UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

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                                   (Mark one)

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

                  For the fiscal year ended September 30, 2004

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

         For the transition period from ______________ to _____________

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                         Commission File Number: 0-10999

                        COMPOSITE TECHNOLOGY CORPORATION
        (Exact name of small business issuer as specified in its charter)

                          Nevada                59-2025386
                (State of incorporation) (IRS Employer ID Number)

                   2026 McGaw Avenue, Irvine, California 92614
               (Address of principal executive offices) (Zip Code)

                                 (949) 428-8500
                           (Issuer's telephone number)

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

Securities  registered  under Section  12(g) of the Exchange Act:  Common Stock:
$0.001 par value

Check  whether  the issuer  has (1) filed all  reports  required  to be files by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period the Company was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Company's knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The  issuer's  revenues  for the  fiscal  year  ended  September  30,  2004  was
$2,500,000.

The aggregate market value of voting common equity held by  non-affiliates as of
December 20, 2004 was approximately  $655,575,351 using the closing price of the
Company's common stock of $5.78 per share on December 20, 2004.

As of December 20, 2004 there were 113,421,341 shares of Common Stock issued and
outstanding.

Transitional Small Business Disclosure Format : Yes [ ] No [X]

<PAGE>

COMPOSITE TECHNOLOGY CORPORATION

                                TABLE OF CONTENTS

                                                                            Page
                                                                          Number
                                                                          ------
PART I                                                                        3
  ITEM 1 - DESCRIPTION OF BUSINESS                                            3
    INTRODUCTION                                                              4
    CORPORATE HISTORY                                                         5
    PRINCIPAL PRODUCT                                                         5
    SUMMARY OF EVENTS & STATUS OF OUR PROGRESS DURING
     THIS PERIOD                                                              8
    SALES AND DISTRIBUTION                                                   10
    MANUFACTURING                                                            10
    INTELLECTUAL PROPERTY                                                    11
    MARKETABILITY                                                            12
    COMPETITION                                                              13
    GOVERNMENTAL REGULATION                                                  15
    RESEARCH AND DEVELOPMENT                                                 16
    EMPLOYEES                                                                16
    RISK FACTORS                                                             17
  ITEM 2 - DESCRIPTION OF PROPERTY                                           25
  ITEM 3 - LEGAL PROCEEDINGS                                                 26
  ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY                       28
            HOLDERS
PART II                                                                      30
  ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND
     RELATED STOCKHOLDER MATTERS                                             30
    QUARTERLY COMMON STOCK PRICE RANGES                                      30
    SALES OF UNREGISTERED SECURITIES                                         32
  ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
            OPERATION                                                        39
  ITEM 7 - FINANCIAL STATEMENTS                                              45
  ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURES                          45
  ITEM 8A - CONTROLS AND PROCEDURES                                          45
  ITEM 8B - OTHER INFORMATION                                                46
PART III                                                                     47
  ITEM 9 - OFFICERS AND DIRECTORS                                            47
    BIOGRAPHICAL INFORMATION                                                 48
    SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                  48
    CODE OF ETHICS                                                           48
  ITEM 10 - EXECUTIVE COMPENSATION                                           49
  ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT                                                  52
  ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                   54
PART IV                                                                      54
  ITEM 13- EXHIBITS AND REPORTS ON FORM 8-K                                  54
    EXHIBITS                                                                 54
  ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES                           56
    AUDIT FEES                                                               56
    AUDIT RELATED FEES                                                       56
    TAX FEES                                                                 56
    ALL OTHER ACCOUNTANT FEES                                                56
FINANCIAL STATEMENTS                                                        F-1
SIGNATURES                                                                   57


                                       2
<PAGE>

CAUTION REGARDING FORWARD-LOOKING INFORMATION

All  statements  contained  in  this  Form  10-KSB,  other  than  statements  of
historical  facts,  that address future  activities,  events or developments are
forward-looking statements, including, but not limited to, statements containing
the words "believe,"  "anticipate,"  "expect" and words of similar import. These
statements are based on certain  assumptions and analyses made by us in light of
our experience and our assessment of historical  trends,  current conditions and
expected future developments as well as other factors we believe are appropriate
under the  circumstances.  However,  whether  actual results will conform to the
expectations  and  predictions of management is subject to a number of risks and
uncertainties that may cause actual results to differ materially.

Such risks include,  among others,  the following:  international,  national and
local general economic and market conditions:  our ability to sustain, manage or
forecast  our  growth;   raw  material  costs  and  availability;   new  product
development and introduction; existing government regulations and changes in, or
the  failure  to  comply  with,  government   regulations;   adverse  publicity;
competition;  the loss of significant  customers or suppliers;  fluctuations and
difficulty in forecasting  operating  results;  changes in business  strategy or
development  plans;  business  disruptions;  the  ability to attract  and retain
qualified  personnel;  the  ability to  protect  technology;  and other  factors
referenced in this and previous filings.

Consequently, all of the forward-looking statements made in this Form 10-KSB are
qualified by these cautionary  statements and there can be no assurance that the
actual  results   anticipated  by  management  will  be  realized  or,  even  if
substantially  realized,  that they will have the  expected  consequences  to or
effects on our business operations.

The safe harbors of  forward-looking  statements  provided by Section 21E of the
Securities  Exchange Act of 1934 are unavailable to issuers of penny stock.  Our
shares may be  considered  penny stock and such safe harbors set forth under the
Reform Act may not be available to us.

As used in this Form 10-KSB, unless the context requires otherwise, "we" or "us"
or the "Company" means Composite Technology Corporation and its subsidiaries.

PART I

ITEM 1 - DESCRIPTION OF BUSINESS

INTRODUCTION

We are a Nevada corporation based in Irvine,  California that specializes in the
development and commercialization of products relating to the electrical utility
industry   using  new   materials   that  extend  the  design  and   performance
possibilities  of  our  products.  Our  first  product  is our  new  proprietary
composite core overhead bare conductor cable, the Aluminum  Conductor  Composite
Core ("ACCC") Cable used in the electric transmission and distribution industry.
We have been developing this product over the past 3 fiscal years and believe it
is an enabling  material  that will  enhance the  electricity  transmission  and
distribution industry.



                                       3
<PAGE>

ACCC  Cable  is  now  commercially  available  from  our  subsidiary  CTC  Cable
Corporation and through strategic partnership with existing cable manufacturers.
General Cable (www.generalcable.com) is active in developing the US and Canadian
markets  and the  Company is  negotiating  with cable  manufacturers  in Europe,
Mexico,  China  and in other  parts of the  world to wrap our ACCC core for sale
locally.

Our innovation  does not stop with cables and it is  anticipated  that follow-on
products  will include  proprietary  electrical  towers and poles,  wind turbine
erection and support systems, and other structural components.

Public  information  concerning the Company is also made  available  through our
website at: www.compositetechcorp.com.

CORPORATE HISTORY

We were  originally  incorporated  under  the laws of the  State of  Florida  on
February 26, 1980 as "Eldorado Gold & Exploration, Inc." On January 13, 1987, we
amended our Articles of  Incorporation  to change the corporate name to Eldorado
Financial  Group,  Inc.  and  modified  our capital  structure  to allow for the
issuance  of up to  100,000,000  shares of common  stock at $0.001 par value per
share.

On June 27, 2001 we changed our state of  incorporation  from Florida to Nevada,
by means of a merger with and into a Nevada  corporation of the same name formed
solely for the purpose of effecting the reincorporation.

On November 3, 2001, we exchanged 60,000,000 shares of restricted,  unregistered
common  stock  for  100.0%  of  the  issued  and  outstanding  common  stock  of
Transmission   Technology   Corporation   ("TTC"),   a  privately-owned   Nevada
corporation  incorporated on March 28, 2001. TTC had been  originally  formed to
secure  a  license  agreement  related  to  a  composite  reinforced  electrical
transmission line system that used composite core materials.  As a result of the
exchange, TTC became our wholly-owned  subsidiary.  The Bylaws of TTC became our
Bylaws.

In conjunction with the November 3, 2001  transaction,  we changed our corporate
name  to  "Composite  Technology   Corporation"  and  amended  our  Articles  of
Incorporation  to allow for the issuance of up to 5,000,000 shares of $0.001 par
value Preferred Stock from none previously authorized and for the issuance of up
to  200,000,000  shares of $0.001 par value  Common  Stock from the  100,000,000
shares previously authorized.

On December 28, 2001, our Board of Directors, and the Board of Directors for TTC
established  an initial  year-end  of  September  30 for TTC and,  concurrently,
elected to change our fiscal  year-end  from  December 31 to September  30. This
action  was  taken  after an  evaluation  and  review  of the  November  3, 2001
acquisition transaction, our operations and the operations of TTC.

Our  acquisition  of TTC effected a change in control and was accounted for as a
"reverse  acquisition"  whereby TTC is the  accounting  acquirer  for  financial
statement  purposes.  Accordingly,  for  all  periods  subsequent  to the  reset
year-end of September 30, 2001, the financial  statements of the Company reflect
the historical  financial statements of TTC from its inception on March 28, 2001
and our operations  subsequent to September 30, 2001, as retroactively  adjusted
for the transactions on November 3, 2001.



                                       4
<PAGE>

Our Bylaws were  modified  on  September  30,  2004 and the  overall  management
structure of the Company has been  revised in the first  quarter of fiscal 2005.
These  changes are being  introduced  to improve  efficiency  and with a view to
moving towards compliance with the new Sarbanes Oxley regulations.

PRINCIPAL PRODUCT

Our principal product is our proprietary  patent pending ACCC cable series which
has been  developed  over the past three years.  These bare  overhead  conductor
cables have unique  properties  that  provide them with  significantly  improved
product characteristics.

The ACCC Cable:

      o     transmits  up  to  two  times  more  power  than  comparably   sized
            conventional cables in use today, reducing congestion problems;

      o     with increased  aluminum cross section is still comparable in weight
            to conventional Aluminum Conductor Steel Reinforced ("ACSR");

      o     virtually  eliminates the problem of high temperature  conductor sag
            (widely  known  since  it  contributed  significantly  to  the  2003
            blackouts);

      o     ACCC  core  controls  the  high  temperature  sag  limits  virtually
            eliminating long term creep of the aluminum conductor;

      o     provides energy savings resulting from less line losses;

      o     has an  operating  temperature  of up to 180  degrees  C,  with  the
            temporary  ability  to  operate  at up to 200  degrees  C,  bringing
            greater emergency reserve capacity;

      o     resists  environmental  degradation,  rust,  corrosion,  acid  rain,
            electrolysis with aluminum or other conductor components, etc;

      o     uses carbon fiber composites which are favored by today's commercial
            airliner manufacturers for superior performance;

      o     has been  reported  by third  parties to have lower  electromagnetic
            fields  and  corona  discharge  that  could  result  in  health  and
            environmental improvements;

      o     elimination of steel core reduces  hysteresis  loss  associated with
            ferromagnetic core;

      o     composite  core's self dampening  properties may reduce the need for
            dampeners and other anti-vibration devices;

      o     uses standard installation techniques and equipment with little need
            to retrain linesmen and reequip teams;

      o     can easily be  retrofitted  on  existing  towers to  upgrade  energy
            throughput;

      o     allows transmission owners,  utility companies,  and power producers
            to replace existing  transmission  lines easily,  typically  without
            modification to the towers;

      o     can substitute for other cables with greater tensioning on the older
            towers to delay the need to replace down rated aging towers, helping
            in the management of infrastructure renovation programs;

      o     the  use  of  ACCC  may   eliminate   the  need  to  establish   new
            rights-of-way that are costly,  time consuming,  and environmentally
            controversial,  since ACCC  offers  increased  throughput,  relieved
            congestion,  reduced line losses,  and enhanced  safety  without the
            necessity of constructing new lines.



                                       5
<PAGE>

Bare overhead electrical conductor is composed of conductive materials that must
hang in the air;  but since  conductive  materials  are not always  strong,  the
conductor  part  is  held  in the air by a  strong  core.  Traditional  Aluminum
Conductor Steel Reinforced  ("ACSR") uses aluminum to conduct (because  aluminum
conducts well and is light) with a steel core to reinforce the cable  (literally
to hold  it up).  Traditional  cable  designers  attempt  a  compromise  between
weakening the core but increasing its conductive  capacity,  on the one hand and
strengthening  the conductor but reducing its conductive  capacity on the other;
while  simultaneously  trying with alloys to increase the operating  temperature
without a significant  increase in the sag of the cable.  This  balancing act is
limited by the  materials.  Cables heat when they carry  electricity  and metals
soften with heat, causing cable sag.

While some cable  designers have been  concentrating  on making alloys of metals
that will  optimize the  strength of the material but retain high  conductivity,
others have been looking at trying to find  alternatives such as new underground
"superconductor"  solutions. The fundamental problem with these innovations,  we
believe,  is that the costs are  prohibitive and the results  uncertain.  Recent
industry  research has nonetheless  focused  significantly  on  superconductors,
which require constant cooling to cryogenic temperatures.  While superconductors
perform with low  transmission  losses,  their much higher  price and  increased
maintenance  constraints make them suitable only for select underground lines in
highly  congested  power centers,  such as New York City. We do not believe that
this technology will be used in overhead transmission or distribution systems in
the foreseeable future.

The solution provided by ACCC comes about by going back to essentials:  engineer
the conductor to conduct more electricity at the lowest cost,  engineer the core
to support the cable without higher  temperature sag, and reduce corrosion while
minimizing  all  unnecessary  side effects and  problems.  The result is the CTC
composite  core that supports  higher  conductive  aluminum  wires,  letting the
aluminum carry the current while the high strength core holds up the cable.

The most widely used bare overhead  conductor in the world today is the Aluminum
Conductor Steel Reinforced  cable or ACSR. The Company  estimates the market for
bare  overhead  conductor in the United  States to be up to $15 billion over the
next 5 years and up to $150 billion worldwide over the same period.  Our goal is
to replace the ACSR cable with our ACCC cable.

ACCC  cables  are  designed  to  be  similar  in  weight  and  size  to  typical
conventional  ACSR  cables.  This  enables  ACCC  cables  to  be  used  as  true
replacements for ACSR in field conditions.  ACCC cable's outside conductive wire
portion has the same diameter and helical configuration as the conventional ACSR
cable;  it can be  handled  and  spliced  with  minimal  re-training  of utility
linemen.  Field  experience has shown that a normal linesman team can put up the
ACCC cable with the same tools and equipment and in the same  timeframes as with
ACSR cables.  The only  difference is the splicing and dead-ending of the inside
composite core. For this function,  accessories are now available that have been
developed by CTC to complement  its ACCC cable.  The Company  manufactures  such
accessories from state of the art equipment in California and FCI/Burndy, one of
the  world's  largest  cable  hardware  manufacturers,  has  agreed  to add  the
accessories to its product range.  The Company  anticipates  that the FCI/Burndy
product will be available commercially in fiscal 2005.

ACCC provides a much higher ampacity rating than the ACSR cable: up to twice the
power down the same line.  This greater  power  throughput  is primarily  due to
higher  conductivity as a result of the addition of significantly  more aluminum
in the same size cable and the use of an annealed  aluminum rather than the less
conductive aluminum typically in use today.



                                       6
<PAGE>

In addition,  the material  properties of the  composite  core in our ACCC cable
substantially  reduce the problem of conductor  sag due to higher  temperatures.
The cable is therefore  rated at an operating  temperature  of 180 degrees C and
does not sag appreciably up to that  temperature.  This compares  favorably with
the normal  operating  temperature of standard ACSR which is 80 degrees C with a
top temperature of about 100 degrees C as compared to the equivalent 200 degrees
C for ACCC.  The  problem  of sag came into  prominence  at the time of the 2003
blackouts  in the  Northeastern  United  States.  It  appears  that the  problem
originated  with an  overheating  line sagging too close to the trees causing an
electrical  short that  stopped the  electricity  transmission.  This forced the
electricity  to  immediately  transfer to other lines,  making them operate at a
greater temperature until they too shut down. This resulted in the collapse of a
major  portion of the northeast  electrical  grid that resulted in many hours of
blackout  for  the  city  of New  York  and  other  places.  ACCC  does  not sag
appreciably with the increased  temperature,  because,  unlike a metal core, our
composite core exhibits much lower thermal  expansion  properties.  In practical
terms, the ability to operate a cable at higher  temperatures is an advantage in
that it creates a much greater emergency  reserve  capacity.  Thus, less sag and
additional  reserve  capacities in the transmission  lines used in the northeast
electrical  grid might have  eliminated  or reduced the  Northeast  black out of
2003.

Corrosion is another  problem  with the use of  transmission  cables.  Corrosion
damages  metals,  reducing  strength.  Salt, SOx and NOx pollution can result in
corrosion  of both the  aluminum  conductor  and  ACSR  steel  cores,  including
galvanic  corrosion due to contact between two different  metals.  Composites do
not have such  problems,  being  engineered  from  non-metallic  materials.  The
non-metallic  core is a major  factor  in the  reliability  of our  ACCC  cable.
Additionally,  the ACCC core is not only  resistant to corrosion  and strong but
also not brittle or fragile,  like some metal matrix composites  proposed in the
market.  Our ACCC core is wound around  standard drums and handled in production
and in the field by workers and linesmen  who do not need to be concerned  about
snapping  the  composite  core  or  shattering  it  with  a  sharp  blow.  Field
demonstrations  show that it comes off the reel easily and goes through standard
pulleys, while being pulled to tension in the normal way. It can also cover much
greater spans than other cables pulled to the same tension.

A further problem facing  traditional  transmission cable is caused by inductive
heating and hysteresis loss.  Electrical  current carried down the conductor and
the steel  core  results  in the  production  of both  heat and  electromagnetic
fields.  This causes the loss of approximately on average 9% of the power on the
line,  depending  on  the  operating  temperatures  and  length.  The  use  of a
lightweight  composite core in the ACCC allows more aluminum to be placed around
the core and reduces the inductive heating, and therefore can reduce the loss of
electricity  on the line by a  significant  percentage.  This could  represent a
significant saving to the utilities in generation and purchasing costs and could
ultimately bring about a reduction in emissions and benefit the environment. One
proposal for two  trans-Kansas  transmission  lines is being  referred to as the
"Green" line because of the ecological benefits of ACCC as well as the fact that
the new lines would carry power from new windpower sites to the grid. Some third
parties  using the cable have also  identified  a reduction  in  electromagnetic
radiation and corona.  These  reductions  can be understood  theoretically.  The
Company is currently investigating the extent and nature of the reduction to see
its effect in practice and to understand if there is any  appreciable  advantage
in densely  populated  or  sensitive  ecological  areas.  The  Company  does not
anticipate the  completion of such analysis until such time as sufficient  cable
is being  operated  in a variety  of  circumstances  that will  enable  accurate
practical measurements to be made.



                                       7
<PAGE>

The ability to  substitute or replace ACSR and other cables with a stronger more
conductive  ACCC cable  brings  other  practical  advantages  that  benefit  the
transmission owners,  utility companies,  and power producers.  These advantages
fall into two important categories relating to: (i) existing line renovation and
refurbishment,  making the existing asset function better,  more efficiently and
deliver more power with less capital expenditure; and (ii) new line construction
which could require fewer support  structures since our cable has  significantly
less sag.

Congestion can be relieved  immediately  because ACCC cable can be installed and
tensioned  identically  to ACSR cable allowing it to replace  existing  overhead
lines without  structural  modification  of the supporting  tower  systems,  new
permissions  and  prohibitive  delays,  therefore  allowing far more power to be
transmitted.

ACCC cable can be used to replace  existing  lines on towers  that are older and
cannot safely support the high levels of tensioning required. This is due to its
limited  thermal  expansion,  ACCC can be installed with less  tensioning  while
meeting required sag and safety  standards.  This is important to utilities that
are struggling with the need to replace their entire  infrastructure  by helping
in the management of their capital expenditure planning.

The fundamental  advantage in using ACCC cable to upgrade  existing lines is the
elimination  of the need to construct  new lines.  It can  eliminate the need to
establish  new  rights-of-way.   This  is  costly,  time  consuming,  uncertain,
controversial and may impact the environment.

SUMMARY OF EVENTS & STATUS OF OUR PROGRESS DURING THIS PERIOD

During the fiscal period ended on September  30, 2004 we have made  considerable
progress in our commercialization  path culminating in the completion of product
and production development for the ACCC cable and its necessary accessories.  We
are  now  operating  a  pilot  commercial  production  successfully  and are now
planning the launch of full scale production of ACCC.

Pivotal  in  this  progress  was the  organization  of the  business  at the new
facility in Irvine, California, the purchase of increasing numbers of production
machines and the addition of new personnel and managers.

The most important external events of the period may be summarized under 4 major
headings, as follows:

The first was the ongoing process of testing and demonstrations that continue to
date.  Throughout the period,  testing has continued,  initially as an essential
part of refining  product and production  process  design,  and more recently to
validate the ACCC  product.  Significant  announcements  of the  publication  of
important test data regarding ACCC were made in the first quarter of fiscal 2004
and testing  and trials  have  continued  progressively  throughout  the year to
underline the initial findings made at that time. Significant contributions have
been made by Kinectrics, the University of Southern California and most recently
the field  installation  at the  Electrical  Power Research  Institute  ("EPRI")
Haslet, Texas facility announced in September of this year.



                                       8
<PAGE>

The second was the  announcement  in May and July of the  inclusion  of the ACCC
family of cables in the Power Line  Systems  ("PLS") CADD design  program.  This
provides engineers with the tools necessary to include the Company's products in
new power line project planning and design.

Third is the  enabling  breakthrough  in our  production  plans  created  by the
execution through our subsidiary CTC Cable Corporation of the "Manufacturing and
Distribution  Agreements"  with General Cable  Industries,  Inc.,  (principal US
operating subsidiary of General Cable Corporation ("General Cable") (NYSE: BGC),
a recognized  leader in the utility  cable market.  General  Cable  produced the
first ACCC cable in the last  quarter of fiscal  2003 and the  relationship  has
become an important part of our North American growth strategy.

General Cable is an important  manufacturer in the utility cable  industry.  The
agreements  give the  Company a firm basis to ensure that the ACCC cable will be
produced  when  required;  gives the Company  significant  openings with General
Cable's preferred and regular  customers;  allows the Company to reduce a number
of planned  marketing  costs;  allows the  Company to sell its  product  through
General Cable with the corresponding  name and warranties that are the cachet of
such a  corporation;  provides  a  certain  assurance  to the  market  regarding
security  of supply  since  General  Cable is one of the world's  largest  cable
manufacturers  and has the  capacity to meet  anticipated  significant  customer
demand  for the  product  and gives  further  impetus to the  marketing  efforts
already undertaken by raising the profile of the Company and its products.

Under the  "Manufacturing  Agreement,"  General Cable will apply aluminum strand
around the Company's  composite core providing a finished ACCC conductor  cable.
They will  utilize  the  utility  cable  industry  standard  specifications  and
manufacturing processes in carrying out the work.

Under the "Distribution  Agreement",  General Cable is appointed a non-exclusive
distributor for the ACCC cable for the U.S. and Canadian  markets only.  General
Cable has built an extensive sales and marketing infrastructure dedicated to the
support of the utility  market.  In its century long  experience  supporting the
utility market,  General Cable has also developed the relationships with utility
companies that will facilitate the commercialization of ACCC cable.

Finally,  June 2004 brought us the announcement of the interest of FCI/Burndy in
manufacturing the accessories necessary for our ACCC core.

This  fiscal year also saw the first  commercial  order for the ACCC cable for a
new transmission line in Kingman,  Kansas during the first quarter and the first
completed commercial installation at Holland, Michigan during the last quarter.

During  this  period  we also  announced  that we have  added  stability  to our
financial  situation  with  the  recent  issue  of $15  million  6%  convertible
Debentures to 4  institutional  investors and subsequent to year end in November
2004,  we have seen the first  major stock  analyst  report to the market on the
business     and     prospects     of     the     Company      (available     at
www.cohenresearch.com/reports under our trading name `CPTC').



                                       9
<PAGE>

SALES AND DISTRIBUTION

During the process of sales and distribution of ACCC, the Company has identified
two important phases: Market Trials and Accepted Usage. Essentially,  sufficient
testing and trials have already been  accomplished  to stimulate  interest among
utilities' engineers.  Those with good foresight understand the potential of the
product,  but the  industry is  cautious.  Field  trials are usually  desired to
evaluate the product.  This can be  accomplished  with ACCC running  alone or in
conjunction  with other  potential  cables.  The  Company is ready to sell trial
quantities  of ACCC  cable to  customers  almost  immediately  for field  trials
together  with  installation  support and  assistance.  The Company  anticipates
receiving  access to data and trial  results for  potential  customers to better
evaluate its ACCC product.

The  Company  uses  three  principal  strategies  for  the  distribution  of its
products.

The first is direct  sales of cable to  utilities  and  distribution  companies.
Manufactured  core is wrapped by General  Cable under  contract  and sold to the
utilities. These sales are arranged through field consultants and by the Company
personnel.  The Company  participates  at trade  shows and uses its  contacts to
enable it to present to decision  makers at the utilities who might benefit from
the Company's products.  It is anticipated that these contacts will develop into
an  arrangement  whereby the utility will try the  Company's  products in a test
line; which in turn will lead to acceptance and further purchases.

The second is sales of core to cable  manufacturing  partners.  In North America
our contractual  partner is General Cable. It is anticipated  that General Cable
will sell the ACCC  products to its customers as part of the General Cable range
of cables. This will lead to the sale of the Company's cable core, the essential
ingredient in ACCC.

The third is using consultants or  intermediaries  who have  relationships  with
governments,   utilities,   engineering   companies,   cable  manufacturers  and
interested  purchasers.  The Company is able to provide such intermediaries with
an  interest  in the sale of the  products  in  return  for sales  into  defined
markets.

It is expected that the first two sales methods will be used  extensively in the
developed markets with a greater reliance on intermediaries and the third method
of sales in certain other  international  markets where developing contacts with
particular  individuals  or  organizations  is an  important  entry  barrier  or
prerequisite to conducting successful business.

MANUFACTURING

CTC is now  concentrating  on the  production of the composite core component of
its  ACCC  cable  and  allowing  specialist  cable  manufacturers  to  wrap  and
distribute  the  finished  cable in their  particular  markets.  Production  for
accessories  has also been  organized to ensure that hardware  supply will match
the cable sales.

The manufacture of the core uses a proprietary  pultrusion process. This process
allows numerous glass and carbon filaments to be pre-tensioned, impregnated with
high  performance  resin systems,  and then rapidly cured as the product emerges
through a heated die. The shape of the dies dictates the core  configuration and
different  designs are utilized for different cable sizes. The proprietary resin
formulations  we use are highly  resistant to temperature,  impact,  tensile and
bending stresses, as well as to the harsh environmental  conditions  encountered
in the field.  The product is also endowed  with long life and a  resistance  to
high energy electrical fields.



                                       10
<PAGE>

At present  the  manufacture  of the core is carried  out at our  facilities  in
Irvine  California,  however,  plans are  underway to transfer  production  to a
separate  facility  as soon as the order  volume  reaches a critical  mass.  The
Company can also manufacture using subcontractors if required.

The ACCC core is then delivered to the cable manufacturer,  General Cable in the
USA and Canada, for wrapping. The core is shipped on round reels and is received
at the cable wrapping  facility in much the same way as traditional steel cores.
Core is delivered in standard lengths to meet stranding limits. The core is then
stranded (or wrapped) with fully annealed  aluminum wires drawn into trapezoidal
shapes.

The Company plans to increase its capacity  ahead of commercial  orders to be in
time for delivery.

Machinery  is  currently  acquired  under  lease and the  Company has lease line
financing in place to fulfill further requirements.

Our  principal  raw  materials in the  production of the ACCC core are glass and
carbon fibers,  combined with specific polymer resins.  Our cable  manufacturers
require raw aluminum rod  materials  usual in the  production  of bare  overhead
cable. Accessories require primarily high grade aluminum and special steels. The
prices  for these raw  materials  are  subject to market  variations.  Glass and
resins can be acquired from several sources,  however the preferred supplier for
the carbon is Toray Industries. While the Company's preference will be to Toray,
the Company is currently  qualifying  alternative  suppliers' carbon material in
its production path.

The Company is  continuing  the  development  of its new  high-speed  production
equipment and is confident that this will be completed in the coming year.

INTELLECTUAL PROPERTY

The Company is  continuing  aggressively  to pursue  patent  protection  for all
aspects of its composite materials, products, and processing.

We filed PCT Application Serial No. PCT/US03/12520 on April 23, 2003, and United
States  Continuation-In-Part  Applications Serial Nos. 10/692304,  filed October
23, 2003; 10/691447,  filed October 22, 2003; 10/690839, filed October 22, 2003,
10/911072,  filed August 4, 2004, PCT  Applications  Serial Nos.  PCT/US02/35199
filed October 22, 2004; PCT/US04/35201,  filed October 22, 2004; and Provisional
Applications Serial Nos. 60/537302, filed January 16, 2004; and 60/536164, filed
January 13,  2004.  The Company is in the  process of formally  assigning  these
pending  patent   applications  to  its  wholly-owned   subsidiary,   CTC  Cable
Corporation, a Nevada corporation, formed December 5, 2003. The Company has also
filed  corresponding  patent  applications  in over 60  countries  worldwide  to
preserve and protect its market opportunities. The inventors of record of all of
our  applications  are Dr. Clem Hiel,  Mr.  George  Korzeniowski,  and Mr. David
Bryant.  Dr.  Hiel  is  world-renowned  in  the  field  of  composite  materials
engineering  and  design.  Mr.  Korzeniowski  has a long and very  distinguished
career  dealing  directly  with  design,   building  and  operating   pultrusion
processing  equipment for composite products  manufacturing.  Mr. Bryant is Vice
President,  Product and Production  Development of the Company and has extensive
experience  with the design and  production  of novel  composite  products.  Our
patent  applications deal with novel composite  materials,  a range of materials
for  such  composites,  processing  to  produce  composite  materials,  range of
operating  characteristics,  and  various  products  made  from  such  composite
materials. The primary products disclosed are electrical transmission conductors
that  substitute  the related  composite  materials  in place of standard  steel
reinforced  cable. The composite  materials are  characterized by both chemistry
and  physical  properties,   and  particular  examples  are  included.   Product
characteristics  such  as  ampacity,  elevated  operating  temperatures,   lower
electrical  resistance,  light-weight,  high  strength  composite  fiber packing
density, corrosion, stiffness, thermal expansion, toughness, fatigue life, creep
resistance,  wear resistance and fiber strength are addressed.  Novel pultrusion
processing  techniques are also  disclosed,  which  techniques are applicable to
both the  conductor  applications  as well as other  composite  based  products.
Numerous cross sectional cable designs are disclosed, as well as various methods
and designs for splicing composite cables.  Transmission  systems  incorporating
our novel composite cables are also addressed.



                                       11
<PAGE>

Based on  available  information  and after  prior art  searches  by our  patent
strategists, we believe our pending patent applications provide the basis for us
to, over time, be issued a number of separate and distinct  patents.  Our patent
applications  will continue to be supplemented with new information based on our
prototype preparation and testing. Our patent applications specifically focus on
materials and conductors conforming to industry specifications and requirements,
as presently in place and as anticipated for the future.

The Company has also acquired  licensing rights pursuant to a License  Agreement
dated February 6, 2003, between W. Brandt Goldsworthy & Associates,  Inc. (WBGA)
and the Company.  The License  Agreement grants the Company the exclusive use of
any  components in the Company's  ACCC products that include items  contained in
patent claims granted to WBGA by the U.S. Patent and Trademark Office ("USPTO").
The License Agreement also provides the Company a broader  non-exclusive license
for any other pultruded composite core electrical cable designs characterized by
WBGA as CRAC-1.  The License  Agreement bears a 2% royalty on net sales revenues
for that  component  of ACCC  using  any  patent  claim  issued to WBGA and a 1%
royalty for any component of the CRAC-1 technology, if any, used by the Company,
provided WBGA is granted  valid patent  Claims by USPTO.  To date no such claims
have  been  granted,  and the  USPTO  issued  a final  rejection  of the  patent
application on October 18, 2004.  WBGA or its assigns has a six-month  period to
respond to the final  rejection or appeal the final  rejection.  The Company was
notified that the rights to the License  Agreement as Licensor were  transferred
to James M.  Dombroski  pursuant to Mr.  Dombroski's  execution of a lien on the
asset dated December 29, 2003. Mr. Dombroski subsequently transferred his rights
to the License Agreement to GIFT Technologies LP on April 13, 2004. The duration
of the License  Agreement is for the life of any patent granted to WBGA by USPTO
for the specific technologies licensed herein.

We are currently  pursuing patent  protection for other composite based products
and  applications.  These  additional  patent  applications  generally relate to
composite-based towers and poles. The Company is currently preparing a number of
additional patent applications and it is anticipated that these will be filed in
the near future.

MARKETABILITY

The U.S.  Department of Energy reported some years ago that much of the nation's
electrical  transmission  and  distribution  infrastructure  is rapidly becoming
incapable  of meeting the demands of our modern  economy.  This is the result of
the  increasing  demand for the  consumption  of  electricity  (it has more than
doubled over the last 10 years)  coupled with aging of the existing  grid (which
is in need of replacement and is prone to failure).

Utilities have been adding to their electrical  generation capacity. In the most
recent 3 years more  generation  capacity (in  gigawatts) has been added than at
any time since 1945. However,  during the same period the investment in delivery
systems for the new capacity (the grid) has not  significantly  increased.  This
will have to be rectified if the new  generation  capacity is to be  efficiently
utilized.  This translates into the necessity for a large increase in investment
into the bare overhead  cable  (conductor)  systems that make up the  electrical
grid. Our ACCC cable is a type of bare overhead cable (conductor).



                                       12
<PAGE>

The currently  available  data  projections  for the size of the market for bare
overhead  conductor are  conflicting,  with different  sources  assigning widely
different  figures to the overall  market size and to the markets for  different
countries. This is probably due to the fact that analysts can easily confirm the
present size of the Grid and its required expansion but cannot adequately factor
in two important considerations.  The first of these is that it is often unclear
how much of the existing grid must be replaced and how quickly. This information
is often  confidential  and in all  cases  sensitive  (with its  combination  of
considerations  of safety,  ecology and commercial  impact).  The second is that
while new  capacity is required on the grid it is often  assumed  that this will
necessitate new lines.  These are far from easy to arrange.  Obtaining rights of
way and permissions sometimes takes years and is of uncertain outcome.

Introduction  of the  Company's  products  may help to  alleviate  some of these
issues since ACCC enables providers to increase  transmission capacity to handle
expected load increases without resorting to the uncertainties of relying on the
permits for and construction of new rights of way. More fundamentally, ACCC is a
true  replacement  for existing  lines that  requires  less  tensioning  and can
therefore be used on weaker towers.

Our ACCC  product  targets an  industry  which is mature in most  industrialized
countries  such as those in North  America and Europe but  developing in various
other countries around the world, such as China and in South America.

COMPETITION

The primary  competing product to our ACCC in North America and in most parts of
the world is still traditional ACSR, a hundred year old technology.  ACSR cannot
satisfy  a number  of  requirements  facing  the  modern  grid and  distribution
operator.  Awareness of this issue has  resulted in a number of  companies  with
various alternative products coming forward. These may be summarized as follows:

      o     Widely used in Europe,  certain cable manufacturers  already produce
            variations  of  ACSS  (Aluminum   Conductor  Strength  Steel).  This
            aluminum  conductor is reinforced  with higher strength steel alloys
            in the core that allow the use of trapezoidal shaped wires,  similar
            to the  Company's  cable.  The ACSS still has a number of  problems,
            particularly in retrofit applications. When compared with equivalent
            sized ACSR cables,  the  trapezoidal  ACSS cable is heavier and thus
            may  require  higher  tensioning,  potentially  resulting  in  tower
            modifications. It is also more expensive than ACSR cable. Variations
            of ACSS also exist in the shape of the aluminum  stranding with both
            trapezoidal  and `Z'  shaped  cables  offering  less wind noise than
            traditional  ACSR. When compared with the Company's ACCC cables,  we
            believe  that  the ACSS  cable:  (i) has  less  aluminum  conductive
            cross-section  than ACCC cables  resulting in marginally  less power
            capacity;  (ii) has much higher sag than the ACCC equivalent;  (iii)
            has  greater  line losses  associated  with  inductive  heating of a
            ferromagnetic core; (iv) has more electromagnetic  field generation;
            and (v) with respect to new line  projects,  would require a greater
            number of larger,  heavier,  taller (and therefore  more  expensive)
            support structures than those required for ACCC cable .



                                       13
<PAGE>

      o     3M  Company  reports  that they have  developed  Aluminum  Conductor
            Composite  Reinforced  (ACCR),  a conductor  with a core composed of
            metal/ ceramic matrix  composite  wires with diameters  ranging from
            0.073" (1.9 mm) to 0.114"  (2.9 mm) that  appears to be wrapped in a
            thin adhesive backed metal foil,  probably  because the composite is
            abrasive.  3M claims their ACCR to have increased ampacity over ACSR
            by 1.5 to 3 times at very high  temperatures.  Its price is reported
            to be seven to ten  times  higher  than  ACSR.  We have not seen any
            published  performance  data from  independent  third  parties as to
            certified  test  results for this  conductor,  although our study of
            available  data  indicates  that our ACCC  cable  will  have  higher
            performance  specifications at temperatures  within normal operating
            ranges. 3M Company literature also indicates that some modifications
            from the ACSR-norm in handling and  installation  procedures  may be
            required  since the ACCR core is reportedly  brittle and may snap or
            shatter if handled  incorrectly.  3M literature  also notes that the
            conductivity   of  the  aluminum  is  lower  than  the  aluminum  in
            conventional  ACSR and also lower  than our ACCC.  3M claims to have
            made  commercial  sales of the product and ACCR is under  evaluation
            alongside the Company's ACCC.

      o     Korea Electric Power Corporation  completed 24 overhead transmission
            line  upgrade  projects  between  1994 and 1997 where they  replaced
            existing  conductors with higher ampacity  conductors using existing
            towers and  rights-of-way.  They used the "Super  Thermal  Resistant
            Aluminum Alloy Conductor with Invar Reinforcement" ("STACIR"), first
            introduced  in 1994.  The cable can operate to 210  degrees  Celsius
            with its  ampacity  approximately  doubled.  The cost of  STACIR  is
            estimated  to be  four to  seven  times  higher  than  ACSR  and has
            slightly increased line losses and weighs more than comparable sized
            ACSR.  Limited  market  acceptance  of this  product  has  occurred,
            although we believe that it is mainly in Korea.

      o     A  multi-sectioned  cable known as the GAP cable has been introduced
            by Sumitomo.  This  conductor has been used by a number of companies
            internationally  and has  reportedly  experienced  mixed  results in
            various  applications.  In  particular it is noted that when fitting
            the conductor it must be first hung without  significant  tension to
            `relax' the cable, installation is difficult and expensive with more
            frequent,  costly  dead-ending.  The  Company  is not  aware  of any
            unreserved  acceptance  of this  cable and  understands  that  those
            companies using the cable are actively  seeking an  alternative.  We
            also believe that significant structural  strengthening of towers is
            required for its use.

      o     Several  companies  are  in the  preliminary  stages  of  developing
            superconducting  technology  in the form of  liquid  nitrogen-cooled
            superconductor  power cables,  which are capable of conducting  with
            very low losses. The disadvantage is that the cost of such cables is
            expected to be up to fifty times the current  price of  conventional
            underground  systems.  It would,  therefore,  only be  practical  in
            specific  short  underground   installations  in  densely  populated
            downtown   metropolitan   areas.   Overhead  use  is  not  presently
            anticipated.

Based upon the available test results,  field trials and commercial  sales,  the
Company  believes  that its ACCC  family of  cables  meets or  exceeds  industry
standards for quality and performance  when compared to ACSR; and is superior in
terms of  performance/cost  to any competing  alternatives.  We believe that its
versatility and performance  enable ACCC to replace the cable products currently
being purchased by grid and  distribution  operators with an  identifiable  cost
advantage when compared with capital expenditures or when considering  operating
savings.



                                       14
<PAGE>

The term  `composite'  covers a wide variety of materials  from cements to metal
matrix composites,  through carbon fiber and fiberglass.  The Company is not the
first entity to attempt to develop a composite  core for a  transmission  cable,
and cannot protect all conceivable  composite cores by its patent  applications.
The Company  believes that its patent  pending ACCC  composite  core is the most
cost  effective  material  for use in bare  overhead  conductor  with  the  best
properties  most  aptly  suited  for  the  `task'  required  of a bare  overhead
conductor.

The Company has also filed additional patent  applications to address additional
subject matter complementary to the information set forth in its original patent
applications.  This  is  intended  to  serve  as an  additional  barrier  to the
development of competing composite products.  A company interested in developing
a competing  product would be investing in composite  core  development  knowing
that there were additional patent applications  claiming subject matter that may
have been filed but not yet public.

The Company  produces  the  composite  core  component  of the ACCC  cable.  Any
qualified cable  manufacturer  should be able to apply the annealed  aluminum to
the outside of core to produce the finished  product.  Since the Company intends
to enter into  agreement with cable  manufacturers  that are willing to wrap the
core to produce the ACCC final product,  such  manufacturers are not immediately
competitors of the Company in  themselves,  although other products they produce
may compete  with the ACCC.  The  Company's  strategy is  currently  to make the
production  of ACCC  available  to cable  manufacturers  that have an  expanding
market and are willing to invest in  bringing  ACCC into their  markets.  In the
United States market, however, the Company has signed an exclusive manufacturing
agreement  with  General  Cable  that  establishes  General  Cable  as the  only
manufacturer of ACCC for the US and Canadian markets until 2007. There are three
principal  manufacturers  of traditional bare overhead  conductors  (ACSR) which
supply the United States market:  Southwire  Company,  reportedly  with over one
third  of the US  market;  General  Cable  Corporation  and  Alcan  Cable,  both
reportedly supply most of the balance of the market. Given the current exclusive
manufacturing  arrangement,  the Company's General Cable production of ACCC will
be in competition with both of the other key producers in the market.

Outside of the United States and Canadian markets,  all the key manufacturers of
ACSR cable are the Company's  potential  partners.  These include General Cable,
Nexans,  Lamifil,  Pirelli Cable and De Angeli Prodotti in Europe; Condumex IUSA
and CME in Mexico;  Jaingsu Far East Group  Company,  Ltd.,  in China;  Aberdare
Cables in South Africa; and numerous others.

GOVERNMENTAL REGULATION

We are not aware of any specific government regulations governing the design and
specifications  of bare  overhead  conductors  in the United  States.  We do not
believe  the  manufacture  of ACCC cable is subject to any  specific  government
regulations   other  than  those   regulations  that   traditionally   apply  to
manufacturing activities such as the Occupational Safety and Health Act of 1970.

Our intended  operations are generally  subject to various  federal,  state, and
local laws and regulations relating to the protection of the environment.  These
environmental laws and regulations,  which have become  increasingly  stringent,
are  implemented   principally  by  the  Environmental   Protection  Agency  and
comparable state agencies,  and govern the management of hazardous  wastes,  the
discharge of pollutants  into the air and into surface and  underground  waters,
and the manufacture and disposal of certain substances. The Company anticipates,
and to date has had, no difficulty in meeting these standards.



                                       15
<PAGE>

Certain  international  markets  may  require  government  or type  registration
approvals   from  leading   companies  or  public  or  semi  private  bodies  or
associations.  It is the Company's policy to examine these barriers to entry and
to select  markets  which will be able to introduce its products in this initial
phase  without  a  significant,  lengthy  or  costly  registration  or  approval
procedures.

RESEARCH AND DEVELOPMENT

We have spent considerable funds on research and development of our proprietary,
patent pending ACCC and related electrical system component  technologies to the
point where the ACCC system is now commercially available. We continue to invest
in the  further  development  of this  product  with a view to  speeding  up and
lowering the cost of production,  as well as enhancing the product's  properties
and   characteristics.   We  also  anticipate  the  need  to  continue  spending
significant funds to protect the ACCC technologies.

In Fiscal Year 2004 we spent $114,959 on development  costs; in fiscal year 2003
we spent $3,210,289 on development costs and $638,555 in Fiscal Year 2002.

EMPLOYEES

As of the date of this filing,  we currently have 48 full time employees and use
the  services of 18  consultants  on a regular  basis for a variety of tasks and
responsibilities.  Additional  consultants are employed as required for specific
tasks. We have 3 corporate  officers:  two Executive  Officers and the Corporate
Secretary.  The two Executive  Officers are the Chief Executive  Officer (`CEO')
and the Chief Operating Officer (`COO').

There are five senior corporate departments:  Operations,  Finance, Intellectual
Property,  Information  Systems,  and  Investor  Relations.  These are  directly
overseen by the CEO. The Operations Department is the responsibility of the COO.
In  the  Operations  Department,  the  COO  presides  over 3  additional  senior
operations departments: Product & Production Development, Business Development &
Sales, and Quality Assurance & Quality Control.

One senior  manager,  employed as a  consultant,  was  appointed  the  corporate
secretary with the task of improving the efficiency of the Company's  operations
and preparing the Company for Sarbanes  Oxley  compliance and the listing of the
Company on an Exchange. He is also responsible for the European,  Middle Eastern
and African Markets and resides in the UK.

As of fiscal  year end 2004,  the CEO was the  acting  Chief  Financial  Officer
(`CFO') in charge of the Finance  Department.  Subsequent to September 30, 2004,
the Company has employed  the  services of a  consultant  to fulfill the role of
acting CFO. It is hoped that  following a  probationary  period this  individual
will be  appointed  to the position of CFO and become an officer of the Company.
The Company already  employs a Controller and Accounting  Manager in the Finance
Department,



                                       16
<PAGE>

As of year end,  the COO was also the  President of the Company in charge of the
Business Development & Sales Department. Three senior corporate managers handle,
respectively: Investor Relations, Quality Control and Assurance, and Product and
Production  Development.  Information Systems and Intellectual Property Strategy
are handled by outside consultants.

The Company  employs 4 additional  senior managers in its Product and Production
Development Department.  and a total additional staff of 25 complete the Product
and Production  Development Department and handle the current production of core
and  accessories.  The Business  Development  and Sales  department is comprised
primarily of  consultants  with one senior  field  person and 2 field  engineers
responsible  for sales..  There are 4  corporate  administrative  assistants,  2
logistics  personnel,  one  security  officer and one  maintenance  person.  The
Company also uses the services of part time employees as required.

To assist the COO in the  performance  of his duties the Company has appointed a
senior manager to the Office of the COO.

We have entered into "at-will" and "as needed" consulting contracts with various
marketing and business  consultants and composite experts to provide us with the
necessary  technical  skills which are required to execute our business plan and
bring our products to market.  Contracts also exist for legal,  patent  strategy
and  accounting  services.  Recruiting  efforts  will  continue  as we bring our
products to market.

RISK FACTORS

WE ARE A "START-UP" COMPANY AND HAVE A LIMITED OPERATING HISTORY.

We are a "start-up" company and have a limited operating history. We are subject
to  business  risks that are typical of  "start-up"  companies  and  "lead-time"
factors are expected to affect the timing of our receipt of revenues.  There can
be no assurance that we will be able to generate any significant revenues. Until
we generate  significant  revenues,  we will experience  negative cash flows and
financial  losses.  Our ability to generate revenues may be affected by numerous
factors.  No  assurance  can be given that a demand for our product will develop
or, if it does develop,  that it will be sufficient to justify our investment in
developing our intended business.

WE EXPECT FUTURE LOSSES AND WE MAY NOT BECOME PROFITABLE.

Prior to acquiring Transmission  Technology Corporation ("TTC"), we were a shell
corporation  having no operating  history,  revenues from operations,  or assets
since December 31, 1989. We have not had any bookable  revenues from  operations
subsequent to acquiring TTC through June 30, 2004. We may experience significant
quarterly and annual losses for the foreseeable future.

We may not ever become profitable. If we do achieve profitability, we may not be
able to sustain or increase  profitability  on a quarterly or annual  basis.  We
expect the need to significantly increase our general administrative and product
prototype and  equipment  prototype  production  expenses,  as  necessary.  As a
result,  we will need to generate  significant  revenues to achieve and maintain
profitability.



                                       17
<PAGE>

OUR  INDEPENDENT  AUDITORS  HAVE ISSUED A QUALIFIED  REPORT WITH  RESPECT TO OUR
ABILITY TO CONTINUE AS A GOING CONCERN.

In  previous  filings,  our  accountants  have  issued a report  relating to our
audited financial  statements which contains a qualification with respect to our
ability to continue as a going concern because,  among other things, our ability
to  continue  as a going  concern is  dependent  upon our  ability  to  generate
profitable  operations in the future and/or to obtain the necessary financing to
meet our obligations and repay our liabilities  from normal business  operations
when they come due.  This is  natural  because  during the  product  development
phase,  a company  must rely on the promise of future  revenues  (if the product
under development gains acceptance) to secure financing from the capital markets
so that it can complete the  development of its products.  There is no guarantee
that the product will be completed,  accepted or provide a marketable  advantage
and therefore no guarantee that the development will ever be profitable.

For the fiscal year ended September 30, 2004, we had a net loss of $(14,323,596)
and negative cash flows from  operations of  $(9,022,676).  For the fiscal years
ended  September  30,  2003 and  2002,  we had net  losses of  $(6,771,252)  and
$(4,523,953),  respectively.  For the same  periods,  we had negative cash flows
from operations of $(2,022,935) and $(715,923), respectively.

We had an operating cash flow deficit of  $(9,022,676) as at September 30, 2004.
During fiscal 2004 this operating cash flow deficit was  $(4,266,853) as of June
30, 2004, $(3,112,739),  as of March 31, 2004, and $(1,224,719),  as of December
31, 2003. The operating cash flow deficit was $(2,022,935),  as of September 30,
2003.

As of September 30, 2004, our accumulated deficit was $(26,075,079).

OUR  INABILITY TO RAISE  ADDITIONAL  WORKING  CAPITAL AT ALL OR TO RAISE IT IN A
TIMELY MANNER COULD  NEGATIVELY  IMPACT OUR ABILITY TO FUND OUR  OPERATIONS,  TO
GENERATE  REVENUES,  AND TO OTHERWISE EXECUTE OUR BUSINESS PLAN,  LEADING TO THE
REDUCTION  OR  SUSPENSION  OF OUR  OPERATIONS  AND  ULTIMATELY  OUR GOING OUT OF
BUSINESS.  SHOULD THIS OCCUR,  THE VALUE OF YOUR  INVESTMENT IN OUR COMMON STOCK
COULD BE ADVERSELY AFFECTED, AND YOU COULD EVEN LOSE YOUR ENTIRE INVESTMENT.

While the Company has raised significant capital through its debenture offering,
it is possible that we will need to raise cash and additional working capital to
cover a possible shortfall in our cash and working capital until such time as we
become cash flow positive  based solely on our revenues less operating and other
costs.  Should the financing we require to sustain our working  capital needs be
unavailable  or  prohibitively  expensive  when we require it, the  consequences
would be a material adverse effect on our business, operating results, financial
condition and prospects.



                                       18
<PAGE>

OUR FAILURE TO RAISE  NECESSARY  CAPITAL  COULD  RESTRICT OUR GROWTH,  LIMIT OUR
ABILITY TO DEVELOP AND MARKET OUR PRODUCT AND HINDER OUR ABILITY TO COMPETE.

In order to fully exploit our business  plan,  we may need to raise  significant
additional  funds.  Failure to obtain  adequate  capital  may:  (i) restrict our
growth;  (ii)  limit  our  ability  to  market  our  product;  (iii)  limit  the
development  of our  product;  (iv) hinder our  ability to compete;  and (v) may
affect our ability to continue our business operations as planned.  Any of these
consequences  would have a material  adverse effect on our business,  results of
operations and financial condition.

TO SATISFY OUR CAPITAL REQUIREMENTS, WE MAY SEEK TO RAISE FUNDS IN THE PUBLIC OR
PRIVATE CAPITAL MARKETS.

Our ability to raise  additional  funds in the public or private markets will be
adversely affected if the results of our business  operations are not favorable,
if any products developed are not well-received or if our stock price or trading
volume is low. We may seek additional  funding through corporate  collaborations
and other financing  vehicles or from loans or investments  from new or existing
stockholders.  There can be no assurance that any such funding will be available
to us, or if  available,  that it will be  available  on  acceptable  terms.  If
adequate  funds  are  not  available,  we  will  not be  able  to  complete  the
commercialization  of any products that we may have developed.  As a result,  we
may be required to discontinue  our operations  without  obtaining any value for
our products under development,  thereby  eliminating  stockholder equity, or we
could be  forced  to  relinquish  rights  to some or all of our  products  under
development  in return  for an amount  substantially  less than we  expended  to
develop such products.  If we are successful in obtaining additional  financing,
the terms of the  financing  may have the effect of  diluting  the  holdings  or
adversely affecting the rights of the holders of common stock.

OUR PRODUCT MAY NOT BE ACCEPTED BY OUR POTENTIAL CUSTOMERS.

While we have  received  numerous  serious  inquiries  about  our  products  and
technology,  there can be no  assurance  that we will be able to profit from the
development  or  manufacture  of our  products  as  planned,  or that we will be
successful in consummating sales of our products to our potential customers. Our
ability to  successfully  commercialize  our products will depend in part on the
acceptance  of our  products by our  potential  customers,  primarily  the major
utility  companies.  The failure of utility  companies  to purchase our products
would have a material adverse effect on our business,  results of operations and
financial  condition.  Any  unfavorable  publicity  concerning  us or any of our
products  could have an adverse  effect on our ability to achieve  acceptance of
our products by utility companies and to commercialize our products, which could
have a  material  adverse  effect on our  business,  results of  operations  and
financial condition.

WE MAY NOT BE ABLE TO MANAGE OUR GROWTH EFFECTIVELY.

The transition  from a small company  focused on research and development of our
products  to a  company  with the  additional  focus on  commercial  production,
marketing,  and sales has placed and will continue to place a significant strain
on our managerial,  operational,  and financial resources. Failure to manage our
growth effectively could have a material adverse effect on our business, results
of operations and financial  condition.  Significant  additional  growth will be
necessary for the Company to achieve its plan of operation.



                                       19
<PAGE>

WE MAY NOT BE ABLE TO DIVERSIFY OUR OPERATIONS INTO OTHER INDUSTRIES.

Because of the limited  financial  resources that we have, we may not be able to
diversify our activities into other areas outside the  development,  production,
and  commercialization  of cable and support systems for use in electrical power
transmission and distribution  systems.  Our inability to diversify our products
into other areas will subject us to economic  fluctuations  within this industry
and therefore increase the risks associated with our operations.

WE MAY NOT BE ABLE TO PROTECT  OUR  PROPRIETARY  RIGHTS AND MAY  INFRINGE ON THE
PROPRIETARY RIGHTS OF OTHERS.

Establishment  of  patents  and other  proprietary  rights is  important  to our
success  and  our  competitive  position.   Accordingly,  we  intend  to  devote
substantial  resources to the  establishment and protection of patents and other
proprietary  rights.  There can be no assurance  that the actions taken by us to
establish and protect any patents or other  proprietary  rights will be adequate
to  prevent  imitation  of our  products  by others or to  prevent  others  from
prohibiting sales of any products we may develop in violation of the patents and
proprietary  rights of others.  Moreover,  no assurance can be given that others
will not assert rights in, or ownership of, patents and other proprietary rights
we may establish or acquire or that we will be able to successfully resolve such
conflicts.

There can be no assurance that any of our pending  patents for our  technologies
and products will be issued.  There can be no assurance that any patents related
to  the  technology   licensed  under  the  License  Agreement  with  W.  Brandt
Goldsworthy & Associates, Inc. will be issued.

WE  DEPEND  ON KEY  PERSONNEL  AND WE MAY  NOT BE  ABLE TO  ATTRACT  AND  RETAIN
QUALIFIED EMPLOYEES.

Our  success  will be largely  dependent,  in  particular,  upon the  continuing
services of Benton H  Wilcoxon,  our Chief  Executive  Officer,  and C.  William
Arrington,  our  President.  If Mr.  Wilcoxon  or Mr.  Arrington  were unable to
provide  services to us for whatever  reason,  our  business  would be adversely
affected.  Neither Mr.  Wilcoxon nor Mr.  Arrington has entered into  employment
agreements with the Company.

In  addition,  our  ability to develop  and market our  products  and to achieve
profitability  will depend on our ability to attract and retain highly  talented
personnel. We face intense competition for personnel from other companies. There
can be no assurance  that we will be successful in attracting  and retaining key
personnel.  The loss of key personnel or the inability to attract and retain the
additional,   highly-talented   employees   required  for  the  development  and
commercialization  of our  products,  could  adversely  affect  our  results  of
operations and our business.

A FAILURE TO ESTABLISH AND MAINTAIN  RELATIONSHIPS  WITH STRATEGIC  PARTNERS MAY
HARM OUR BUSINESS.

We will depend on  establishing  and  maintaining  relationships  with strategic
partners. Our ability to develop,  produce, and market our products is dependent
upon our ability to establish and maintain  relationships  with other  companies
and  individuals.  We may not be able to enter  into  relationships  with  these
companies  on  commercially  reasonable  terms or at all.  Even if we enter into
these  relationships,  not all such relationships may result in benefits for our
company.



                                       20
<PAGE>

WE CANNOT CONTROL THE COST OF OUR RAW MATERIALS.

Our  principal  raw  materials  will be glass and carbon  fibers,  plus  various
polymer resins and high-grade  aluminum.  The prices for these raw materials are
subject to market forces  largely  beyond our control,  including  energy costs,
organic chemical feed stocks,  market demand,  and freight costs. The prices for
these raw materials have varied  significantly and may vary significantly in the
future.  We may not be able to adjust  our  product  prices,  especially  in the
short-term, to recover the costs of increases in these raw materials. Our future
profitability  may be adversely  affected to the extent we are unable to pass on
higher raw material and energy costs to our customers.

INTERRUPTIONS  OF  SUPPLIES  FROM OUR KEY  SUPPLIERS  MAY AFFECT OUR  RESULTS OF
OPERATIONS AND FINANCIAL PERFORMANCE.

Interruptions  or shortages of supplies  from our key suppliers of raw materials
could disrupt production or impact our ability to increase production and sales.
We use a limited  number of sources for most of the other raw materials  that we
use. We do not have  long-term or volume  purchase  agreements  with most of our
suppliers, and may have limited options in the short-term for alternative supply
if these  suppliers fail, for any reason,  including  their business  failure or
financial  difficulties,  to continue  the supply of  materials  or  components.
Moreover, identifying and accessing alternative sources may increase our costs.

WE ARE CONTROLLED BY A SMALL NUMBER OF STOCKHOLDERS.

As at the date of this filing,  two  stockholders in the aggregate  beneficially
own or control approximately 36.2% of the outstanding common stock. As a result,
these  persons  will have the  ability  to  control  substantially  all  matters
submitted to our  stockholders  for approval and to control our  management  and
affairs.

See "Security Ownership of Certain Beneficial Owners and Management."

WE WILL LIKELY EXPERIENCE CUSTOMER CONCENTRATION.

Until and unless we secure multiple customer relationships, it is likely that we
will  experience  periods  during which we will be highly  dependent on one or a
limited number of customers. Dependence on a single or a few customers will make
it difficult to satisfactorily  negotiate attractive prices for our products and
will expose us to the risk of substantial  losses if a single dominant  customer
stops conducting business with us.

OUR BUSINESS MAY BE SUBJECT TO INTERNATIONAL RISKS.

We are  pursuing  international  business  opportunities,  including  in  China,
Mexico,  Brazil,  Europe, Russia, the Middle East, certain far eastern countries
and  Africa.  Risks  inherent in  international  operations  include  unexpected
changes in regulatory requirements, export restrictions, tariffs and other trade
barriers; challenges in staffing and managing foreign operations; differences in
technology  standards,  employment laws and business  practices;  longer payment
cycles and problems in collecting accounts  receivable;  political  instability;
changes in currency exchange rates; currency exchange controls;  and potentially
adverse tax consequences.



                                       21
<PAGE>

WE MUST COMPLY WITH ENVIRONMENTAL REGULATIONS.

Our intended  operations are subject to various  Federal,  state, and local laws
and  regulations   relating  to  the  protection  of  the   environment.   These
environmental laws and regulations,  which have become  increasingly  stringent,
are  implemented   principally  by  the  Environmental   Protection  Agency  and
comparable state agencies,  and govern the management of hazardous  wastes,  the
discharge of pollutants  into the air and into surface and  underground  waters,
and the  manufacture and disposal of certain  substances.  There are no material
environmental claims currently pending or, to our knowledge,  threatened against
us. In  addition,  we believe  our planned  operations  will be  implemented  in
compliance with the current laws and regulations.  We estimate that any expenses
incurred in maintaining  compliance with current laws and  regulations  will not
have a material effect on our earnings or capital expenditures.  However,  there
can be no assurance that current regulatory  requirements will not change,  that
currently  unforeseen  environmental  incidents  will not  occur,  or that  past
non-compliance with environmental laws will not be discovered.

CHANGES IN INDUSTRY  STANDARDS AND REGULATORY  REQUIREMENTS MAY ADVERSELY AFFECT
OUR BUSINESS.

As a manufacturer and distributor of wire and cable products we are subject to a
number of  industry  standard-setting  authorities,  such as the  "Institute  of
Electrical and Electronic  Engineers" (IEEE), the European based  "International
Council on Large Electric Systems"  ("CIGRE"),  the "American Society of Testing
and Materials" (ASTM) and the Canadian Standards Association.  In addition, many
of our products may become  subject to the  requirements  of Federal,  state and
local  or  foreign  regulatory   authorities.   Changes  in  the  standards  and
requirements  imposed by such authorities could have an adverse effect on us. In
the event we are unable to meet any such  standards  when  adopted our  business
could be adversely affected. In addition, changes in the legislative environment
could  affect the growth and other  aspects of important  markets  served by us.
While certain legislative bills and regulatory rulings are pending in the energy
and  telecommunications  sectors which could  improve our markets,  any delay or
failure to pass such  legislation and regulatory  rulings could adversely affect
our opportunities and anticipated prospects may not arise. It is not possible at
this time to predict  the impact  that any such  legislation  or  regulation  or
failure to enact any such legislation or regulation, or other changes in laws or
industry  standards  that  may be  adopted  in the  future,  could  have  on our
financial results, cash flows or financial position.

WE WILL EXPERIENCE COMPETITION FROM OTHER COMPANIES IN THE INDUSTRY.

Our  competitors  include  makers of  traditional  bare  overhead wire and other
companies with  developmental-stage  products that have the potential to compete
with ACCC cable. While we are not aware of any existing competing  manufacturers
that  have  been  able  to  significantly  and  cost  effectively  increase  the
performance  of the  current  electrical  power  transmission  and  distribution
cables,  there is no  certainty  that  unique  technological  advances  won't be
achieved by our competition,  with better capital  resources,  in the future. We
believe our  competitors  will continue to improve the design and performance of
their  products  and to  introduce  new  products  with  competitive  price  and
performance  characteristics.  We expect that we will be required to continue to
invest in product  development,  productivity  improvements and customer service
and support in order to compete in our markets. Such competitors could develop a
more  efficient  product or  undertake  more  aggressive  and  costly  marketing
campaigns  than us which may  adversely  affect our marketing  strategies  which
could have a material  adverse effect on our business,  results of operations or
financial condition.  In addition, as we introduce new products, we will compete
directly with a greater  number of companies.  There can be no assurance that we
can compete  successfully against current or future competitors nor can there be
any  assurance  that  competitive  pressures  faced  by us will  not  result  in
increased marketing costs, loss of market share or otherwise will not materially
adversely  affect our business,  results of operations and financial  condition.
See "Competition" under the section of this prospectus entitled  "Description of
Business."



                                       22
<PAGE>

WE ARE RESPONSIBLE FOR THE INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS.

Our  Bylaws  provide  for  the  indemnification  of  our  directors,   officers,
employees, and agents, under certain circumstances,  against attorney's fees and
other  expenses  incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of the Company. This
indemnification policy could result in substantial expenditures, which we may be
unable to recoup.

TERRORIST  ATTACKS  AND OTHER  ATTACKS OR ACTS OF WAR MAY  ADVERSELY  AFFECT THE
MARKETS IN WHICH WE OPERATE, OUR OPERATIONS AND OUR PROFITABILITY.

The attacks of September 11, 2001, and subsequent events, including the military
action in Iraq, have caused and may continue to cause instability in our markets
and have led and may continue to lead to,  further armed  hostilities or further
acts of  terrorism  worldwide,  which  could  cause  further  disruption  in our
markets.  Acts of terrorism may impact our  operations or those of our customers
or  suppliers  and may  further  limit  or  delay  purchasing  decisions  of our
customers.  Depending on their magnitude,  acts of terrorism or war could have a
material  adverse  effect on our  business,  financial  results,  cash flows and
financial position.

RISKS RELATED TO INVESTMENT IN OUR SECURITIES

THERE IS CURRENTLY A LIMITED TRADING MARKET FOR OUR COMMON STOCK.

Our common  stock is traded in the OTC market  through the OTC  Bulletin  Board.
There is currently an active trading market for the common stock;  however there
can be no assurance that an active trading market will be maintained. Trading of
securities on the OTC Bulletin  Board is generally  limited and is effected on a
less regular  basis than that effected on other  exchanges or quotation  systems
(such as the NASDAQ Stock Market), and accordingly investors who own or purchase
common stock will find that the liquidity or transferability of the common stock
is limited.  Additionally,  a stockholder  may find it more difficult to dispose
of, or obtain accurate quotations as to the market value, of common stock. There
can be no  assurance  that the common stock will ever be included for trading on
any stock exchange or through any other  quotation  system  (including,  without
limitation, the NASDAQ Stock Market).

THE  APPLICATION  OF THE "PENNY STOCK" RULES COULD  ADVERSELY  EFFECT THE MARKET
PRICE OF OUR COMMON STOCK.

As long as the trading  price of our common stock is below $5.00 per share,  the
open-market  trading  of our common  stock will be subject to the "penny  stock"
rules. The "penny stock" rules impose additional sales practice  requirements on
broker-dealers  who sell securities to persons other than established  customers
and accredited investors (generally those with assets in excess of $1,000,000 or
annual income exceeding  $200,000 or $300,000  together with their spouse).  For
transactions  covered  by these  rules,  the  broker-dealer  must make a special
suitability  determination  for the purchase of securities and have received the
purchaser's   written   consent  to  the   transaction   before  the   purchase.
Additionally,  for any transaction  involving a penny stock,  unless exempt, the
broker-dealer  must  deliver,  before the  transaction,  a  disclosure  schedule
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered  representative  and current quotations for the
securities.  Finally,  monthly  statements must be sent disclosing  recent price
information  on the limited  market in penny stocks.  These  additional  burdens
imposed on broker-dealers may restrict the ability of broker-dealers to sell the
common stock and may affect a stockholder's ability to resell the common stock.



                                       23
<PAGE>

Stockholders  should  be  aware  that,  according  to  Securities  and  Exchange
Commission  Release No.  34-29093,  the market for penny  stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the  security  by one or a few  broker-dealers  that are often
related  to  the  promoter  or  issuer;  (ii)  manipulation  of  prices  through
prearranged  matching  of  purchases  and sales and false and  misleading  press
releases;  (iii) boiler room practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differential and markups by selling broker-dealers;  and (v)
the wholesale  dumping of the same  securities  by promoters and  broker-dealers
after prices have been manipulated to a desired level,  along with the resulting
inevitable  collapse of those prices and with consequent  investor  losses.  Our
management is aware of the abuses that have occurred  historically  in the penny
stock  market.  Although  we do not  expect to be in a position  to dictate  the
behavior  of the market or of  broker-dealers  who  participate  in the  market,
management  will strive within the confines of practical  limitations to prevent
the described patterns from being established with respect to our securities.

THE PRICE OF OUR COMMON STOCK IS VOLATILE.

The market price of the common stock may be subject to significant  fluctuations
in response to our operating  results,  announcements  of new products or market
expansions  by us or our  competitors,  changes  in  general  conditions  in the
economy,   the  financial   markets,   the  electrical  power  transmission  and
distribution  industry,  or other developments and activities  affecting us, our
customers,  or  our  competitors,   some  of  which  may  be  unrelated  to  our
performance.  The sale or attempted  sale of a large amount of common stock into
the market may also have a  significant  impact on the  trading  price of common
stock.  The closing bid prices for the common stock have  fluctuated from a high
of $5.25 to a low of $0.87 since September 30, 2003.

WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE.

We have not paid dividends on the common stock and do not anticipate paying such
dividends in the foreseeable future.

WE ISSUED DULY  AUTHORIZED  SHARES TO EMPLOYEES AND  CONSULTANTS  UNDER OUR 2002
NON-QUALIFIED STOCK COMPENSATION PLAN UNDER THE INCORRECT ASSUMPTION THAT WE HAD
REGISTERED  THE  SHARES  PURSUANT  TO  FEDERAL  SECURITIES  LAWS.   HOWEVER,  WE
SUBSEQUENTLY  REALIZED  THAT  THESE  SHARES  HAD NOT  BEEN  REGISTERED  PRIOR TO
ISSUANCE.  AS A  RESULT,  OUR  ISSUANCE  MAY HAVE  VIOLATED  FEDERAL  AND  STATE
SECURITIES  LAWS,  AND  MAY  RESULT  IN  OUR  LIABILITY  TO  CERTAIN  SUBSEQUENT
PURCHASERS OF THESE SHARES.



                                       24
<PAGE>

Between  March 18, 2003 and February 4, 2004 we issued  common stock and options
representing  1,504,780 shares of common stock to nine employees and consultants
pursuant to our 2002 Non-Qualified Stock Compensation Plan. Although we believed
that we and our counsel had filed the appropriate registration statement on Form
S-8,  on  February  5, 2004,  it came to our  attention  that such  registration
statement had not been filed.  It may be determined that such issuances were not
exempt from  registration or  qualification  under Federal and state  securities
laws, and we did not obtain the required  registrations or qualifications.  As a
result,  we may be subject to contingent  liabilities from these  investors,  as
well as subsequent  purchasers  of the shares  directly and  indirectly  issued.
These  liabilities  may include an obligation to make a rescission  offer to the
holders of these shares and options. If rescission is required and accepted,  we
could be required to make  payments to the holders of these  shares and options.
In addition,  Federal securities laws do not expressly provide that a rescission
offer will terminate a purchaser's right to rescind a sale of stock that was not
registered  as  required.  If  rescission  is  required,  and  any or all of the
offerees reject the rescission offer, we may continue to be liable under Federal
and  state  securities  laws.  See our  disclosure  titled  "Stock  Compensation
Issuances."

A LARGE  NUMBER OF COMMON  SHARES ARE  ISSUABLE  UPON  EXERCISE  OF  OUTSTANDING
OPTIONS,  WARRANTS AND  CONVERTIBLE  DEBENTURES.  THE EXERCISE OR  CONVERSION OF
THESE  SECURITIES  COULD  RESULT IN THE  SUBSTANTIAL  DILUTION OF THE COMPANY IN
TERMS OF A  PARTICULAR  PERCENTAGE  OWNERSHIP IN THE COMPANY AS WELL AS THE BOOK
VALUE OF THE COMMON SHARES. THE SALE OF A LARGE AMOUNT OF COMMON SHARES RECEIVED
UPON  EXERCISE OF THESE  OPTIONS OR WARRANTS ON THE PUBLIC MARKET TO FINANCE THE
EXERCISE PRICE OR TO PAY ASSOCIATED  INCOME TAXES,  OR THE PERCEPTION  THAT SUCH
SALES COULD OCCUR, COULD SUBSTANTIALLY  DEPRESS THE PREVAILING MARKET PRICES FOR
OUR SHARES.

The exercise  price or conversion  price of  outstanding  options,  warrants and
convertible  debentures may be less than the current market price for our common
shares.  In the event of the exercise of these  securities,  a shareholder could
suffer  substantial  dilution of his/her  investment in terms of the  percentage
ownership in the Company as well as the book value of the common shares held.

ITEM 2 - DESCRIPTION OF PROPERTY

We do not own any real estate.  During the first quarter of fiscal year 2003, we
rented office space in Irvine, California on a month to month basis at a rate of
$4,600  per month and 8,000  square  feet of  manufacturing  space on a month to
month basis for $8,000 per month at a separate  location.  On January 1, 2004 we
commenced  leasing a combination  manufacturing  and office  facility in Irvine,
California  with  approximately  105,120  square feet (21,180 square feet in the
office area with the remaining 83,940  manufacturing,  storage and other areas).
The lease is for seven years with the first cash payment beginning March 1, 2004
for $ 73,584 per month, since the rent for January and February of 2004 was paid
by a grant of 140,160 restricted shares to the landlord, with a provision for no
security deposit.

We  own  3,000  shares  of  Integrated  Performance  Systems,  Inc.  ("IPS"),  a
publicly-traded  electronics manufacturing corporation located in Frisco, Texas.
IPS is a  manufacturer  and supplier of  performance-driven  circuit  boards for
high-speed digital computer and telecommunications applications.

We do not anticipate  investing in real estate or interests in real estate, real
estate mortgages,  or securities of or interests in persons primarily engaged in
real estate activities. We currently have no formal investment policy, and we do
not  intend to  undertake  investments  in real  estate as a part of our  normal
operations.



                                       25
<PAGE>

ITEM 3 - LEGAL PROCEEDINGS

The following  disclosure  identifies  all known or  anticipated  material legal
proceedings  commenced by or against the Company or its wholly owned subsidiary,
Transmission  Technology Corporation ("TTC"), CTC Cable Corporation ("CCC"), CTC
Wind Systems ("CWS"), CTC Towers & Poles Corporation ("TPC"):

J.P. Turner & Company,  L.L.C. ("J.P.  Turner") initiated arbitration before the
National  Association of Securities  Dealers in February 2004 alleging Composite
Technology  Corporation  ("CTC") breached a finder's agreement by failing to pay
certain fees to J.P. Turner.  CTC disputes that any breach of the agreement took
place and denies that J.P.  Turner made any  introductions  of  investors to CTC
which  directly  led to  financing.  CTC has filed a  counterclaim  against J.P.
Turner   alleging   claims  of  fraud  against  J.P.   Turner   arising  out  of
misrepresentations  made by J.P.  Turner  concerning an investment  opportunity.
J.P. Turner seeks $200,000 in monetary  damages,  a warrant to purchase  200,000
shares of CTC common  stock at an  exercise  price  equal to the  closing bid on
December 17, 2003,  pre -judgment  interest as of December 18, 2003,  reasonable
attorneys' fees and costs. CTC seeks compensatory damages in an amount according
to proof,  punitive damages, and reasonable attorneys' fees and costs based upon
its  counterclaims.  CTC filed its Statement of Answer and  Counterclaims on May
17, 2004. The matter is presently set for hearing in February 2005.

On October 16, 2003, CTC filed suit against Acquvest,  Inc., Paul Koch, Victoria
Koch, Patricia Manolis,  and Michael Tarbox in Orange County Superior Court. CTC
alleges causes of action for declaratory relief, breach of contract,  fraudulent
inducement,  rescission and economic duress arising out of certain  subscription
and related agreements among the Company and the defendants.  In connection with
such agreements,  CTC issued to Acquvest,  Inc. and Patricia  Manolis,  in April
2003 and September  2003, a total of 150,000 units for a total purchase price of
$375,000.  Each unit consists of 10 shares of  unregistered,  restricted  common
stock and 10 Series I warrants to purchase one share of unregistered, restricted
common stock.  Each Series I warrant  entitles the holder to purchase a share of
common  stock at $0.50 per share and expires on March 30, 2005.  The  agreements
provide for the  issuance of up to an  additional  550,000 of such units for the
same  purchase  price of $2.50 per unit,  subject  to  certain  conditions,  and
registration of share issuances under the Securities Act of 1933. The additional
units have not been issued and the  additional  purchase  consideration  has not
been paid. The parties  disagree as to their  respective  rights and obligations
with respect to the original  issuances and such additional units.  10,000 units
were also issued to Paul Koch for services in connection  with such  agreements,
and a dispute has arisen as to his entitlement to those and additional units and
warrants in connection with the  agreements.  The defendants deny CTC's material
allegations  and have asserted  cross-claims  against CTC. CTC is seeking actual
damages,  punitive  damages,  statutory  costs,  attorneys'  fees and injunctive
relief against the  defendants.  CTC believes the defendants  will seek the same
relief and issuance of the additional units against CTC and CTC's officers. By a
letter to CTC's counsel  dated  September 8, 2004,  Acquvest  stated that it was
waiving the  contractual  conditions  to its purchase of an  additional  400,000
units under its subscription  agreement and was tendering $1,000,000,  which was
available  on deposit,  to CTC as payment for the units.  On May 13,  2004,  the
court  sustained  the  defendants'  demurrers  as to CTC's  causes of action for
breach of contract, fraudulent inducement,  rescission (only as against Patricia
Manolis) and economic duress and the defendants'  motion to strike CTC's request
for punitive  damages  based on the  rescission  and economic  duress  causes of
action,  with  leave for CTC to amend its  complaint.  CTC has filed an  amended
complaint.  Acquvest, Koch, and Manolis filed a Cross-Complaint on September 16,
2004.  The  parties  stipulated  to  permit   Cross-Complainants  to  amend  the
Cross-Complaint, which was filed on December 17, 2004. CTC expects to attack the
Amended  Cross-Complaint via demurrer.  Trial date has been set for May 9, 2005,
though CTC has moved to continue the trial date to a later date.  The hearing on
that motion is currently set for January 7, 2005.



                                       26
<PAGE>

On November 4, 2003, Ascendiant Capital Group LLC, Mark Bergendahl,  and Bradley
Wilhite  ("Plaintiffs")  filed suit in Orange  County  Superior  Court  alleging
causes  of  action  against  CTC  and  its  CEO,  Benton  Wilcoxon,   personally
("Defendants") for breach of contract,  specific performance,  fraud and deceit,
negligent misrepresentations, breach of covenant of good faith and fair dealing,
and  declaratory  relief  arising  out of a  business  advisory  and  consulting
agreement (the "Agreement")  allegedly executed between CTC and Ascendiant.  CTC
denies the material  allegations  and, on November 10, 2003, CTC filed a case in
Orange County  Superior Court against  Plaintiffs  alleging causes of action for
declaratory  relief,  breach of contract,  fraudulent  inducement,  and economic
coercion  arising out of the  Agreement  as well as various  unrelated  business
agreements  between  Plaintiffs  and Wilcoxon.  CTC is seeking  actual  damages,
punitive damages, statutory costs, attorneys' fees and injunctive relief against
Plaintiffs. The principal parties are Ascendiant,  Bergendahl,  Wilhite, CTC and
Wilcoxon.  On November 24, 2003,  the court entered an order  consolidating  the
cases.  On  January  15,  2004,  the  parties  agreed to submit  all  claims and
cross-claims  arising out of the  Agreement  to binding  arbitration  before the
Honorable  Robert Thomas Ret. at JAMS - Orange County.  The remaining claims and
cross-claims  not arising out of the Agreement are pending  before the Honorable
Kazuharu  Makino  of  Orange  County  Superior  Court.  On May 28,  2004,  CTC's
demurrers  to  Plaintiffs'  causes  of action in the  arbitration  for  specific
performance,  negligent  misrepresentation  and breach of covenant of good faith
and fair dealing were sustained, with leave to amend, as well as CTC's motion to
strike Plaintiff's claims for punitive damages. Plaintiffs subsequently filed an
amended complaint. Judge Thomas has reserved ruling on Plaintiffs' demurrers and
motion  to  strike in the  arbitration  pending  the  outcome  of the  ruling on
Plaintiffs'  demurrers  and  motions  to  strike  filed  with  respect  to CTC's
cross-claim  pending in the  superior  court.  An order has issued in the Orange
County  Superior  Court  action  exempting  this  case  from  various  pre-trial
deadlines  and noting  that he expects  that the case will not  proceed to trial
within 24 months of the date of filing.

On September 10, 2004,  Adam Devone filed a Complaint in Orange County  Superior
Court (Case No.  04-CC-09321)  against Donner,  Evan Wride and Global  Research,
Inc., Nutek, Inc., Zeta Centauri, Inc., Sherpa Financial & Investigations,  Inc.
and Multiplyingchurches.org,  Inc. (collectively, the "Donner Parties") and CTC.
Devone alleges a variety of claims against the Donner Parties based upon alleged
contractual  breaches  and  tortuous  conduct  related to a  $200,000  loan made
between Devone and the Donner Parties.  CTC is only party to the last two causes
of action for Imposition of Constructive  Trust and Declaratory  Relief.  Devone
seeks a  constructive  trust on any CTC  shares  or  related  proceeds  obtained
through  the  use  of  Devone's  $200,000.   Devone  further  seeks  a  judicial
declaration  that the CTC  securities  and proceeds  derived  therefrom  are his
property. As noted earlier,  Devone is not presently seeking monetary damages or
costs against CTC. On October 6, 2004, CTC filed a Motion for Order  Discharging
Liability  asserting  it  should  be  discharged  from the  matter as it took no
position with regard to the dispute between the parties. On October 8, 2004, CTC
filed an Answer to the Complaint.  The Motion for Order Discharging Liability is
presently   set  to  be  heard  on  January  3,  2004.   On  October  20,  2004,
Multiplyingchurches.org,  Inc. ("MC Org") filed a  Cross-Complaint  against CTC,
Adam Devone, Sheryl Lyn Devone (Plaintiff's wife) and Roes 1-100 alleging claims
for breach of contract  against CTC and Roes  51-100 and  tortious  interference
with contract against Plaintiff, his wife and Roes 1-50. MC Org alleges that CTC
breached a warrant  agreement  by failing to issue shares  thereunder  and seeks
unspecified  damages and an injunction  compelling CTC to issue shares under the
warrant agreement.  CTC filed an Answer to MC Org's  Cross-Complaint on November
19, 2004.



                                       27
<PAGE>

On October 13, 2004,  Michael Tarbox ("Tarbox") filed an action in Orange County
Superior Court (Case No. 04-CC-10345) against Paul Koch,  Acquvest,  CTC and Doe
Defendants.  Tarbox alleges that Koch made fraudulent  transfers to Acquvest and
the Doe defendants  for the purpose of avoiding the debt owed to Tarbox.  Tarbox
alleges that CTC  securities  were intended to serve as security for a debt owed
by Koch to Tarbox.  Tarbox alleges that Defendants were not bona fide purchasers
of the CTC securities  since they were receiving such securities for the benefit
of Tarbox.  Tarbox  further  alleges that CTC breached an agreement to pay him a
finder's fee in connection with  investments  made by Koch.  Tarbox alleges that
CTC's breach has caused him to suffer damages in excess of $750,000. On November
9, 2004, CTC filed a Motion to Consolidate  this action with the Acquvest action
above (OCSC Case No. 03-CC-12640).  The Motion to Consolidate is set for January
7, 2005.  On November 14, 2004,  CTC filed a demurrer to the  Complaint.  Tarbox
agreed to amend the Complaint in response thereto.

Other than the matters discussed above, we are not aware of any material pending
legal proceedings involving CTC or its subsidiaries.

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

During the fourth  quarter of the fiscal  year ended  September  30,  2004,  the
Company  gave  notice to its  Shareholders  of the 2003 Annual  General  Meeting
together with a Proxy Statement and a copy of the 10-KSB for the fiscal year end
2003.

The  shareholders  were  asked to vote on 4 issues  at the 2003  Annual  General
Meeting  held at 10:00 am (PST) on  Thursday  October 28, 2004 at the offices of
the Company at 2026 McGaw Avenue,  Irvine,  California 92614. The issues were as
follows:

      1.    To elect two directors, each to a one-year term;

      2.    To ratify the selection of Singer Lewak,  Greenbaum & Goldstein LLP,
            as the independent auditor for the Company;

      3.    To approve an increase  in the number of shares  subject to the 2002
            Non-Qualified Stock Compensation Plan by 15 million shares; and

      4.    To transact any other  business  that may  properly  come before the
            meeting.

Only  the  110,692,432  stockholders  of  record  at the  close of  business  on
September 8, were  entitled to notice of, and to vote at, the  meeting.  Further
details  of the  matters  placed  before the  Shareholders  is  included  in the
Schedule 14A  disclosure  filed with the SEC and available on the SEC website at
http://www.sec.gov

The  Shareholders  approved the Election of both Directors,  the ratification of
Singer  Lewak  as  the  independent  auditors  and  the  increase  in  the  2002
Non-Qualified Stock Compensation Plan.



                                       28
<PAGE>

Voting was as follows:

                                           For       Against        Abstained
Election of Directors:

Voting for Benton H Wilcoxon           85,628,639      391,005        650,335
Voting for C. William Arrington:       85,628,589      391,005        650,355

Voting for the Auditors:               85,655,736      173,621        840,642

Voting to extend the Option Plan:      54,736,200    5,963,476      1,891,490

Voting for the election of Directors  and the  appointment  of the auditors were
routine.  Voting for the  extension  of the  option  plan was not  routine.  The
Company  received  48,301,092 votes cast by proxy and 38,368,907 votes were cast
through  ADP Proxy  Services  of  Englewood  New York,  NY. The total  number of
shareholders  voting at the meeting  was  therefore  86,669,999  or 78.2% of the
shareholders of record.

Decisions are passed by the majority of those voting for,  against or abstaining
from a particular motion.


                                       29
<PAGE>

                                     PART II

ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Common Stock is not listed on any stock exchange. The Common Stock is traded
over-the-counter  on the  OTC  Bulletin  Board  under  the  symbol  "CPTC."  The
following table sets forth the high and low bid information for the Common Stock
for each quarter within the last two fiscal years.

 QUARTERLY COMMON STOCK PRICE RANGES



--------------------------------------------------------------------------------
 QUARTER ENDED                                     2002/2003
--------------------------------------------------------------------------------
                                          HIGH                     LOW
--------------------------------------------------------------------------------
 December 31, 2002                       $0.25                   $0.09
--------------------------------------------------------------------------------
 March 31, 2003                          $0.61                   $0.16
--------------------------------------------------------------------------------
 June 30, 2003                           $0.52                   $0.32
--------------------------------------------------------------------------------
 September 30, 2003                      $2.67                   $0.49
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
 QUARTER ENDED                                     2003/2004
--------------------------------------------------------------------------------
                                          HIGH                     LOW
--------------------------------------------------------------------------------
 December 31, 2003                       $2.38                   $1.28
--------------------------------------------------------------------------------
 March 31, 2004                          $2.14                   $1.02
--------------------------------------------------------------------------------
 June 30, 2004                           $1.74                   $0.84
--------------------------------------------------------------------------------
 September 30, 2004                      $1.92                   $0.95
--------------------------------------------------------------------------------

These quotations reflect inter-dealer prices, without retail mark-up,  mark-down
or commission  and may not  represent  actual  transactions.  As of December 15,
2004, there were approximately  5,126 stockholders of record of our Common Stock
and no stockholders of record of our Preferred Stock.


                                       30
<PAGE>


We have never paid any  dividends on the Common Stock.  We currently  anticipate
that any future  earnings will be retained for the  development  of our business
and  do  not  anticipate  paying  any  dividends  on  the  Common  Stock  in the
foreseeable future.

On May 15, 2001, TTC  established the 2001 Incentive  Compensation  Stock Option
Plan ("TTC  PLAN").  After the Plan of  Reorganization  between TTC and Eldorado
(the  predecessor of CTC) in November 2001, we suspended  using the TTC Plan and
converted  the  granted  options  to a new CTC  plan.  We  established  our 2002
Non-Qualified  Stock  Compensation  Plan (the  "Plan") on February 27, 2002 with
9,000,000  shares  approved and terminated the TTC Plan. The purpose of the Plan
is to grant  stock  and  stock  options  to  purchase  our  common  stock to our
employees and key  consultants.  On February 17, 2003 by Written Consent in Lieu
of Annual  Meeting the Plan was  approved  and amended to include an  additional
5,000,000  shares and declared  effective on that date and approved the transfer
of options granted to two Director/Officers  under the TTC Plan to the Plan. The
total amount of shares subject to the Plan was then  increased  from  14,000,000
shares to  29,000,000  by decision of the  Shareholders  dated October 28, 2004,
subsequent to the September 30, 2004 fiscal year-end.

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------
                                        Number of securities                                Number of securities
                                           to be issued upon          Weighted-average       remaining available
                                                 exercise of         exercise price of       for future issuance
                                        outstanding options,      outstanding options,              under equity
Plan Category                            warrants and rights      and warrants rights.       compensation plans.
----------------------------------------------------------------------------------------------------------------
                                                (A)                        (B)                        (C)
----------------------------------------------------------------------------------------------------------------
<S>                                                <C>                           <C>                      <C>
Equity Compensation Plans                          7,195,366                       $0.43                     0 (1)
approved by security holders.
----------------------------------------------------------------------------------------------------------------
Equity Compensation Plans                                  0                        0                        0
not approved by security
holders.
----------------------------------------------------------------------------------------------------------------
TOTAL                                              7,195,366                       $0.43                     0
----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The shareholders  meeting of the Company passed a motion on October 29, 2004
to  increase  the  number  of shares  subject  to the 2002  Non-Qualified  Stock
Compensation  Plan by 15 million shares ("Stock Plan").  Once  registered,  this
will bring the total number of shares  registered  under the plan to 29 million.
The Company has already issued 11,265,868 shares of the Stock Plan to remunerate
certain professional  consultants.  As at Fiscal 2004 Employees and professional
consultants  issued with  options  had  exercised  2,607,220  options to acquire
shares.


                                       31
<PAGE>

SALES OF UNREGISTERED SECURITIES

PREFERRED STOCK

SERIES "A" PREFERRED

On April 12, 2001, TTC issued 165 shares of 10% Series A Cumulative  Convertible
Preferred Stock (the "TTC Series A Preferred") to Red Guard in reliance upon the
exemption from  registration  set forth in Section 4(2) of the Securities Act of
1933, as amended (the  "Securities  Act"),  in  consideration  for the rights to
certain  technology.  All of the recipients took their securities for investment
purposes without a view to distribution and had access to information concerning
the Company and our business  prospects,  as required by the Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these  securities.  Each share of TTC Series A Preferred was convertible into
one  share of TTC  Common  Stock at an  original  conversion  price of $0.20 per
share. In September 2002, Red Guard returned to the Company for cancellation all
of its 165 TTC Series A Preferred and cancelled outstanding loans of $62,000 and
unpaid  interest  on payment by the Company of various  securities  owned by the
Company  in AMJ  Logistics,  Inc,  STL Group,  Inc,  Geyser  Group,  Ltd and TMA
Ventures LLC/MEMX.

SERIES "B" PREFERRED

On July 12, 2001,  TTC granted to Red Guard an option to purchase up to $500,000
of 10% Series B Cumulative Convertible Preferred Stock of TTC (the "TTC Series B
Preferred") at $100 per share (the "Red Guard Option") and a warrant to purchase
up to 120,000 shares of TTC Common Stock at $20.00 per share that, on completion
of the November 3, 2001 reverse  acquisition  transaction  with CTC, enabled Red
Guard to purchase up to 1,905,600  shares of CTC common stock at $1.26 per share
(the "Red Guard Warrant") in reliance upon the exemption from  registration  set
forth in Section 4(2) of the  Securities Act in  consideration  for revising the
conversion  terms of the TTC Series A  Preferred,  including  an increase in the
conversion  from  $0.20 to $7.50 per  share.  All of the  recipients  took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising  for the acquisition of these  securities.  The Red Guard Option was
exercisable  at any time and expired on January 12, 2002.  The Red Guard Warrant
is exercisable at any time and expires on June 12, 2006.

On August 28,  2001,  Red Guard  exercised  a portion of the Series B option and
purchased  an  aggregate  $100,000 of Series B Preferred  from the  Company.  On
October 11, 2001, Red Guard assigned an additional  portion of this option to an
unrelated  individual  who then  exercised  the option to purchase an  aggregate
$32,000 of Series B Preferred  from the  Company.  We relied upon the  exemption
from registration as set forth in Section 4(2) of the Securities Act of 1933 for
the issuance of these  securities.  All of the recipients took their  securities
for  investment  purposes  without  a view to  distribution  and had  access  to
information  concerning the Company and our business  prospects,  as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.

During  August 2001,  Red Guard  exercised a portion of the Red Guard Option and
purchased  1,000 shares of TTC Series B Preferred in reliance upon the exemption
from  registration set forth in Section 4(2) of the Securities Act for $100,000.
Each share of TTC Series B  Preferred  was  convertible  into five shares of TTC
Common Stock at a conversion  price of $20.00.  All of the recipients took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.

On October  11,  2001,  TTC issued  320 shares of TTC Series B  Preferred  to an
individual in reliance upon the exemption from registration set forth in Section
4(2) of the Securities Act for approximately $32,000. Each share of TTC Series B
Preferred  is  convertible  into five shares of TTC Common Stock at a conversion
price of $20.00. These shares were converted to 207,576 shares of CTC restricted
common stock in April 2003.  All of the  recipients  took their  securities  for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.

On October 18, 2001, Red Guard  exercised a portion of the Red Guard Warrant and
purchased  500 shares of TTC Common Stock in reliance  upon the  exemption  from
registration  set  forth in  Section  4(2) of the  Securities  Act for  $10,000.
Pursuant to the  Reorganization  Agreement,  each share of TTC Common  Stock was
exchanged  for 15.88 or in aggregate  7,940 shares of Common  Stock.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


                                       32
<PAGE>

In  January  2004,  the  Company  converted  the  1,000  shares  of Series B 10%
preferred  stock of its  subsidiary  Transmission  Technology  Corporation  into
80,000 shares of unregistered,  restricted  common stock that were issued to one
individual  pursuant to a court order. In addition under the terms of the order,
the Company  was  obliged to issue  27,631  shares of  unregistered,  restricted
common  stock in  satisfaction  of the  unpaid  preferred  stock  dividends  and
interest totaling $31,996. We relied upon the exemption from registration as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
securities.  All of the recipients took their securities for investment purposes
without a view to  distribution  and had access to  information  concerning  the
Company  and our  business  prospects,  as required  by the  Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


COMMON STOCK

The following 3 issuances  occurred in  connection  with the issue of 60 million
unregistered  restricted  shares  of the  Company  as a  result  of the  reverse
acquisition of Eldorado and the reorganization of TTC into CTC:

1.  On  October  30,   2001,   TTC  issued  an   aggregate   79,402   equivalent
post-acquisition  shares of restricted,  unregistered common stock to a law firm
as a retainer for future legal services to be provided  during a one-year period
from October 30, 2001.  However,  during  January 2002,  the Company and the law
firm agreed to rescind this transaction and in April 2002 the 79,402 shares were
returned to the Company.  We relied upon the exemption from  registration as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
securities.  All of the recipients took their securities for investment purposes
without a view to  distribution  and had access to  information  concerning  the
Company  and our  business  prospects,  as required  by the  Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


2. Pursuant to the  Reorganization  Agreement,  on November 3, 2001, the Company
issued  57,546,000  shares of Common  Stock to  certain  stockholders  of TTC in
reliance upon the exemption from  registration  set forth in Section 4(2) of the
Securities  Act,  in  exchange  for 95.91% of the TTC Common  Stock.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


3. In addition, following November 3, 2001, we issued 2,374,598 shares of Common
Stock  to  certain  stockholders  of TTC in  reliance  upon the  exemption  from
registration  set forth in Section 4(2) of the  Securities  Act, in exchange for
the  remaining  shares of TTC Common  Stock.  All of the  recipients  took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


In November 2001, certain consultants were issued an aggregate of 450,000 shares
of Common Stock in reliance upon the exemption  from  registration  set forth in
Section  4(2)  of the  Securities  Act as  compensation  for the  services  they
provided in connection  with the  acquisition of TTC. All of the recipients took
their securities for investment  purposes without a view to distribution and had
access to  information  concerning  the Company and our business  prospects,  as
required by the Securities Act. In addition,  there was no general  solicitation
or advertising for the acquisition of these securities.


In May 2002,  the Company  issued  40,000  shares of the  Company's  restricted,
unregistered  common  stock  to  an  unrelated  entity  for  various  consulting
services.  This  transaction was valued at  approximately  $16,000.  The Company
relied upon the exemption from  registration as set forth in Section 4(2) of the
Securities  Act of 1933 for the issuance of these shares.  All of the recipients
took their securities for investment purposes without a view to distribution and
had access to information concerning the Company and our business prospects,  as
required by the Securities Act. In addition,  there was no general  solicitation
or advertising for the acquisition of these securities.


In July 2002,  the Company  issued an aggregate  333,333 shares of the Company's
restricted,  unregistered  common  stock to two  separate  persons in return for
approximately  $61,000 in cash.  Each of the shares issued  carried a warrant to
acquire an equal number of restricted,  unregistered common stock at an exercise
price of $0.50 and shall  expire on July 12, 2006.  The Company  relied upon the
exemption from  registration  as set forth in Section 4(2) of the Securities Act
of 1933 for the  issuance  of these  shares.  All of the  recipients  took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


In July 2002,  the Company  issued an aggregate  150,000 shares of the Company's
restricted,  unregistered  common stock to two separate  unrelated  entities for
consulting services.  The Company relied upon the exemption from registration as
set forth in Section  4(2) of the  Securities  Act of 1933 for the  issuance  of
these  shares.  All of the  recipients  took  their  securities  for  investment
purposes without a view to distribution and had access to information concerning
the Company and our business  prospects,  as required by the Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


                                       33
<PAGE>

In August 2002, the Company issued an aggregate  265,790 shares of the Company's
restricted,  unregistered  common  stock  to an  individual  and an  entity  for
professional  consulting  services.  The Company  relied upon the exemption from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance  of these  shares.  All of the  recipients  took their  securities  for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


During  August,  the  Company  issued  42,500  shares of Common  Stock to AMJ in
reliance upon the exemption from  registration  set forth in Section 4(2) of the
Securities  Act in exchange for 37,335 shares of the common stock of AMJ. All of
the recipients took their  securities for investment  purposes without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


In  September,  2002,  the Company  issued an  aggregate  515,297  shares of the
Company's restricted,  unregistered common stock to two individuals in repayment
of outstanding  indebtedness of $90,000 and accrued, but unpaid,  interest.  The
Company relied upon the exemption from registration as set forth in Section 4(2)
of the  Securities  Act of 1933 for the  issuance  of these  shares.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


In September  2002, the Company issued  598,630  warrants to compliment  certain
unregistered restricted share issuances stock to two individuals. These numbered
warrants  were  issued  with an  exercise  price of $0.50 and expire on July 12,
2005. The Company relied upon the exemption  from  registration  as set forth in
Section 4(2) of the Securities Act of 1933 for the issuance of these shares. All
of the recipients took their  securities for investment  purposes without a view
to  distribution  and had access to  information  concerning the Company and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


During the fourth quarter of 2002, the Company,  in conjunction  with a separate
Private   Placement   Memorandum   sold  6,400  Units  for  gross   proceeds  of
approximately  $12,800 to two  individuals.  Each Unit consisted of 10 shares of
unregistered,  restricted  common  stock;  10 Series A  warrants  and 5 Series B
warrants.  One of these  individuals  rescinded  his  investment  and his 34,000
shares and all the  warrants  were  cancelled.  The  remaining  30,000  warrants
expired   unexercised  in  Fiscal  2004.  We  relied  upon  the  exemption  from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance of these  securities.  All of the recipients took their  securities for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


During the first and second quarters of fiscal 2003,  under a Private  Placement
Memorandum,  the Company sold an aggregate 3,254,000 Units to 52 individuals and
entities.  Each Unit consists of one share of  unregistered,  restricted  common
stock and one Series E warrant to purchase one share of unregistered, restricted
common stock.  Each Series E warrant  entitled the holder to purchase a share of
common stock at $0.25 per share and expired on December 1, 2004.  We relied upon
the exemption from  registration  as set forth in Section 4(2) of the Securities
Act of 1933 for the issuance of these  securities.  All of the  recipients  took
their securities for investment  purposes without a view to distribution and had
access to  information  concerning  the Company and our business  prospects,  as
required by the Securities Act. In addition,  there was no general  solicitation
or advertising for the acquisition of these securities.


During  February  2003,  the  Company  issued  750,000  shares of the  Company's
restricted,  unregistered common stock to nineteen individuals and six unrelated
entities for various consulting  services relating to intellectual  property and
business development. The Company relied upon the exemption from registration as
set forth in Section  4(2) of the  Securities  Act of 1933 for the  issuance  of
these  shares.  All of the  recipients  took  their  securities  for  investment
purposes without a view to distribution and had access to information concerning
the Company and our business  prospects,  as required by the Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


In February 2003, CTC entered a Settlement Agreement and Mutual Release pursuant
to which the Company issued 1,500,000 shares of unregistered,  restricted common
stock to  various  parties in the  actions.  The shares  issued  were  valued at
$93,750.  We relied upon the exemption from registration as set forth in Section
4(2) of the Securities Act of 1933 for the issuance of these securities.  All of
the recipients took their  securities for investment  purposes without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


In  February  2003,  the Company  issued an  aggregate  1,065,000  shares of the
Company's restricted, unregistered common stock to two individuals, in repayment
of debts  incurred in payment of  services.  We relied upon the  exemption  from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance of these  securities.  All of the recipients took their  securities for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


In March 2003, the Company  issued an aggregate  275,000 shares of the Company's
restricted,  unregistered  common  stock to an  individual,  who was an existing
shareholder of the Company,  for  conversion of $30,000 of a short-term  working
capital loan and accrued,  but unpaid,  interest.  We relied upon the  exemption
from registration as set forth in Section 4(2) of the Securities Act of 1933 for
the issuance of these  securities.  All of the recipients took their  securities
for  investment  purposes  without  a view to  distribution  and had  access  to
information  concerning the Company and our business  prospects,  as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


                                       34
<PAGE>

During the first and second  quarters  of fiscal  2003,  in  conjunction  with a
separate Private Placement  Memorandum,  the Company sold an aggregate 3,470,500
Units to 28  individuals  and  entities.  Each  Unit  consists  of one  share of
unregistered,  restricted  common stock and one warrant Series H to purchase one
share of unregistered, restricted common stock at an exercise price of $0.50. We
relied upon the exemption from  registration as set forth in Section 4(2) of the
Securities  Act of  1933  for  the  issuance  of  these  securities.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


During the  February  2003,  the Company  issued an aggregate  200,000  Series H
Warrants to one entity in remuneration for professional  services connected with
the issuance of the Series H Warrants. Each Series H warrant gives the older the
right to  purchase  one share of  unregistered,  restricted  common  stock at an
exercise price of $0.50.  We relied upon the exemption from  registration as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
securities.  All of the recipients took their securities for investment purposes
without a view to  distribution  and had access to  information  concerning  the
Company  and our  business  prospects,  as required  by the  Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


In April 2003, the Company  issued 27,900 shares of CTC restricted  common stock
to 2  individuals  in  settlement  of a dispute.  The  Company  relied  upon the
exemption from  registration  as set forth in Section 4(2) of the Securities Act
of 1933 for the  issuance  of these  shares.  All of the  recipients  took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


In April 2003 the Company  issued  250,000  Series L warrants  to  purchase  the
Company's restricted  unregistered common stock with an exercise price of $0.42,
to one  individual  in  settlement  of a dispute  over  attorney's  fees.  These
warrants expire April 8, 2008. We relied upon the exemption from registration as
set forth in Section  4(2) of the  Securities  Act of 1933 for the  issuance  of
these  securities.  All of the recipients  took their  securities for investment
purposes without a view to distribution and had access to information concerning
the Company and our business  prospects,  as required by the Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


In April 2003 the  Company  issued  49,999  Series K warrants  to  purchase  the
Company's restricted  unregistered common stock at an exercise price of $0.50 to
3 individuals for business development services. These warrants expire March 30,
2005. We relied upon the  exemption  from  registration  as set forth in Section
4(2) of the Securities Act of 1933 for the issuance of these securities.  All of
the recipients took their  securities for investment  purposes without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


During March through September 2003, pursuant to Private Placement Memoranda, we
sold an aggregate 150,000 Units to one entity and one individual;  an additional
10,000 Units were issued in  compensation  for the arrangement of the financing.
Each Unit consisted of 10 shares of restricted, unregistered common stock and 10
Series I warrants  to  purchase  one share of  unregistered,  restricted  common
stock.  Each Series I warrant  entitles the holder to purchase a share of common
stock at $0.50 per share and  expires  on March 30,  2005.  In the  subscription
agreement there was a conditional provision for the issue of up to an additional
550,000 Units to the entity and the individual, however, the proceeds in payment
were  never  received;  an  additional  40,000  Units  that were to be issued in
connection  with  the  perfection  of the  subscription  were  cancelled  due to
non-performance.  The matter is now subject to  litigation  as discussed in Item
3(B) above under Composite Technology Corporation v. Acquvest,  Inc., Paul Koch,
Victoria Koch,  Patricia Manolis,  and Michael Tarbox. The shares related to the
550,000  Units  were  issued by the  transfer  agent and were  being held by the
attorney  handling the matter for us, however,  these were cancelled in October,
2003. The above 10,000 Units issued in  compensation  are themselves the subject
of separate  litigation that is preventing  their  exercise.  We relied upon the
exemption from  registration  as set forth in Section 4(2) of the Securities Act
of 1933 for the issuance of these  securities.  All of the recipients took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


In August 2003, the Company  issued  236,171 shares of restricted,  unregistered
common  stock  to an  individual  in  compensation  for the  provision  of legal
services  amounting  to $53,710.  The Company  relied  upon the  exemption  from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance  of these  shares.  All of the  recipients  took their  securities  for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


During  August  2003,  pursuant  to a Private  Placement  Memoranda,  we sold an
aggregate 16,667 Units for gross proceeds of $50,000.  Each Unit consisted of 10
shares of  restricted,  unregistered  common stock and five Series O warrants to
purchase  one share of  unregistered,  restricted  common  stock.  Each Series O
warrant  entitles  the holder to purchase one share of common stock at $0.60 per
share and  expires at the  earlier  of June 30,  2005 or three  weeks  following
written  notification  by us that its common  stock closed at or above $0.90 per
share for 10 consecutive trading days. In addition, the Series O warrants can be
redeemed by us for $0.001 each if a Registration  Statement  covering the shares
underlying  the  Series O warrants  has been  declared  effective  and our stock
closes at or above $0.90 for 10  consecutive  days. We relied upon the exemption
from registration as set forth in Section 4(2) of the Securities Act of 1933 for
the issuance of these  securities.  All of the recipients took their  securities
for  investment  purposes  without  a view to  distribution  and had  access  to
information  concerning the Company and our business  prospects,  as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


                                       35
<PAGE>

During  August  2003,   the  Company   issued   700,000  shares  of  restricted,
unregistered  common stock to two entities in compensation  for the provision of
professional  consulting  services.  The Company  relied upon the exemption from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance  of these  shares.  All of the  recipients  took their  securities  for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


During  the last  quarter  of  fiscal  2003,  pursuant  to a  Private  Placement
Memoranda, we sold an aggregate 50,000 Units for gross proceeds of $125,000 to 5
individuals  and  entities.  Each Unit  consisted  of 10  shares of  restricted,
unregistered  common  stock and 10 Series N warrants  to  purchase  one share of
unregistered, restricted common stock. Each Series N warrant entitles the holder
to  purchase  one share of common  stock at $0.50 per share and  expires  at the
earlier of June 30, 2005 or three weeks  following  written  notification  by us
that our  common  stock  closed at or above  $0.75 per share for 10  consecutive
trading  days.  In  addition,  the Series N warrants  can be  redeemed by us for
$0.001 each if a  Registration  Statement  covering  the shares  underlying  the
Series N warrants has been declared  effective and our common stock closes at or
above  $0.75  for 10  consecutive  days.  We  relied  upon  the  exemption  from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance of these  securities.  All of the recipients took their  securities for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


During September and October 2003, pursuant to Private Placement  Memoranda,  we
sold an aggregate  367,500 Units to 26  individuals.  Each Unit  consisted of 10
shares of  restricted,  unregistered  common  stock and two Series P warrants to
purchase  one share of  unregistered,  restricted  common  stock.  Each Series P
warrant  entitles  the holder to purchase one share of common stock at $0.80 per
share and  expires at the  earlier  of July 30,  2005 or three  weeks  following
written  notification  by us that its common  stock closed at or above $1.20 per
share for 10 consecutive trading days. In addition, the Series P warrants can be
redeemed by the Company for $0.001 each if a Registration Statement covering the
shares  underlying  the Series P warrants has been  declared  effective  and our
common stock closes at or above $1.20 for 10  consecutive  days.  We relied upon
the exemption from  registration  as set forth in Section 4(2) of the Securities
Act of 1933 for the issuance of these  securities.  All of the  recipients  took
their securities for investment  purposes without a view to distribution and had
access to  information  concerning  the Company and our business  prospects,  as
required by the Securities Act. In addition,  there was no general  solicitation
or advertising for the acquisition of these securities.


During September 2003, pursuant to various Private Placement Memoranda,  we sold
an  aggregate  of 88,462  restricted  unregistered  shares of common  stock to 3
individuals at a price of $0.65 per share for gross proceeds of $57,500;  27,778
restricted  unregistered  shares of common stock to one individual at a price of
$0.90  per  share  for  gross  proceeds  of  $25,000;   and  195,000  restricted
unregistered  shares of common  stock to 3  individuals  at a price of $1.00 per
share for gross proceeds of $195,000. The Company relied upon the exemption from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance  of these  shares.  All of the  recipients  took their  securities  for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.

During September 2003,  pursuant to a Private Placement  Memoranda,  the Company
sold an  aggregate  of  25,000  Units to 4  individuals  for gross  proceeds  of
$100,000.  Each Unit  consisted of 10 shares of restricted  unregistered  common
stock  and two  Series  P  warrants  to  purchase  one  share  of  unregistered,
restricted common stock. Each Series P warrant entitles the holder to purchase a
share of common  stock at $0.80 per share and expires at the earlier of July 30,
2005 or three weeks  following  written  notification  by the  Company  that its
common stock closed at or above $1.20 per share for 10 consecutive trading days.
In  addition,  the Series P warrants  can be  redeemed by the Company for $0.001
each if a  Registration  Statement  covering the shares  underlying the Series P
warrants has been declared effective and the Company's common stock closes at or
above  $1.20  for 10  consecutive  days.  We  relied  upon  the  exemption  from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance of these  securities.  All of the recipients took their  securities for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these  securities.

During  November 2003,  pursuant to a Private  Placement  Memoranda,  we sold an
aggregate  of  89,360  restricted  unregistered  shares  of  common  stock  to 5
individuals  at a price of $1.40 per share for gross  proceeds of $125,104.  The
Company relied upon the exemption from registration as set forth in Section 4(2)
of the  Securities  Act of 1933 for the  issuance  of these  shares.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


                                       36
<PAGE>

In November  2003,  the Company made an offer to the holders of the Series E and
Series H warrants that if the holders  exercised  their warrants before December
10, 2003,  the holder would  receive one Series R warrant to purchase 1 share of
unregistered  restricted  common  stock  for  every  5  Series  E or H  warrants
exercised.  Each Series R warrant  entitles  the holder to purchase one share of
common stock at $1.95 per share and expires on December  30, 2005.  In addition,
the  Series R warrants  can be  redeemed  by the  Company  for $0.001  each if a
Registration  Statement covering the shares underlying the Series R warrants has
been declared effective and the Company's common stock closes at or above $3 for
10  consecutive  days  and if the  shares  underlying  the  warrants  have  been
registered.  In December 2003, the Company issued 58,500 Series R warrants to 13
individuals  in exchange for proceeds of $153,125.  We relied upon the exemption
from registration as set forth in Section 4(2) of the Securities Act of 1933 for
the issuance of these  securities.  All of the recipients took their  securities
for  investment  purposes  without  a view to  distribution  and had  access  to
information  concerning the Company and our business  prospects,  as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


During   December  2003,  the  Company  issued  140,160  shares  of  restricted,
unregistered common stock to an entity in lieu of 2 month's rent on a commercial
facility  valued  at  $147,168.  The  Company  relied  upon the  exemption  from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance  of these  shares.  All of the  recipients  took their  securities  for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


In  December  2003,  the Company  issued  2,400,000  Units for cash  proceeds of
$2,790,000  net of  offering  costs  of  $210,000.  The  December  Offering  was
subscribed  by 5  investment  funds.  Each  unit  consisted  of one share of the
Company's  unregistered  restricted common stock and 0.5 warrant to purchase one
share of the Company's unregistered restricted common stock at an exercise price
of $2.04 per share.  The warrants vest  immediately and expire in December 2008.
The  Company  has the right to call the  warrants  if the  closing  price of the
Company's  common  stock  is  greater  than  200% of the  exercise  price of the
warrants for 20 consecutive  trading days. In June 2004, the Company offered the
warrant holders, for a limited period of time, the opportunity to exercise their
warrants at a reduced strike price of $0.50. Pursuant to this offer, the Company
issued 1,000,000 shares of the Company's  unregistered,  restricted common stock
against  receipt  of  $500,000.  One  holder of  200,000  warrants  did not take
advantage of this right.  In connection  with this  offering,  one  professional
company was issued with an  additional  120,000  warrants on the same terms.  We
relied upon the exemption from  registration as set forth in Section 4(2) of the
Securities  Act of  1933  for  the  issuance  of  these  securities.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


During   January  2004,   the  Company   issued  58,881  shares  of  restricted,
unregistered   common  stock  to  two  entities  in   compensation   of  various
professional  services.  The Company relied upon the exemption from registration
as set forth in Section 4(2) of the  Securities  Act of 1933 for the issuance of
these  shares.  All of the  recipients  took  their  securities  for  investment
purposes without a view to distribution and had access to information concerning
the Company and our business  prospects,  as required by the Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.

During March 2004, the Company issued 150,000 shares of restricted, unregistered
common stock in the name of one entity in partial  compensation  of professional
services.  The Company relied upon the exemption from  registration as set forth
in Section 4(2) of the  Securities Act of 1933 for the issuance of these shares.
During the June,  2004 it was  agreed by the  Company  and the  entity  that the
entity would not accept the shares in lieu of partial  payment for  professional
services  with the result that the 150,000  shares  were  cancelled.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.



                                       37
<PAGE>

In July 2004, the Company  issued  770,000  shares of  restricted,  unregistered
common stock to one individual and 3 entities in remuneration for and payment of
debts  relating to various  professional  services.  The Company relied upon the
exemption from  registration  as set forth in Section 4(2) of the Securities Act
of 1933 for the  issuance  of these  shares.  All of the  recipients  took their
securities for investment purposes without a view to distribution and had access
to information concerning the Company and our business prospects, as required by
the  Securities  Act.  In  addition,   there  was  no  general  solicitation  or
advertising for the acquisition of these securities.


In July and August  2004,  the  Company  issued  675,000  shares of  restricted,
unregistered common stock to two individuals as part of a legal settlement.  The
Company relied upon the exemption from registration as set forth in Section 4(2)
of the  Securities  Act of 1933 for the  issuance  of these  shares.  All of the
recipients  took their  securities  for  investment  purposes  without a view to
distribution  and had  access to  information  concerning  the  Company  and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.


During August 2004,  the Company  issued  418,000  shares to two  consultants in
remuneration for services carried out in 2003. We relied upon the exemption from
registration  as set forth in Section 4(2) of the Securities Act of 1933 for the
issuance of these  securities.  All of the recipients took their  securities for
investment purposes without a view to distribution and had access to information
concerning the Company and our business prospects, as required by the Securities
Act. In  addition,  there was no general  solicitation  or  advertising  for the
acquisition of these securities.


During the last quarter of fiscal 2004,  the Company issued  1,427,000  Series S
warrants  to 7  individuals  and 2  entities  in  connection  with  professional
services  rendered to the Company and in settlement of certain disputes relating
to such  services.  Each Series S warrant  entitles  the holder to purchase  one
share of unregistered, restricted common stock at $1.00 per share and expires at
the earlier of July 17, 2007 or following  written  notification  by us that our
common stock closed at or above $3.00 per share for 10 consecutive trading days.
One  individual  was granted  100,000 Series S warrants at the discretion of the
Chief Executive  Officer.  We relied upon the exemption from registration as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
securities.  All of the recipients took their securities for investment purposes
without a view to  distribution  and had access to  information  concerning  the
Company  and our  business  prospects,  as required  by the  Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


During the last quarter of fiscal 2004, the Company issued 160 Series T warrants
to 4 individuals and 1 entity in connection with professional  services rendered
to the Company.  Each Series T warrant entitles the holder to purchase one share
of unregistered,  restricted  common stock at $1.00 per share and expires at the
earlier of July 17, 2008. We relied upon the exemption from  registration as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
securities.  All of the recipients took their securities for investment purposes
without a view to  distribution  and had access to  information  concerning  the
Company  and our  business  prospects,  as required  by the  Securities  Act. In
addition,  there was no general  solicitation or advertising for the acquisition
of these securities.


DEBENTURE OFFERING

On August 17,  2004,  CTC  closed a  financing  transaction  in which it sold 6%
convertible  debentures (the  "Debentures") to select  institutional  accredited
investors, in order to raise a total of $15,000,000. We received $5,000,000 upon
closing  and  $10,000,000  was  deposited  into a  Custodian  Account  to secure
repayment of the Debentures.  The Debentures will mature on August 17, 2007. The
investors may convert the  Debentures  into our common stock for $1.67 per share
(the "Conversion Price"). We may force conversion of all outstanding  Debentures
if the daily  volume  weighted  average  price of our common  stock  exceeds the
Conversion  Price by 150%. We may drawdown the $10,000,000 held in the Custodian
Account on a monthly basis  starting  after the effective date of a Registration
Statement  registering the common stock issuable upon  conversion  Debentures by
exercising a monthly optional redemption (the "Monthly Redemption"). The minimum
Monthly  Redemption is $500,004.  The Monthly Redemption may only be paid by the
issuance  of our  common  stock to the  investors  priced  at 93% of the  volume
weighted  average  price  of our  common  stock  at the  time  of  such  Monthly
Redemption.

The  investors  also  received  warrants to purchase an  aggregate  of 3,453,947
shares of common stock, 50% of which are at an exercise price of $1.75 per share
and the balance of which are at an exercise price of $1.82 per share.

On November 23, 2004, we reached an agreement with the four funds that purchased
the Debentures to release the $10 million that was held in a custodian  account.
The $10 million was to be released  periodically  after the  effectiveness  of a
registration  statement  filed by the  Company on Form SB-2  pursuant to monthly
optional  redemptions.  In  consideration  for  such  early  release  of the $10
million, each of the four funds was issued an additional warrant to purchase (in
aggregate) 1,083,591 shares of our common stock with an exercise price of $3.23.
The four  funds  also  agreed  to extend  the  deadlines  for the  filing of and
effectiveness date of the registration statement.


                                       38
<PAGE>

Lane Capital Markets ("Lane Capital") acted as our exclusive placement agent and
financial advisor in connection with the placement of the Debentures. In partial
consideration for Lane Capital's services,  Lane Capital received 500,000 Series
U warrants, a 4-year warrant to purchase 500,000 shares of our common stock with
an exercise price of $1.82 per share. CTC may, subject to a 20 day notice,  call
the warrants if our common  stock is equal to or exceeds 200% of their  exercise
price.

We relied upon the exemption from  registration  as set forth in Section 4(2) of
the Securities  Act of 1933 and Rule 506 of Regulation D promulgated  under such
Act for the issuance of these securities.

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

The following  discussion  of our financial  condition and results of operations
should be read in  conjunction  with the financial  statements and related notes
thereto.  The following discussion contains certain  forward-looking  statements
that involve risks and uncertainties. Our actual results could differ materially
from those discussed herein. We undertake no obligation  publicly to release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.

RESULTS OF OPERATIONS

We have had no revenue for either the Fiscal Years ended  September  30, 2003 or
September 30, 2002.

In the Fiscal Quarter ended December 31, 2003 CTC commenced  providing  services
under a $2.675 million contract for design, production, and installation of a 21
mile long new ACCC transmission line in Kansas.  Revenue from this contract will
be recognized  upon  completion  and as of September 30, 2004,  CTC had received
$564,750 under the initial  milestones of the contract that has been recorded as
deferred revenue.

Subsequent  to year end, the Company  also began to receive  income from certain
trial sales of the cable.  The Company  expects to make more trial sales  before
the market accepts its ACCC products for full deployment.

During the fiscal  year ending  September  30,  2004,  CTC  provided  consulting
services to Global  American  Energy and its related  companies.  These services
were provided under an amended and restated Consulting Agreement that terminated
on September  30, 2004.  Under the  arrangement,  the Company  provided  general
consulting  services  and business  advice  relating to the planning of overhead
electrical transmission power lines and utility services,  including undertaking
preliminary  feasibility  analysis and strategic advice  regarding  location and
scope as well as advice regarding the establishment of production facilities for
the production of products used in the Electrical  Transmission Industry.  Under
the  terms of this  agreement  Global  American  Energy is  required  to pay the
Company $2.5 million for work carried out between  March 31, 2003 and  September
30, 2004. As a development  stage company,  the Company has previously  expensed
all its costs since inception.  The Company has, however,  recorded direct costs
related to this  consulting  work.  The Company  does not  anticipate  receiving
regular revenues from such consulting work.

During the period  commencing with the  reorganization of the Company in 2001 to
the end of fiscal year 2004 the Company was in its developmental  phase with the
primary task of elucidating  and rendering  concrete the promise of its concepts
and designs for the Electrical  Power Industry.  We believe that the last fiscal
year was a pivotal one for the Company and the year end marks a turning point in
the  Company's  focus from  development  to  commercial  production  and sale of
promising, commercially viable products.



                                       39
<PAGE>

ACCC BARE OVERHEAD CABLE OPERATIONS

The product and  production  development  strategy of the Company is to take the
initial concept to  commercially  promising  prototype,  then move production to
design,  making relevant  product  modifications  to optimize the combination of
manufacturability and performance.  Following optimization,  pilot production is
organized  to mimic  factory  conditions  under  close  monitoring.  During this
process  the  entire  process  is  documented  so that  the  technology  will be
available for transfer to third parties or  subsidiaries in a full scale factory
launch.

At the  beginning  of the Fiscal Year  ending  September  2004,  the Company had
completed its initial  product and  manufacturing  process  development  and was
commencing the  manufacture of ACCC cable core and the wrapping of the core with
aluminum under sub-contract with General Cable.

During  fiscal  2004,  the Company  has  progressed  its product and  production
development  path through product  refinement to the commencement of pilot plant
operations  with a unit of 2 lines.  The unit has since been expanded to 3 lines
and is currently operating under factory conditions.

Essential milestones along this path were as follows:

The  design  characteristics  of the ACCC  family of cables  were  accepted  and
included in the bare overhead  conductor line CADD design  software  produced by
Power Line Systems ("PLS CADD").

Additional  development  work  for  various  conductor   ancillaries,   such  as
connection  hardware was conducted  during the fiscal year ending  September 30,
2004 and will now be produced by a new pilot  production  unit at the  Company's
Irvine  facility  as well as by FCI  Burndy,  one of the  leading  producers  of
hardware in the US which has agreed to produce the special hardware  accessories
required  to install  the ACCC  successfully.  These  special  accessories  will
supplement  their existing high  temperature  accessories  that can be used with
ACCC.  Field  installation  and testing of this  hardware has been  successfully
carried  out at EPRI (see  below)  and will  continue  during  the first part of
fiscal 2005. The use of conventional  installation tools,  grippers,  equipment,
and techniques all proved satisfactory for the installation of the ACCC.

An important  body of test data is available  from  Kinectrics,  the  Electrical
Power Research Institute ("EPRI") performed at the Haslet Texas facility and the
University of Southern California. Testing of the ACCC cable has been successful
and all tests have been performed to accepted  industry  standards,  or, in some
cases,  to specific third party utility  company  protocols.  To date, all final
results meet or exceed industry requirements.  Additional  demonstration testing
is expected to commence and/or continue during fiscal 2005 at the Electric Power
Research Institute (EPRI),  the U.S.  Department of Energy at Oak Ridge National
Laboratories (ORNL), the Western Area Power Administration  (WAPA), the New York
State Energy Research & Development  Authority  (NYSERDA),  EDF  (Electricity of
France), and at other third party labs, both domestic and abroad.



                                       40
<PAGE>

The Company is now finalizing its plans for the establishment of full scale core
and accessories production at a suitable factory location.

The marketing and sales  strategy of the Company has been  operating in parallel
with its product development strategy. Due to the nature of the business and the
principal  customers for the cable, the product  introduction is followed by the
sale of small amounts of cable for trial purposes.  In point of fact these sales
are significant in the furtherance of the commercialization of the ACCC but this
importance  is not  initially  necessarily  reflected  in terms of revenue.  The
Company  expects  that the  successful  trial of the product will lead to larger
commercial  sales  that  will  require  a ramp  up of  its  core  and  accessory
production capacity.

During the fiscal year ending  September 2004, the first  commercial order for a
21 mile long new ACCC  transmission line of a new smaller "Hawk" sized cable was
placed in December of 2003. This trial  implementation  for design,  production,
and  installation  of a line in Kansas during 2004 and 2005 is expected to bring
the Company  $2.6 million  dollars  with  completion  anticipated  in 2005.  The
Company had  started  delivery of the  necessary  cable and initial  hanging the
cable began following the fiscal year end.

The  first  commercial  installation  of  "Hawk"  sized  ACCC  conductor  for  a
distribution   line  was   completed   at   Holland,   Michigan.   Other   trial
implementations  have been  completed or are planned  during the initial part of
fiscal 2005.

The Company believes that the commercial  viability and utility of the ACCC bare
overhead  conductors has been  thoroughly  proven  through  laboratory and field
testing and commercial sale.

The most significant event,  immediately subsequent to the 2004 fiscal year end,
announced  on October 4, 2004,  was the  signature  of  agreements  with General
Cable.  These agreements give the Company the ability to supply large commercial
quantities of cable using the General Cable production  facilities and access to
the General Cable sales force. In addition,  the final ACCC product sold through
General Cable will integrate seamlessly with its other products, forming part of
their TransPowrTM product line as the ACCC/TW Bare Overhead Conductor.

The ability to supply commercial  quantities of ACCC with the General Cable seal
of  approval  and  access  to  the  General  Cable  sales  force  allows  CTC to
concentrate on core production.

OTHER PROPRIETARY PRODUCTS

During the year ending September 30, 2004 the Company completed the initial work
on the design and  fabrication  of a prototype for the production of specialized
machines to produce  composite  poles,  lattice towers and wind turbine  support
towers.



                                       41
<PAGE>

FINANCIAL CONSIDERATIONS

In November 2003, we completed 2 private placements  receiving gross proceeds of
$100,000 and $125,104 respectively.  We further completed a $3,000,000 "December
Price Offering" financing in December of 2003, netting $2,790,000  following the
payment of offering costs. In June 2004, the Company offered the "December Price
Offering"  warrant  holders,  for a limited period of time,  the  opportunity to
exercise their warrants at a reduced strike price of $0.50 and, pursuant to this
offer,  $500,000 was received  from the exercise of 1,000,000  Series  "December
Price  Offering"  warrants.  In July 2004, we called for the exercise of all the
Series H warrants,  and to date all these warrants have been  exercised,  except
for one, now expired  warrant for up to 5,000 shares of common stock.  This call
has brought CTC an additional $1,832,750. A majority of the Company's Series "E"
Warrants were also exercised bringing $465,000 during the year.

On August 17, 2004, CTC closed its 6% convertible  debenture  offering to select
institutional accredited investors, in order to raise a total of $15,000,000. We
received $5,000,000  ($4,200,000 net) upon closing and $10,000,000 was deposited
into a Custodian  Account to secure repayment of the Debentures.  Since year end
and following negotiations with the institutional investors, the Company has now
secured  the  release  of  the  $10,000,000  from  the  Custodian  Account.  The
Debentures  will  mature on August 17,  2007.  The  investors  may  convert  the
Debentures  into our common stock for $1.67 per share. A total of $1,050,000 has
been paid to Lane Capital Markets who acted as our exclusive placement agent and
financial  advisor in connection with the placement of the Debentures:  $717,500
during fiscal 2004 and the remaining $307,500 during the first quarter of fiscal
2005.

We believe that our current cash balance,  the proceeds  from the  conversion of
warrants,  progress  payments  that may be made on the $2.675  million order and
additional sales of cable will cover anticipated operating expenses for a period
of one year without supplementing our cash reserves.  The proceeds from the sale
of the Debentures will,  however, be used exclusively for operations relating to
the  commercialization  of our principal product, the ACCC cable and general and
intellectual  property expenses relating to other products.  With respect to the
pursuit  of  our  other  products  and  technologies,   CTC  will  proceed  with
discussions  with  potential  sources of financing  through one or more of CTC's
subsidiaries in joint ventures or other forms of partnership or cooperation.

ACQUISITION OF PLANT AND EQUIPMENT

We do not own any real estate. We have designed, built and successfully operated
three  pultrusion  lines  for ACCC  composite  core.  These  lines are now being
operated in the leased  facility  that we moved into during the first quarter of
2004.  We expect  1-3  additional  lines to be made  operational  at the  Irvine
facility before moving production to a new facility.

SALE-LEASE BACK OF CAPITAL ASSETS

On May 5, 2004 we  entered  into a  $500,000  sale  leaseback  of certain of our
capital assets,  including our pultrusion  lines.  Under the terms of the Master
Lease Agreement we received $450,000 which was net of a 10% security deposit and
are to make payments of $16,440 per month for 36 months. At the end of the lease
period,  CTC has the  right to renew  the lease  for an  additional  12  months,
terminate  and return the equipment or purchase the equipment at the fair market
value,  subject  to a  minimum  of 10%  and a  maximum  of  20% of the  original
capitalized  cost.  We  recognized  a gain in the  amount of $ 59,045  from this
transaction  and will defer the gain and  recognize it as income over the period
of the initial lease term.



                                       42
<PAGE>

PLAN OF OPERATIONS

ACCC COMMERCIALIZATION STRATEGY

The  Company  plans to  continue  its  strategic  path  outlined  in "RESULTS OF
OPERATIONS - ACCC Bare Overhead Cable  Operations." As an important part of this
strategy,  the Company expects to open a production  facility for the commercial
production of the ACCC core,  planned for the second  quarter of the fiscal year
ending September 30, 2005.

ACCC targets an industry which is mature in North America and Western Europe and
developing in various other countries around the world,  such as Eastern Europe,
China & South  East  Asia,  and South  America.  In spite of this,  the  Company
believes  that  the  utility  and  distribution   companies  will  be  investing
increasing  amounts in  renewing  their  aging,  insufficient  transmission  and
distribution networks.

The  Company's  strategy  at present is to enter  into  arrangements  with cable
manufacturers  internationally  under which the Company  will supply its core to
these  manufacturers  for  wrapping  and resale in  allocated  markets.  Initial
deliveries  will be made from  production  facilities in the US with  additional
local facilities established as the market requires.

In certain  selected  international  markets the Company  plans to joint venture
with local partners in the establishment of its ACCC core production and sales.

ORGANIZATION OF A NEW PRODUCTION FACILITY

The  Company  considers  it a priority  to  organize  its full scale  commercial
production at a new facility in preparation for its expected orders of cable. As
an alternative,  the Company still maintains the ability to use  sub-contractors
to  produce  the  core   necessary   for  supply  to  General  Cable  and  other
manufacturers,  but would  prefer to  organize  its own  production  in a timely
manner.  The  Company  does not  anticipate  acquiring  any real estate for this
purpose.  Equipment  leasing  agreements  are  being  negotiated  to  supplement
existing funding arrangements for this purpose. The Company expects that the new
production facility will return its initial capital investment in a short period
of time,  however,  the  Company  will use its  income to invest in a  continued
ramp-up of capacity.

CONTINUING PRODUCT RESEARCH AND DEVELOPMENT

We continue to believe research and development  activities are important to our
success.  Over  the past 12  calendar  months  we  completed  various  composite
reinforced  cable  designs  and  developed  the  hardware  required  to  splice,
terminate,  and extend the cable.  Additionally,  we designed and sought patents
for novel composite  structures.  In 2005 we plan to complete our prototype high
speed ACCC core production process and our unique production line equipment that
will  allow for the cost  effective  production  of several  types of  composite
shapes for use in distinct complex composite products.

We plan to continue  designing,  prototyping and producing our proprietary  high
speed  manufacturing  systems for our own use and for sale to our joint  venture
partners and/or licensees, as appropriate.  We will, in some instances,  produce
cable  through  relationships  with existing  cable  makers,  by having them add
helically  stranded   combinations  of  individual  aluminum  wires  around  the
composite core and/or by using our proprietary pultrusion systems which CTC will
supply.



                                       43
<PAGE>

FINANCIAL PLANS

Following  the drawdown of the $10 million  from the  Debenture  financing,  the
Company believes that it now has sufficient  operating  capital to carry out its
plans for the future.  It is anticipated  that the Company will begin generating
sales in Fiscal year ending September 30, 2005 sufficient to cover its operating
costs.  Central to the  Company's  financial  strategy  for  fiscal  2005 is the
securing  of  sufficient  lease  financing  to  manage  the  ramp up of its core
production and the  organization of separate larger  production  facilities.  As
part of the  preparation  for this,  subsequent  to year end,  the  Company  has
already obtained  approximately $1.4 million in lease financing  commitments and
has a firm offer for an additional $3 million in equipment lease financing.

The Company expects to commit $3-5 million in raw materials purchases that would
secure access to long term supplies of such raw materials.  These amounts may be
funded from down payments on purchases, trading credit facilities and short term
loans, topped up, as necessary, with operating capital.

Our  financial  statements  include a going  concern  opinion  from our auditors
acknowledging  that  during the year  ended  September  30,  2004,  the  Company
incurred a net loss of $14,323,596  and had negative cash flows from  operations
of $8,945,903;  and in addition that the Company had an  accumulated  deficit of
$26,075,079 at September 30, 2004.  These losses and negative cash flows are the
result of Company  undergoing its product  development phase during its start-up
period.  During start up a product  development company must rely on the promise
of future revenues (if the product under development gains acceptance) to secure
finance from the capital  markets so that it can complete the development of its
products.  During this phase,  there is no  guarantee  that the product  will be
completed, accepted or provide a marketable advantage and therefore no guarantee
that the development will ever be profitable.  The start up company's ability to
become  a going  concern  is  dependent  upon its  ability  to  emerge  from its
development  phase with a business  that can  generate  profit  form  operations
and/or to obtain the necessary  financing to meet its  obligations and repay its
liabilities  arising  from  normal  business  operations  when  they  come  due.

Management believes that the Company is now emerging from its development phase;
and while the  outcome of it future  development  cannot be  predicted  with any
certainty at this time, in its present  situation,  management  believes that it
has  completed  product  development  sufficiently  and  is  able  to  plan  the
introduction  of the  ACCC  product  into the  market.  In  connection  with its
introduction,  ACCC has, to date,  had an excellent  reception in the market and
the Company  believes that it can break even on its operations  without the need
for raising additional  operating capital.  However,  management plans to ensure
that sufficient  capital will be available to provide for its capital needs with
minimal  borrowings  and may issue equity  securities to ensure that this is the
case.

PERSONNEL

The Company currently has 48 full time employees.  The opening of new production
facilities will increase this number significantly. The Company expects that the
number  of  employees  at its  central  office  may fall  marginally  as the new
production facilities are organized.

The Company makes extensive use of the services of professional  consultants and
consulting  companies.  The Company expects to continue this practice during the
course  of the  fiscal  year  ending  September  30,  2005.  In  particular  the
Information  Systems and Intellectual  Property  Departments will continue to be
operated under the  responsibility of the CEO using outside consulting firms and
individuals.  The Company believes that it would be difficult to secure the same
level of expertise at an  affordable  rate by hiring  employees for these areas.
The Company  expects to decrease  its  dependence  on external  consultants  for
marketing and sales during Fiscal 2005.

The Company expects to increase the number of corporate officers by 2 to a total
of 4 in the new year with the  addition  of a  President  and a Chief  Financial
Officer (who will assume the role of Corporate Secretary).

The Company  currently  has 2  Directors.  The Company is seeking and expects to
increase  the  number  of  members  of the  Board  by 3  additional  independent
directors during the fiscal year ending September 30, 2005.

We have recently agreed to employ an acting Chief Financial  Officer and we hope
that  following  a  probationary  period he will  become  our CFO.  We have also
recently hired marketing field engineers to support our product sales.

We believe that our  employee  relations  are good.  None of our  employees  are
represented  by a  collective  bargaining  unit.  We  anticipate  employing  the
services of a professional  human resources  consulting  specialist to audit and
supervise our HR policies and procedures.



                                       44
<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

ITEM 7 - FINANCIAL STATEMENTS

Our financial  statements  appear at the end of this report  beginning  with the
Index to Financial Statements on page F-1 of this report.

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

None.

ITEM 8A - CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange  Act,  within the 90 days prior to
the filing date of this report,  the Company  carried out an  evaluation  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures.  This evaluation was carried out under the supervision and with
the  participation  of the Company's  management,  including the Chief Executive
Officer  (acting  as the  principal  accounting  officer)  and  Chief  Operating
Officer.  Based upon that evaluation,  the Company's Chief Executive Officer and
Chief Operating  Officer have concluded that the Company's  disclosure  controls
and  procedures  are  effective.  The  Company has  enhanced  and  upgraded  its
accounting  system with the  addition of new  software  and is in the process of
transferring  the system to a new secure  server.  These measures are part of an
overall upgrade of the management computer systems that will make management and
control of  operations  more  efficient  and prepare the way for Sarbanes  Oxley
compliance.  The Company is required to be in compliance with the Sarbanes Oxley
regulations  by the end of Fiscal Year 2005.  The Company is proceeding  through
the first 2 quarters of Fiscal 2005 to introduce changes to its operating rules.
Many of these changes involve the use of new electronic systems for tracking and
documenting  management  decisions  and their  implementation.  Much of the work
required is in documenting existing systems differently and adapting them to the
new rules and systems.  There have been no significant  changes in the Company's
internal controls or in other factors, which could significantly affect internal
controls subsequent to the date the Company carried out its evaluation.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information  required to be disclosed in Company reports
filed or submitted 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.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive  Officer and Chief Financial  Officer as appropriate,  to allow timely
decisions regarding required disclosure.



                                       45
<PAGE>

ITEM 8B - OTHER INFORMATION

None.


                                       46
<PAGE>

PART III

ITEM 9 - OFFICERS AND DIRECTORS

The following  table sets forth the names,  ages, and positions of our directors
and officers.

<TABLE>
<CAPTION>
Name                                Age                       Position Held        Officer since          Director since
------------------------          -----                    ----------------      ---------------        ----------------
<S>                               <C>               <C>                          <C>                    <C>
Benton H Wilcoxon                    55             Chief Executive Officer                 2001                    2002
                                                     Chairman, Acting Chief
                                                          Financial Officer

C. William Arrington                 63                            Director                 2001                    2002
                                                    Chief Operating Officer
                                                              and President

Dominic J. Majendie                  42             Corporate Secretary and                 2004                     N/A
                                                       Vice President, EMEA
</TABLE>

The two  directors  named above will serve until the next annual  meeting of our
stockholders  or until their  successors  are duly  elected and have  qualified.
Directors will be elected for one-year terms at the annual stockholders meeting.
Officers  will hold their  positions at the pleasure of the board of  directors,
absent  any  employment  agreement.  There is no  arrangement  or  understanding
between any of our directors or officers and any other person  pursuant to which
any  director or officer was or is to be selected as a director or officer,  and
there is no  arrangement,  plan or  understanding  as to whether  non-management
stockholders  will exercise their voting rights to continue to elect the current
board of directors. There are also no arrangements, agreements or understandings
between non-management  stockholders that may directly or indirectly participate
in or influence the management of our affairs.

There are no family  relationships  among the foregoing  directors and executive
officers.  None of the directors or executive officers has, during the past five
years: (a) Had any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy  or within two years  prior to that  time;  (b) Been  convicted  in a
criminal  proceeding  or  subject  to a pending  criminal  proceeding;  (c) Been
subject to any order, judgment, or decree, not subsequently reversed,  suspended
or vacated, of any court of competent  jurisdiction,  permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business,  securities,  futures,  commodities or banking activities;  and (d)
Been  found  by a court  of  competent  jurisdiction  (in a civil  action),  the
Securities and Exchange  Commission or the Commodity Futures Trading  Commission
to have  violated a Federal or state  securities  or  commodities  law,  and the
judgment has not been reversed, suspended, or vacated.



                                       47
<PAGE>

BIOGRAPHICAL INFORMATION

BENTON H WILCOXON,  55, has been our Chief  Executive  Officer since November 3,
2001 and Chairman of the Board and a Director since February 2002. Currently, he
is also the acting Chief Financial Officer of CTC. He also is Chairman and Chief
Executive  Officer of the Company's  100% owned  subsidiaries  TTC, CCC, CWS and
TPC. From 1998 to 2001, he was a consultant for Magnesium Alloy  Corporation,  a
Canadian  company  involved in the  development  of magnesium  salt deposits and
served as a Director from 1998 until December 2003. Between 1998 and 2000 he was
a  consultant  to Macallan & Callanish  Ltd.,  regarding  business in Russia and
Ukraine.  Mr.  Wilcoxon held senior  positions with Ashurst  Technology  Ltd., a
Bermuda corporation, from 1991 to 1997, culminating as Chairman, Chief Executive
Officer and President. Ashurst Technology Ltd. commercialized advanced materials
technologies, primarily from the Ukraine.

C. WILLIAM  ARRINGTON,  63, has been our President  since November 3, 2001 and a
Director since February 2002. He also is President and Chief  Operating  Officer
of CTC's 100% owned  subsidiaries  TTC, CCC, CWS and TPC. Mr. Arrington has over
forty years experience in the electrical  energy  industry,  both generation and
transmission.  This  work  has  been  in the  areas  of  fossil  fuel,  nuclear,
hydroelectric,  wind and solar generation. He has also worked extensively in the
chemical,  petrochemical,  utility and infrastructure development fields both in
the U.S.  and  abroad.  Mr.  Arrington  has  served  in many  capacities  in DOE
programs. Through the USAFI program, he has achieved several degrees including a
PhD in electrical engineering and an MBA. He currently serves on the boards of a
number of energy and technology  related  companies.  Mr. Arrington has operated
his own consulting  firm for the past eight years.  Throughout his career he has
specialized in air and water pollution control, new materials,  renewable energy
sources, resource conservation and technology commercialization.

DOMINIC J. MAJENDIE, 42, was appointed Secretary in August 2004. He has held the
position of Director of  Operations  for EMEA  (Europe,  Middle East and Africa)
since October 2002.  From October 2001 to September  2002, Mr.  Majendie was the
General Manager of Middle East  Telecommunications  Company  FZ-LLC,  Dubai UAE,
with  the  responsibility  for  operations  including  VoIP   telecommunications
operations  and  tendering  for  telecommunications  network  construction.  Mr.
Majendie has worked in the senior  management of new materials,  technology,  IT
and  telecommunications  companies in North America,  Europe,  Ukraine,  and the
Middle  East.  From April  1999 to  October  2001,  Mr.  Majendie  served as the
Chairman of the Supervisory  Board of ZAT 'Telesystems of Ukraine,' where he was
responsible  for the  reorganization  of the business and the company as well as
guiding  strategic,  marketing  and business  planning,  and  negotiations  with
investors, equipment suppliers and partners for the launch of a mobile and local
access  telecommunications  network. He has a law degree from Geneva University,
Switzerland.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange  Act of 1934  (the  "Exchange  Act")
requires our directors and executive officers,  and persons who beneficially own
more than ten percent of a registered  class of our equity  securities,  to file
with the Securities and Exchange  Commission (the "Commission")  initial reports
of beneficial  ownership  and reports of changes in beneficial  ownership of our
Common Stock. The rules promulgated by the Commission under Section 16(a) of the
Exchange  Act  require  those  persons to furnish us with  copies of all reports
filed with the  Commission  pursuant to Section 16(a).  The  information in this
section is based  solely upon a review of Forms 3, Forms 4, and Forms 5 received
by us.


                                       48
<PAGE>

Mr. Wilcoxon timely filed Form 4s to report changes in his beneficial  ownership
during  fiscal 2003 and had no changes to  beneficial  ownership in fiscal 2004.
Mr.  Arrington had no changes in his beneficial  ownership during fiscal 2003 or
fiscal 2004. Mr. Majendie failed to timely file a Form 3 within 10 days after he
was elected an officer in August 2004.  Mr.  Majendie did not have any change in
beneficial  ownership  after he was elected an officer in August  2004.  Form 5s
were not required to be filed under Rule  16a-3(f)(2)  because all  transactions
otherwise required to be reported on Form 5 were reported before the due date of
the Form 5.

CODE OF ETHICS

We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller, or persons performing similar functions. Such code of ethics will be
provided to any person without charge,  upon request.  You may request a copy of
this code of ethics to be sent as a pdf file to an e-mail address; if you do not
have an e-mail  address you may request a copy by sending  such request to us at
our principal office.

AUDIT COMMITTEE FINANCIAL EXPERT

No person  serving  as a director  qualifies  as an "audit  committee  financial
expert,"  as  defined  by the  Sarbanes  Oxley  Act of 2002 and the  regulations
promulgated under the Securities Act of 1933 and the Securities  Exchange Act of
1934. In forming our Board of Directors,  we sought out individuals who would be
able to guide our operations based on their business  experience,  both past and
present,  or  their  education.  Our  business  model  is not  complex  and  our
accounting  issues are  straightforward.  Responsibility  for our  operations is
centralized  within  management.  We rely on the  assistance of others,  such as
independent  contractor  accountants,  to help us with  the  preparation  of our
financial statements. We recognize that having a person who possesses all of the
attributes of an audit committee  financial expert would be a valuable  addition
to our Board of Directors, however, we are not, at this time, able to compensate
such a person therefore, we may find it difficult to attract such a candidate.

PROCEDURES FOR NOMINATING DIRECTORS

There have been no material  changes to the procedures by which our stockholders
may  recommend  nominees to our board of directors  during the fiscal year ended
September 30, 2004 or since the last time we responded to Item 7(d)(2)(ii)(G) of
Schedule 14A.

ITEM 10 - EXECUTIVE COMPENSATION

The  following  executive  compensation  disclosure  reflects  all  compensation
awarded to, earned by or paid to the executive  officers  below,  for the fiscal
years ended  September  30, 2004,  2003,  2002 and 2001.  None of our  executive
officers  received  compensation in excess of $130,000 for the fiscal year ended
September 30, 2004, and no officer  received  compensation in excess of $120,000
for the fiscal  years 2003,  2002 or 2001,  respectively.  The  following  table
summarizes  all  compensation  received by our Chief  Executive  Officer,  Chief
Operating  Officer/President,  Corporate  Secretary and Chief Financial  Officer
(former) in fiscal years 2004, 2003, 2002 and 2001.


                                       49
<PAGE>

<TABLE>
<CAPTION>
                             Annual Compensation
                      --------------------------

                                                                        Other Annual
Name and                      Fiscal         Salary       Bonus         Compensation
Principal Position              Year            ($)         ($)                  ($)
------------------              ----       --------       -----         ------------
<S>                             <C>        <C>             <C>           <C>
Benton H Wilcoxon (1)           2004       $120,000          --                   --
Chief Executive                 2003       $120,000          --                   --
Officer                         2002       $ 60,000          --                   --

C. William Arrington (2)        2004       $120,000          --                   --
Chief Operating                 2003       $120,000          --                   --
Officer and President           2002         60,000          --                   --


Dominic J. Majendie (3)         2004       $120,000          --               10,000
President                       2003              0          --                   --
                                2002              0          --                   --

Brent N. Robbins (4)            2004       $ 65,077          --                   --
Chief Financial                 2003       $ 30,000          --                   --
Officer (former)
</TABLE>


<TABLE>
<CAPTION>
                                   Long-Term Compensation
                                   --------------------------------
                                         Awards                             Payouts
                                      ---------                           ---------
                                 Stock           Underlying        LTIP            All Other
Name and                      Award(s)         Options/SARs     Payouts         Compensation
Principal Position                 ($)                  ($)         ($)                  ($)
------------------           ---------         ------------     -------         ------------
<S>                          <C>               <C>              <C>             <C>
Benton H Wilcoxon (1)               --              635,216          --                   --
Chief Executive                     --              635,216          --                   --
Officer                             --              635,216          --                   --

C. William Arrington (2)            --              635,216          --                   --
Chief Operating                     --              635,216          --                   --
Officer and President               --              635,216          --                   --


Dominic J. Majendie (3)        250,000            1,000,000          --                   --
President                           --            1,000,000          --                   --
                                    --                    0          --                   --

Brent N. Robbins (4)                 0                   --          --                   --
Chief Financial                750,000                   --          --                   --
Officer (former)
</TABLE>

(1) Benton H Wilcoxon was awarded an additional 2 million options by decision of
the Board of  Directors  dated  August  13,  2003.  This grant is subject to the
approval by an  independent  committee  established by the Board of Directors to
consider compensation.

(2) C. William Arrington was awarded an additional 2 million options by decision
of the Board of Directors  dated  August 13, 2003.  This grant is subject to the
approval by an  independent  committee  established by the Board of Directors to
consider compensation.

(3) In August  2004,  Dominic J.  Majendie was awarded the  restricted  stock in
consideration for services rendered during the fiscal year ended 2003.

(4) Brent Robbins'  employment with the Company as the Chief  Financial  Officer
ceased on January 30, 2004. His base salary was $120,000 per annum.  At the time
of  termination  he exercised  120,765  options and the  remaining  629,235 were
cancelled.

The following  table shows all grants during the fiscal year ended September 30,
2004 of stock  options  under our  stock  option  plans to the  named  executive
officers.

           OPTIONS/SAR GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 2004
                               (Individual Grants)

There were no options  granted to  Company's  executives  during the fiscal year
ending September 30, 2004.

Benton H  Wilcoxon  and C.  William  Arrington  were each  awarded  an option to
purchase 2 million  options by decision of the Board of  Directors  dated August
13,  2003.  This grant is subject to the  approval by an  independent  committee
established  by the Board of Directors to consider  compensation.  The committee
has not yet met to decide this issue.


                                       50
<PAGE>

The  following  table  provides  information  as to  the  number  and  value  of
unexercised  options to purchase  CTC Common  Stock held by the named  executive
officers at September 30, 2004. None of the named executive  officers  exercised
any options during the fiscal year ended September 30, 2004.

<TABLE>
<CAPTION>

                                  Number of Securities Underlying          Value of Unexercised In-the-Money
                              Unexercised Options at Fiscal Year-             Options at Fiscal Year-End ($)
Name                            End (#) Exercisable/Unexercisable                  Exercisable/Unexercisable
----                            ---------------------------------                  -------------------------
<S>                           <C>                                          <C>
Benton H Wilcoxon                               381,129 / 254,087                  $474,293.23 / $316,196.73
C. William Arrington                            381,129 / 254,087                  $474,293.23 / $316,196.73
Dominic J. Majendie                             340,000 / 660,000                  $414,459.32 / $804,538.68
Brent N. Robbins (1)                                        0 / 0                                      0 / 0
</TABLE>

(1)  Prior to his  termination  Mr.  Brent N.  Robbins  held a total of  750,000
options.  120,765 of these  options  issued to Mr.  Robbins  were  exercised  on
January  29, 2004  following  the  departure  of Mr.  Robbins and the  remaining
629,235 were cancelled. The table reflects the position at fiscal year-end 2004.

                 LONG-TERM INCENTIVE PLAN AWARDS ("LTIP") TABLE

We do not currently have any LTIP.

COMPENSATION OF DIRECTORS

Directors do not receive  compensation for their services as directors,  but are
to be reimbursed for expenses incurred in attending board meetings.

EMPLOYMENT   AGREEMENTS,   TERMINATION  OF  EMPLOYMENT   AND   CHANGE-IN-CONTROL
ARRANGEMENTS

Except for the Employment Agreement with Mr. Dominic Majendie,  dated October 1,
2003,  we currently  have no  employment  agreements  with any of our  executive
officers,  nor  any  compensatory  plans  or  arrangements  resulting  from  the
resignation,  retirement  or any  other  termination  of  any  of our  executive
officers, from a change-in-control,  or from a change in any executive officer's
responsibilities following a change-in-control.

Mr.  Dominic  Majendie was originally  employed as Director of Operations,  EMEA
(Europe,  Middle East, and Africa) of CTC, now Vice  President,  EMEA,  under an
employment agreement dated October 1, 2003, which expires on September 30, 2008.
The essential terms of the employment agreement are as follows:

Mr. Majendie was initially  entitled to annual base compensation of $120,000.00,
which shall be  increased at a minimum of 10% per year and an option to purchase
up to 1,000,000  shares of common  stock,  vesting with respect to 85,000 shares
each quarter was issued as of August 11, 2003.



                                       51
<PAGE>

CTC will reimburse Mr.  Majendie for all reasonable  business or travel expenses
and office  related  expenses  incurred in the  performance  of his duties,  and
provide him with a $150.00 per month  telephone  allowance  and a company car in
accordance  with the  guidelines  set out by the Board of Directors from time to
time, or an equivalent car allowance in cash.

In the event that CTC merges, sells a controlling  interest, or sells a majority
of its assets, CTC will pay Mr. Majendie 18 months salary.

In the event the agreement is terminated prior to its expiration for any reason,
Mr.  Majendie will be entitled to receive his then current base salary,  any and
all accrued, earned but unpaid bonuses or benefits described.

In the event that Mr. Majendie's  employment is terminated due to his death, his
beneficiary or  beneficiaries  shall be entitled to receive Mr.  Majendie's then
current Base Salary through 60 days after the date of his death.

The  employment  agreement  provides  for early  termination  in the case of Mr.
Majendie's  death,  permanent  incapacity  for 6 months or more or for  "Cause."
Cause  includes  (i)  the   commission  of  a  criminal  act  involving   fraud,
embezzlement  or  breach of trust or other act  which  would  prohibit  him from
holding his position under the rules of the Securities and Exchange  Commission,
(ii) willful,  knowing and malicious  violation of written  corporate  policy or
rules  of  the  Company,   (iii)   willful,   knowing  and   malicious   misuse,
misappropriation,   or  disclosure   of  any  of   proprietary   matters,   (iv)
misappropriation,  concealment,  or  conversion of any money or property of CTC,
(v) being under the habitual  influence of  intoxicating  liquors or  controlled
substances  while in the course of employment,  (vi) intentional and non-trivial
damage or  destruction  of property of CTC,  (vii)  reckless and wanton  conduct
which  endangers  the safety of other  persons or property  during the course of
employment or while on premises  leased or owned by CTC,  (viii) the performance
of duties in a habitually  unsatisfactory  manner after being repeatedly advised
in  writing  by  CTC of  such  unsatisfactory  performance,  or  (ix)  continued
incapacity to perform his duties, unless waived by CTC.

The agreement also contains provisions relating to Mr. Majendie's  obligation to
maintain the confidentiality of CTC proprietary information.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership of our common stock as of December 9, 2004,  determined  in accordance
with Rule 13d-3 and 13d-5 of the Exchange Act by (i) each person who is known by
CTC to own beneficially more than five percent (5%) of the outstanding shares of
our voting  securities,  (ii) each  director and  executive  officer of CTC, and
(iii) all directors and executive  officers of CTC as a group.  Unless otherwise
indicated  below,  to the  knowledge of CTC, all persons  listed below have sole
voting and investing power with respect to their shares of common stock,  except
to the extent authority is shared by spouses under applicable community property
laws, and, unless otherwise stated,  their address is 2026 McGaw Avenue,  Irvine
California  92614.  Also included are the shares held by all executive  officers
and directors as a group.


                                       52
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Title of Class                           Name and address                         Amount and nature              Percent of class
                                      of beneficial owner                   of beneficial ownership
---------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                <C>                                      <C>
Common                                  Benton H Wilcoxon                                19,858,442 (1)                    17.76%
                                        2026 McGaw Avenue
                                          Irvine CA 92614
---------------------------------------------------------------------------------------------------------------------------------
Common                               C. William Arrington                                20,631,641 (2)                    18.45%
                                        2026 McGaw Avenue
                                          Irvine CA 92614
---------------------------------------------------------------------------------------------------------------------------------
Common                                Dominic J. Majendie                                   675,000 (3)                        *%
                                           Dunston House,
                                        Dunston's Corner,
                                     Hemingstone, Ipswich
                                      Suffolk IP6 9QD, UK
---------------------------------------------------------------------------------------------------------------------------------
Common                                G. William Harrison (4)                             5,764,461 (5)                      5.2%
                                        26218 James Drive
                                       Grosse Il MI 48138
---------------------------------------------------------------------------------------------------------------------------------
                    All officers and directors as a group                                41,165,083                         36.8%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* less than 1%.

(1)  Represents  ownership  after  gifts to family  members  in 2002 of  439,200
shares; and gifts to family members and a research  association totaling 240,000
shares  in 2003;  and  gifts to family in early  2004  totaling  94,000  shares.
Ownership  of  19,477,312  shares is  increased  by 381,129  options that may be
exercised within the next 60 days. The executive owns a total of 635,216 options
to purchase  shares of common  stock and a further 2 million  options  have been
granted subject to the approval of a Board Committee.

(2) Ownership of 20,250,512  shares is increased by 381,129  options that may be
exercised within the next 60 days. The executive owns a total of 635,216 options
to purchase  shares of common  stock and a further 2 million  options  have been
granted subject to the approval of a Board Committee.

(3)  Ownership of 250,000  shares is  increased  by 425,000  options that may be
exercised  within  the next 60 days.  The  executive  owns a total of  1,000,000
options to purchase shares of common stock

(4) The address of G. William Harrison is 26218 James Drive,  Grosse Il Michigan
48138.

(5) Represents  beneficial ownership of shares indirectly owned or controlled by
G. William Harrison,  an outsider who is not a director or officer of CTC as per
the Company records September 30, 2004:  George W. Harrison,  III Trust (538,318
shares); Kathleen M. Harrison Trust (440,322 shares); Bridgestone Capital Group,
LLC (Mr.  Harrison is Chairman of the Board and President)  (1,000 shares);  and
Red Guard  Industries,  Inc. (Mr.  Harrison is Chairman of the Board) (4,784,821
shares).  As at December 9, 2004,  Mr. G. William  Harrison has confirmed to the
Company that his total  holdings of the  Company's  common shares or warrants to
purchase  such  shares  held by himself or his wife  either  directly or through
controlled entities represents 5,188,721 or 4.6%.


                                       53
<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Between  December  21,  2001 and  February  11,  2002,  Red Guard  made five (5)
short-term  working  capital  loans to the  Company  aggregating  $57,000.  Each
respective  loan was for a term of six months and bore  interest  at ten and one
half of a percent (10 1/2%) per annum.  On September  30, 2002,  the Company and
Red Guard  consummated a transaction  whereby Red Guard exchanged  100.0% of the
issued and  outstanding  Series "A" Preferred  Stock;  all accrued,  but unpaid,
dividends;  certain  short-term  working  capital  loans;  and all accrued,  but
unpaid,  interest in return for certain of the Company's investment interests in
other companies.

Prior to the consummation of the transactions contemplated by the Reorganization
Agreement,  Glenn Little was the controlling  stockholder of the Company, owning
8,548,899  shares  of  Common  Stock.  On  November  3,  2001,  as  part  of the
transactions  contemplated  by the  Reorganization  Agreement,  he  contributed,
without  consideration,  3,116,515  shares of Common  Stock to the  Company  for
cancellation.  In addition, for his services in connection with the transaction,
he was issued 185,000 shares of Common Stock.

In June 2004, a director of the Company  made a short term non interest  bearing
loan to the Company of $81,000. This loan was repaid on August 9, 2004.

PART IV

ITEM 13- EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

Number            Description
------            -----------

2.1***            Articles of Merger of ElDorado Financial Group, Inc., a
                  Florida corporation, into ElDorado Financial Group, Inc., a
                  Nevada corporation

2.2*              Agreement and Plan of Reorganization By and Among
                  Transmission Technology Corporation, Certain of its
                  Stockholders, and ElDorado Financial Group, Inc. dated
                  November 3, 2001

3.1***            Articles of Incorporation of the Company

3.2               By-Laws of the Company



                                       54
<PAGE>

10.1***           2001 TTC Incentive Compensation Stock Option Plan

10.2**            Technology License Agreement by and between W.B.G., Inc. and
                  Transmission Technology Corporation dated May 7, 2001.

10.3****          Composite Technology Corporation 2002 Non-Qualified Stock
                  Compensation Plan

10.4*****         Composite Technology Corporation Option Agreement - Benton
                  Wilcoxon dated August 13, 2003

10.5*****         Composite Technology Corporation Option Agreement - William
                  Arrington dated August 13, 2003

10.6*****         Composite Technology Corporation Option Agreement - Dominic
                  Majendie dated August 11, 2003

10.7*****         Lease Agreement between Composite  Technology  Corporation and
                  CNH, LLC dated November 7, 2003.

10.8******        Manufacturing Agreement between Composite Technology
                  Corporation and General Cable Corp dated October 2, 2004.

10.9******        Distribution Agreement between Composite Technology
                  Corporation and General Cable Corp dated October 2, 2004.

14.*****          Code of Business Ethics

21                Subsidiaries of the Registrant

23.1              Consent of Singer Lewak Greenbaum & Goldstein LLP

31.1              Certification Pursuant to Rule 13a-14(a) and 15d-14(a) (4)
                  of Principal Executive Officer and Principal Financial Officer

32.1              Certification Pursuant to Section 1350 of Title 18 of the
                  United States Code of Principal Executive Officer and
                  Principal Financial Officer

(*) Incorporated herein by reference to Form 8-K filed with the U. S. Securities
and Exchange Commission on November 20, 2001.

(**)  Incorporated  herein  by  reference  to  Form  8-K  filed  with  the U. S.
Securities and Exchange Commission on January 11, 2002.

(***)  Incorporated  herein by  reference  to Form  10-KSB  filed with the U. S.
Securities and Exchange Commission on February 14, 2002.

(****)  Incorporated  herein by reference to Definitive  Schedule 14C filed with
the U.S. Securities and Exchange Commission on January 27, 2003.

(*****)  Incorporated  herein by  reference  to Form 10-KSB  filed with the U.S.
Securities and Exchange Commisson on February 2, 2004.

(******)  Incorporated  herein  by  reference  to Form 8-K  filed  with the U.S.
Securities and Exchange Commisson on October 7, 2004.


                                       55
<PAGE>

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
professional services rendered by our principal accountants for the audit of our
annual financial statements, review of financial statements included in our Form
10-QSBs  and other  services  provided  by the  accountant  in  connection  with
statutory and regulatory filings are as follows:

Fiscal Year 2003: $98,598.48;

Fiscal Year 2004: $103,418.61 (to date).

AUDIT RELATED FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
assurance and related  services by our principal  accountant that are reasonably
related to the  performance of the audit or review of our financials  statements
are as follows:

Fiscal Year 2003: $0.00;

Fiscal Year 2004: $0.00.

TAX FEES

The  aggregate  fees  billed  during  Fiscal  Year 2003 and Fiscal Year 2004 for
professional  services rendered by our principal accountants for tax compliance,
tax advice and tax planning are as follows:

Fiscal Year 2003: $3,000.00 (to date);

Fiscal Year 2004: $0.00 (to date).

ALL OTHER ACCOUNTANT FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
other  professional  services  rendered  by  our  principal  accountants  are as
follows:

Fiscal Year 2003: $0.00;

Fiscal Year 2004: $0.00.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

The Company does not have an audit committee and does not have any  pre-approval
policies or procedures.



                                       56
<PAGE>


                     COMPOSITE TECHNOLOGY CORPORATION
                               AND SUBSIDIARY
                       (DEVELOPMENT STAGE COMPANIES)

                                                                CONTENTS
                             SEPTEMBER 30, 2004

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


                                                                  Page

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORTS              F-2

CONSOLIDATED FINANCIAL STATEMENTS

       Consolidated Balance Sheet                                  F-3

       Consolidated Statements of Operations                       F-4

       Consolidated Statements of Shareholders' Equity        F-5 - F10

       Consolidated Statements of Cash Flows                 F-11 - F12

       Notes to Consolidated Financial Statements            F-13 - F41



                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders
Composite Technology Corporation and Subsidiaries
Irvine, California


We  have  audited  the  consolidated   balance  sheet  of  Composite  Technology
Corporation and subsidiaries  (collectively,  the "Company") as of September 30,
2004,  and the related  consolidated  statements  of  operations,  shareholders'
equity and cash  flows for each of the year  ended  September  30,  2004.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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  provided  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 Composite Technology
Corporation  and  subsidiaries as of September 30, 2004 and the results of their
operations  and their cash flows for each of the year ended  September 30, 2004,
in conformity with U.S. generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements, the Company has suffered recurring losses from operations.
The Company  incurred a net loss of  $(14,323,596)  and negative cash flows from
operations of $(9,022,676).  In addition, the Company had an accumulated deficit
of $(26,075,079) at September 30, 2004. This raises  substantial doubt about the
Company's ability to continue as a going concern.  Management's  plans in regard
to these matters are also  described in Note 2. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.



SINGER LEWAK GREENBAUM & GOLDSTEIN, LLP

Los Angeles, California
December 14, 2004


                                      F-2
<PAGE>

                    COMPOSITE TECHNOLOGY CORPORATION
                              AND SUBSIDIARY
                      (DEVELOPMENT STAGE COMPANIES)
                       CONSOLIDATED BALANCE SHEET
                            SEPTEMBER 30, 2004
-----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                  ASSETS

CURRENT ASSETS
<S>                                                            <C>
     Cash and cash equivalents                                 $  2,930,615
     Restricted cash (See Note 11)                               10,010,060
     Accounts receivable                                          2,501,994
     Inventory                                                      788,799
     Prepaid expenses and other current assets                      378,052
                                                               ------------
         Total current assets                                    16,609,520

PROPERTY AND EQUIPMENT, net                                       1,253,123
OTHER ASSETS                                                        218,600
                                                               ------------
                TOTAL ASSETS                                   $ 18,081,243
                                                               ============


                   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable - trade                                  $  1,371,631
     Accrued legal settlement                                       469,904
     Accrued payroll and related expenses                           122,621

     Accrued officer compensation                                   264,561
     Deferred revenue                                               564,750
     Deferred gain on sale of assets                                 49,569
     Lease obligations - current                                    251,782
                                                               ------------

         Total current liabilities                                3,094,818
                                                               ------------
LONG TERM LIABILITIES
     Convertible notes payable, net
                Of unamortized debt discount                      8,901,016
     Lease obligation - long term                                   482,600

                                                               ------------
         Total long term liabilities                              9,383,706
                                                               ------------
                 Total liabilities                               12,478,524
                                                               ------------


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common stock, $0.001 par value
         200,000,000 shares authorized
         110,841,320 shares issued and outstanding                  110,841
     Deferred compensation - stock options                         (362,925)
     Additional paid-in capital                                  31,929,883
     Deficit accumulated during the development stage           (26,075,079)
                                                               ------------


                Total shareholders' equity                        5,602,719
                                                               ------------

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                    $ 18,081,243
</TABLE>


                                      F-3
<PAGE>

                  COMPOSITE TECHNOLOGY CORPORATION
                            AND SUBSIDIARY
                    (DEVELOPMENT STAGE COMPANIES)

                 CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
  FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
-----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                               For the
                                                                             Period from
                                           For the Year Ended              March 28, 2001
                                              September 30,                (Inception) to
                                     -------------------------------        September 30,
                                          2004               2003               2004
                                     -------------      -------------      -------------
<S>                                  <C>                <C>                <C>
Sales                                $   2,500,000      $          --      $   2,500,000

Less: Cost of
   Goods Sold                              314,548                 --            314,548
                                     -------------      -------------      -------------
Gross Margin                             2,185,452                 --          2,185,452

OPERATING EXPENSES
  Officer compensation                     282,258            240,000            847,158
  General and
     administrative                      5,519,506          1,213,190          7,155,856
  Legal, professional,
     and consulting                      3,360,267          1,496,655          7,898,110
  Research and
     development                           114,959          3,210,289          3,325,248
  Reorganization                                --                 --             30,000
  Depreciation                             153,039             18,569            176,214
  Compensation expense
     related to issuance
     of common stock -
     legal                               1,058,000                 --          1,058,000
  Stock issued for
     Legal settlement                      739,000                 --            739,000
Compensation expense
         related to fair
         value of warrants -
         consultants                     1,792,510                 --          1,792,510
Compensation expense
         related to issuance
         of common stock -
         consulting                      1,265,165                 --          1,265,165
Compensation expense
         related to fair value
         warrants                        1,540,000                 --          1,540,000
Compensation expense
     related to
     issuances of
     common stock at
     less than fair value                       --                 --            603,500
Compensation expense
   related to
   fair value of stock
   options - legal                         128,250            269,225            563,900
 Compensation expense
   related to fair value
   of stock options -
   research
   and development                         170,570            303,324            737,449
                                     -------------      -------------      -------------

     Total operating
       expenses                         16,123,524          6,751,252         27,732,110
                                     -------------      -------------      -------------
LOSS FROM OPERATIONS                   (13,938,072)        (6,751,252)       (25,546,658)
                                     -------------      -------------      -------------

OTHER INCOME/(EXPENSE)
  Interest expense                        (408,898)                --           (414,564)
  Interest income                           13,897                 --             13,897
  Gain on Sale of Assets                     9,476                 --              9,476
  Carrying value
    impairment adjustment
    on investments in
    other companies                             --                 --           (137,230)
                                     -------------      -------------      -------------
     Total other income
       and expense                        (385,525)                --           (528,421)
                                     -------------      -------------      -------------

NET LOSS                             $ (14,323,597)     $  (6,751,252)     $ (26,075,079)

PREFERRED STOCK
DIVIDENDS                                       --             20,000                 --
                                     -------------      -------------      -------------

NET LOSS AVAILABLE TO COMMON
     SHAREHOLDERS                    $ (14,323,597)     $  (6,771,252)     $ (26,075,079)
                                     =============      =============      =============

BASIC AND DILUTED LOSS PER SHARE
   Loss per share                    $       (0.14)     $       (0.08)
   Preferred stock dividend                     --                 --
                                     -------------      -------------

TOTAL BASIC AND DILUTED
   LOSS PER SHARE
   AVAILABLE TO COMMON
   SHAREHOLDERS                      $       (0.14)     $       (0.08)
                                     =============      =============

WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING                     103,168,626         87,132,657
                                     =============      =============
</TABLE>


                                      F-4
<PAGE>

                    COMPOSITE TECHNOLOGY CORPORATION
                              AND SUBSIDIARY
                       (DEVELOPMENT STAGE COMPANIES)

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
-----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              Preferred Stock                    Common Stock
                                       ----------------------------      ---------------------------
                                         Shares           Amount           Shares          Amount
                                       -----------      -----------      -----------     -----------
<S>                                    <C>              <C>              <C>             <C>
BALANCE,
MARCH 28, 2001
(INCEPTION)                                     --      $        --        9,166,510     $     9,167
RECAPITALIZATION EFFECT OF
  REVERSE ACQUISITION WITH
  TRANSMISSION TECHNOLOGY
  CORPORATION                                1,165                1       57,333,485          57,333
PREFERRED STOCK DIVIDENDS
NET LOSS
                                       -----------      -----------      -----------     -----------

BALANCE, SEPTEMBER
30, 2001                                     1,165                1       66,500,000          66,500
ISSUANCE OF SERIES B
  PREFERRED
  STOCK                                                                          320              --
ISSUANCE OF COMMON
  STOCK FOR
    Cash                                                                   2,065,790           2,066
    Consulting and legal fees                                              4,319,868           4,320
    Investment in other
      company                                                                 42,500              42
    Conversion of notes
      payable and accrued
      interest                                                               866,173             866
CANCELLATION OF COMMON
  STOCK UPON TERMINATION
  OF CONTRACT                                                                (79,402)            (79)
FAIR VALUE OF STOCK OPTIONS FOR
  SERVICES RENDERED
DEFERRED COMPENSATION - FAIR
  VALUE OF STOCK OPTIONS FOR
  SERVICES RENDERED
EXCHANGE OF PREFERRED
  STOCK AND ACCRUED
  DIVIDENDS FOR INVESTMENT
  IN OTHER
  COMPANIES                                   (165)     $        --
PREFERRED STOCK DIVIDENDS
NET LOSS
                                       -----------      -----------      -----------     -----------
</TABLE>


                                      F-5
<PAGE>


<TABLE>
<CAPTION>
<S>                                    <C>              <C>              <C>             <C>
BALANCE, SEPTEMBER
30, 2002                                     1,320                1       73,714,929     $    73,715
ISSUANCE OF COMMON
  STOCK FOR
    Cash                                                                  16,786,410          16,786
    Services rendered
    for research
    and development                                                        3,803,900           3,804
    Legal services rendered                                                4,950,000           4,950
    Offering costs                                                           750,000             750
    Legal settlement                                                       1,500,000           1,500
    Payment of debt                                                          300,000             300
ISSUANCE OF WARRANTS FOR
    Services rendered for research
    and development
    Offering costs
    Legal settlement
COMMON STOCK COMMITTED FOR
    Cash
    Exercise of options
    Exercise of warrants
OFFERING COSTS
DEFERRED COMPENSATION - FAIR
    VALUE OF STOCK OPTIONS FOR
    SERVICES RENDERED
SUBSCRIPTION RECEIVABLE
PREFERRED STOCK CONVERTED TO
    COMMON
    STOCK                                     (320)              --          207,576     $       208
PREFERRED STOCK DIVIDENDS
NET LOSS
                                       -----------      -----------      -----------     -----------

BALANCE, SEPTEMBER
 30, 2003                                    1,000      $         1      102,012,815     $   102,013
                                       -----------      -----------      -----------     -----------

ISSUANCE OF COMMON STOCK FOR
   Cash                                                                    2,489,360     $     2,489
   Warrants Exercised                                                      7,482,928           7,483
   Options Exercised                                                         440,765             441
   Legal fees                                                                700,000             700
   Legal settlements                                                         675,000             675
   Consulting fees                                                         1,098,881           1,099

Cancellation of previously
    issued shares                                                         (4,434,000)         (4,434)
    Preferred Stock
    Exchange                                 (1000)              (1)         107,631             108

Issuance of common stock
    for rent                                                                 140,160             140

Common stock issued for
    cashless transactions                                                    127,780             128

NET LOSS
                                       -----------      -----------      -----------     -----------

Balance, September
30, 2004                                        --      $        --      110,841,320     $   110,841
</TABLE>


                                      F-6
<PAGE>

                     COMPOSITE TECHNOLOGY CORPORATION
                              AND SUBSIDIARY
                      (DEVELOPMENT STAGE COMPANIES)

             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
   FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        Common            Deferred
                                      Common             Stock          Compensation      Additional
                                       Stock         Subscription          Stock            Paid-In
                                     Committed         Receivable          Options          Capital
                                    -----------       -----------       -----------       -----------
<S>                                 <C>               <C>             <C>               <C>
BALANCE, MARCH 28, 2001
 (INCEPTION                         $   --              $    --       $        --       $ 2,001,570
RECAPITALIZATION EFFECT OF
  REVERSE ACQUISITION WITH
  TRANSMISSION TECHNOLOGY
  CORPORATION                                                                            (1,292,946)
PREFERRED STOCK DIVIDENDS
NET LOSS
                                     -----------       -----------    -----------       -----------

BALANCE, SEPTEMBER
 30, 2001                                     --                --             --           708,624
ISSUANCE OF SERIES B
  PREFERRED STOCK                                                                            32,000
ISSUANCE OF COMMON
  STOCK FOR
    Cash                                                                                    956,444
    Consulting and legal fees                                                             1,977,169
    Investment in other
      company                                                                               191,408
    Conversion of notes
      payable and accrued
      interest                                                                              152,730
CANCELLATION OF COMMON
   STOCK UPON TERMINATION
   OF CONTRACT                                                                             (299,921)
FAIR VALUE OF STOCK OPTIONS FOR
   SERVICES RENDERED                                                  (1,664,275)         1,664,275
DEFERRED COMPENSATION - FAIR
   VALUE OF STOCK OPTIONS FOR
   SERVICES RENDERED                                                                        429,980
EXCHANGE OF PREFERRED
  STOCK AND ACCRUED
  DIVIDENDS FOR INVESTMENT
  IN OTHER COMPANIES                                                                       (169,098)
PREFERRED STOCK DIVIDENDS
NET LOSS
                                     -----------       -----------    -----------       -----------
</TABLE>


                                      F-7
<PAGE>

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

BALANCE, SEPTEMBER 30, 2002         $         --       $        --   $(1,234,295)         5,213,631
ISSUANCE OF COMMON
  STOCK FOR
    Cash                                                                                  3,164,010
    Services rendered for research
      and development                                                                     2,336,325
    Legal services rendered                                                               1,758,135
    Offering costs                                                                          213,000
    Legal settlement                                                                         92,250
    Payment of debt                                                                          42,801
ISSUANCE OF WARRANTS FOR
    Services rendered for research
      and development                                                                        61,250
    Offering costs                                                                           20,600
    Legal settlement                                                                         11,750
COMMON STOCK COMMITTED FOR
    Cash                                 100,000
    Exercise of
     options                              15,000
    Exercise of
      Warrants                            79,375
OFFERING COSTS                                                                            (251,350)
DEFERRED COMPENSATION - FAIR
    VALUE OF STOCK OPTIONS FOR
    SERVICES RENDERED                                                    572,549
SUBSCRIPTION
RECEIVABLE                               (50,000)
PREFERRED STOCK CONVERTED TO
    COMMON STOCK                                                                               (208)
PREFERRED STOCK DIVIDENDS
NET LOSS
                                     -----------       -----------    -----------       -----------

BALANCE, SEPTEMBER
 30, 2003                            $   194,375       $   (50,000)   $ (661,746)       $12,662,194
                                     -----------       -----------    -----------       -----------

ISSUANCE OF COMMON STOCK FOR
   Cash                                                                                   3,122,616
   Warrants exercised                   (146,875)           50,000                        3,330,167
   Options exercised                     (45,000)                                           143,565
   Legal fees                                                                             1,057,300
   Legal Settlements                                                                        738,325
   Consulting fees                                                                        1,264,066

CANCELLATION OF PREVIOUSLY ISSUED
   SHARES                                                                                    (1,686)
   Preferred stock exchange                                                                    (107)

ISSUANCE OF COMMON STOCK
   FOR RENT                                                                                 147,028

OFFERING COSTS
   Securities Purchase Agreement                                                           (220,030)

INDUCED CONVERSION WARRANTS RELATED TO
   Securities Purchase Agreement                                                          1,540,000

DEFERRED COMPENSATION - FAIR
  VALUE OF STOCK OPTION                                                  298,820

COMMON STOCK ISSUED FOR
  CASHLESS TRANSACTIONS                                                                        (128)

COMMITTED STOCK ADJUSTMENT                (2,500)                                           (10,000)
  Debt discount on convertible
     debenture                                                                            6,364,063
  Issuance of warrants for services
     Rendered                                                                             1,792,510

PREFERRED STOCK DIVIDENDS
NET LOSS
                                     -----------       -----------    -----------       -----------

BALANCE, SEPTEMBER 30, 2004                   --                --      (362,925)        31,929,883
                                     ===========       ===========    ===========       ===========
</TABLE>


                                      F-8
<PAGE>

                     COMPOSITE TECHNOLOGY CORPORATION
                              AND SUBSIDIARY
                      (DEVELOPMENT STAGE COMPANIES)

             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
   FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
 -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                         Deficit
                                        Accumulated
                                        during the
                                        Development
                                           Stage              Total
                                       ------------       ------------
<S>                                    <C>                <C>
BALANCE, MARCH 28, 2001
    (INCEPTION)                        $ (2,010,737)      $         --
RECAPITALIZATION EFFECT OF
    REVERSE ACQUISITION WITH
    TRANSMISSION TECHNOLOGY
    CORPORATION                           2,010,737            775,125
PREFERRED STOCK DIVIDENDS                    (8,222)            (8,222)
NET LOSS                                   (493,450)          (493,450)
                                       ------------       ------------

BALANCE, SEPTEMBER 30, 2001                (501,672)           273,453
ISSUANCE OF SERIES B
    PREFERRED STOCK                                             32,000
ISSUANCE OF COMMON
    STOCK FOR
      Cash                                                     958,510
      Consulting and legal fees                              1,981,489
      Investment in other
        company                                                191,450
      Conversion of notes
        payable and accrued
        interest                                               153,596
CANCELLATION OF COMMON
    STOCK UPON TERMINATION
    OF CONTRACT                                               (300,000)
FAIR VALUE OF STOCK OPTIONS FOR
    SERVICES RENDERED                                     $        --
DEFERRED COMPENSATION - FAIR
    VALUE OF STOCK OPTIONS FOR
    SERVICES RENDERED                                     $    429,980
EXCHANGE OF PREFERRED
    STOCK AND ACCRUED
    DIVIDENDS FOR INVESTMENT
    IN OTHER COMPANIES                                        (169,098)
PREFERRED STOCK DIVIDENDS              $     (5,871)            (5,871)
NET LOSS                                 (4,518,082)        (4,518,082)
                                       ------------       ------------


                                      F-9
<PAGE>

BALANCE, SEPTEMBER 30, 2002              (5,025,625)          (972,573)
ISSUANCE OF COMMON
    STOCK FOR
      Cash                                                   3,180,796
      Services rendered for research
        and development                                      2,340,129
      Legal services rendered                                1,763,085
      Offering costs                                           213,750
      Legal settlement                                          93,750
      Payment of debt                                           43,101
ISSUANCE OF WARRANTS FOR
      Services rendered for research
        and development                                         61,250
      Offering costs                                            20,600
      Legal settlement                                          11,750
COMMON STOCK COMMITTED FOR
    Cash                                                  $    100,000
    Exercise of options                                         15,000
    Exercise of warrants                                        79,375
OFFERING COSTS                                                (251,350)
DEFERRED COMPENSATION - FAIR
    VALUE OF STOCK OPTIONS FOR
    SERVICES RENDERED                                          572,549
SUBSCRIPTION RECEIVABLE                                        (50,000)
PREFERRED STOCK CONVERTED TO
    COMMON STOCK                                                   --
PREFERRED STOCK DIVIDENDS              $    (20,000)           (20,000)
NET LOSS                                 (6,751,252)        (6,751,252)
                                       ------------       ------------

BALANCE, SEPTEMBER 30, 2003            $(11,796,877)      $    449,960
                                       ------------       ------------


ISSUANCE OF COMMON STOCK FOR
   Cash                                                   $  3,125,105
   Warrants issued                                           3,240,774
   Exercise of options                                          99,005
   Legal fees                                                1,058,000
   Legal Settlements                                           739,000
   Consulting Services                                       1,265,165
CANCELLATION OF PREVIOUSLY ISSUE SHARES                         (6,120)
   Preferred stock exchanged                 45,393             45,393
ISSUANCE OF COMMON STOCK FOR RENT                              147,168
INDUCED CONVERSION WARRANTS RELATED TO
    SECURITIES PURCHASE AGREEMENT                            1,540,000
DEFERRED COMPENSATION STOCK OPTIONS                            298,820
COMMITTED STOCK ADJUSTMENT                                     (12,500)
    Debt discount on convertible debenture                   6,364,063
    Issuance of warrants for services rendered               1,792,510

OFFERING COSTS                                                (220,030)

NET LOSS                                (14,323,597)       (14,323,597)
                                       ------------       ------------

BALANCE, SEPTEMBER 30, 2004            $(26,075,079)      $  5,602,719
</TABLE>


                                      F-10
<PAGE>

                     COMPOSITE TECHNOLOGY CORPORATION
                              AND SUBSIDIARY
                      (DEVELOPMENT STAGE COMPANIES)

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
                    FOR THE PERIOD FROM MARCH 28, 2001
                    (INCEPTION) TO SEPTEMBER 30, 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                       For the
                                                                                     Period from
                                                       For the Year Ended           March 28, 2001
                                                          September 30,             (Inception) to
                                                 ------------------------------      September 30,
                                                     2004              2003              2004
                                                 ------------      ------------      ------------
<S>                                              <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                       $(14,323,597)     $ (6,751,252)     $(26,086,381)
  Adjustments to reconcile net loss
    to net cash used in operating activities
      Accretion of deferred
        gain on PP&E                                   (9,476)               --            (9,476)
      Depreciation                                    153,039            18,569           176,214
      Amortization of prepaid expenses
        originally paid
        with common stock                             132,845            17,535           218,993
  Interest on fixed
        conversion features                           265,169                --           265,169
  Expense related to fair value of
    vested options                                  1,838,821                --         1,838,821
  Issuance of common stock for
    services                                        2,470,333         4,103,214         8,136,810
  Issuance of common stock for legal
    settlement                                        739,000            93,750           832,750
  Issuance of warrants for services
    rendered for research and
    development                                            --            61,250            61,250
  Issuance of warrants for legal
    settlement                                             --            11,750            11,750
  Compensation expense related to
    issuances of common stock at
    less than fair value                                   --                --           603,500
  Compensation expense related to
    fair value of stock
    options                                                --           572,549         1,002,529
Issuance of warrants for
    Services                                        1,792,510                --         1,792,510
Carrying value impairment adjustment
   on investments in
   other companies                                         --                --           137,230
 (Increase) decrease in Assets
   Inventory                                         (788,799)               --          (788,799)
   Accounts receivable                             (2,501,994)               --        (2,501,994)
   Prepaids                                          (239,201)          157,000           (82,816)
   Capitalized Construction
      Costs                                          (206,279)               --          (206,279)
   Other Assets                                      (209,600)               --          (209,600)
Increase (decrease) in
   Accounts payable -
   trade                                              905,188          (497,093)        1,377,931
Accrued legal settlement                              324,304           145,600           469,904
Accrued payroll and related
   expenses                                            61,369            61,252           122,621
Accrued interest payable                                   --             3,250            13,101
Accrued officer
   compensation                                         8,942           (20,309)          234,633
Deferred Revenue                                      564,750                --           564,750
                                                 ------------      ------------      ------------

Net cash used in
operating activities                               (9,022,676)       (2,022,935)      (12,024,879)
                                                 ------------      ------------      ------------
</TABLE>


                                      F-11
<PAGE>


<TABLE>
<CAPTION>
<S>                                              <C>               <C>               <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Cash advanced by (to)
  officers, net                                            --                --            29,928
Purchase of property
  and equipment                                      (846,385)         (198,694)       (1,070,293)
Proceeds from
  sale of property and
  equipment                                           500,000                --           500,000
Investments in other
  companies                                                --                --           (40,000)
                                                 ------------      ------------      ------------

Net cash provided by
(used in) investing
activities                                           (346,385)         (198,694)         (580,365)
                                                 ------------      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Common stock subscription
  receivable                                               --           (50,000)          (50,000)
Proceeds from sale of
  committed stock                                          --           194,375           194,375
 Offering costs                                      (220,030)          (17,000)         (237,030)
Proceed from
  excercised of options                                99,006                --            99,006
Proceeds from issuance of
  convertible
  debenture                                        15,000,000                --        15,000,000
Proceeds from notes
  payable                                                  --            30,000           253,000
Payments on capital lease
  Assets                                              (65,618)               --           (65,618)
Proceeds from sale of
  preferred stock                                          --                --           132,000
Proceeds from sale of
  common stock                                      3,125,105         3,180,796         6,979,411
Proceeds from exercise
  of warrants                                       3,240,775                --         3,240,775
                                                 ------------      ------------      ------------

Net cash provided by financing
  activities                                       21,179,238         3,338,171        25,545,919
                                                 ------------      ------------      ------------

Net increase (decrease) in
  cash and cash
  equivalents                                    $ 11,810,177      $  1,116,542      $ 12,940,675

CASH AND CASH EQUIVALENTS, BEGINNING
  OF PERIOD                                         1,130,498            13,956                --
                                                 ------------      ------------      ------------

CASH AND CASH EQUIVALENTS, END OF
    PERIOD                                       $ 12,940,675      $  1,130,498      $ 12,940,675
                                                 ============      ============      ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
INTEREST PAID                                    $    408,898      $         --      $    409,048
                                                 ============      ============      ============
</TABLE>



                                      F-12
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES

During the year ended September 30, 2004, the company completed the following:

      o     Converted  the 1,000 shares of Series B 10%  preferred  stock of its
            subsidiary,  Transmission  Technology Corporation into 80,000 shares
            of  unregistered,  restricted  common  stock.  In addition,  Company
            issued 27,631  shares of  unregistered,  restricted  common stock in
            satisfaction  of the unpaid  preferred  stock dividends and interest
            totaling $31,996.

      o     Issued  700,000  shares  of free  trading  common  stock  registered
            pursuant to Form S-8 to two individuals  for legal and  intellectual
            property services, valued at $1.058 million.

      o     Committed to issue  20,000  shares of the  restricted,  unregistered
            common stock to one  individual for  consulting  services.  This was
            valued at $28,050. It was later determined that this transaction was
            not in the best  interest of either party and therefore the contract
            was not  consummated  or fully  executed.  The  20,000  shares  were
            reversed and the $28,050 was reclassed to accounts payable.

      o     During the year ended  September 30, 2004,  675,000 shares of common
            stock was issued,  valued at $739,00 for legal  settlements as shown
            in Note 9.

      o     In January 2004,  140,160  shares of common stock valued at $147,168
            were issued in lieu of first 2 month's rent at new Irvine location.

      o     During the year ended September 30, 2004, 127,780 shares were issued
            under cashless exercise of options.

      o     Fixed assets were acquired during the year ended September 30, 2004,
            for Capital Leases in the amount of $800,000.

During the year ended September 30, 2003, the Company completed the following:

      o     Converted  $30,000  of  short-term  loans and  accrued  interest  of
            $13,101 into 300,000 shares of common stock.

      o     Converted  320 shares of Series B convertible  preferred  stock into
            207,576 shares of unregistered, restricted common stock.

      o     Issued  750,000  shares of  unregistered,  restricted  common  stock
            valued at  $213,750  and  warrants  to  purchase  200,000  shares of
            unregistered, restricted common stock valued at $20,600 for offering
            costs.

During the year ended September 30, 2002, the Company completed the following:

      o     Exchanged 165 shares of preferred stock and accrued dividends valued
            at $169,098 for investments in other companies.

      o     Converted  $161,000  of notes  payable  and  accrued  interest  into
            866,173 shares of common stock.



                                      F-13
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

Composite Technology  Corporation ("CTC") was incorporated under the laws of the
State of Florida on February 26, 1980 as Eldorado  Gold &  Exploration,  Inc. On
January 13, 1987,  CTC's  Articles of  Incorporation  were amended to change the
corporate name to Eldorado  Financial Group,  Inc., and CTC's capital  structure
was  modified to allow for the  issuance of up to  100,000,000  shares of common
stock at $0.001 par value per share.

On June 27,  2001,  CTC's state of  incorporation  was changed  from  Florida to
Nevada by means of a merger with and into  Eldorado  Financial  Group,  Inc.,  a
Nevada  corporation  formed on June 25, 2001 solely for the purpose of effecting
the  reincorporation.  The  Articles of  Incorporation  and Bylaws of the Nevada
corporation  are the  Articles  of  Incorporation  and  Bylaws of the  surviving
corporation.  Such  Articles  of  Incorporation  did not make any changes to the
capital structure of CTC.

On November 3, 2001, CTC exchanged 60,000,000 shares of restricted, unregistered
common stock for 100% of the issued and outstanding common stock of Transmission
Technology   Corporation   ("TTC"),   a   privately-owned   Nevada   corporation
incorporated  on March 28,  2001.  TTC was  formed  to own a  license  agreement
related to patent-pending  composite  reinforced  electrical  transmission lines
utilizing composite core materials. TTC became a wholly-owned subsidiary of CTC.

In November 2001, in conjunction with the acquisition of TTC, Eldorado Financial
Group,  Inc.'s name was changed to  Composite  Technology  Corporation,  and its
Articles  of  Incorporation  were  amended  to allow for the  issuance  of up to
5,000,000  shares  of $0.001  par value  preferred  stock  from none  previously
authorized and for the issuance of up to 200,000,000  shares of $0.001 par value
common stock from the 100,000,000 shares previously authorized. CTC also changed
its year end to September 30.

The acquisition of TTC by CTC effected a change in control and was accounted for
as a reverse  acquisition,  whereby TTC is the accounting acquirer for financial
statement  purposes.  Accordingly,  the financial  statements of CTC reflect the
historical  financial statements of TTC from its inception on March 28, 2001 and
the operations of the Company (as defined in Note 4) subsequent to September 30,
2001.

In December 2003, the Company incorporated three inactive subsidiaries as Nevada
corporations:  CTC Wind  Systems  Corporation  ("WSC"),  CTC  Cable  Corporation
("CCC"), and CTC Towers and Poles Corporation ("TPC").



                                      F-14
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


NOTE 2 - GOING CONCERN

These financial statements have been prepared on a going concern basis. However,
during the year ended  September  30, 2004,  the Company  incurred a net loss of
$(14,323,596)  and  negative  cash flows from  operations  of  $(8,945,903).  In
addition,  the Company had an accumulated  deficit of $(26,075,079) at September
30, 2004. The Company's ability to continue as a going concern is dependent upon
its ability to generate profitable operations in the future and/or to obtain the
necessary  financing to meet its obligations  and repay its liabilities  arising
from normal business operations when they come due. The outcome of these matters
cannot be predicted with any certainty at this time.

Since  inception,  the Company has  satisfied  its capital  needs  primarily  by
issuing equity securities. With the introduction of its primary product into the
market and following the results of the first evaluation  sales,  management now
believes that it will generate significant revenues during fiscal 2005. There is
no guarantee that the product will be accepted or provide a marketable advantage
and  therefore  no  guarantee  that the  product  will  ever be  profitable.  In
addition,  management plans to ensure that sufficient  capital will be available
to provide for its capital  needs with minimal  borrowings  and may issue equity
securities to ensure that this is the case. However,  there is no guarantee that
the  Company  will  be  successful  in  obtaining   sufficient  capital  through
borrowings  or selling  equity  securities.  These  financial  statements do not
include  any  adjustments  to the  amounts  and  classification  of  assets  and
liabilities that may be necessary should the Company be unable to become a going
concern.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEVELOPMENT STAGE ENTERPRISE

The Company is a development  stage company as defined in Statement of Financial
Accounting  Standards  ("SFAS") No. 7,  "Accounting and Reporting by Development
Stage  Enterprises."  The Company is devoting  substantially  all of its present
efforts to establish a new business,  and its planned principal  operations have
not yet commenced.  All losses  accumulated since inception have been considered
as part of the Company's development stage activities.

PRINCIPLES OF CONSOLIDATION

The consolidated  financial statements include the accounts of CTC and ts wholly
owned  subsidiaries,  TTC,  CCC  and  TPC  (collectively,  the  "Company").  All
significant    inter-company    accounts   and   transactions   are   eliminated
consolidation.

CASH AND CASH EQUIVALENTS

For the purpose of the  statements  of cash flows,  the  Company  considers  all
highly liquid investments  purchased with original maturities of three months or
less to be cash equivalents.



                                      F-15
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The Company provides for depreciation
using the straight-line method over estimated useful lives of three to 10 years.
Expenditures  for  maintenance and repairs are charged to operations as incurred
while renewals and betterments are  capitalized.  Gains or losses on the sale of
property and equipment are reflected in the statements of operations.

IMPAIRMENT OF LONG-LIVED ASSETS

Management  evaluates  long-lived assets for impairment whenever even or changes
in  circumstances  indicate  that the  carrying  value  of an  asset  may not be
recoverable.  If the  estimated  future  cash  flow  (undiscounted  and  without
interest  charges) from the use of an asset are less than the carrying value, an
impairment  would be recorded to reduce the related asset to its estimated  fair
value.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The  Company's  financial  instruments  include  cash and cash  equivalents  and
accounts payable - trade.  The carrying amounts for these financial  instruments
approximates fair value due to their short maturities.

COMPREHENSIVE INCOME

The  Company  utilizes  SFAS No. 130,  "Reporting  Comprehensive  Income."  This
statement  establishes  standards  for  reporting  comprehensive  income and its
components in a financial  statement.  Comprehensive  income as defined includes
all  changes in equity (net  assets)  during a period  from  non-owner  sources.
Examples of items to be included in  comprehensive  income,  which are  excluded
from net income,  include  foreign  currency  translation  adjustments,  minimum
pension   liability   adjustments,   and   unrealized   gains   and   losses  on
available-for-sale  securities.  Comprehensive  income is not  presented  in the
Company's  financial  statements  since the  Company did not have any changes in
equity from non-owner sources.

REORGANIZATION COSTS

CTC and TTC have  adopted the  provisions  of American  Institute  of  Certified
Public  Accountants  Statement  of  Position  98-5,  "Reporting  on the Costs of
Start-Up  Activities,"  whereby all organization and initial costs incurred with
the incorporation  and initial  capitalization of TTC, the costs associated with
the reverse  acquisition of TTC by CTC, and costs incurred by TTC related to the
reverse  acquisition  transaction  with CTC were  charged to  operations  in the
period the respective costs were incurred.

STOCK-BASED COMPENSATION

SFAS No. 123, "Accounting for Stock-Based  Compensation," as amended by SFAS No.
148,  "Accounting  for  Stock-Based  Compensation - Transition and  Disclosure,"
defines a fair value based method of accounting  for  stock-based  compensation.
However,  SFAS No. 123 allows an entity to continue to measure compensation cost
related  to stock and stock  options  issued to  employees  using the  intrinsic
method of accounting  prescribed by Accounting  Principles Board ("APB") Opinion
No.  25,"Accounting for Stock Issued to Employees."  Entities electing to remain
with the accounting  method of APB No. 25 must make pro forma disclosures of net
income and earnings per share as if the fair value method of accounting  defined
in SFAS No. 123 had been  applied.  The  Company  has elected to account for its
stock-based compensation to employees using the intrinsic value method under APB
No. 25.


                                      F-16
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses are charged to operations as incurred.

REVENUE RECOGNITION

The  Company  records  profits or losses on its  installation  contracts  on the
completed-contract  method of accounting.  Under the method,  billings and costs
are accumulated  during the period of installation,  but no profits are recorded
before  the  completion  of  the  work.   Provisions  for  estimated  losses  on
uncompleted contracts are made at the time such losses are determined. Operating
expenses,  including indirect costs and administrative  expenses, are charged as
incurred to periodic income and not allocated to contract costs.

ACCOUNTS RECEIVABLE

The  Company  extends  credit to its  customers.  Collateral  is  generally  not
required.  Credit losses are provided for in the financial  statements  based on
management's  evaluation of historical  and current  industry  trends as well as
history  with  individual  customers.  Although  the Company  expects to collect
amounts due, actual collections may differ from estimated amounts.

INVENTORIES

Inventories  are  stated  at  lower  of  cost or  market,  with  cost  generally
determined on a FIFO basis.

INCOME TAXES

The Company accounts for income taxes under the liability method, which requires
the  recognition of deferred tax assets and  liabilities for the expected future
tax  consequences of events that have been included in the financial  statements
or tax returns. Under this method,  deferred income taxes are recognized for the
tax consequences in future years of differences  between the tax bases of assets
and liabilities and their financial  reporting  amounts at each period end based
on enacted tax laws and statutory  tax rates  applicable to the periods in which
the differences are expected to affect taxable income.  Valuation allowances are
established,  when  necessary,  to reduce  deferred  tax  assets  to the  amount
expected to be realized.

As of September 30, 2004,  the deferred tax assets  related to the Company's net
operating  loss  carry-forwards  are fully  reserved.  Due to the  provisions of
Internal  Revenue Code  Section 338, the Company may not have any net  operating
loss  carry-forwards  available  to offset  financial  statement  or tax  return
taxable income in future periods as a result of a change in control involving 50
percentage  points  or more of the  issued  and  outstanding  securities  of the
Company.

ESTIMATES

The preparation of financial  statements  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.



                                      F-17
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


LOSS PER SHARE

The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per share is
computed  by   dividing   loss   available   to  common   shareholders   by  the
weighted-average number of common shares outstanding.  Diluted loss per share is
computed  similar  to basic  loss per  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 if the additional
common  shares were  dilutive.  Common  equivalent  shares are excluded from the
computation  if their  effect  is  anti-dilutive.  The  following  common  stock
equivalents  were excluded from the  calculation of diluted loss per share since
their effect would have been anti-dilutive:

<TABLE>
<CAPTION>
                                                2004                   2003                  2002
                                             ----------             ---------             -------
<S>                                          <C>                    <C>                   <C>
Series B convertible preferred stock         --                     80,000                105,600
Options for common stock                     7,195,336              8,147,740             5,307,740
Warrants                                     13,081,681             17,047,624            2,796,290
</TABLE>


CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk consist of cash and cash  equivalents.  The Company  places its cash
and cash equivalents with high credit, quality financial institutions. At times,
such cash and cash equivalents may be in excess of the Federal Deposit Insurance
Corporation  insurance  limit of $100,000.  The Company has not  experienced any
losses in such accounts and believes it is not exposed to any significant credit
risk on cash and cash equivalents.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2004 consisted of the following:

Office furniture and equipment             $  215,513
Leasehold Improvements                        350,693
Manufacturing equipment                       803,387
                                           ----------
                                            1,369,593

 Less accumulated depreciation                116,470
                                           ----------

TOTAL                                      $1,253,123
                                           ==========

Depreciation  expense was  $153,039,  $18,569,  and $176,214 for the years ended
September  30, 2004 and 2003 and the period from March 28, 2001  (inception)  to
September 30, 2004, respectively.

NOTE 5 - CONTRACT RIGHTS

On April 12, 2001,  TTC issued 165 shares of restricted,  unregistered  Series A
cumulative,  convertible  preferred  stock to Red Guard  Industries,  Inc. ("Red
Guard") to acquire the rights to  negotiate  to acquire the license from W.B.G.,
Inc. ("WBG") to manufacture,  develop, and sell certain patent-pending composite
reinforced  aluminum  conductor  technologies.  Red Guard was a related party as
discussed  further in Note 11.  This  transaction  was valued at an  agreed-upon
amount of approximately $165,000.


                                      F-18
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


TTC entered into a  technology  license  agreement  with WBG on May 7, 2001 (the
"License Agreement").  The License Agreement related to patent pending composite
reinforced aluminum conductor  technologies and all improvements and gave TTC an
exclusive license to the technologies  covered by the License Agreement.  In the
License  Agreement,  WBG represented and warranted to TTC that WBG had the right
to enter into the License Agreement,  including without limitation, the right to
grant  TTC the  exclusive  rights to the  technologies  covered  by the  License
Agreement.

TTC agreed to pay  royalties to WBG,  initially at a maximum rate of 5% of Gross
Revenues (as defined in the License Agreement)  received by TTC from the sale of
the technology  products until sales of product have equaled the design capacity
of the first commercial  composite core production line. Design capacity will be
defined as the pultruded composite core capacity stated on the specifications by
the builder (WBG) as mutually agreed upon by TTC. The royalty will decline by 1%
of Gross Revenues upon the addition of each new composite core  production  line
until the fourth line is installed,  whereupon WBG would receive a royalty of 2%
of Gross Revenues received by TTC from the sale of the technology products.

In the event of any sub-license agreements, TTC will pay the same royalty to WBG
as it would if it sold the products itself.  WBG also agreed to provide TTC full
disclosure  of all  current  and  future  technologies  covered  by the  License
Agreement as well as disclosure of any interested  parties in such technologies.
TTC agreed to pay WBG to design,  build,  install  and  provide  specifications,
manuals,  and training to complete  commercial  product  equipment lines for the
technologies,  with the price and specifications to be mutually agreed upon. TTC
would  advance  funds  to WBG for  each  phase  as  required  under  a  mutually
agreed-upon  budget and  schedule.  If WBG is unable to supply  said  additional
commercial  product lines, then TTC will have the right to produce same. No such
requirement existed as of September 30, 2003.

The Company,  TTC, and WBG (aka WBGA) were involved in litigation  regarding the
interpretation  and  enforcement  of the  License  Agreement  (see Note 9).  The
lawsuits were settled amicably in February 2003,  resulting in a revised License
Agreement between W. Brandt Goldsworthy & Associates, Inc. ("WBGA") and CTC. The
new License  Agreement  (the "New License  Agreement")  supersedes  the previous
License  Agreement.  The New License  Agreement grants CTC the exclusive license
for use of any  components in CTC's Aluminum  Conductor  Composite Core ("ACCC")
products  that include items  contained in patent claims  granted to WBGA by the
United States Patent and Trademark Office (the "USPTO").

The New License Agreement also provides CTC a broader  non-exclusive license for
any other pultuded composite core electrical cable designs characterized by WBGA
as CRAC-1.  The New License  Agreement  bears a 2% royalty on net sales revenues
for that  component  of ACCC  using  any  patent  claim  issued to WBGA and a 1%
royalty  for any  component  of the  CRAC-1  technology,  if  any,  used by CTC,
provided WBGA is granted  valid patent claims by the USPTO.  As of September 30,
2003,  no such  claims  have been  granted by the USPTO.  The  Company  has been
notified  that the rights to the New License  Agreement  as  Licensor  have been
transferred to James M.  Dombroski  pursuant to Mr.  Dombroski's  execution of a
lien on the asset  dated  December  29,  2003.  The  duration of the New License
Agreement  is for the life of any  patent  granted  to WBGA by the USPTO for the
specific technologies licensed therein.

NOTE 6 - INVESTMENTS IN OTHER COMPANIES

Investments in other  companies at September 30, 2003 consisted of an investment
in  Integrated  Performance  Systems,  Inc.,  which was  valued at $1,000 and is
included in other assets on the accompanying consolidated balance sheet.


                                      F-19
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------

On April 12, 2001, the Company exchanged 15,086,000 equivalent  post-acquisition
shares of  restricted,  unregistered  common  stock  with Red Guard for  various
marketable and restricted  securities in four  unrelated  entities.  The initial
exchange transaction was valued using an agreed-upon  valuation of approximately
$137,750.  Through  September 30, 2001, upon evaluations in accordance with SFAS
No. 121,  "Accounting  for the  Impairment of Long-Lived  Assets and  Long-Lived
Assets to be Disposed of,"  management  has  recognized  an aggregate  permanent
valuation impairment of $137,230 against these holdings.

Integrated  Performance Systems,  Inc. ("IPS") is a publicly-traded  electronics
manufacturing  corporation  located in Frisco,  Texas. IPS is a manufacturer and
supplier of  performance-driven  circuit boards for high-speed  digital computer
and  telecommunications  applications.  The Company  acquired an aggregate 3,000
shares of IPS in the April 12, 2001 transaction.

STL Group,  Inc. ("STL") is a privately-owned  company based in Cleveland,  Ohio
involved in  manufacturing  and  distributing  patented and FDA  approved  solid
surgical implants and other surgical products. The Company acquired an aggregate
15,000 post-STL forward split shares of STL in the April 12, 2001 transaction.

TMA Ventures,  LLC/MEMX,  Inc. is a privately-owned  company which was formed in
2000 to  commercialize  micro  electro-mechanical  systems  "MEMS"  technologies
licensed by Sandia  National  Laboratories,  specifically to make an all optical
cross-connect  microchip for optical switches. The Company acquired an aggregate
3,389 units in TMA Ventures,  Inc.,  which  convert on a one-for-one  basis into
shares in MEMX, Inc., in the April 12, 2001 transaction.

AMJ  Logistics,  Inc.  ("AMJ") is a  privately-owned  software  company based in
Tucson,  Arizona.  AMJ's primary product is an open-architecture,  event-driven,
object-oriented  integrated Electronic Data Interchange ("EDI") system providing
transaction  accountability  for a complete audit trail for history and accurate
tracing of costs.  On August 11, 2001,  the Company  executed a 30-day  purchase
option to acquire up to an additional 110,000 unregistered, restricted shares of
common stock of AMJ at prices ranging  between $12.40 and $16 per share.  During
August  2001,  the Company paid  $10,000 in cash and issued  158,800  equivalent
post-acquisition  shares of  restricted,  unregistered  common stock,  valued at
$4,500,  to acquire  approximately  72,665 shares of AMJ common stock under this
option.

On September  29,  2001,  the Company made an advance of $30,000 cash to AMJ. On
October 13, 2001, AMJ and the Company agreed to convert this $30,000 advance and
an additional  advance of $20,000 made on October 3, 2001,  into 3,125 shares of
AMJ's restricted,  unregistered  common stock. In December 2001, the Company and
AMJ settled the outstanding  balances on the purchase option  agreement with the
issuance of 42,500 shares of the Company's restricted, unregistered common stock
to AMJ in exchange  for 37,335  shares of  restricted,  unregistered  AMJ common
stock. This transaction was valued at approximately $909,635, which approximated
the discounted  "fair value" of the Company's common stock based upon the quoted
closing price of the Company's  unrestricted  equity securities as quoted on the
date of the transaction.  As a result of all AMJ  transactions  through December
31, 2001, the Company owned an aggregate of 114,125 shares of AMJ, including the
initial 1,000 shares acquired in the April 12, 2001 transaction.

On September  30, 2002,  the Company and Red Guard  consummated  a  transaction,
whereby  Red  Guard  exchanged  100% of the  issued  and  outstanding  Series  A
preferred stock, all accrued but unpaid dividends,  certain  short-term  working
capital  loans,  and all  accrued  but unpaid  interest in return for all of the
Company's investment interests in other companies,  except for the investment in
IPS.


                                      F-20
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


NOTE 7 - COMMITMENTS AND CONTINGENCIES

LEASE

Until December 2003, the Company operated in leased offices,  located in Irvine,
California, on a month-to-month agreement at a rate of $4,600 per month and in a
manufacturing  facility,  located in  Irvine,  California,  on a  month-to-month
agreement at a rate of $8,000 per month.  The Company  leases  office  equipment
with a minimum payment of $965 per month. Leases expire through December 2010.

Rent expense was $687,649,  $140,035, and $876,028 for the years ended September
30, 2004 and 2003 and the period from March 28, 2001  (inception)  to  September
30, 2004, respectively.

In January 2004,  the Company  entered into a seven-year  lease  agreement for a
combination  manufacturing and office facility in Irvine, California for minimum
monthly payments of $73,584.  The Company paid for the first two month's rent by
issuing 140,160 shares of its  unregistered,  restricted  common stock valued at
$147,168.

Future  minimum  operating  lease payments under the new leases at September 30,
2004 were as follows:

                                  Operating Leases

 Year Ending
September 30,
-------------

2005                             $ 1,017,466
2006                               1,055,309
2007                               1,093,153
2008                               1,130,996
2009                               1,161,372
Thereafter                         1,498,272
                                 -----------

TOTAL                            $ 6,956,568
                                 ===========

In February 2004, the Company  entered into an equipment  lease with payments of
$625 per month which includes 6.5% interest.  The lease will terminate  February
1, 2008.

In May 2004,  the Company  entered into a $500,000 sale  leaseback of certain of
its capital  assets.  Under the terms of the Master Lease  Agreement the Company
received  $450,000  which  was  net of a 10%  security  deposit,  and is to make
payments of $16,441 per month for 36 months. At the end of the lease period, the
Company has the right to renew the lease for an additional 12 months,  terminate
and return the equipment or purchase the equipment at the greater of fair market
value subject to a minimum of 10% and a maximum of 20% of the capitalized  cost.
The company recognized a gain in the amount of $59,045 from this transaction and
will defer the gain and  recognize  it as income  over the period of the initial
lease term.

In June 2004, the Company entered into a $300,000  equipment lease with the same
company financing the sale leaseback, above. The Company received $131,421 which
was net of a 10% security  deposit  ($30,000)  and direct  payment to one vendor
($126,750) and less advance payments.  The Company is to make payments of $9,864
per month for 36  months.  The terms,  at the end of the lease,  are the same as
above sale leaseback.

Future minimum capital lease payments under the new leases at September 30, 2004
were as follows:


                                      F-21
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


                                          Capital Leases

 Year Ending
September 30,
--------------

2005                                         $ 323,161
2006                                           323,161
2007                                           201,502
2008                                             3,128
2009                                                --
Thereafter                                          --
                                            ----------
Total payments                              $  850,952

Less: Amounts representing interest           (116,570)

                                            ----------
Fair Value of Capital Leases                   734,382
         Less current portion                 (251,782)
                                            ----------
          Non current portion                  482,600


Property and  equipment  under  capital  leases  consisted  of the  following at
September 30, 2004:

Machinery and equipment                     $  826,379

Accumulated depreciation                        85,155
                                            ----------

NET PROPERTY AND EQUIPMENT                  $  741,224
                                            ==========


PROFESSIONAL SERVICES CONSULTING AGREEMENTS

The Company has entered into various consulting  agreements for professional and
product development services as follows:

      o     A contract  with an unrelated  partnership  for legal  services at a
            rate of $300 per hour,  payable in common stock issued pursuant to a
            Registration Statement under the Securities Act of 1933 on Form S-8.
            The Company is required to issue  common  stock in blocks of 100,000
            shares to prepay for these legal services.  This agreement commenced
            in January 2002 for a one-year  term.  This agreement also contained
            the  granting of options to purchase up to 200,000  shares of common
            stock pursuant to a Registration  Statement under the Securities Act
            of 1933 on Form  S-8 at a price  of  $1.75  per  share  for  100,000
            options and $2 per share for 100,000 options.  The options vested on
            the grant date.

      o     A contract with a corporation, whose controlling officer sits on the
            Company's   product    development/advisory   board,   for   product
            development  and  research  services at a rate of $19,500 per month.
            This  agreement  commenced  in January  2002 and expires in December
            2006.  This  agreement,  as amended,  also contained the granting of
            options to purchase up to 1,000,000  shares of common stock pursuant
            to a Registration Statement under the Securities Act of 1933 on Form
            S-8 at a price of $1.31 per share. The exercise price was reduced to
            $0.25 on March 31, 2003. The options vest in pro-rata equal segments
            of 20% of the total  grant on an annual  basis  starting in December
            2002.  The Company is obligated to pay the  corporation  interest on
            unpaid  amounts at a rate of 10% per annum and is obligated to pay a
            royalty  to the  corporation's  employee  equal  to  0.35%  of gross
            revenues  on all  products  sold  by the  Company  using  technology
            developed by this individual.


                                      F-22
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


      o     A contract with a corporation, whose controlling officer sits on the
            Company's   product    development/advisory   board,   for   product
            development  and  research  services at a rate of $25,000 per month.
            This agreement  commenced in January 2002 and runs for an indefinite
            time period.  This  agreement also contained the granting of options
            to  purchase  up to 750,000  shares of common  stock  pursuant  to a
            Registration  Statement under the Securities Act of 1933 on Form S-8
            at a price of $1 per share.  The exercise price was reduced to $0.25
            on March 31, 2003.  The options vest in pro-rata  equal  segments of
            20% of the total grant on an annual basis starting in December 2002.
            The Company is obligated to pay the  corporation  interest on unpaid
            amounts at a rate of 10% per annum and is obligated to pay a royalty
            to the  corporation's  employee  equal to 0.35% of gross revenues on
            all products sold by the Company using technology  developed by this
            individual.

      o     The company has contracted with several  consultants during the year
            ended  September  30,  2004,  most of which have no definite  ending
            date. The Company has spent in excess of $488,000 on consultants who
            have   assisted   with   financing,   information   technology   and
            finance/accounting.

      o     Two  individuals  were  contracted  during  the year to assist  with
            Investor Relations. They have indefinite termination dates.

      o     In addition to the consultants  mentioned above who have contributed
            to  our  product  development,   are  four  additional   consultants
            contracted  this  year.  The  Company  has paid  them  approximately
            $292,000 this year, and will continue with their contracts until the
            projects are completed.

      o     To assist with the Company's Marketing and Sales efforts the Company
            has contracted with several consultants.  This year the company paid
            in excess of $425,000 for these services.

      o     A total of 1,427,000  Series S warrants were issued for the exercise
            price of $1.00, expiration July '07.

FINANCIAL SERVICES AGREEMENTS

The  Company  has  entered  into  various  financial  services   agreements  for
professional and product development services as follows:

      o     A contract with an unrelated  corporation  for financial  consulting
            services at a rate of  $500,000  per year,  payable in common  stock
            issued pursuant to a Registration Statement under the Securities Act
            of 1933 on Form S-8.  This  agreement  commenced  in March  2002 and
            expires in March 2004. This agreement also contained the granting of
            options to purchase up to 1,000,000  shares of common stock pursuant
            to a Registration Statement under the Securities Act of 1933 on Form
            S-8 at a price of $0.10 per  share.  The  options  vest in  pro-rata
            equal segments in April 2002, January 2003, and January 2004.

      o     A contract with an individual for financial  consulting services for
            1,000,000  shares of common stock issued  pursuant to a Registration
            Statement  under  the  Securities  Act of  1933 on  Form  S-8.  This
            contract commenced on January 2002 and expired in January 2003. This
            agreement  also  contained the granting of options to purchase up to
            1,000,000   shares  of  common  stock  pursuant  to  a  Registration
            Statement under the Securities Act of 1933 on Form S-8 at a price of
            $0.40 per share.  The options  vested on the grant date and have all
            been exercised as of September 30, 2002.  Furthermore the Company is
            obligated  to pay the  individual  a success fee equal to 10% on all
            equity capital raised by the  individual.  As of September 30, 2004,
            the  Company did not have any  obligation  under the  "success  fee"
            portion of this agreement.


                                      F-23
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


      o     A consulting  agreement with an unrelated entity for the procurement
            of  qualified   consultants  to  deliver  capital   financing  on  a
            "successful  efforts"  basis for a one-time fee of 400,000 shares of
            unregistered,  restricted  common  stock  as  compensation  for  all
            consultants.  Furthermore, the entity will also receive a commission
            of 10% in cash and 10% in  equivalent  warrants for common stock for
            successful  funding  through sources  identified by this entity.  No
            fees have been paid on this agreement through September 30, 2004.

      o     A finder's fee  agreement  for capital  financing  with an unrelated
            party was agreed to in August 2004. This entity was paid $717,500 in
            August 2004 and $307,500 in December  2004. The contract is complete
            as of December 22, 2004.

LITIGATION

TRANSMISSION TECHNOLOGY CORPORATION ("TTC"): TRANSMISSION TECHNOLOGY CORPORATION
V. W. BRANDT  GOLDSWORTHY & ASSOCIATES,  INC., ET AL CASE NO. 01-07118 WAS FILED
IN AUGUST 15, 2001 BEFORE THE UNITED STATES DISTRICT COURT,  CENTRAL DISTRICT OF
CALIFORNIA.  THE  PRINCIPAL  PARTIES TO THE SUIT ARE TTC, C. WILLIAM  ARRINGTON,
CTC, WBGA, WBG, TOM SAWYER, AND COMPOSITE POWER CORPORATION.

TTC: Transmission  Technology Corporation v. W. Brandt Goldsworthy & Associates,
Inc., et al (Continued) On or about May 7, 2001, TTC, a wholly-owned  subsidiary
of CTC,  entered into a written  agreement  with WBG granting TTC the  exclusive
license to all WBG teleconductor  technologies,  including Composite  Reinforced
Aluminum Conductor and Advanced Composite  Reinforced Aluminum Conductor and any
improvements by WBGA. The litigation concerns the interpretation and enforcement
of the License  Agreement.  The lawsuits were settled amicably in February 2003,
resulting in a revised License Agreement between WBGA and the Company.


DR. CLEM HIEL ET AL. V. W. BRANDT GOLDSWORTHY & ASSOCIATES, INC., ET AL

Case No. 02CC05443 was filed on April 9, 2002 in the State of California for the
County of Orange. It was transferred to and is pending before the Superior Court
of the State of California for the County of Los Angeles.  The principal parties
are Dr. Clem Hiel, Dr. Alonso  Rodriguez  (both of whom are former  employees of
WBG, and/or WBGA and are currently  consultants of CTC), WBGA, WBG and W. Brandt
Goldsworthy.  CTC has agreed to bear the expense of this  proceeding  because it
affects  two  of  CTC's  consultants.  These  consultants  are  involved  in the
commercialization  of CTC's novel aluminum conductor  composite core cable. This
matter was settled in February 2003.

JARBLUM V. TRANSMISSION TECHNOLOGY CORPORATION, ET AL

Case No.  SC-072087 was filed on May 13, 2002 in the Superior Court of the State
of  California  for the County of Los  Angeles,  West  District.  The  principal
parties are Plaintiff  William  Jarblum and Defendants  TTC, CTC, and C. William
Arrington.  The case was settled in April 2003 for the issuance of 50,000 Series
K warrants  valued at $11,750 and cash of $210,000 to be paid through  September
2004. This amount was paid the settlement completed.

TRANSMISSION TECHNOLOGY CORPORATION, ET AL V. TOM SAWYER

Case No. 02CC10972 was filed on June 21, 2002 in the Superior Court of the State
of California for the County of Orange.  It was transferred to the United States
District  Court,  Central  District  of  California  after  being  allowed to be
included in the action of TTC v. WBG/WBGA et al. The principal  parties are TTC,
CTC, Arrington, Wilcoxon, and Sawyer. The plaintiffs seek declaratory relief and
an  injunction  against  Sawyer,  as well as damages  arising  from various tort
causes of actions,  including  without  limitation,  tortuous  interference with
contract,  fraud,  legal  malpractice,   and  breach  of  fiduciary  duty.  This
proceeding  is  indirectly  related to the  litigation  concerning  the  License
Agreement.  This  matter  was  settled  in  February  2003  along  with the TTC:
Transmission Technology Corporation v. W. Brandt Goldsworthy & Associates, Inc.,
et al matter with the issuance of 1,500,000  shares of restricted,  unregistered
common stock valued at $93,750.


                                      F-24
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


TRANSMISSION TECHNOLOGY CORPORATION, ET AL. V. MICHAEL WINTERHALTER, ET AL

Case No. 02CC12539 was filed July 26, 2002 in the Superior Court of the State of
California for the County of Orange.  TTC/CTC filed suit against Winterhalter (a
WBG employee or business  associate)  based on his campaign  against  TTC/CTC by
contacting third parties and disparaging  TTC/CTC and threatening  third parties
with lawsuits for dealing with TTC/CTC. This proceeding is indirectly related to
the  litigation  concerning  the License  Agreement.  This matter was settled in
February 2003.

GARY COPE AND ROBERT NIKOLEY V. COMPOSITE TECHNOLOGY CORPORATION, ET AL

The Orange County  Superior  Court Case No.  03CC05636 was filed on December 24,
2002.  Plaintiffs  Cope and Nikoley  allege  causes of action for  violations of
California Labor Code, wrongful termination,  unfair business practices,  breach
of  contract,  breach of fiduciary  duty,  fraud,  negligent  misrepresentation;
defamation, declaratory relief, and an accounting arising out of various alleged
salary and  wrongful  termination  disputes.  The  principal  parties  are Cope,
Nikoley,  CTC,  Wilcoxon,  and Arrington.  CTC denies the  plaintiffs'  material
allegations.  The case is presently  in the  discovery  stage,  and the trial is
scheduled to begin in May 2004, although a continuance is likely. The settlement
agreement and release was entered into as of June 30, 2004 by and between Robert
Nikoley and CTC. In compliance with the Settlement Agreement, Nikoley was issued
575,000 shares of CTC common stock and $65,000 in attorney's fees. The stock was
issued on July 19th and the payments were made in July 2004 and September  2004.
The Cope settlement,  dated August 16, 2004 was for 100,000 shares of CTC common
stock  and  $10,000  cash.  The stock was  issued  on  August  27,  2004 and the
certificates and check for $10,000 was forwarded to Cope's attorney on September
1, 2004.

COMPOSITE  TECHNOLOGY  CORPORATION V. ACQUVEST,  INC., PAUL KOCH, VICTORIA KOCH,
PATRICIA MANOLIS, AND MICHAEL TARBOX

The Orange County  Superior Court Case  No.03-CC-12640  was filed on October 16,
2003. CTC alleges causes of action for declaratory  relief,  breach of contract,
fraudulent  inducement,  rescission,  and economic duress arising out of certain
alleged  subscription and investment  agreements executed between CTC, Acquvest,
Inc., and Patricia Manolis. Purported related "finder's fee" agreements are also
at issue  involving  Paul Koch and Michael  Tarbox.  The  Defendants  deny CTC's
material allegations, and Acquvest, Koch, and Manolis filed a Cross-Complaint on
September 16, 2004. The parties stipulated to permit Cross-Complainants to amend
the Cross-Complaint, which was filed on December 17, 2004. CTC expects to attack
the Amended  Cross-Complaint  via  demurrer.  Trial date has been set for May 9,
2005, though CTC has moved to continue the trial to a later date. The hearing on
that motion is currently set for January 7, 2005.

ASCENDIANT CAPITAL GROUP, LLC, MARK BERGENDAHL, AND BRADLEY WILHITE V. COMPOSITE
TECHNOLOGY CORPORATION AND BENTON H. WILCOXON

The Orange  County  Superior  Court Case No.  03CC13314 was filed on November 4,
2003.  Ascendiant,  Bergendahl,  and  Wilhite  allege  causes of action  against
defendants  for breach of  contract,  specific  performance,  fraud and  deceit,
negligent misrepresentations, breach of covenant of good faith and fair dealing,
and  declaratory  relief  arising  out of a  business  advisory  and  consulting
agreement (the "Agreement") allegedly executed between CTC and Ascendiant.


                                      F-25
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


CTC denies the material allegations,  and on November 10, 2003, CTC filed a case
in Orange County  Superior Court against  Ascendiant,  Bergendahl,  and Wilhite,
alleging causes of action for declaratory relief, breach of contract, fraudulent
inducement,  and  economic  coercion  arising  out of the  Agreement  as well as
various unrelated business  agreements between the plaintiffs and Wilcoxon.  The
principal parties are Ascendiant,  Bergendahl,  Wilhite,  CTC, and Wilcoxon.  On
November  24,  2003,  the court  entered an order  consolidating  the cases.  On
January  15,  2004,  the  parties  agreed to submit all claims and  cross-claims
arising out of the Agreement to binding  arbitration before a neutral arbitrator
at JAMS-Orange  County. The remaining claims and cross-claims not arising out of
the Agreement  remain pending in Orange County  Superior  Court.  An arbitration
date has been set for February 8, 2005.

COMPOSITE TECHNOLOGY CORPORATION AND BENTON H. WILCOXON V. MICHAEL DEANGELO

The Orange  County  Superior  Court Case No.  03CC13319 was filed on November 4,
2003.  CTC alleges  causes of action against  DeAngelo for  declaratory  relief,
economic duress, and fraudulent  inducement arising out of a consulting services
agreement  executed  by the  parties  on which CTC  alleges  DeAngelo  failed to
perform.  DeAngelo denies CTC's material  allegations and previously  stated his
intention to assert cross-claims against CTC. On December 23, 2003, CTC obtained
a default in this case due to DeAngelo's failure to respond to the complaint. On
February 23, 2004, a default judgment was entered against the defendant.

J.P. TURNER & COMPANY, L.L.C. V. COMPOSITE TECHNOLOGY CORPORATION

J.P. Turner & Company,  L.L.C.  ("J.P.  Turner") initiated an arbitration before
the  National  Association  of  Securities  Dealers in  February  2004  alleging
Composite  Technology  Corporation  ("CTC")  breached  a finder's  agreement  by
failing to pay certain fees to J.P. Turner.  CTC disputes that any breach of the
agreement  took place and denies  that J.P.  Turner  made any  introductions  of
investors to CTC which directly lead to financing.  CTC has filed a counterclaim
against J.P.  Turner alleging claims of fraud against J.P. Turner arising out of
misrepresentations  made by J.P.  Turner  concerning an investment  opportunity.
J.P. Turner seeks $200,000 in monetary  damages,  a warrant to purchase $200,000
common  shares of CTC at an exercise  price equal to the closing bid on December
17, 2003,  pre-judgment  interest as of December 18, 2003, reasonable attorneys'
fees and costs. CTC seeks compensatory  damages in an amount according to proof,
punitive  damages,  and  reasonable  attorneys'  fees and costs  based  upon its
counterclaims.  CTC filed its Statement of Answer and  Counterclaims  on May 17,
2004.  The matter is presently set for hearing in February  2005.  Additionally,
Composite  recently  asked the panel of  arbitrators  assigned  to the matter to
change the location of the hearing from Georgia to California.  The  arbitrators
denied the motion for change of venue and the hearing is scheduled to proceed in
Georgia next year.

ADAM DEVONE V. COMPOSITE TECHNOLOGY CORPORATION, ET AL.

On September 10, 2004,  Adam Devone filed a Complaint in Orange County  Superior
Court (Case No.  04-CC-09321)  against Donner,  Evan Wride and Global  Research,
Inc., Nutek, Inc., Zeta Centauri, Inc., Sherpa Financial & Investigations,  Inc.
and Multiplyingchurches.org,  Inc. (collectively, the "Donner Parties") and CTC.
Devone alleges a variety of claims against the Donner Parties based upon alleged
contractual  breaches  and  tortuous  conduct  related to a  $200,000  loan made
between Devone and the Donner Parties.  CTC is only party to the last two causes
of action for Imposition of Constructive  Trust and Declaratory  Relief.  Devone
seeks a  constructive  trust on any CTC  shares  or  related  proceeds  obtained
through  the  use  of  Devone's  $200,000.   Devone  further  seeks  a  judicial
declaration  that the CTC  securities  and proceeds  derived  therefrom  are his
property. As noted earlier,  Devone is not presently seeking monetary damages or
costs against CTC. On October 6, 2004, CTC filed a Motion for Order  Discharging
Liability  asserting  it  should  be  discharged  from the  matter as it took no
position with regard to the dispute between the parties. On October 8, 2004, CTC
filed an Answer to the Complaint.  The Motion for Order Discharging Liability is
presently   set  to  be  heard  on  January  3,  2004.   On  October  20,  2004,
Multiplyingchurches.org,  Inc. ("MC Org") filed a  Cross-Complaint  against CTC,
Adam Devone, Sheryl Lyn Devone (Plaintiff's wife) and Roes 1-100 alleging claims
for breach of contract  against CTC and Roes  51-100 and  tortious  interference
with contract against Plaintiff, his wife and Roes 1-50. MC Org alleges that CTC
breached a warrant  agreement  by failing to issue shares  thereunder  and seeks
unspecified  damages and an injunction  compelling CTC to issue shares under the
warrant agreement.  CTC filed an Answer to MC Org's  Cross-Complaint on November
19, 2004.


                                      F-26
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


MICHAEL TARBOX V. COMPOSITE TECHNOLOGY CORPORATION, ET AL.

Michael Tarbox ("Tarbox") filed this action on October 13, 2004 in Orange County
Superior Court (Case No. 04-CC-10345) against Paul Koch,  Acquvest,  CTC and Doe
Defendants.  Tarbox alleges that Koch made fraudulent  transfers to Acquvest and
the Doe defendants  for the purpose of avoiding the debt owed to Tarbox.  Tarbox
alleges that CTC  securities  were intended to serve as security for a debt owed
by Koch to Tarbox.  Tarbox alleges that Defendants were not bona fide purchasers
of the CTC securities  since they were receiving such securities for the benefit
of Tarbox.  Tarbox  further  alleges that CTC breached an agreement to pay him a
finder's fee in connection with  investments  made by Koch.  Tarbox alleges that
CTC's breach has caused him to suffer damages in excess of $750,000. On November
9, 2004, CTC filed a Motion to Consolidate  this action with the Acquvest action
above (OCSC Case No. 03-CC-12640).  The Motion to Consolidate is set for January
7, 2005.  On November 14, 2004,  CTC filed a demurrer to the  Complaint.  Tarbox
agreed to amend the Complaint in response thereto.

NOTE 8 - SHAREHOLDERS' EQUITY

PREFERRED STOCK

On April 12,  2001,  TTC  authorized  165  shares  of Series A, 10%  cumulative,
convertible  preferred  stock (the "Series A Preferred  Stock") issued at $1,000
per share.  The Series A shareholders  were entitled to receive  cumulative cash
dividends  at a rate of 10% per annum of the issuance  price  ($1,000 per share)
from the date of issuance of the shares  until such  shares are  converted  into
common stock or redeemed by the Company. The dividends were payable quarterly on
the last day of March, June, September, and December in each year, commencing on
September 30, 2001.

The Series A Shares are convertible into common stock at a negotiated conversion
rate of $0.47 per effective post-acquisition share at the election of the holder
beginning 90 days after the date of  issuance.  The Series A Shares are callable
at any time by TTC at a price of 102% of  issuance  value upon a 10-day  advance
written  notice.  These  shares  were  issued on April 12,  2001 to Red Guard to
acquire the rights to negotiate to acquire the license to manufacture,  develop,
and  sell  certain  patent  pending  composite   reinforced  aluminum  conductor
technologies.  This transaction was valued at an agreed-upon amount of $165,000.
On September  30, 2002,  the Company and Red Guard  consummated  a  transaction,
whereby  Red  Guard  exchanged  100% of the  issued  and  outstanding  Series  A
preferred stock, all accrued but unpaid dividends,  certain  short-term  working
capital  loans,  and all  accrued  but unpaid  interest in return for all of the
Company's investment interests in other companies,  except for the investment in
IPS.

On June 27, 2001,  TTC  authorized  and allocated  2,000 shares of Series B, 10%
cumulative,  convertible  preferred  stock (the "Series B Stock").  The Series B
Stock was issued at $100 per share.  The Series B shareholders  will be entitled
to receive  cumulative cash dividends at a rate of 10% per annum of the issuance
price ($100 per share) from the date of issuance of the shares until such shares
are  converted  into common stock or redeemed by the Company.  The dividends are
payable  quarterly on the last day of March,  June,  September,  and December in
each year, commencing on September 30, 2001. Any dividends on the Series B Stock
that are not paid  within 30 days after the date upon which  payment  thereof is
due will bear interest at 10% per annum from such date until ultimately paid.


                                      F-27
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


The shares are  convertible  into common stock at a rate of $1.25 per  effective
post acquisition share at the election of the holder beginning 90 days after the
date of issuance.  The Series B Stock is callable at a price of 109% at any time
by TTC upon 10-days advance  written  notice.  TTC sold 1,000 Series B Shares to
Red Guard for cash  proceeds of $100,000 on August 28, 2001 and 320 shares to an
unrelated third party for cash proceeds of $32,000 on October 11, 2001.

In April  2003,  the  Company  converted  320  shares of the Series B Stock into
207,576 shares of unregistered, restricted common stock.

In  January  2004,  the  Company  converted  the  1,000  shares  of Series B 10%
preferred  stock of its  subsidiary  Transmission  Technology  Corporation  into
80,000 shares of unregistered,  restricted  common stock that were issued to one
individual  pursuant to a court order. In addition under the terms of the order,
the Company  was  obliged to issue  27,631  shares of  unregistered,  restricted
common  stock in  satisfaction  of the  unpaid  preferred  stock  dividends  and
interest totaling $31,996.

COMMON STOCK
BUSINESS COMBINATION

On November 3, 2001, in connection with a business combination transaction,  the
Company's then  controlling  shareholder  surrendered  and canceled an aggregate
3,116,515 shares of common stock to the Company for no consideration. The effect
of this  transaction  was to reduce  the common  stock  account by the par value
(approximately $3,117) and increase the additional paid-in capital account. This
transaction reduced the issued and outstanding common stock to 6,050,000 shares.

On  November  3,  2001,   the  Company   executed  an  Agreement   and  Plan  of
Reorganization,  whereby the Company  issued an aggregate  60,000,000  shares of
restricted, unregistered common stock to the shareholders of TTC in exchange for
100% of the issued  and  outstanding  stock of TTC.  TTC was  incorporated  as a
Nevada  corporation  on March 28,  2001 to own a license  agreement  related  to
patent pending  composite  reinforced  electrical  transmission  lines utilizing
composite core materials. TTC became a wholly-owned subsidiary of the Company.

SERVICES RENDERED

On  November  3,  2001,  the  Company  issued  an  aggregate  450,000  shares of
restricted,   unregistered  common  stock  to  four  unrelated  entities  and/or
individuals as compensation for various financial  consulting  services provided
in the  Agreement and Plan of  Reorganization.  This  transaction  was valued at
approximately  $90,000,  which  approximates  the "fair value" of the  Company's
common stock on the date of the transaction  using the discounted  closing price
of the Company's common stock as quoted on the NASDAQ Electronic Bulletin Board.
Upon  completion of the November 3, 2001 reverse  acquisition  transaction,  the
Company had an  aggregate  66,500,000  shares of issued and  outstanding  common
stock.

On October 30, 2001, TTC issued an aggregate 79,402 equivalent  post-acquisition
shares of restricted,  unregistered common stock to its corporate law firm at an
agreed-upon  value of  approximately  $300,000  as a retainer  for future  legal
services to be provided  during a one-year  period from  October 30,  2001.  The
retainer shares vested against normal monthly  billings from the law firm to the
Company using the  agreed-upon  valuation of $3.78 per share,  regardless of the
open market price of the Company's common stock during the billing month.

If the aggregate  market value of the 79,402 shares are worth less than $450,000
in the open market at the  average  mean of the bid and ask price for the shares
during the one-month period just preceding the first anniversary of the retainer
agreement  (October  30,  2002),  then the law firm  will have 15 days to make a
written election to either a) exercise a downward  adjustment in the agreed-upon
price of $3.78 to an amount of not less than $1.89 per share,  which would cause
the Company to issue up to an  additional  79,402  equivalent  post  acquisition
shares to the law firm,  or b) put all 79,402  shares  back to the  Company  and
require payment in cash for the legal services  provided during the initial term
of the agreement.


                                      F-28
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


During  January  2002,  the  Company  and the law firm  agreed to  rescind  this
transaction,  and the 79,402  shares were  returned to the  Company.  All future
transactions  between the Company and the law firm will be  conducted  on a cash
transaction basis.

On February 27,  2002,  the Company  filed a  Registration  Statement  Under The
Securities Act of 1933 on Form S-8 to register an aggregate  9,000,000 shares of
common stock pursuant to the 2002 Non-Qualified  Stock Compensation Plan. During
the period from February 28, 2002 through September 30, 2002, the Company issued
an  aggregate  5,929,868  shares of common  stock  pursuant to this plan.  These
shares were issued at prices ranging between $0.19 and $1.85 per share, as based
on the closing  quoted stock price on the respective  date of each  transaction.
These transactions were valued at an aggregate of $2,701,490.

On May 22, 2002, the Company  issued 40,000 shares of the Company's  restricted,
unregistered  common  stock  to  an  unrelated  entity  for  various  consulting
services.   This  transaction  was  valued  at  approximately   $16,000,   which
approximates  the  "fair  value"  of the  Company's  stock  on the  date  of the
transaction using the discounted  closing price of the Company's common stock as
quoted on the NASDAQ  Electronic  Bulletin  Board.  In July and August 2002, the
Company  issued  an  aggregate  350,000  shares  of  the  Company's  restricted,
unregistered  common stock to two  separate  unrelated  entities for  consulting
services.  These  transactions  were  valued  at  approximately  $95,000,  which
approximates  the  "fair  value"  of the  Company's  stock  on the  date  of the
transaction using the discounted  closing price of the Company's common stock as
quoted on the NASDAQ Electronic Bulletin Board.

During the year ended September 30, 2003, the Company issued 6,422,171 shares of
free trading common stock  registered  pursuant to Form S-8 to nine  individuals
for product  design,  technology  registration,  legal  services and  consulting
services  valued at  $2,597,310,  which  approximated  the closing  price of the
Company's common stock as quoted on the NASDAQ Electronic  Bulletin Board on the
date of issue.

During the year ended September 30, 2003, the Company issued 2,331,729 shares of
the Company's  restricted,  unregistered common stock to six individuals and two
unrelated  entities for various  consulting  services.  These  transactions were
valued at $1,505,903, which approximates the "fair value" of the Company's stock
on the  date of the  transaction  using  the  discounted  closing  price  of the
Company's common stock as quoted on the NASDAQ Electronic Bulletin Board.

During the year ended September 30, 2004, the company completed the following:

      o     Issued  700,000  shares  of free  trading  common  stock  registered
            pursuant to Form S-8 to two individuals  for legal and  intellectual
            property services, valued at approximately $1,058,000.

      o     Committed to issue  20,000  shares of the  restricted,  unregistered
            common stock to one  individual for  consulting  services.  This was
            valued at $28,050. It was later determined that this transaction was
            not in the best  interest of either party and therefore the contract
            was not  consummated  or fully  executed.  The  20,000  shares  were
            reversed and the $28,050 was reclassed to accounts payable.

      o     During the year ended September 30, 2004, 1,098,881 shares of common
            stock were issued to 6 consultants with a value of $1,265,165.

      o     In January 2004,  140,160  shares of common stock valued at $147,168
            were issued in lieu of first 2 month's rent at new Irvine location.


                                      F-29
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


INVESTMENTS IN OTHER COMPANIES

On  December  4,  2001,  the  Company  issued  42,500  shares  of the  Company's
restricted,   unregistered  common  stock  in  exchange  for  37,335  shares  of
restricted,  unregistered  AMJ  common  stock.  This  transaction  was valued at
approximately  $191,450,  which  approximates  the "fair value" of the Company's
stock on the date of the transaction  using the discounted  closing price of the
Company's common stock as quoted on the NASDAQ Electronic Bulletin Board.

CONVERSION OF SHORT-TERM LOANS

In July and September  2002, the Company  issued an aggregate  866,173 shares of
the   Company's   restricted,   unregistered   common  stock  to  four  separate
individuals,  several of whom were  existing  shareholders  of the Company,  for
conversion of short-term  working capital loans and accrued but unpaid interest.
These  transactions  were valued at  approximately  $153,596,  which equaled the
outstanding debt and was in excess of the "fair value" of the Company's stock on
the date of the transaction using the discounted  closing price of the Company's
common stock as quoted on the NASDAQ Electronic Bulletin Board.

In  February  2003,  the  Company  issued  an  aggregate  300,000  shares of the
Company's  restricted,  unregistered  common stock to an individual,  who was an
existing  shareholder of the Company,  for conversion of $30,000 of a short-term
working capital loan and accrued but unpaid interest.

LEGAL SETTLEMENT

In  February  2003,  the  Company   issued   1,500,000   shares  of  restricted,
unregistered common stock valued at $93,750 in connection with the settlement of
certain legal matters (see Note 9).

During the year ended  September  30, 2004,  675,000  shares of common stock was
issued, valued at $739,00 for legal settlements as shown in Note 9.

CASH

On August 22, 2002, the Company sold 65,790 shares of  restricted,  unregistered
common stock to an individual for cash proceeds of approximately  $25,000.  This
transaction was consummated in excess of the "fair value" of the Company's stock
on the  date of the  transaction  using  the  discounted  closing  price  of the
Company's common stock as quoted on the NASDAQ Electronic Bulletin Board.

During  December 2002, the Company sold an aggregate 6,400 Units, in conjunction
with a Private Placement  Memorandum,  for gross proceeds of $11,520.  Each Unit
consisted of 10 shares of  restricted,  unregistered  common stock,  10 Series A
warrants, and five Series B warrants.  Each Series A warrant entitles the holder
to purchase  one share of common stock at a price of $0.35 per share and expires
at the earlier of December 1, 2003 or three weeks following written notification
by the Company that its common stock closed at or above $0.61 per share for five
consecutive trading days. In addition,  the Series A warrants can be redeemed by
the Company  for $0.001 each if a  Registration  Statement  covering  the shares
underlying  the Series A warrants has been declared  effective and the Company's
common stock closes at or above $0.61 for five consecutive days.

Each Series B warrant  entitles the holder to purchase one share of common stock
at $0.60 per share and  expires at the  earlier of June 30,  2004 or three weeks
following written notification by the Company that its common stock closed at or
above $1.05 per share for five consecutive trading days. In addition, the Series
B warrants  can be redeemed  by the  Company  for $0.001 each if a  Registration
Statement covering the shares underlying the Series B warrants has been declared
effective  and the  Company's  common  stock  closes at or above  $1.05 for five
consecutive days.


                                      F-30
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


Between November 2002 and February 2003, the Company sold an aggregate 2,954,000
Units,  pursuant  to a  Private  Placement  Memorandum,  for gross  proceeds  of
$295,400.  Each Unit consisted of one share of restricted,  unregistered  common
stock and one Series E warrant to purchase one share of unregistered, restricted
common stock.  Each Series E warrant  entitles the holder to purchase a share of
common stock at $0.25 per share and expires on December 1, 2004.

During February and March 2003,  pursuant to Private  Placement  Memoranda,  the
Company sold an aggregate  3,465,500 Units for gross proceeds of $866,375.  Each
Unit  consisted of one share of  restricted,  unregistered  common stock and one
Series H warrant to purchase one share of unregistered, restricted common stock.
Each Series H warrant  entitles the holder to purchase one share of common stock
at $0.50 per share and expires at the earlier of January 30, 2005 or three weeks
following written notification by the Company that its common stock closed at or
above $0.75 per share for five consecutive trading days. In addition, the Series
H warrants  can be redeemed  by the  Company  for $0.001 each if a  Registration
Statement covering the shares underlying the Series H warrants has been declared
effective  and the  Company's  common  stock  closes at or above  $0.50 for five
consecutive  days. The Company  incurred  offering costs of $234,350  related to
this  offering,   consisting  of  warrants  to  purchase  200,000  unregistered,
restricted  shares of common  stock,  with the same terms as those issued to the
investors,  valued at $20,600 and  750,000  unregistered,  restricted  shares of
common stock valued at $213,750.

During April and September 2003,  pursuant to Private Placement  Memoranda,  the
Company sold an aggregate  150,000  Units for gross  proceeds of $375,000.  Each
Unit  consisted  of 10 shares of  restricted,  unregistered  common stock and 10
Series I warrants  to  purchase  one share of  unregistered,  restricted  common
stock.  Each Series I warrant  entitles the holder to purchase a share of common
stock at $0.50 per share and expires on March 30,  2005.  The  Company  received
subscription  agreements for the issuance of up to an additional  550,000 Units.
However,  the  proceeds of  $1,125,000  were never  received.  The matter is now
subject  to  litigation  as  discussed  in  Note 8  under  Composite  Technology
Corporation v. Acquvest,  Inc., Paul Koch, Victoria Koch, Patricia Manolis,  and
Michael  Tarbox.  The shares  related to the  550,000  Units were  issued by the
transfer  agent and were being held by the attorney  handling the matter for the
Company. The shares were canceled in October 2003.

During August 2003, pursuant to Private Placement Memoranda, the Company sold an
aggregate 16,667 Units for gross proceeds of $50,000.  Each Unit consisted of 10
shares of  restricted,  unregistered  common stock and five Series O warrants to
purchase  one share of  unregistered,  restricted  common  stock.  Each Series O
warrant  entitles  the holder to purchase one share of common stock at $0.60 per
share and  expires at the  earlier  of June 30,  2005 or three  weeks  following
written  notification  by the Company  that its common  stock closed at or above
$0.90 per share for 10  consecutive  trading  days.  In  addition,  the Series O
warrants  can be  redeemed  by the  Company  for $0.001  each if a  Registration
Statement covering the shares underlying the Series O warrants has been declared
effective  and the  Company's  common  stock  closes  at or above  $0.90  for 10
consecutive days.

During September 2003, pursuant to Private Placement Memoranda, the Company sold
an aggregate 50,000 Units for gross proceeds of $125,000. Each Unit consisted of
10 shares of restricted,  unregistered  common stock and 10 Series N warrants to
purchase  one share of  unregistered,  restricted  common  stock.  Each Series N
warrant  entitles  the holder to purchase one share of common stock at $0.50 per
share and  expires at the  earlier  of June 30,  2005 or three  weeks  following
written  notification  by the Company  that its common  stock closed at or above
$0.75 per share for 10  consecutive  trading  days.  In  addition,  the Series N
warrants  can be  redeemed  by the  Company  for $0.001  each if a  Registration
Statement covering the shares underlying the Series N warrants has been declared
effective  and the  Company's  common  stock  closes  at or above  $0.75  for 10
consecutive  days.   During  September  2003,   pursuant  to  Private  Placement
Memoranda,  the Company sold an aggregate  332,500  Units for gross  proceeds of
$1,330,000. Each Unit consisted of 10 shares of restricted,  unregistered common
stock  and two  Series  P  warrants  to  purchase  one  share  of  unregistered,
restricted  common stock.  Each Series P warrant entitles the holder to purchase
one share of common  stock at $0.80 per share and expires at the earlier of July
30, 2005 or three weeks following  written  notification by the Company that its
common stock closed at or above $1.20 per share for 10 consecutive trading days.
In  addition,  the Series P warrants  can be  redeemed by the Company for $0.001
each if a  Registration  Statement  covering the shares  underlying the Series P
warrants has been declared effective and the Company's common stock closes at or
above $1.20 for 10 consecutive days.


                                      F-31
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


During September 2003, pursuant to Private Placement Memoranda, the Company sold
an aggregate of 311,240 restricted unregistered shares of common stock at prices
between $0.65 and $1.00 per share for gross proceeds of $277,500.

During  November 2003,  pursuant to a Private  Placement  Memoranda,  we sold an
aggregate  of  89,360  restricted  unregistered  shares  of  common  stock  to 5
individuals  at a price of $1.40 per share for gross  proceeds of $125,104.  The
Company relied upon the exemption from registration as set forth in Section 4(2)
of the Securities Act of 1933 for the issuance of these shares.

In  December  2003,  the Company  issued  2,400,000  Units for cash  proceeds of
$2,790,000  net of  offering  costs  of  $210,000.  The  December  Offering  was
subscribed  by 5  investment  funds.  Each  unit  consisted  of one share of the
Company's  unregistered  restricted common stock and 0.5 warrant to purchase one
share of the Company's unregistered restricted common stock at an exercise price
of $2.04 per share.  The warrants vest  immediately and expire in December 2008.
The  Company  has the right to call the  warrants  if the  closing  price of the
Company's  common  stock  is  greater  than  200% of the  exercise  price of the
warrants for 20 consecutive trading days.

RED GUARD

On July 12, 2001,  TTC granted to Red Guard an option to purchase up to $500,000
of Series B, 10% cumulative, convertible preferred stock of TTC (the "TTC Series
B  Preferred")  at $100 per share  (the "Red  Guard  Option")  and a warrant  to
purchase  shares of TTC Common Stock that, on completion of the November 3, 2001
reverse  acquisition  transaction  with CTC, enabled Red Guard to purchase up to
1,905,660  shares  of CTC  common  stock at $1.26  per  share  (the  "Red  Guard
Warrant") in reliance upon the exemption from  registration set forth in Section
4(2) of the Securities Act.

The Red Guard Option and Warrant were granted to Red Guard as an  inducement  to
modify  the  conversion  price of the TTC  Series A  Preferred  from an  initial
conversion  price of $0.20 per share,  as adjusted for TTC stock splits prior to
the  November 3, 2001  reverse  acquisition  transaction  with CTC, to $0.47 per
share  after  accounting  for  the  effects  of  the  CTC  reverse   acquisition
transaction.  The Red Guard  Option was  exercisable  at any time and expired on
January 12, 2002. The Red Guard Warrant expires July 12, 2006.

On August 28,  2001,  Red Guard  exercised  a portion of the Series B option and
purchased  an  aggregate  $100,000 of Series B Preferred  from the  Company.  On
October 11, 2001, Red Guard assigned an additional  portion of this option to an
unrelated  individual  who then  exercised  the option to purchase an  aggregate
$32,000 of Series B Preferred from the Company. The remaining portion of the Red
Guard Option expired on January 12, 2002.

The following table summarizes all Red Guard Option activity from the grant date
through September 30, 2003:

                                                                  Weighted
                                                     Number of    Average
                                                     Shares       Exercise Price
                                                     ----------   ------------

Outstanding, March 18 2001 (inception)                       --   $         --
             Granted                                      5,000   $       1.26
             Exercised                                   (1,000)  $       1.26

Outstanding, September 30, 2001                           4,000   $       1.26
             Granted                                       (320)  $       1.26
             Canceled/expired                            (3,680)  $       1.26

OUTSTANDING, SEPTEMBER 30, 2002, 2003 AND 2004               --   $         --
                                                     ==========   ============


                                      F-32
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


STOCK OPTIONS

On May 15, 2001, TTC  established the 2001 Incentive  Compensation  Stock Option
Plan (the "TTC  Plan").  The  purpose  of the TTC Plan was to grant  options  to
purchase  the  Company's  common  stock  to  employees  of the  Company  and any
subsidiaries to attract and retain persons of ability and provide incentives for
them to exert  their  best  efforts on behalf of the  Company.  The TTC Plan was
administered  by  either  the  Company's  Board  of  Directors  or  a  committee
established  and  appointed by the Board of Directors.  Under the TTC Plan,  the
Board had reserved  4,764,000  shares of common stock to support the  underlying
options which may be granted. As part of TTC's acquisition by CTC on November 3,
2001, the TTC Plan was  terminated,  and the options were converted into options
to purchase  shares of CTC's  common  stock  pursuant to the 2002  Non-Qualified
Stock  Compensation  Plan (the  "Stock  Plan").  The  number of shares  reserved
initially  under the Stock Plan was  9,000,000.  This  number was  increased  to
14,000,000 on October 24, 2002.

The exercise price of the  underlying  shares will be determined by the Board of
Directors; however, the exercise price may not be lower than 100% of the mean of
the last reported bid and asked price of the Company's common stock as quoted on
the NASDAQ  Bulletin  Board or any other exchange or  organization.  The term of
each option will be  established  by the Board of Directors at the date of issue
and may not exceed 10 years. The Plan  automatically  terminates on May 15, 2021
and no options under the Plan may be granted after May 15, 2011.

In June 2001, the TTC Board of Directors granted options to various officers and
employees  that,  when  converted to Stock Plan options,  comprised an aggregate
1,357,740  to  purchase  an  equivalent  number  of  shares  of CTC  restricted,
unregistered  common stock.  Under the Stock Plan these options were exercisable
at a price of $0.35 and expire in June, 2011. On March 31, 2004, 87,308 of these
options were cancelled. The remaining 1,270,432 options will expire December 31,
2011.

On March 31, 2002, the Company granted an aggregate 5,200,000 options to various
consulting  professionals to purchase an equivalent  number of shares registered
under the Company's Form S-8, filed in February 2002 for services to be rendered
over the next one to five years from the grant date.  The options were issued at
exercise  prices  between  $0.08 and $2.00 per share.  These  options  expire at
various  dates  between March 31, 2003 and December 31, 2011. On March 31, 2002,
2,000,000 of these options were exercised and on January 12, 2003,  250,000 were
cancelled.  Between  September  2003 and  August  2004,  1 of  these  consulting
professionals  has exercised a total of 320,000 options to acquire common shares
of CTC.

The Company recorded deferred compensation of $1,664,275 related to 3,200,000 of
the options  granted on March 31, 2002 and the 750,000  options granted on April
1, 2002. The Company  recorded  compensation  expense of $298,820,  $572,549 and
$429,980 during the years ended September 30, 2004, 2003 and 2002, respectively,
for the value of the legal,  consulting,  and research and development  services
rendered during those years.

On  April  1,  2002,  the  Company  granted  750,000  options  to  a  consulting
professional  to purchase an equivalent  number of shares  registered  under the
Company's  Form S-8, filed in February 2002 for services to be rendered over the
next one year from the grant date.  The options were issued at an exercise price
of $0.50 per share.  The options  vested as follows:  150,000  immediately  upon
issue and  150,000  per year on the grant  anniversary  date from  April 1, 2003
through April 1, 2006. These options were cancelled March 31, 2003.

In  February,  2003, 3 employees  received an  aggregate  of 750,000  options to
purchase an equivalent number of shares registered under the Company's Form S-8,
filed in  February  2002 at an exercise  price of $0.25.  These  options  expire
December  31,  2011.  Since  issuance,  2 of these  employees  have been granted
cashless  exercise of certain of these  options at the market rate on the day of
exercise, resulting in the cancellation of 215,682 of the options in payment for
the exercise of 84,318  options to acquire  common  shares of CTC. The remaining
warrants will vest at a rate of 50,000 each year.

In July 2003,  an employee  received  250,000  options to purchase an equivalent
number of shares registered under the Company's Form S-8, filed in February 2002
at  an  exercise  price  of  $0.25;  50,000  of  these  options  were  exercised
immediately.  These options expire December 31, 2011. The remaining options vest
at a rate of 50,000 per year.


                                      F-33
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


In August 2003, 4 employees and a consultant  received an aggregate of 2,950,000
options  to  purchase  an  equivalent  number  of  shares  registered  under the
Company's Form S-8, filed in February 2002 at an exercise price of $0.53.  These
options expire December 31, 2011. Since issuance, 3 of these employees have been
granted cashless exercise of certain of these warrants at the market rate on the
day of  exercise,  resulting  in the  cancellation  of 730,986 of the options in
payment for the exercise of 144,014 options to acquire common shares of CTC. The
remaining options vest on a quarterly schedule.

In July 2004, 7 employees  received an aggregate of 969,904  options to purchase
an equivalent number of shares registered under the Company's Form S-8, filed in
February 2002 at an exercise price of $1.00.  These options expire  December 31,
2011. Since issuance, 1 of these employees has been granted cashless exercise of
certain of these  warrants at the market rate on the day of exercise,  resulting
in the  cancellation  of 391,112 of the options in payment  for the  exercise of
8,888 options to acquire common shares of CTC. These options vest at the rate of
10% each six months over 5 years commencing October 16, 2004.

The following  table  summarizes  the Stock Plan stock option  activity from the
conversion of the Plan through September 30, 2004.


                                      F-34
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------

                                                                  Weighted-
                                                                  Average
                                                Number            Exercise
                                                of Shares         Price
                                                ----------        -----------

Outstanding, March 18, 2001 (inception)                 --         $      --
       Granted under the Plan                    1,357,740         $    0.35(1)
                                                ----------

Outstanding, February, 2001 following

Registration of the Stock Plan                   1,357,740         $    0.35
       Granted                                   5,950,000         $    0.35
       Exercised                                (2,000,000)        $    0.24
                                                ----------

Outstanding, September 30, 2002                  5,307,740         $    0.39
       Granted                                   3,950,000         $    0.46
       Exercised                                  (110,000)        $    0.25
       Cancelled                                (1,000,000)        $    0.69
                                                ----------

Outstanding, September 30, 2003                  8,147,740         $    0.39
       Granted                                     969,904         $    1.00
       Exercised                                  (497,220)        $    0.11
       Cancelled                                (1,425,088)        $    0.30
                                                ----------

         OUTSTANDING, SEPTEMBER 30, 2004         7,195,336         $    0.43
                                                ==========

         EXERCISABLE, SEPTEMBER 30, 2004         3,277,258         $    0.37
                                                ==========


(1) The exercise  price  recorded is following the conversion of the Plan to the
Stock Plan and the necessary adjustments.


                                      F-35
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------

The  weighted-average  remaining  contractual life of the options outstanding at
September 30, 2004 was 7.3 years. The exercise prices of the options outstanding
at September 30, 2004 ranged from $0.10 to $2.00,  and  information  relating to
these options is as follows:

<TABLE>
<CAPTION>
                                                                                        Weighted-           Weighted-
                                                                     Weighted-          Average             Average
                                                                     Average            Exercise            Exercise
     Range of                 Stock              Stock               Remaining          Price of            Price of
     Exercise                 Options            Options             Contractual        Options             Options
     Prices                   Outstanding        Exercisable         Life               Outstanding         Exercisable
     ------                   -----------        -----------         -----------        -----------         -----------
<S>                           <C>                <C>                 <C>                <C>                 <C>
$ 0.10 - 0.24                  1,000,000           1,000,000         7.3 years          $ 0.10              $ 0.10
$ 0.25 - 0.49                  3,350,432           1,542,258         7.3 years          $ 0.29              $ 0.30
$ 0.50 - 0.99                  2,075,000             535,000         7.3 years          $ 0.53              $ 0.53
$ 1.00 - 1.49                    569,904                   0         7.3 years          $ 1.00              $ 1.00
$ 1.50 - 1.49                          0                   0         --                 --                  --
$ 1.75 - 2.00                    200,000             200,000         7.3 years          $ 1.88              $ 1.88
                               ---------           ---------

                               7,195,336           3,277,858
                               =========           =========

</TABLE>

The  Company  has  adopted  the  disclosure-only  provisions  of SFAS  No.  123.
Accordingly,  no compensation  cost other than that required to be recognized by
APB 25 for the difference  between the fair value of the Company's  common stock
at the grant date and the exercise price of the options has been recognized. Had
compensation cost for the Company's Stock Plan been determined based on the fair
value at the grant date for awards  consistent  with the  provisions of SFAS No.
123, the Company's net loss and loss per share for the years ended September 30,
2003 and 2002  would  have been  increased  to the pro forma  amounts  indicated
below:


                                      F-36
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                  2004                2003                2002
                                             --------------      --------------      --------------
<S>                                          <C>                 <C>                 <C>
Net loss
     As reported                             $  (14,323,596)     $   (6,751,252)     $   (4,518,082)
     Add stock based employee
         compensation expense
         included in net income,
         net of tax                                      --                  --                  --
     Deduct total stock based employee
         compensation expense determined
         under fair value method for all
         awards, net of tax                        (642,594)            (73,520)                 --
                                             --------------      --------------      --------------

     PRO FORMA                               $  (14,966,190)     $   (6,824,772)     $   (4,518,082)
                                             ==============      ==============      ==============

 Earnings per common share
     Basic - as reported                     $        (0.13)     $        (0.08)     $        (0.07)
     Basic - pro forma                       $        (0.13)     $        (0.08)     $        (0.07)
     Diluted - as reported                   $        (0.13)     $        (0.08)     $        (0.07)
     Diluted pro forma                       $        (0.13)     $        (0.08)     $        (0.07)
</TABLE>

For purposes of computing  the pro forma  disclosures  required by SFAS No. 123,
the fair value of each option  granted to employees  and  directors is estimated
using the Black-Scholes option-pricing model with the following weighted-average
assumptions  for the  year  ended  September  30,  2004:  dividend  yield of 0%,
expected volatility of 100%, risk-free interest rate of 4.14%, and expected life
of 7.3 years.  All options  granted  during fiscal 2003 and 2004 were granted at
the  market  price  for  common  stock on the day of the grant  decision.  Stock
options  were not  granted  to  employees  or  directors  during  the year ended
September 30, 2002.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options,  which do not have vesting  restrictions  and are
fully  transferable.  In addition,  option valuation models require the input of
highly  subjective  assumptions,  including the expected stock price volatility.
Because the Company's employee stock options have characteristics  significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.


                                      F-37
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


WARRANTS

On July 12,  2001,  TTC  issued to Red  Guard,  as an  inducement  to modify the
conversion price of the TTC Series A Preferred from an initial  conversion price
of $0.20 per share,  as adjusted  for TTC stock  splits prior to the November 3,
2001  reverse  acquisition  transaction  with  CTC  to  $0.47  per  share  after
accounting for the effects of the CTC reverse acquisition  transaction,  a stock
warrant to purchase  1,905,600  shares of TTC  restricted,  unregistered  common
stock at a price  of $1.26  per  share,  in  reliance  upon the  exemption  from
registration  set forth in  Section  4(2) of the  Securities  Act of 1933.  This
warrant is  exercisable  at any time after its  issuance and expires on June 12,
2006. Due to the  uncertainty  related to the ultimate  exercise for purchase of
any shares covered by this warrant,  TTC did not assign any compensation expense
upon the issuance of this warrant.

CTC intends to  substitute  CTC shares of common stock in place of the TTC stock
prescribed in the above warrant.  On October 18, 2001, the holder of the Warrant
to purchase  shares of the Company's  common stock  exercised 7,940 warrants and
purchased  7,940  shares of  restricted,  unregistered  common stock for $10,000
cash.

In April 2003, the Company granted 50,000 Series K warrants valued at $11,750 as
payment for a legal  settlement.  Each Series K warrant  entitles  the holder to
purchase one share of  restricted  unregistered  common stock at $0.50 per share
and expires on September 30, 2005. In April 2003,  the Company  granted  250,000
Series L  warrants  valued at $61,250 as payment  for  services  rendered.  Each
Series L warrant  entitles  the  holder  to  purchase  one  share of  restricted
unregistered common stock at $0.42 per share and expires on April 8, 2006.

In September  2003,  267,500  warrants were exercised at exercise prices between
$0.25 and $0.50 per share.

In  September  2003,  the Company  issued  500,000  Series N warrants  valued at
$250,000.  Each  Series N  warrant  is  exercisable  at $0.50  per share for the
purchase of restricted  unregistered  common stock. The warrants are callable at
$0.50 per share and expire on June 30, 2005.

In August 2003, the Company  issued 83,335 Series O warrants  valued at $50,001.
Each  Series O warrant is  exercisable  at $0.60 per share for the  purchase  of
unrestricted registered common stock. The warrants are callableat$0.60 per share
and expire on June 30, 2005.

In  September  2003,  the Company  issued  785,000  Series P warrants  valued at
$628,000.  Each  Series P  warrant  is  exercisable  at $0.80  per share for the
purchase of unrestricted  registered  common stock. The warrants are callable at
$0.80 per share and expire on July 30, 2005.

In December  2003,  the  Company  issued  1,200,000  "December  Price  Offering"
warrants  valued at  $2,448,000.  Each  "December  Price  Offering"  warrant  is
exercisable  at $2.04 per  share for the  purchase  of  unrestricted  registered
common  stock.  The  warrants  are  callable  at $2.04 per  share and  expire on
December 31,  2008.  The Company  issued  120,000  warrants to one  professional
company which resulted in compensation expense of $ 153,207.

In January 2004, the Company issued 58,500 Series R warrants valued at $114,075.
Each  Series R warrant is  exercisable  at $1.95 per share for the  purchase  of
unrestricted  registered  common  stock.  The warrants are callable at $1.95 per
share and expire on December 10, 2005.

In September  2004, the Company  issued  1,527,000  Series S warrants  valued at
$1,427,000,  of which  100,000  are being  held  pending  final  performance  of
services  rendered.  Each Series S warrant is exercisable at $1.00 per share for
the purchase of restricted  unregistered common stock. The warrants are callable
at $1.00 per share and expire on July 17, 2007. The Company recognized  $918,376
of compensation expense for services rendered.

In September  2004,  the Company  issued  160,000 Series T warrants for services
rendered  valued at $160,000.  Each Series T warrant is exercisable at $1.00 per
share for the purchase of restricted unregistered common stock. The warrants are
non-callable  and expire on July 17, 2008.  The Company  recognized  $105,915 of
compensation expense for services rendered.


                                      F-38
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


In connection  with the  convertible  debenture  offering,  the Company issed in
August 2004, 1,726,973 "Debenture" warrants valued at $3,022,203 and exercisable
at $1.75 per share and 1,726,973  "Debenture"  warrants valued at $3,143,091 and
exercisable  at $1.82  per  share.  Both are  exercisable  for the  purchase  of
restricted  unregistered  common stock,  are  non-callable and expire August 17,
2008. Registration rights were attached to these warrants. SEE, NOTE 11.

In September  2004,  the Company  issued  500,000 Series U warrants for services
rendered  valued at $915,000.  The Series U warrant is  exercisable at $1.82 per
share for the purchase of restricted unregistered common stock. The warrants are
callable  and expire on August 18,  2008.  The  Company  recognized  $615,012 of
compensation expense for services rendered.

The following table presents warrant activity through September 30, 2004:

                                                                    Weighted-
                                                                     Average
                                                    Number          Exercise
                                                   of Shares         Price
                                                  ----------      -----------

 Outstanding, March 18, 2001 (inception)                  --      $        --
     Granted                                       1,905,600      $      1.26
                                                 -----------

Outstanding, September 30, 2001                    1,905,600      $      1.26
     Granted                                         848,630      $      0.50
     Exercised                                        (7,940)     $      1.26
                                                 -----------

 Outstanding, September 30, 2002                   2,796,290      $      1.06
     Granted                                      14,568,834      $      0.46
     Exercised                                      (267,500)     $      0.29
                                                 -----------

OUTSTANDING, SEPTEMBER 30, 2003                   17,398,457      $      0.55
     Granted                                       7,359,446      $      1.58
     Exercised                                    (6,735,222)     $       .42
     Cancelled                                    (4,821,000)     $       .49
                                                 -----------

OUTSTANDING, SEPTEMBER 30, 2004                   13,201,681      $      1.08
                                                 ===========

EXERCISABLE, SEPTEMBER 30, 2004                   13,201,681      $      1.08
                                                 ===========


                                      F-39
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


NOTE 9 - INCOME TAXES

The provision for (benefit from) income taxes differs from the amount that would
result from applying the federal  statutory  rate for the years ended  September
30, 2004 and 2003 as follows:

                                                     2004               2003
                                                  -----------       ------------

 Statutory regular federal income benefit rate     (3,247,000)      $(1,955,800)
 Change in valuation allowance                      2,256,000         2,337,700
 State tax, net of federal benefit                   (421,000)         (342,300)
 Other                                              1,412,000             6,100
                                                  -----------       ------------
 TOTAL                                                    --        $        --
                                                  ===========       ============

Significant  components of the Company's deferred tax assets and liabilities for
federal  and state  income  taxes as of  September  30,  2004  consisted  of the
following:

Deferred tax assets
          Net operating loss carry-forwards                 $ 4,737,000
          Warrants issued for services                          767,000
          Common Stock issued for services rendered             489,000
          Loan origination fees                                 454,000
          Common Stock issued for legal settlement              316,000
          Other                                                  12,000
          Less valuation allowance                           (6,775,000)
                                                            -----------

 NET DEFERRED TAX ASSETS                                    $        --
                                                            ===========

During the year ended September 30, 2004, the valuation  allowance  increased by
$2,256,000.  As of  September  30,  2004,  the  Company had net  operating  loss
carry-forwards  for  federal  and state  income tax  purposes  of  approximately
$20,617,771   and   $20,617,771,   respectively.   The   net   operating   loss
carry-forwards  begin  expiring in 2020 and 2010,  respectively.  The amount and
availability  of  the  net  operating  loss  carry-forwards  may be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three-year, look-back period, whether there
is a deemed  more than a 50% change in control,  the  applicable  long-term  tax
exempt bond rate,  continuity of historical  business,  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carry-forwards.


                                      F-40
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 AND
      FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


NOTE 10 - RELATED PARTY TRANSACTIONS

Prior  to the  November  3,  2001  acquisition  of TTC by CTC,  TTC  engaged  in
significant transactions involving both its preferred stock and its common stock
of TTC with Red Guard, an entity in which a shareholder,  officer,  and director
of TTC, and  subsequently,  of the  Company,  is also a  shareholder  and was an
officer  through  December 2001. Key  transactions  involving this  relationship
included the issuance of the Series A and Series B Preferred Stock, the issuance
of common stock to acquire  various  marketable  and  restricted  securities  in
various  unrelated  entities,  and to acquire the rights to negotiate to acquire
the license to manufacture,  develop, and sell certain patent-pending  composite
reinforced aluminum conductor technologies.

On September  30, 2002,  the Company and Red Guard  consummated  a  transaction,
whereby  Red  Guard  exchanged  100% of the  issued  and  outstanding  Series  A
preferred stock, all accrued but unpaid dividends,  certain  short-term  working
capital  loans,  and all  accrued  but unpaid  interest in return for all of the
Company's investment interests in other companies,  except for the investment in
IPS.

A short term non interest  bearing loan made by one of Company's  Directors  was
repaid in July 2004.

NOTE 11 - CONVERTIBLE DEBENTURES

On August 17, 2004,  the Company  closed a Convertible  Debenture  offering with
four select  institutional  accredited  investors for  $15,000,000.  The Company
received  $5,000,000  upon  closing  and  $10,000,000  was placed in a Custodian
Account to secure  payments for the debentures.  The bonds are convertible  into
the  Company's  common stock at a conversion  price of $1.67 at any time through
the maturity date of August 17, 2007. Also, the bonds bear interest at a rate of
6% payable quarterly on September 30th, December 31st, March 31st and June 30th.
There are  3,453,944  warrants for the Company's  common stock  attached to this
agreement at a value of  $3,824,200.  The Company has  recorded a Debt  Discount
against this  debenture  in the amount of  $6,364,063  and  amortized it through
September 30, 2004,  $265,169.  The remaining balance will be amortized over the
next 34 1/2 months.

NOTE 12 - SUBSEQUENT EVENTS

MANUFACTURING & DISTRIBUTION AGREEMENTS

Subsequent  to year end September 30, 2004,  CTC signed two  "Manufacturing  and
Distribution Agreements" with General Cable Industries, Inc.

CONVERTIBLE DEBENTURES

Since year end and following negotiations with the institutional  investors, the
Company secured the release of the $10,000,000  which was originally placed in a
Custodial  Account.  Refer to Note 3. These funds were  received on November 23,
2004.An  additional  amount of $307,500 was paid to Lane Capital upon release of
the funds. Refer to Financial Considerations (MD&AS).

LEASE COMMITMENTS

As part of the  preparation  for the ramp up of the Company's core production on
November  23, 2004,  the Company  obtained  approximately  $1.4 million in lease
financing  commitments  and has a firm  offer for an  additional  $3  million in
equipment lease financing.


                                      F-41
<PAGE>

                                        SIGNATURES

      In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of
1934, as amended,  the registrant  caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                   COMPOSITE TECHNOLOGY CORPORATION



                                   By: /s/ Benton H Wilcoxon
                                       --------------------------
                                       Benton H Wilcoxon
                                       Chief Executive Officer

                                   Dated: December 22, 2004


      In accordance with the Securities  Exchange Act of 1934, as amended,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


                                   /s/ Benton H Wilcoxon
                                   --------------------------
                                   Benton H Wilcoxon
                                   Chief Executive Officer,
                                   Acting Chief Financial Officer and
                                   Chairman

                                   Dated:   December 22, 2004


                                   /s/ C. William Arrington
                                   --------------------------
                                   C. William Arrington
                                   President and Director

                                   Dated:   December 22, 2004

                                       57