
-    All documents concerning any promotional materials concerning the Company's
     stock;
-    All  documents  concerning  the  resignation  of  Donal  Myrick.

On  May  17,  2004,  the  SEC  broadened its request for information to include:
-    All  information  relating to the Company's decision to list on any foreign
     exchange;
-    All documents relating to the listing of the Company's stock on any foreign
     exchange;
-    Any  information relating to any transfers of stock that the Company may be
     aware  that  were  directed  overseas.

Subsequent  to  the  notification of the initial inquiry, the Board of Directors
elected  to  suspend  the  current  consulting agreement between the Company and
Robert  Genovese  pending  the outcome of the SEC inquiry.  The Company is fully
cooperating  with  the  SEC  inquiry.

ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

a)     Exhibits:  None
b)     Reports  on  Form  8-K:  None


                                       29
<PAGE>
SIGNATURES


Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on this 18th day of
May  2004.


                                      SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP

     Date:  August  16,  2004


                                           /s/ William H. Ham
                                      By:  -------------------------------------
                                           William H. Ham,
                                           Chief Executive Officer and President


The  undersigned,  the Chief Financial Officer of the Registrant, certifies that
this  report complies with all of the requirements of section 13(a) and 15(d) of
the  Exchange  Act and the information contained in this report fairly presents,
in  all  material respects, the financial condition and results of operations of
the  Registrant.

     Date:  August  16,  2004

                                           /s/ Nancy  C.  Gontarek
                                           -------------------------------------
                                           Nancy  C.  Gontarek,
                                           Chief  Financial  Officer


                                       30
<PAGE>