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

                                   FORM 10-KSB

[x]    ANNUAL REPORT PURSUANT TO 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 __________________

Commission file number: 000-30405

                      Universal Communication Systems, Inc.
                    ----------------------------------------
                 (Name of small business issuer in its charter)

               Nevada                                 860887822
               ------                                 ---------
   (State or other jurisdiction of        (I.R.S. Employer Identification No.)
   incorporation or organization)

407 Lincoln Road, Ste 12F, Miami Beach, Florida                         33139
-------------------------------------------                             -----
   (Address of principal executive offices)                          (Zip Code)

Issuer's telephone number: (305) 672-6344

Name of each exchange on which registered:  OTC Bulletin Board under the trading
                                              symbol UCSY

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

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, $.001 par value per share
                                (Title of class)

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

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

Issuer's revenues for its most recent fiscal year:  $375,007

Aggregate market value of voting stock held by non-affiliates of the issuer as
of December 30, 2004: $9,308,315

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 236,426,863 shares of common stock as
of December 30, 2004.

Documents incorporated by reference:        None.

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

<PAGE>
                    Universal Communication Systems, Inc.

                                 Index to Annual
                              Report on Form 10-KSB
                  For The Fiscal Year Ended September 30, 2004

                                                                            Page

ITEM 1.    DESCRIPTION OF BUSINESS.............................................3

ITEM 2.    DESCRIPTION OF PROPERTY............................................ 9

ITEM 3.    LEGAL MATTERS...................................................... 9

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................10

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........11

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.........15

ITEM 7.    FINANCIAL STATEMENTS...............................................19

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE.............. ..........................19

ITEM 8A.    CONTROLS AND PROCEDURES...........................................19

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT ...............20

ITEM 10.   EXECUTIVE COMPENSATION.............................................22

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....23

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................24

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K...................................24

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.............................26

SIGNATURES....................................................................27

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                                     PART I

Introductory Statement
----------------------

         All statements contained herein that are not historical facts,
including but not limited to, statements regarding the Company's current
business strategy, the Company's projected sources and uses of cash, and the
Company's plans for future development and operations, are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance our business plans
on terms satisfactory to us; competitive factors; changes in labor, equipment
and capital costs; changes in regulations affecting our business; future
acquisitions or strategic partnerships; general business and economic
conditions; and factors described from time to time in the reports filed by us
with the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on any such forward-looking statements, which statements are made
pursuant to the Private Litigation Reform Act of 1995 and, as a result, are
pertinent only as of the date made.

         All of the share price information presented herein has been adjusted
to reflect the 1 for 1,000 reverse split of our outstanding common stock
effective August 23, 2002.

ITEM 1.  DESCRIPTION OF BUSINESS

Introduction

For the past two fiscal years we have had minimal revenues. We have a history of
losses, and an accumulated shareholder deficit of $35,376,531. Because of our
recurring losses, our independent auditors have expressed doubt as to our
ability to continue as a going concern.

We will require short-term outside investment on a continuing basis to finance
our current operations and capital expenditures. If we do not obtain short term
financing we may not be able to continue as a viable concern. We do not have a
bank line of credit, although our subsidiary has a checking account overdraft
facility, and there can be no assurance that any required or desired financing
will be available through bank borrowings, debt, or equity offerings, or
otherwise, on acceptable terms. If future financing requirements are satisfied
through the issuance of equity securities, investors may experience significant
dilution in the net book value per share of common stock.

We currently have three channels of activity, each conducted by a wholly owned
subsidiary. AirWater Corporation, ("AirWater") a Florida corporation formed in
March, 2003, has been established to design, manufacture (utilizing contract
manufacturing organizations) and market systems that perform water extraction
from air. Millennium Electric T.O.U. Ltd., ("Millenium") an Israeli company,
acquired September, 2003, specializes in the development and installation of
solar power systems worldwide, primarily to government and industrial users.

                                      -3-
<PAGE>

Solar One, Inc., ("Solar One") a Florida corporation, formed in July, 2003,
manufactures (subcontracted to third parties) and markets portable photovoltaic
cells in leather cases for consumer electronic products. Solar One was formed to
source the manufacturing and to market the product line of photovoltaic consumer
energy panel products designed by Solar Style, Ltd., ("Solar Style") a wholly
owned Israeli subsidiary. We have recently combined the technology of the
photovoltaic system of Millenium and the water extraction systems of AirWater
and developed a self powered air water machine.

We are focusing our sales efforts in the European, African, Middle Eastern and
Asian government and industrial markets for AirWater and Millenium product and
service offerings. Solar One is targeting the North American and European
consumer markets. We have discontinued, effective January, 2003, our previous
telecommunication and wireless broad band business activities to focus on the
water extraction and photovoltaic technology.

History

In February of 1997, Worldwide Wireless, Inc., a Nevada corporation, was formed
to coordinate the operations of TSI Technologies, Inc., a Nevada corporation,
and National Micro Vision Systems, Inc., a Nevada corporation. Its purpose was
to complete the development of its patented advanced distributed wireless
telephone and network designs and to finance, manufacture, and market these
units and systems. TSI Technologies, Inc. was the research and development
company formed for the purpose of creating and developing the distributed
wireless call processing system. National Micro Vision Systems, Inc. was formed
to operate a network of wireless Internet sites. In April of 1998, Worldwide
Wireless, Inc., TSI Technologies, Inc. and National Micro Vision Systems, Inc.
acquired Upland Properties, Inc., a Nevada corporation, for stock and
transferred their assets to Upland Properties, Inc. Upland Properties, Inc. then
changed its name to World Wide Wireless Communications, Inc. and began trading
on the OTC Bulletin Board (OTC:BB)under the symbol WLGS.

On February 10, 2000 we acquired all of the shares of Digital Way, S.A., a
Peruvian telecommunications company. In June of 2001, we received a notice of
default from the sellers of Digital Way, claiming a breach of the terms of our
purchase agreement. On May 10, 2002, we executed a settlement agreement with
those sellers. Under the terms of the agreement, we re-aligned the stock
ownership of Digital Way, by returning 73% of the common shares owned by us to
the former owners. In addition, we retained a 50% interest in the first $6.2
million of equity value of Digital Way, in the event of a sale or other
disposition. Any value beyond the first $6.2 million will be divided based on
shareholdings. Our chairman, Michael Zwebner, remains on the Board of Directors
of Digital Way, S. A., however he has not actively participated in the affairs
of the company. The settlement agreement fully cancels all debts, claims and
counter claims between us and the sellers, and allows for future co-operation in
the ongoing development or sale of Digital Way. Although we have reached this
settlement, management of Digital Way has not provided the necessary financial
information for Digital Way to be included in our financial reporting, and the
results of the Company's investment in Digital Way is unclear at this time. The
Company has fully impaired this investment. Management continues to seek a third
party buyer for our 27% interest in Digital Way SA.

On November 1, 2001, current management took control of the company. During the
fiscal year ended September 30, 2002, we moved our offices from Oakland,


                                      -4-
<PAGE>

California to Miami Beach, Florida and changed our name to Universal
Communication Systems, Inc. We then changed our symbol to UCSI. Following our
one for one thousand reverse stock split on August 23, 2002, our symbol was
changed to UCSY.

In January, 2003, we identified a new business venture, abandoned the
telecommunication and wireless business and adopted a new business plan. We
formed a wholly owned subsidiary, AirWater Corporation, whose purpose and
mission is to design, build and market machines that produce drinkable water
from the air. The first step in the endeavor was to obtain licensing rights to
the technology. To that end, we acquired the rights to four patents by an
agreement dated March 24, 2003, relating to this technology from J. J. Reidy
Company of Holden, Massachusetts. AirWater Patents Corporation was formed to
hold our acquired licensed patent rights. Under the terms of the agreement, we
paid $300,000, and we are obligated to pay, for a one year period, a royalty
payment of between 5 to 7.5% on all sales of equipment which uses the patented
technology. Of the $300,000 purchase price, the company paid $100,000 in cash,
and the balance of $200,000 was settled by issuing 4,000,000 restricted common
shares.

Beginning in March 2003 we pursued various consulting, marketing and sales
agreements. The activities covered by these agreements include, product design,
electrical and mechanical engineering, systems integration, research and
development, conceptual designs, global contacts, mergers and acquisitions,
product and company publicity, marketing, sales and general business consulting.

On April 30, 2003 we executed a letter of intent to acquire CinemaElectric,
Inc., a Los Angeles based multimedia messaging service company for a purchase
price of $10 million. On August 12th, 2003, and by mutual agreement, we withdrew
from this Letter Of Intent. We withdrew our letter of intent so that Brenex Oil
Corporation could issue their letter of intent to acquire CinemaElectric, Inc.,
which they did on August 12, 2003. We received 10% of the entity resulting from
the acquisition of CinemaElectric by Brenex Oil Corporation.

We completed an agreement to purchase all of the stock of Millennium on
September 29, 2003. As part of the Millenium acquisition, we acquired 50% of
Solar Style, Ltd. On April 30, 2004, we acquired the remaining 50% of Solar
Style for 500,000 shares of common stock and warrants exercisable for two years,
for 1 million shares at a price of $0.10 per share. Solar Style is an inactive
Israeli company that holds certain rights to manufacture and market solar power
products. In connection with the Millenium / Solar Style acquisitions, a new U.
S. subsidiary, Solar One Corporation, was formed to market solar power products
and systems.

Millenium and its president, Mr. Ami Elazari, operate in the forefront of the
high technology field of solar energy, solar panels, and solar powered consumer
products. The Company and Mr. Elazari are the holders of more than 21
international patents relating to both Photo Voltaic ("PV") and solar energy
systems and products.

Our strategy

Under the auspices of new management, we have made considerable progress in
restructuring prior obligations and removing debt. We have concentrated our
activities, as previously mentioned, on the AirWater product and the photo
voltaic product lines. We have withdrawn from the wireless internet market,


                                      -5-
<PAGE>

disposed of assets for cash and we continue our negotiations with creditors to
compromise, extend, convert and/or forgive debt owed by the company prior to the
new management.

Since March of 2003, we have worked to design, research and develop as well as
source the manufacture of our AirWater machines. We have successfully sourced
the manufacturing of our machines. In 2004, we have embarked on a worldwide
sales and marketing program, focusing on the markets listed above.

AirWater technology and competition

The applications for the AirWater system technology are extensive. It is our
belief that the initial product should be the model that offers the easiest
entry into the marketplace, gains the quickest exposure, and generates a
substantial cash flow. To this end, we believe that a residential 5-gallon-per-
day model would best fit this goal.

Our reasoning is as follows:

o        The bottled water market is approximately a $7.1+ billion marketplace
         with projected growth in excess of 10% per year. Its cost to the
         consumer, inconvenience and logistical aggravation and the fluctuation
         in the quality of the water make bottled water vulnerable to an
         alternative, AirWater products for example, which is cheaper per
         gallon on the order of 1-2 kW per gallon, has consistent quality and is
         convenient.
o        It is the easiest model to take to market thus maximizing its exposure.
o        It would be readily accepted by foreign customers, where size is often
         very important.
o        It would create a very lucrative aftermarket sector for serviceable
         parts such as water filters, containers and ultra-violet light bulbs.

We believe that the global market for AirWater machines is largely untapped and
undeveloped. The AirWater technology and system is very new, and much of the
initial sales efforts that we are currently engaged in are dedicated to
education, and the detailed explanation of the machines, the built in safety
systems and their general operation.

Operational safety and computer managed user maintenance is built into every
AirWater system by the use of a patented, inexpensive, programmable chip. The
water filtration industry is reliant upon voluntary user discipline in the
important issue of safety, and the periodic changing of the machine filters.

The AirWater system knows when an air filter needs cleaning, or is missing,
when the UV bulb becomes ineffective, when the water filter needs changing and
if the user accidentally tries to use an expired water filter. The AirWater
system will not operate if any of those factors exist and displays to the user
the reason on a small electronic display panel.

Management further believes that there are a number of specific market segments
that the AirWater products can be introduced to and marketed to.

First is the home consumer product market, to which the company is addressing a
Small Office / Home Office ("SOHO") styled product. Next is the commercial


                                      -6-
<PAGE>

market, for such users as small hospitals, local field clinics, small farms,
factories and so on. And then there is the larger customer such as International
Aid Agencies, Governments, The United Nations, The Red Cross, Local Towns and
Villages, and Military Forces worldwide all in areas and countries where water
is scarce, or difficult to transport.

At this time, the company is aware of very limited competition. The company has
identified Electric Gas & Technologies Inc, a Dallas Texas based company,
and World Wide Water Inc., of Los Angeles California as competitors. In
addition, the company has seen a similar product sold in the US Market, made or
offered for sale by Liquid Air Inc, based in California. Almost in all cases,
these companies are in various stages of "start up" mode, having been in the
Water from Air business less than a few years, and are just starting to offer
machines to customers. As a result of a settlement from litigation instituted by
Electric Gas & Technologies, Inc., we have acquired the assets and rights to
their technology with respect to water from air processes. See Item 3 - Legal
Matters for additional information.

We believe that as the AirWater products and Systems become more engrained in
the global marketplace, and are more publicized and accepted, there will be
additional companies entering this industry, thus creating increased
competition. We further believe that our patents and intellectual property
rights will place us at a competitive advantage.

In certain global areas where electricity and or gas power sources are either
not available or in short supply, there is a need for a power alternative to
conventional sources. Our subsidiary, Millennium, has designed the system to
fulfill this technological need of providing Photo Voltaic (PV) Electric Energy
to provide the necessary power to the air water units.

Following our acquisition in 2003, Millennium's management focused on re-
organizing the company. This included moving to new offices, purchasing new
computer systems, and the addition of several key positions including operations
officer, marketing manager and regional marketing manager. Millennium is also
conducting educational seminars for potential clients, by targeting architects,
elected officials and military personnel.

Millennium's strategic vision for sales is to create a group of international
independent sales consultants to provide a more extensive marketing and
networking program than that which could be achieved by an employee based sales
force.

Solar Style Inc. USA, ("Solar") formed as part of Solar One, Inc. with offices
in Baltimore, is the basis of the planned North American Distribution network of
the Solar Style (Israel) product line.

Solar is offering PV Solar Chargers for a wide range of products, including
Laptop computers, Palms, Walkmans and Discmans, as well as a wide range of
cellular phones. The PV Solar Chargers negate the need for consumer electronic
products to be connected to the electric grid, in order to charge or recharge
the appliance. Solar Style (Israel) has a manufacturing agreement with a Hong
Kong firm. The products are targeted at the portable consumer electronic market.
Solar Style's technology converts solar energy into electricity in a packaged
solution that recharges mobile electronic devices by a small portable
photovoltaic solar panel, which is specially designed to fit in an elegant
leather case.

                                      -7-
<PAGE>

Solar manufactures the panels and carrying-cases separately, which are then
assembled and sold as a unit. The panels can easily be plugged in to solar cells
and charged outdoors by sunlight and indoors by electric light. The photo
voltaic cells act as battery chargers allowing a non-dependant use of the mobile
device, making batteries / battery-chargers unnecessary.

Solar's value proposition spans two levels:

The practical and the environmental. On the practical level, Solar's
products enable consumers to use their mobile devices without having to worry
about plugs and connectors. On the Environmental level, in today's "green-aware"
world, where environmental concerns have come to be very important to consumers,
Solar offers mobile device users a reliable environmentally friendly power
source.

We are in the process of establishing distribution and sales channels for the
existing products. We continue research and development of improvements on
existing and creation of new products, concurrent with ongoing sales. There are
two methods of distribution for Solar's products and technology, both of which
are being pursued at various levels:

                 A "traditional" manufacturer-distributor value chain, by which
it will have control over manufacturing and distribution, and sell its products
through large distributors.

                 A licensing option, limited by time and dependant on results,
by which its involvement at the manufacturing stage will be minimal (just enough
to preserve unique knowledge and enable further product development), while
distribution, promotion, and sales management are left to a licensee/business
partner.

Patents/Intellectual Property

We currently hold a patent for our distributed wireless call processing system.
As we have exited this business, we are looking to license this technology to a
third party developer in order to potentially create a royalty stream of income.
However, we cannot guarantee that we will enter into such an agreement.

We also hold the exclusive global patent and licensing rights to four air to
water patents under an agreement with J.J. Reidy Company, relating to
atmospheric extraction of water and its purification process. These patents,
numbered: 05106512-00, 05149446-00, 05203989-00, and 05366705-00, were
issued by the US Government Patent Office. Two of these licenses were issued in
1992 and the other two in 1993 respectively. These patents relate to the Air
Water Products not only in the USA, but in countries covered by the PCT global
agreements.

The Patent Cooperation Treaty (PCT) simplifies and reduces the cost of obtaining
international patent protection and facilitates public access to a wealth of
technical information relating to inventions. By filing one international patent
application under the PCT you can simultaneously seek protection for an
invention in over one hundred countries, including developing countries
throughout the world. The Patent Cooperation Treaty (PCT) has over the past
three decades emerged as a major international filing system for seeking patent
protection worldwide in a cost effective and efficient manner. In addition,


                                      -8-
<PAGE>

through the dissemination of latest technical information contained in published
PCT applications, the PCT system has been actively contributing to the
development of science and technology.

The company fully intends to utilize the patents and intellectual property
rights in its pursuit and ongoing development of the business.

Further, through our Millenium subsidiary, we own 21 international patents in
the photo voltaic solar power and energy system area.

Employees

As of September 30, 2004, we had four employees, located in our Millenium
office in Israel and one employee in our Maryland office of Solar. Our Miami
office is serviced by outside consultants. No employee is represented by a labor
union and the company believes its employee relations to be good.

ITEM 2.  DESCRIPTION OF PROPERTY

         We own no real estate. Effective June 1, 2004, we leased an 1,800
square foot corporate and administrative office facility at 407 Lincoln Road,
Suite 12F, Miami Beach, FL 33139. The lease provides for a three-year term at a
monthly rate of $4,375.

           Solar One, Inc. leases a 1,147 square foot administrative office in
Baltimore, Maryland under a lease which commenced December 1, 2003. This lease
is for an eighteen month period and expires May 30, 2005. The lease is at a
monthly rate of $2,198.42.

           Millenium Electric T.O.U., Ltd., leases 2,500 square foot
administration and manufacturing offices in the Rannana Industrial zone in
Israel under a lease which ends in 2005. The minimum remaining payments under
this lease are $60,180 for 2004 and $55,165 for 2005.

ITEM 3.  LEGAL MATTERS

On August 26, 1999, we filed suit against Credit Bancorp, in U.S. District Court
in San Francisco, regarding improprieties on the part of Credit Bancorp relating
to a loan. The case was settled on October 11, 1999. As part of the settlement
agreement, Credit Bancorp agreed to convert the original loans granted to us to
a convertible debenture in the amount of $740,000. On October 11, 1999, we
issued a convertible unsecured debenture for $740,000 to Credit Bancorp in
settlement of this obligation. The terms of this convertible unsecured debenture
are 7% interest per annum payable, semiannually on the last day of February and
September, with the principal due September 30, 2002. All amounts of unpaid
principal and accrued interest of this debenture are convertible at any time at
the conversion price of $1,600 per share of unregistered, restricted shares of


                                      -9-
<PAGE>

our common stock. Credit Bancorp has agreed to convert principal and accrued
interest owing on the debenture into 483 shares of our common stock.

In November 1999, the SEC filed suit against Credit Bancorp alleging violations
of various securities laws in connection with its actions in relation to us and
others, and seeking various forms of relief including disgorgement of its
illegal gains. A receiver has been appointed to administer the affairs of Credit
Bancorp. We have been informed that the appointed receiver denies that such a
conversion request was made and that the principal amount and accrued interest
of the debenture are due. We currently carry the 483 share obligation in our
equity under escrowed shares. No provision for debenture principal and accrued
interest have been made in our financial statements, as we believe the
receiver's claim is unfounded and the company will prevail. The matter remains
unresolved at September 30, 2004.

On August 7, 2003, Electric Gas & Technology of Dallas, Texas ("ELGT"),
published a press announcement claiming that a complaint and $60 million lawsuit
had been filed in Federal court in Texas (identified in the court records as
Federal District Court, Northern District of Texas -- Dallas Division Cause No.
3-03CV-1798-G). Their press release stated that we had infringed on their
patents. We filed a counter claim in the United States District Court, Southern
District of Florida, case number 03-22196-Civ-Seitz, disputing ELGT's claims of
patent infringement and as a result of statements published in their press
releases, we included in our complaint $118 million in damages against both ELGT
and its president, Mr. Dan Zimmerman, for their false, defamatory and libelous
statements. On November 24, 2004 a settlement agreement was reached calling for:

     1.   a stipulation for the entry of a "Consent Judgment" in favor of our
          subsidiary, Airwater Corporation and the Company, jointly, and against
          Atmospheric Water Technology, Inc. ("AWT") in the amount of $5
          million,

     2.   the payment of the amount of $25,000 in cash, and

     3.   the issuance of 150,000 shares of ELGT's restricted common stock
          ("Shares").

Further agreed, was that after the stipulation for the entry of the "Consent
Judgment" has been executed by the parties, ELGT is to assign to us all of
ELGT's equity ownership interest (i.e. shares of stock or otherwise) in AWT.
This includes all ELGT and AWT's right, title and interest in U.S. Patent No.
4,255,937 and all enhancements thereto, and all ELGT and AWT's right, title and
interest to the copyright and trademarks describing the technology in the U.S.
Patent, and the Trademark known as "Watermaker", and all ELGT and AWT's right,
title and interest in U.S. Patent No. 5,553,459. This transfer to the Company
and AirWater Corporation is equal to 92% of the outstanding stock (controlling
interest) of AWT and includes all of the US and Global business, as well as all
the appertaining Patents, Trademarks and Licenses. Finally, all parties agreed
that each side shall bear its own costs and attorney's fees.

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

         No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of the security holders through the
solicitation of proxies or otherwise.

                                      -10-
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Prior to April 3, 2002, our common stock was traded on the over the
counter Bulletin Board market under the symbol "WLGS". From April 4, 2002
through August 22, 2002 our common stock was traded on the over the counter
Bulletin Board market under the symbol "UCSI". From August 23, 2002 to the
present, our common stock is trading on the over the counter Bulletin Board
market under the symbol "UCSY".

The following table sets forth the range of high and low closing
bid prices for each period indicated as reported by the National Association of
Securities Dealers composite feed or other qualified interdealer quotation
medium. The quotations provided reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions. All of the share price information presented below has been
adjusted to reflect the 1 for 1,000 reverse split of our outstanding common
stock effective August 23, 2002.

Price Range for Common Stock
----------------------------

FISCAL YEAR SEPT 30, 2005           High                Low
                                  --------           --------
   First Quarter                   $ 0.050             $0.015

FISCAL YEAR SEPT 30, 2004           High                Low
                                  --------           --------
   First Quarter                   $ 0.115             $0.060
   Second Quarter                    0.081             $0.045
   Third Quarter                     0.160             $0.043
   Fourth Quarter                    0.058             $0.043

FISCAL YEAR SEPT 30, 2003           High                Low
                                  --------           --------
   First Quarter                   $ 0.170             $0.100
   Second Quarter                    0.100              0.045
   Third Quarter                     0.230              0.030
   Fourth Quarter                    0.115              0.060

         Since our shares began trading on the OTC Bulletin Board in 1997, the
prices for our shares have fluctuated widely. There may be many factors which
may explain these variations, but we believe that the following are some of
these factors:

         o        the demand for our common stock;

                                      -11-
<PAGE>

         o        the number of market makers for our common stock;

         o        developments in the market for broadband Internet access and
                  wireless transmission in particular; and

         o        changes in the performance of the stock market in general.

         In recent years, the stock market has experienced extreme price and
volume fluctuations that have had a substantial effect on the market prices for
many emerging growth companies such as ours, which may be unrelated to the
operating performances of the specific companies.
Companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we become the
object of securities class action litigation, it could result in substantial
costs and a diversion of our management's attention and resources and have an
adverse effect on our business, financial condition and results of operations.
In addition, holders of shares of our common stock could suffer substantial
losses as a result of fluctuations and declines in the stock price.

         There are approximately 600 holders of record and an estimated 7,800
holders in street name of our common stock as of September 30, 2004.

         The trading of our shares is subject to limitations set forth in Rule
15g-9 of the Securities Exchange Act. This rule imposes sales practice
requirements on broker-dealers who sell so-called penny stocks to persons other
than established customers, accredited investors or institutional investors.
Accredited investors are generally defined to include individuals with a net
worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together with their spouses during the previous two years and expected annual
income of that amount during the current year. For sales of shares to other
persons, broker-dealers must make special suitability determinations, and obtain
the written consent of the purchaser to the sale prior to consummating the sale
and are generally prohibited from making cold-calls or other unsolicited
inquiries to purchasers without complying with these rules. These rules may
adversely affect the ability of broker-dealers and others to sell our shares or
to sell shares in the secondary market.

No cash dividends have been declared to date on our Company's common stock. We
expect that all earnings, if any, will be retained to finance the growth of our
Company and that no cash dividends will be paid for the foreseeable future.


                                      -12-
<PAGE>

On May 21, 2002, stockholders approved a measure to increase the number of
authorized common shares from 300 million to 800 million.

EQUITY COMPENSATION PLAN INFORMATION
------------------------------------
<TABLE>
<CAPTION>
                                               Number of            Weighted-          Number of securities
                                            securities to be     average exercise    remaining available for
                                              issued upon           price of          future issuance under
                                              exercise of         outstanding          equity compensation
                                              outstanding           options,             plans (excluding
                                           options, warrants      warrants and       securities reflected in
Plan Category                                  and rights            rights                column (a))
------------------------------------------------------------------------------------------------------------
                                                  (a) (b) (c)
------------------------------------------------------------------------------------------------------------
<S>                                              <C>                 <C>                   <C>
Equity compensation plans approved by              0                   n/a                     0
security holders
------------------------------------------------------------------------------------------------------------
Equity compensation plans not approved by        257,250             $0.095                1,571,175 (1)
security holders
------------------------------------------------------------------------------------------------------------
Total                                            257,250             $0.095                1,571,175
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to form S-8, dated 12/23/03. Submitted under plan, 11,000,000
    shares, issued, 9,428,825.

                                      -13-
<PAGE>

Description of Equity Compensation

Options issued were issued pursuant to the 2001 Stock Option Plan and also
provided as motivation and incentives to individuals considered important to the
Company's success. The 2001 plan was approved by our board of directors, but not
submitted to a vote of stockholders.

The total number of options granted and outstanding at September 30, 2004, and
the average exercise price and expiration dates for each year are as follows:

                 Total    Exercise
        Year    Options   Price      Expiration Date
        ----    -------   --------   -----------------
        2001    251,150     $0.095    December 31, 2006
                  6,100   $602.00     December 31, 2006
               --------
       Total    257,250

Sales of Unregistered Securities
--------------------------------

              We have issued and sold unregistered securities that have
not previously been reported as set forth below. An underwriter was not utilized
in any of these transactions. The recipients of securities in each transaction
represented their intention to acquire the securities without a view to
distribution. All the issued securities were restricted securities under Rule
144, Reg. D or Reg. S regulations, and appropriate restrictive legends were
affixed to the securities in each transaction.

On July 14, 2004, we issued 164,340 shares of common stock under private
placement subscriptions at $0.05 per share. These securities were issued in
transactions exempt from registration under the Securities Act of 1933 in
reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. In connection
with these transactions, we paid a commission of 10% to a third party.

On July 27, 2004, we issued 12,375,000 shares of common stock under private
placement subscriptions to our Chairman, at prices ranging from $0.025 to $0.05
per share. These securities were issued in transactions exempt from registration
under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the
Securities Act of 1933.

On September 13, 2004, we issued 1,998,000 shares of common stock under private
placement subscriptions at $0.05 per share. These securities were issued in
transactions exempt from registration under the Securities Act of 1933 in
reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. In connection
with these transactions, we paid a commission of 10% to a third party.

On December 6, 2004, the Company sold 25,000 shares of Series B 8% Convertible
Preferred Stock and Warrants to purchase 16,666,667 shares of common stock for
which it received net proceeds of $250,000. The Series B Convertible Preferred
Stock, with a face value of $250,000, is convertible into common stock at $0.015
per share. The Warrants are exercisable at $0.03 per share until December 6,
2009.

On January 5, 2005, the Company sold 30,000 shares of Series C 8% Convertible
Preferred Stock and A, B and C Warrants to purchase 20,000,000 shares of common
stock for which it received net proceeds of $300,000. The Series C Convertible
Preferred Stock, with a face value of $300,000, is convertible into common stock
at $0.03 per share. The A Warrants are exercisable for 10,000,000 shares of
common stock at $0.04 per share until January 5, 2010. The B Warrants are
exercisable for 5,000,000 shares of common stock at $0.06 per share until
January 5, 2010. and the C Warrants are exercisable for 5,000,000 shares of
common stock at $0.08 per share until January 5, 2010.

Other Securities Transactions
-----------------------------

Pursuant to the April 14, 2000 Securities Purchase Agreement (the 4% convertible
debentures) and the March 29, 2001 Securities Purchase Agreement (the 8% Senior


                                      -14-
<PAGE>

Secured Convertible Debentures), the investors converted $337,050 of debentures
into 10,000,000 shares of the Company's common stock on various dates between
July 29 and September 13, 2004, at various prices ranging from $0.03867 per
common share to $0.044 per common share.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The following should be read in conjunction with the "Risk Factors" and
the "Financial Statements" and the Notes thereto.

Plan of Operations
------------------

For the past three fiscal years we have had minimal revenues. We have a history
of losses, and an accumulated shareholder deficit of $35,376,531. Because of our
recurring losses, our independent auditors have expressed doubt as to our
ability to continue as a going concern.

     We will require additional capital in the short term to remain a going
concern.

     We will require substantial short term outside investment on a continuing
basis to finance our current operations and any limited capital expenditures
identified to protect existing investments. Our revenues for the foreseeable
future may not be sufficient to attain profitability. Since inception, we have
generated little revenue and have incurred substantial expenditures. We expect
to continue to experience losses from operations while we develop the Air -
Water and photo voltaic businesses. In view of this fact, our auditors have
stated in their report for the period ended September 30, 2004 that our ability
to meet our future financing requirements, and the success of our future
operations, cannot be determined at this time. In order to finance our working
capital requirements we are negotiating equity investments, but there can be no
assurance that we will obtain the required capital or that it will be obtained
on terms favorable to us. If we do not obtain short term financing we may not be
able to continue as a viable concern. Although one of our subsidiaries has a
bank account overdraft facility, we do not have a bank line of credit and there
can be no assurance that any required or desired financing will be available
through bank borrowings, debt, or equity offerings, or otherwise, on acceptable
terms, if at all. If future financing requirements are satisfied through the
issuance of equity securities, investors may experience significant dilution in
the net book value per share of common stock.

        We are currently focusing our operations on the design, manufacture and
sale of water production and generation systems along with solar power systems.
There are no assurances that this business activity will be successful, that we
will be able to identify and sell to the market and that the market will respond
to our product line.

                                      -15-
<PAGE>

PLAN OF OPERATION FOR THE NEXT 12 MONTHS
----------------------------------------

Our cash position at September 30, 2004 is $453,134. This is only sufficient to
provide coverage for three and a half months of operating cash needs, based on
the current reporting period's negative cash flow from operations. However, our
Chairman, in connection with Port Universal Ltd., a company in which he owns a
one third interest, has agreed to provide funding as needed until our sales
activities are sufficient to cover our cash flow needs. This agreement by our
Chairman and Port Universal is not a binding obligation; we have no assurances
that this funding will continue beyond the short term. Further, we anticipate
that by December 31, 2005, our subsidiaries will have sufficient revenues that
we will not require funding from equity sales.

With our focus on the airwater and photo voltaic businesses, we have been able
to obtain private placement funding to finance our activities in these fields.
We anticipate continuing to receive operating funds from private placement sales
of our common stock, until such time as product sales are sufficient to support
the organization, however no assurances can be made that we will be able to find
willing investors.

We do not have any major expenditures planned, nor do we anticipate the purchase
or sale of plant and / or significant equipment. Our plan calls for the use of
third party contract manufacturers, thus avoiding the allocation of our
resources into manufacturing operations. We anticipate funding any sizeable
orders for either AirWater equipment or Photovoltaic installations, through
deposits and advances from customers.

We do not anticipate any substantial change in the number of employees in the
near term for our existing operations.

We have several potential sizeable contracts in the sales process. Should these
contracts be awarded, we will need to raise additional equity or arrange for
financing vehicles to fund those contracts. Any equity raised could result in
dilution of existing shareholders. Additionally, we are uncertain as to the
availability of sufficient financing on acceptable terms.

Results of Operations
---------------------

     Revenues and cost of sales for the fiscal year ended September 30, 2004
were earned primarily by our subsidiary, Millenium. Our Peruvian subsidiary had
revenues which are not reported as a result of a lack of cooperation from our
subsidiary's management.

         General and administrative expenses totaled $2,832,670 in the fiscal
year ended September 30, 2003 and $1,785,431 in the fiscal year ended September
30, 2003. The increase in expenses resulted from activities associated with the
entrance into the air-water technology industry.

                                      -16-
<PAGE>

         General and administrative expenses for the fiscal years ended
September 30, 2004 and 2003 were comprised of the following items:

                                                  2004              2003
                                                  ----              ----
Abandoned acquisitions and fees               $        -        $  171,397
Consultants and outside services               1,114,528           609,977
Depreciation                                      13,079             5,690
Financing costs and fund raising expense         187,597           120,804
Legal expense                                    322,482           228,661
Miscellaneous and other expenses                 238,456            42,478
Professional fees                                245,893           136,154
Rent                                              78,432            27,650
Salaries                                         313,458                 -
Travel                                           318,745            72,620
Settlement loss - WSI, Inc.                            -           370,000
                                              ----------        ----------
                                              $2,832,670        $1,785,431
                                              ==========        ==========

Liquidity and Capital Resources
-------------------------------

         As of September 30, 2004 our total working capital was deficient in the
amount of $1,610,181. This represents a $219,625 increase over our September 30,
2003 deficiency of $1,390,556. Until substantial revenues commence from the sale
of our AirWater equipment, we will need to obtain funding from external sources
to finance our current operations.

         Since we began operations, we have generated minor revenues and have
incurred substantial expenditures and operating losses. In view of this fact,
our auditors have stated in their report for the fiscal years ended September
30, 2004 and 2003 that there is substantial doubt about our ability to continue
as a going concern, dependent upon our ability to meet our future financing
requirements, and the success of our future operations, the outcome of which
cannot be determined at this time. In order to finance our working capital
requirements, we have and continue to negotiate equity investments with several
sophisticated investors, but there can be no assurance that we will obtain this
capital in the future, or that it will be obtained on terms favorable to us. If
we do not obtain short term financing we may not be able to continue as a viable
concern. We do not have a bank line of credit and there can be no assurance that
any required or desired financing will be available through bank borrowings,
debt, or equity offerings, or otherwise, on acceptable terms. If future
financing requirements are satisfied through the issuance of equity securities,
investors may experience significant dilution in the net book value per share of
common stock.

         On June 6, 2003, we defaulted on the January 6, 2003 12% notes in the
amount of $60,000, which came due on that date. The holders of the Notes, who
also hold a portion of the convertible debentures, did not  take  action  to
foreclose on the Notes.  These notes have been included in a proposed negotiated
settlement whereby the notes and the debentures will be converted into shares of
common stock at a fixed conversion price.

         During the fiscal years ended September 30, 2004 and 2003, we received
equity investments and advances of $2,593,452 and $1,214,829 respectively. These
investments and advances were in the form of issuance of our common stock in
various private placements and the issuance of preferred convertible Series A
stock.

                                      -17-
<PAGE>

Risk Factors
------------

-We will require additional capital in the short term to remain a going concern

         We will require short term outside investment on a continuing basis to
finance our current operations and any expansion of activities. Since we began
operations, we have generated virtually no revenues and have incurred
substantial expenditures. We expect to continue to experience losses from
operations while we develop our new revenue source, consummate acquisitions and
develop other technologies. In view of this fact, our auditors have stated in
their report for the period ended September 30, 2004 that our ability to meet
our future financing requirements, and the success of our future operations,
cannot be determined at this time. In order to finance our working capital
requirements we are negotiating existing equity investments and new investments,
but there can be no assurance that we will obtain this capital or that it will
be obtained on terms favorable to us. If we do not obtain short term financing
we may not be able to continue as a viable concern. We do not have a bank line
of credit and there can be no assurance that any required or desired financing
will be available through bank borrowings, debt, or equity offerings, or
otherwise, on acceptable terms. If future financing requirements are satisfied
through the issuance of equity securities, investors may experience significant
dilution in the net book value per share of common stock.

-We are dependent on the services of key individuals and the loss of any of
these individuals could significantly affect our ability to operate our business

-We may be unable to protect our intellectual property rights

      Our success depends in part on our ability to protect our proprietary
technologies. We rely on a combination of patent, copyright and trademark laws,
trade secrets and confidentiality and other contractual provisions to establish
and protect our proprietary rights. We have received one patent from the United
States Patent and Trademark Office pertaining to the distributed wireless call
processing system and may file for additional patents in the future. However,
our patents may not be of sufficient scope or strength, others may independently
develop similar technologies or products, duplicate any of our products or
design around our patents, and the patents may not provide us competitive
advantages. Litigation, which could result in substantial costs and diversion of
effort by us, may also be necessary to enforce any patents issued or licensed to
us or to determine the scope and validity of third-party proprietary rights. Any
such litigation, regardless of outcome, could be expensive and time consuming,
and adverse determinations in any such litigation could seriously harm our
business.

                                      -18-
<PAGE>

-We may not be able to successfully market and develop the air from water
systems required by the market we are focusing our sales efforts on. Governments
and humanitarian organizations are subject to political influences which can
change without notice. Needs, as defined by these groups, may also change. If we
cannot design, build and modify the systems to meet with these changes, our
marketing efforts may not be productive.

-Other risk issues

         We have pursued, are currently pursuing and, in the future may pursue,
new technologies and businesses internally and through acquisitions and
combinations which involve significant risks. Any such acquisition or
combination may involve, among other things, the issuance of equity securities,
the payment of cash, the incurrence of contingent liabilities and the
amortization of expenses related to goodwill and other intangible assets, and
transaction costs, which have adversely affected, or may adversely affect, our
business' results of operations and financial condition. Our ability to
integrate and organize any new businesses and/or products, whether internally
developed or obtained by acquisition or combination, will likely require
significant expansion of our operations. There is no assurance that we will have
or be able to obtain the necessary resources to satisfactorily effect such
expansion, and the failure to do so could have a material adverse effect on our
business, financial condition and results of operations. In addition future
acquisitions and or combinations by the Company involve risks of, among other
things, entering markets or segments in which we have no or limited prior
experience, the potential loss of key employees of the acquired company and/or
difficulty, delay or failure in the integration of the operations, management,
personnel and business of any such new business with our business and operating
and financial difficulties of any new or newly combined operations, any of which
could have a materially adverse effect on our business, financial condition and
results of operations. Moreover, there can be no assurance that the anticipated
benefits of any specific acquisition or of any internally developed new business
segment or business combination will be realized.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Index to Financial Statements on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

         There have been no changes in or disagreements with our independent
auditors regarding accounting and financial disclosure required to be reported
under this item.

ITEM 8A. CONTROLS AND PROCEDURES

 Our management carried out an evaluation pursuant to Rule 13a-15 of the
Securities Exchange Act of 1934, as amended, under the supervision and with the
participation of our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this Report. Based upon that evaluation,
our chief executive officer and chief financial officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in reports that we file or furnish under the
Exchange Act are recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.

         During the period covered by this report on Form 10-KSB, there has been
no change in our internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

                                      -19-
<PAGE>
                                    PART III

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

         Our executive officers and directors and their ages as of December 30,
2004 are as follows:
<TABLE>
<CAPTION>
Name                       Age   Position                  Period of Service
-----                      ---   --------                  -----------------
<S>                        <C>                             <C>
Michael J. Zwebner......   52    Chairman of the Board     November 2001-present
                                    and CEO
Curtis Orgil...........    52    CFO and Director          November 2001-present
Ramsey Sweis............   38    Director                  May 1998-present
Alexander Walker, Jr. ..   77    Director                  November 2001-present
Ami R. Elazari..........   52    Director                  October 2003-present
</TABLE>

         MICHAEL ZWEBNER has served as a Director since November, 2001 and is
the Chairman of the Board of Directors. He is the founder of TVC Telecom, Inc.
(formerly Talk Visual Corporation) and has served as a Director and its Chairman
of the Board of Directors from September, 1998 until March, 2003. From 1974 to
1986, Mr. Zwebner founded and ran a travel and tourism company and a charter
airline, specializing in the areas of air charter travel, wholesale ticketing
and general business and tourist travel. From 1986 to 1990, Mr. Zwebner owned
and operated several real estate companies as well as managed a chain of five
family restaurants and related catering services in England. From 1991 to 1997,
Mr. Zwebner founded and served as Vice-President of Cardcall International
Holdings Inc. (USA) and Operating Manager of Cardcall (UK) Ltd. for which he
designed and developed telecommunications and marketing concepts and organized
the prepaid phone card operations. Mr. Zwebner also coordinated corporate
finance activities for Cardcall. In February of 1997, Mr. Zwebner negotiated and
secured the sale/merger of the Cardcall Group to a publicly-held entity based in
Connecticut. In addition, in February of 1988, Mr. Zwebner negotiated the
creation of a multi-million dollar joint venture between Cardcaller Canada Inc.
and Datawave Systems Inc. of Vancouver, Canada.

         ALEX WALKER, JR. has served as a Director of the Company since
November, 2001. Mr. Walker has served as Chairman of the Board of the Nevada
Agency and Trust Company in Reno, Nevada, a licensed and registered trust
company and transfer agent in business since 1903. He received his B.A. from
Waynesburg College in 1950 and his J.D. from the University of Pittsburgh School
of Law in 1952. From 1956 to date, he has maintained a private practice as an
attorney.

         CURTIS A. ORGILL has served as a Director of the Company since
November, 2001. He received his Bachelor of Science degree in 1974 from Brigham
Young University. He worked for Deloitte Haskins & Sells in Salt Lake City,
Utah. Later he transferred to Reno, Nevada where he helped establish their new
office. While in Reno, Mr. Orgill was the Partner-in-Charge of the tax
department there and was the senior tax partner in the state of Nevada. While
with Deloitte, Mr. Orgill was on its National Industry Teams for Qualified
Retirement Plans and Agribusiness. Since 1995, he has been a principal with


                                      -20-
<PAGE>

Bartig, Basler & Ray, CPA's, Inc., a regional accounting firm with headquarters
in Sacramento, California. He is the treasurer of the Northern Nevada
International Center and of the BYU Management Society of Northern Nevada. He
has chaired the Taxation Committee for the Nevada Society of Certified Public
Accountants. He is a former treasurer and board member of the Nevada Museum of
Art, the American Lung Association of Reno, the Economic Development Authority
of Western Nevada, and the Northern Nevada Development Authority. He was a
founding board member of the Nevada World Trade Council and was a member of the
Advisory Council for the University of Nevada, Reno College of Business.

         RAMSEY SWEIS has served as a Director since May, 1998. He has had
extensive experience in management and in the product design industry. He has
been a leader and developer of high performance teams by enabling, training and
motivating team members. In the recent past he has provided computer and
engineering services to General Motors and Chrysler Corporation. In connection
with those activities Mr. Sweis has developed designs between engineering,
prototype models, tooling and vendor sources. Mr. Sweis resides in Roseville,
Michigan. He currently serves as a Program Manager for Hanke Training & Design
of Clawson, Michigan. From 1997 to 1999 Mr. Sweis served as a designer for
Computer and Engineering Services of Auburn Hills, Michigan. From 1991 to 1997,
Mr. Sweis was a design leader for Megatech Engineering of Warren, Michigan,
contracted to General Motors of Warren, Michigan.

         AMI R. ELAZARI has served as a Director since August 26, 2003. He is
the founder, President and CEO of Millennium Electric T.O.U. Ltd. He is a Lt.
Col. (Res.) in the Israeli army and served in the IDF Intelligence special unit.
Mr. Elazari is an energy and computer engineer and holds a BA in Psychology and
an MBA with honors. He is the Vice Chairman of the Israel Export Institute
Environmental Technology Center and the Vice Chairman of the Israel Export
Institute Start-Up Company Center. Mr. Elazari is an internationally renowned
energy expert on solar energy. He represents Israel in the IEA and holds a
number of world patents in his name, mainly in renewable energy. Between 1990-
1995 Mr. Elazari managed Amitec Energy and Computer Industries, from 1995-1999
he managed the PV division of Chromagen Solar Systems. He is a member of the
Israeli Financial forum, High tech forum and has published numerous articles in
his field of expertise.

         During the fiscal year ended September 30, 2004 the Board of Directors
of the Company met one time. The Board members, during their term in fiscal year
2004, attended all of the meetings of the Board of Directors and meetings of any
committees of the Board of Directors on which such person served which were held
during the time that such person served.

Director Compensation

         The Company has no standard arrangements pursuant to which directors of
the Company are compensated for any services provided as a director.

Limitation of Liability and Indemnification Matters

         Our Bylaws provide that we may indemnify any director, officer, agent
or employee against all expenses and liabilities, including counsel fees,


                                      -21-
<PAGE>

reasonably incurred by or imposed upon them in connection with any proceeding in
which they may become involved by reason of their being or having been a
director, officer, employee or agent of our Company. Moreover, our Bylaws
provide that we shall have the right to purchase and maintain insurance on
behalf of any such persons whether or not we would have the power to indemnify
such person against the liability insured against. Insofar as indemnification
may be afforded for liabilities arising under the Securities Act, we have been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock. Officers, directors and greater
than ten percent stockholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.

         To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended September 30, 2004, we believe that
Ami Elazari has not filed the required Form 4.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth certain summary information concerning
compensation paid or accrued by the Company on behalf of the Chief Executive
Officer. No other executive officers of the Company have total annual salary and
bonus for fiscal year 2004 which exceeded $100,000, with respect to services
rendered by such persons to the Company and its subsidiaries for each of the
fiscal years ended September 30, 2004, 2003 and 2002.
<TABLE>
<CAPTION>
                                                                    Long-Term
                                                                   Compensation
                                                Other Annual          Awards
                                       Salary   Compensation     ---Securities---
Name and Principal Position(6)  Year    ($)          ($)       Underlying Options(#)
---------------------------     ----   ------   ------------  ----------------------
<S>                             <C>  <C>             <C>              <C>
Michael J. Zwebner (1)          2004 $240,000(2)     -0-              -0-
   Chairman of the Board        2003 $240,000(3)     -0-              -0-
   of Directors, CEO            2002 $240,000(4)     -0-              -0-
</TABLE>
-----------
(1) Mr. Zwebner works under a contract with Overseas Communications, Ltd.
(2) For the fiscal year ended September 30, 2004, this amount was paid $135,000
    in cash and the Company issued 1,316,666 shares of common stock.
(3) For the fiscal year ended September 30, 2003, this amount was paid $80,000
    in cash and the Company issued 3,160,742 shares of common stock.
(4) For the fiscal year ended September 30, 2002, this amount was paid with
    common stock in the amount of 378,578 shares.

                                      -22-
<PAGE>
                   AGGREGATED OPTION EXERCISES IN FISCAL 2004
                   AND VALUE OF OPTIONS AT SEPTEMBER 30, 2004

         The following tables set forth certain information with respect to the
Company's Chief Executive Officer concerning unexercised stock options held as
of September 30, 2004.
<TABLE>
<CAPTION>
                                            Individual Grants

                                               Percent of
                                 Number of       Total
                                 Securities      options
                                 Underlying     granted to      Exercise
                                   Options      employees        Price      Expiration
                                   Granted    in Fiscal 2004   ($/Share)        Date
                                   -------     ------------    ---------        ----
<S>                              <C>           <C>             <C>          <C>
- NONE
</TABLE>

<TABLE>
<CAPTION>
                                   Aggregated Options/ SAR Exercises at September 30, 2004
                                   -------------------------------------------------------
                                  Number of Securities Underlying      Value of Unexercised In-
           Shares Acquired          Unexercised Options/SARS at       the-Money Options/ SARS at
            or Exercised                September 30, 2004               September 30, 2004
            (#)     ($)              Exercisable/Unexercisable         Exercisable/Unexercisable
<S>         <C>     <C>           <C>                                 <C>
- NONE
</TABLE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of December 30, 2004, the number
and percentage of shares of Common Stock beneficially owned (as defined in Rule
13d-3 adopted under the Exchange Act) by (a) all persons known to the Company to
own beneficially more than 5% of any class of voting security of the Company,
(b) each of the Company's directors, (c) the Company's Chief Executive Officer
and (d) all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
Name of Named Executive Officer,          Number of     Percentage       Upon Exercise of
Director, or Beneficial Owner              Shares       Ownership      Options or Warrants
------------------------------             ------       ---------      -------------------
<S>                                       <C>               <C>              <C>
Michael J. Zwebner (3)                    28,777,609 (1)    12.2%                   0

Alexander Walker, Jr. (3)                    557,000           *                    0

Ramsey Sweis (3)                           1,723,970           *                500,000

Curtis Orgil (3)                             251,000           *                    0

Ami R. Elazari   (3)                       4,980,159         2.1%

Executive Officers and Directors          36,289,738        15.3%
 as a Group - 5 individuals

Endeavour Capital                         23,406,259         9.9%             22,474,453 (2)
c/o Endeavour Advisors, Ltd.
P.O.B. 57116
Jerusalem 91570

Alpha Capital Aktiengesellschaft          16,886,713(4)      7.1%             10,470,236 (2)
Pradafant 7, Furstentums 9490,
Vaduz, Liechtenstein

Port Universal Ltd.                       13,970,832         5.9%
c/o Mizrahi Bank
78 Hayarkon Street
Tel Aviv Israel

Esquire Trade & Finance, Inc.             13,513,093         5.7%
Trident Chambers, Road Town
Tortola, British Virgin Islands
</TABLE>

                                      -23-
<PAGE>

-------------------------------------------
 *  Less than 1%

(1) Includes 3,358,823 shares beneficially held by Overseas Communications
    Limited, 534,014 shares beneficially held by Overseas Development Holdings
    Limited and 4,656,200 shares beneficially held by Port Universal.

(2) Represents shares convertible under the 4%, due April 14, 2005, $1,299,210
    and 8%, due March 29, 2005, $386,374 convertible debentures held, but not
    more than 9.9% of total outstanding, as per the provision of the debentures.

(3) The address of each such person is c/o the Company, 407 Lincoln Rd., Ste
    12F, Miami Beach, FL 33139

(4) Includes 9,424,242 shares convertible at $0.033 per share under the Series A
    8% Cumulative Convertible Preferred Stock, dated April 19, 2004.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Commencing November 1, 2001, we engaged the services of the Chairman
Michael Zwebner under a consulting agreement through Overseas Development
Holdings Corporation, a foreign corporation. The annual payment is $240,000.
Overseas Development Holdings Corporation is 33% owned by our Chairman.

         Alexander Walker, Jr., a Director and the Secretary of our company, is
Chairman of the Board and a shareholder of Nevada Agency and Trust Company, our
transfer agent since November 6, 2001. During the fiscal year ended September
30, 2004, we incurred fees aggregating $8,352 to Nevada Agency and Trust
Company.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

   ITEM (601)                    DOCUMENT
   ----------                    --------
 (i)   3.1    Articles of Incorporation.

 (i)   3.2    Amendment to Articles of Incorporation

 (i)   3.3    Amendment to Articles of Incorporation.

 (i)   3.4    By-laws.

 (iv)  3.5    Amendment to Articles of Incorporation.

 (i)   4.1    Form of Certificate Evidencing shares of Common Stock of
              Universal Communication Systems, Inc.

 (i)   4.2    Convertible Unsecured Debenture for $740,000 issued by World
              Wide Wireless Communications, Inc. to Credit Bancorp.

                                      -24-
<PAGE>

 (v)   10.1   Stock Purchase Agreement dated November 30, 1999 Between
              Infotel Argentina S.A. and Universal Communication Systems, Inc.

 (v)   10.3   Security Purchase Agreement Among World Wide Wireless
              Communications, Inc. and the Purchasers Named Therein.

 (v)   10.4   Registration Rights Agreements Among World Wide Wireless
              Communications, Inc. and the Purchasers Named Therein.

 (v)   10.5   Escrow Agreement Among the Purchasers Named Therein, the
              Representative of the Purchasers and the Escrow Agent.

 (v)   10.6   Form of Debenture of Universal Communication Systems, Inc.
              with Respect to the 4% Convertible Debenture Due 2005.

 (v)   10.7   Form of Warrant to Purchase Shares of World Wide Communications,
              Inc. Issued in the Offering.

 (vi)  10.8   Amendment to the Securities Purchase Agreement entered into
              between World Wide Wireless Communications and the selling
              shareholders named therein.

 (ii)  10.9   Second Amendment to the Securities Purchase Agreement
              entered into between World Wide Wireless Communications and
              the selling shareholders name therein.

 (ii)  10.11  World Wide Communications, Inc. Incentive Stock Option Plan

 (iii) 10.12  Agreement between Overseas Communication Limited and World
              Wide Wireless Communications, Inc.

 (vii) 10.13  Stock Purchase Agreement by Universal Communication Systems, Inc.
              and Ami R. Elazari and Caltan Development, Ltd., dated
              August 22, 2003.

(viii) 10.14  Consulting Agreement - Dorit Elazari

(viii) 10.15  Consulting Agreement - Joseph Moore

(viii) 10.16  Consulting Agreement - Otzarot Nechasim Vehashkaot, Ltd.

       10.17  Certificate of Designation for Series A 8% Cumulative Convertible
              Preferred Stock

       21.1   Subsidiaries

       31.1   Certification Pursuant to 18 USC Section 302
              for Michael Zwebner.

       31.2   Certification Pursuant to 18 USC Section 302
              for Curtis Orgil.

       32.1   Certification Pursuant to 18 USC Section 1350 as adopted pursuant
              to Section 906 of Sarbanes- Oxley Act of 2002 for Michael Zwebner.

       32.2   Certification Pursuant to 18 USC Section 1350 as adopted pursuant
              to Section 906 of Sarbanes- Oxley Act of 2002 for Curtis Orgil.

                                      -25-
<PAGE>
------------------
          (i) Filed with the registration statement on Form SB-2 with the
              Securities and Exchange Commission on May 31, 2000.
         (ii) Filed with the registration statement on Form SB-2 with the
              Securities and Exchange Commission on December 15, 2000.

        (iii) Filed with Form 10-KSB for the period September 30, 2002.

         (iv) Filed with Form DEF14A on April 25, 2002.

          (v) Filed with the registration statement on Form SB-2 with the
              Securities and Exchange Commission on May 31, 2000.

         (vi) Filed with Form 10-KSB for the period September 30, 2000.

        (vii) Filed with Form 8-K on October 14, 2003.

       (viii) Filed with Form 10-KSB for the period September 30, 2003.

    (b)  The following Form 8-K was filed during the fourth quarter.

                None

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents fees for the audits of the Company's annual
consolidated financial statements for the fiscal year ended September 30, 2004
and for other services provided by Reuben E. Price, P.A.

Audit Fees................................................ $180,000
Audit-Related Fees........................................    -0-
Tax Fees..................................................    -0-
All Other Fees............................................    -0-

                                      -26-
<PAGE>
                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on January 13, 2005.

                                      Universal Communication Systems, Inc.


                                      By:   /s/ MICHAEL ZWEBNER
                                            ------------------
                                            Michael J. Zwebner
                                            Chief Executive Officer

         In accordance with the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant in the capacities indicated on January 13, 2005:

<TABLE>
<CAPTION>
Signature                             Title                              Date
---------                             -----                              ----
<S>                         <C>                                    <C>
/s/ MICHAEL J. ZWEBNER      Director, Chief Executive Officer,     January 13, 2005
----------------------      and Chairman of the Board (Principal
Michael J. Zwebner          Financial and Accounting Officer)

/s/ ALEXANDER WALKER, JR    Director and Secretary                 January 13, 2005
------------------------
Alexander Walker, Jr.

/s/ RAMSEY SWEIS            Director                               January 13, 2005
- ---------------------
Ramsey Sweis

/s/ CURTIS ORGILL           Director and Chief Financial Officer   January 13, 2005
-----------------------
Curtis Orgil

/s/ AMI R. ELAZARI          Director                               January 13, 2005
- ---------------------
Ami R. Elazari
</TABLE>

                                      -27-

<PAGE>
               --------------------------------------------------


                      UNIVERSAL COMMUNICATION SYSTEMS, INC.
               --------------------------------------------------



                     REPORT ON AUDIT OF FINANCIAL STATEMENTS

                            AS OF SEPTEMBER 30, 2004

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











                            REUBEN E. PRICE & COMPANY
                         PUBLIC ACCOUNTANCY CORPORATION




<PAGE>
                      UNIVERSAL COMMUNICATION SYSTEMS, INC.
                           ---------------------------


                                    CONTENTS



                                                                      PAGE
                                                                      ----

         FINANCIAL STATEMENTS:


             Report of Independent Auditor                             F-1

             Consolidated Balance Sheet as of
                September 30, 2004                                     F-2

             Consolidated Statements of Operations for the
                Years Ended September 30, 2004 and 2003                F-3

             Consolidated Statements of Shareholders' Deficit
                for the Years Ended September 30, 2004 and 2003        F-4

             Consolidated Statements of Cash Flows for the
                Years Ended September 30, 2004 and 2003             F-5 - F-6

             Notes to Consolidated Financial Statements             F-7 - F-21


                                       ii

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders of
Universal Communication Systems, Inc.

We have audited the accompanying consolidated balance sheet of Universal
Communication Systems, Inc. and subsidiaries, as of September 30, 2004, and the
related consolidated statements of operations, shareholders' deficit and cash
flows, for the years then ended. The consolidated financial statements of
Universal Communication Systems, Inc. and subsidiaries 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 provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Universal
Communication Systems, Inc. and subsidiaries, as of September 30, 2004 and 2003
and the results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3, the
Company's current liabilities exceed current assets by $1,797,720, nd it has
suffered recurring losses that raise substantial doubt about its ability to
continue as going concern. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing requirements,
and the success of future operations, the outcome of which cannot be determined
at this time. Management's plans in regard to these matters are also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



Reuben E. Price & Co.

San Francisco, California
January 13, 2005

                                      F-1
<PAGE>

Part I.  FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS

              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                           Consolidated Balance Sheet
<TABLE>
<CAPTION>
                                                                      September 30,
                                                                          2004
                                                                      ------------
                             ASSETS
<S>                                                                   <C>
Current Assets:
   Cash & cash equivalents                                            $    453,134
   Accounts receivable, net of allowances of 0                            102,009
   Notes receivable                                                        128,357
   Inventory, finished goods                                                41,994
   Prepaid expenses                                                         65,362
                                                                      ------------
        Total Current Assets                                               790,856
                                                                      ------------
Fixed Assets, Net                                                          411,817
                                                                      ------------
Other Assets:
   Patents, net                                                            540,914
   Goodwill                                                                 30,000
   Deposits                                                                 24,133
                                                                      ------------
       Total Other Assets                                                  595,047
                                                                      ------------
            Total Assets                                              $  1,797,720
                                                                      ============

               LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities:
   Accounts payable, trade                                            $    254,012
   Accrued expenses                                                      1,201,987
   Due to related party                                                     31,744
   Notes payable                                                            60,000
   Liabilities of discontinued operations                                  946,794
                                                                      ------------
       Total Current Liabilities                                         2,494,537
Long-term Liabilities:
    Convertible debentures                                               2,060,374
                                                                      ------------
            Total Liabilities                                            4,554,911
                                                                      ------------
Commitments and Contingencies                                                   --
Shareholders' Deficit:
   Preferred stock, par value $.001 per share , 10,000,000 shares
       authorized, 30,000 shares issued and outstanding                         30
   Common stock, par value $.001 per share,
      800,000,000 shares authorized, 202,900,000 shares
       issued and outstanding                                              202,900
   Additional paid-in capital                                           32,509,910
   Accumulated deficit                                                 (35,376,531)
   Accounts receivable, shareholder                                        (93,500)
                                                                      ------------
       Total Shareholders' Deficit                                      (2,757,191)
                                                                      ------------
             Total Liabilities and Shareholders' Deficit              $  1,797,720
                                                                      ============
</TABLE>

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

                                      F-2
<PAGE>
              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                               For the Year Ended
                                                                  September 30,
                                                              2004            2003
                                                          ------------     -----------
<S>                                                       <C>              <C>
Revenues                                                  $    375,007     $        --
Cost of Revenues                                               292,841              --
                                                          ------------     -----------
Gross Margin                                                    82,166              --
                                                          ------------     -----------
Operating Expenses:
    Sales and marketing                                        403,787         151,804
    Product development                                             --          62,333
    Amortization of patent rights                               75,000              --
    General and administrative                               2,832,670       1,785,431
                                                          ------------     -----------
        Total Operating Expenses                             3,311,457       1,999,568
                                                          ------------     -----------
Other Income & Expense:
    Interest income                                             11,575              --
    Less: Interest expense                                     314,217         285,572
                                                          ------------     -----------
        Total Other Expense                                    302,642         285,572
                                                          ------------     -----------
Net Loss                                                  $  3,531,933     $ 2,285,140
                                                          ============     ===========

Basic and Diluted Net Loss per Common Share               $       0.03     $      0.09
                                                          ============     ===========

Basic and Diluted Weighted Average Shares Outstanding      132,537,737      26,758,511
                                                          ============     ===========
</TABLE>

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

                                      F-3
<PAGE>
              UNIVERSAL COMMUNICATIONS SYSTEMS, INC. & SUBSIDIARIES
                Consolidated Statements of Shareholders' Deficit
                 For the Years Ended September 30, 2004 and 2003
<TABLE>
<CAPTION>
                                                                                               Accumulated
                                  Common Stock       Preferred     Additional                    Other
                              ----------------------   Stock        Paid-in   Accumulated     Comprehensive        Total
                               Shares        Amount    Amount       Capital      Deficit          Income          Deficit
                              -----------   -------- ---------    ----------- ------------    -------------     ----------
<S>                           <C>           <C>        <C>        <C>         <C>                <C>            <C>
Balance, September 30, 2002     5,967,990   $  5,968   $--        $23,071,546  $(29,548,458)     $--            (6,470,944)
Common stock issued in private
    placements between $0.026
    and $1.00 per share        22,742,301     22,742    --          1,192,087      --             --             1,214,829
Conversions of debentures
    for common stock between
    $0.0253 and $0.1275
    per share                  23,486,734     23,487    --            693,578      --             --               717,065
Common stock issued for
    services between $0.04
    and $ 0.12 per share       18,008,770     18,009    --          1,086,386      --             --             1,104,395
Common stock issued for
    purchase of subsidiary
    at $.05 per share           5,000,000     5,000     --            245,000      --             --               250,000
Common stock issued for
    non-cash investments
    in patent rights
    at of $0.05 per share       4,000,000      4,000    --            196,000      --             --               200,000
Common stock issued between
    $0.033 and $1.00 per
    share in escrow, not paid   2,017,451      2,017    --             (2,017)     --             --                    --
Receivable from shareholder                                                                       (93,500)         (93,500)
Net loss for the fiscal year
    ended, September 30, 2003    --          --         --           --          (2,285,140)      --            (2,285,140)
                              -----------   --------   ---        -----------  ------------      --------      -----------
Balance, September 30, 2003    81,223,246     81,223    --        $26,482,580  $(31,833,598)     $(93,500)     $(5,363,295)
Preferred stock issued in
    private placement at
    $10. per share
    for 30,000 shares            --          --         30            299,970            --       --               300,000
Common stock issued in
    private placements between
    $0.02 and $.06 per share   60,593,464     60,595    --          2,232,859            --       --             2,293,454
Common stock issued in
    payment of note payable       300,000        300    --             25,634            --       --                25,934
Conversions of debentures
    for common stock between
    $0.0287 and $0.15
    per share                  43,506,234     43,506    --          2,432,430            --       --             2,475,936
Common stock issued for
    services between
    $0.040 and $0.11
    per share                  16,776,309     16,776    --          1,006,938            --       --             1,023,714
Common stock issued for
    purchase of subsidiary
    at $.06 per share             500,000        500    --             29,500            --       --                30,000
Dividends on preferred stock                            --           --             (11,000)      --               (11,000)
Net loss for the fiscal year
    ended, September 30, 2004          --         --    --           --          (3,531,933)      --            (3,531,933)
                              -----------   --------   ---        ----------- ------------       --------       ----------
Balance, September 30, 2004   202,899,253   $202,900   $30        $32,509,911 $(35,376,531)      $(93,500)      (2,757,191)
                              ===========   ========   ===        =========== ============       ========       ==========
</TABLE>

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

                                      F-4
<PAGE>
              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                     Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                          For the Year Ended
                                                                            September 30,
                                                                        2004             2003
                                                                    -----------      -----------
<S>                                                                 <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Loss                                                        $(3,531,933)     $(2,285,140)
    Adjustments to reconcile net loss from operations
      to net cash used by operating activities:
     Common stock issued for services                                 1,023,714        1,104,395
     Depreciation and amortization expense                               88,079            5,690
     Interest payable added to principal of debentures                   79,330          239,513
     Interest payable added to principal of note payable                 15,254           30,509
     Accrued interest on notes receivable                               (11,575)              --
    Changes in operating assets and liabilities:
     (Increase) Decrease in accounts receivable                           3,850         (105,859)
     (Increase) in inventory                                            (37,094)          (4,900)
     (Increase) Decrease in prepaid and other                           (39,727)         (85,249)
     Increase (Decrease) in accrued expenses and
     accounts payable                                                   888,658          181,902
                                                                    -----------      -----------

     Net Cash (Used) by Operating Activities                         (1,521,444)        (919,139)
                                                                    -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of patent rights                                           (9,200)        (100,000)
     Purchase of fixed assets                                          (381,637)         (37,662)
     Note receivable                                                         --         (116,782)
     (Increase) in advances to related parties                          (11,368)         (46,676)
                                                                    -----------      -----------

     Net Cash (Used) by Investing Activities                           (402,205)        (301,120)
                                                                    -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds of short term notes                                           --           60,000
      Proceeds (repayment) of overdraft facility                        (25,721)          25,721
      Repayment of note payable                                        (274,066)              --
      Proceeds from issuance of common stock                          2,293,452        1,214,829
      Proceeds from issuance of preferred stock                         300,000               --
      Increase (Decrease) in advances from related parties              (61,364)          63,517
                                                                    -----------      -----------

     Net Cash Provided by Financing Activities                        2,232,101        1,364,067
                                                                    -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                                             308,452          143,808

CASH AND CASH EQUIVALENTS
    AT BEGINNING OF PERIOD                                              144,682              874
                                                                    -----------      -----------

CASH AND CASH EQUIVALENTS
    AT END OF YEAR                                                  $   453,134      $   144,682
                                                                    ===========      ===========
</TABLE>

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

                                      F-5
<PAGE>
              UNIVERSAL COMMUNICATION SYSTEMS, INC. & SUBSIDIARIES
                     Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                 For the Year Ended
                                                                   September 30,
                                                                 2004          2003
                                                              ----------     --------
<S>                                                           <C>            <C>
CONTINUED:

SUPPLEMENTAL DISCLOSURES OF CASH:
     Interest paid                                            $       --     $     --
     Income taxes paid                                        $       --     $     --
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
     Interest accrued on debentures, added to
         the principal of the debentures                      $   79,333     $239,852
     Interest accrued on note payable added
         to the principal of the note                         $   15,254     $ 30,509
     Dividends accrued on preferred stock                     $   11,000
     Debentures converted to capital stock                    $2,475,936     $717,065
     Capital stock issued in acquisition of subsidiary        $   30,000     $250,000
     Capital stock issued in acquisition of patent rights     $       --     $200,000
      Capital stock issued in payoff of note payable          $   25,934     $     --
</TABLE>

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

                                      F-6
<PAGE>
         Universal Communication Systems, Inc. and Subsidiaries
            Notes to the Consolidated Financial Statements
                        September 30, 2004

NOTE 1 - BACKGROUND, ACQUISITIONS AND SUBSIDIARIES

Background
----------

Universal Communications Systems, Inc. (the Company) and its
subsidiaries are actively engaged worldwide in developing and marketing
solar energy systems, as well as systems for the extraction of
drinkable water from the air.  Consolidated subsidiaries include
wholly-owned subsidiaries AirWater Corp, AirWater Patents Corp,
Millennium Electric T.O.U. Ltd, Solar Style Inc (USA), and Solar One
Inc, and Solar Style Ltd., and majority-owned subsidiary Millennium
USA.

AirWater Systems
----------------

On March 21, 2003, the Company licensed worldwide rights to patents
held by J.J. Reidy & Co, relating to a water production/generation
system, for a period of not less than 10 years.  In connection with the
licensing, the Company created two wholly-owned subsidiaries: AirWater
Corp, to produce and market the systems, and AirWater Patents Corp, to
hold the Company's licensed patent rights.  The Company paid $100,000
cash and 4 million shares of Company stock valued at $200,000.
Additionally, the license agreement requires royalty payments of 5-7%
of gross water system sales, with minimum royalty payments of $10,000
monthly beginning November 2003.  The $300,000 acquisition cost is
included in Patents.

Millennium Solar Systems
------------------------

On September 29, 2003, the Company completed an agreement to purchase
100% of the stock of Millennium Electric T.O.U. Ltd (Millennium), an
Israeli company specializing in the development and installation of
solar power systems worldwide.  Terms included an initial transfer of 5
million shares of Company stock, valued at $250,000, with options for
the sellers to purchase an additional 22 million shares at various
exercise prices, ranging from $0.05 to $0.39 per share, to be granted
under various conditions related to certain future events and future
Company performance standards.

The Company's purchase cost plus net liabilities assumed, resulted in
$300,064 of intangibles in the form of patent costs, which is included
in Patents. As discussed in Note 12, no amortization or impairment has
been recognized.

Two new wholly-owned US subsidiaries, Solar One Inc and Solar Style Inc
(USA), were created by the Company to market the solar systems.  As of
September 30, 2003, they were inactive, with no assets or liabilities.
For the fiscal year ended September 30, 2004 Solar One Inc. remains
inactive.  Solar Style Inc. (USA) has leased office space in Baltimore
Maryland, and contracted with manufactures to bring to marked solar
powered products for the portable consumer market. At this time no
units have been sold.

Millennium has two subsidiaries: 65%-owned Millennium USA, and 50%-
owned Solar Style Ltd.  Both are inactive, with no assets or
liabilities.  The Company purchased the remaining 50% of Solar Style
Ltd. from an outside investor for 500,000 shares valued at $30,000.
Solar Style LTD was purchase to create a controlling interest, and to
obtain sole use of the name Solar Style.  The Company, and its wholly
owned subsidiary Millennium, now own 100% of Solar Style Ltd.

Millennium's assets and liabilities are included in the Company's
consolidated balance sheet at September 30, 2003. However, Millennium's
results are not included in the Company's consolidated statements of
operations, shareholders' deficit, or cash flows for the year ended
September 30, 2003.  Millennium's results are included in the Company's
statements of operations, sharekholders' deficit, and statement of cash
flows for the year ended September 30, 2004.


                                      F-7
<PAGE>
         Universal Communication Systems, Inc. and Subsidiaries
            Notes to the Consolidated Financial Statements
                        September 30, 2004

NOTE 1 - BACKGROUND, ACQUISITIONS AND SUBSIDIARIES (continued)

Millennium Solar Systems (continued)
------------------------------------

The following pro forma data is presented on a combined basis, as if
Millennium had been acquired as of October 1, 2001:

                                                            2003
                                                        -----------
Revenues                                                $   162,066
Expenses                                                  2,477,052
                                                        -----------
Net (Loss)                                              ($2,314,986)
                                                        ===========
Basic & Diluted Loss per Share                               ($0.09)
                                                              =====

Hard Disc Cafe, Inc.
--------------------

During fiscal 2002, the Company advanced $147,794 and signed a non-
binding letter of intent to acquire Hard Disc Cafe, Inc. (HDC), a
Florida corporation, majority-owned by an officer of the Company.  HDC
intended to develop and license themed internet cafes.  During 2002,
HDC ceased all operations and returned $10,699 to the Company.  As a
result, the Company recognized a loss of $26,397 in fiscal 2003.

Card Universal Corporation, Inc.
--------------------------------

During fiscal 2003, the Company entered into a non-binding letter of
intent to acquire Card Universal Corporation, Inc. (CUC), a privately
held development stage Florida corporation of which an officer of the
Company was CEO and a major shareholder. CUC intended to provide and
market prepaid "Stored Money Cards". CUC has ceased its development
activities, is currently inactive, and the acquisition has been
abandoned.

Digital Way, Peru
-----------------

The Company owns 27% of Digital Way, S.A., a Peruvian
telecommunications company. The Company treats Digital Way as an
unconsolidated investment. Pursuant to APB 18, par 17, absent evidence
to the contrary, and investor is presumed to have the ability to
significantly influence an investee if it owns 20% or more of the
investee's voting stock and the equity method of accounting is
required.  Because the majority ownership is concentrated among a small
group of shareholders who operate Digital Way without regard to the
views of Universal and the financial information necessary to apply the
equity method of accounting is not being made available, Universal is
unable to apply the equity method.  Because significant doubt exists as
to the recovery from this investment, the investment is fully impaired.

CinemaElectric
---------------

During fiscal 2003, the Company agreed to acquire CinemaElectric, a Los
Angeles based multimedia messaging service company. On August 12, 2003,
the Company released CinemaElectric from the agreement in exchange for
10% of CinemaElectric's stock, which was received in the fiscal year
ended September 30, 2004. As of the date of publishing these financial
statements, no value could be calculated on the shares of this non-
publicly traded company. At such time as a value can be determined, the
Company will record the 10% investment in CinemaElectric.

                                      F-8
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of all
majority-owned subsidiaries.  Investments in which the Company has the
ability to exercise significant influence, but not control, are
accounted for by the equity method. All other investments are carried
at the lower of cost or fair value. Intercompany transactions are
eliminated.

Basic and Diluted Net Loss Per Share
------------------------------------

The calculation of basic and diluted net loss per share is in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". Net loss per common share, basic and diluted, has
been computed using weighted average common shares outstanding. The
effect of outstanding stock options and warrants totaling 27,521 in
fiscal 2003 and 18,083,131 in 2004 has been excluded from the dilutive
computation, as their inclusion would be anti-dilutive.

                                      F-9
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

                                                     Fiscal Year Ended
                                                       September 30,
                                                  2004                2003
                                             --------------      ------------

Net loss                                     $   (3,531,933)     $ (2,285,140)
                                             ==============      ============

Weighted average number of common shares        132,537,737        26,758,511
                                             ==============      ============
Basic and diluted loss per share             $        (0.03)     $      (0.09)
                                             ==============      ============

Cash Equivalents
----------------

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Balances in
bank accounts may, from time to time, exceed federal insured limits.

Inventory
---------

Inventory is stated at the lower of cost (determined using the "first-
in, first-out" method) or market. Inventory write-offs are provided to
cover risks arising from slow-moving items or obsolescence.

Fixed Assets
------------

Furniture, fixtures and equipment are depreciated over their estimated
useful lives of 3 to 15 years, using the straight-line method of
depreciation.

Long-Lived Assets
-----------------

The Company reviews its long-lived assets on a quarterly basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards (SFAS) No. 144. This statement provides a single
accounting model for long-lived assets to be disposed of and
significantly changes the criteria that would have to be met to
classify an asset as held-for-sale. Classification as held-for-sale is
an important distinction since such assets are not depreciated and are
stated at the lower of fair value and carrying amount. This statement
also requires expected future operating losses from discontinued
operations to be displayed in the period(s) in which the losses are
incurred, rather than as of the measurement date as previously
required.

                                      F-10
<PAGE>

             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Estimates
---------

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

Fair Value of Financial Instruments
-----------------------------------

For cash, cash equivalents, other assets, accounts payable, and accrued
expenses, the carrying amounts represent their fair market value. The
carrying amount of the debentures payable approximates fair value
because of similar current rates at which the Company could borrow
funds with consistent remaining maturities.

Segment Information
-------------------

The Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS No. 131) in 1999. This statement establishes
standards for the reporting of information about operating segments in
annual and interim financial statements and requires restatement of
prior year information. The Company has no reportable operating
segments for the years ended September 30, 2004 and 2003.  All products
and services in the current fiscal year, are related to one operating
segment, the installation of solar energy products worldwide.

Comprehensive Income and Foreign Currency Translation
-----------------------------------------------------

The Company has adopted FASB Statement No. 130, Reporting Comprehensive
Income. The Company's foreign subsidiaries transactions are recorded in
New Israeli Shekels ("NIS"); however, most of the company's revenues
are received in U.S. dollars or linked to the U.S. dollar, and a
substantial portion of its costs is incurred in U.S. dollars
Accordingly, the Company has determined the U.S. dollar as the currency
of its primary economic environment and thus its functional and
reporting currency.

The financial statements of the Company's foreign subsidiaries are
measured using the U.S. dollar as the functional currency. Where there
are foreign currency transactions, assets and liabilities are
translated at exchange rates as of the balance sheet date and revenues
and expenses were translated at average rates of exchange in effect
during the year. Any cumulative translation adjustments are recorded as
a separate component of shareholders' equity.

Revenue Recognition and Trade Accounts Receivable
-------------------------------------------------

The Company's revenues are recognized when contracted services are
provided for or products are shipped to unaffiliated customers. The
Securities and Exchange Commission's Staff Accounting Bulletin (SAB)
No. 101, "Revenue Recognition" provides guidance on the application of
generally accepted accounting principles to selected revenue
recognition issues. The Company has concluded that its revenue
recognition policy is appropriate and in accordance with generally
accepted accounting principles and SAB No. 101.  Trade accounts
receivable older than 90 days are considered past due and are subject
to write down.

Fixed Assets
------------

Fixed assets are recorded at cost. Additions and improvements are
capitalized; these include all material, labor, and engineering costs
to design, install or improve the asset. Interest costs on construction
projects are also capitalized. These costs are carried as construction
in progress until the asset is ready for its intended use, at which
time the costs are transferred to land, buildings, or machinery and
equipment. Routine repairs and maintenance are expensed as incurred.
The cost of plant and equipment is depreciated using the straight-line
method over the estimated useful life of the asset. In compliance with
SFAS 144, long-lived assets are reviewed for impairment whenever in
management's judgment conditions indicate a possible loss. Such
impairment tests compare estimated undiscounted cash flows to the
recorded value of the asset. If an impairment is indicated, the asset
is written down to its fair market value or, if fair market value is
not readily determinable, to an estimated fair value based on
discounted cash flows.


Goodwill
--------

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is
now subject only to impairment reviews. A fair-value-based test is
applied at the reporting unit level, which is generally one level below
the segment level. This test requires various judgments and estimates.
A goodwill impairment loss will be recorded for any goodwill that is
determined to be impaired. Goodwill is tested for impairment at least
annually.

Patents
---------------------------

Patents are amortized for their patents life of 15 years.  In
accordance with SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, all intangible assets are assessed for impairment
whenever events indicate a possible loss. Such an assessment involves
estimating undiscounted cash flows over the remaining useful life of
the intangible. If the review indicates that undiscounted cash flows
are less than the recorded value of the intangible asset, the carrying
amount of the intangible is reduced by the estimated cash-flow
shortfall on a discounted basis, and a corresponding loss is charged to
the Statement of Consolidated Operations.

Stock Based Compensation
------------------------
From time to time the company has compensated key employees with shares
of common stock in lieu of salary (see note 12 on related party
transactions).

Shipping Costs
--------------
The company incurred no significant shipping costs in the current year.

Advertising Costs
-----------------
Advertising costs are expensed as incurred.

Recent Accounting Pronouncements
--------------------------------

In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143
establishes guidelines related to the retirement of tangible

                                      F-11
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)
--------------------------------------------

long-lived assets of the Company and the associated retirement costs.
This statement requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made.  The
associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived assets. This statement is effective
for financial statements issued for the fiscal years beginning after
June 15, 2002 and with earlier application encouraged.  The Company
adopted SFAS No. 143 and the adoption did not have a material impact
on the financial statements of the Company at September 30, 2003.

In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144,  "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS No. 144"). SFAS No. 144 replaces SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of." This standard establishes a single
accounting model for long-lived assets to be disposed of by sale,
including discontinued operations. SFAS No. 144 requires that these
long-lived assets be measured at the lower of carrying amount or fair
value less cost to sell, whether reported in continuing operations or
discontinued operations. This statement is effective beginning for
fiscal years after December 15, 2001, with earlier application
encouraged.  The Company adopted SFAS No. 144 and the adoption did not
have a material impact on the financial statements of the Company at
September 30, 2003.

In April 2002, the Financial Accounting Standards Board issued SFAS No.
145, "Rescission of FASB Statements No. 44, 4 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections" ("SFAS No. 145"), which
updates, clarifies and simplifies existing accounting pronouncements.
FASB No. 4, which required all gains and losses from the extinguishment
of debt to be aggregated and, if material, classified as an
extraordinary item, net of related tax effect was rescinded.  As a
result, FASB No. 64, which amended FASB No. 4, was rescinded as it was
no longer necessary. SFAS No. 44, "Accounting for Intangible Assets of
Motor Carriers", established the accounting requirements for the
effects of transition to the provisions of the Motor Carrier Act of
1980. Since the transition has been completed, SFAS No. 44 is no longer
necessary and has been rescinded.  SFAS No. 145 amended SFAS No. 13 to
eliminate an inconsistency between the required accounting for sale-
leaseback transactions and the required accounting for certain leases
modifications that have economic effects that are similar to sale-
leaseback transactions.  The Company adopted SFAS No. 145, which has
not had a material effect on the Company's financial statements.

                                      F-12
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)
--------------------------------------------

In June 2002, the Financial Accounting Standards Board issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities"
("SFAS No. 146"). SFAS No. 146 addresses significant issues regarding
the recognition, measurement, and reporting of costs associated with
exit and disposal activities, including restructuring activities.  SFAS
No. 146 also addresses recognition of certain costs related to
terminating a contract that is not a capital lease, costs to
consolidate facilities or relocate employees, and termination benefits
provided to employees that are involuntarily terminated under the terms
of a one-time benefit arrangement that is not an ongoing benefit
arrangement or an individual deferred-compensation contract. SFAS No.
146 was issued in June 2002, effective December 31, 2002 with early
adoption encouraged.  There has been no impact on the Company's
financial position or results of operations from adopting SFAS No. 146.

In April 2003, the Financial Accounting Standards Board issued SFAS No.
149,  "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities"  (hereinafter  "SFAS No. 149"). SFAS No. 149 amends and
clarifies the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133,  "Accounting for Derivative Instruments
and Hedging Activities".  This statement is effective for contracts
entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003.  The adoption of SFAS No.
149 did not have a material impact on the financial position or results
of operations of the Company.

In May 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and
Equity" (hereinafter "SFAS No. 150"). SFAS No. 150 establishes
standards for classifying and measuring certain financial instruments
with characteristics of both liabilities and equity and requires that
those instruments be classified as liabilities in statements of
financial position. Previously, many of those instruments were
classified as equity. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and otherwise
is effective at the beginning of the first interim period beginning
after June 15, 2003. The Company has determined that there was no
impact on the Company's financial statements from the adoption of this
statement.

In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. (FIN)46 "Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51" (hereinafter "FIN 46"). FIN
46 requires certain variable interest entities to be consolidated by
the primary beneficiary of the entity if the equity investors in the
entity do not have the characteristics of a controlling financial

                                      F-13
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)
--------------------------------------------

interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial
support from other parties.  FIN 46 is effective for all new variable
interest entities created or acquired after January 31, 2003.  The
provisions of FIN 46 must be applied for the first interim or annual
period beginning after June 15, 2003.  The Company does not have any
entities that require disclosure or new consolidation as a result of
adopting the provisions of FIN 46.

In November 2002, the Financial Accounting Standards Board issued FIN
45 "Guarantor's Accounting and Disclosure Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others."  FIN 45
requires a company, at the time it issues a guarantee, to recognize an
initial liability for the fair value of obligations assumed under the
guarantee and elaborates on existing disclosure requirements related to
guarantees and warranties.  The initial recognition requirements of FIN
45 are effective for guarantees issued or modified after December 31,
2002 and do not have an impact on the financial statements of the
Company. The Company does not anticipate issuing any guarantees which
would be required to be recognized as a liability under the provisions
of FIN 45 and thus does not expect the adoption of this interpretation
to have an impact on its results of operations or financial position.

Revenues form the sales of products are recognized in accordance with
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial
Statements when persuasive evidence of an arrangement exists, delivery
of the product has occurred, provided the collection of resulting
receivable is probable, the price is fixed or determinable and no
significant obligation exists.  The Company does not grant right of
return.

NOTE 3 - GOING CONCERN AND SIGNIFICANT RISKS AND UNCERTAINTIES

The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. The Company's current liabilities
exceed current assets by nearly $1.704,000, and have experienced losses
since inception, and had an accumulated deficit of $35,377,000 at
September 30, 2004. Net losses are expected for the foreseeable future.
As such, there is substantial doubt as to the Company's ability to
continue as a going concern. Management has modified its business plan
and is currently focusing its operations on the design, manufacture and
sale of water production and generation systems along with solar power
systems. The Company needs to secure additional capital through sales
of common stock. There is no assurance that management will be
successful in its efforts to raise additional capital.

NOTE 4  FIXED ASSETS

                                                     September 30
                                                  2004         2003
                                                --------     -------
Cost:
        Furniture, fixtures and equipment       $ 49,123     $29,686
        Office leasehold improvements              4,780          --
        Equipment molds                           21,000          --
        Demonstration equipment  Air Water       362,234      25,814
        Demonstration equipment  Solar One         9,338       9,338
                                                --------     -------

         Total                                   446,475      64,838
                                                --------     -------

Accumulated depreciation and amortization:
        Furniture, fixtures and equipment         29,979      21,579
        Office leasehold improvements              1,304          --
        Equipment molds                            3,375          --
        Demonstration equipment  Air Water            --          --
        Demonstration equipment  Solar One            --          --
                                                --------     -------
         Total accumulated depreciation and
          amortization                            34,658      21,579
                                                --------     -------

Depreciated cost                                $411,817     $43,259
                                                ========     =======

Depreciation and amortization expense for
 the fiscal year                                $ 13,079     $ 5,690
                                                ========     =======

Depreciation of furniture, fixtures and office equipment is computed on
the straight-line basis over periods of 3 to 10 years.  Leasehold
improvements are amortized on the straight-line basis for the period of
the space lease.  Equipment molds are being depreciated on the
straight-line basis for 3 to 5 years.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Litigation
----------

In November 1998, the Company and its predecessor affiliates filed an
action against the lessor of its leases for the Concord and San Marcos,

California multipoint distribution service channels. Thereafter, the
lessor cross-complained against the Company and its predecessors,
alleging breach of contract. On December 9, 1999, a settlement
agreement was signed. Under terms of the settlement agreement, the
Company had an option to purchase the Concord and San Marcos leases for
a price of $250,000 each, less lease payments already made. The Company
elected to exercise the option to purchase the Concord lease, and the
appropriate transfer procedure has been initiated with the U.S. Federal
Communications Commission (FCC) which is still pending. The Company
believes that under current FCC regulations it is not required to pay
the $250,000 purchase price until such time as the FCC has approved the
transfer of the license, and has made no payment. Management has
abandoned the pursuit of these leases and licenses.

During 1999, the Company borrowed $740,000 from Credit Bancorp.  Also
in 1999, the Company filed suit against Credit Bancorp in US District
Court in San Francisco, regarding improprieties. The case was settled
in 1999, with the $740,000 loan converting to a $740,000 convertible
debenture. In 2000, Credit Bancorp's receiver agreed to convert the
debenture into 462 shares of the Company's stock. A new receiver has
been appointed to administer the affairs of Credit Bancorp. The Company
has been informed that the appointed receiver denies that such a
conversion request was made, and the Company may be liable for the
principal plus accrued interest. As of September 30, 2003, no shares
had been issued. Management believes that the receiver's claim lacks an
authoritative basis, and that the resolution of these matters will not
have a material effect on the Company's financial statements.

On April 19, 2001, the Company was served with a complaint alleging
unjust enrichment and a violation of California Business and
Professions Code by Broad Horizons, Inc., a Florida corporation. The
complaint stems from allegations that the Company improperly received
monetary benefits from the Company's intended acquisition of
Comunicacoes 100Fio, Ltda, a Brazilian corporation, and the Company's
subsequent relations with Luis Cuza, a former vice-president and
director of Broad Horizons, Inc., and a former member of the Company's
board of directors. The Company denies the allegations and believes
that the resolution of this matter will not have a material effect on
the Company's financial statements.

In fiscal 2003, Electric & Gas Technology Inc (ELGT) filed suit against
the Company in Federal District Court in Texas, alleging patent
infringement and other claims regarding the Company's AirWater
products.  This suit was dismissed without prejudice, for
venue/jurisdictional reasons.  It is not yet clear whether ELGT will
re-file in another jurisdiction.  The Company has counter-sued ELGT in
Federal District Court in Florida for defamation and patent
infringement, which case is still pending.  Management believes that
the resolution of these matters will not have a material effect on the
Company's financial statements.

                                      F-14
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 5 - COMMITMENTS AND CONTINGENCIES (continued)

Operating Leases
----------------

During 2003, the Company converted the lease of its Miami executive and
administrative offices to a month-to-month basis.  The Company's
Millennium subsidiary in Israel rents facilities under non-cancelable
operating leases for periods ending in 2005, and also leases a car
under a 36-month lease commencing October 2003.

Future minimum lease payments required under these leases are as
follows at September 30, 2003:

         Fiscal year
         Ending September 30,
         --------------------

                2005               $13,512
                2006                13,512
                                   -------
                                   $27,024
                                   =======

Management Agreement
--------------------

The Company entered into a three year consulting agreement with
Overseas Communications Limited ("Overseas") on November 2, 2001, for
Mr. Michael Zwebner to act as Chairman and CEO of the Company. This
agreement was extended by one year on November 1, 2004.  The Agreement
calls for a monthly payment of $20,000, payable in cash or the
Company's common stock. For the fiscal years ended September 30, 2004
and 2003, the Company paid $157,000 and $83,000 in cash, respectively,
and issued 85,000 and 3,160,742 shares of common stock, respectively,
under this agreement. Mr. Zwebner is a shareholder of Overseas.

Settlement Agreement
--------------------

        As described more fully in Note 9, below, the Company has entered into
a settlement agreement with the Andrew Corporation, formerly a major
supplier to the Company. The related note payable for $300,000 was
fully satisfied with the issuance of 300,000 shares valued at $25,934.

Concentrations
--------------

The Company's wholly owned subsidiary Millennium depends on many third-
party suppliers and manufacturers for key products and components,
contained in our products. For some of these products and components,
Millennium may only use a single source supplier, in part due to the
lack of alternative sources of supply. If the supply of a key product
or component is delayed or curtailed, Millennium's ability to ship the
related product or solution in desired quantities and in a timely
manner could be adversely affected, possibly resulting in reductions in
net sales

Consultant Agreements
---------------------

In September 2003, the Company entered into two consulting agreements
with two Millennium executives. The remaining contingent obligations on
these agreements at September 30, 2003 totals $114,000.  The consulting
agreements expired in the fiscal year ended September 30, 2004 with no
remaining contingent obligations.

AirWater Minimum Royalty Payments
---------------------------------

As discussed more fully in Note 1, the Company's license agreement,
through its AirWater subsidiary, requires monthly royalty payments of
$10,000 per month through October 2013.

NOTE 6  NOTES PAYABLE

Notes payable consist of a non-interest bearing debt instruments.
Interest on these notes has been imputed and accrued at 8%.  These
notes are past due, but are expected to be paid in full in the coming
fiscal year.


NOTE 7 - SHAREHOLDERS' EQUITY

During the fiscal year ended September 30, 2004, the Company sold
60,593,464 shares of its common stock for net cash proceeds of
$2,293,454. The Company issued 43,506,234 shares of common stock in
conversion of outstanding debentures for an aggregate value of
$2,475,936. The Company also issued 16,776,309 shares of its common
stock for services at an aggregate value of $1,023,714. Stock issued
for services was at the reported market price for the shares at the
time of issuance.  The Company issued 500,000 shares valued at $30,000
for the purchase of a 50% equity interest in Solar Style Ltd. (see Note
1).

The Company has 100,000,000 of authorized preferred shares.  On April
20, 2004 the Company received $300,000 for the issuance 30,000 shares
of Series A cumulative, non-participating convertible preferred stock.
Holders of the preferred shares are entitled to receive cumulative cash
dividends at the annual rate of 8%.  Each Preferred shares is
convertible at the option of the holder, into shares of common stock.
Interest accrued, but not paid on the preferred stock was $11,000 for
the year ended September 30, 2004.

During the fiscal year ended September 30, 2003, the Company sold
22,742,301 shares of its common stock for net cash proceeds of
$1,214,829. The Company issued 23,486,734 shares of common stock in
conversion of outstanding debentures for an aggregate value of
$717,065. The Company also issued 18,008,770 shares of its common stock
for services at an aggregate value of $1,104,395. Stock issued for
services was at the reported market price for the shares at the time of
issuance.

                                      F-15
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 8 - INCOME TAXES

A reconciliation between the actual income tax benefit and the federal
statutory rate follows:
<TABLE>
<CAPTION>
                                                               Fiscal years ended September 30,
                                                                2004                      2003
                                                     ----------------------      -------------------
                                                        Amount           %        Amount          %
                                                        ------          ---       ------         ---
<S>                                                  <C>                 <C>     <C>             <C>
   Computed income tax benefit at statutory rate     $ 1,205,000         34 %    $656,000        34 %
   Tax benefit reserved for doubtful valuation        (1,205,000)       (34)%    (656,000)      (34)%
                                                     -----------                 --------

   Income tax benefit                                 None                          None
                                                      ----                          ----
</TABLE>

At September 30, 2004 the Company had a net operating loss carry
forward for federal tax purposes of approximately $32,832,000 which, if
unused to offset future taxable income, will expire between the years
2011 to 2023. A valuation allowance has been recognized to
offset the related deferred tax assets due to the uncertainty of
realizing any benefit therefrom.

Under section 382 of the Internal Revenue Code, the utilization of net
operating loss carryforwards is limited after an ownership change, as
defined, to an annual amount equal to the market value of the loss
corporation's outstanding stock immediately before the date of the
ownership change multiplied by the highest Federal long-term tax exempt
rate in effect for any month in the 3 calendar month period ending in
the calendar month in which the ownership change occurred. Due to the
ownership changes as a result of the May 1998 reorganization and
subsequent stock issuances, any future realization of the Company's net
operating losses will be severely limited.

Significant components of the Company's deferred tax assets are as
follows:

                                             2004              2003
                                         -----------       -----------
Net operating loss carryforwards         $32,832,000       $29,300,000

Valuation allowance                      (32,832,000)      (29,300,000)
                                          ----------        ----------
Net deferred tax assets                      None              None
                                             ====              ====


It is the intention of the Company to file a consolidated tax return.

                                      F-16
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 9 - STOCK OPTION PLANS

Nonstatutory Stock Options
--------------------------

The Company has issued stock options under nonstatutory stock option agreements.
The options are granted at the fair market value of the shares at the date the
option is granted. The options are granted for a period of 5 years, and are
fully exercisable during the term of the option period or within thirty (30)
days of the participant's resignation or termination. The range of exercise
price is from $1.63 to $0.95. All shares have vested and are exercisable.

Combined transactions in non-employee options for the fiscal years
ended September 30, 2004 and 2003 are as follows:
<TABLE>
<CAPTION>
                                                         2004                            2003
                                                 --------------------           -------------------
                                                                Average                     Average
                                                   Number of    Exercise        Number of   Exercise
                                                   Shares       Price           Shares      Price
                                                   ---------    -------         ---------   -------
<S>                                                  <C>        <C>             <C>         <C>
         Options outstanding October 1               1,300      $0.095          251,400     $0.095
         Granted                                        --          --               --         --
         Expired                                      (250)         --               --         --
         Exercised                                      --          --         (250,000)      .095
                                                     -----      ------         --------    -------
         Options outstanding, September 30           1,050      $0.095            1,300     $0.095
                                                     =====      ======         ========     ======
</TABLE>

Incentive Stock Plan
--------------------

The Company adopted an incentive stock plan on August 5, 1998, which
was approved by the shareholders on March 1, 2001. The options are
granted at the fair market value of the shares at the date that the
option is granted. The options are granted for a period of 10 years,
and are exercisable after one year from the date of grant, at a vested
rate of 20% per year during the term of the option period or within
thirty (30) days of the participant's resignation or termination. The
number of shares of stock covered by each outstanding option, and the
exercise price per share thereof set forth in each such option, shall
be proportionately adjusted for any stock split, and or stock dividend.
All such options were being treated as non-statutory stock options
until the incentive stock plan was approved by the shareholders.  There
is no range of exercise price, all shares have an exercise price of
$0.593.  All shares have vested and are exercisable.

                                      F-17
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 9 - STOCK OPTION PLANS (continued)

Combined transactions in employee options for the fiscal years ended
September 30, 2004 and 2003 are as follows:
<TABLE>
<CAPTION>
                                                         2004                            2003
                                                 --------------------           -------------------
                                                                Average                     Average
                                                   Number of    Exercise        Number of   Exercise
                                                   Shares       Price           Shares      Price
                                                   ---------    -------         ---------   -------
<S>                                                  <C>        <C>             <C>         <C>
 Options outstanding October 1                       6,100      $0.593          6,300       $0.593
     Granted                                             0           0              0            0
     Expired                                        (1,650)          0           (200)           0
     Exercised                                           0           0              0            0
                                                    ------      ------          -----       ------
     Options outstanding, September 30               4,450      $0.593          6,100       $0.593
                                                    ======      ======          =====       ======
</TABLE>

The Company applies APB Opinion 25 in accounting for its stock
compensation plans discussed above. Accordingly, no compensation costs
have been recognized for these plans in 2004 or 2003. Had compensation
costs been determined on the basis of fair value pursuant to FASB
Statement No. 123, no compensation costs would have been recognized
inasmuch as no options were granted under these plans.

NOTE 10- SECURITIES PURCHASE AGREEMENTS AND DEBENTURES

On April 14, 2000, the Company entered into a Securities Purchase
Agreement with six investors, for the purchase of investment units,
consisting of common stock, common stock purchase warrants, 4%
subordinated debentures maturing April 14, 2005, and preferred stock.
On August 10, 2000 and again on October 18, 2000, the Company agreed
with the investors to modify certain terms of the earlier funding
agreement including elimination of the warrants and the preferred
stock.  The investors acquired $6,720,000 of 4% subordinated
debentures.  Interest is compounded semi-annually on the aggregate
principal amount and is payable upon conversion, redemption or maturity
of the debentures.  Accumulated accrued interest is payable by
increasing the aggregate principal amount of the debentures semi-
annually and convertible into common stock of the Company.  The
debentures are not callable and can be converted into common stock at
the option of the Holder at any time. The debentures are convertible
generally at 85% of the average per share market value for the 5
consecutive trading days immediately prior to the conversion date.

On March 29, 2001, the Company entered into a Senior Secured
Convertible Debentures and Warrants Purchase Agreement with several
investors. On June 7, 2001 the Company and several investors agreed to
amend the March 29, 2001 Senior Secured Convertible Debentures and
Warrants Purchase Agreement. The investors agreed to purchase $200,000
principal amount of 8% senior convertible debentures, maturing in
February and March 2005. The Company also agreed to issue letter
warrants to purchase up to $125,000 divided by 85% of the average of
the three lowest bid prices during the 22 trading days prior to June 7,
2001.  Interest is computed at 8% per annum on the principal amount,
compounded quarterly and is payable upon conversion, redemption or
maturity of the debentures.  The debentures are convertible generally
at 70% of the average of the 3 lowest bid prices during the 22 trading
days immediately prior to the conversion date.

In July 2003, an individual purchased a 4% Convertible Debenture with a
principal amount of $100,000, maturing in 2005, from an existing
bondholder.  The debenture, as amended, allows its conversion at any
time into 2,300,000 freely transferable shares of the Company's stock.

                                      F-18
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 10- SECURITIES PURCHASE AGREEMENTS AND DEBENTURES (continued)

Commencing on February 5, 2002 through September 30, 2002, debenture
holders exercised their option to convert $2,492,885 of 4% debentures
and $123,551 of 8% debentures into 4,898,636 shares of common stock.

During the fiscal year ended September 30, 2003, debenture holders
exercised their option to convert $717,065 of 4% debentures into
23,486,734 shares of common stock.

During the fiscal year ended September 30, 2004, debenture holders
exercised their option to convert $1,921,902 of 4% debentures into
28,019,978 shares of common stock and $554,034 of 8% debenture into
15,486,256 shares of common stock.


The balance of long-term debentures is shown in the following table.
All of the debentures are due in the year 2005.

                                                Balance Outstanding
                                                 September 30, 2004

4% Debenture                                         $1,537,975
8% Debentures                                           522,399
                                                     ----------
                        Total long term              $2,060,374
                                                     ==========

NOTE 11- SETTLEMENT AGREEMENT AND NOTE PAYABLE

On January 14, 2001, the Company entered into a Settlement Agreement with its
systems integrator, Andrew Corporation, to repay costs incurred in purchasing
their services and equipment in an approximate amount of $1,400,000. Under the
Agreement, Andrew received an initial payment of $100,000 and was scheduled to
receive and additional $100,000 each month until the loan was repaid. No
payments were made. On September 3, 2002, the Company reached a settlement
agreement with Andrew Corporation for all amounts due. The Company issued a note
in the amount of $300,000 due in April 2004. The note bore no interest and was
secured by 300,000 shares of the Company's common stock. The amount due was paid
in April 2004,of which, $274,066 was in cash, and the balance with the issuance
of 300,000 shares of common stock valued at $25,634.

                                      F-19
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 11 - SETTLEMENT AGREEMENT AND NOTE PAYABLE (continued)

Because there was no stated interest, $45,763 was calculated as imputed
interest, resulting in a stated value of the note payable of $254,237
recorded as part of Notes Payable. Interest expense of $15,254 and
$30,509 was computed for the years ended September 30, 2003 and 2004
and was added to the stated value of the note, increasing the stated
value at the time of finale payment of the note payable in April 2004
to $300,000.

NOTE 12 - RELATED PARTY TRANSACTIONS

The Company has a payable to officers of its subsidiary, Millennium, of
$31,744.  The Company expects to pay in full, all amounts owed to
related parties in the next fiscal year.

Mr. Zwebner advanced certain funds to the Company, of which $11,368 was
outstanding and payable to him at September 30, 2003.  Furthermore, Mr.
Zwebner assumed a liability owing to the Company from a third party,
resulting in an Account Receivable, Shareholder of $93,500.

As discussed in Note 12, the Company entered into a three year consulting
agreement with Overseas Communications Limited ("Overseas") on November 2, 2001,
for Mr. Michael Zwebner to act as Chairman and CEO of the Company. The Agreement
calls for a monthly payment of $20,000, payable in cash or the Company's common
stock. For the fiscal years ended September 30, 2004 and 2003, the Company paid
$135,000 and $80,000 in cash, respectively, and issued 1,316,666 and 3,160,742
shares of common stock, respectively, under this agreement. Mr. Zwebner is a
controlling shareholder of Overseas. Additionally, Mr. Zwebner was issued
4,505,000 shares of stock valued at $150,125 for the year ended September 30,
2004 for expenses incurred on behalf of the Company.

During the 2004 fiscal year, the Company issued 1,980,167 shares valued
at $118,810 to Millennium President Mr. Ami Alizari, as compensation
for services.

During the 2004 fiscal year, the Company issued 1,165,909 shares valued
at $128,250 to the Company's board member, Mr. Ramsey Sweis, as
compensation for his services.

During the 2004 fiscal year, the Company paid $8,352 to its stock
registrar, The Nevada Agency and Trust Company (NATCO). Alexander
Walker Jr, the Company's Corporate Secretary and a Director, is the
Chairman and a shareholder of NATCO.  Mr. Walker also received 500,000
shares of the Company's stock as compensation for legal services in the
year ended September 30, 2003.

Mr. Curt Orgil, the Company's Treasurer and a Director, received
200,000 shares of the Company's stock as compensation for financial
services in the year ended September 30, 2003.

NOTE 13- PRODUCT DEVELOPMENT COSTS

The Company does not capitalize costs for improvement or refinement of
existing products.  Product development expenses charged against
earnings were $62,333 and $0 in the fiscal years ended September 30,
2003 and September 30, 2004, respectively.  The Company has changed its
focus from product development to instillation and consulting.

                                      F-20
<PAGE>
             Universal Communication Systems, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               September 30, 2004

NOTE 14- PATENTS

Intangibles consist of $300,064 of goodwill allocated to patents,
related to the Millennium acquisition (see Note 1), and $306,650 of
patent and related license costs, $300,000 of which relates to the
acquisition of the AirWater patent licenses from J.J. Reidy (also see
Note 3), and $6,650 of which relates to the Company's distributed
wireless call processing (DWCP) system.

No amortization is recognized during fiscal 2003 on the Millennium
patents, because they were acquired at the end of the year. For the
year ended September 30, 2004 $30,000 in amortization expense was
recognized.

No amortization is recognized during fiscal 2003 on the AirWater and
DWCP patents, because production was limited to retypes and
demonstration units.  For the year ended September 30, 2004 $45,000 in
amortization was recognized.

It was determined after as a subsequent event that the DWCP patents
were deemed to be fully impaired (see footnote 16 on subsequent
events).

 It is estimated that amortization expense over the next five years
will total $375,000.  However, with the Company's adoption of SFAS No.
142, intangible assets will be tested for impairment annually, and will
be tested for impairment between annual tests if an event occurs that
would indicate that the carrying amount may be impaired.  The amount of
the impairment loss is calculated by the excess of the asset's carrying
value over its fair value. Management has analyzed the patents and
licenses, and has determined that there is no impairment at this time.
Patents are being amortized on a straight-line bases over their 10 year
life.

NOTE 15 - NOTES RECEIVABLE

The Companies investment in notes receivable consists solely of demand
notes maturing in less than one year, in the amount of $128,357 and
$116,782 for the years ended September 30, 2003 and 2004, respectively.
Investments with maturities of less than one year are classified as
short-term investments.  These investments are carried at cost (which
approximates fair value), with an interest rate of 10% per annum.

NOTE 16 - SUBSEQUENT EVENTS

On December 15, 2003, the Company tentatively agreed to acquire 51% of
GiraSOLAR BV, a Dutch holding company with 2 subsidiaries, Stroomwerk
Energy and Solar Service Buro, both involved in the photo-voltaic solar
industry. The Company is in the process of conducting its due diligence
in connection with this proposed acquisition.  As part of the agreement
to acquire GiraSOLAR, 36,000,000 shares are being held in escrow.  If
the sale of GiraSOLAR is finalized, the Company shares will become the
property of GiraSOLAR shareholders.  As of the date of this report, the
Company is continuing doing its due diligence and legal preparatory
work, in anticipation of closing the acquisition.

It was determined after the conclusion of audit field work that patents
associated with Companies distributed wireless call processing (DWCP)
valued at $6,650 was totally impaired.  This intangible asset will be
expensed in the first quarter of 2005.

                                      F-21