UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2004

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                        FOR THE TRANSITION PERIOD FROM TO

                        COMMISSION FILE NUMBER: 000-32849
                                                ----------

                            ACCUPOLL HOLDING CORP.
                            ----------------------
             (Exact name of registrant as specified in its charter)

             NEVADA                                  11-2751630
             ------                                  ----------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

               15101 RED HILL AVE. SUITE # 220, TUSTIN, CA   92780
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (949) 200-4000
                                                           ---------------

Securities registered under Section 12(b) of the Exchange Act:  None

Securities  registered  under Section  12(g) of the Exchange Act:  Common Stock,
$.001 par value per share

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]


         Indicate by check mark if disclosure  of delinquent  filers in response
to  Item  405 of  Regulation  S-K is  not  contained  herein,  and  will  not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-K/A
or any amendment to this Form 10-K/A. [X]



         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Act). Yes [X] No [ ]

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity was last sold,  or the average bid and asked price of such common
equity, as of the last business day of the registrant's most recently  completed
second  fiscal  quarter.  As of December 31, 2003:  $101,215,926.00  (67,477,284
shares at $1.50/ share).

         Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock, as of the latest  practicable date:  180,705,970 shares
of common stock, $.001 par value per share, as of September 24, 2004.

         Documents incorporated by reference:

         Certain portions of the  registrant's  definitive proxy statement to be
filed with the Securities and Exchange  Commission pursuant to Regulation 14A in
connection  with the  registrant's  2004  Annual  Meeting  of  Stockholders  are
incorporated  herein by  reference  into Part III of this Annual  Report on Form
10-K/A.

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                                TABLE OF CONTENTS

                                                                           PAGE

                                     PART I

Item 1.     BUSINESS.........................................................1
Item 2.     PROPERTIES......................................................17
Item 3.     LEGAL PROCEEDINGS...............................................17
Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............18

                                    PART II

Item 5.     MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
            MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES...............18
Item 6.     SELECTED FINANCIAL DATA.........................................19
Item 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS.......................................20
Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......26
Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................27
Item 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE........................................27
Item 9A.    CONTROLS AND PROCEDURES.........................................27
Item 9B.    OTHER INFORMATION...............................................27

                                    PART III

Item 10.    DIRECTORS AND OFFICERS OF THE REGISTRANT........................27
Item 11.    EXECUTIVE COMPENSATION..........................................27
Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT......................................................27
Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................27
Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES..........................27

                                     PART IV

Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES......................28

SIGNATURES  ................................................................30



<PAGE>

                                     PART I

NOTE REGARDING FORWARD LOOKING INFORMATION

         Various statements in this Form 10-K/A and in future filings by us with
the  Securities  and  Exchange  Commission,  in our press  releases  and in oral
statements  made by or with the  approval  of  authorized  personnel  constitute
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995.  Forward-looking  statements are based on current
expectations  and are  indicated  by  words  or  phrases  such as  "anticipate,"
"could," "currently envision," "estimate," "expect," "intend," "may," "project,"
"seeks," "we  believe,"  "will," and similar  words or phrases and involve known
and  unknown  risks,  uncertainties  and other  factors  that may  cause  actual
results,  performance  or  achievements  to differ  materially  from any  future
results,   performance   or   achievements   expressed   or   implied  by  those
forward-looking  statements. Some of the factors that could affect our financial
performance  or cause  actual  results  to  differ  from our  estimates  in,  or
underlying,  such forward-looking  statements are set forth under the heading of
"Risk Factors."

         These forward-looking  statements are based largely on our expectations
and are subject to a number of risks and uncertainties, many of which are beyond
our control.  Actual results could differ materially from these  forward-looking
statements as a result of the facts described in "Risk Factors." We undertake no
obligation to update publicly or revise any forward-looking statements,  whether
as a result of new  information,  future events or otherwise.  In light of these
risks  and  uncertainties,   we  cannot  assure  you  that  the  forward-looking
information contained in this Form 10-K/A will, in fact, transpire.

ITEM 1. BUSINESS

THE COMPANY

         AccuPoll  Holding  Corp.  ("AccuPoll",  "we" or "us") seeks to become a
leader in  developing  and  marketing  computerized  voting  machines  and their
associated  products and services for use in federal,  state,  local and private
elections.

         We have  developed a direct  recording  electronic  (DRE) voting system
that provides a voter-verified  paper audit trail that is both human and machine
readable. Our system was qualified as meeting federal voting system standards on
March 25, 2004 and we believe that it is currently  the only  electronic  voting
system providing these features that is so qualified. Key benefits of our voting
system include:  an intuitive touch screen  interface,  an audit capability that
includes  multiple copies of the electronic  records and a voter-verified  paper
audit trail (VVPAT) that is both human and machine readable. Additional benefits
include the ability to support  multiple  languages,  to prevent  overvotes,  to
provide under-vote  warnings,  the use of software based on open source products
(e.g.,  Linux) and open standards  (e.g.,  XML,  Unicode,  Java), and the use of
non-proprietary hardware.

         As of September  22, 2004,  our DRE voting  system was certified by the
states of Alabama, Arkansas, Kentucky, Mississippi, Ohio, South Dakota, Utah and
West Virginia. Currently, we are in the process of applying for certification in
additional states.

         Our objective is to protect citizens' right to vote by insuring access,
accuracy,  privacy and integrity in the voting process and in so doing to become
the leading  provider of polling  place  electronic  voting  solutions  that are
reliable, accurate, immediate,  confidential, secure, easy-to-use and auditable.
Our website address WWW.ACCUPOLL.COM.

         We are  subject to the  informational  requirements  of the  Securities
Exchange  Act of  1934,  and in  accordance  therewith  file  reports,  proxy or
information  statements and other  information  with the Securities and Exchange
Commission.  Such  reports,  proxy  statements  and  other  information  can  be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,  D.C. 20549.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.20549, at
prescribed rates. In addition, the Commission maintains a web site that contains
reports,  proxy  and  information  statements  and other  information  regarding


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registrants  that file  electronically  with the Commission.  The address of the
Commission's web site is http://www.sec.gov.

         We are in  the  process  of  building  a  section  of  our  website  at
WWW.ACCUPOLL.COM  to make available our reports that we file with the Securities
and Exchange  Commission.  Until this section of our website is operational,  we
voluntarily provide paper copies of our filings free of charge upon request.

CORPORATE HISTORY

         We were  incorporated  in the State of Nevada on January  30, 1985 with
the name "Kiwi  Ventures,  Ltd." On  November  4, 1985,  we changed  our name to
"Western  International Pizza Corporation" and owned and operated 17 Godfather's
pizza  franchise  restaurants  in Arizona  until we ceased those  operations  in
approximately 1990.

         Our  current  operations  began in August  2001 with the  formation  of
AccuPoll, Inc., a Delaware corporation. On May 20, 2002, we entered into a share
exchange with AccuPoll,  Inc.  Pursuant to the exchange,  all of the outstanding
common stock and warrants of AccuPoll,  Inc. were exchanged for our shares. As a
result of the exchange,  the stockholders of AccuPoll,  Inc. acquired 75,500,000
shares of our common stock, which represented  approximately 98.7% of our issued
and  outstanding  common stock  immediately  after the  exchange.  Following the
exchange, we changed our name to "AccuPoll Holding Corp."

RECENT ACQUISITIONS

         On June 30,  2004,  we entered into an agreement to acquire 100% of the
issued and outstanding  capital stock of NTS Data Services,  Inc. ("NTS"), a New
York corporation with an address at 1342 Military Road,  Niagara Falls, New York
14304 (the  "Agreement").  According to the Agreement,  upon closing,  NTS would
become a  wholly-owned  subsidiary  of AccuPoll.  The  Agreement is subject to a
number  of terms and  conditions,  including  but not  limited  to  satisfactory
completion of due  diligence,  completion  of financing and other  conditions as
outlined in the Agreement.  As of August 31, 2004 the transaction had not closed
due to certain  conditions of the transaction not being met. NTS provided such a
letter to AccuPoll expressing interest not to move forward with the contemplated
transaction.

INDUSTRY BACKGROUND

         Elections, especially those in democratic countries, are held under the
auspices of various  government  systems.  Until the 1960's almost all elections
were   conducted   with   manually   counted   pre-printed   paper  ballots  and
lever-activated  mechanical  voting machines,  commonly known as lever machines.
Lever  machines,  which are  cumbersome to use and consist of hundreds of moving
parts,  require  significant  maintenance  and are  expensive to  warehouse  and
transport.  This method of voting and  recording of votes,  in addition to being
inefficient,  was susceptible to inaccuracies,  significant  time delays,  other
mechanical  difficulties,  and in some  instances  manipulation.  In  1964,  the
Votomatic punch card voting system was patented.  While this system has not been
actively  manufactured  since the mid 1980s,  it remains  the most  widely  used
system in North America.  In the early 1980's,  optical scan voting systems were
introduced  and began to  penetrate  the  election  equipment  market place on a
relatively  small  scale.  According  to a  study  conducted  by the  California
Institute  of  Technology  and  Massachusetts  Institute of  Technology,  market
penetration  for optical scan voting  systems  grew to slightly  over 25% of the
installed voting machine base nationwide as of July 2001.

         In recent years, the election industry began to computerize in response
to increased public acceptance and familiarity with using computers. The benefit
of computers is that they offer the opportunity to count ballots  accurately and
quickly.  Additionally,  computer  technology has created the potential for more
convenient   participation,   accessibility   for   disabled   voters   to  vote
independently  and the  elimination  of pre-printed  paper ballots.  Service and
support  have  also  become  increasingly  important  components  of the  newer,
technologically  advanced voting systems.  While the employment of technology is
becoming more generally accepted,  we believe that many voting systems currently
being marketed lag in the application of state-of-the-art computer technology.

         To our knowledge, of the voting systems on the market produced and sold
by the four largest voting system vendors  (Diebold  Election  Systems,  Sequoia
Voting Systems,  Election Systems + Software and Hart InterCivic),


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only  Sequoia  Voting  Systems  currently  produces a DRE voting  system  with a
voter-verified  paper audit trail.  Many of our competitors  continue to receive
poor reviews from the academic,  information-security  and political communities
for inadequate security, deficient software coding standards,  inadequate change
management practices, and lack of a voter verified paper audit trail. We believe
that some of these systems continue to operate with non-certified  software, and
lack flexible functionality.

         DRE  voting  systems  are  computer-based   systems  first  and  voting
appliances  second.  Because every computer system is susceptible to programming
bugs and/or possible tampering, we believe that computerized voting systems must
provide for an independent,  voter verified  record of each voter's  intent.  We
believe that in order to provide a system that the voter can have confidence in,
we must provide a voter with a voter-verified  paper audit trail. Our DRE voting
system provides for both a secure electronic recording of the voting process and
an indelible voter-verified  paper-audit trail that satisfies the federal voting
system standards for  record-keeping  that is maintained  independently from the
electronic results.

MARKET OPPORTUNITY

         The U.S.  presidential  election of November 2000 had a significant and
disruptive impact on the nation. According to a report from California Institute
of Technology  and  Massachusetts  Institute of  Technology,  approximately  1.5
million votes were lost in 2000 because of  difficulties  in either using voting
equipment or recording the results of those votes. The difficulties  experienced
with accuracy and  verifiability,  particularly  with punch card  systems,  have
generated   opportunities   for  manufacturers  of  electronic  voting  systems.
Following the 2000 election, the U.S. Congress enacted the Help America Vote Act
of 2002,  or HAVA.  HAVA was signed  into law by  President  Bush on October 29,
2002. HAVA expanded the federal government's role in elections through mandates,
standards and funding.  The U.S. Congress  authorized a total of $3.9 billion to
help states  implement  HAVA. In 2003,  $650 million was disbursed to the states
under HAVA. Of this $650 million,  half of the funds were  designated to replace
punch card and lever voting machines and the balance could be used by the states
to comply with HAVA's  requirements  and  implement  other  improvements  to the
administration  of  elections.  An  additional  $3 billion is authorized to help
states fund HAVA's  requirements for updating voting systems,  allowing disabled
voters  to vote  independently,  providing  provisional  ballots,  creating  and
maintaining  statewide  voter  registration  lists,  training poll workers,  and
educating  voters.  These  funds  are  distributed  to  states  annually  over a
three-year  period after  individual  states  certify that they have developed a
plan to use the funds to implement HAVA requirements.  States are also obligated
to  provide a five  percent  match.  Beginning  in May 2004,  the newly  created
Elections  Assistance  Commission began receiving state  certifications,  and as
each state's certification is processed,  funds will be disbursed.  Beginning on
January 1, 2006, HAVA requires that state voting systems:

          o    Permit  the voter to  review  the votes  selected  and  change or
               correct votes before the ballot is cast;

          o    Notify  the  voter if he or she  casts  more  than one vote for a
               single office and provide an opportunity to correct the ballot;

          o    Produce a permanent paper record with a manual audit capacity;

          o    Provide  disability  access,  including  nonvisual access for the
               blind and visually  impaired,  in a manner that provides the same
               opportunity for access and participation  (including  privacy and
               independence) as for other voters;

          o    Provide alternative language accessibility; and

          o    Comply with error rate standards.

         Further, each state is required to adopt uniform and non-discriminatory
standards for what constitutes a vote and how it will be counted.

         According to the National Association of Secretaries of State there are
approximately  200,000  polling  places in the  United  States,  covering  7,000
jurisdictions,  with 1.4 million  polling  place  workers  supervised  by 22,000
election officials.  According to surveys conducted by the National  Association
of  Counties  the  typical  polling  place in the  United  States  is  currently
configured to contain an average of seven voting stations.  On election day, the
100 million  voters in the United  States use over 1.4 million  voting  machines
where  approximately  60% of the voting  sites are  currently  using  antiquated
punch, lever, or paper ballot technologies. These are the same machine types for
which HAVA mandates  replacement by 2006. We are targeting  these polling places
with our


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touch-screen electronic DRE voting product.

OUR PRODUCTS

         The AccuPoll DRE voting system  consists of one or more voting stations
that offer  voters an  "ATM-like"  interface,  and that  prepare and print voter
verified paper records,  also known as "Proof of Vote" or "voter  verified paper
audit trail," for machine or hand counting.  Each in-precinct  voting station is
physically connected by means of a local area network to a voting administrative
workstation.  The entire  in-precinct  system is not  connected  to any  network
outside of the polling place during voting hours. The user-friendly touch screen
interface provides the user easy to follow instructions.  The system is compact,
sturdy and has an estimated useful life of at least five years.

         Once a voter  makes his or her  choices,  a Proof of Vote is printed on
paper by the voting  station.  The voter can then  examine the Proof of Vote for
accuracy  before  depositing it into a ballot box. If the Proof of Vote does not
accurately  reflect  the  voter's  intent,  that voter can then notify a polling
place  official.  The  official  will then void the  electronic  ballot  and its
corresponding Proof of Vote, and allow the voter to re-vote. Importantly,  while
the Proof of Vote is printed, the voter's electronic ballot is stored locally on
the voting  station and is also  immediately  transmitted  to the polling  place
voting administrative workstation. Thus, when the polling place closes, multiple
redundant  copies of the  electronic  ballots are  available  in addition to the
paper Proofs of Vote. At no time is the voter's identity  associated with either
the electronic  ballot or the paper Proof of Vote.  Accordingly,  each ballot is
securely  stored  in  multiple  locations  and in  forms  that  can  be  readily
cross-audited against each of the other ballot representations.

         We have based our system  software on open  standards  (JAVA  language,
Unicode,  and XML for the ballot and behavior  specifications).  As a result, we
have eliminated the need to deploy  proprietary  technologies that are expensive
to acquire and maintain and which we believe often lack the flexibility to adapt
quickly to meet changing voting system standards.  Our solutions are scalable in
the software and hardware design.  Our hardware  components are "off the shelf",
and replacement parts, such as printers, are readily available, thereby reducing
maintenance costs and unit downtime.

         We  have  designed  our  product  with  both  the  voter  and  election
administrator in mind. To our knowledge,  we have created the only voting system
that has been  qualified as meeting  federal  voting  system  standards and that
offers a  voter-verified  paper  audit  trail  that is both  human  and  machine
readable,  and is readily  accessible and easily  employable by disabled voters.
Examples of our system's  disability  accommodating  functions include a special
tactile keypad to facilitate  ease of navigation for the blind,  Braille text on
the keypad,  audio ballot support in the voter's selected language,  recognition
of  non-human   touch  from  users  with   prosthetic   limbs,   and  wheelchair
accessibility.  The touch screen function is user-friendly and has been designed
to minimize potential errors. Other notable features include the ability to:

          o    support  multiple  languages,  both  on-screen  and in audio (all
               languages supported by Java/Unicode);

          o    alter visual  schemes to better  enable those with modest  visual
               impairments, such as color blindness or tunnel vision;

          o    notify  electronically  the  voting  administrator  of  equipment
               malfunction(s);

          o    spoil an erroneous  ballot  before the voter  deposits his or her
               Proof of Vote into the ballot box;  the  ability to provide  full
               support for provisional ballots as required by HAVA; and

          o    record write-in candidates.

         Elections   officials  also  enjoy  benefits  from  our  system  as  it
eliminates  the  need  for  costly  pre-printed  paper  ballots.   The  election
tabulation and reporting  functions greatly enhance the reliability and accuracy
of the voting process. Furthermore, the non-proprietary hardware ensures greater
inter-operability and ease of repairs or upgrades.

         We have  entered  into a contract  for the  manufacture  of our current
product which is comprised of a printer, touch screen, computer processing unit,
smart card reader,  integrated case, power supply and related control  software.
The  contract  requires  us  to  acquire  the  product   exclusively  from  this
manufacturer  unless the  manufacturer  is unable to produce and deliver on time
our required quantity. We believe that other manufacturers would be available to
manufacture  the  product  should  this  manufacturer  become  unavailable.  The
manufacturer  may change prices upon 60 days prior written  notice to us. Unless
sooner  terminated,  the agreement expires in December 2006. As of September 22,
2004, the manufacturer and its president own 766,000 shares of our common stock.
For a


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discussion of risks with respect to this arrangement, please see "Risk Factors -
Risks Relating to Our Business - We rely on a third-party manufacturer."

BUSINESS STRENGTHS

         Our key business strengths are described below:

         OUR  PRODUCT  IS A  FEDERALLY  QUALIFIED  VOTING  SYSTEM  WITH A  VOTER
VERIFIED PAPER AUDIT TRAIL THAT IS BOTH HUMAN AND MACHINE READABLE. On March 25,
2004, the AccuPoll  voting system was qualified as being compliant with the 1990
federal  voting  system  standards as to hardware,  and the 2002 federal  voting
system  standards as to software.  We believe that our  technology  is currently
unmatched  in its  capability  to  simultaneously  produce  multiple  copies  of
electronic  ballots  (recorded on both the polling  place voting  administrative
workstation and the local voting  station),  as well as generate an independent,
voter-verified  paper audit  trail,  which is  completely  auditable  and can be
optically  scanned.  We  believe  the  ability  of our system to provide a fully
auditable  paper record of the election is critical,  as HAVA  requires that any
voting system purchased with federal funds produce a permanent paper record with
a manual audit  capacity  that will be  available as an official  record for any
recount.  We have  submitted an updated  version of our DRE voting system to the
Independent Test  Authorities  (ITAs) for full  qualification  testing under the
2002 federal voting system standards.  We expect to complete full  qualification
testing under the 2002 federal voting standards before January 1, 2005.

         WE ARE WELL POSITIONED TO TAKE ADVANTAGE OF THE CURRENT MARKETPLACE AND
ENVIRONMENT   OF  ELECTION   REFORM.   We  believe  that  we  have   designed  a
technologically  advanced  electronic  voting  product  that  meets the  current
federal  voting  system  standards  and the  requirements  of  HAVA,  as well as
addresses current voting systems'  technology  deficiencies.  We believe that we
are first to market in terms of  designing a voting  system that  complies  with
both the requirements of HAVA and the federal voting system standards. Achieving
voting  system  standards  compliance  can be a  lengthy  and  arduous  process,
typically taking twelve or more months, thereby posing a significant barrier for
competitors. In addition to being qualified under the federal standards, we have
spent the past two years  marketing our product to our target  customer base and
thus we believe we are well positioned to begin generating sales once the states
begin disbursing their federal funds and we have received the appropriate  state
certifications.  With the recent availability of $2.35 billion to the states, we
believe that a number of significant  purchasing decisions will be made prior to
the end of 2004.  As of June 17, 2004,  approximately  half of the federal funds
have been  distributed  to the states.  The  remaining  funds are expected to be
distributed once the states complete the necessary  requirements.  However,  the
portion of funds used by a state for  acquisition  of new  voting  systems  will
depend upon each state's plan and we cannot assure you that states will use this
funding to purchase  our product or that states will make  purchasing  decisions
this year.

         WE  HAVE  RELATIONSHIPS  WITH  WELL-KNOWN  AND  ESTABLISHED   PARTNERS.
AccuPoll  has  entered  into  teaming  and  reseller   agreements  with  various
established companies that offer election-related services. We have entered into
a teaming  agreement with Alternative  Resources  Corporation  (ARC) whereby ARC
will  provide  deployment  and support  services for our DRE voting  system.  In
addition,  we have entered into a multi-state reseller agreement with AmCad, LLC
whereby AmCad will assist with the  marketing  and  deployment of our DRE voting
system. We are currently in negotiations with additional  well-known,  large and
well capitalized marketing partners in other targeted states. However, we cannot
assure you that any of these  negotiations  will lead to a  definitive  business
relationship in the future.

         OUR  EXPERIENCED  MANAGEMENT  TEAM HAS DEEP  KNOWLEDGE  OF  INFORMATION
TECHNOLOGY. Our senior management collectively has 80 years of experience in the
information  technology  industry  in  coding  and  development  marketing.  Our
management  team has held senior  positions  at leading  information  technology
firms,  such as MCI Systemhouse and EDS, and has considerable  experience in the
process of large-scale systems deployment.

BUSINESS STRATEGY

         We plan to  leverage  our  business  strengths  in  order  to grow  our
operations. The key elements to our business strategy are described below:


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         LEVERAGE THE MARKETING STRENGTH AND INFRASTRUCTURE OF OUR PARTNERS.  We
believe that the  relationships  that we are  building  with our  marketing  and
reselling  partners  will help to  position us in critical  larger  markets.  We
believe that we will gain enhanced  credibility  through  associating with these
partners.  Additionally,  we believe that we have the ability to leverage  their
resources  and  networks  and in turn be better  positioned  to sell and  deploy
programs  into  these  larger  target  markets.  Our  partners  are well  known,
established companies that have considerable  experience in providing technology
solutions  and service  support in the  election  process.  We will  continue to
maintain,  and intend to expand,  our strategic  alliances  with these and other
established partners in the election services business. Currently we have chosen
to develop partnering relationships on a state-by-state basis.

         EXPAND  OUR  TARGETED,  INDEPENDENT  MARKETING  STRATEGY  TO SMALL- AND
MID-SIZED  CUSTOMERS.  We have begun a direct marketing approach to reach small-
and mid-sized target markets. We initiated this marketing program by identifying
specific  regions  and  developing  a  presence  by  attending  trade  shows and
conferences,  which provides us with  opportunities to meet, as well as educate,
our  customers.  We also  market  our  system by means of our  website  and have
prepared a web-based  virtual voting experience to further enhance the awareness
and  understanding  of our product.  We are  building  awareness of the AccuPoll
product so as to be well  positioned  in our target  markets as HAVA  funding is
disbursed to the states.  We are working to obtain all  appropriate  federal and
local certification with that timing in mind. We intend to grow our direct sales
and marketing force,  engage additional  lobbyists in our target states,  engage
local  sales/marketing  agents,  and build a robust  sales  support and delivery
organization that will reinforce our sales and marketing activities. The ramp up
in each of these areas is critical to support  the  upcoming  procurement  cycle
that will begin following the May 2004 release of federal funds to the states.

         MAINTAIN  PRODUCT  LEADERSHIP.  As the  developer  of the first  voting
system  with a  voter-verified  paper  audit  trail  that  is  both  human-  and
machine-readable and that is also qualified as compliant with the federal voting
system  standards,  we believe  that our product has the  potential  to become a
leader in the voting system market.  We are firmly committed to ongoing research
and development and  standardized  product testing to insure that our electronic
voting  system  continues  to be a leading  platform in the  market.  We plan to
design and test new  generations  of our  product  with the intent of  enhancing
functionality in anticipation of additional  government  requirements and market
demands (e.g., instant runoff voting).

         SELECTIVELY EXPAND INTO RELATED PRODUCT OFFERINGS. When appropriate, we
intend to  acquire  selectively  related  businesses  that  complement  our core
product  line and expand the range of  services  that we can offer our  customer
base.  As we find  opportunities  that broaden our  offerings,  we will consider
making  additional  acquisitions.  We believe it is important to complement  our
revenue  stream by  expanding  into related  products and services  where we can
leverage our knowledge and capabilities in electronic voting systems.

         EXPAND ADDRESSABLE  MARKETS VIA ENTRY INTO FOREIGN VENUES. The standard
election process is universal by nature, and as part of its core technology, the
AccuPoll DRE voting system was designed and  implemented as a flexible  platform
that can be adapted to meet the needs of  various  countries.  We plan to expand
our  international  sales  effort  in  Europe,  Canada,  Asia/Pacific  and Latin
America.

REGULATORY MATTERS

         We expect that our voting systems will be sold primarily to counties in
the United States and other  governmental  jurisdictions.  In the United States,
our ability to sell our voting system products  depends on the  qualification of
each product through  independent testing for compliance with the federal voting
system standards.  In addition,  most states require  state-level  certification
before  we may  sell  our  products  to local  jurisdictions  in  those  states.
Moreover,  local  jurisdictions may require vendor  qualification and acceptance
level testing.  Because we plan to sell our products to government agencies,  we
will  be  subject  to  laws,   regulations  and  other  procedures  that  govern
procurement and contract implementation by those agencies.

         As of September  22, 2004,  our DRE voting  system was certified by the
states of Alabama, Arkansas, Kentucky, Mississippi, Ohio, South Dakota, Utah and
West Virginia. Currently, we are in the process of applying for certification in
additional states.

         Obtaining the necessary qualifications and certifications and complying
with  government  procurement


                                       6

<PAGE>

requirements can be time consuming, involve unexpected delays and may be costly.
We are subject to a number of  significant  risks and  uncertainties  associated
with government  regulation and procurement  that could materially and adversely
affect our business. For a description of these risks and uncertainties,  please
see "Risk Factors - Risks Relating to Regulation."

ENVIRONMENTAL PROTECTION

         Our compliance with federal, state and local laws or regulations,  that
govern the discharge of materials  into the  environment  has not had a material
adverse effect upon our capital  expenditures,  earnings or competitive position
within our markets.

COMPETITION

         The  market  for the  manufacture  and  supply of  computerized  voting
machines is highly competitive. We anticipate that competition will intensify in
the  future.  As  of  June  30,  2004,  we  believe  that  our  competitors,  in
alphabetical order, included:

COMPANY NAME                                          PRODUCT NAME
------------                                          ------------
Advanced   Voting   Solutions,   Inc.,  a             WINvote
private company based in Frisco, Texas

Avante International Technology,  Inc., a             VOTE-TRAKKER
private  company based in Princeton,  New
Jersey

Diebold Elections  Systems,  Inc., (DESI)             AccuVote-TS
a subsidiary  of Diebold,  Inc.  based in
McKinney, Texas

Election  Systems +  Software  (ES+S),  a             IVotronic
private company based in Omaha, Nebraska

Guardian Voting Systems,  a subsidiary of             ELECTronic 1242
Danaher   Controls   based   in   Gurnee,
Illinois

Hart InterCivic,  a private company based             eSlate
in Austin, Texas

Sequoia Voting  Systems,  a subsidiary of             AVC Edge
De  La  Rue,   plc,   based  in  Oakland,
California

Unilect  Corporation,  a private  company             Patriot
based in Dublin, California

         We believe that the  following are the primary  competitive  factors in
our market:

o        accessibility;
o        auditability;
o        brand recognition and market penetration;
o        customer support and service;
o        ease of use;
o        government qualification and certification of products;
o        price;


                                       7

<PAGE>

o        reliability of services; and
o        security.

         We believe that we compete  favorably  with  respect to these  factors.
However,  many of our competitors have significantly greater market penetration,
brand-name  recognition,  engineering and marketing  capabilities and financial,
technological and personnel  resources than we do. As a result, they may be able
to develop and expand their  customer base more  quickly,  adapt more swiftly to
new or  emerging  technologies  and  changes in  customers'  requirements,  take
advantage of acquisitions  and other business  opportunities  more readily,  and
devote greater  resources to the marketing and sale of services than we can. Our
competitor's  products may offer different features than our products that might
make their products more attractive to some voting administrators. To the extent
that  we do not  compete  successfully  with  respect  to  any  of  the  primary
competitive factors in our market, our business may be materially harmed.

RESEARCH AND DEVELOPMENT

         We  expect  that the pace of  technological  advances  in the  computer
voting  machine  industry  will  rapidly   increase.   Our  ability  to  compete
successfully  is heavily  dependent  upon our ability to ensure a continuing and
timely flow of  competitive  products and  technology  to the  marketplace.  Our
internal  product  development  efforts are focused on designing and  developing
computerized  voting machines that adhere to industry  standards and incorporate
the technologies and features that we believe are most desired by our customers.

         Expenditures for research  activities  relating to product  development
and  improvement  were  approximately  $176,000  for the  period  August 9, 2001
(inception) through June 30, 2004.

         We believe that continued  strategic  investment in product development
is  essential  for us to become  competitive  in the  markets we serve.  Without
significant  additional financing,  we will be unable to continue development of
our products.

INTELLECTUAL PROPERTY

         We  rely  upon  trade  secrets,   technical   know-how  and  continuing
technological  innovation to develop and maintain our competitive position.  The
products  that we  design  require  a large  amount of  engineering  design  and
manufacturing  expertise.  The  majority  of these  technological  capabilities,
however,  are not protected by patents or licenses.  We rely on the expertise of
our  employees and our learned  experiences  in both design and  manufacture  of
these products.  We have taken steps to protect both our  intellectual  property
and brand name in the  marketplace.  We have applied to the United States Patent
and  Trademark  Office  for a systems  and  method  patent  with  respect to our
electronic  voting  system  that  produces an official  voter  verifiable  paper
ballot. We have also filed trademark  applications with the United States Patent
and Trademark Office to protect the Accupoll brand name and logo. We are subject
to  a  number  of  significant  risks  and  uncertainties  associated  with  our
intellectual  property that could  materially and adversely affect our business.
For a description of these risks and  uncertainties,  please see "Risk Factors -
Risks Relating to our Technology."

OUR EMPLOYEES AND CONSULTANTS

         As of  June  30,  2004,  we  had  19 and  10,  respectively,  full-time
employees and  consultants.  Our employees are not  represented  by a collective
bargaining organization. We believe our relationship with our employees is good.

                                  RISK FACTORS

         BEFORE  DECIDING  TO  INVEST  IN US OR TO  MAINTAIN  OR  INCREASE  YOUR
INVESTMENT, YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, IN ADDITION
TO OTHER INFORMATION CONTAINED IN THIS REPORT. EACH OF THE FOLLOWING RISKS COULD
CAUSE  OUR  BUSINESS,  FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS  TO BE
MATERIALLY HARMED. THESE RISKS COULD CAUSE THE TRADING PRICE OF OUR COMMON STOCK
TO DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.


                                       8

<PAGE>

RISKS RELATING TO OUR BUSINESS

WE HAVE INCURRED SIGNIFICANT LOSSES TO DATE AND MAY NEVER BE PROFITABLE.

         We began our  current  operations  on August 9, 2001 and have  incurred
significant  operating  losses during each fiscal period since that date. We had
no revenues during the period from  commencement of our voting system operations
through June 30, 2004.  Revenues from our wholly owned  subsidiary Z Prompt were
$1.7 million from  November 1, 2003 through June 30, 2004.  At June 30, 2004, we
had an accumulated  deficit of approximately  $21.2 million from our operations.
We expect that we will incur  significant  operating  losses and  negative  cash
flows from operations for the foreseeable  future. If our losses continue and we
are unable to commercialize,  manufacture and market our products  successfully,
we may never generate sufficient  revenues to achieve  profitability or positive
cash flows from operations.

OUR AUDITORS HAVE  INCLUDED A GOING  CONCERN  PARAGRAPH IN THEIR AUDIT REPORT ON
OUR FINANCIAL STATEMENTS FOR OUR FISCAL YEAR ENDED JUNE 30, 2004.

         We have prepared our  consolidated  financial  statements  for the year
ended June 30, 2004 on a going-concern basis, which contemplates the realization
of assets and  satisfaction of liabilities  and other  commitments in the normal
course of  business.  However,  the report from our  independent  auditors  with
respect to our  consolidated  financial  statements  for the year ended June 30,
2004 states that our losses from  operations,  negative working capital and lack
of operational history, among other factors, raise "substantial doubt" about our
ability to continue as a going concern.

OUR SUBSIDIARY,  Z PROMPT, INC. HAS FILED A PETITION FOR RELIEF UNDER CHAPTER 11
OF THE UNITED STATES BANKRUPTCY CODE AND WE MAY LOSE OUR ENTIRE INTEREST IN IT.

         On March 23, 2004, our wholly-owned subsidiary, Z prompt, Inc., filed a
petition for relief under  Chapter 11 of the United  States  Bankruptcy  Code. Z
prompt continues to conduct business  activities as a  debtor-in-possession.  We
cannot predict the outcome of this proceeding and it involves numerous risks and
uncertainties, such as:

     o    The appointment of a trustee;

     o    The ability of creditors to obtain relief from the automatic stay;

     o    The continued willingness of customers to do business with Z prompt;

     o    The ability of Z prompt to obtain financing on acceptable terms;

     o    The  outcome  of any  adversary  proceedings  that have been or may be
          commenced by or against Z prompt;

     o    The possible  conversion of the case to liquidation under Chapter 7 of
          the Bankruptcy Code or dismissal of the case;

     o    The  ability to obtain  confirmation  of a plan of  reorganization  on
          terms acceptable to us; and

     o    The ability of Z prompt to successfully  execute any confirmed plan of
          reorganization.

         In  addition,  Z prompt will incur legal and other fees and expenses in
connection  with the bankruptcy  proceedings  and we may be unable to fund these
costs. Z prompt has been our only source of consolidated revenues since November
1,  2003,  the date on which  the  acquisition  was  recognized  for  accounting
purposes.  If Z prompt is unable to reorganize  successfully,  we could lose our
entire interest in it.

WE WILL NEED SIGNIFICANT ADDITIONAL FINANCING TO CONTINUE OPERATIONS.

         We  require  substantial  additional  financing  in order to be able to
continue operations. In the past, our capital requirements have been met through
sales of our common stock and  convertible  notes.  We cannot assure you that we
will be able to raise new capital or that  sources of capital  will be available
to us on terms that we find  acceptable.  If we are unable to obtain  additional
financing  on  acceptable  terms,  we will be  unable  to  continue  operations.
Moreover,  if we raise  additional  capital  through  borrowing  or  other  debt
financing,  we would incur  substantial  interest  expense.  Sales of additional
equity  securities or securities  convertible into equity securities will


                                       9

<PAGE>

result in dilution to our present stockholders.

WE HAVE  GENERATED NO REVENUES FROM OUR VOTING SYSTEM  PRODUCT,  AND AN UNPROVEN
BUSINESS STRATEGY AND HAVE ONLY A LIMITED OPERATING HISTORY FOR YOU TO REVIEW IN
EVALUATING OUR BUSINESS AND PROSPECTS.

         At June 30, 2004,  we had  generated  no revenues  from the sale of our
voting  system  products.  Our limited  operating  history makes it difficult to
evaluate  our  prospects.  We cannot  assure you that we will be able to achieve
significant sales of our products or maintain product sales.

WE EXPECT THAT OUR  OPERATING  RESULTS MAY  FLUCTUATE  SUBSTANTIALLY,  WHICH MAY
MATERIALLY AFFECT OUR BUSINESS AND THE MARKET PRICE OF OUR COMMON STOCK.

         You should  not rely on our  period-to-period  financial  results as an
indication of our future performance.  We expect that our operating results will
fluctuate  substantially as a result of a number of factors,  many of which will
be beyond our control such as the following:

     o    When our products  are  qualified  as  compliant  with federal  voting
          system standards and certified by the states;

     o    When  public  agencies  schedule  procurements  of  electronic  voting
          systems and the timing associated with the procurements;

     o    Delays in the development and introduction of our products;

     o    Delays in the manufacture and delivery of our products;

     o    The adoption of new or amended federal voting system standards,  state
          certification requirements,  or other legal mandates applicable to our
          products;

     o    The hiring, retention and utilization of our personnel;

     o    The financial impacts associated with future business acquisitions, if
          any;

     o    The receipt of additional financing;

     o    General economic conditions; and

     o    The  occurrence  of other events or  circumstances  described in these
          risk factors.

         Fluctuations in our operating  results could affect the market price of
our stock and could cause the price to decline. As a result, we may be unable to
finance future growth through sales of our equity securities.

IF WE ARE  UNABLE TO EXPAND  OUR  SALES,  MARKETING,  DISTRIBUTION  AND  SERVICE
CAPABILITIES  OR ENTER INTO  AGREEMENTS  WITH THIRD PARTIES TO DO SO, WE WILL BE
UNABLE TO SUCCESSFULLY MARKET AND SELL OUR PRODUCTS.

         We currently have limited sales, marketing or distribution capabilities
and limited service capabilities.  If we are unable to expand these capabilities
either  by  developing  our  own  sales,  marketing,   distribution  or  service
organization or by entering into  agreements with others at a competitive  cost,
we will be unable to market and successfully sell our products. We plan to enter
into strategic  relationships  with other companies to provide services relating
to our products,  including product roll-out support, election worker education,
help desk, and break/fix  support.  We cannot assure you that we will be able to
develop and maintain  successful  relationships  on terms  acceptable to us. The
failure to do so could materially and adversely affect the marketing and sale of
our products.

WE RELY ON A THIRD  PARTY  MANUFACTURER.  TO THE EXTENT  THAT THIS  MANUFACTURER
EXPERIENCES  FINANCIAL  OR  OPERATIONAL  DIFFICULTIES,  OUR  BUSINESS  COULD  BE
INTERRUPTED.

         We currently  rely, and expect to continue to rely, on a third party to
manufacture  our  product.  Our  agreement  requires  us to acquire  the product
exclusively from this manufacturer  unless the manufacturer is unable to produce
and deliver on time our required quantity.  To the extent that this manufacturer
experiences  financial  or  operational  difficulties,  our  business  could  be
interrupted. These difficulties could inhibit our ability to provide products in
sufficient  quantities with acceptable  quality and at an acceptable cost to our
customers.  Any disruption in supply of our product from this manufacturer would
cause us to delay  delivery to our customers  that could lead to a loss of sales
and revenues.


                                       10

<PAGE>

WE FACE SUBSTANTIAL  COMPETITION AND POTENTIAL  COMPETITION FROM OTHERS WHO HAVE
SIGNIFICANTLY GREATER FINANCIAL RESOURCES AND OTHER RESOURCES THAN US.

         We  expect  significant   competition  from  existing  competitors  and
potential  competitors.  We may not  have  the  financial  resources,  technical
expertise,  sales and  marketing  abilities or support  capabilities  to compete
successfully.  Many of our existing competitors have greater market penetration,
brand-name recognition, market presence, engineering and marketing capabilities,
and financial,  technological  and personnel  resources than we do. As a result,
many of our competitors have several  significant  advantages over us as we seek
to market and sell our products.

OUR FUTURE  SUCCESS  DEPENDS UPON  RETAINING KEY PERSONNEL  AND  ATTRACTING  NEW
EMPLOYEES.

         Our  future  performance  depends   significantly  upon  the  continued
contributions of both Mr. Dennis Vadura,  our chief executive  officer,  and Mr.
Frank J. Wiebe,  our  president.  The loss of the services of Mr.  Vadura or Mr.
Wiebe or any of our senior  management or key  personnel  could  materially  and
adversely affect our business.  We may not be able to retain these employees and
searching for their  replacements  could divert attention from senior management
and delay our ability to  implement  our  business  strategy.  All of our senior
management  and key employees can terminate his or her  relationship  with us at
any time.

         If we are successful in implementing and developing our business, among
other  things,   we  expect  that  we  will  need  to  increase  our  workforce.
Accordingly,  our future  success will likely  depend on our ability to attract,
hire, train and retain highly skilled management,  technical,  sales,  marketing
and customer support personnel.  Competition for qualified  employees is intense
and our financial resources are limited.  Consequently, we may not be successful
in attracting,  hiring,  training and retaining the people we need,  which would
impede our ability to implement our business strategy.

WE HAVE ENGAGED IN TRANSACTIONS  WITH A COMPANY OWNED BY TWO INDIVIDUALS WHO ARE
ALSO OUR DIRECTORS, OFFICERS AND SHAREHOLDERS.

         In April  2002,  we entered  into a master  services  agreement  with a
company,  Web Tools  International,  Inc., that is owned and operated by Messrs.
Dennis Vadura and Frank Wiebe. Each of these individuals is a director,  officer
and  shareholder  with  respect  to  both us and Web  Tools  International.  The
agreement  terminated  on March 31,  2004.  The  financial  results of Web Tools
International  were  consolidated  with our results from January 1, 2004 through
March  31,  2004.  As of June 30,  2004 we owed  Web  Tools  International  $1.5
million.

WE WILL  NEED TO  CONTINUE  TO  IMPROVE  AND  DEVELOP  PRODUCTS  IN  ORDER TO BE
SUCCESSFUL.

         We  expect  that the pace of  technological  advances  in the  computer
voting  machine  industry  will  rapidly   increase.   Our  ability  to  compete
successfully  is heavily  dependent  upon our ability to ensure a continuing and
timely flow of competitive products and technology to the marketplace. We cannot
assure  you that we will be  successful  in the  timely  development  of new and
improved technologies.

WE ARE SUBJECT TO CURRENT LITIGATION.

         We are  defendants  in two separate  lawsuits.  In addition,  we may be
subject to  litigation  in the future.  For a  description  of this  litigation,
please see "ITEM 3 - LEGAL PROCEEDINGS."

WE MAY  ACQUIRE  OTHER  BUSINESSES  AND OUR  BUSINESS  COULD BE  MATERIALLY  AND
ADVERSELY AFFECTED AS A RESULT OF ANY OF THESE ACQUISITIONS.

         We  are  looking  for  strategic  opportunities  to  grow  our  product
offerings through acquisitions or strategic investments.  In this regard, during
the year ended June 30,  2004,  we entered  into an agreement to purchase all of
the  outstanding  shares of Z prompt,  Inc. that was  recognized  for accounting
purposes  during our fiscal quarter ended  December 31, 2003. In the future,  we
may acquire or make strategic investments in other complementary  businesses. We
have limited experience in acquiring or investing in other businesses and we may
not be successful in completing,  financing, or integrating an acquired business
into our existing operations.


                                       11

<PAGE>

         Any such  acquisitions  could  involve the dilutive  issuance of equity
securities and the incurrence of debt. In addition, the acquisition of Z prompt,
Inc. and future acquisitions may involve numerous additional risks, such as:

     o    unanticipated costs associated with the acquisition or investment;

     o    diversion of management time and resources;

     o    problems in assimilating and integrating the new business operations;

     o    potential loss of key customers or personnel of an acquired company;

     o    increased legal and compliance costs; and

     o    unanticipated liabilities of an acquired company.

         Even when an  acquired  company  has  already  developed  and  marketed
products,  we  can  not  assure  you  that  the  products  will  continue  to be
successful,  that product  enhancements will be made in a timely fashion or that
pre-acquisition  due diligence  will have  identified  all possible  issues that
might arise with respect to the acquired  company or its products and that could
materially and adversely affect us.

RISKS RELATING TO OUR TECHNOLOGY

SHOULD OUR PRODUCTS FAIL TO PERFORM  PROPERLY,  OUR REPUTATION COULD BE DAMAGED,
WE COULD LOSE SALES AND CUSTOMERS  AND WE COULD  POTENTIALLY  INCUR  SIGNIFICANT
LIABILITIES.

         Our  products  incorporate  a number  of  intricate  computer  software
programs  and hardware  components  that must work  seamlessly  in order for our
product  to  function  correctly.  While we expect  our  products  to perform to
federal  voting  system  standards,  we cannot  assure you that our product will
function  properly at all times. If our system's  software  programs or hardware
components  experience  failure or  malfunction or are alleged to have failed or
malfunctioned,  we  are  likely  to  receive  significant  adverse  publicity  -
particularly  if the  failure is alleged to have had an effect on the outcome of
an election.  As a result, our reputation could be damaged,  we could lose sales
and customers and we could potentially incur liabilities.

SHOULD  WE  FAIL  TO  SECURE  OR  PROTECT  OUR  INTELLECTUAL   PROPERTY  RIGHTS,
COMPETITORS MAY BE ABLE TO USE OUR TECHNOLOGIES.

         We have applied to the United States Patent and Trademark  Office for a
patent with respect to our  electronic  voting  system that produces an official
voter verifiable paper ballot and for trademark registration with respect to the
AccuPoll name and logo. We cannot assure you that a patent will be issued or our
trademarks will be registered.  If issued,  we cannot assure you that we will be
able to defend or enforce the patent,  trademark or other intellectual  property
rights that we may have in our products,  name or logo. Although we may initiate
litigation  to stop  infringement,  intellectual  property  litigation  is often
expensive and could consume our limited financial resources. Additionally, third
parties may be better able to sustain the costs of litigation.  If we are unable
to  defend  or  enforce  our  rights,  other  parties  may be  able  to use  our
technologies  without  paying any  compensation  to us.  Furthermore,  we cannot
assure you that our competitors  will not design around any issued  patents,  or
improve upon our technology, or that we will be able to detect infringements. If
we are unable to  establish,  defend or enforce  rights to our  technology,  our
business may be materially damaged.

SHOULD WE SUE TECHNOLOGIES  THAT CONFLICT WITH THE RIGHTS OF THIRD PARTIES,  OUR
BUSINESS COULD BE MATERIALLY AND ADVERSELY AFFECTED.

         Our  competitors  and  others  may  have or  acquire  patent  or  other
intellectual  property  rights that they could attempt to enforce against us. If
they do so, the following could occur:

     o    We could be sued and required to defend  ourselves  in  time-consuming
          and costly  litigation  (even if it is ultimately  determined that the
          claim is without merit);

     o    We  may  be  adjudged   liable  for   substantial   damages  for  past
          infringement, including possible treble damages if it is found that we
          have willfully infringed;

     o    We may be prohibited  from selling or licensing our product  without a
          license which may not be


                                       12

<PAGE>

          available on  commercially  acceptable  terms,  if at all, or that may
          require us to pay substantial royalties;

     o    We may have to redesign  our products so that they do not infringe and
          such redesign may not be possible or may be costly and time-consuming.

         If any of the foregoing occurs, our business is likely to be materially
and adversely affected.

RISKS RELATING TO REGULATION

EACH OF OUR VOTING SYSTEM  PRODUCTS MUST MEET  QUALIFICATION  AND  CERTIFICATION
STANDARDS BEFORE WE WILL BE ABLE TO SELL THEM.

         In the United  States,  our ability to sell our voting system  products
depends on the  qualification  of each product through  independent  testing for
compliance with the federal voting system  standards.  In addition,  most states
require  state-level  certification  before  we may sell our  products  to local
jurisdictions  in  those  states.  Moreover,  local  jurisdictions  may  require
acceptance  level  testing.  At June 30,  2003,  none of our  products  had been
qualified or  certified.  In March 2004,  our DRE voting system was qualified as
complying with the 1990 federal  voting system  standards,  as to hardware,  and
2002 federal voting system standards,  as to software, and has been subsequently
certified by the states of Alabama, Arkansas, Kentucky, Mississippi, Ohio, South
Dakota, Utah and West Virginia.  We are seeking full qualification of our voting
system under the 2002 federal voting system standards but cannot assure you that
we will obtain that  qualification.  We cannot assure you that our products will
be certified by additional  states. If we are unable to obtain  certification in
additional states, we may not be able to generate sufficient revenues to achieve
profitability.

STATE ELECTION OFFICIALS MAY DECERTIFY OUR PRODUCTS.

         If certified in a state, our products will be subject to ongoing review
by the state which may  withdraw  certification.  For  example,  the  California
Secretary of State recently issued an order withdrawing certification of certain
of our  competitors'  products.  We  cannot  assure  you  that a state  will not
withdraw  certification  of our  products  on the  basis  that  the  product  is
defective,  obsolete or  otherwise  unacceptable  for use. If  certification  is
withdrawn,  we will not be able to continue to sell the product in the state and
are likely to receive significant adverse publicity. As a result, our reputation
could be  materially  damaged,  causing us to lose sales and  customers in other
jurisdictions.

WE EXPECT FEDERAL VOTING SYSTEM STANDARDS,  STATE  CERTIFICATION AND OTHER LEGAL
REQUIREMENTS PERTAINING TO OUR PRODUCTS TO CHANGE.

         The market for computerized  voting machines and related  equipment for
use in federal,  state, local and other elections,  is changing as new technical
standards are considered. We expect that federal voting system standards,  state
certification  and other legal  requirements  will change. We may not be able to
anticipate  new standards or changes to existing  standards and we cannot assure
you that our products will comply, or can be modified to comply with, any new or
changed  standards or requirements  that may be adopted.  If our products do not
comply  and  cannot be  modified  to comply  with new or  changed  standards  or
requirements, we may not be able to sell some or all of our products.

WE MAY NOT BE ABLE TO OBTAIN  FEDERAL AND STATE  CERTIFICATION  OF PRODUCTS IN A
TIMELY MANNER, WHICH COULD DELAY THE MARKETING AND SALES OF OUR PRODUCTS.

         Independent  testing  authorities test and certify our products.  There
are a  limited  number  of  testing  authorities  able to test and  certify  our
products in accordance  with federal voting system  standards.  These  companies
also  conduct  testing  and  certification  for our  competitors.  Any delays or
disruptions in the services provided by our independent  testing  authorities is
likely  to  affect  our  ability  to  market  and sell our  products  and  could
materially   and  adversely   impact  our  sales  and  our  ability  to  achieve
profitability.

IF  OUR  PRODUCTS  ARE  NOT  ACCEPTED  BY  FEDERAL,  STATE,  LOCAL  AND  FOREIGN
GOVERNMENTS AND VOTERS AS REPLACEMENTS  FOR CURRENT VOTING SYSTEMS,  WE WILL NOT
BE SUCCESSFUL.


                                       13

<PAGE>

         Our success  depends on the acceptance of our products as  replacements
for current  voting  systems both in the United  States and abroad.  Even if our
products satisfy applicable qualification and certification requirements,  local
governments  may elect not to purchase them for a number of reasons,  including,
but not limited to, voter acceptance of our technology.  In recent years,  there
has been significant public controversy regarding the reliability,  benefits and
costs  of  various  alternative  voting  systems,  including  electronic  voting
systems.  We have  expended  a  significant  amount  of our time  and  financial
resources  demonstrating  our product  capabilities  to various  state and local
government  officials.  If  our  products  do  not  achieve  significant  market
acceptance  among  state and local  governments,  we may not be able to generate
sufficient  revenues  to  achieve   profitability.   In  addition,   if  foreign
governments  do not accept our products,  the  long-term  growth of our business
will be limited.

WE WILL BE SUBJECT TO LAWS,  REGULATIONS  AND OTHER  PROCEDURES  WITH RESPECT TO
GOVERNMENT PROCUREMENT.

         Because we plan to sell our products to government agencies, we will be
subject to laws,  regulations and other  procedures that govern  procurement and
contract  implementation by those agencies.  These agencies are likely to impose
vendor  qualification  requirements,   such  as  requirements  with  respect  to
financial  condition,  insurance and history.  We have limited  experience  with
government  procurement  and  cannot  assure  you  that  we will be able to meet
existing or future procurement laws,  regulations and procedures or that we will
be able to qualify as a vendor.  Some  procurement  processes  could  involve an
extensive  period of product  evaluation,  including  evaluation  by the public.
Compliance with  government  procurement and  qualification  requirements  could
significantly  delay  sales of our  products.  Delays  could  also  occur due to
protests of bid  specifications  or challenges to contract awards. If we fail to
comply with an agency's  procurement  or vendor  qualification  requirements  or
procedures,  we will be unable to market and sell our  products to that  agency.
Government  agencies may also impose  contractual terms and conditions,  such as
warranty,  termination and indemnification  provisions,  that are unfavorable to
us.

OUR COSTS WILL INCREASE AS A RESULT OF NEW AND AMENDED SECURITIES REGULATIONS.

         New and amended  regulations  adopted by the  Securities  and  Exchange
Commission  will increase our  accounting,  legal and compliance  costs as these
changes become effective.  Additionally,  we expect increased accounting,  legal
and compliance costs because for periods  beginning after June 30, 2003, we will
no longer be subject to the less extensive disclosure requirements applicable to
a "small business issuer" as defined by the Securities and Exchange Commission.

RISKS RELATING TO OUR SECURITIES

SOME HOLDERS OF OUR SECURITIES MAY HAVE THE RIGHT TO RESCIND THEIR PURCHASES.



         We have offered and sold a substantial number of shares of common stock
and warrants and options to purchase common stock without registration under the
Securities  Act of 1933, as amended,  or  qualification  under state  securities
laws.  If any offer or sale were not exempt from,  or otherwise  not subject to,
federal and state  registration and  qualification  requirements,  the purchaser
would have a number of remedies,  including  the right to rescind the  purchase.
The Securities  Act of 1933, as amended,  requires that any claim for rescission
be  brought  within  one  year  of the  violation.  We have  sold  approximately
11,878,000 shares of common stock and warrants and options to purchase shares of
common stock in the United  States  within one year of June 30,  2004.  The time
periods  within  which  claims  for  rescission  must  be  brought  under  state
securities  laws  vary  and  may be two  years  or  more  from  the  date of the
violation.  We have sold  approximately  14,170,000  shares of common  stock and
warrants  and options to purchase  shares of common  stock in the United  States
within two years of June 30,  2004.  Further,  we cannot  assure you that courts
will not apply  equitable or other  doctrines to extend the period  within which
purchasers may bring their claims.  The number of warrants and options described
above does not include  warrants  and  options to purchase a total of  3,600,000
shares of common  stock  issued  within two years of June 30,  2004 to our chief
executive officer, Dennis Vadura and our president,  Frank Wiebe or a warrant to
purchase  12,400,000  shares of common  stock for which the holder has agreed in
writing  that it will not  assert  any  right to  rescission  that it may  have.
However, we cannot assure you that this agreement is enforceable.



         Should  federal or state  securities  regulators  deem it  necessary to
bring  administrative  or legal  actions


                                       14

<PAGE>

against us based upon a failure  to  register  or  qualify,  the  defense of any
enforcement action is likely to be costly,  distracting to our management and if
unsuccessful could result in the imposition of significant penalties. The filing
of a claim for  rescission or  enforcement  action against us or our officers or
directors  could  materially  and  adversely  impact our stock  price,  generate
significant  adverse publicity that materially  affects our sales and materially
impairs our ability to raise capital through future sales of our securities.  We
may also incur significant  expenses should we determine that it is advisable to
register  shares  issuable upon exercise of  outstanding  warrants or options or
upon conversion of outstanding notes.

WE HAVE NOT FILED OR SENT INFORMATION  STATEMENTS IN CONNECTION WITH STOCKHOLDER
ACTIONS BY WRITTEN CONSENT.

         In  2002,  we  effected  a 1 for 5  reverse  split  of our  issued  and
outstanding  shares of common  stock and filed  amendments  to Article IV of our
articles of  incorporation  to provide for a class of preferred  stock.  Each of
these  actions  required  the approval of our  stockholders  that we believe was
given by written consent. In connection with these written consents,  we did not
file with the Securities and Exchange Commission written information  statements
containing the information  specified in its proxy rules.  Also, we did not send
information  statements  in advance of the action as required by the proxy rules
of the Securities and Exchange  Commission.  Accordingly,  it is possible that a
stockholder could challenge the validity of these actions and the Securities and
Exchange Commission could take enforcement action against us. The defense of any
challenge  or  enforcement  action is likely to be  costly,  distracting  to our
management  and  could  in the  case  of an  enforcement  action  result  in the
imposition of significant penalties. The filing of a stockholder challenge or an
enforcement  action  could  materially  and  adversely  impact our stock  price,
generate  significant  adverse publicity that materially  affects our sales, and
materially  impair our  ability to raise  capital  through  future  sales of our
securities.

SOME OF THE HOLDERS OF OUR COMMON STOCK MAY BE SUBJECT TO DILUTION.

         As of June  30,  2004,  we had  outstanding  warrants  and  options  to
purchase 81,369,913 shares of common stock and notes convertible into 48,256,000
shares of common stock.  The exercise  price of the warrants and options  ranges
from $.01 to $1.55 per share and the notes are currently  convertible  at prices
ranging  from $.0625 to $.1224 per share.  The number of shares of common  stock
issuable  upon  conversion  of certain of the notes may be greater in the future
because the conversion  price is the lower of the specified  price or 50% of the
average  three  lowest  closing  prices for our common stock for the twenty days
immediately  preceding the conversion date. The exercise or conversion prices of
these  securities  are  generally  substantially  lower  than our  stock  price.
Therefore,  holders of our common stock and  potential  investors are subject to
substantial  dilution if these securities are exercised or converted.  The terms
on which we could obtain additional capital may be adversely affected during the
time that the warrants and options may be exercised or the notes converted.

FUTURE  SALES OF OUR COMMON  STOCK IN THE PUBLIC  MARKET  COULD  CAUSE OUR STOCK
PRICE TO FALL.

         Sales of a  substantial  number of shares  of our  common  stock in the
public market could cause the market price of our common stock to decline. As of
June 30, 2004, we had 154,347,064 shares of common stock  outstanding,  of which
approximately  55 million are freely  tradable  without  restriction  or further
registration under the Securities Act of 1933, as amended.  As of June 30, 2004,
our affiliates held  approximately 80 million shares of our common stock,  which
are transferable  pursuant to Rule 144, as promulgated  under the Securities Act
of 1933,  as amended.  Although we do not believe that our  affiliates  have any
present intentions to dispose of any shares of common stock owned by them, there
can be no assurance that such intentions will not change in the future.  We have
filed a registration  statement  with the Securities and Exchange  Commission on
Form S-8 covering up to 12,000,000  shares of our common stock that are issuable
upon  exercise  of  outstanding  warrants.  The  exercise  of those  options  or
warrants,  and the prompt  resale of shares of our common  stock  received,  may
result in downward pressure on the price of our common stock.

A DECLINE IN THE PRICE OF OUR COMMON  STOCK  COULD  AFFECT OUR  ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY  IMPACT OUR ABILITY TO CONTINUE OUR NORMAL
OPERATIONS.

         A prolonged  decline in the price of our common stock could result in a
reduction in the liquidity of our common stock and a reduction in our ability to
raise capital.  Because our operations  primarily have been financed through the
sale of equity  securities,  a decline in the price of our common stock could be
especially detrimental to


                                       15

<PAGE>

our liquidity  and our  operations.  We may be forced to  reallocate  funds from
other  planned  uses and this would have a  significant  negative  effect on our
business plans and operations, including our ability to develop new products and
continue our current  operations.  If our stock price declines,  there can be no
assurance  that we will be able to raise  additional  capital or generate  funds
from operations  sufficient to meet our  obligations.  If we are unable to raise
sufficient  capital in the future, we may not have the resources to continue our
normal operations.

OUR COMMON STOCK IS QUOTED ON THE OTC BULLETIN BOARD AND TRADING MAY BE SPORADIC
AND VOLATILE.

         Our common stock is quoted on the OTC Bulletin Board.  Trading in stock
quoted  on the OTC  Bulletin  Board is  often  thin  and  characterized  by wide
fluctuations in trading  prices,  due to many factors that may have little to do
with our operations or business prospects.  Moreover,  the OTC Bulletin Board is
not a stock  exchange,  and trading of securities  on the OTC Bulletin  Board is
often more sporadic than the trading of securities  listed on a quotation system
or a stock exchange.

THE  PRICE  OF OUR  COMMON  STOCK IS  LIKELY  TO  CONTINUE  TO BE  VOLATILE  AND
STOCKHOLDERS COULD INCUR SUBSTANTIAL LOSSES.

         The  market  price of our common  stock has been,  and in the future is
likely to be,  highly  volatile.  This  volatility  could result in  substantial
losses for  stockholders.  Our stock price may fluctuate  widely for a number of
reasons, including:

     o    Media  reports and  announcements  with respect to  electronic  voting
          technology in general or our products or those of our competitors;

     o    Qualification or certification, or withdrawal of certification, of our
          products or those of our competitors;

     o    Changes  in  federal  voting  system  standards,  state  certification
          standards or other legal requirements pertaining to our products;

     o    Litigation initiated by or against us, including litigation pertaining
          to patents or other intellectual property rights;

     o    Dissemination of information about us by others, including on Internet
          bulletin boards;

     o    Changes in our key personnel;

     o    General economic conditions; and

     o    The  occurrence  of other events or  circumstances  described in these
          Risk Factors.

         Companies  are often sued by  investors  after  periods of stock  price
volatility.  This type of  litigation  could be filed  against  us in the future
which  could  result  in  substantial  expense  and  diversion  of  management's
attention and, if successful, substantial damage awards.

TRADING OF OUR STOCK MAY BE RESTRICTED  BY THE SEC'S "PENNY  STOCK"  REGULATIONS
WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.

         The Securities and Exchange  Commission has adopted  regulations  which
generally define "penny stock" to be any equity security that has a market price
less than  $5.00 per share or an  exercise  price of less than  $5.00 per share,
subject to certain  exceptions.  Our  securities  are covered by the penny stock
rules, which impose additional sales practice requirements on broker-dealers who
sell to persons other than established customers and accredited  investors.  The
penny stock rules require a  broker-dealer,  prior to a  transaction  in a penny
stock not  otherwise  exempt  from the  rules,  to deliver a  standardized  risk
disclosure document in a form prepared by the Securities and Exchange Commission
that provides  information  about penny stocks and the nature and level of risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer  quotations for the penny stock,  the  compensation of the
broker-dealer  and  its  salesperson  in the  transaction  and  monthly  account
statements  showing the market value of each penny stock held in the  customer's
account.  The bid and offer  quotations,  and the  broker-dealer and salesperson
compensation  information,  must be given to the  customer  orally or in writing
prior to effecting the  transaction and must be given to the customer in writing
before or with the customer's  confirmation.  In addition, the penny stock rules
require that prior to a transaction  in a penny stock not otherwise  exempt from
these


                                       16

<PAGE>

rules,  the  broker-dealer  must make a special written  determination  that the
penny  stock  is a  suitable  investment  for  the  purchaser  and  receive  the
purchaser's   written  agreement  to  the  transaction.   These  disclosure  and
suitability  requirements  may have the effect of reducing  the level of trading
activity  in the  secondary  market for a stock  that is subject to these  penny
stock  rules.  Consequently,  these  penny stock rules may affect the ability of
broker-dealers  to trade our  securities.  We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.

OUR  ARTICLES OF  INCORPORATION  AUTHORIZE  THE BOARD OF  DIRECTORS TO ISSUE AND
DESIGNATE  THE  RIGHTS  OF  SERIES  OF  PREFERRED  STOCK  WITHOUT  ACTION BY THE
STOCKHOLDERS.

         Our authorized  capital stock consists of 600,000,000  shares of common
stock and 80,000 shares of preferred stock. Our board of directors,  without any
action by  stockholders,  is  authorized  to  divide  the  authorized  shares of
preferred  stock  into  series  and to  designate  the  rights,  qualifications,
preferences,  limitations  and terms of the  shares of any  series of  preferred
stock,  including  but not limited to dividend,  redemption,  voting  rights and
preferences.  The  rights of holders  of shares of  preferred  stock that may be
issued might be superior to the rights granted to the holders of existing shares
of common stock. Further, the ability of our board of directors to designate and
issue series of preferred  shares  could impede or deter an  unsolicited  tender
offer  or  takeover  proposal  and the  issuance  of  additional  shares  having
preferential  rights could affect adversely the voting power and other rights of
holders of our common stock.

PROVISIONS  OF  NEVADA  LAW  COULD  DISCOURAGE,   DELAY  OR  PREVENT  A  MERGER,
ACQUISITION  OR OTHER CHANGE IN CONTROL OF US, EVEN IF A CHANGE IN CONTROL WOULD
BENEFIT OUR STOCKHOLDERS.

         At any time that we have 200 or more stockholders of record, we will be
subject to  Nevada's  statutes  that  prohibit  us from  engaging  in  specified
business  combinations  with  "interested  stockholders,"  including  beneficial
owners of 10% or more of the voting power of our outstanding shares. Thereafter,
combinations  may be  permissible  only if specified  conditions  are satisfied.
Nevada law also provides that directors may resist a change or potential  change
in control if the directors  determine  that the change is opposed to, or not in
the  best  interest  of,  the  corporation.  Additionally,  Nevada  law  permits
directors and officers in exercising their respective  powers with a view to the
interests of the corporation,  to consider:  the interests of the  corporation's
employees,  suppliers, creditors and customers; the economy of the state and the
nation;  the  interests of community  and society;  and the long-term as well as
short-term  interests of the  corporation  and its  stockholders,  including the
possibility   that  these   interests  may  be  best  served  by  the  continued
independence of the corporation.  Accordingly,  these statutory provisions could
discourage potential takeover attempts and could reduce the price that investors
might be willing to pay for shares of our common stock in the future.

ITEM 2. PROPERTIES

         We occupy  approximately  10,000 square feet of office space located at
15101 Red Hill Ave. Suite # 220,  Tustin,  California.  The cost of the lease is
$1.10 per square foot. Our lease expires on July 31, 2006.

ITEM 3. LEGAL PROCEEDINGS.

         In September  2003,  we were served with a lawsuit filed in the Supreme
Court of New York, County of New York, by Stern & Co  Communications  LLC, d/b/a
Stern + Co. Stern  alleging  that we breached a contract with them by failing to
tender payment in full for services rendered. Stern sought to recover damages in
the amount of  $35,000,  and a warrant to purchase  36,000  shares of our common
stock. In November 2003, we entered into a stipulated  settlement agreement with
Stern. In consideration  for a full release of Stern's claims,  we granted Stern
15,000 shares of common stock and a warrant to purchase  15,000 shares of common
stock at an  exercise  price  equal to our  closing  stock  price on the date of
issuance.

         In December 2003,  Paul Musco,  the  ex-President  of our  wholly-owned
subsidiary,  Z prompt, Inc. filed suit against us and Z prompt in Superior Court
of  California,  County  of  Orange,  California.  The claim  alleged  breach of
contract, fraud and misrepresentation  stemming from our acquisition of, and his
termination of his employment  with, Z prompt.  Mr. Musco is seeking  damages in
excess of $800,000,  plus punitive  damages.  We believe that Mr. Musco breached
his  agreements  with Z prompt  and have filed a cross  complaint  for breach of
contract, fraud,


                                       17

<PAGE>

negligence and breach of fiduciary duty seeking $2,000,000.  Mr. Musco has since
filed his own cross-complaint  against us, Dennis Vadura,  Frank Wiebe and Craig
Hewitt  alleging fraud and tortious  interference  with  contract.  In addition,
Michael  Shockett has joined the suit and filed a cross complaint  against us, Z
prompt,  Dennis Vadura,  Frank Wiebe and Craig Hewitt alleging  fraud,  tortuous
interference  with  contract  and  wrongful  termination.  Michael  Shockett was
terminated  from  employment  with us in  April  2004  for  cause.  Although  no
assurance  can be given that we will prevail on the merits,  we will  vigorously
defend these allegations.

         In October 2003, a former  employee of Z prompt,  Nathalie  Luu,  filed
suit against us and Z prompt in Superior Court of California,  County of Orange,
California. The complaint claims wrongful termination, intentional infliction of
emotional  distress and  retaliatory  discharge,  based on allegations  that the
plaintiff  was  terminated  for  reporting  to  management   alleged  fraudulent
accounting  practices  by Z prompt  management.  The former  employee is seeking
$112,000 in monetary  damages  including loss of wages,  plus punitive  damages.
This suit is currently in  negotiations to be settled for $100,000 to be paid by
the issuance by us of common stock.  A settlement  would release us and Z prompt
from liability in connection with the suit.

         On March 23, 2004, our wholly-owned subsidiary, Z prompt, Inc., filed a
petition for relief under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court,  Central District of California.  As of June 30,
2004, Z prompt had not filed a proposed Plan of Reorganization.

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

         There was no matter  submitted  during the fourth quarter of the fiscal
year covered by this report to a vote of security holders.

                                    PART II.

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

         Our common stock is currently quoted on the  Over-The-Counter  Bulletin
Board under the symbol ACUP. For the periods indicated, the following table sets
forth the high and low bid prices per share of common  stock.  The below  prices
represent inter-dealer quotations without retail markup, markdown, or commission
and may not necessarily represent actual transactions.

                                                             Fiscal 2004
                                                      ------------  ------------
COMMON STOCK                                            High (1)       Low (1)
----------------------------------------------------  ------------  ------------

First Quarter Ended September 30, 2003                   $2.00         $0.81
Second Quarter Ended December 31, 2003                   $1.75         $1.35
Third Quarter Ended March 31, 2004                       $3.85         $1.44
Fourth Quarter ended June 30, 2004                       $3.57         $0.90

                                                             Fiscal 2003
                                                      ------------  ------------
COMMON STOCK                                            High (1)       Low (1)
----------------------------------------------------  ------------  ------------

First Quarter Ended September 30, 2002                   $1.24         $0.90
Second Quarter Ended December 31, 2002                   $1.70         $0.85
Third Quarter Ended March 31, 2003                       $1.70         $1.01
Fourth Quarter ended June 30, 2003                       $1.14         $0.91

(1)  Prices adjusted to reflect a 4 for 1 stock dividend that was effective July
     2002.

         As of September  24th,  2004,  180,705,970  shares of common stock were
held by approximately  1,817  stockholders of record. Our registrar and transfer
agent is Signature Stock Transfer,  Inc., One Preston Park, 2301 Ohio Dr., Suite
100, Plano, Texas 75093; telephone (972) 612-4120.

DIVIDEND POLICY

         We have not adopted any policy  regarding  the payment of  dividends on
its Common Stock.  The Company does not intend to pay any cash  dividends on its
Common Stock in the  foreseeable  future.  All cash resources are expected to be
invested in developing the Company's  business.  There are no restrictions  that
materially limit our ability to pay cash dividends.

                                       18

<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

         AccuPoll sold the following  unregistered  securities  during the three
month period ended June 30, 2004 without  registration  under the Securities Act
of 1933.

         In May,  2004 the Company  issued  1,960,000  shares of common stock to
three different  shareholders,  as a result of a net exercise of warrants with a
strike  price of $.0625 per share.  The Company  relied upon Section 4(2) of the
Securities Act as an exemption from registration.

         In June,  2004 the Company issued  3,105,262  shares of common stock to
three different  shareholders,  as a result of a net exercise of warrants with a
strike  price of $.0625 per share.  The Company  relied upon Section 4(2) of the
Securities Act as an exemption from registration.

         In June, 2004 the Company issued  2,156,250 shares of common stock as a
result of a  convertible  debt of  $250,000  which was  converted  at $.1224 per
share.  The  Company  relied  upon  Section  4(2)  of the  Securities  Act as an
exemption from registration.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                     ACCUPOLL HOLDING CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                          June 30, 2004, 2003 AND 2002
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                    (Restated)
                                                                                        2004           2003           2002
                                                                                   ------------    -----------    -----------
                                ASSETS
<S>                                                                             <C>              <C>             <C>
CURRENT ASSETS
           Cash                                                                    $    113,789    $        --    $   288,675
           Accounts receivable, net                                                     254,895             --             --
           Note Receivable                                                               50,000
           Inventories                                                                  168,636             --             --
           Deferred acquisition costs                                                        --        144,206
           Prepaid expenses                                                                  --          2,500        156,000
                                                                                   ------------    -----------    -----------
                                                                                        537,320        146,706        494,675

PROPERTY AND EQUIPMENT, net                                                              14,012             --        411,966
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net                                           2,544,207      1,403,899         74,376
OTHER ASSETS                                                                             26,246             --        130,000
                                                                                   ------------    -----------    -----------

           TOTAL ASSETS                                                            $  3,121,785    $ 1,550,605    $ 1,111,017
                                                                                   ============    ===========    ===========

               LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
           Accounts payable and accrued expenses                                   $  1,817,284    $   931,503    $   401,548
           Related party payables                                                     1,228,070        872,940
           Deferred revenues                                                             74,628             --             --
           Convertible debt                                                           3,304,600             --        (68,750)
           Notes payable to related parties                                              30,000        175,000
           Put liability related to warrant issuance                                    163,760        113,750             --
           Liabilities subject to compromise                                            732,544                            --
                                                                                   ------------    -----------    -----------

           TOTAL LIABILITIES                                                          7,350,886      2,093,193        332,798
                                                                                   ------------    -----------    -----------

EQUITY INSTRUMENTS SUBJECT TO RESCISSION                                              6,200,000      4,377,033             --
                                                                                   ------------    -----------    -----------

STOCKHOLDERS' DEFICIT

           Convertible Series A preferred stock, $0.01 par value,
           80,000 shares authorized, no shares issued and outstanding
           (liquidation preference of zero)                                                 --             --             --
           Common stock, par value of $0.001, 600,000,000 shares
             authorized; 158,482,171 and 112,945,963 shares issued and
             outstanding at June 30, 2004 and 2003, respectively                        158,482        112,946        (12,500)
           Capital Stock                                                                173,203
           Additional paid-in capital                                                12,046,817      2,222,580      3,024,096
           Accumulated deficit                                                      (22,634,400)    (7,255,147)    (2,406,580)
                                                                                   ------------    -----------    -----------
                                                                                    (10,429,101)    (4,919,621)       778,219
                                                                                   ------------    -----------    -----------

           TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                             $  3,121,785    $ 1,550,605    $ 1,111,017
                                                                                   ============    ===========    ===========

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       19
<PAGE>


                             ACCUPOLL HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For The Years Ended June 30, 2004 and 2003, and
      For The Period From August 9, 2001 (Inception) Through June 30, 2002
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------

                                                                                    (Restated)
                                                                   Year Ended      Year Ended      Period Ended
                                                                 June 30, 2004    June 30, 2003    June 30, 2002
                                                                 -------------    -------------    ------------
<S>                                                             <C>             <C>               <C>

NET SALES                                                        $   1,508,656    $          --    $         --

COST OF SALES                                                        1,185,797               --              --
                                                                 -------------    -------------    ------------

GROSS PROFIT                                                           322,859               --              --

EXPENSES
        General and administrative                                   6,770,137        3,104,192         904,083
        Professional fees                                              654,276        1,714,475       1,198,622
        Interest                                                     4,534,947           29,900         303,875
        Loss on disposal of investment                               1,200,000               --              --
        Impairment of goodwill                                       2,542,752               --              --
                                                                 -------------    -------------    ------------
                                                                    15,702,112        4,848,567       2,406,580
                                                                 -------------    -------------    ------------

NET LOSS                                                         $ (15,379,253)   $  (4,848,567)   $ (2,406,580)
                                                                 =============    =============    ============

BASIC AND DILUTED LOSS
    PER COMMON SHARE                                             $       (0.12)   $       (0.05)   $      (0.04)
                                                                 =============    =============    ============

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                                             130,782,481      106,687,447      68,735,272
                                                                 =============    =============    ============

</TABLE>


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

         We are in the business of developing and marketing  computerized voting
machines and their associated  products and services for use in federal,  state,
local and private  elections.  We have developed a direct  recording  electronic
(DRE) voting  system that  provides a  voter-verified  paper audit trail that is
both human and machine readable. Our system was qualified as meeting the federal
voting  system  standards  on March 25, 2004 and we believe that it is currently
the only electronic voting system providing these features that is so qualified.
As of September  22, 2004,  our DRE voting system was certified by the states of
Alabama,  Arkansas,  Kentucky,  Mississippi,  Ohio, South Dakota,  Utah and West
Virginia.  Currently,  we are in the process of applying  for  certification  in
additional states.



         For the fiscal  years ended June 30, 2004,  2003 and 2002,  we incurred
losses of $15,379,253,  $4,848,567 and $2,406,580,  respectively. As of June 30,
2004 we had an accumulated deficit of $22,634,400.

SUBSEQUENT EVENT

         On  September  13, 2004,  AccuPoll  Holding  Corp.  completed a private
placement transaction with 11 accredited  investors,  pursuant to which AccuPoll
sold an  aggregate  of  3,666,668  shares of common  stock,  1,833,338




                                       20

<PAGE>

Series A Warrants,  1,833,338 Series B Warrants and 1,833,338 Series C Warrants.
AccuPoll received gross proceeds totaling $1,649,900.10.  For each two shares of
common stock,  AccuPoll issued investors one A Warrant,  one B Warrant and one C
Warrant.  Each two shares and three warrants were sold at a price of $0.90.  The
private  placement was deemed exempt from registration  requirements  under Rule
506 of Regulation D under the Securities Act of 1933.

         J.P.   Turner  +  Company,   LLC  acted  as  placement  agent  for  the
transaction.  AccuPoll  agreed to pay J.P.  Turner + Company a cash fee of 8% of
the aggregate purchase price. AccuPoll will also pay J.P. Turner + Company 8% of
the cash proceeds  received  from the exercise of warrants  issued in connection
with the placement. In addition,  AccuPoll issued J.P. Turner + Company warrants
to purchase  458,333  shares of common stock,  exercisable  for five years at an
exercise price of $0.54 per share.  Further, J.P. Turner + Company will receive:
(a) one Placement  Agent's A Warrant,  exercisable at $0.66 per share,  for each
eight A Warrants  exercised  by an investor on a cash basis;  (b) one  Placement
Agent's B Warrant,  exercisable  at $1.07 per  share,  for each eight B Warrants
exercised  by an  investor  on a cash  basis;  and (c) one  Placement  Agent's C
Warrant,  exercisable at $2.40 per share, for each eight C Warrants exercised by
an investor on a cash basis. All Placement  Agent's Warrants are exercisable for
five years after the respective  issue dates, are not subject to call and may be
exercised on a cashless basis.

         On one  occasion,  for a period  commencing  91 days after the  closing
date, but not later than two years after the closing date,  upon written request
of the holders of more than 50% of the shares and warrant shares actually issued
upon  exercise  of  warrants,  AccuPoll is required to prepare and file with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933  registering  the shares of common stock issued to the investors and
the shares  underlying  the warrants,  including  warrant  shares  issuable upon
exercise  of  warrants  issued  to  the  placement   agent  (the   "Registration
Statement").  The A  Warrants  expire  150 days  from the date the  Registration
Statement is declared  effective by the Securities  and Exchange  Commission and
are  exercisable at $0.55 per share.  The B Warrants expire four years after the
date the  Registration  Statement is declared  effective by the  Securities  and
Exchange  Commission  and are  exercisable  at $0.89 per  share.  The C Warrants
expire  three  years  after  the date the  Registration  Statement  is  declared
effective by the Securities and Exchange Commission and are exercisable at $2.00
per share.

         AccuPoll  may call the  warrants  beginning  30 trading  days after the
effective date of the  Registration  Statement and ending 30 trading days before
the expiration of the warrants. A call notice may be given by AccuPoll for the A
Warrants  only within five trading days after the common stock has had a closing
price as reported for the principal market of $1.10 or higher for 15 consecutive
trading  days.  A call notice may be given by AccuPoll  for the B Warrants  only
within  five  trading  days  after the common  stock has had a closing  price as
reported for the principal market of $1.78 or higher for 15 consecutive  trading
days. A call notice may be given by AccuPoll for the C Warrants only within five
trading days after the common stock has had a closing  price as reported for the
principal market of $2.95 or higher for 15 consecutive trading days.

         Beginning  September 8, 2004 and until the  Registration  Statement has
been  effective for 150 days,  the investors must be given at least ten business
days prior  written  notice of any proposed sale by AccuPoll of its common stock
or other securities or debt  obligations  except in connection with (a) employee
stock options or compensation  plans,  (b) as full or partial  consideration  in
connection with any merger,  consolidation or purchase of  substantially  all of
the securities or assets of any corporation or other entity,  or (c) as has been
described in the reports or other written  information filed with the Securities
and Exchange  Commission or delivered to the investors prior to the closing date
("Excepted Issuances").

         Other  than  the  Excepted   Issuances,   if  at  any  time  until  the
Registration  Statement has been  effective  for 150 days,  if AccuPoll  offers,
issues or agrees to issue any common  stock or  securities  convertible  into or
exercisable for shares of common stock (or modify any of the foregoing which may
be outstanding at any time prior to the closing date) to any person or entity at
a price per share or conversion or exercise  price per share which shall be less
than $0.45,  without the consent of each investor,  then AccuPoll is required to
issue,  for each  such  occasion,  additional  shares  of  common  stock to each
investor so that the average  per share  purchase  price of the shares of common
stock issued to the  investor (of only the common stock or warrant  shares still
owned by the  investor)  is equal to such  other  lower  price  per  share.  For
purposes of this  issuance  and  adjustment,  the  issuance  of any  security of
AccuPoll carrying the right to convert such security into shares of common stock
or of any warrant,  right or option to purchase


                                       21

<PAGE>

common  stock will  result in the  issuance of the  additional  shares of common
stock upon the issuance of such convertible security,  warrant,  right or option
and again upon any subsequent  issuances of shares of common stock upon exercise
of such  conversion or purchase rights if such issuance is at a price lower than
$0.45.

         The  exercise  price of the  warrants is subject to  adjustment  in the
event AccuPoll effects a  reorganization,  consolidation or merger, or transfers
all or substantially all of its properties or assets. Also, until the expiration
date of the  warrants,  if AccuPoll  issues any common stock except for Excepted
Issuances,  prior to the complete  exercise of the warrants for a  consideration
less than the purchase  price that would be in effect at the time of such issue,
then the exercise  price shall be reduced to such other lower issue  price.  For
purposes of this adjustment,  the issuance of any security or debt instrument of
AccuPoll  carrying the right to convert such  security or debt  instrument  into
common stock or of any warrant,  right or option to purchase  common stock shall
result  in an  adjustment  to  the  exercise  price  upon  the  issuance  of the
above-described security, debt instrument, warrant, right, or option.

RESULTS OF OPERATIONS

COMPARISON OF YEAR ENDED JUNE 30, 2004 TO YEAR ENDED JUNE 30, 2003



         REVENUES:  For  the  year  ended  June  30,  2004  we had  revenues  of
approximately $1.5 million.  For the year ended June 30, 2003 we had no revenue.
The  increase was caused by our  acquisition  of Z prompt which was recorded for
accounting purposes in November 2003.

         GENERAL  AND  ADMINISTRATIVE   EXPENSES:   General  and  administrative
expenses  were  $3,160,257  for the year  ended  June 30,  2004 as  compared  to
$3,104,192  for the year ended  June 30,  2003.  The  increase  in  general  and
administrative  expenses is the result of addtional staff.

         PROFESSIONAL FEES: Professional fees were $4,264,156 for the year ended
June 30, 2004 as compared to  $1,714,475  for the year ended June 30, 2003.  The
increase in professional  fees is due to costs of services to develop the Ballot
Buddy  product  and non-cash  expenses  related to the  issuance  of warrants to
consultants.

         INTEREST  EXPENSE:  Interest  expense was $4,534,947 for the year ended
June 30,  2004 as  compared  to $29,900  for the year ended June 30,  2003.  The
increase in interest expense is due to non-cash  beneficial  conversion  charges
for equity instruments tied to fun raising.

         NET LOSS:  For the year ended June 30, 2004,  we incurred a net loss of
$15,379,253 and a loss per common share of $0.12. This compares to a net loss of
$4,848,567  and a loss per  common  share of $0.05 for the year  ended  June 30,
2003.  The  increased  loss is due to increased  professional  fees and interest
expense plus the impairment of goodwill  totalling  $2,542,752 and a loss on the
disposal  of an  investment  totalling  $1,200,000,  as well  as the  additional
expenses of our newly acquired subsidiary.

COMPARISON OF YEAR ENDED JUNE 30, 2003 TO PERIOD ENDED JUNE 30, 2002

         REVENUES:  For  the  years  ended  June  30,  2003  and  2002 we had no
revenues.

         GENERAL  AND  ADMINISTRATIVE   EXPENSES:   General  and  administrative
expenses  increased by approximately  243% to $3,104,192 for the year ended June
30, 2003 from  $904,083  for the period  ended June 30,  2002.  The  increase in
general  and  administrative  expenses  is the result of  addtional  staff,  and
non-cash  expenses  related to the issuance of options and warrants to employees
and consultants that are in the money.



         PROFESSIONAL FEES: Professional fees were $1,714,475 for the year ended
June 30, 2003 as compared to  $1,198,622  for the year ended June 30, 2002.  The
increase  in  professional  fees by  approximately  43% was  due to increases in
development  fees of ballot buddy  product and  increased  legal and  accounting
expenses.

         INTEREST EXPENSE:  Interest expense was $29,900 for the year ended June
30,  2003 as  compared  to  $303,875  for the  year  ended  June 30,  2002.  The
significant decrease in interest expense less non-cash beneficial conversion for
investments.

         RESEARCH AND DEVELOPMENT:  Research and development expenses was $0 for
the year ended June 30, 2003 as compared to $176,064 for the year ended June 30,
2002.

         NET LOSS:  For the year ended June 30, 2003,  we incurred a net loss of
$4,848,567  and a net loss per share of $0.05.  This  compares  to a net loss of
$2,406,580 and a net loss per share of $0.04 for the year ended June 30, 2002.


                                       22

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         From August 2001, the date of our inception,  through June 30, 2004, we
have raised a total of  approximately  9.7 million from the sale of common stock
and convertible notes and other securities.



         As of June 30, 2004 we had cash of approximately $114,000 and a working
capital deficiency of approximately $6.8 million.  Our accumulated deficit as of
June 30, 2004 was approximately $22.6 million.



         In  November  2003,  we secured a $5 million  dollar  revolving  credit
facility,  in the form of two  seven-month  convertible  notes.  The notes  bear
interest at an annual rate of 10% and  originally  matured on June 30, 2004, but
have been extended to December 31, 2004.  The notes are  convertible  on 90 days
written  notice by the  holders  at the lesser of (i) 50% of the  average  three
lowest  closing  prices for our common  stock for the  twenty  days  immediately
preceding the conversion date or (ii) $.0625 per share. At June 30, 2004, we had
borrowed $2,180,000 under such notes.

         We have a convertible  debenture with Palisades  Holdings,  LLC whereby
Palisades Holdings, at its discretion, may provide us loans of up to $1,250,000.
The convertible debenture bears interest at an annual rate of 10% and originally
matured on June 30,  2004,  but has been  extended to  December  31,  2004.  The
debenture is convertible on 90 days written notice by Palisades  Holdings at the
lesser of (i) 50% of the  average  three  lowest  closing  prices for our common
stock for the twenty days  immediately  preceding  the  conversion  date or (ii)
$.0625  per  share.  At June 30,  2004,  we had  borrowed  $872,000  under  such
debenture.



         On  December  19,  2002 we  issued  a  $165,000  note to an  individual
investor.  The note bears  interest at an annual rate of 8% and is payable  upon
demand.  At June 30, 2004,  the principal and accrued but unpaid  interest under
such debenture equaled $15,000.



         We have offered and sold a substantial number of shares of common stock
and warrants and options to purchase common stock without registration under the
Securities  Act of 1933, as amended,  or  qualification  under state  securities
laws.  If any offer or sale were not exempt from,  or otherwise  not subject to,
federal and state  registration and  qualification  requirements,  the purchaser
would have a number of remedies,  including  the right to rescind the  purchase.
The Securities  Act of 1933, as amended,  requires that any claim for rescission
be  brought  within  one  year  of the  violation.  We have  sold  approximately
11,878,000 shares of common stock and warrants and options to purchase shares of
common stock in the United  States  within one year of June 30,  2004.  The time
periods  within  which  claims  for  rescission  must  be  brought  under  state
securities  laws  vary  and  may be two  years  or  more  from  the  date of the
violation.  We have sold  approximately  14,170,000  shares of common  stock and
warrants  and options to purchase  shares of common  stock in the United  States
within two years of June 30,  2004.  Further,  we cannot  assure you that courts
will not apply  equitable or other  doctrines to extend the period  within which
purchasers may bring their claims.  The number of warrants and options described
above does not include  warrants  and options to  purchase  3,600,000  shares of
common  stock  issued  within two years of May 31,  2004 to our chief  executive
officer, Dennis Vadura and our president,  Frank Wiebe and a warrant to purchase
12,400,000  shares of common  stock for which the  holder  has agreed in writing
that it will not assert any right to rescission  that it may have.  However,  we
cannot assure you that this agreement is enforceable.

CAPITAL EXPENDITURES

         We anticipate  certain capital  expenditures  related to developing and
testing  subsequent  versions of the voting  system  hardware and  software.  We
estimate such capital expenditures for hardware to be approximately $250,000 and
an  additional  $250,000 for software  over the course of the fiscal year ending
June 30,  2005.  We will be reliant on future  fund  raising in order to pay for
development and testing of these subsequent versions.

GOING CONCERN


         Our  independent  registered  public  accounting firm has stated in its
audit report  included in this Form 10-K/A,  that we have  incurred  losses from
operations since inception,  have negative working capital of approximately $6.8
million at June 30, 2004, and lack operational history. These conditions,  among
others,  raise  substantial  doubt  about our  ability  to  continue  as a going
concern.

         The Company  has not  generated  any  revenues  from its Voting  System
operations,  and there is no assurance of any future revenues.  The Company will
require substantial additional funding for continuing the development, obtaining
regulatory approval, and commercialization of its product. There is no assurance
that the Company will be able to obtain sufficient  additional funds when needed
or that such funds,  if available,  will be obtainable on terms  satisfactory to
the Company.

Management has taken actions to address these matters, which include:

     o    Retention of experienced  management  personnel with particular skills
          in the commercialization of such products;

     o    Attainment  of  technology  to develop such  products  and  additional
          products; and

     o    Raising  additional  funds  through  the  sale of debt  and/or  equity
          securities.

         Federal,  State and various foreign  government  regulations govern the
sale of the Company's products.  There can be no assurance that the Company will
receive the regulatory approval required to market its proposed products.

         The accompanying  consolidated  financial statements have been prepared
assuming that the Company will  continue as a going concern which  contemplates,
among other things, the realization of assets and satisfaction of liabilities in
the  ordinary  course of  business.  As stated  above,  the Company has incurred
losses through June 30, 2004, has negative  working capital at that date and has
a lack of operational  history which,  among other  factors,  raise  substantial
doubt about its ability to continue as a going concern.  The Company  intends to
fund operations  through sales of the Voting System,  but there is no commitment
by any entities for the purchase of any of the proposed products. In the absence
of significant sales and profits, the Company may seek to raise additional funds
to meet its working capital  requirements  through debt and/or equity  financing
arrangements.  Management believes that such arrangements, combined with the net
proceeds from the transaction  described above in the "Subsequent Event" section
of this Item 7, will be sufficient to fund the Company's  capital  expenditures,
working capital needs and other cash  requirements  for the year ending June 30,
2005. The successful  outcome of future  activities cannot be determined at this
time,  and there is no  assurance  that,  if  achieved,  the  Company  will have
sufficient  funds to execute its  intended  business  plan or generate  positive
operating results.

         These  circumstances,  combined with the potential liability associated
with certain equity instruments subject to rescission (see "Critical  Accounting
Policies" below for additional  information),  raise substantial doubt about the
Company's ability to continue as a going concern. The accompanying  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



                                       23

<PAGE>

INFLATION

         Our management believes that inflation has not had a material effect on
our results of operations.

OFF-BALANCE SHEET ARRANGEMENTS

         We do not have any off balance sheet  arrangements  that are reasonably
likely to have a current or future effect on our financial condition,  revenues,
results of operations, liquidity or capital expenditures.

CONTRACTUAL OBLIGATIONS

         As of June 30, 2004, we had the following contractual obligations:

<TABLE>
<CAPTION>

         Contractual Obligations                                                  Payments due by period
         -----------------------                              ------------------------------------------------------------

                                                                            Less then                            More than
                                                                Total        1 year     1-3 years    3-5 years   5 years
                                                             -----------   ----------   ----------   ---------   ---------
<S>                                                         <C>           <C>           <C>        <C>         <C>

Operating Lease Obligations
    Greenberg Farrow Architecture
       - Tustin office                                       $   132,000                $ 132,000
    Olen Lease - Irvine facility                             $    39,911   $   39,911

    Amarillo Grant - Texas facility                          $   250,000   $  250,000

Long-Term Debt
    Bank of America line of Credit                           $   225,000   $  225,000
    Notes Payable                                            $   201,657   $  201,657

Convertible Debt                                              $ 3,304,600   $3,304,600

Consulting agreements
    National Strategies Inc.                                 $    60,000   $   60,000

                                                             -----------   ----------   ----------   ---------   ---------

Total                                                        $ 4,213,168   $4,081,168   $ 132,000   $     -     $     -
                                                             ===========   ==========   ==========

</TABLE>

BUSINESS TRENDS

         There are three  business  trends  evident in the market today that are
material to  AccuPoll's  operations.  The first is the delay in the  procurement
cycle until after the November 2004  election.  This trend was influenced by two
factors:  1) the delay in the  distribution  of the federal funds by EAC, and 2)
the  upcoming   Presidential  Election  in  November  2004.  The  delay  in  the
distribution  of the  federal  funds was caused by the delay in  nominating  and
confirming the EAC  Commissioners  (scheduled to be completed by April 2003, but
instead  was  completed  in  December  2003),  and the delay on the part of some
states in meeting all the  requirements for the funds to be released by the EAC.
With the delay in  funding  until June 2004,  less than five  months  before the
November 2004 election, the majority of counties have decided not to risk making
any changes until after the November 2004 election.

         The  second  business  trend  is the  growing  momentum  of  the  VVPAT
movement. As of May 2004, eighteen states (Alabama, Alaska, Arizona, California,
Connecticut,  Georgia, Illinois, Maine, Maryland,  Minnesota, New Hampshire, New
Jersey,  New York, Ohio,  Vermont,  Virginia,  West Virginia and Wisconsin) have
either  passed or are  actively  considering  legislation  that  would make it a
requirement  for any DRE voting system used in the state to produce a VVPAT.  In
another five states  (California,  Missouri,  Oregon, New Hampshire and Nevada),
the Secretary of State has issued a directive mandating VVPAT in the state.

         The  third  business  trend  is the  growing  list of  states  that are
requiring  DRE voting  systems to be  qualified  under the 2002  federal  voting
system  standards.  This  requirement  is  primarily  focused  in  states  where
electronic  voting  systems  have  not been  previously  used  (e.g.,  Illinois,
Missouri, Iowa and North Carolina).

         Overall  the net  impact  of these  trends  on  AccuPoll  is  positive.
AccuPoll  already has a DRE voting system with a VVPAT  qualified under the 1990
federal voting system standards.  We are currently in the process of testing our
DRE voting system under the 2002 federal voting system  standards.  We expect to
complete  federal  qualification  testing  under the 2002 federal  voting system
standards by January 1, 2005. This places AccuPoll in position as one of the few
vendors  with a DRE voting  system that is  federally  qualified  under the 2002
voting  system  standards  and has a  VVPAT  in time  for the  beginning  of the
procurement cycle after the November 2004 election. This is especially important
in states like Missouri and Illinois  that have not  previously  authorized  DRE
voting  systems  to be  used  in the  state,  but  must at a  minimum  meet  the
accessibility  requirements under HAVA (i.e.,


                                       24

<PAGE>

one DRE voting machine per polling place).

CRITICAL ACCOUNTING POLICIES

         The  preparation  of financial  statements  and related  disclosures in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make judgments,  assumptions and estimates that
affect the amounts  reported in our  consolidated  financial  statements and the
accompanying notes. The amount of assets and liabilities reported on our balance
sheet and the amount of revenues  and  expenses  reported for each of our fiscal
periods are affected by estimates and  assumptions,  which are used for, but not
limited  to, the  accounting  for  equity  instruments  subject  to  rescission,
software  development  costs,  estimated  allowance for doubtful  accounts,  the
realizability  of our  investments in affiliated  companies and the valuation of
deferred  tax assets.  Actual  results  could differ from these  estimates.  The
following critical accounting policies are significantly  affected by judgments,
assumptions and estimates used in the preparation of the financial statements:

EQUITY INSTRUMENTS SUBJECT TO RESCISSION



         We account for common  stock and other equity  instruments  that may be
subject  to  rescission  claims at  estimated  fair value  (based on  applicable
measurement   criteria)  in  accordance   with  the   Securities   and  Exchange
Commission's  promulgated accounting rules and interpretive releases.  Under the
Securities and Exchange  Commission's  interpretation  of accounting  principles
generally  accepted  in the United  States,  reporting  such  claims  outside of
stockholders' equity is required,  regardless of how remote the redemption event
may be.

         The  Company  may be subject to  possible  claims for  rescission  with
respect to the sale or other  issuances  of certain  common  stock,  options and
warrants. The accompanying consolidated balance sheets reflect an adjustment for
the matter described below.

         Approximately  26.6  million  shares  of the  Company's  common  stock,
options and warrants  that were issued or granted in the United  States  without
registration or qualification  under federal or state securities laws during the
two-year period ended June 30, 2004 may be subject to rescission. The fair value
of these  securities  was estimated  based on a  combination  of (a) the selling
price of the common stock on the dates sold, (b) the price per the agreement for
stock issued in conversion of debt,  (c) the fair value of the stock options and
warrants on their grant dates, and (d) an independent  valuation.  Based in part
on advice of counsel, the fair value of these options and warrants was estimated
using  the  Black-Scholes  option-pricing  model.  Based  on  these  measurement
criteria,  the  Company's  potential  liability  directly  associated  with  the
aforementioned  securities transactions is estimated to approximate $6.2 million
(including interest) at June 30, 2004 plus legal fees and any fines or penalties
that might be assessed by regulatory agencies.

         Based on advice of counsel,  the potential  liability  discussed  above
does not include  options to  purchase a total of 3.6  million  shares of common
stock  issued to the  Company's  president  and to its chief  executive  officer
because these two  individuals  are also principal  stockholders of the Company;
acting  together,  they have the ability to control the Company.  The  estimated
fair value of the  options  described  in this  paragraph  (excluding  interest)
approximated $1,360,000 at June 30, 2004.

         Management  is unable to  determine  at this time whether any claim for
rescission may be filed against the Company;  however, there can be no assurance
that such claims will not be asserted.  In addition,  regulatory  agencies could
launch a formal investigation and/or institute an enforcement proceeding against
the Company.

         The ultimate  outcome of the matters  discussed  above is not presently
determinable. Accordingly, management is unable to estimate the total liability,
if any, that the Company may incur as a result of such contingencies. Regardless
of how remote a rescission event may be, GAAP as interpreted by the SEC requires
that  equity  securities  subject  to  rescission  be  reported  outside  of the
stockholders'  equity section of the balance sheet until the applicable statutes
of limitations have expired.  Thus, the Company has reported  approximately $6.2
million as "mezzanine  equity" in the  accompanying  June 30, 2004  consolidated
balance sheet.

         Approximately  8.5 million shares of the Company's  common stock issued
in connection with the acquisition of Z prompt, with an issuance-date  estimated
fair value of approximately  $1.8 million,  have been excluded from the June 30,
2003 mezzanine equity amount, as the acquisition was not recorded until November
2003 for reasons described in Note 3 to the accompanying  consolidated financial
statements.



CAPITALIZED SOFTWARE DEVELOPMENT COSTS

         In accordance  with SFAS No. 86  "Accounting  for the Costs of Computer
Software to be Sold Leased or Otherwise  Marketed," we capitalize  certain costs
related to the  development  of new  software  products  or the  enhancement  of
existing software products for sale or license. These costs are capitalized from
the  point in time  that  technological  feasibility  has been  established,  as
evidenced by a working model or detailed  working program design to the point in
time that the product is available for general release to customers. Capitalized
development costs will be amortized on a straight-line  basis over the estimated
economic lives of the products,  beginning with the general  product  release to
customers.  Research  and  development  costs  incurred  prior  to  establishing
technological  feasibility  and costs  incurred  subsequent  to general  product
release  to  customers  are  charged to expense  as  incurred.  We  periodically
evaluate  whether events or  circumstances  have occurred that indicate that the
remaining useful lives of the capitalized  software  development costs should be
revised or that the remaining balance of such assets may not be recoverable.

         At June 30, 2004, we believe that no revisions to the remaining  useful
lives or write-down of capitalized software development costs are required.  Our
systems were qualified as meeting federal voting system  standards in late March
2004. We began  amortizing the  capitalized  software  development  costs over a
period of thirty-six months beginning April 2004.

STOCK BASED COMPENSATION

         We account for stock-based  compensation  issued to employees using the
intrinsic  value based  method as  prescribed  by  Accounting  Principles  Board
Opinion No. 25 (APB 25),  "Accounting for Stock issued to Employees."  Under the
intrinsic value based method, compensation expense is the excess, if any, of the
fair  value of the stock at the grant  date or other  measurement  date over the
amount an employee must pay to acquire the stock.  Compensation expense, if any,
is recognized over the applicable  service period,  which is usually the vesting
period.

         SFAS 123, "Accounting for Stock-Based  Compensation," if fully adopted,
changes the method of accounting for employee stock-based  compensation plans to
the fair value  based  method.  For stock  options and  warrants,  fair value is
determined using an option pricing model that takes into account the stock price
at the grant  date,  the  exercise  price,  the  expected  life of the option or
warrant,   stock  volatility  and  the  annual  rate  of  quarterly   dividends.
Compensation  expense, if any, is recognized over the applicable service period,
which is usually the vesting period.


                                       25

<PAGE>

         The adoption of the accounting  methodology of SFAS 123 is optional and
we have elected to continue  accounting for stock-based  compensation  issued to
employees using APB 25;  however,  pro forma  disclosures,  as if we adopted the
cost recognition  requirement under SFAS 123, are required to be presented.  For
stock-based  compensation issued to non-employees,  we use the fair value method
of accounting under the provisions of SFAS 123.

         Financial Accounting Standards Board (FASB)  Interpretation No. 44 (FIN
44),  "Accounting  for Certain  Transactions  Involving Stock  Compensation,  an
Interpretation  of APB  25"  clarifies  the  application  of APB 25 for  (a) the
definition  of employee  for  purposes of applying  APB 25, (b) the criteria for
determining  whether  a plan  qualifies  as a non  compensatory  plan,  (c)  the
accounting  consequence for various  modifications  to the terms of a previously
fixed  stock  option or award and (d) the  accounting  for an  exchange of stock
compensation  awards in a business  combination.  We believe that we account for
transactions involving stock compensation in accordance with FIN 44.

         SFAS 148,  "Accounting  for  Stock-Based  Compensation - Transition and
Disclosure,  an  amendment  of SFAS No. 123,"  provides  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this statement amends the
disclosure  requirements  of SFAS 123 to require  prominent  disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.



FINANCIAL REPORTING RELATED TO WEB TOOLS INTERNATIONAL, INC.

         In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest  Entities,  an Interpretation of ARB 51". The primary objectives of FIN
No. 46 are to provide  guidance  on the  identification  of  entities  for which
control is achieved  through means other than voting rights  (variable  interest
entities,  or VIEs),  and how to determine  when and which  business  enterprise
should  consolidate  the VIE.  This new model for  consolidation  applies  to an
entity for which  either:  (a) the equity  investors  do not have a  controlling
financial  interest;  or (b) the equity  investment at risk is  insufficient  to
finance that  entity's  activities  without  receiving  additional  subordinated
financial support from other parties. In addition, FIN No. 46 requires that both
the primary  beneficiary and all other  enterprises with a significant  variable
interest in a VIE make additional disclosures.  As amended in December 2003, the
effective  dates  of FIN No.  46 for us are as  follows:  (a) for  interests  in
special-purpose  entities:  the first period ended after  December 15, 2003; and
(b) for all other types of VIEs: the first period ended after March 15, 2004.

         As disclosed in the notes to our  accompanying  consolidated  financial
statements,  we are associated with Web Tools International,  Inc. (WTI) through
common  ownership;  in  addition,  we were  virtually  WTI's only  customer  for
software  development services in fiscal 2003. Based on these and other factors,
we determined  that (1) WTI is a VIE and (2) we were its primary  beneficiary as
of January 1, 2004.  Therefore,  effective  January 1, 2004, the accounts of WTI
were consolidated with those of AccuPoll.  For reasons explained in the notes to
our June 30, 2004 consolidated  financial  statements,  the accounts of WTI were
de-consolidated effective April 1, 2004.

THE CONTINUED CONSOLIDATION OF A SUBSIDIARY IN BANKRUPTCY

         As discussed in the notes to our  accompanying  consolidated  financial
statements, Z prompt (a wholly-owned subsidiary of the Company) filed bankruptcy
in March 2004.  The  Company is the single  largest  pre-petition  creditor of Z
prompt.   Management  has  determined   that  it  would  not  be  meaningful  to
de-consolidate the accounts of Z prompt at this time because the Company (a) has
a  substantial  negative  investment  in Z prompt  as of June  30,  2004 and (b)
expects to regain control of this  subsidiary  based on the  expectation  that Z
prompt will be able to negotiate a confirmed reorganization plan and emerge from
bankruptcy by approximately March 2005.



RECENT ACCOUNTING PRONOUNCEMENTS

         We  continue  to assess  the  effects  of  recently  issued  accounting
standards.  The impact of all recently adopted and issued  accounting  standards
has been disclosed in Note 1 of the consolidated  financial  statements included
in this amended report on Form 10-K/A.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Changes in United  States  interest  rates  would  affect the  interest
earned on our cash and cash  equivalents.  Based on our  overall  interest  rate
exposure at June 30,  2004,  a  near-term  change in  interest  rates,  based on
historical  movements,  would not  materially  affect the fair value of interest
rate sensitive  instruments.  Our debt instruments have fixed interest rates and
terms and,  therefore,  a significant  change in interest rates would not have a
material adverse effect on our financial position or results of operations.


                                       26
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial  information  required by this Item is attached hereto at
the end of this report.

ITEM  9. CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

         None.

ITEM 9A.  CONTROLS AND PROCEDURES

         We maintain  disclosure  controls  and  procedures  (as defined in Rule
13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934, as amended)
that are  designed to ensure that  information  required to be  disclosed in our
periodic reports filed under the Exchange Act is recorded, processed, summarized
and reported  within the time periods  specified in the  Securities and Exchange
Commission's  rules and forms,  and that such  information  is  accumulated  and
communicated to our management,  including our chief executive officer and chief
financial officer, as appropriate,  to allow timely decisions regarding required
disclosure.  In designing and evaluating the disclosure controls and procedures,
management  recognized  that any  controls  and  procedures,  no matter how well
designed and operated,  can provide only  reasonable  assurance of achieving the
desired  objectives,  and  management  necessarily  was  required  to apply  its
judgment in evaluating the  cost-benefit  relationship of possible  controls and
procedures.

         We carried out an  evaluation  of the  effectiveness  of the design and
operation of our disclosure  controls and  procedures as of June 30, 2004.  This
evaluation was carried out under the supervision and with the  participation  of
our management,  including our principal (chief) executive officer and principal
(chief)  financial  officer.  Based upon the evaluation,  our principal  (chief)
executive  officer and principal  (chief)  financial  officer concluded that our
disclosure  controls  and  procedures  were  of  limited  effectiveness  at  the
reasonable assurance level at June 30, 2004.

         There have been no  changes  in our  internal  control  over  financial
reporting during the quarter ended June 30, 2004 that have materially  affected,
or are  reasonably  likely to  materially  affect,  our  internal  control  over
financial reporting.

         During the year ended June 30,  2004,  we hired  additional  accounting
personnel to re-evaluate  and revise our disclosure  controls and procedures and
to implement new disclosure  controls and  procedures.  As part of this plan and
implementation, we are re-evaluating, re-designing, and documenting policies and
procedures,   putting  those   procedures  in  operation  and   monitoring   the
effectiveness of the procedures.


ITEM 9B. OTHER INFORMATION

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information required by this Item will be contained in AccuPoll's Proxy
Statement  under the caption  "Directors and Executive  Officers," and is hereby
incorporated by reference thereto.

ITEM 11. EXECUTIVE COMPENSATION

         Information required by this Item will be contained in AccuPoll's Proxy
Statement under the caption "Executive Compensation," and is hereby incorporated
by reference thereto.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information required by this Item will be contained in AccuPoll's Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management," and is hereby incorporated by reference thereto.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information required by this Item will be contained in AccuPoll's Proxy
Statement under the caption "Certain  Transactions," and is hereby  incorporated
by reference thereto.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Information required by this Item will be contained in Accupoll's Proxy
Statement  under the caption  "Principal  Accountant  Fees and Services," and is
hereby incorporated by reference thereto.


                                       27

<PAGE>
                                    PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBITS

EXHIBIT NUMBER                            DESCRIPTION
--------------------------------------------------------------------------------
2.1               Reorganization  Agreement dated April 9, 2003 between AccuPoll
                  and Z prompt,  Inc.  (Incorporated by reference from Exhibit 1
                  to Form 8-K, filed April 23, 2003)

2.2               Agreement  and Plan of  Reorganization  dated June 30, 2004 by
                  and among AccuPoll Holding Corp., NTSD Acquisition,  Inc., NTS
                  Data  Services  Corp.,  NTS Data  Services,  Inc.,  Matthew M.
                  Biondi and John F. Jennings  (Incorporated  by reference  from
                  Exhibit 10.1 to Form 8-K, filed July 1, 2004).

3.1               Articles of Incorporation dated January 25, 1985 (Incorporated
                  by reference  from Exhibit 3(i) to Form 10-KSB for fiscal year
                  ended June 30, 2000)

3.2               Amendment to Articles of Incorporation  dated November 4, 1985
                  (Incorporated  by reference  from Exhibit 3(ii) to Form 10-KSB
                  for fiscal year ended June 30, 2000)


3.3               Certificate  of Amendment to Articles of  Incorporation  dated
                  May 2, 2002

3.4               Certificate  of Amendment to Articles of  Incorporatoin  dated
                  May 23, 2002

3.5               Certificate  of Amendment to Articles of  Incorporation  dated
                  June 2, 2003

3.6               Bylaws  (Incorporated  by reference to Exhibit  3(iii) to Form
                  10-KSB  for  the  fiscal  year  ended  June  30,  2000,  filed
                  September 8, 2000)

3.7               Amendment to Bylaws dated April 20, 2000.



4.1               Debenture,  dated June 20, 2003 between AccuPoll and Palisades
                  Holdings,  LLC  (Incorporated by reference from Exhibit 4.1 to
                  Form  10-KSB/A for the fiscal year ended June 30, 2003,  filed
                  June 8, 2004)

4.2               Debenture,  dated  November 20, 2003, by and between  AccuPoll
                  Holding Corp.,  AccuPoll,  Inc. and Hyde Investments,  Ltd, as
                  amended  (Incorporated  by reference from Exhibit 10.1 to Form
                  10-Q/A for the quarter ended December 31, 2003,  filed June 8,
                  2004)

4.3               Debenture,  dated  November 20, 2003, by and between  AccuPoll
                  Holding  Corp.,  AccuPoll,  Inc. and  Livingston  Investments,
                  Ltd., as amended  (Incorporated by reference from Exhibit 10.1
                  to Form 10-Q/A for the quarter ended December 31, 2003,  filed
                  June 8, 2004)

4.4               Convertible  Note,  dated July 2003,  between AccuPoll and Pan
                  American  Management  (Incorporated  by reference from Exhibit
                  10.1 to Form 10-Q/A for the quarter ended  September 30, 2003,
                  filed June 8, 2004)

4.5               Subscription Agreement,  dated September 8, 2004 (Incorporated
                  by reference from Exhibit 4.1 to Form 8-K, filed September 17,
                  2004)

4.6               Form of  Common  Stock  Purchase  Warrant A  (Incorporated  by
                  reference  from Exhibit 4.2 to Form 8-K,  filed  September 17,
                  2004)

4.7               Form of  Common  Stock  Purchase  Warrant B  (Incorporated  by
                  reference  from Exhibit 4.3 to Form 8-K,  filed  September 17,
                  2004)

4.8               Form of  Common  Stock  Purchase  Warrant C  (Incorporated  by
                  reference  from Exhibit 4.4 to Form 8-K,  filed  September 17,
                  2004)

4.9               Form of Placement  Agent  Warrant  (Incorporated  by reference
                  from Exhibit 4.5 to Form 8-K, filed September 17, 2004)

4.10              Form of Funds Escrow Agreement (Incorporated by reference from
                  Exhibit 4.6 to Form 8-K, filed September 17, 2004)

9.1               Proxy in favor of Dennis  Vadura and Frank Wiebe from Picasso,
                  LLC  (Incorporated  by reference from Exhibit 10.9 to the Form
                  10-KSB for the fiscal year ended June 30, 2002,  filed October
                  7, 2002)

9.2               Proxy  in  favor  of  Dennis   Vadura  and  Frank  Wiebe  from
                  ViperTrust  (Incorporated  by reference  from Exhibit 10.10 to
                  the Form 10-KSB for the fiscal year ended June 30, 2002, filed
                  October 7, 2002)

                                       28
<PAGE>

EXHIBIT NUMBER                            DESCRIPTION
--------------------------------------------------------------------------------
9.3               Proxy in favor of Dennis  Vadura and Frank  Wiebe from  Aramis
                  Investment, LLC (Incorporated by reference from Exhibit 9.3 to
                  Form  10-KSB/A for the fiscal year ended June 30, 2003,  filed
                  June 8, 2004)

9.4               Proxy in favor of  Dennis  Vadura  and  Frank  Wiebe  from The
                  Glacier Trust  (Incorporated  by reference from Exhibit 9.4 to
                  Form  10-KSB/A for the fiscal year ended June 30, 2003,  filed
                  June 8, 2004)

9.5               Proxy in favor of Dennis  Vadura and Frank Wiebe from Morpheus
                  Trust  (Incorporated  by  reference  from  Exhibit 9.5 to Form
                  10-KSB/A for the fiscal year ended June 30,  2003,  filed June
                  8, 2004)

10.1              Stock Exchange  Agreement dated May 20, 2002, between WIPC and
                  AccuPoll, Inc., Dennis Vadura and Frank Wiebe (Incorporated by
                  reference from Exhibit 1 to Form 8-K/A filed May 28, 2002)

10.2              Employment  Agreement,  dated  May 20,  2002,  between  Dennis
                  Vadura and AccuPoll  (Incorporated  by reference  from Exhibit
                  10.2 to Form 10-KSB/A for the fiscal year ended June 30, 2003,
                  filed June 8, 2004)

10.3              Employment Agreement,  dated May 20, 2002, between Frank Wiebe
                  and AccuPoll  (Incorporated  by reference from Exhibit 10.2 to
                  Form  10-KSB/A for the fiscal year ended June 30, 2003,  filed
                  June 8, 2004)

10.4              Indemnification Agreement,  between Dennis Vadura and AccuPoll
                  (Incorporated  by reference from Exhibit 10.13 to the Form-KSB
                  for fiscal year ended June 30, 2002, filed October 7, 2002)

10.5              Indemnification  Agreement,  between  Frank Wiebe and AccuPoll
                  (Incorporated  by reference from Exhibit 10.14 to the Form-KSB
                  for fiscal year ended June 30, 2002, filed October 7, 2002)

10.6              Master  Services  Agreement  dated  April  2002 with Web Tools
                  International,  Inc.  (Incorporated  by reference from Exhibit
                  10.7 to Form-KSB  for fiscal year ended June 30,  2002,  filed
                  October 7, 2002)

10.7              Consulting Agreement dated April 23, 2002 between AccuPoll and
                  GCH Capital,  Ltd (Incorporated by reference from Exhibit 10.8
                  to Form-KSB for fiscal year ended June 30, 2002, filed October
                  7, 2002)

10.8              Consulting Agreement, dated May 29, 20002 between Craig Hewitt
                  and AccuPoll  (Incorporated by reference from Exhibit 10.17 to
                  the  Form-KSB  for  fiscal  year ended  June 30,  2002,  filed
                  October 7, 2002)

10.9              AccuPoll 2002 Consultant  Compensation  Plan  (Incorporated by
                  reference from Exhibit 10 to Form S-8 filed June 11, 2002)

10.10             Exclusive  Territory and Compensation  Agreement,  November 4,
                  2003, by and between AccuPoll and AmCad, LLC  (Incorporated by
                  reference  from Exhibit  10.12 to Form 10-KSB/A for the fiscal
                  year ended June 30, 2003, filed June 8, 2004)

10.11             Standard Sublease dated July 23, 2003 between Greenberg Farrow
                  Architecture,  Inc.  and AccuPoll  (Incorporated  by reference
                  from Exhibit  10.14 to Form 10-KSB/A for the fiscal year ended
                  June 30, 2003, filed June 8, 2004)

10.12             Teaming  Agreement dated July 9, 2004 by and between AccuPoll,
                  Inc. and  Alternative Resources  Corporation  (Incorporated by
                  reference  from Exhibit 10.12 to Form 10-K for the fiscal year
                  ended June 30, 2004, filed September 28, 2004).

10.13             Exclusive  Supply  Agreement  dated  December  20, 2001 by and
                  between Source Technologies, Inc. and Web Tools International,
                  Inc.  (Incorporated  by reference  from Exhibit  10.13 to Form
                  10-K for the fiscal year ended June 30, 2004,  filed September
                  28, 2004

14.1              Code of Ethics (Incorporated by reference from Exhibit 14.1 to
                  Form 10-K for the  fiscal  year  ended  June 30,  2004,  filed
                  September 28, 2004).

21.1              List of Subsidiaries  (Incorporated  by reference from Exhibit
                  21.1 to Form 10-K for the fiscal  year  ended  June 30,  2004,
                  filed September 28, 2004).

31.1              Certification  by Chief  Executive  Officer  pursuant  to Rule
                  13a-14(a) or 15d-14(a),  as adopted pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002

31.2              Certification  by Chief  Financial  Officer  pursuant  to Rule
                  13a-14(a) or 15d-14(a),  as adopted pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002

32.1              Certification by Chief Executive Officer pursuant to 18 U.S.C.
                  Section  1350,  as  adopted  pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002

32.2              Certification by Chief Financial Officer pursuant to 18 U.S.C.
                  Section  1350,  as  adopted  pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002

FINANCIAL STATEMENT SCHEDULES

The information required by this Item is either not applicable,  included in the
notes to consolidated financial statements, or is not significant.


                                       29

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    ACCUPOLL HOLDING CORP.

Dated:   October 6, 2004            By:   /s/ Dennis Vadura
                                          -----------------------------------
                                          Dennis Vadura,
                                          Chief Executive Officer and Director


Dated:   October 6, 2004            By:   /s/ Frank J. Wiebe
                                          -----------------------------------
                                          Frank J. Wiebe,
                                          President, Secretary, Treasurer
                                          and Director


Dated:   October 6, 2004            By:   /s/ Craig A. Hewitt
                                          -----------------------------------
                                          Craig A. Hewitt,
                                          Chief Financial Officer and Principal
                                          Accounting Officer

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

SIGNATURE              TITLE                                  DATE

/s/ Dennis Vadura      Chief Executive Officer and Director   October 6, 2004
----------------------
Dennis Vadura


/s/ Frank J. Wiebe     President, Secretary, Treasurer        October 6, 2004
---------------------- and Director
Frank J. Wiebe


                                       30

<PAGE>

/s/ Andrea M. Porcelli Director                               October 6, 2004
-----------------------
Andrea M. Porcelli


/s/ Phil Trubey        Director                               October 6, 2004
----------------------
Phil Trubey


                                       31


<PAGE>


Index to Financial Statements                                           Page
                                                                        ----

Report of Independant Registered Public Accounting Firm.................F-1

Consolidated balance sheets at June 30, 2004 and 2003...................F-2

Consolidated statements of operations for the years ended
June 30, 2004 and 2003 and for the period from August 9, 2001
(Inception) through June 30, 2002.......................................F-3

Consolidated statements of stockholders' deficit for the years
ended June 30, 2004 and 2003 and for the period from August 9, 2001
(Inception) through June 30, 2002.......................................F-4

Consolidated statements of cash flows for the years ended
June 30, 2004 and 2003 and for the period from August 9, 2001
(Inception) through June 30, 2002.......................................F-7



Notes to consolidated financial statements..............................F-8



<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
AccuPoll Holding Corp.

We have audited the accompanying consolidated balance sheets of AccuPoll Holding
Corp. and  subsidiaries  ("the  "Company") as of June 30, 2004 and 2003, and the
related consolidated  statements of operations,  stockholders'  deficit and cash
flows for the period from August 9, 2001  (Inception)  through June 30, 2002 and
for the  years  ended  June 30,  2004 and  2003.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.



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



In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of AccuPoll Holding
Corp.  and  subsidiaries  as of June 30, 2004 and 2003, and the results of their
operations  and their cash flows for the period from August 9, 2001  (Inception)
through  June 30,  2002 and for the  years  ended  June 30,  2004 and  2003,  in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  As discussed in Note 1, the
Company  has losses from  operations  through  June 30, 2004 and an  accumulated
deficit of approximately $22.6 million at that date, negative working capital at
June 30, 2004  approximating  $6.8  million and a lack of  operational  history.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going  concern.  Management's  plans in regard to these matters
are described in Note 1. The  consolidated  financial  statements do not include
any adjustments that may result from the outcome of this uncertainty.

As discussed in Note 10 to the accompanying  consolidated  financial statements,
the Company may be subject to possible  rescission  claims regarding the sale or
other issuances of certain equity  instruments.  Accordingly,  the June 30, 2003
consolidated  balance sheet has been restated to reflect the potential liability
associated  with such  transactions.  As  discussed  in Note 11, an  expense  of
$655,000  relating to warrants issued for services that were not provided by the
vendor  was  recorded  during the year ended  June 30,  2003.  Accordingly,  the
consolidated  statement of operations  for the year then ended has been restated
to reduce the previously reported net loss by $655,000.

/s/ Squar, Milner, Reehl & Williamson, LLP
Newport Beach, California

September 27, 2004

F-1

<PAGE>





                             ACCUPOLL HOLDING CORP.
                           CONSOLIDATED BALANCE SHEETS
                             June 30, 2004 and 2003
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                                          2004            2003
                                                                                                     (AS RESTATED)
                                                                                     ------------    ------------
                                  ASSETS
<S>                                                                                  <C>             <C>
CURRENT ASSETS
      Cash                                                                           $    113,789    $         --
      Accounts receivable, net                                                            254,895              --
      Inventories                                                                         168,636              --
      Deferred acquisition costs                                                               --         144,206
      Prepaid expenses                                                                         --           2,500
                                                                                     ------------    ------------
                                                                                          537,320         146,706

PROPERTY AND EQUIPMENT, net                                                                14,012              --
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net                                             2,544,207       1,403,899
OTHER ASSETS                                                                               26,246              --
                                                                                     ------------    ------------

      TOTAL ASSETS                                                                   $  3,121,785    $  1,550,605
                                                                                     ============    ============
                   LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
      Accounts payable and accrued expenses                                          $  1,817,284    $    931,503
      Related party payables                                                            1,228,070         872,940
      Deferred revenues                                                                    74,628              --
      Convertible debt. net of discount                                                 3,304,600              --
      Notes and accrued interest payable to related parties                                30,000         175,000
      Put liability related to warrant issuance                                           163,760         113,750
      Liabilities subject to compromise                                                   732,544              --
                                                                                     ------------    ------------
                                                                                        7,350,886       2,093,193
                                                                                     ------------    ------------

EQUITY INSTRUMENTS SUBJECT TO RESCISSION                                                6,200,000       4,377,033
                                                                                     ------------    ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
      Convertible Series A preferred stock, $0.01 par value, 80,000 shares
      authorized, no shares issued or outstanding (liquidation preference of zero)             --              --
      Common stock, par value of $0.001, 600,000,000 shares
        authorized; 158,482,171 and 112,945,963 shares issued and outstanding
        at June 30, 2004 and 2003, respectively                                           158,482         112,946
      Additional paid-in capital                                                       12,046,817       2,222,580
      Accumulated deficit                                                             (22,634,400)     (7,255,147)
                                                                                     ------------    ------------
                                                                                      (10,429,101)     (4,919,621)
                                                                                     ------------    ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                    $  3,121,785    $  1,550,605
                                                                                     ============    ============
</TABLE>

--------------------------------------------------------------------------------
PAGE F-2       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>

                             ACCUPOLL HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For The Years Ended June 30, 2004 and 2003, and
      For The Period From August 9, 2001 (Inception) Through June 30, 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                         YEAR ENDED      YEAR ENDED      PERIOD ENDED
                                       JUNE 30, 2004    JUNE 30, 2003    JUNE 30, 2002
                                                        (As Restated)
                                       -------------    -------------    -------------
<S>                                    <C>              <C>              <C>
NET SALES                              $   1,508,656    $          --    $          --

COST OF SALES                              1,185,797               --               --
                                       -------------    -------------    -------------
GROSS PROFIT                                 322,859               --               --
EXPENSES
      General and administrative           3,160,257        3,104,192          904,083
      Professional fees                    4,264,156        1,714,475        1,198,622
      Interest                             4,534,947           29,900          303,875
      Loss on disposal of investment       1,200,000               --               --
      Impairment of goodwill               2,542,752               --               --
                                       -------------    -------------    -------------
                                          15,702,112        4,848,567        2,406,580
                                       -------------    -------------    -------------

NET LOSS                               $ (15,379,253)   $  (4,848,567)   $  (2,406,580)
                                       =============    =============    =============
BASIC AND DILUTED LOSS
    PER COMMON SHARE                   $       (0.12)   $       (0.05)   $       (0.04)
                                       =============    =============    =============
WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                   130,782,481      106,687,447       68,735,272
                                       =============    =============    =============
</TABLE>

--------------------------------------------------------------------------------
PAGE F-3       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>
                             ACCUPOLL HOLDING CORP.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
       For The Years Ended June, 30 2004 and 2003 and For The Period From
                August 9, 2001 (Inception) Through June 30, 2002
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                      Common Stock         Common Stock  Additional                       Total
                                                -------------------------- Subscription   Paid-in       Accumulated   Stockholder's
                                                   Shares        Amount     Receivable    Capital         Deficit        Deficit
                                                -----------   ------------   --------   ------------    ------------   ------------
<S>                                             <C>           <C>           <C>           <C>            <C>           <C>
Balance at August 9, 2001 (Inception)                    --   $         --   $     --   $        --     $         --   $         --

Issuance of common stock upon formation          61,280,000         61,280         --        (61,280)             --             --

Issuance of common stock at $0.08 per
share for the conversion of notes payable,
including accrued interest of $16,375             3,724,292          3,724         --        300,151              --        303,875

Issuance of common stock at $0.08
per share for note receivable                       612,800            613         --         49,387              --         50,000

Proceeds from the issuance of common
stock at $0.08 per share in connection with
the exercise of warrants                          3,724,292          3,724    (12,500)       298,744              --        289,968

Proceeds from the issuance of common stock
at $0.12 per share in connection with the
exercise of warrants                              6,177,024          6,177         --        750,004              --        756,181

Issuance of common stock in connection
with the merger with WIPC (including 18,400,000
shares issued to brokers)                        18,639,000         18,639         --        (18,639)             --             --

Issuance of common stock at $0.06 per share
for services                                      4,800,000          4,800         --        295,200              --        300,000

Issuance of common stock at $0.08 per share
for services                                      3,840,000          3,840         --        309,504              --        313,344

Estimated fair value of warrants granted
in connection with convertible debt                      --             --         --        287,500              --        287,500

Estimated fair value of options and
warrants granted for services                            --             --         --        813,525              --        813,525

Equity instruments subject to rescission                 --             --         --     (1,021,834)             --     (1,021,834)

Interest on equity instruments subject
to rescission                                            --             --         --        (12,137)             --        (12,137)

Net loss                                                 --             --         --             --      (2,406,580)    (2,406,580)
                                                -----------   ------------   --------   ------------    ------------   ------------

Balance at June 30, 2002 (as restated)          102,797,408   $    102,797   $(12,500)  $  1,990,125    $ (2,406,580)  $   (326,158)
                                                ===========   ============   ========   ============    ============   ============
Issuance of common stock at $0.91 for services        6,593              7         --          5,993              --          6,000

Issuance of common stock at $1.02 for services       32,862             33         --         33,486              --         33,519

Issuance of common stock at $1.04 for services       17,000             17         --         17,663              --         17,680

Issuance of common stock at $1.05 for services      207,142            207         --        217,292              --        217,499

Issuance of common stock at $1.17 for services      120,000            120         --        140,280              --        140,400

Issuance of common stock at $1.18 for services        6,667              7         --          7,860              --          7,867

Issuance of common stock at $1.20 for services       30,000             30         --         35,970              --         36,000

Issuance of common stock at $1.25 for services        8,500              9         --         10,616              --         10,625

Issuance of common stock at $1.40 for services       20,000             20         --         27,980              --         28,000

Issuance of common stock at  $0.00 per share
in connection with the cashless  exercises
of warrants                                         208,540            209         --           (209)             --             --

Proceeds from the issuance of common stock at
$0.06 per share in connection with the exercise
of warrants                                         911,954            912         --         56,201              --         57,113

Proceeds from the issuance of common stock at
$0.08 per share in connection with the exercise
of warrants                                         245,120            245         --         19,755              --         20,000

Proceeds from the issuance of common stock at
$0.12 per share in connection with the exercise
of warrants                                       2,828,272          2,828         --        343,113              --        345,941

Proceeds from the issuance of common stock at
$0.25 per share in connection with the
exercise of warrants                                200,000   $        200   $     --   $     49,800    $         --   $     50,000
</TABLE>

....continued
--------------------------------------------------------------------------------
PAGE F-4       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS
....continued
<PAGE>
<TABLE>
<CAPTION>
                                                      Common Stock         Common Stock  Additional                       Total
                                                -------------------------- Subscription   Paid-in       Accumulated   Stockholder's
                                                   Shares        Amount     Receivable    Capital         Deficit        Deficit
                                                -----------   ------------   --------   ------------    ------------   ------------
<S>                                             <C>           <C>           <C>           <C>            <C>           <C>
Proceeds from the issuance of common stock at
$0.06 per share for cash                            535,445   $        535         $-   $     32,929              $-   $     33,464

Proceeds from the issuance of common stock at
$0.12 per share for cash                          3,642,480          3,642         --        444,057              --        447,699

Proceeds from the issuance of common stock at
$0.25 per share for cash                            840,000            840         --        209,160              --        210,000

Proceeds from the issuance of common stock at
$0.30 per share for cash                             52,280             52         --         15,782              --         15,834

Proceeds from the issuance of common stock at
$0.40 per share for cash                             62,500             63         --         24,937              --         25,000

Proceeds from the issuance of common stock at
$0.47 per share for cash                             95,200             95         --         44,940              --         45,035

Proceeds from the issuance of common stock at
$0.50 per share for cash                             50,000             50         --         24,950              --         25,000

Proceeds from the issuance of common stock at
$0.95 per share for cash                             28,000             28         --         26,572              --         26,600

Commissions paid for fund raising activity               --             --         --       (281,944)             --       (281,944)

Beneficial conversion feature in connection
with the issuance of convertible debt                    --             --         --         50,000              --         50,000

Estimated fair value of warrants granted in
connection with note payable                             --             --         --         20,000              --         20,000

Estimated fair value of warrants granted
for services                                             --             --         --      1,839,000              --      1,839,000

Estimated fair value of options granted
for services                                             --             --         --        273,084              --        273,084

Liability incurred in connection with the
issuance of warrants                                     --             --         --       (113,750)             --       (113,750)

Equity instruments subject to rescission                 --             --         --     (3,185,309)             --     (3,185,309)

Interest on equity instruments subject to
rescission                                               --             --         --       (157,753)             --       (157,753)

Write off of subscriptions receivable                    --             --     12,500             --              --         12,500

Net loss                                                 --             --         --             --      (4,848,567)    (4,848,567)
                                                -----------   ------------   --------   ------------    ------------   ------------

Balance at June 30, 2003 (as restated)          112,945,963        112,946   $     --   $  2,222,580    $ (7,255,147)  $ (4,919,621)
                                                ===========   ============   ========   ============    ============   ============
Common stock issued for cash                      6,553,857          6,554         --        799,518              --        806,072

Common stock issued for services                     35,000             35         --         34,915              --         34,950

Proceeds from the issuance of common stock
in connection with the exercise of warrants      20,502,794         20,503         --      3,778,113              --      3,798,616

Estimated fair value of warrants
granted for services                                     --             --         --        786,000              --        786,000

Liability incurred in connection with the
issuance of warrants                                     --             --         --        (50,010)             --        (50,010)
</TABLE>
....continued
--------------------------------------------------------------------------------
PAGE F-5       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS
....continued

<PAGE>
<TABLE>
<CAPTION>

                                                      Common Stock         Common Stock  Additional                       Total
                                                -------------------------- Subscription   Paid-in       Accumulated   Stockholder's
                                                   Shares        Amount     Receivable    Capital         Deficit        Deficit
                                                -----------   ------------   --------   ------------    ------------   ------------

<S>                                             <C>           <C>           <C>           <C>            <C>           <C>
Estimated fair value of warrants granted
in connection with convertible debt                      --             --         --        362,800             --         362,800

Common stock issued in connection with
conversion of convertible debt and
accrued interest                                  3,881,250          3,881         --        772,369              --        776,250

Beneficial conversion feature in connection
with the issuance of convertible debt                    --             --         --      3,641,800              --      3,641,800

Issuance of common stock in connection
with cashless exercise of options                 6,030,307          6,030         --         (6,030)             --             --

Commissions paid for fund raising activity               --             --         --       (277,000)             --       (277,000)

Acquisition of Z Prompt                           8,533,000          8,533         --      1,804,729              --      1,813,262

Equity instruments subject to rescission                 --             --         --     (1,500,967)             --     (1,500,967)

Interest on equity instruments subject
to rescission                                            --             --         --       (322,000)             --       (322,000)

Net loss                                                 --             --         --             --     (15,379,253)   (15,379,253)
                                                -----------   ------------   --------   ------------    ------------   ------------

Balance at June 30, 2004                        158,482,171   $    158,482   $     --   $ 12,046,817    $(22,634,400)  $(10,429,101)
                                                ===========   ============   ========   ============    ============   ============
</TABLE>
--------------------------------------------------------------------------------
PAGE F-6       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
                             ACCUPOLL HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For The Years Ended June 30, 2004 and 2003, and
      For The Period From August 9, 2001 (Inception) Through June 30, 2002
--------------------------------------------------------------------------------

<TABLE>

                                                                                     YEAR ENDED      YEAR ENDED     PERIOD ENDED
Cash flows from operating activities:                                               JUNE 30, 2004   JUNE 30, 2003   JUNE 30, 2002
                                                                                                   (AS RESTATED)
                                                                                   ----------------------------------------------
<S>                                                                                <C>              <C>             <C>
     Net loss                                                                       $(15,379,253)   $ (4,848,567)   $ (2,406,580)
     Adjustments to reconcile net loss to net cash used in
       operating activities:
         Depreciation and amortization                                                   245,408              --              --
         Loss on disposal of fixed assets                                                 12,640              --              --
         Estimated fair value of warrants granted in
            connection with notes payable                                                     --          20,000         287,500
         Estimated fair value of options and warrants
            granted for services                                                         786,000       2,112,084         813,525
         Estimated fair value of common stock issued
            for services                                                                  34,950         497,590         327,344
         Amortization of estimated fair value of warrants granted
            and beneficial conversion feature in connection with
            the issuance of convertible notes payable                                  4,054,600              --              --
         Convertible debt issued for services                                          1,276,000              --              --
         Loss on disposal of investment                                                1,200,000              --              --
         Impairment of goodwill                                                        2,542,752              --              --
         Accrued interest related to the conversion of notes payable                          --              --          16,375
         Write off of subscription receivable                                                 --          12,500              --
         Write off of prepaid consulting                                                      --         286,000              --
         Changes in operating assets and liabilities:
            Accounts receivable                                                         (209,939)             --              --
            Inventories                                                                  (73,300)             --              --
            Prepaid expenses                                                               2,500          (2,500)             --
            Other assets                                                                 128,996              --              --
            Accounts payable and accrued expenses                                        622,237         755,211         176,292
            Related party payables                                                       358,327          10,000         151,020
            Increase in capitalized software development costs                        (1,371,600)       (530,013)       (111,966)
                                                                                    ------------    ------------    ------------

     Net cash used in operating activities                                            (5,769,682)     (1,687,695)       (746,490)
                                                                                    ------------    ------------    ------------
Cash flows from investing activities:
     Increase in deferred acquisition costs                                                   --        (144,206)             --
     Purchases of property and equipment                                                 (11,135)             --              --
     Proceeds from related party note receivable                                              --         300,000        (300,000)
     Cash of acquired entity                                                               2,368              --              --
                                                                                    ------------    ------------    ------------

     Net cash provided by (used in) investing activities                                  (8,767)        155,794        (300,000)
                                                                                    ------------    ------------    ------------
Cash flows from financing activities:
     Proceeds from the issuance of notes payable to related parties                      210,950         175,000              --
     Principal payments of notes payable to related parties                             (195,000)             --              --
     Proceeds from issuance of convertible debt                                        1,528,600          50,000         287,500
     Borrowings on line-of-credit                                                         20,000              --              --
     Proceeds from the issuance of common stock                                          806,072         546,688              --
     Proceeds from issuance of common stock upon exercise of warrants, net             3,521,616         473,054       1,046,149
                                                                                    ------------    ------------    ------------

     Net cash provided by financing activities                                         5,892,238       1,244,742       1,333,649
                                                                                    ------------    ------------    ------------
Net increase (decrease) in cash                                                          113,789        (287,159)        287,159
Cash at beginning of period                                                                   --         287,159              --
                                                                                    ------------    ------------    ------------

Cash at end of period                                                               $    113,789    $         --    $    287,159
                                                                                    ============    ============    ============

Supplemental  disclosure of cash flow  information -
Cash paid during the period for:

         Interest (none paid in cash)                                               $         --    $         --    $         --
                                                                                    ============    ============    ============

         Income taxes                                                               $        800    $        800    $        800
                                                                                    ============    ============    ============
</TABLE>



SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND OPERATING ACTIVITIES
See accompanying notes to the consolidated  financial statements for information
relating to non-cash  investing  and  financing  activities  concerning  prepaid
consulting  fees,  issuance  of common  stock  related to  convertible  debt and
warrants,   issuance  of  preferred  stock,  increase  in  capitalized  software
development costs, beneficial conversion features and related party payables.



--------------------------------------------------------------------------------
PAGE F-7       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


                             AccuPoll Holding Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2004


Note 1  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

AccuPoll  Holding  Corporation,  a Nevada  corporation  (the "parent  company"),
principally operates through its wholly owned subsidiary  AccuPoll,  Inc., which
was incorporated on August 9, 2001 in Delaware. The parent company is engaged in
the design and  development  of a voting  system with an intuitive  touch-screen
interface (the "Voting System") that provides a polling place electronic  voting
solution  that  is  reliable,   accurate,   immediate,   secure,  easy  to  use,
confidential and auditable.  The Voting System has the ability to simultaneously
produce two  different  electronic  audit  trails  (recorded on both the polling
place administrative work station and the local voting station),  in addition to
generating  a  printed-paper  ballot.  The parent  company  completed  a reverse
acquisition  with a publicly  traded  company (see Note 2) in May 2002,  and its
common stock is quoted on the  Over-The-Counter  Bulletin Board under the symbol
"ACUP." For financial reporting purposes, the parent company was classified as a
development stage enterprise until November 2003.

Principles of Consolidation

         GENERAL

The accompanying  consolidated  financial statements include the accounts of the
parent company and its wholly-owned  subsidiary AccuPoll,  Inc. In addition, the
accounts of Z prompt, Inc. ("Z prompt"), a wholly-owned subsidiary, are included
in  such  financial   statements   from  November  1,  2003.   All   significant
inter-company balances and transactions have been eliminated in consolidation.

Except where the context requires otherwise, the entities named in the preceding
paragraph are hereinafter collectively referred to as the "Company."

         BANKRUPTCY OF Z PROMPT


As  discussed  in Note 12, Z prompt filed  voluntary  bankruptcy  in March 2004.
Although  the  Company  is not  presently  a member of the  unsecured  creditors
committee  that was formed in connection  with the bankruptcy  proceedings,  the
Company is the single largest pre-petition creditor of Z prompt.

F-8

<PAGE>

In addition, as described in Note 6, the Company and certain of its officers and
principal  stockholders are presently  involved in civil litigation with certain
former stockholders and officers of Z prompt.  Management has determined that it
would not be meaningful to de-consolidate  the accounts of Z prompt at this time
because the Company (a) has a substantial  negative investment in Z prompt as of
June 30, 2004, and (b) expects to re-gain  control of this  subsidiary  based on
the   expectation   that  Z  prompt  will  be  able  to  negotiate  a  confirmed
reorganization  plan and emerge from bankruptcy by approximately  March of 2005.
See Note 3 for additional information regarding Z prompt.


         AFFILIATED ENTITY


As further  explained  below in the "Variable  Interest  Entity" section of this
note,  the  accounts of affiliate  Web Tools  International,  Inc.  ("WTI") were
consolidated  with those of the Company as of January 1, 2004 in accordance with
Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46. For
reasons discussed in Note 5, WTI was de-consolidated as of April 1, 2004.

Going Concern/Liquidity Considerations

The Company has not generated  any revenues  from its Voting System  operations,
and there is no  assurance  of any future  revenues.  The Company  will  require
substantial  additional  funding  for  continuing  the  development,   obtaining
regulatory approval, and commercialization of its product. There is no assurance
that the Company will be able to obtain sufficient  additional funds when needed
or that such funds,  if available,  will be obtainable on terms  satisfactory to
the Company.

Management has taken actions to address these matters, which include:

     o    Retention of experienced  management  personnel with particular skills
          in the commercialization of such products;

     o    Attainment  of  technology  to develop such  products  and  additional
          products; and

     o    Raising  additional  funds  through  the  sale of debt  and/or  equity
          securities.

Federal, State and various foreign government regulations govern the sale of the
Company's products.  There can be no assurance that the Company will receive the
regulatory approval required to market its proposed products.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern  which  contemplates,  among
other things,  the realization of assets and  satisfaction of liabilities in the
ordinary  course of business.  The Company has incurred  losses through June 30,
2004, has negative working capital at that date of  approximately  $6.8 million,
and has a lack of operational history which, among other factors,

F-9

<PAGE>

raise  substantial  doubt about its ability to continue as a going concern.  The
Company intends to fund operations through sales of the Voting System, but there
is no  commitment  by any  entities  for  the  purchase  of any of the  proposed
products.  In the absence of significant sales and profits, the Company may seek
to raise additional funds to meet its working capital  requirements through debt
and/or   equity   financing   arrangements.   Management   believes   that  such
arrangements,  combined with the net proceeds from the transaction  described in
Note 18, will be sufficient to fund the Company's capital expenditures,  working
capital needs and other cash requirements for the year ending June 30, 2005. The
successful  outcome of future  activities cannot be determined at this time, and
there is no assurance that, if achieved,  the Company will have sufficient funds
to execute its intended business plan or generate positive operating results.

These circumstances, combined with the potential liability described in Note 10,
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern. The accompanying  consolidated  financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Other Risks and Uncertainties

The  Company  intends  to  operate  in an  industry  that is  subject to intense
competition,  government  regulation  and  technological  change.  The Company's
operations  are  subject  to  significant  risks  and  uncertainties   including
financial,  operational,  technological,  regulatory and other risks  associated
with an emerging business, including the potential risk of business failure.

From time to time, the Company  maintains cash balances at certain  institutions
in excess of the FDIC limit of $100,000.

Use of Estimates



The Company  prepares its consolidated  financial  statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
("GAAP"), which require management to make estimates and assumptions that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and  liabilities  at the date of the financial  statements,  and reported
amounts of  revenues  and  expenses  during the  reporting  period.  Significant
estimates made by management include  realization of long-lived  assets,  equity
instruments subject to rescission,  valuation of stock options and warrants, and
the continued consolidation of a wholly-owned  subsidiary in bankruptcy.  Actual
results could differ from those estimates.



Software Development Costs

In accordance with Statement of Financial  Accounting  Standards ("SFAS") No. 86
"Accounting for the Costs of Computer Software to be Sold,  Leased, or Otherwise
Marketed,"

F-10

<PAGE>

the Company capitalizes certain costs related to the development of new software
products or the enhancement of existing  software  products for sale or license.
These  costs  are  capitalized  from  the  point  in  time  that   technological
feasibility  has been  established,  as evidenced by a working model or detailed
working-program  design to the point in time that the product is  available  for
general  release  to  customers.  Capitalized  software  development  costs  are
amortized on a straight-line  basis over the three-year  estimated economic life
of the products,  beginning (as applicable)  with the general product release to
customers or when the Voting System  qualified under certain federal  standards.
Research and  development  costs  incurred prior to  establishing  technological
feasibility  and  costs  incurred  subsequent  to the  events  described  in the
preceding sentence are charged to expense as incurred.

The Company periodically evaluates whether events or circumstances have occurred
that  indicate  that the  remaining  useful  lives of the  capitalized  software
development costs should be revised or that the remaining balance of such assets
may not be recoverable.  At June 30, 2004, management believes that no revisions
to the remaining useful lives or write-down of capitalized  software development
costs are  required.  The Company  began  amortizing  its  capitalized  software
development costs in April 2004,  following the March 2004  qualification of its
Voting System as complying with certain federal voting system standards; at June
30, 2004, accumulated amortization approximated $ 230,000.

Fair Value of Financial Instruments



SFAS No. 107, "Disclosures About Fair Value of Financial  Instruments," requires
disclosure of fair value  information  about  financial  instruments  when it is
practicable  to  estimate  that  value.  The  carrying  amount of the  Company's
accounts payable and accrued expenses  approximates  their estimated fair values
due to the short-term maturities of those financial instruments.  In the opinion
of management, the fair value of payables to related parties cannot be estimated
without incurring excessive costs; for that reason, the Company has not provided
such disclosure.  Other information about related-party liabilities (such as the
carrying  amount,  the interest rate, and the maturity date) is provided,  where
applicable, elsewhere in these notes to consolidated financial statements.



Stock-based Compensation

The Company accounts for stock-based  compensation issued to employees using the
intrinsic  value based  method as  prescribed  by  Accounting  Principles  Board
Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees." Under the
intrinsic value based method,  compensation  is the excess,  if any, of the fair
value of the stock at the grant date (or other measurement date) over the amount
an employee must pay to acquire the stock.  Compensation,  if any, is recognized
over the applicable service period, which is usually the vesting period.

F-11

<PAGE>

SFAS No. 123,  "Accounting  for  Stock-Based  Compensation,"  if fully  adopted,
changes the method of accounting for employee  stock-based  compensation  to the
fair value based method. In addition,  under this pronouncement,  the fair value
of options and warrants  issued to  non-employees  is estimated  using an option
pricing  model that takes into  account the stock  price at the grant date,  the
exercise price, the expected life of the equity instrument,  and the annual rate
of quarterly  dividends.  Compensation  expense,  if any, is recognized over the
applicable service period, which is usually the vesting period.

FIN No. 44, "Accounting for Certain  Transactions  Involving Stock Compensation,
an  Interpretation  of APB 25," clarifies the  application of APB 25 for (a) the
definition of  "employee"  for purposes of applying APB 25, (b) the criteria for
determining  whether  a plan  qualifies  as a  non-compensatory  plan,  (c)  the
accounting  consequences of various  modifications  to the terms of a previously
fixed  stock  option or  award,  and (d)  accounting  for an  exchange  of stock
compensation  awards in a business  combination.  Management  believes  that the
Company accounts for transactions involving stock-based employee compensation in
accordance with FIN No. 44.

SFAS  No.  148,  "Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure,  an  amendment  of SFAS  123," was  issued in  December  2002 and is
effective for fiscal years ended after December 15, 2002.  SFAS No. 148 provides
alternative  methods  of  transition  for a  voluntary  change to the fair value
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosure in both annual and interim financial  statements about (a)
the method of  accounting  for  stock-based  employee  compensation  and (2) the
effect of the method used on reported results.

The  adoption of the  accounting  methodology  of SFAS No. 123 is  optional  for
stock-based employee  compensation,  and the  Company  has  elected to  continue
accounting  for options  issued to employees  using APB 25.  However,  pro forma
disclosures, as if the Company adopted the cost recognition requirements of SFAS
No. 123, are required to be presented.

At June 30, 2004, the Company has no stock-based  employee  compensation  plans;
however,  there have been  non-plan  options  granted by the  Company to certain
employees.  There is no stock-based  employee  compensation expense reflected in
net loss for fiscal  2004,  fiscal  2003,  or for the period from August 9, 2001
(Inception)  through June 30, 2002 because  options  granted to employees had an
exercise  price  equal to or  greater  than the market  value of the  underlying
common stock on the grant date. The following  table  illustrates  the effect on
net loss and loss per common  share if the  Company  had  applied the fair value
recognition provisions of SFAS 123 to stock-based employee compensation.

F-12

<PAGE>
<TABLE>
<CAPTION>

                                                         PERIODS ENDED JUNE 30,
                                                   2004          2003          2002
                                               -----------    -----------    -----------
<S>                                         <C>             <C>            <C>

Net loss attributable to common
    stockholders *                            $(15,701,253)  $(5,006,567)   $(2,418,717)
Add: total stock-based employee
     compensation expense determined
     under fair value based method
     for all awards                             (1,421,100)      (598,230)       (68,340)
                                               -----------    -----------    -----------
    Pro-forma                                 $(17,122,353)   $(5,604,797)   $(2,487,057)
                                               ===========    ===========    ===========
Basic and diluted loss per common share:
    As reported                                $     (0.12)   $     (0.05)   $     (0.04)
                                               ===========    ===========    ===========
    Pro-forma                                  $     (0.13)   $     (0.05)   $     (0.04)
                                               ===========    ===========    ===========
</TABLE>


* These amounts include interest related to certain equity  instruments  subject
to rescission (see Note 10).

Beneficial Conversion Feature

The  convertible  feature of a note  payable (see Note 4) provides for a rate of
conversion that is below market value. This feature is normally characterized as
a beneficial conversion feature ("BCF").  Pursuant to Emerging Issues Task Force
("EITF") Issue No. 98-5 ("EITF 98-5"),  "Accounting For  Convertible  Securities
with  Beneficial  Conversion  Features  or  Contingently  Adjustable  Conversion
Ratio," and EITF Issue No. 00-27, "Application of EITF Issue No. 98-5 To Certain
Convertible  Instruments,"  the Company has estimated the fair value of such BCF
to approximate  $50,000 for the year ended June 30, 2003 and none for the period
ended June 30, 2002.



In connection with its fiscal 2004 borrowings  under several  convertible  notes
payable,  the Company  recorded and amortized BCFs of  approximately  $3,640,000
(including  the  transactions  described  in Notes 4, 13 and 14) during the year
ended June 30, 2004.

Inventories

Inventories  are stated at the lower of cost or  estimated  market,  and consist
entirely of finished  goods (Voting  System  machines).  Cost is determined on a
weighted average basis that approximates the first-in,  first-out method. Market
is estimated by comparison with recent  purchases or net realizable  value.  The
net realizable  value is estimated based on  management's  forecast for sales of
the Company's  products or services in the ensuing years.  The industry in which
the Company operates is  characterized by technological  advancement and change.
Should demand for the Company's  products  prove to be  significantly  less than
anticipated,  the ultimate  realizable value of the Company's inventory could be
substantially  less  than  the  amount  shown in the  accompanying  consolidated
balance sheets.



F-13

<PAGE>

Revenue Recognition

The Company  records  sales when goods are  shipped to the  customer or upon the
completion  of the service.  Amounts  received  prior to the  completion  of the
earnings process, such as maintenance contracts paid in advance, are included in
deferred revenues in the accompanying consolidated balance sheets.

The Securities and Exchange  Commission (the "SEC") has issued Staff  Accounting
Bulletin No. 104 ("SAB 104"),  "Revenue  Recognition,"  which outlines the basic
criteria  that  must be met to  recognize  revenue  and  provides  guidance  for
presentation  of revenue  and for  disclosures  related  to revenue  recognition
policies in financial  statements filed with the SEC.  Management  believes that
the Company's revenue recognition accounting policy conforms to SAB 104.

Indefinite-Life Intangible Assets

Goodwill  represents  the excess of the purchase  price over the estimated  fair
value  of  identifiable  net  assets  acquired.  The  Company  has  applied  the
provisions  of  SFAS  No.  142,  "Goodwill  and  Other  Intangible  Assets,"  in
accounting  for  goodwill.  SFAS  No.  142  requires  that  goodwill  and  other
intangible  assets that have indefinite  lives not be amortized,  but instead be
tested at least annually for impairment when events or changes in  circumstances
indicate  that the  asset  might be  impaired.  For  indefinite-life  intangible
assets, impairment is tested by comparing the carrying value of the asset to the
estimated  fair  value of the  reporting  unit to which they are  assigned.  The
Company recorded an impairment charge approximating  $2,543,000 to write-off all
of the goodwill associated with the acquisition of Z Prompt described in Note 3.

Impairment of Long Lived-Assets

The Company  periodically  evaluates the carrying value of its long-lived assets
under the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets." SFAS No. 144 addresses financial accounting and reporting
for the impairment or disposal of long-lived assets, and supersedes (a) SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of," and (b) the  accounting  and reporting  provisions of
APB Opinion  No. 30  ("Reporting  the Effects of the  Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual and  Infrequently  Occurring  Events and
Transactions") for the disposal of a segment of a business as previously defined
in that Opinion.  SFAS No. 144 also amends Accounting  Research Bulletin ("ARB")
No. 51,  "Consolidated  Financial  Statements,"  to eliminate  the  exception to
consolidation of a subsidiary when control is likely to be temporary.

SFAS No. 144 requires impairment losses to be recorded on long-lived assets used
in  operations,  including  amortizable  intangible  assets when  indicators  of
impairment are present. Indicators of impairment include an economic downturn or
a change in the  assessment  of

F-14

<PAGE>

future  operations.  In the event a condition is identified that may indicate an
impairment  issue, an assessment is performed using a variety of  methodologies,
including  analysis  of  undiscounted  future  cash  flows,  estimates  of sales
proceeds and independent  appraisals.  If such assets are impaired,  the expense
recognized  is the amount by which the carrying  amount of the asset exceeds the
estimated fair value.  Assets to be disposed of are reported at the lower of the
carrying value or the estimated fair market value, less cost to sell.



On March  31,  2004,  the  Company's  wholly-owned  subsidiary  Z  prompt  filed
bankruptcy (see Note 12). In connection with the bankruptcy  filing, the Company
recorded an impairment charge  approximating  $2,543,000 to write-off all of the
goodwill associated with the acquisition of this subsidiary (see Note 3).

Income Taxes

Deferred income taxes reflect the estimated tax effect of temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts reported for income tax purposes. The Company records a
valuation  allowance for deferred tax assets when,  based on  management's  best
estimate of taxable income (if any) in the foreseeable future, it is more likely
than not that some portion of the deferred tax assets may not be realized.



Advertising

The Company  expenses the cost of advertising as incurred.  Advertising  expense
approximated  $170,000,  $310,000, and $90,000 for the years ended June 30, 2004
and 2003 and for the period from  August 9, 2001  (Inception)  through  June 30,
2002, respectively.

Research and Development



Certain expenditures for research and development activities relating to product
development  and   improvement   are  charged  to  expense  as  incurred.   Such
expenditures  approximated  $175,000 for the period  August 9, 2001  (Inception)
through June 30, 2002.  There were no such  expenditures for the year ended June
30, 2003. The Company  incurred  approximately  $137,000 for  development of its
products during fiscal 2004.

F-15

<PAGE>

Loss Per Common Share

Under SFAS No. 128,  "Earnings per Share," basic  earnings per share is computed
by dividing net income available to common shareholders by the  weighted-average
number  of  common  shares  assumed  to be  outstanding  during  the  period  of
computation.  Diluted  earnings  per common  share is computed  similar to basic
earnings per common share,  except that the  denominator is increased to include
the number of additional  common shares that would have been  outstanding if the
potential  common shares had been issued and the  additional  common shares were
dilutive (approximating  75,000,000,  31,700,000,  and 28,200,000 shares at June
30, 2004,  2003 and 2002,  respectively),  based on the treasury  stock  method.
Because the Company has incurred  net losses,  basic and diluted loss per common
share  are  equal   because   additional   potential   common  shares  would  be
anti-dilutive.


                                                    PERIODS ENDED JUNE 30,
                                           2004          2003          2002
                                       -----------   -----------    ------------
Net loss, as reported                 $(15,379,253)  $(4,848,567)   $(2,406,580)
Interest related to equity
    instruments subject to
     rescission                           (322,000)     (158,000)       (12,137)
                                       -----------   -----------    ------------
Net loss available to common
     stockholders                     $(15,701,253)  $(5,006,567)   $(2,418,717)
                                       ===========   ===========    ============
Shares used to compute basic and
     diluted loss per common share:
   Weighted-average common shares      130,782,481   106,687,447     68,735,272
                                       ===========   ===========    ============
Basic and diluted loss per
   common share                        $     (0.12)  $     (0.05)   $     (0.04)
                                       ===========   ===========    ============

Derivative Instruments and Hedging Activities

SFAS No. 133, "Accounting For Derivative Instruments and Hedging Activities" (as
amended by SFAS Nos.  137, 138, 140, 141 and 145),  establishes  accounting  and
reporting  standards for derivative  instruments,  including certain  derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity  recognize all derivatives as either assets or liabilities on the
balance  sheet at their fair value.  The Company has no  derivatives  or hedging
activities as of June 30, 2004 or June 30, 2003.

Comprehensive Income

F-16

<PAGE>

SFAS No. 130, "Reporting  Comprehensive  Income,"  establishes the standards for
reporting and display of  comprehensive  income and its components in a full set
of  general-purpose  financial  statements.  The  adoption  of SFAS  130 has not
materially impacted the Company's financial position or results of operations.

Segment Information

SFAS 131, "Disclosures about Segments of an Enterprise and Related Information,"
changed the way public  companies  report  information  about  segments of their
business  in their  annual  financial  statements  and  requires  them to report
selected segment  information in their quarterly reports issued to shareholders.
It also  requires  entity-wide  disclosures  about the  products and services an
entity provides,  the foreign countries in which it holds significant assets and
its major  customers.  At June 30, 2004 and 2003,  the  Company  operates in one
segment, as disclosed in the accompanying consolidated statements of operations.

Variable Interest Entity

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of ARB 51." The primary objectives of FIN No. 46 are
to provide  guidance  on the  identification  of entities  for which  control is
achieved through means other than voting rights (variable interest entities,  or
"VIEs"), and how to determine when and which business enterprise (if any) should
consolidate the VIE. This new model for  consolidation  applies to an entity for
which  either:  (a) the equity  investors  do not have a  controlling  financial
interest;  or (b) the equity  investment at risk is insufficient to finance that
entity's activities without receiving additional  subordinated financial support
from other  parties.  In  addition,  FIN No. 46  requires  that both the primary
beneficiary and all other enterprises with a significant  variable interest in a
VIE make  additional  disclosures.  As amended in December  2003,  the effective
dates  of FIN No.  46 for the  Company  are as  follows:  (a) For  interests  in
special-purpose  entities:  the first period ended after  December 15, 2003; and
(b) For all other types of VIEs: the first period ended after March 15, 2004.

The Company is associated with WTI through common ownership; in addition,  until
April 2004 the Company  was a major  customer  of WTI for  software  development
services.  (WTI derived approximately 75% and 98% of their revenue from services
provided to the  Company  for the year ended June 30, 2003 and the seven  months
ended January 31, 2004,  respectively.)  Based on these and other  factors,  the
Company  determined  that, as of January 1, 2004,  (i) WTI is a VIE and (ii) the
Company was its primary beneficiary.  Therefore,  effective January 1, 2004, the
accounts  of WTI were  consolidated  with  those  of the  Company.  For  reasons
explained in Note 5, the accounts of WTI were de-consolidated effective April 1,
2004.

F-17

<PAGE>

Significant Recent Accounting Pronouncements

In April 2003,  the FASB issued SFAS No. 149,  "Amendments  of Statement  133 on
Derivative  Instruments  and Hedging  Activities,"  which  amends and  clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under SFAS No. 133. This  pronouncement is effective for contracts  entered into
or  modified  after June 30,  2003 (with  certain  exceptions),  and for hedging
relationships  designated  after June 30, 2003. The adoption of SFAS No. 149 did
not have a material impact on the Company's consolidated financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  a  company  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for public  companies as follows:  (i) in November  2003,  the FASB
issued  FASB Staff  Position  ("FSP") FAS 150-03  ("FSP  150-3"),  which  defers
indefinitely (a) the measurement and classification guidance of SFAS No. 150 for
all  mandatorily  redeemable   non-controlling  interests  in  (and  issued  by)
limited-life  consolidated  subsidiaries,  and (b)  SFAS No.  150's  measurement
guidance for other types of mandatorily  redeemable  non-controlling  interests,
provided  they  were  created  before  November  5,  2003;  (ii)  for  financial
instruments  entered  into or  modified  after May 31, 2003 that are outside the
scope of FSP 150-3; and (iii)  otherwise,  at the beginning of the first interim
period  beginning  after June 15, 2003. The Company  adopted SFAS No. 150 on the
aforementioned  effective dates. The adoption of this pronouncement did not have
a material impact on the Company's results of operations or financial condition.

In  December  2003,  the FASB  issued a  revision  of SFAS No.  132,  EMPLOYERS'
DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS. This pronouncement
("SFAS No. 132-R") expands employers'  disclosures about pension plans and other
post-retirement  benefits, but does not change the measurement or recognition of
such plans  required by SFAS No. 87, No. 88, or No. 106.  SFAS No. 132-R retains
the existing  disclosure  requirements  of SFAS No. 132,  and  requires  certain
additional  disclosures about defined benefit  post-retirement  plans. Except as
described in the  following  sentence,  SFAS No. 132-R is effective  for foreign
plans for fiscal years ending after June 15,  2004;  after the  effective  date,
restatement  for some of the new  disclosures  is required  for  earlier  annual
periods. Some of the interim-period disclosures mandated by SFAS No. 132-R (such
as the components of net periodic benefit cost, and certain key assumptions) are
effective  for foreign  plans for quarters  beginning  after  December 15, 2003;
other interim-period  disclosures will not be required for the Company until the
first  quarter of 2005.  Since the  Company  does not have any  defined  benefit
post-retirement  plans,  the  adoption  of this  pronouncement  did not have any
impact on the Company's results of operations or financial condition.

F-18

<PAGE>

Other significant recent accounting pronouncements issued by the FASB (including
its Emerging  Issues Task Force),  the  American  Institute of Certified  Public
Accountants,  and  the  SEC  are  discussed  elsewhere  in  these  notes  to the
consolidated  financial  statements.  In the opinion of management,  significant
recent accounting  pronouncements  did not or will not have a material effect on
the consolidated financial statements, other than FIN No. 46 as discussed above.

Stock Dividend

Effective  July 18, 2002,  the  Company's  Board of  Directors  approved a stock
dividend that was accounted for as a  four-for-one  stock split.  All references
throughout these  consolidated  financial  statements and notes to the number of
shares,  per share amounts,  stock  options,  and market prices of the Company's
common stock have been restated to reflect such stock dividend.

Equity Instruments Subject to Rescission

The Company  accounts for common stock and other equity  instruments that may be
subject  to  rescission  claims at  estimated  fair value  (based on  applicable
measurement criteria) in accordance with the SEC's promulgated  accounting rules
and interpretive  releases.  Since equity instruments  subject to rescission are
redeemable at the holder's  option or upon the occurrence of an uncertain  event
not solely within the Company's control, such equity instruments are outside the
scope  of  SFAS  No.  150 and  its  related  interpretations.  Under  the  SEC's
interpretation  of GAAP,  reporting such claims outside of stockholders'  equity
(as  "mezzanine  equity") is required,  regardless of how remote the  redemption
event may be.

Restatements and Reclassifications

As previously  reported,  the accompanying  June 30, 2003  consolidated  balance
sheet has been restated to reflect equity instruments subject to rescission, and
the  financial  statements  described in Note 11 have been restated as explained
therein.  All  financial  information  included in these  notes to  consolidated
financial  statements  that relates to the quarters ended September 30, 2003 and
December  31, 2003  reflects  (a) the  applicable  adjustments  described in the
amended Form 10-Q's for such  periods,  and (b) the  restatement  of the balance
sheets as of those dates to reflect equity instruments subject to rescission. In
addition,  all  financial  information  included in these notes to  consolidated
financial  statements  for the first  three  quarters  of  fiscal  2003 has been
adjusted as described in Note 9.

As of the effective  date of SFAS No. 150 (see above),  management  reclassified
the June 30, 2003 balance (approximately  $114,000) of the put liability related
to warrant  issuances from  "mezzanine  equity" to the liability  section of the
Company's consolidated balance sheet.

F-19

<PAGE>

Certain  reclassifications  have  been  made  to the  2003  and  2002  financial
statement presentation to conform to the current year's presentation.

NOTE 2  REVERSE ACQUISITION

On May 20, 2002, Western  International Pizza Corporation  ("WIPC"),  a publicly
traded  company,   entered  into  a  Stock  Exchange  Agreement  (the  "Exchange
Agreement")  with AccuPoll,  Inc ("AccuPoll") in a tax-free share exchange under
Section  368(a)(1)(B)  of  the  Internal  Revenue  Code.  Such  transaction  was
accounted for as a reorganization.  In May 2002, pursuant to a Certificate filed
with the Nevada  Secretary of State,  WIPC effected a one for 2000 reverse split
of all the outstanding shares of its common stock. Thereafter, in May 2002, WIPC
effected  a 1 for 5 reverse  stock  split of all the  outstanding  shares of its
common stock. Pursuant to the Exchange Agreement,  all of the outstanding common
and preferred  stock and  outstanding  warrants of AccuPoll  were  exchanged for
shares of WIPC on a 1 for 1.532  basis.  By  virtue of the  reorganization,  the
stockholders of AccuPoll acquired 75,500,000 restricted common shares of WIPC.

Management  accounted for the  reorganization  as a capital  stock  transaction.
Accordingly,  the  reorganization  was  reported  as a  recapitalization  of the
Company and AccuPoll is considered the acquirer for accounting purposes. Through
its former  stockholders,  the  Company is deemed the  acquirer  for  accounting
purposes because of (a) its majority  ownership of WIPC, (b) its  representation
on WIPC's board of directors, and (c) the executive management positions held by
former officers of AccuPoll.

In  connection  with the reverse  acquisition,  the  Company  issued 4.8 million
shares of restricted  common stock at $0.06 per share  (estimated to be the fair
value of the services  rendered) to a broker.  The related $300,000 was expensed
during the period ended June 30, 2002.

NOTE 3  PURCHASE OF BUSINESS

On April 9,  2003,  the  Company  entered  into an  agreement  with Z prompt  (a
California  corporation) to purchase all of the  outstanding  capital stock of Z
prompt from its  stockholders  in exchange for 8 million shares of the Company's
restricted  common stock.  The primary reason for this purchase was to acquire a
nationwide network of qualified  computer hardware  technicians who could assist
with the  maintenance of the AccuPoll  Ballot Buddy product -  specifically  its
integrated printer.

Additionally,  the Company was required to settle an outstanding promissory note
of Z prompt in the principal amount of approximately $400,000 that was held by a
former  stockholder  of Z prompt,  in exchange for 533,000  shares of restricted
common  stock of the  Company.  The  Company  advanced  Z  Prompt  approximately
$144,000 in  connection  with the  acquisition;  such

F-20

<PAGE>

advances were initially  recorded as deferred  acquisition  costs because of the
contingency described in the following paragraph.

The agreement between AccuPoll and the Z prompt  stockholders  provided that the
transaction could be rescinded by the former Z prompt shareholders if AccuPoll's
electronic  voting  system was not certified by Wyle Labs by September 30, 2003.
Such certification was obtained on October 31, 2003;  accordingly,  the Z prompt
acquisition was recorded for accounting purposes in November 2003.

Based on an independent valuation, the estimated fair value of AccuPoll's common
stock issued for the Z prompt acquisition  approximated $1.8 million ($0.213 per
common share).  Among other factors,  the valuation  utilized  information  from
then-recent   issuances  of  the  Company's   common  stock  in   equity-raising
transactions.

The purchase price was allocated to the business acquired based on the estimated
fair value of the assets acquired and liabilities assumed, as follows:

               Assets        $   183,329
               Goodwill        2,542,752
               Liabilities      (912,819)
                             -----------
                             $ 1,813,262
                             ===========

The  results  of  operations  of Z  prompt  are  included  in  the  accompanying
consolidated financial statements from November 1, 2003. The following pro forma
summary presents condensed consolidated results of operations as if Z prompt had
been acquired as of the beginning of the years ended June 30, 2004 and 2003:

                              YEAR ENDED  JUNE 30
                        -----------------------------
                            2004           2003
                        -------------   -------------
Net loss                $(14,043,675)   $ (5,761,013)
                        =============   =============
Loss per common share   $      (0.11)   $      (0.05)
                        =============   =============

The above amounts are based upon certain  assumptions  and estimates,  which the
Company  believes are  reasonable.  The pro forma  results of  operations do not
purport to  necessarily  be

F-21

<PAGE>

indicative  of the  results  which  would have been  obtained  had the  business
combination  occurred as of the beginning of the aforementioned  years, or which
may be obtained in fiscal 2005 and thereafter.

See Notes 6 and 12 for additional information related to Z Prompt.

NOTE 4  CONVERTIBLE NOTE PAYABLE



We have a  convertible  debenture  which at the  discretion  of the  convertible
debenture grantor (the "Grantor") may provide us loans of up to $1,250,000.  The
convertible  debenture  bears  interest at an annual rate of 10% and  originally
matured on June 30,  2004,  but has been  extended to  December  31,  2004.  The
debenture is  convertible on ninety days written notice by Grantor at the lesser
of (i) 50% of the average three lowest  closing  prices for our common stock for
the twenty days  immediately  preceding the  conversion  date or (ii) $0.625 per
share.  At June 30, 2004,  we had borrowed  $872,000  under such  debenture.  In
connection  with such  borrowing,  the  Company  granted a warrant  to  purchase
6,400,000 shares of the Company's  restricted  common stock at an exercise price
of $0.06 per common  share.  The  warrant  vested upon grant and expires in July
2008.  The  Company  recorded  the  relative  fair value of the  warrant and the
beneficial  conversion  feature  as a debt  discount  in  the  total  amount  of
approximately  $200,000.  The  discount  associated  with the  warrant  is being
amortized to interest  expense over the term of the related  debt.  The discount
associated with the beneficial  conversion  feature was  insignificant,  and was
recorded as interest expense upon issuance.

In November  2003,  the Company  issued an additional  warrant to the Grantor to
purchase  6  million  shares  of the  Company's  restricted  common  stock at an
exercise price of $0.06 per share in connection  with a deferral of the maturity
date of the above  convertible  debt instrument to December 2004 and an increase
of the available  borrowings to $1,250,000 from the original amount of $600,000.
The warrant vested upon grant and expires in October 2008. The Company  recorded
the relative fair value of the warrant,  which approximated  $40,000,  as a debt
discount which is being amortized to interest  expense over the extended term of
the convertible debenture.



See Notes 13 and 14 for other convertible notes payable.

NOTE 5  RELATED PARTY TRANSACTIONS

Related Party Payables

Related party payables approximated $1,487,000 and $875,000 at June 30, 2004 and
2003, respectively, which represent expenses incurred by the Company relating to
the management services agreement entered into with WTI (see below). The amounts
bear no interest and are due within thirty days of receipt.

Notes Payable to Related Parties



During the year ended June 30,  2003,  the  Company  borrowed  an  aggregate  of
$165,000 for working capital  purposes from a related party.  The note calls for
interest at 8% and is due on demand. Per the note agreement,  the Company issued
the creditor  warrants (with an estimated  value of $20,000) to purchase  40,000
shares of restricted  common stock of the Company.  At June 30, 2004,  this note
was paid in full.



Master Services Agreement

F-22

<PAGE>

In April  2002,  the  Company  entered  into a Master  Services  Agreement  (the
"Services  Agreement")  whereby WTI provided  substantially  all  non-production
services related to the Company's Voting System.  Under the Services  Agreement,
the Company was  charged  hourly  rates for the  services of WTI  employees  who
worked on developing the computer  software for the Company's Voting System.  In
addition,  the Company paid WTI for all reimbursable expenses, as defined in the
Services Agreement.  The Company was not charged for the use of the office space
or fixed  assets of WTI;  overhead-related  charges  were  included in the basic
hourly rates charged by WTI to the Company. All inventions,  concepts, know-how,
methodologies,  processes, algorithms,  techniques,  compilations,  software and
other works of authorship  of any nature  created or developed by WTI during the
life of the Services Agreement remain the exclusive property of AccuPoll.

WTI, which was incorporated in 1996, is in the business of software  engineering
in various computer languages with an emphasis on Linux/Apache, Sun Solaris, and
Microsoft  NT/Win2K  platforms.  WTI is owned and operated by Dennis  Vadura and
Frank Wiebe. Mr. Vadura is the Company' chief executive officer, a director, and
a principal  stockholder;  Mr. Wiebe is the Company's president and treasurer, a
director,   and  a  principal   stockholder   (collectively   the   "controlling
stockholders").  During the years  ended June 30,  2004 and 2003,  WTI  invoiced
approximately $1,450,000 and $1,300,000,  respectively, to the Company under the
terms of the Services Agreement,  of which  approximately  $1,487,000 is due and
payable at June 30, 2004.

The Services  Agreement  expired on March 31, 2004. Since that date, the Company
has not used the services of WTI because the  software for the Voting  System is
now  substantially  complete;  any additional  computer  programming that may be
necessary  will be  provided by Company  employees  (some of whom are former WTI
employees).  At this time, WTI is virtually a dormant entity with just two minor
customers and only a few employees. Although the Company's June 30, 2004 payable
to WTI is a substantial amount (see the preceding paragraph), there is no intent
to pay this liability in the foreseeable future. Given its minimal operations at
this time, management believes that WTI is no longer dependent for its continued
existence upon additional subordinated financial support from the Company or its
controlling stockholders.  For these reasons,  management has concluded that the
Company  is no  longer  the  primary  beneficiary  of WTI  and,  therefore,  has
de-consolidated the accounts of WTI as of April 1, 2004.

NOTE 6  OTHER COMMITMENTS AND CONTINGENCIES

Consulting Agreements

F-23

<PAGE>

In April 2002, the Company issued  consultants  3,840,000 shares of common stock
at $0.08 per share, valued at $313,344 (based on the market value on the date of
grant), of which $286,000 was included in the June 30, 2002 consolidated balance
sheet as prepaid  consulting  fees and  $27,344 was  expensed  during the period
ended June 30, 2002. The related consulting services were to be provided through
April 2004, and the Company was amortizing the prepaid  consulting fees over the
service period on a straight-line  basis. As part of the same  transaction,  the
Company granted  warrants to purchase 2 million shares of its restricted  common
stock at an exercise price of $0.06 per share,  valued at $500,000 (based on the
Black-Scholes  pricing  model) to such  consultants as a  non-refundable  fee in
exchange for general business consulting services, which the Company recorded in
the accompanying  consolidated statement of operations for the period ended June
30, 2002. During the year ended June 30, 2003, the Company  determined it was no
longer receiving benefit from the consultant and expensed the remaining $286,000
in the accompanying consolidated statement of operations for the year ended June
30, 2003.

Litigation

         Z prompt

In October  2003, a former  officer and principal  stockholder  of Z prompt (the
"plaintiff")  filed a lawsuit  against  the  Company  and Z prompt  (hereinafter
collectively  referred  to as the  "defendants")  alleging  breach of  contract,
conversion, and fraud relating to (a) the plaintiff's employment contract with Z
prompt,  (b) the merger  agreement  described  in Note 3,  and/or (c) a Z prompt
promissory note (approximately $167,000 plus interest) payable to the plaintiff.
The plaintiff is seeking minimum compensatory damages (including deferred salary
and  collection  of the  promissory  note) of  approximately  $1.6  million,  an
unstated  amount in  excess of $1  million  based on the fraud  allegation,  and
punitive damages according to proof.

In December  2003,  the  defendants  sued the  plaintiff  in a  cross-complaint,
alleging (among other things) breach of good faith/fair dealing covenant, breach
of contract, fraud, misrepresentation, negligence, and breach of fiduciary duty.
The  cross-complainants  are seeking (a)  compensatory  damages of approximately
$1,960,000,  (b) the rescission of all agreements  between the plaintiff and the
defendants (such as the aforementioned  merger agreement),  (c) the cancellation
of all Company stock currently owned by the plaintiff,  and (d) punitive damages
in an unstated amount. This cross-complaint was amended in February 2004 to name
two other former officers/stockholders of Z prompt as additional defendants.

In  January  of 2004,  the  plaintiff  amended  his  complaint  to name  certain
officers/stockholders  of the Company as additional  defendants,  alleging fraud
and interference with contract. This action seeks compensatory damages in excess
of $2 million and punitive damages according to proof.



In June 2004,  the  Bankruptcy  Court  granted  the  plaintiff  relief  from the
automatic  stay  provided by the  Bankruptcy  Code (see Note 12)  regarding  the
litigation  described above, and the matter

F-24

<PAGE>

is presently scheduled for trial in Orange County (California) Superior Court in
January  2005.  In the same  action,  Z prompt  agreed to withdraw its motion in
Bankruptcy Court seeking rejection of the executory  contracts  described above.
Management intends to vigorously defend the October 2003 lawsuit described above
(as  amended),  and does not believe that the  plaintiff's  recovery (if any) of
uninsured  damages  will  have  a  material  adverse  effect  on  the  Company's
consolidated financial statements.



         GENERAL

From time to time,  the Company may be involved in various  claims,  lawsuits or
disputes arising in the normal operations of its business. Other than the matter
described in Note 10, the Company is not currently  involved in any such matters
which management  believes could have a material adverse effect on the Company's
financial position or results of operations. Exclusive Supply Agreement

In December 2001, the Company entered into an exclusive supply contract expiring
in 2006  with a  vendor  to  manufacture  the  Voting  System  product.  Per the
agreement, if the supplier is unable to produce and deliver on time the required
quantity of  product,  the Company  may obtain the Voting  System  product  from
another supplier.

Professional



The Company has entered into general consulting/lobbying agreements with various
third  parties to provide  services  related  to the  marketing  and sale of the
Company's product in certain cities; such agreements expired through April 2004.
Pursuant to the agreements, the Company will pay commissions on sales within the
various territories, as defined.



During  the year  ended  June 30,  2003,  the  Company  entered  into a Location
Incentives   Agreement  (the  "LIA")  with  the  Amarillo  Economic  Development
Corporation  ("AEDC") to establish the  Company's  customer  service  center and
voting machine repair operations in Amarillo,  Texas.  According to the terms of
the LIA,  the AEDC  paid the  Company  $250,000  upon  execution  of a lease for
facilities in Amarillo.  The funds  advanced under the LIA are to be used solely
for the  operations  in Amarillo.  If the Company does not meet certain  minimum
employment  requirements  (as defined in the LIA),  it will be required to repay
all amounts  advanced.  The Company has recorded the advance in the accompanying
consolidated  balance  sheets in  accounts  payable  and  accrued  expenses.  In
connection with the LIA, the Company granted warrants to purchase 250,000 shares
of its restricted  common stock at an exercise price of $1.04 per share,  valued
at approximately $174,000 based on the Black-Scholes pricing model. The warrants
vested on the grant date, and expire in November 2012.



Lease Commitments

The Company rents office space under operating lease agreements which expire at
various dates through June 30, 2006.  The minimum annual rent under such leases
approximates $170,000 in fiscal 2005 and $130,000 in fiscal 2006.



NOTE 7  STOCKHOLDERS' EQUITY

Preferred Stock

F-25

<PAGE>



In December 2003, the Company entered into an agreement to issue 8,471 shares of
its cumulative  convertible Series A Preferred Stock ("Series A") and $1,200,000
of  convertible  notes payable in exchange for 3,325,000  shares of free trading
common stock of Material  Technologies,  Inc., a publicly  traded  company whose
common stock is quoted on the  Over-The-Counter  Bulletin Board under the symbol
"MTNA." In attempting to execute such  transaction,  the Company's intent was to
gain access to capital markets through the potential sale of MTNA common stock.

The Company  has not filed a  certificate  of  designation  with  respect to any
series of preferred stock. On May 7, 2004,  management entered into an agreement
whereby the Company  exchanged the 3,325,000  shares of common stock of Material
Technologies,  Inc. for the 8,471 shares of Series A. Accordingly,  as of May 7,
2004, no preferred stock was issued or outstanding. However, the Company remains
liable on the $1.2 million convertible note payable;  see Note 14 for additional
information.

The  accounting  adjustment  for  the  transaction  described  in the  preceding
paragraph  has been  reflected in the  accompanying  June 30, 2004  consolidated
financial  statements of the Company as "loss on disposal of  investment".  This
adjustment  of the  Company's  financial  statements  increased  the  previously
reported net loss for the quarter ended December 31, 2003 by approximately  $1.2
million ($0.01 per common share).



Common Stock

In August 2003, the Company issued 7,000,000  shares of restricted  common stock
as collateral for potential  loan proceeds  approximating  $1,650,000  ("Secured
Note"), less applicable commissions.  The Secured Note accrues interest at 4.5%,
will require quarterly  interest-only payments through maturity, and matures two
years from receipt of proceeds.  As of the date of this filing,  the Company has
not received any proceeds or paid any related commissions.

During the quarter ended March 31, 2004, the Company issued 13,884,534 shares of
restricted common stock in connection with the exercise of warrants for proceeds
of approximately $2.3 million, net of commissions approximating $400,000.

During the quarter  ended March 31,  2004,  the  Company  also issued  1,724,167
shares  of  restricted  common  stock in  connection  with the  conversion  of a
$500,000 note payable plus accrued interest approximating $17,000.

In May,  2004,  the Company  issued  1,960,000  shares of common  stock to three
different  shareholders,  as a result  of a net  exercise  of  warrants  with an
exercise price of $.0625 per share.

In June,  2004,  the Company  issued  3,105,262  shares of common stock to three
different  shareholders,  as a result  of a net  exercise  of  warrants  with an
exercise price of $.0625 per share.

In June,  2004, the Company issued  2,156,250 shares of common stock as a result
of convertible  debt of $250,000 which was converted at $.1224 per share.



In July 2004,  the Company  issued  18,406,248  shares of common  stock to seven
different  shareholders,  as a result  of a net  exercise  of  warrants  with an
exercise price of $.0625 per share.



F-26

<PAGE>

Warrants

From time to time, the Company issues  warrants  pursuant to various  consulting
agreements

During the year ended June 30, 2003,  the Company  granted  warrants to purchase
250,000 shares of the Company's  restricted common stock at an exercise price of
$0.91 per share valued at $206,000 (based on the Black-Scholes pricing model) to
a consultant for services rendered,  which has been expensed in the accompanying
consolidated  statement  of  operations  for the year  ended June 30,  2003.  In
connection  with the  issuance,  the  warrant  holder  may cause the  Company to
re-purchase  any warrants not  previously  exercised by the warrant holder on or
after  June 2006 for $0.46  per  share.  Accordingly,  a  related  liability  of
$113,750 was recorded in the  accompanying  June 30, 2003  consolidated  balance
sheet, representing the Company's re-purchase liability.



During the  quarter  ended  March 31,  2004,  the  Company  granted  warrants to
purchase 375,000 shares of the Company's  restricted  common stock with exercise
prices ranging from $0.18 to 1.54 per share,  valued at  approximately  $953,000
(based on the Black-Scholes  pricing model), to various consultants for services
to be rendered  through  February 2005.  The Company is amortizing  such expense
over the term of the  related  services.

During the  quarter  ended  March 31,  2004,  the  Company  granted  warrants to
purchase  11,346,180  shares  of the  Company's  restricted  common  stock  with
exercise  prices ranging from $0.12 to $1.00 per share.  These  warrants  vested
upon grant, and are exercisable through March 2009. Such warrants were issued in
connection  with equity  fund-raising  activities and,  accordingly,  no related
expense was reported in the accompanying consolidated financial statements.

F-27

<PAGE>

A summary of changes in warrants during each period is presented below:



                                                             Weighted Average
                                              Warrants       Exercise Price
                                         ----------------    -----------------
Balance, August 9, 2001 (Inception)                   --        $          --

Warrants granted                              34,512,804                 0.08

Warrants exercised                            (9,901,316)               (0.11)

Warrants granted                              15,340,813                 0.29

Warrants exercised                            (4,393,886)               (0.11)

Warrants cancelled                            (3,972,000)               (0.25)
                                         ----------------    -----------------

Balance, June 30, 2003                        31,586,415               $ 0.15
                                         ================    =================


Warrants granted                              52,681,292                 0.48

Warrants exercised                           (21,067,794)               (0.22)

Warrants cancelled                                     -                    -
                                         ----------------    -----------------

Balance, June 30, 2004                        63,199,913               $ 0.40
                                         ================    =================

Warrants exercisable at June 30, 2004         63,199,913               $ 0.40
                                         ================    =================



Per share values at grant date of         Weighted Average    Weighted Average
warrants issued during fiscal 2004:        Fair Value          Exercise Price
                                         ----------------    -----------------


Less than fair market value                       $ 0.72               $ 1.55
                                         ================    =================

Equal to fair market value                        $ 0.87               $ 1.54
                                         ================    =================


Greater than fair market value                    $ 1.39               $ 0.25
                                         ================    =================
The following table summarizes  information  related to warrants  outstanding at
June 30, 2004:

<TABLE>
<CAPTION>

                                         Warrants Outstanding                                    Warrants Exercisable
                     ------------------------------------------------------------------  -------------------------------------
<S>                    <C>             <C>                        <C>                  <C>                 <C>

                                             Weighted Average          Weighted Average                       Weighted Average
   Exercise Price          Number       Remaining Contractual Life      Exercise Price        Number           Exercise Price
--------------------------------------  --------------------------  -------------------  ------------------  -----------------


    $0.01 - $0.08          33,145,366                4.66            $         0.06           33,145,366      $       0.06

    $0.12 - $0.25           8,828,992                7.59                      0.17            8,828,992              0.17

    $0.26 - $0.50           4,239,428                5.14                      0.36            4,239,428              0.36

    $0.75 - $0.90           7,313,157                0.25                      0.76            7,313,157              0.76

    $1.00 - $1.40           9,672,970                4.63                      1.52            9,672,970              1.52
                     -----------------  --------------------------  -------------------  ----------------    -----------------

                           63,199,913                4.68            $         0.40           63,199,913      $       0.40

</TABLE>

F-28

<PAGE>

The  following  outlines  the  significant  assumptions  used to  calculate  the
estimated fair value information  presented utilizing the Black-Scholes  pricing
model:

                                  Year Ended       Year Ended       Period Ended
                                 June 30, 2004    June 30, 2003    June 30, 2002
                               ----------------  ---------------  --------------

Discount rate                        2.00%            3.50%            3.50%

Volatility                         72% - 112%      105% - 170%        0% - 51%

Expected life in years                 3                3                1

Expected dividend yield               --               --               --
                               ----------------  ---------------  --------------


Stock Options

From time to time, the Company issues non-plan stock options pursuant to various
agreements and other compensatory arrangements to employees and third parties.

A summary of changes in stock options during each year is presented below:

                                                             Weighted average
                                           Stock Options      Exercise Price
                                          -----------------  ----------------


Balance, August 9, 2001 (Inception)                      -     $          -
Options granted                                  6,780,000              0.31
Options exercised                                        -                -
Options cancelled                                        -                -
                                          -----------------  ----------------

Balance, June 30, 2002                           6,780,000              0.31
Options granted                                  5,670,000              0.94
Options exercised                                        -                 -
Options cancelled                                        -                 -
                                          -----------------  ----------------

Balance, June 30, 2003                          12,450,000     $        0.60
Options granted                                    600,000              1.54
Options exercised                                 (550,000)             0.51
Options cancelled                                        -                 -
                                          -----------------

Balance, June 30, 2004                          12,500,000     $        0.65
                                          =================  ================

Options exercisable at June 30, 2004             9,117,500     $        0.64
                                          =================  ================

F-29

<PAGE>


Per share values at grant date of      Weighted Average  Weighted Average
options issued during fiscal 2004:         Fair Value      Exercise Price
                                       ----------------  ----------------


   Less than fair market value                      N/A               N/A
                                       ================  ================

   Equal to fair market value          $          0.74            $ 1.54
                                       ================  ================

   Greater than fair market value                   N/A               N/A
                                       ================  ================



The following table summarizes information related to options at June 30, 2004:


<TABLE>
<CAPTION>

                                         Options Outstanding                         Options Exercisable
                         ------------------------------------------------------------------------------------
      <S>               <C>          <C>                   <C>                 <C>        <C>
                                        Weighted Average
                                      Remaining Contractual  Weighted Average             Weighted Average
        Exercise Price      Number            Life             Exercise Price     Number      Exercise Price
------------------------------------  ---------------------  ------------------  ---------  -----------------


             $0.31         6,480,000             7.92        $        0.31       4,500,000    $    0.45

             $0.91         5,160,000             8.97                 0.91       3,982,500         1.21

             $1.50           260,000             1.61                 1.50         260,000         1.50

             $1.54           600,000             8.44                 1.54         375,000         0.24

                         -----------  ---------------------  ------------------  ---------  -----------------

Total                     12,500,000             8.25        $        0.68       9,117,500    $    0.64
                         -----------  ---------------------  ------------------  ---------  -----------------

</TABLE>



The  following  outlines  the  significant  assumptions  used to  calculate  the
estimated fair value information  presented utilizing the Black-Scholes  pricing
model:

                                Year Ended     Year Ended     Period Ended
                              June 30, 2004  June 30, 2003     June 30, 2002
                              -------------  -------------  ----------------

Discount rate                     2.00%              3.50%           3.50%

Volatility                         72%               170%          0% - 51%

Expected life in years              3                 3               3

Expected dividend yield               --              --             --
                              -------------  -------------  ----------------

F-30

<PAGE>



NOTE 8  INCOME TAXES

Income tax expense, all current, for the years ended June 30, 2004 and 2003 and
the period from August 9, 2001 (Inception) through June 30, 2002 differed from
the amounts computed by applying the U.S. Federal income tax rate of 34 percent
to the loss before income taxes as a result of the following:



<TABLE>
<CAPTION>

                                                      2004         2003          2002
                                                  -----------   -----------   -----------
<S>                                              <C>           <C>           <C>

Computed "expected" tax benefit                   $(4,756,000)  $(1,649,000)  $  (801,000)
Adjustment in income taxes resulting from:

    Change in valuation allowance                   4,334,000     1,891,000       921,000
    Other                                                  -            800           800
    State and local income taxes, net of federal     (439,600)     (242,000)     (120,000)
    Goodwill Impairment                               864,000            -             -
                                                  -----------   -----------   -----------
                                                  $     2,400   $       800   $       800
                                                  ===========   ===========   ===========
</TABLE>

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets at June 30, 2004, 2003 and 2002 are presented below:

<TABLE>
<CAPTION>

                                                      2004          2003           2002
                                                  -----------   -----------   -----------
<S>                                              <C>           <C>            <C>
Net Operating Losses                                4,052,000       199,000        86,000
Stock-based Compensation                            1,327,000     1,327,000       456,000
Start-up Costs                                      1,142,000     1,142,000       309,000
Loss on Investments                                   480,000           -             -
Capitalized research and development                   70,000        70,000        70,000
Other                                                  75,000        74,000           -
                                                  -----------   -----------   -----------

Deferred tax asset                                  7,146,000     2,812,000       921,000
Less: Valuation Allowance                          (7,146,000)   (2,812,000)     (921,000)
                                                  -----------   -----------   -----------
Net deferred tax asset                                     -             -             -
                                                  ===========   ===========   ===========

</TABLE>



As of June 30,  2004,  the  Company  had tax net  operating  loss  carryforwards
("NOLs") of approximately  $10,800,000 and $6,400,000 available to offset future
taxable  income for Federal and State  purposes,  respectively.  The Federal and
State carryforwards  expire in varying amounts through 2024. Effective September
11, 2002,  pursuant to California  revenue and tax code section 24416.3,  no net
operating  loss  deduction  will be allowed for any taxable year beginning on or
after January 1, 2002, and before January 1, 2004. For any suspended losses, the
carryforward  period is  extended  by one year for losses  incurred in tax years
beginning on or after January 1, 2002,  and before  January 1, 2003;  and by two
years for losses incurred in taxable years beginning before January 1, 2002.



F-31

<PAGE>

Due to the change in ownership  provisions of the Internal  Revenue Code Section
382, net operating loss carryforwards for Federal and State income tax reporting
purposes  are  subject to annual  limitations.  Should an  additional  change in
ownership occur, net operating loss carryforwards may be limited as to their use
in future years.

In 2004,  2003 and 2002, the Company  concluded that a full valuation  allowance
against its net deferred tax assets was  appropriate.  SFAS 109 requires  that a
valuation allowance must be established when it is more likely than not that all
or a portion  of  deferred  tax  assets  will not be  realized.  In making  such
determination,  a review of all available positive and negative evidence must be
considered, including scheduled reversal of deferred tax liabilities,  projected
future  taxable  income,   tax  planning   strategies,   and  recent   financial
performance.  The accounting  guidance  further states that forming a conclusion
that a valuation  allowance  is not needed is  difficult  when there is negative
evidence such as cumulative losses in recent years. As a result of the Company's
recent cumulative losses, the Company concluded that a full valuation  allowance
should be recorded in 2004, 2003 and 2002.



NOTE 9  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS - FISCAL 2003



In June  2003,  the  Company  recorded  an  adjustment  to  capitalize  software
development  costs of  approximately  $436,000 that were previously  expensed in
earlier  fiscal 2003  quarters  relating to WTI.  The  allocation  of such costs
incurred from a related party (see Note 5) was adjusted in the fourth quarter of
fiscal 2003. The effect of this adjustment on the first three quarters of fiscal
2003 is summarized below:

                                                 QUARTER  ENDED
                                   -----------------------------------------
                                     9/30/02        12/31/02        3/31/03
                                   -----------    -----------    -----------
Net loss, as previously reported   $  (738,639)   $(1,683,613)   $(1,115,187)
Adjustment described above             162,315        157,725        115,775
                                   -----------    -----------    -----------
Net loss, as restated              $  (576,324)   $(1,528,888)   $  (999,412)
                                   ===========    ===========    ===========

Such  adjustment  had no effect on the  basic/diluted  (rounded) loss per common
share for any of the first three quarters of fiscal 2003.

NOTE 10  EQUITY INSTRUMENTS SUBJECT TO RESCISSION

The Company may be subject to possible claims for rescission with respect to the
sale or other  issuances of certain  common  stock,  options and  warrants.  The
accompanying  consolidated  balance  sheets reflect an adjustment for the matter
described below.



Approximately  26.6 million  shares of the Company's  common stock,  options and
warrants that were issued or granted in the United States  without  registration
or  qualification  under  federal or state  securities  laws during the two-year
period ended June 30, 2004 may be subject to rescission. The fair value of these
securities was estimated  based on a combination of (a) the selling price of the
common stock on the dates sold, (b) the price per the agreement for stock issued
in conversion  of debt,  (c) the fair value of the stock options and warrants on
their grant dates, and (d) an independent valuation.  Based in part on advice of
counsel,  the fair value of these options and warrants was  estimated  using the
Black-Scholes  option-pricing  model. Based on these measurement  criteria,  the
Company's  potential  liability  directly  associated  with  the  aforementioned
securities  transactions  is estimated to  approximate  $6.2 million  (including
interest) at June 30, 2004 plus legal fees and any fines or penalties that might
be assessed by regulatory agencies.

Based on advice of counsel,  the potential  liability  discussed  above does not
include options to purchase a total of 3.6 million shares of common stock issued
to the Company's  president and to its chief executive officer because these two
individuals  are also principal  stockholders of the Company;  acting  together,
they have the ability to control the Company.  The  estimated  fair value of the
options described in this paragraph (excluding interest) approximated $1,360,000
at June 30, 2004.



Management is unable to determine at this time whether any claim for  rescission
may be filed against the Company;  however,  there can be no assurance that such
claims will not be asserted.

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<PAGE>

In addition,  regulatory  agencies  could launch a formal  investigation  and/or
institute an enforcement proceeding against the Company.



The  ultimate   outcome  of  the  matters   discussed  above  is  not  presently
determinable. Accordingly, management is unable to estimate the total liability,
if any, that the Company may incur as a result of such contingencies. Regardless
of how remote a rescission event may be, GAAP as interpreted by the SEC requires
that  equity  securities  subject  to  rescission  be  reported  outside  of the
stockholders'  equity section of the balance sheet until the applicable statutes
of limitations have expired.  Thus, the Company has reported  approximately $6.2
million as "mezzanine  equity" in the  accompanying  June 30, 2004  consolidated
balance sheet.



Approximately  8.5  million  shares  of the  Company's  common  stock  issued in
connection with the  acquisition of Z prompt,  with an  issuance-date  estimated
fair value of approximately  $1.8 million,  have been excluded from the June 30,
2003 mezzanine equity amount, as the acquisition was not recorded until November
2003 for reasons described in Note 3.

NOTE 11  RESTATEMENT OF STATEMENTS OF OPERATIONS

Subsequent  to the original  issuance of the Company's  June 30, 2003  financial
statements,  it was determined that consulting  services,  for which the Company
had  granted a warrant  to  purchase  1 million  shares of common  stock with an
estimated  fair  value of  $655,000,  had not  been  and will not be  performed.
Therefore,  the accompanying  consolidated statements of operations for the year
ended June 30, 2003 and for the period from Inception through June 30, 2003 have
been  restated.  The effect of such  restatement  was to reduce  the  previously
reported net loss by $655,000 with no effect on (rounded) loss per common share.

NOTE 12.  BANKRUPTCY FILING OF WHOLLY-OWNED SUBSIDIARY Z PROMPT

On March 23, 2004 (the  "Petition  Date"),  Z prompt (or the  "Debtor")  filed a
voluntary  petition for relief (the  "Chapter 11 Case") under  Chapter 11 of the
United  States  Bankruptcy  Code (the  "Bankruptcy  Code") in the United  States
Bankruptcy  Court  for the  Central  District  of  California  (the  "Bankruptcy
Court"). Since the Petition Date, Z prompt has conducted its business activities
as a debtor-in-possession under the Bankruptcy Code.

As a result of the Chapter 11 Case, the realization of Z prompt's assets and the
liquidation of its  liabilities  are subject to  uncertainty.  In the Chapter 11
Case, a substantial portion of the Debtor's  liabilities as of the Petition Date
is  subject  to  compromise  or  other  treatment  under  a  confirmed  plan  of
reorganization.  Generally,  actions to enforce or otherwise effect repayment of
all  pre-Chapter 11  liabilities  (as well as any pending  litigation,  absent a
stipulation to  the contrary - see the "Z prompt litigation"  section of Note 6)
against the Debtor are stayed while Z prompt operates as a  debtor-in-possession
during bankruptcy proceedings. Schedules have been filed by the Debtor with

F-33

<PAGE>

the Bankruptcy  Court setting forth the liabilities  (approximately  $1 million)
and assets of Z prompt as of the Petition Date based on its unaudited accounting
records.  Any differences between amounts reflected in such schedules and claims
filed by creditors will be investigated, and will either be amicably resolved or
adjudicated by the Bankruptcy Court. The ultimate amount and settlement terms of
such liabilities are not presently determinable.



Financial  accounting  and  reporting  during a Chapter 11 case are  governed by
Statement   of  Position   No.   90-7,   FINANCIAL   REPORTING  BY  ENTITIES  IN
REORGANIZATION  UNDER THE  BANKRUPTCY  CODE  ("SOP  No.  90-7").  For  financial
reporting purposes, Z prompt's pre-petition  liabilities and obligations,  which
may be  subject to  settlement  or  otherwise  dependent  on the  outcome of the
Chapter 11 case, have been segregated and classified as "liabilities  subject to
compromise" in the accompanying  June 30, 2004  consolidated  balance sheet (see
Note 17). Z prompt did not have any significant  reorganization items (income or
expense)  during the year ended June 30, 2004.  Certain  additional  disclosures
including  (a) claims not subject to  reasonable  estimation of the amount to be
allowed and (b) any significant difference between reported interest expense and
stated contractual  interest will be provided (as required by SOP No. 90-7) when
such amounts are determinable and/or when the related transactions occur.



Management  continues to conduct the business  activities  of Z prompt under the
supervision  of the  Bankruptcy  Court and,  among other  things,  the Debtor is
granted a 120-day exclusive right to propose a plan of reorganization which must
be  approved  by the  creditors  and  confirmed  by  the  Bankruptcy  Court.  In
accordance  with the Bankruptcy  Code, an automatic stay provides that creditors
of Z prompt and other parties in interest are prevented  from seeking  repayment
of pre-petition debts. Additionally, unless otherwise approved by the Bankruptcy
Court, the Debtor must refrain from paying any pre-petition indebtedness.

On  April  20,  2004,  the  Bankruptcy  Court  approved  a  debtor-in-possession
financing  arrangement  whereby Z prompt is  permitted  to  obtain  credit  from
AeroFund  Financial,  Inc.  of no more than  $500,000  through  the sale  and/or
factoring of its  post-petition  accounts  receivable;  this credit  facility is
collateralized by a security interest in such accounts receivable.

Although  legal fees and other  administrative  expenses  to complete Z Prompt's
bankruptcy  proceedings  may  be  significant,   they  are  not  susceptible  of
reasonable  estimation at this time. Z prompt could decide to reject some or all
of its lease obligations in the Chapter 11 Case. This action may result in lease
rejection  claims  pursuant to the  Bankruptcy  Code;  any such claims  would be
adjudicated by the Bankruptcy Court.

An important element in successfully reorganizing the Debtor will be the ability
to restructure  certain  liabilities in order to reduce indebtedness and provide
funding for  operations.  As part of the process of attempting to reorganize,  Z
prompt intends to pursue various  financing

F-34

<PAGE>

alternatives that may be available,  although there can be no assurance that the
Debtor will be able to successfully  implement any such  alternatives.  Though Z
prompt  intends to make efforts to increase its revenues to improve  operations,
it is possible that losses will continue for the foreseeable future and that the
Debtor will require  additional funding and financial support from a third party
and/or its parent  company.  There can be no assurance that any such  additional
financing will be available on acceptable  terms, that such funds (if available)
would  enable  Z prompt  to  continue  operating,  or that  the  Debtor  will be
successful in increasing its revenues.  In addition,  there is no assurance that
the creditors and the Bankruptcy Court will approve a  reorganization  plan that
will allow Z prompt to survive.

The Company's March 23, 2004 receivable from Z prompt (which has been eliminated
in  consolidation,  and therefore is not included in the Note 18  disclosure) of
approximately $275,000 is subject to compromise in the bankruptcy proceedings.

Condensed  financial  information  of Z prompt  as of June 30,  2004 and for the
period from November 1, 2003 (when the  acquisition  was recorded for accounting
purposes) to June 30, 2004 is presented below.



                                  Z PROMPT INC.
                            BALANCE SHEET (Unaudited)
                                  June 30, 2004
--------------------------------------------------------------------------------


                                  ASSETS

CURRENT ASSETS
      Cash                                                   $     34,010
      Accounts receivable, net                                    254,895
      Inventories                                                  20,667
                                                             ------------
                                                                  309,572

OTHER, net                                                          2,512
                                                             ------------

      TOTAL ASSETS                                           $    312,084
                                                             ============
             LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
      Accounts payable and accrued expenses                  $    301,734
      Loan from parent company                                    620,395
      Deferred revenues                                            74,628
      Liabilities subject to compromise                           732,544

                                                             ------------
      TOTAL LIABILITIES                                         1,729,301
                                                             ------------

STOCKHOLDERS' DEFICIT                                          (1,417,217)
                                                             ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT            $    312,084
                                                             ============



F-35

<PAGE>


                                  Z PROMPT INC.
                       STATEMENT OF OPERATIONS (Unaudited)




                                     EIGHT MONTHS ENDED
                                       JUNE 30, 2004
                                       -------------

NET SALES                              $   1,508,656

COST OF SALES                              1,185,797
                                       -------------

GROSS PROFIT                                 322,859

EXPENSES
      General and administrative             586,011
      Salaries and related                   279,293
      Interest                               128,710
      Loss on disposal of assets              16,648
                                       -------------
                                           1,010,662
                                       -------------

PRETAX LOSS                            $   (687,803)
                                       =============

F-36

<PAGE>


NOTE 13  SUBORDINATED CONVERTIBLE DEBT

In July 2003, the Company  borrowed  $500,000  under a subordinated  convertible
note payable, (the "Subordinated  Convertible Note"), which bears interest at 7%
per annum. All borrowings were due six months from the receipt of proceeds, with
semi-annual  interest payments on the outstanding balance. In December 2003, the
Subordinated  Convertible  Note  was  converted  into  1,666,667  shares  of the
Company's restricted common stock at $0.30 per share.



A BCF approximating $500,000 was recorded during the quarter ended September 30,
2003.  Such discount was amortized to interest  expense  during the three months
ended September 30, 2003 as the  subordinated  convertible  note was convertible
upon  issuance.   Since  the  Subordinated   Convertible  Note  was  immediately
convertible,  the entire BCF was  charged to interest  expense in the  Company's
restated financial statements for the quarter ended September 30, 2003.

NOTE 14  CONVERTIBLE NOTES PAYABLE

         THE NOVEMBER 2003 NOTES

In November 2003, we secured a $5 million dollar revolving  credit facility,  in
the form of two  seven-month  convertible  notes.  The notes bear interest at an
annual  rate of 10% and  originally  matured  on June 30,  2004,  but have  been
extended to December 31, 2004. The notes are  convertible on ninety days written
notice by the  holders  at the  lesser of (i) 50% of the  average  three  lowest
closing  prices for our common stock for the twenty days  immediately  preceding
the conversion  date or (ii) $.0625 per share. At June 30, 2004, we had borrowed
$2,180,000  under such  notes.  Included in this  balance  the Company  borrowed
$1,200,000 in connection  with a transaction  with Material  Technologies,  Inc.
(see Note 7). The Company subsequently  un-wound the Material  Technologies Inc.
transaction  and  expensed  the entire  $1,200,000  as a loss on disposal of the
investment in Material  Technologies  Inc.'s common stock. At June 30, 2004, the
Company  remains  liable for the $1.2  million  convertible  debt as part of the
total borrowings under such notes.

         OTHER FISCAL 2004 ACTIVITY

As  consideration  for renewing  certain  convertible debt (including the credit
facility  described in the  preceding  paragraph)  and in payment of interest on
such  debt,  the  Company  issued  a total  of  approximately  $1.3  million  of
additional convertible debt during the year ended June 30, 2004.



F-37

<PAGE>

         THE JANUARY 2004 NOTE

In January 2004, the Company borrowed  $250,000 under a convertible note payable
(the "January  Note"),  which bears  interest at 7% per annum.  All  borrowings,
including interest, were due in July 2004. The January Note was convertible into
restricted common stock of the Company at a rate of $0.12 per share, at any time
at the option of the note holder.  In June 2004,  the January Note was converted
into 2,083,333 shares of the Company's common stock.

A beneficial conversion feature  approximating  $250,000 was recorded during the
quarter ended March 31, 2004, and was expensed upon issuance of the January Note
based on the immediate conversion feature.

NOTE 15  LINE OF CREDIT

Z prompt had a revolving line of credit  agreement (the "Line") with a financial
institution,  which bore interest at 5% per annum. A shareholder of the Company,
who is a former  majority  shareholder of Z prompt,  has guaranteed the Line. At
June 30, 2004, the outstanding  borrowings  under this credit  facility  totaled
$225,000,  which is  included  in  "liabilities  subject to  compromise"  in the
accompanying June 30, 2004 consolidated balance sheet.

NOTE 16  SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

Selected  quarterly  financial  data for each of the  quarters  in the  two-year
period ended June 30, 2004 are presented below.


                               FOR THE QUARTER ENDED

                          9/30/03         12/31/03        3/31/04       6/30/04
                          -------         --------        -------       -------
Net sales                $     --        $ 361,232      $ 620,140     $ 527,284
Gross profit                   --          218,729         15,568        88,562
Net loss               (1,612,690)      (3,593,022)    (4,282,293)   (5,891,248)
Loss per common share       (0.01)           (0.03)         (0.03)        (0.04)


                               FOR THE QUARTER ENDED

                          9/30/02         12/31/02       3/31/03       6/30/03
                          -------         --------       -------       -------
Net sales               $      --       $       --      $     --      $     --
Gross profit                   --               --            --            --
Net loss                 (576,324)      (1,528,888)     (999,412)   (1,743,943)
Loss per common share       (0.01)           (0.01)        (0.01)        (0.02)



See the  "Restatements and  Reclassifications"  section of Note 1 for additional
information.



F-38

<PAGE>

NOTE 17  LIABILITIES SUBJECT TO COMPROMISE

The March 23, 2004  balances of Z prompt's  liabilities  that became  subject to
compromise  on that date  (excluding  its  liability to the parent  company) are
approximately as follows:

         Accounts  payable and accrued expenses    $ 335,544
         Secured line of credit payable (Note 15)    225,000
         Note payable to related party               172,000
                                                   ---------
                  Total                            $ 732,544
                                                   =========

NOTE 18  SUBSEQUENT EVENT (Unaudited)

On September 13, 2004,  the Company  completed a private  placement  transaction
(the "private  transaction") with eleven accredited  investors pursuant to which
the Company sold a total of 3,666,668 common shares and 1,833,338 each of Series
A warrants, Series B warrants, and Series C warrants (collectively the "investor
warrants").  Net proceeds from the private transaction  approximated $1,518,000.
Upon request of the holders of more than 50% of the issued shares (including the
exercised investor warrants) at any time between mid-December 2004 and September
13, 2006,  the Company is obligated to file a registration  statement  under the
Securities  Act of 1933,  as amended  (the  "Securities  Act"),  to register the
common stock sold and the stock  underlying both types of warrants issued in the
private transaction. The terms of the investor warrants are as follows:

     SERIES A:  expire 150 days after the  registration  statement  is  declared
     effective  by  the  SEC  ("effectiveness"),   with  an  exercise  price  of
     $0.55/share;

     SERIES B: expire four years after effectiveness,  with an exercise price of
     $0.89/share; and

     SERIES C: expire three years after effectiveness, with an exercise price of
     $2.00/share.

During the period from thirty trading days after effectiveness to thirty trading
days before the expiration of the investor warrants,  such warrants are callable
if the closing  price of the  Company's  common stock  reaches  certain  minimum
levels for a defined time  period.  The  investor  warrants are  price-protected
against the issuance of any equity instruments (including securities exercisable
or convertible into common stock) at less than $0.45 per common share.

In addition to the cash fee paid to the placement agent for the initial phase of
the private transaction,  the Company (a) issued warrants to the placement agent
to purchase  458,333  shares of common  stock  exercisable  for five years at an
exercise price of $0.54 per share,  (b) agreed to pay the placement  agent 8% of
the cash proceeds from the exercise of any investor warrants, and (c) will issue
five-year  non-callable  placement  agent  warrants when  investor  warrants are
exercised in multiples of eight.  The  placement  agent  warrants  have exercise
prices  that  range  from  $0.66 to  $2.40  per  common  share.  Management  has
determined  that  the  private  transaction  is  exempt  from  the  registration
requirements under Rule 506 of Regulation D of the Securities Act.

F-39