SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                               AMENDMENT NO. 2 to
                                   FORM 10-QSB
                                   -----------


[X]   Quarterly Report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

      For the quarterly period ended December 31, 2003

[ ]   Transition Report pursuant to 13 or 15(d) of the Securities Exchange
      Act of 1934

      For the transition period          to


                        Commission File Number OOO-26709

                         Y3K SECURE ENTERPRISE SOFTWARE, INC.
      -----------------------------------------------------------------------
          (Exact name of small Business Issuer as specified in its charter)


           Nevada                                         98-0201259
 ---------------------------------             ---------------------------------
 (State or other jurisdiction of               (IRS Employer Identification No.)
    incorporation or organization)


                  800 Bellevue Way NE, Suite 600, Bellevue, WA 98004
       ----------------------------------------------------------------------
                      (Address of principal executive offices)

                                 (425) 605-9220

                                  ------------------
                      Issuer's telephone number, including area code


       108 West Stewart Avenue, Puyallup, Washington, 98371 (253) 284-2935
      ------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                           if changed since last report)


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

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:  77,473,480 shares of $0.001 par value
common stock outstanding as of January 26, 2004.


                                        1

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

                      Y3K SECURE ENTERPRISE SOFTWARE, INC.

                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                    RESTATED

                                DECEMBER 31, 2003




                                        2

<PAGE>

                      Y3K SECURE ENTERPRISE SOFTWARE, INC.
                          (A Development Stage Company)

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                         DECEMBER 31     JUNE 30
                                                                             2003          2003
                                                                         -----------    -----------
<S>                                                                      <C>            <C>
ASSETS

CURRENT

     Cash                                                                $     2,813    $       653
      Lease Security Deposit                                                   3,165             --
                                                                         -----------    -----------
            TOTAL CURRENT ASSETS                                               5,978            653

CAPITAL ASSETS                                                                 2,401          4,769
                                                                         -----------    -----------
                                                                         $     8,379    $     5,422
                                                                         ===========    ===========
LIABILITIES

CURRENT

     Accounts payable and accrued liabilities                            $   612,038    $   697,337
     Loans payable - Note 3                                                1,048,166        884,166
     Capital lease obligations                                               121,565        121,565
                                                                         -----------    -----------
            TOTAL CURRENT LIABILITIES                                      1,781,769      1,703,068
                                                                         -----------    -----------

SHAREHOLDERS' DEFICIENCY

SHARE CAPITAL

     Authorized:

         200,000,000 common shares, par value $0.001 per share

    Issued and outstanding:

          69,456,640 common shares at December 31, 2003 and 52,050,605
          June 30, 2003                                                       69,457         52,050
    Share subscriptions receivable                                           (15,280)          (571)
    Additional paid-in capital                                             3,905,145      2,741,023

DEFICIT                                                                   (5,732,712)    (4,490,148)
                                                                         -----------    -----------

                                                                          (1,758,110)    (1,697,646)

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

                                                                         $     8,379    $     5,422
                                                                         ===========    ===========
</TABLE>


                                        3

<PAGE>

                        Y3K SECURE ENTERPRISE SOFTWARE, INC.
                              (A Development Stage Company)


                     CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT

<TABLE>
<CAPTION>
                                        THREE MONTHS ENDED             SIX MONTHS ENDED        INCEPTION TO
                                           DECEMBER 31                    DECEMBER 31           DECEMBER 31
                                           -----------                    -----------           -----------
                                       2003            2002           2003           2002           2003
                                       ----            ----           ----           ----           ----

<S>                                 <C>            <C>            <C>            <C>            <C>
Revenues                                     --            431             --            431        138,833

Expenses                                994,209        342,014      1,210,757        508,845      5,773,803
                                    -----------    -----------    -----------    -----------    -----------

Operating Loss                         (994,209)      (341,583)    (1,210,757)      (508,414)    (5,634,970)

Other Income (Expense)                  (21,809)            --        (31,807)            --        (71,999)
                                    -----------    -----------    -----------    -----------    -----------

Net Loss For Period                  (1,016,018)      (341,583)    (1,242,564)      (508,414)    (5,706,969)
                                    ===========    ===========    ===========    ===========    ===========

Net Loss Per Share                  $      (.02)           NIL    $      (.02)   $      (.01)
                                    ===========    ===========    ===========    ===========

Weighted Average Number of Common
Shares Outstanding                   63,188,245     51,946,280     63,188,245     51,946,280
                                    ===========    ===========    ===========    ===========
</TABLE>


                                        4
<PAGE>


                           Y3K SECURE ENTERPRISE SOFTWARE, INC.
                               (A Development Stage Company)

                           CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                               INCEPTION
                                                                                                                MARCH 19
                                                       THREE MONTHS ENDED             SIX MONTHS ENDED          1999 TO
                                                           DECEMBER 31                   DECEMBER 31           DECEMBER 31
                                                      2003           2002           2003           2002           2003
                                                   -----------    -----------    -----------    -----------    -----------
<S>                                                <C>               <C>          <C>              <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Net loss                                      $(1,016,018)      (341,583)    (1,242,564)      (508,414)    (5,706,969)

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
  FROM OPERATING ACTIVITIES

     Fair value of unpaid compensation                      --             --         96,000
     Depreciation and amortization                       1,184          1,184          2,368          2,368         41,111
     Write off leasehold improvements                       --         14,881
     Guarantee of Karunga note                                                                                     400,000
     Write off notes receivable                             --             --         48,000
     Write off investment                                   --             --         25,000
     Loss from default under equipment leases               --             --        142,955
     Stock issued for other than cash                  682,514        166,667        826,358        166,667      1,126,752
     Lease deposit                                          --             --         (3,165)            --         (3,165)
      Change in payables and accrued liabilities       (48,265)       151,570        (56,245)       313,525        700,126
                                                   -----------    -----------    -----------    -----------    -----------
                                                      (380,585)       (22,162)      (473,248)       (25,854)    (3,115,309)
                                                   -----------    -----------    -----------    -----------    -----------
 CASH FLOWS FROM INVESTING ACTIVITIES

     Purchase of equipment and property                     --             --       (151,470)
     Advances on notes receivable                           --             --             --             --        (40,000)
     Investment in Humanicom, Inc.                          --             --             --             --        (25,000)
                                                   -----------    -----------    -----------    -----------    -----------
                                                            --             --             --             --       (216,470)
                                                   -----------    -----------    -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

       Loans payable                                    97,000             --        164,000             --        648,166
       Share subscriptions receivable                  (14,709)          (571)       (14,709)          (571)       (15,280)
       Principal payments on capital leases                 --             --             --             --        (20,970)
       Capital contribution from Shareholder                --         75,000             --         75,000         75,000
       Issuance of common stock for cash               276,727            776        326,117            776        531,043
       Advance on purchase of Karunga                  (50,000)       (50,000)            --
       Issuance of preferred stock                          --             --             --             --      2,116,633
                                                   -----------    -----------    -----------    -----------    -----------
                                                       359,018         25,205        475,408         25,205      3,334,592
                                                   -----------    -----------    -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                          (21,567)         3,043          2,160           (649)         2,813
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD          24,380          7,030            653         10,722             --
                                                   -----------    -----------    -----------    -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD           $     2,813         10,073          2,813         10,073          2,813
                                                   ===========    ===========    ===========    ===========    ===========
</TABLE>


                                        5

<PAGE>


                      Y3K SECURE ENTERPRISE SOFTWARE, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2003

1.    BASIS OF PRESENTATION

      The unaudited  consolidated  financial  statements as of December 31, 2003
      included herein have been prepared without audit pursuant to the rules and
      regulations of the Securities and Exchange Commission. Certain information
      and  footnote   disclosures  normally  included  in  financial  statements
      prepared in accordance with United States  generally  accepted  accounting
      principles  have been  condensed  or  omitted  pursuant  to such rules and
      regulations.  In the opinion of management, all adjustments (consisting of
      normal recurring  accruals)  considered  necessary for a fair presentation
      have been  included.  It is suggested  that these  consolidated  financial
      statements be read in conjunction with the June 30, 2003 audited financial
      statements and notes thereto.

2.    ACQUISITION OF SUBSIDIARY

      Effective March 22, 2002, Y3K Secure  Enterprise  Software,  Inc. acquired
      100% of the issued and outstanding  shares of Y3K  Incorporated by issuing
      13,100,000  common shares.  In addition,  the former  shareholders  of Y3K
      Incorporated  received an additional 4,981,374 common shares in a separate
      transaction.

      A summary of the transaction is as follows:

      The   outstanding   shares  of  Zeballos  prior  to  the  acquisition  was
      27,688,500.  Y3K, Inc.,  shareholders  had common shares of 12,789,792 and
      preferred shares of 5,291,582 for a total conversion of common shares from
      Zeballos of 18,081,374.  In order for Y3K, Inc.,  shareholders  to receive
      18,081,374 shares of Zeballos,  13,100,000 newly issued shares were issued
      and 4,981,374  shares were received from existing  issued and  outstanding
      shares (part of the  27,688,500  common shares issued and  outstanding  to
      Zeballos shareholders) of Zeballos common shares.

      The transaction  resulted in the Zeballos  shareholders holding a total of
      22,707,126,  or  56%  of  the  total  issued  and  outstanding  shares  of
      40,788,500 and Y3k, Inc.,  shareholders  having a total of 18,081,374,  or
      44% of the total  issued  and  outstanding  shares  after the close of the
      acquisition.  Even though Y3k shareholders  ended up with 44% of the total
      issued  and   outstanding   shares  after  the   acquisition   the  former
      shareholders  of Y3K  Incorporated  did have  control as outlined in items
      (b), (c), and (d) of paragraph 17 of SFAS 14.

      -     the existence of a large  minority  voting  interest in the combined
            entity

      -     control of the board of the combined entity

      -     domination of the senior management of the combined entity


                                        6
<PAGE>


                      Y3K SECURE ENTERPRISE SOFTWARE, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2003

     Accordingly,   the  transaction,   which  is  referred  to  as  a  "reverse
     take-over",  has been treated for accounting  purposes as an acquisition by
     Y3K Incorporated of the net assets and liabilities of Y3K Secure Enterprise
     Software,  Inc. Under this purchase  method of  accounting,  the results of
     operations of Y3K Secure  Enterprise  Software,  Inc. are included in these
     consolidated financial statements from March 22, 2002.

     Y3K Secure  Enterprise  Software,  Inc. had a net asset  deficiency  at the
     acquisition  date,  therefore,  the 13,100,000 shares issued on acquisition
     were  issued at fair value of $0 with the net asset  deficiency  of $25,743
     charged to deficit.  Y3K  Incorporated  is deemed to be the  purchaser  for
     accounting  purposes.  Accordingly,  its net  assets  are  included  in the
     consolidated balance sheet at their previously recorded amounts.

     The acquisition is summarized as follows:

     Current Liabilities

         Accounts payable                           $     25,743
                                                    --------------
     Net Asset Deficiency                            $    (25,743)
                                                    ==============


3.    LOANS PAYABLE

      The Loans Payable are due to various entities and individuals as follows:

<TABLE>
<CAPTION>
<S>                                                                                                <C>
     The Loans Payable are due to various entities and individuals as follows:

     Loans from shareholders with unsecured demand notes at 12% per annum                               $322,500

     Loan due to bank - defaulted in year 2001 (unsecured)                                               155,666

     Loan due to Cornell Capital, Inc. *                                                                 150,000

     Loan due as guarantor to creditor of Karunga Technologies, inc.                                     400,000

     Loan due to private party                                                                            20,000
                                                                                                       ---------

          Total Loans Payable                                                                         $1,048,166
                                                                                                       =========
</TABLE>

*     1,555,556 common shares were issued to Cornell Capital,  Inc., as security
      for the $150,000 loan bearing interest at 12% per annum until paid.


                                        7
<PAGE>


Item  2. Management's Discussion and Analysis

During the year ended June 30, 2002, we completed our  acquisition of Y3K, Inc.,
a private  Washington  State company that owns FusionPak,  a suite of enterprise
business  software designed for the  telecommunications,  banking and government
sectors.

Plan of Operation

During the six month period ended  December 31, 2003,  we continued our attempts
to raise the necessary  funds to continue to conduct our business  plan. We were
successful in securing  $150,000 in private debt financing from Cornell Capital,
$20,000 from a private  investor with common stock issuances to retire $6,000 in
debt for a net raise in debt of $164,000.  (See Note 3 to  financial  statements
above).  In addition during the six month period we sold 3,981,304 common shares
for net  proceeds of $325,669,  issued  4,472,219  common  shares for the vested
options  exercised by the founders for $447 and issued  7,396,956  common shares
for services totaling $826,358.  The Company also issued 1,555,556 common shares
to Cornell  Capital as collateral  for their loan of $150,000.  These funds have
been  sufficient  to fund our  operations  at a level that allowed us to further
develop  and  enhance  Fusion  Pak,  which  is our  suite of  business  software
products,  and to engage in  marketing  of Fusion Pak to a number of  interested
businesses. In order to continue operations we will need additional capital, the
amount of which will be  dependant  in large part in our ability to increase our
marketing  efforts to begin to  generate  revenues in an amount that will reduce
our ongoing need for additional capital investment.

Our plan of  operations  for the next twelve months is to complete the following
objectives within the time period specified, subject to our obtaining additional
financing for the continued development of Y3K, Inc.'s business:

      We plan to undertake an  advertising,  marketing,  and sales campaign upon
      raising  adequate  funding.  We  anticipate  that  the  expenses  will  be
      approximately  $500,000.  We plan to undertake an advertising,  marketing,
      and sales campaign to market the bundled services of FOX communication for
      which  the  Company  has  signed a Joint  Operations  Agreement  effective
      September 10, 2003. The monthly  minimum is $50,000 and we anticipate that
      we will be out of pocket for up to 5 months  before we  realize  cash flow
      from our efforts.  Once sales are  sufficient  from the bundled  services,
      YTHK  will  not be  required  to use  its own  funds  for  marketing.  Our
      anticipated  out of  pocket  for  these  expenses  will  be  approximately
      $250,000.

      We plan to purchase and lease additional  equipment for our business at an
      approximate cost of $50,000

      With adequate  funding,  we anticipate our monthly operating costs will be
      approximately   $150,000  per  month  in  order  to  achieve  our  planned
      operations  compared  to a minimum  of  $50,000  per month just to sustain
      minimum operations.

      We anticipate  accomplishing  the purchase of the Karunga  technology  for
      which we have continued to advance joint  development  costs, as well as a
      $50,000 advance toward the acquisition of the technology.  The funds being
      advanced are for the continued  co-development  of the current  version of
      the ICS. We currently  have a license  agreement with Karunga that expired
      on December  31, 2003 and an extension  was issued on the license  through
      February 28, 2004. We have also extended the original  technology purchase
      agreement that originally  expired in March 2003 through February 28, 2004
      to allow both  companies to complete the intended  acquisition  of the ICS
      technology. There is no guarantee that we will conclude our agreement with
      Karunga but do expect that we will receive  additional  extensions  of the
      license  agreement  as we  continue  to  deal  in good  faith  toward  the
      acquisition of the technology.


                                        8
<PAGE>

      Currently  there are three  people from  Karunga who are working with YTHK
      for the continued development of its new product and business adaptation.

In an effort to  accommodate  Karunga,  and protect our current  interest as the
licensee of the ICS  software,  we advanced  $50,000 to a  non-related  party to
which Karunga has a substantial liability for a residual payment due for certain
core technology of its ICS system.  We advanced the $50,000 in order to keep the
technology  from being seized by said party.  In addition to the cash payment we
also agreed to act as guarantor on a new note Karunga issued to the  non-related
party.  Since we view Karunga's ICS system as a core element of our Fusion - Pak
suite of networking  computer related  services,  the advance and note guarantee
were deemed necessary and appropriate by our management. The principal amount of
the note we guaranteed is $400,000 and the note required monthly  payments.  The
entire  amount of the note was due and  payable  as of March 15,  2003 and as of
December 31, 2003 the balance due under the note is approximately

$460,000,  including  accrued  interest.  As of June 30,  2003 the  Company  has
expensed the principal amount of the note,  $400,000,  in its financials and set
up the liability to the  beneficiary of the note.  The note is accruing  default
interest  at the rate of 18% per  annum.  Karunga  is in  default on the note at
December  31,  2003,  and it is unlikely  that Karunga will be able to cure that
default in the near future.  However, the noteholder has indicated a willingness
to wait for a reasonable period of time to allow us to obtain a cash infusion in
order to make  additional  payment  under the note.  As of December 31, 2003 the
noteholder has made no demand to the Company for payment.  When and if demand is
made on the Company for payment of the amount due under the note, it is unlikely
that the Company  will have the  resources  to pay the note unless it is able to
secure  sufficient  capital from another source or is able to  re-negotiate  the
current note and extend the term for payment of the amount due. In any event, it
is likely  that a demand for  payment of the note would have a serious  negative
effect on the  Company's  liquidity and would require it to divert a significant
amount of its capital resources or its revenues to meet its obligation under the
guarantee.

In order to explore the  possible  bundling of services  with other  proprietary
software,  the  Company  has  signed an  agreement  with  xSides,  a  Washington
Corporation  that is the developer of a secure platform that allows companies to
control content displayed on the PC desktop.  The 2 year agreement gives Y3K the
opportunity to introduce and populate the space with their software applications
that  will  interoperate  with the  xSides  technology  and  allows  Y3K to sell
(license) the xSides  product to enterprise  level  customers.  xSides  patented
technology  manages data  delivered to and  displayed on a computer and can even
create an  alternate  start  menu or a  completely  new  secure  space  residing
directly on the desktop.

As part of the xSides  Agreement,  effective  September 3, 2003,  Y3k has leased
office space to accommodate  employees of xSides. The office space is located at
100 South King Street,  Suite 535, Seattle, WA 98104 and comprises 2,302 sq. ft.
of  rentable  space.  The lease is for one year  with a base rent of $3,165  per
month.

As a result of this agreement,  Mr. Michael Secright of the xSides employees has
become a consultant for YTHK whose responsibilities are as follows:

      -     Deploy and manage  network  supporting  y3k  integration/development
            teams

      -     Manage  and  support   development   efforts  that   require   sever
            integration and development

      -     Support of  corporate IT  operations  for xSides and Y3k - Introduce
            third party relationships to Y3K and nurture those relationships


                                        9
<PAGE>

      -     Evaluate third party technology and report findings.

      -     Responsible for  administrative  duties and budget for IT xSides and
            Y3k operations

On  June  12,   2003   Y3K   announced   a  new   strategic   partnership   with
InteractNetworks.  Under this partnership Y3K signed a resellers  agreement that
allows  Y3K  to  add  InteractNetworks   Lockdown(TM)  Vulnerability  Management
Appliance  (VMA) to Y3K's  comprehensive  line of security  solutions  products.
Lockdown(TM)  Vulnerability  Management Appliances (VMA) automates vulnerability
assessment  auditing and reporting  for 50 to 25,000 IP addresses.  All auditing
and reporting is managed through a secure web interface. This simple, automated,
and  scalable  architecture  significantly  reduces  the  cost of  vulnerability
auditing  and  reporting.  Reporting,  from  up  to  50  Lockdown(TM)  VMAs,  is
consolidated,  providing a comprehensive  solution for large enterprise networks
and global deployments. Additionally, detailed reporting ensures compliance with
Enterprise,   HealthCare  (HIPPA),   Financial  Institutions  (GLB),  and  other
government, federal and state agency security guidelines.

This is a stand-alone product and not part of the Fusion Pak product line.

On August 15,  2002 we entered  into the Equity  Line of Credit  Agreement  with
Cornell  Capital,  Inc.,  ("Cornell")  which provides the  opportunity for us to
obtain up to $7,000,000 in equity financing through August 15, 2004. In order to
have  access  to the funds  available  under  the  equity  line of credit we are
required  to  register  the shares that we sell to Cornell so that it can resell
those shares  without  restriction.  We are  preparing a Form SB-2  Registration
Statement  seeking to  register  30,000,000  shares of our common  stock that we
believe will be sufficient  for us to obtain the entire  $7,000,000 in financing
made  available  to us under the Equity Line of Credit  Agreement.  We expect to
have the  registration  statement  filed in the third quarter of fiscal 2004. In
the  interim  period  prior to our filing the SB-2,  the  Company  has issued to
Cornell Capital, Inc., 1,555,556 shares of common stock to be held as collateral
for a loan of $150,000.

>From the  proceeds  under the Equity Line of Credit,  the Company may repay its
short-term  loan proceeds from Cornell  Capital,  Inc., and continue with equity
funding  under the  terms of the  Equity  Line of  Credit,  as funds are  deemed
necessary by the Company.

Further,  the  Company  will  continue  to issue  common  shares  to  accredited
investors at a discount from the market price to compensate the investor for the
required time to hold the stock before it can be resold under Rule 144.

If we do not raise additional funds by selling our shares or obtaining loans, or
if we are unable to generate sufficient revenue our business will fail.

Y3K intends to use this type of financing sparingly since credit line draws will
increase the number of our issued and outstanding shares, therefore is likely to
have a dilutive effect on our existing shareholders.  Further, until the trading
price for our common stock is higher, taking an advance under the Equity Line of
Credit will  require the  issuance of a  substantial  number of shares to obtain
even a minimal  amount of  funding  under the  Equity  Line of  Credit.  We will
continue to focus our efforts towards increasing sales and revenues,  which will
reduce our need for additional  capital as well as increase the intrinsic  value
of our  stock  which we hope will also  cause an  increase  in the price for our
stock in the forthcoming months.


                                       10
<PAGE>


If the funds available under the equity line are insufficient or unavailable, or
we elect to not draw the amount of funds  necessary  to fund our cash needs,  we
will need to raise  additional  funds. It is likely that this will require us to
sell  additional  amounts of our shares,  either common or preferred.  If we are
unable to secure additional  infusions of either debt or equity financing in the
amount sufficient to maintain our business, it will fail.

With  additional  revenues,  we plan to retain  staffing  levels  sufficient  to
achieve our goals. This additional  staffing may include full-time and part-time
employees,  and  consultants.  Without  sufficient  revenues,  we will  continue
limiting  our  employees  to  our  president,  vice-president/secretary,  office
manager and receptionist.

Completion of our plan of operation is subject to obtaining adequate  financing.
However, we cannot assure investors that adequate financing will be obtained. In
the absence of our projected revenues, we may be unable to proceed with our plan
of operation.  Even without significant  revenues within the next twelve months,
we still anticipate being able to continue with our present  activities,  but we
will require  financing to potentially  achieve our goal of profit,  revenue and
growth.

The  foregoing  represents  our best estimate of our cash needs based on current
planning and business conditions.  The exact allocation,  purposes and timing of
any  monies  raised in  subsequent  private  financings  may vary  significantly
depending upon the exact amount of funds raised and status of our business plan.

In the event we are not  successful  in reaching  our initial  revenue  targets,
additional  funds may be required  and we would then not be able to proceed with
our business plan for the development and marketing of the our core products and
services.  Should  this occur,  we would  likely seek  additional  financing  to
support the continued operation of our business.

Results of Operations

During the year ended June 30, 2002, we completed our  acquisition  of Y3K, Inc.
The transaction, which is referred to as a "reverse take-over", has been treated
for accounting  purposes as an acquisition by Y3K Incorporated of the net assets
and  liabilities  of Y3K Secure  Enterprise  Software,  Inc. Under this purchase
method of  accounting,  the  results  of  operations  of Y3K  Secure  Enterprise
Software,  Inc. are included in these  consolidated  financial  statements  from
March  22,  2002.  The  financial   statements  presented  herein  compares  the
three-month and six-month periods ended December 31, 2003 and December 31, 2002.

Since  incorporation,  we have funded our operations  through  private loans and
equity  financings.  As at December 31, 2003, our assets were recorded at $8,379
consisting of cash of $2,813, a lease deposit on new space of $3,165 and capital
assets of $2,401. Our liabilities totaled $1,738,769, consisting of $612,038 in

accounts payable and accrued liabilities,  loans payable of $1048,166, including
the Karunga  note  guarantee,  and lease  obligations  of $121,565  from a prior
office space leased by the Company.

In the  three-month  period ended  December 31, 2003,  we incurred a net loss of
$1,016,018 as compared to a loss of $341,583 for the same period last year.  For
the  six-month  period  ended  December  31,  2003,  we  incurred  a net loss of
$1,242,564 as compared to a loss of $508,414 for the same period last year.  The
substantial  increase in expenses  was  primarily  due to the issuance of common
shares of  restricted  common  stock to various  individuals  and  entities  for
consulting services. (See Item 2 - Changes in Securities). During the period, we
realized no significant amounts of revenue.

Since  inception  the  Company  has  accumulated  losses of  $5,706,969  through
December 31, 2003.

Liquidity and Capital Resources

     During the three month  period ended  December  31,  2003,  we continued to
raise funds to continue to conduct our business plan.  During the period we were
successful  in  obtaining a total of $255,000 of cash  infusions in exchange for
2,747,326  shares of our common stock.  These funds were applied to our business
operations.  In  addition,  we issued  5,317,245  shares of our common  stock to
various persons in exchange for their services which were valued at $682,514.

     We expect that we will continue to rely on debt and/or equity financings to
finance the shortfall in cash that we expect to incur for the next 12 months. If
we are unsuccessful in securing the necessary capital, then it is likely that we
will be forced to  continue to operate at minimal  levels,  which will delay our
ability to fully implement our plan of operation.  Ultimately, it is likely that
if we are unable to secure the financing,  or secure a revenue stream sufficient
for us to expand our current level of operation, the company will fail.


                                       11
<PAGE>


Item  3. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive  Officer and its Chief  Financial  Officer,  after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in the  Securities  Exchange Act of 1934 Rules 13a-14 (c) and 15d-14
(c)) as of the end of the period covered by this quarterly report on Form 10-QSB
(the  "Evaluation  Date")),  have concluded that, as of the Evaluation Date, the
Company's  disclosure  controls and  procedures  were  adequate and effective to
ensure that material  information  relating to the Company and its  consolidated
subsidiaries  is recorded,  processed,  summarized and reported by management of
the Company on a timely basis in order to comply with the  Company's  disclosure
obligations  under  the  Securities  Exchange  Act of 1934  and  the  SEC  rules
thereunder.

Changes in Internal Controls

There were no significant changes in the Company's internal controls or in other
factors that could  significantly  affect the Company's  disclosure  control and
procedures  subsequent to the Evaluation Date, nor any significant  deficiencies
or material  weaknesses in such  disclosure  controls and  procedures  requiring
corrective actions.

New Accounting Pronouncements

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
Accounting for Business  Combinations  and SFAS No.142,  Accounting for Goodwill
and other Intangible  Assets effective for fiscal years beginning after December
15,  2001.  Under  SFAS No.  141,  a  company  must use the  purchase  method of
accounting  for all  business  acquisitions.  Under SFAS No. 142,  goodwill  and
intangible  assets deemed to have  indefinite  lives will no longer be amortized
but  will  be  subject  to  annual  impairment  tests  in  accordance  with  the
statements. The adoption of these standards is expected to have no effect on our
financial statements.

      In  August  2001,  the  FASB  issued  SFAS  No.  144,  Accounting  for the
Impairment or Disposal of Long-Lived Assets. This statement  superseded SFAS No.
121,  Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed Of and addresses  financial  accounting  and reporting for
impairment of long-lived  assets to be held and used, and long-lived  assets and
components of an entity to be disposed of. We adopted this  statement on January
1, 2002.

      In  November  2002,  the FASB  issued  Interpretation  No. 45 ("FIN  45"),
Guarantor's  Accounting and Disclosure  Requirements  for Guarantees,  including
Indirect Guarantees of Indebtedness of Others. FIN 45 clarifies the requirements
of  SFAS  No.  5,  Accounting  for  Contingencies,  relating  to  a  guarantor's
accounting  for, and disclosure of, the issuance of certain types of guarantees.
For  certain  guarantees  issued  after  December  31,  2002,  FIN 45 requires a
guarantor to recognize,  upon issuance of a guarantee,  a liability for the fair
value of the obligations it assumes under the guarantee. Guarantees issued prior
to January 1, 2003 are not subject to liability recognition,  but are subject to
expended  disclosure  requirements.  We do not believe that the adoption of this
Interpretation  will  have a  material  impact  on  our  financial  position  or
statement of operations.

      In January  2003,  FASB  issued FIN 46, an  interpretation  of  Accounting
Research  Bulletin No. 51. FIN 46, requires us to consolidate  variable interest
entities  for which we are deemed to be the  primary  beneficiary  and  disclose
information  about  variable  interest  entities in which we have a  significant
variable  interest.  FIN 46 became effective  immediately for variable  interest
entities  formed after  January 31, 2003 and will become  effective in the third
quarter of 2003 for any variable  interest  entities formed prior to February 1,
2003.  The adoption of this  standard is expected to have no material  effect on
our financial statements.


                                       12
<PAGE>


                           PART II- OTHER INFORMATION

Item 1. Legal Proceedings

We are the plaintiff in a lawsuit filed in Pierce County,  Washington,  Superior
Court which we commenced in October  2002.  In this  litigation we are asserting
claims against a corporation and one of its apparent  principals related totheir
alleged  breach of  contract  to  provide  debt  financing  to the  Company.  In
addition, the Company is seeking compensation for the damages it suffered as the
result of the defendants'  attempts to dispose of shares of the Company's common
stock that had been pledged to secure the promised,  but undelivered  financing.
The  defendants  have asserted a counterclaim  against the company,  pursuant to
which they seek a money judgment  against us in an unspecified  amount.  We have
been  advised by the  attorney  representing  us in the lawsuit that he believes
that the  counterclaim has little or no merit. The Company is not a party to any
other  pending  legal  proceeding.  Management  is not  aware of any  threatened
litigation, claims or assessments.

Item 2. Changes in Securities

      During the quarter, the Company issued common shares as follows:

      2,747,326  shares of common  stock  were  issued  for cash,  subscriptions
      receivable and the cancellation of two notes, each for $3,000, in exchange
      for the issuance of 100,000 and 166,667 common shares,  at prices of $.033
      and $.018, respectively, as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Person/Class               # of           Cash Consideration     Date of             Other Consideration
                           Shares                                Transaction         Describe
                           Sold
--------------------------------------------------------------------------------------------------------------
<S>                        <C>              <C>                   <C>                <C>
Accredited Individual          166,667                           Oct. 1, 2003        Cancelled $3,000
                                                                                     Note

Accredited Individual            100,000                         Oct. 31, 2003       Cancelled $3,000
                                                                                     Note

Accredited Individual            227,273     $35,000.00          Oct. 31, 2003

Accredited Individual          1,454,545    $160,000.00          Nov. 3, 2003

Accredited Individual             89,286     $10,000.00          Nov. 15, 2003

Accredited Individual            150,000     $15,000.00          Dec. 4, 2003

Accredited Individual              4,000                         Dec. 14, 2003       Subscription Agreement
                                                                                     $280.

Accredited Individual            555,555     $35,000.00          Dec. 18, 2003       Plus Subscription
                                                                                     Agreement $15,000

--------------------------------------------------------------------------------------------------------------
    Totals                     2,747,326    $255,000.00                              $21,280.00

--------------------------------------------------------------------------------------------------------------
</TABLE>


                                       13
<PAGE>

      5,317,245  shares of common  stock were issued for  services  amounting to
      $682,514  at prices  ranging  from  $.08 to $.17 per  share.  The  largest
      recipient of shares issued for services was to Jeffrey Galpren;  1,500,000
      common  shares  valued  at  $210,000  with the next  largest  issuance  of
      1,133,333 common shares to William Cox, as consideration  for cancellation
      of his accrued termination contract totaling $136,000.

      t 6 6 The table below details the common shares issued for services:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Person/Class                # of            Consideration          Date of              Description of
                            Shares          (Value of              Transaction          Services Rendered
                            Sold            Service)
------------------------------------------------------------------------------------------------------------------
<S>                         <C>             <C>                    <C>                    <C>
William Cox                 1,133,333       $ 136,000.00           Dec. 11, 2003          Shares for
                                                                                          severance

David Canon                   200,000       $ 34,000.00            Nov. 11, 2003          Intro to
                                                                                          Entertainment Group

Individual                     50,000       $  9,000.00            Oct. 1, 2003           Consulting

Individual                    500,000       $ 45.000.00            Nov. 6, 2003           Promotional Services

Individual                     50,000       $  7,000.00            Nov. 3, 2003           Legal Fees

Jack Orr, Esq.                150,000       $ 25,000.00            Nov. 4, 2003           SEC Work

Jeffrey Galpren             1,500,000       $210,000.00            Nov. 3, and Dec. 1,    Planning, financial
                                                                   2003                   consulting, B of D
                                                                                          consulting

Individual                     50,000        $ 7,000.00            Nov. 3, 2003           Consulting

Individual                     58,824       $ 10,000.00            Nov. 5, 2003           Interest on Note

Individual                     50,000        $ 7,000.00            Nov. 3, 2003           S-8 work

Corporation                   500,000       $ 45,000.00            Nov. 6, 2003           Promotional
                                                                                          services

Limited liability co.         600,000       $102,000.00            Nov. 13, 2003          Business Development

Individual                     50,000       $  9.000.00            Oct. 1, 2003           Consulting

Corporation                   425,088       $ 36,014.00            Oct. 28, 2003          Commission on stock
                                                                                          sale and Webcast
------------------------------------------------------------------------------------------------------------------
   Totals                   5,317,245      $ 682,514.00
------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       14
<PAGE>

      4,472,219  shares of common  stock were  issued to  founders  representing
      shares that were fully vested at December  31,  2003.  Each share was paid
      for at the option price of par of the private  company,  Y3k,  Inc.,  that
      initially issued the shares at $.0001 as follows:


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Person/Class                              # of            Cash Consideration  Date of
                                          Shares                              Transaction
                                          Sold
----------------------------------------------------------------------------------------------------------
<S>                                         <C>                   <C>              <C>
Consulting Services, Inc. Defined                486,111            $  48.61       Dec. 31, 2003
Benefit Plan (a)

JandT Trust (b)                                  777,777            $  77.77       Dec. 31, 2003

Tim Neuman                                        38,889            $   3.88       Dec. 31, 2003

James Stephens                                 1,069,444            $ 106.94       Dec. 31, 2003

Stanley Stone                                    611,109            $  61.11       Dec. 31, 2003

King Cole                                      1,361,111            $ 136.11       Dec. 31, 2003

Tristan Springmeyer                               77,778            $   7.78       Dec. 31, 2003

Don Linkem                                        25,000            $   2.50       Dec. 31, 2003

Paul Wilson                                       25,000            $   2.50       Dec. 31, 2003
-------------------------------------------------------------------------------------------------------------
   Totals                                      4,472,219            $ 447.22
-------------------------------------------------------------------------------------------------------------
</TABLE>

Item  3. Defaults Upon Senior Securities

         None.

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

         None.

Item  5. Other Information

         None.

Item  6. Exhibits

Index to Exhibits:

31.1         Certification of the Chief Executive Officer      Provided herewith
             Pursuant to Section 302 of the Sarbanes-Oxley
             Act of 2002

31.2         Certification of The Chief Financial Officer      Provided herewith
             Pursuant to Section 302 of the Sarbanes-Oxley
             Act of 2002

32.1         Certification by King Cole Pursuant to            Provided herewith
             Section 906 of the Sarbanes-Oxley Act of 2002

32.2         Certification by Leon Caldwell Pursuant to        Provided herewith
             Section 906 of the Sarbanes-Oxley Act of 2002


                                       15

<PAGE>

SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                            Y3K SECURE ENTERPRISE SOFTWARE, INC.

                                            /s/ King Cole
                                            ------------------------------------
Date:  May 7, 2004                          King Cole, President and CEO


                                       16