<PAGE>

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

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 2004

                                       or

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        Commission file number: 000-50588

                                 LIGHTFIRST INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                              36-4437640
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                 Identification No.)

      25 Northwest Point Boulevard, Suite 700, Elk Grove Village, IL 60007
                    (Address of principal executive offices)

                                 (847) 640-8880
              (Registrant's telephone number, including area code)

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

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

As of October 31, 2004, there were 6,406,000 shares of the registrant's common
stock outstanding, par value $.001.

<PAGE>

                          QUARTERLY REPORT ON FORM 10-Q
                     FOR THE PERIOD ENDED SEPTEMBER 30, 2004

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   Page No.
<S>                                                                                <C>
PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)                                              1
         Balance Sheets as of September 30, 2004 and December 31, 2003                 1
         Statements of Operations                                                      3
         Statements of Shareholders' Deficiency                                        4
         Statements of Cash Flows                                                      5
         Notes to Financial Statements (Unaudited)                                     7

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations                                                                 8

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                   16

Item 4.  Controls and Procedures                                                      16

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings                                                            17

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                  17

Item 3.  Defaults Upon Senior Securities                                              18

Item 4.  Submission of Matters to a Vote of Security Holders                          18

Item 5.  Other Information                                                            18

Item 6.  Exhibits                                                                     18

SIGNATURES                                                                            19
</TABLE>

<PAGE>

                         PART I -- FINANCIAL INFORMATION

                    Item 1. Financial Statements (Unaudited)

                                 LIGHTFIRST INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              September 30,   December 31,
                                                                2004            2003
                                                              -------------   ------------
                                                              (Unaudited)     (Audited)
<S>                                                           <C>             <C>
                                     ASSETS
CURRENT ASSETS
  Cash                                                         $ 54,338       $  9,645
  Accounts receivable, net of allowance for doubtful
    accounts of $10,000                                           7,579          4,019
  Prepaid expenses                                                2,096             --
  Deferred offering costs                                       314,287        204,853
                                                               --------       --------
                                     TOTAL CURRENT ASSETS       378,300        218,517

PROPERTY - Computer equipment                                    44,196         39,430
  Less accumulated depreciation                                  37,618         27,695
                                                               --------       --------
                                                                  6,578         11,735

OTHER ASSETS
  Customer list, net of accumulated amortization of
    $260,742 and $217,765 at September 30, 2004 and
     December 31, 2003, respectively                                574         43,551
  Deposits                                                       87,894         17,894
                                                               --------       --------
                                                                 88,468         61,445

                                                                473,346        291,697
                                                               ========       ========
</TABLE>

See notes to financial statements.

                                     - 1 -
<PAGE>

<TABLE>
<CAPTION>
                                                                    September 30,    December 31,
                                                                       2004              2003
                                                                    -----------      -----------
                                                                    (Unaudited)       (Audited)
<S>                                                                 <C>              <C>
                    LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
  Line of credit payable to shareholder                             $ 2,236,986      $ 1,264,987
  Accounts payable                                                      677,342          430,388
  Deferred revenue                                                      185,139          130,123
  Accrued payroll                                                     1,188,771          722,855
  Accrued payroll taxes and related penalties                         1,107,793        1,151,670
  Due to officer/shareholder                                              1,701            1,681
  Accrued interest payable to shareholder                               191,055           64,986
                                                                    -----------      -----------
                                        TOTAL CURRENT LIABILITIES     5,588,787        3,766,690
LONG-TERM LIABILITIES
  Notes payable to shareholder                                          620,000          620,000
  Accrued interest payable to shareholder                               143,322           88,387
                                                                    -----------      -----------
                                                                        763,322          708,387
SHAREHOLDERS' DEFICIENCY
Common stock, $.001 par value:
    Authorized, 10,000,000 shares
    Issued and outstanding, 6,406,000 shares                              6,406            6,406
  Additional paid-in capital                                          1,383,744        1,383,744
                                                                    -----------      -----------
                                                                      1,390,150        1,390,150
  Deficit accumulated during the development stage                   (7,268,913)      (5,573,530)
                                                                    -----------      -----------
                                                                     (5,878,763)      (4,183,380)
                                                                    -----------      -----------
                                                                    $   473,346      $   291,697
                                                                    ===========      ===========
</TABLE>

                                     - 2 -
<PAGE>

                                 LIGHTFIRST INC.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Period from
                                                      inception        For the three months ended Sept 30,
                                                   (April 11, 2001)    -----------------------------------
                                                 to September 30, 2004       2004             2003
                                                 ---------------------   -----------       -----------
<S>                                              <C>                     <C>               <C>
Revenues                                              $ 1,483,704        $   106,802       $   120,800

Cost of revenues                                        1,403,605            109,806           105,871
                                                      -----------        -----------       -----------
                                    GROSS PROFIT           80,099             (3,004)           14,929

General and administrative expenses                     7,093,602            443,774           380,196
                                                      -----------        -----------       -----------
                            LOSS FROM OPERATIONS       (7,013,503)          (446,778)         (365,267)

Other income (expense):
  Interest income                                           1,200                  -               213
  Interest expense                                       (336,358)           (68,760)          (36,142)
  Net realized gain from sale of investments               79,748                  -                 -
                                                      -----------        -----------       -----------
                                                         (255,410)           (68,760)          (35,929)
                                                      -----------        -----------       -----------
                                        NET LOSS      $(7,268,913)       $  (515,538)      $  (401,196)
                                                      ===========        ===========       ===========

Net loss per share:
  Basic and diluted                                         (1.20)             (0.08)            (0.06)

Weighted average shares outstanding:
  Basic and diluted                                     6,060,043          6,406,000         6,406,000
                                                      ===========        ===========       ===========

<CAPTION>
                                                  For the nine months ended Sept. 30,
                                                  -----------------------------------
                                                          2004         2003
                                                      -----------   -----------
<S>                                                   <C>           <C>
Revenues                                              $   328,699   $   367,973

Cost of revenues                                          337,727       340,017
                                                      -----------   -----------
                                    GROSS PROFIT           (9,028)       27,956

General and administrative expenses                     1,504,314     1,645,974
                                                      -----------   -----------
                            LOSS FROM OPERATIONS       (1,513,342)   (1,618,018)

Other income (expense):
  Interest income                                               -           957
  Interest expense                                       (182,041)      (88,151)
  Net realized gain from sale of investments                    -             -
                                                      -----------   -----------
                                                         (182,041)      (87,194)
                                                      -----------   -----------
                                        NET LOSS      $(1,695,383)  $(1,705,212)
                                                      ===========   ===========

Net loss per share:
  Basic and diluted                                         (0.26)        (0.27)

Weighted average shares outstanding:
  Basic and diluted                                     6,406,000     6,395,444
                                                      ===========   ===========
</TABLE>

See notes to financial statements.

                                     - 3 -
<PAGE>

                                 LIGHTFIRST INC.
                          (A Development Stage Company)

                     STATEMENTS OF SHAREHOLDERS' DEFICIENCY

           PERIOD FROM INCEPTION (APRIL 11, 2001) TO DECEMBER 31, 2003

              AND NINE MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Common Stock
                                                         -------------------   Additional  Deficit accumulated   Total
                                                          Number of             paid-in        during the      shareholders'
                                                            shares    Amount    capital    development stage    deficiency
                                                         ------------ ------- ------------ ------------------- -------------
<S>                                                      <C>          <C>     <C>          <C>                 <C>
Balance at April 11, 2001                                           - $     -  $        -      $         -     $         -
Issuance of common stock to founding shareholder            5,000,000   5,000      (4,900)               -             100
Issuance of common stock to consultant                        187,000     187        (137)               -              50
Issuance of common stock to investors                         691,800     692     691,108                -         691,800
Net loss for the period April 11, 2001 through
December 31, 2001                                                   -       -           -         (802,970)       (802,970)
                                                         ------------ ------- -----------     ------------     -----------
                                             BALANCE AT
                                      DECEMBER 31, 2001     5,878,800   5,879     686,071         (802,970)       (111,020)

Issuance of common stock to investors                         508,200     508     507,692                -         508,200
Net loss for the year                                               -       -           -       (2,472,470)     (2,472,470)
                                                         ------------ ------- -----------     ------------     -----------
                                             BALANCE AT
                                      DECEMBER 31, 2002     6,387,000   6,387   1,193,763       (3,275,440)     (2,075,290)

Issuance of common stock in exchange for services              19,000      19     189,981                -         190,000
Net loss for the year                                               -       -           -       (2,298,090)     (2,298,090)
                                                         ------------ ------- -----------     ------------     -----------
                                             BALANCE AT
                                      DECEMBER 31, 2003     6,406,000   6,406   1,383,744       (5,573,530)     (4,183,380)

Net loss for the nine months ended September 30, 2004               -       -           -       (1,695,383)     (1,695,383)
                                                         ------------ ------- -----------     ------------     -----------
                                             BALANCE AT
                                     SEPTEMBER 30, 2004  $  6,406,000 $ 6,406 $ 1,383,744     $ (7,268,913)    $(5,878,763)
                                                         ============ ======= ===========     ============     ===========
</TABLE>

See notes to financial statements.

                                     - 4 -
<PAGE>

                                 LIGHTFIRST INC.
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        Period from
                                                                         inception        For the nine months ended Sept. 30,
                                                                     (April 11, 2001) to  -----------------------------------
                                                                      September 30, 2004         2004            2003
                                                                     -------------------      -----------    -----------
<S>                                                                  <C>                      <C>            <C>
 CASH FLOWS - OPERATING ACTIVITIES
    Net loss for the period                                              $(7,268,913)         $(1,695,383)   $(1,705,212)
    Adjustments to reconcile net loss to net cash
      used for operating activities:
        Bad debts                                                             16,638                    -              -
        Compensation expense                                                 190,000                    -        190,000
        Interest expense                                                     334,377              181,004         88,151
        Depreciation and amortization                                        298,360               52,900         74,191
        Net realized (gain)  from sale of investments                        (79,748)                   -              -
        Changes in certain assets and liabilities
          affecting operations:
          Accounts receivable                                                (17,579)              (3,560)           786
          Prepaid expenses                                                    (2,096)              (2,096)             -
          Deposits                                                           (87,894)             (70,000)        (5,965)
          Accounts payable                                                   677,342              246,954          7,156
          Deferred revenue                                                    36,232               55,016         62,180
          Accrued expenses                                                 2,296,564              422,039        510,495
                                                                         -----------          -----------    -----------
                                                 NET CASH USED FOR
                                              OPERATING ACTIVITIES        (3,606,717)            (813,126)      (778,218)

CASH FLOWS - INVESTING ACTIVITIES
  Increase in note receivable                                                 (6,638)                   -           (305)
  Purchases of property                                                      (44,196)              (4,766)             -
  Purchase of investments                                                   (108,260)                   -              -
  Proceeds from the sale of investments                                      732,808                    -              -
  Acquisition of customer list                                              (112,409)                   -              -
                                                                         -----------          -----------    -----------
                                  NET CASH PROVIDED FROM (USED FOR)
                                              INVESTING ACTIVITIES           461,305               (4,766)          (305)

CASH FLOWS - FINANCING ACTIVITIES
  Proceeds from issuance of common stock to
    minority shareholders                                                    655,250                    -              -
  Proceeds from issuance of common stock to
    founding shareholder                                                         100                    -              -
  Proceeds from line of credit and notes payable to shareholder            2,856,986              971,999        899,710
  Deferred offering costs                                                   (314,287)            (109,434)      (140,436)
  Due (from) to officer/shareholder                                            1,701                   20         18,933
                                                                         -----------          -----------    -----------
                                            NET CASH PROVIDED FROM
                                              FINANCING ACTIVITIES         3,199,750              862,585        778,207
                                                                         -----------          -----------    -----------

                                   NET INCREASE (DECREASE) IN CASH            54,338               44,693           (316)
Cash at beginning of period                                                        -                9,645          4,608
                                                                         -----------          -----------    -----------
                                             CASH AT END OF PERIOD       $    54,338          $    54,338    $     4,292
                                                                         ===========          ===========    ===========
</TABLE>

                                     - 5 -
<PAGE>

                                 LIGHTFIRST INC.
                          (A Development Stage Company)

                        STATEMENTS OF CASH FLOWS, Cont'd
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Period from
                                                    inception
                                               (April 11, 2001) to  Nine months ended Sept. 30,
                                                  September 30,     ---------------------------
                                                      2004             2004          2003
                                               -------------------   ---------    ----------
<S>                                            <C>                   <C>          <C>
NON-CASH OPERATING, INVESTING AND
  FINANCING ACTIVITIES
    Investments received as consideration for
      sale of common stock                           $ 544,800         $  -           $  -
                                                     =========         ====           ====
    Acquisition of customer list offset by
      deferred revenue                               $ 148,907         $  -           $  -
                                                     =========         ====           ====
    Issuance of common stock in exchange for
      services                                       $ 190,000         $  -           $  -
                                                     =========         ====           ====
</TABLE>

See notes to financial statements.

                                     - 6 -
<PAGE>

                                 LIGHTFIRST INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 2004

NOTE A: UNAUDITED INTERIM FINANCIAL INFORMATION

      The accompanying unaudited financial statements of LightFirst Inc. have
      been prepared in accordance with accounting principles generally accepted
      in the United States of America for interim financial information and with
      the instructions to Form 10-Q and Article 10 of Regulation S-X.
      Accordingly, these interim financial statements do not include all of the
      information and footnotes required by accounting principles generally
      accepted in the United States of America for complete financial
      statements. In the opinion of the Company's management, the unaudited
      interim financial statements have been prepared on the same basis as the
      audited financial statements and include all adjustments, consisting only
      of normal recurring adjustments, necessary for the fair presentation of
      the Company's results of operations and its cash flows for the interim
      period. Operating results for the nine months ended September 30, 2004 are
      not necessarily indicative of the results that may be expected for the
      full year ended December 31, 2004.

      The accompanying unaudited financial statements should be read in
      conjunction with the financial statements and related notes presented in
      the Company's Annual Report on Form 10-K for the year ended December 31,
      2003.

NOTE B: GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLANS

      The accompanying unaudited financial statements have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America, which contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business as a going
      concern. The Company has been in the development stage since its inception
      on April 11, 2001.

      The Company has a limited operating history and its future prospects are
      subject to the risks, expenses and uncertainties frequently encountered by
      companies in the new and rapidly evolving markets for Internet based
      products and services. These risks include the failure to develop and
      protect the Company's online brands, the failure of vendors and
      third-party providers to supply hardware and software products and
      services, systems and online security failure, the rejection of the
      Company's services by Internet consumers, vendors and advertisers, the
      inability of the Company to maintain and increase their customer base in
      levels sufficient to generate profitable operations, as well as other
      risks and uncertainties. The success of the Company also depends on the
      continued growth of the Internet as a viable commercial marketplace.

      The Company filed a Registration Statement on Form S-1 with the Securities
      and Exchange Commission ("SEC"), which was declared effective on August
      20, 2004 and will terminate on November 17, 2004. The purpose of this
      filing is to give the Company the ability to go to the public markets for
      additional equity capital. There are no assurances that shares of common
      stock will be sold in connection with the Registration Statement. In the
      event the Company is not able to raise additional equity capital or obtain
      additional amounts of debt financing, there is uncertainty as to the
      Company's ability to continue as a going concern.

      Management is currently devoting substantial efforts to sell its common
      shares in connection with its initial public offering. Should the public
      offering be consummated, management believes the Company will be better
      able to execute its business plan and begin their revenue producing
      activities related to electronic bill presentation and related services.

                                     - 7 -
<PAGE>

      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
      RESULTS OF OPERATIONS

      The following discussion and analysis should be read in conjunction with
      the financial statements and the notes to those statements that appear
      elsewhere in this report, and it contains forward-looking statements that
      reflect our plans, estimates, beliefs, expectations, and intentions. You
      can identify these statements by words such as "expect," "anticipate,"
      "intend," "plan," "objective," "believe," "seek," "hope," "look," "is
      designed to," "estimate," "may," "will" and "continue" or similar words.
      Our actual results could differ materially from those discussed in the
      forward-looking statements. See "Risks and Uncertainties" for information
      regarding factors known to us that could cause reported financial
      information not to be necessarily indicative of future results and that
      could cause our future results to differ from our expectations.

      OVERVIEW

      Our objective is to be a leading provider of consolidated electronic bill
      presentment and payment services, or e-bill consolidation services, for
      consumers. E-bill consolidation is the practice of using a single online
      location to manage the bill paying process: the typical e-bill
      consolidator provides electronic bill presentment, bill payment, and
      record-keeping services. We have developed a new model that looks to build
      upon the prevailing model by adding discounts, rebates and payment
      programs that add convenience and value to the online bill paying
      experience.

      Our model expands our role in the online billing process by positioning us
      as an intermediary that will manage the relationship between consumers and
      providers of household products and services, such as utilities,
      telecommunications services, insurance, financial services, and others. As
      the intermediary, we intend to use the combined buying power of our
      customer base to negotiate volume discounts, rebate and reward
      arrangements, reduced interest rates and premiums, and other money-saving
      advantages for our customers. In addition, our model incorporates
      processes that are designed to help us overcome the barriers that have,
      until now, prevented widespread adoption of e-bill consolidation services
      by the mass market.

      We earn revenues by providing Internet dial-up access to approximately
      7,000 customers in the Chicago, Illinois area. The remainder of our 9,000
      members are in our disadvantaged student program and pay no fee for our
      service. Our business plan calls for the use of our e-bill consolidation
      service to create four additional primary revenue streams:

            -     we intend to purchase and resell products and services to our
                  customers at a markup;

            -     we hope to earn commissions and referral fees from businesses
                  we introduce to our customers;

            -     we intend to retain a portion of any administrative discounts
                  that we can negotiate for our customers; and

                                     - 8 -
<PAGE>

            -     we intend to retain a portion of any vendor rebates our
                  customers earn by using a co-branded credit card that we plan
                  to offer.

      To date, we have focused mainly on building our distribution network, an
      essential first step in generating all of our revenue streams. Following
      our initial public offering, we intend to focus on establishing the
      significant strategic relationships that we believe are essential to
      developing the revenue streams described above. We have begun to enter
      into discussions with a limited number of potential billers, but we do not
      expect to formalize any strategic relationships until after our initial
      public offering is complete. Specifically, we are seeking and will
      continue to seek to enter into agreements with billers that will allow us
      to offer money-saving benefits to our customers. The agreements we hope to
      negotiate with billers will fall into one of four categories: reseller
      agreements, affiliate agreements, administrative discount agreements and
      rebate agreements. We expect these agreements to provide us with revenue
      from price mark-ups, commissions, referral fees, rebates and credits. We
      intend to negotiate bulk pre-payment terms with many of these billers to
      simplify the bill-presentment process and to induce billers to provide our
      customers with greater discounts. As a result, we will, in effect, be
      assuming the credit risk for these bills, which could adversely affect our
      profitability. We intend to finance these bulk pre-payments with a
      revolving line of credit secured by accounts receivable from a commercial
      lending institution. It is likely that we will incur substantial debt
      under such a credit facility, which would result in a substantial interest
      expense for us in the future. In addition, we must enter into a
      relationship with a financial institution that will extend credit to our
      customers so they can take advantage of our full array of bill-paying
      options. We intend to structure such a financial institution relationship
      so that we receive a portion of any loan revenues generated by such
      lending. We believe completing our initial public offering is an important
      factor in winning these strategic contracts, and we intend to pursue these
      relationships when our initial public offering is complete.

      Beginning in March 2004 and ending on July 12, 2004, we conducted an
      initial public offering of securities pursuant to a Registration Statement
      on Form S-1 that was declared effective by the Securities and Exchange
      Commission on February 13, 2004. As we did not sell the required minimum
      number of shares of our common stock before the expiration of the offering
      period, that offering terminated without any shares having been sold. We
      filed a new Registration Statement on Form S-1 with the Commission, which
      the Commission declared effective on August 20, 2004, for the purpose of
      terminating the prior offering and of commencing a new offering of our
      common stock. The new offering will terminate on November 17, 2004. In the
      event that our initial public offering is not consummated, the Company may
      be unable to implement its business plan and may be unable to continue as
      a going concern.

      Our main cost of revenue consists of fees paid for telecommunications
      services, network and collocation costs, all related to operating our
      network and connecting end users to the Internet.

      Sales and marketing expenses consist primarily of costs of building a
      distribution channel of City Managers. We have built an extensive network
      of independently contracted associates to distribute our service to
      communities in the metropolitan area surrounding Chicago, Illinois.

                                     - 9 -
<PAGE>

      General and administrative expenses consist primarily of salary, benefits,
      and related expenses for management, technical, customer support and
      accounting personnel; expenses relating to facilities; professional fees;
      and other general corporate expenses. We expect that, in support of the
      continued growth of our business and our operations as a public company,
      sales, general and administrative expenses will continue to increase for
      the foreseeable future.

      Since our inception in April 2001, we have incurred significant losses
      and, as of September 30, 2004, we had an accumulated deficit of
      $7,268,913. These losses have resulted from the significant costs incurred
      for marketing and building our distribution channel and expenses for the
      development and maintenance of our technology platform. We intend to
      continue to invest heavily in marketing, product development, and
      technology. As a result, we believe that we will continue to incur
      substantial operating losses for the foreseeable future.

      CRITICAL ACCOUNTING POLICIES

      The accompanying financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of
      America, which require that management make numerous estimates and
      assumptions. Actual results could differ from those estimates and
      assumptions, affecting our reported results of operations and financial
      position. Our significant accounting policies are more fully described in
      Note A to our audited financial statements included in our Annual Report
      on Form 10-K for the year ended December 31, 2003. The critical accounting
      policies described here are those that are most important to the depiction
      of our financial condition and results of operations. Their application
      requires our management's subjective judgment in making estimates about
      the effect of matters that are inherently uncertain.

      We have incurred costs in connection with raising additional capital
      through the sale of our common stock. These costs have been capitalized
      and will be charged against additional paid-in capital should common stock
      be issued. If there is no issuance of common stock, the costs incurred
      will be charged to operations.

      Revenue Recognition. Revenues consist of subscriber Internet access
      service fees and are recorded when earned (i.e., at the time services are
      provided). Deferred revenue consists of amounts collected for annual
      Internet access service subscriptions at the beginning of the subscription
      year. Of this deferred revenue, a proportionate amount is recognized at
      the end of each month in which service has been provided.

      Deferred Income Taxes. Deferred income tax assets and liabilities arise
      from temporary differences associated with differences between the
      financial statement and tax basis of assets and liabilities, as measured
      by the enacted tax rates that are expected to be in effect when these
      differences reverse. Deferred tax assets and liabilities are classified as
      current or noncurrent, depending on the classification of the assets or
      liabilities to which they relate. Deferred tax assets and liabilities not
      related to an asset or liability are classified as current or noncurrent
      depending on the periods in which the temporary differences are expected
      to reverse. The principal types of temporary differences between assets
      and liabilities for financial statement and tax return purposes are set
      forth in Note H to the financial statements included in our Annual Report.

                                     - 10 -
<PAGE>

      RESULTS OF OPERATIONS

      The following table summarizes our operating results in dollars and as a
      percentage of total revenue for each of the periods shown.

<TABLE>
<CAPTION>
                                                   Three Months Ended                         Nine Months Ended
                                     -----------------------------------------  --------------------------------------------
                                      September 30, 2004    September 30, 2003    September 30, 2004    September 30, 2003
                                     --------------------  -------------------  ---------------------  ---------------------
                                                 % of Net             % of Net               % of Net               % of Net
                                       Amount    Revenue     Amount   Revenue      Amount    Revenue      Amount    Revenue
                                     ----------  --------  ---------- --------  ------------ --------  ------------ --------
<S>                                  <C>         <C>       <C>        <C>       <C>          <C>       <C>          <C>
Revenue                              $  106,802    100.0%  $  120,800   100.0%  $    328,699   100.0%  $    367,973   100.0%
Cost of Revenue                      $  109,806    102.8%  $  105,871    87.6%  $    337,727   102.7%  $    340,017    92.4%
                                     ----------   ------   ----------  ------   ------------  ------   ------------  ------
Gross Profit                         $   (3,004)    (2.8%) $   14,929    12.4%  $     (9,028)   (2.7%) $     27,956     7.6%

Operating Expenses
     Sales & Marketing               $  177,759    166.4%  $  161,713   133.9%  $    625,972   190.4%  $    708,035   192.4%
     Product Development             $   54,510     51.0%  $   45,124    37.4%  $    235,119    71.5%  $    238,722    64.9%
     General & Administrative        $  204,145    191.1%  $  148,629   122.9%  $    590,324   179.6%  $    625,026   169.8%
     Depreciation & Amortization     $    7,360      6.9%  $   24,730    20.5%  $     52,899    16.1%  $     74,191    20.2%
                                     ----------   ------   ----------  ------   ------------  ------   ------------  ------
General & Administrative Total       $  443,774    415.5%  $  380,196   314.6%  $  1,504,314   457.7%  $  1,645,974   447.3%
                                     ----------   ------   ----------  ------   ------------  ------   ------------  ------
Operating Income (Loss)              $ (446,778)  (418.3%) $ (365,267) (302.4%) $ (1,513,342) (460.4%) $ (1,618,018) (439.7%)

Other Income (Expense)
     Interest Income                 $       --      0.0%  $      213     0.2%  $         --     0.0%  $        957     0.3%
     Interest Expense                $  (68,760)   (64.4%) $  (36,142)  (29.9%) $   (182,041)  (55.4%) $    (88,151)  (24.0%)
     Gain (Loss) on Sale of
     Investment                      $       --      0.0%  $       --     0.0%  $         --     0.0%  $         --     0.0%
                                     ----------   ------   ----------  ------   ------------  ------   ------------  ------
Total Other Income                   $  (68,760)   (64.4%) $  (35,929)  (29.7%) $   (182,041)  (55.4%) $    (87,194)  (23.7%)

Loss before provision for income tax $ (515,538)  (482.7%) $ (401,196) (332.1%) $ (1,695,383) (515.8%) $ (1,705,212) (463.4%)

Provision for income tax             $       --       --   $       --      --   $         --      --   $         --      --

Net Income (Loss)                    $ (515,538)  (482.7%) $ (401,196) (332.1%) $ (1,695,383) (515.8%) $ (1,705,212) (463.4%)
                                     ==========   ======   ==========  ======   ============  ======   ============  ======
</TABLE>

      Revenue

      During the three months ended September 30, 2004, net revenues decreased
      11.6% relative to the three months ended September 30, 2003, from $120,800
      to $106,802. During the nine months ended September 30, 2004, net revenues
      decreased 10.7% relative to the nine months ended September 30, 2003, from
      $367,973 to $328,699. The decreases in revenue were due to a reduction in
      the number of subscribers resulting from non-renewals of subscriptions
      following the change in our network service provider in the fourth quarter
      of 2003 and from normal attrition. Dial-up Internet access service revenue
      accounted for all of the revenue for these periods.

                                     - 11 -
<PAGE>

      Cost of Revenue

      Cost of revenue increased 3.7% from $105,871, or 87.6% of net revenues,
      for the quarter ended September 30, 2003, to $109,806 or 102.8% of net
      revenues, for the quarter ended September 30, 2004. Cost of revenue
      decreased from $340,017, or 92.4% of net revenues, for the nine months
      ended September 30, 2003, to $337,727 or 102.7% of net revenues, for the
      nine months ended September 30, 2004. The decrease in costs for the nine
      months ended September 30, 2004 can be attributed to deferred collocation
      costs that resulted in excess one-time charges during the first quarter of
      2003 and to a credit for collocation services that we received in the
      first quarter of 2004. The decrease was largely offset by increases in
      collocation and networking charges pursuant to new collocation and
      networking agreements which took effect in September 2003 and December
      2003, respectively. The increase in direct costs for the quarter ended
      September 30, 2004 relative to the same quarter in the prior year can be
      attributed to the same increases in networking and collocation charges
      discussed above. The overall increase as a percentage of net revenue is
      attributable to the decrease in revenue for the both the three-month and
      nine-month periods ending September 30, 2004 relative to the same periods
      in the prior year.

      Operating Expenses

      Sales and Marketing. Sales and marketing costs relate to expenses to
      develop our markets and channels of distribution to those markets,
      primarily the cost of building up our pool of independent sales agents,
      whom we call City Managers. These costs include the salaries for the Area
      Directors responsible for recruiting, training, and managing City Managers
      and compensation paid to City Managers. Sales and marketing expenses
      increased 9.9% from $161,713, or 133.9% of net revenue, for the three
      months ended September 30, 2003, to $177,759, or 166.4% of net revenue,
      for the three months ended September 30, 2004. The increase in sales and
      marketing expenses for the quarter ended September 30, 2004 relative to
      the same period in 2003 was due primarily to increases in the costs of
      healthcare benefits for sales and marketing personnel and increased
      printing, fulfillment, and postal expenses for sales materials. The
      increase as a percentage of net revenue was attributable to this increase
      in costs and to the decrease in net revenues for the same period.

      Sales and marketing expenses decreased 11.6% from $708,035, or 192.4% of
      net revenue, for the nine months ended September 30, 2003, to $625,972, or
      190.4% of net revenue, for the nine months ended September 30, 2004. The
      decrease for this period is primarily attributable to the one-time
      issuance of 19,000 shares of stock, 250 shares of which were awarded to
      each of 76 City Managers in exchange for services in June 2003. We made
      these awards of stock in reliance on the exemption from registration under
      the federal securities laws contained in Rule 701 under the Securities Act
      of 1933. The value of these shares was calculated using the public
      offering price of $10.00 per share. Net of the effect of these stock
      awards, sales and marketing expenses increased 20.8% for the nine months
      ended September 30, 2004, offsetting the decrease attributable to the
      one-time stock issuance. The increases in sales and marketing costs were
      primarily attributable to an increase in sales and marketing personnel,
      including an increase in the number of Area Directors, for most of the
      nine-month period ended September 30, 2004 as compared to the same period
      in the prior year, to increases in health insurance premiums for

                                     - 12 -
<PAGE>

      sales and marketing personnel and to increases in sales-related printing,
      fulfillment, and delivery expenses. The overall decrease as a percentage
      of net revenues is attributable to the net decrease in costs, and is
      offset by the decrease in net revenues for the period.

      Product Development. Product development costs consist of internal costs
      and external fees to develop our technical platform and back-end systems,
      including salaries for our software development staff. Product development
      costs increased 20.8% to $54,510, or 51.0% of net revenues, for the
      quarter ended September 30, 2004, from $45,124, or 37.4% of net revenues,
      for the quarter ended September 30, 2003. The increase in product
      development costs for the quarter was attributable to an increase in
      software design and development activities and to increases in the cost of
      healthcare benefits for our product development staff. Product development
      costs decreased 1.5% to $235,119, or 71.5% of net revenues for the nine
      months ended September 30, 2004, from $238,722, or 64.9% of net revenues,
      for the nine months ended September 30, 2003. The decrease in product
      development costs was attributable to a decrease in product development
      activities during the first two quarters of 2004, which was largely offset
      by the increase in product development activities in the third quarter of
      2004 and increases in healthcare benefit costs for the entire nine-month
      period. Overall, the increases in product development costs as a
      percentage of net revenues for both the three-month and nine-month periods
      ended September 30, 2004 relative to the same periods in the prior year
      are attributable to the decrease in net revenues for both periods.

      General and Administrative. The main components of general and
      administrative expenses were wages and employee benefits, taxes and
      insurance expenses, professional and consulting fees, and rent. General
      and administrative expenses increased from $148,629, or 122.9% of net
      revenues, for the three months ended September 30, 2003, to $204,145, or
      191.1% of net revenues, for the three months ended September 30, 2004. The
      increase in general and administrative expenses for this period is
      primarily attributable to increases in professional fees, an increase in
      healthcare insurance costs, and an increase in the rent for our corporate
      offices due to a new lease agreement which went into effect in May 2003.
      These increases were partially offset by the effect of a tax penalty that
      was incurred during the quarter ended September 30, 2003. The increase as
      a percentage of net revenues is attributable to this increase in costs and
      to the decrease in net revenues for the same period.

      General and administrative expenses decreased from $625,026, or 169.8% of
      net revenues, for the nine months ended September 30, 2003, to $590,324,
      or 179.6% of net revenues, for the nine months ended September 30, 2004.
      The decrease in general and administrative costs for the nine-month period
      ended September 30, 2004 relative to the same period in 2003 was primarily
      due to a reduction in administrative personnel during the nine months
      ended September 30, 2004 relative to the same period in the prior year and
      to the effect of a tax penalty incurred during the nine months ended
      September 30, 2003; the decreases were partially offset by increases in
      rent, insurance costs, printing costs, professional fees, and other
      administrative expenses. As a percentage of net revenues, the decrease in
      general and administrative expenses is a result of the overall decrease in
      costs, which is partially offset by a decrease in net revenues.


                                     - 13 -
<PAGE>

      Interest Income and Expense

      Interest Income. Interest income was $0 for the nine months ended
      September 30, 2004, $213 for the quarter ended September 30, 2003, and
      $957 for the nine months ended September 30, 2003. Interest income for the
      nine months ended September 30, 2003 consisted of interest on one
      promissory note held by the Company. That promissory note was not in
      effect during the nine months ended September 30, 2004.

      Interest Expense. Interest expense was $68,760 in the quarter ended
      September 30, 2004 and $36,142 in the quarter ended September 30, 2003.
      Interest expense was $182,041 in the nine months ended September 30, 2004
      and $88,151 in the nine months ended September 30, 2003. The increases in
      interest expense were primarily due to increases in accrued interest
      resulting from increases in principal owed by us under our operating line
      of credit, as well as accrual of interest on two promissory notes made by
      us in July and November 2002, respectively.

      LIQUIDITY AND CAPITAL RESOURCES

      During the first nine months of 2004, our cash increased by $44,693, from
      $9,645 at December 31, 2003 to $54,338 at September 30, 2004.

      Net cash used in operating activities was $813,126 during the nine months
      ended September 30, 2004 and $778,218 during the nine months ended
      September 30, 2003. During the nine months ended September 30, 2004, we
      financed our operations primarily through accrued accounts payable,
      accrued expenses, and accrued interest expense of $246,954, $422,039, and
      $181,004 respectively.

      Net cash used for investing activities was $4,766 for the nine months
      ended September 30, 2004. This consisted primarily of computer equipment
      purchases. Net cash used for investing activities was $305 for the nine
      months ended September 30, 2003.

      Net cash provided by financing activities was $862,585 for the nine months
      ended September 30, 2004 and $778,207 for the nine months ended September
      30, 2003. For the nine months ended September 30, 2004, cash from
      financing activities consisted of $971,999 in cash received pursuant to a
      line of credit from a shareholder, and was offset by deferred offering
      costs of $109,434.

      We have not generated any net cash from operations since our inception. We
      have funded operations primarily through private sales of equity
      securities, borrowings from third parties, deferred salary arrangements
      with our employees, tax payment deferrals and trade payables.

      We are party to a secured credit line agreement with a shareholder, under
      which we owed an outstanding principal balance of approximately $2,237,000
      as of September 30, 2004. As of the same date, we had approximately
      $763,000 in credit available under this agreement. On March 1, 2004, the
      agreement was modified to increase the credit line from $1,500,000 to
      $3,000,000 and on May 1, 2004, the maturity date was extended to January
      1, 2005. The terms of the credit line agreement allow the company to draw
      funds against the line of credit for any legitimate business purpose with
      three days' notice, provided that the creditor, in his sole discretion,
      approves the request. We intend to continue financing our operations with
      proceeds from this credit line until

                                     - 14 -
<PAGE>

      we receive the proceeds of our initial public offering. All amounts
      outstanding under the line of credit loan agreement, including principal
      and accrued interest, become due and payable on January 1, 2005 or upon
      the occurrence of an acceleration event, as defined in the loan documents,
      including a successful public offering of the company's stock.

      We filed a Registration Statement on Form S-1 (File No.333-107769) with
      the Securities and Exchange Commission, which was declared effective by
      the Commission on February 13, 2004. Shortly thereafter, we commenced an
      initial public offering, on a best efforts basis, of 2,000,000 shares of
      common stock at a price of $10 per share. The offering period lasted for
      150 days from effectiveness, or until July 11, 2004. As we did not sell
      the required minimum number of shares of our common stock (1,200,000
      shares) by the expiration of the offering period, the offering terminated
      and we refunded all proceeds we had received for the offering, without
      interest. We filed a new Registration Statement (File No. 333-118000) with
      the Commission, which the Commission declared effective on August 20,
      2004, for the purpose of terminating our previous effective registration
      statement and recommencing our offering for 90 days. The offering will
      terminate on November 17, 2004. To receive the proceeds of the offering,
      we must sell a minimum of 1,500,000 shares for an aggregate price of
      $15,000,000. Receipt of the proceeds of the offering, should it occur,
      will contribute significantly to our liquidity.

      Income Taxes

      We have historically reported net losses and, in accordance with
      accounting principles generally accepted in the United States, have not
      recorded any income tax benefits from these losses. We reported a net loss
      for the first nine months of 2004 and have recorded income taxes at an
      effective tax rate of 0%. To the extent that we report taxable income in
      future periods, we intend to use net operating loss carryforwards to the
      extent available to offset the taxable income and reduce cash outflows for
      income taxes.

      RISKS AND UNCERTAINTIES

      Risks and uncertainties that could impact our business, results of
      operations and cash flows and cause future results to differ from our
      expectations include the following: (1) that we have not completed our
      initial public offering and there are no assurances that we will be able
      to do so; (2) that we have historically not been profitable and we may not
      be able to attain or sustain profitability; (3) that our business strategy
      is new and unproven; (4) that our marketing strategy is non-traditional
      and may not be effective in acquiring customers; (5) that our efforts to
      develop the LightFirst brand may be unsuccessful; (6) that we have not yet
      entered into the agreements with providers of households products and
      services that are critical for us to fully implement our business plan and
      that there are no assurances that we will be able to do so; (7) that we
      have not yet entered into an agreement with a bank or similar financial
      institution, which is critical for us to provide some of the features that
      we propose to provide, and that there are no assurances that we will be
      able to do so on favorable terms or at all; (8) that we have not yet
      negotiated with a commercial lending institution for a line of credit
      secured by accounts receivable that we intend to use to finance the bulk
      pre-payments that we intend to make to billers, and there is no assurance
      that we will be able to do so on favorable terms or at all; (9) that we
      operate in an industry that is highly competitive, and our competitors
      have greater resources and brand

                                     - 15 -
<PAGE>

      recognition than we do; (10) that we rely on third-party providers for key
      services that are critical to our operations and that any change in our
      ability to obtain these services on reasonable terms could harm our
      business; (11) that service interruptions, breakdowns, or breaches in
      security could cause us to lose customers and/or expose us to liability;
      (12) that we may experience losses due to defaults on payments by our
      customers or due to fraud; (13) that we might become subject to laws and
      regulations, compliance with which could increase the cost of doing
      business; (14) that changes in general economic conditions may have a
      negative effect on our business; (15) that we may not be able to protect
      our proprietary technologies or successfully defend infringement claims
      and may be required to enter licensing arrangements on unfavorable terms;
      and (16) that some other unforeseen event or circumstance could impair our
      operations. The intention of this list is to present some of the known
      risks that could cause future operating results to differ materially from
      our expectations and from the forward-looking statements contained in this
      report. This list is not a complete list of factors that could affect our
      business and results of operations, and it should be read in conjunction
      with the more detailed descriptions of risk factors contained in our
      Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and
      our effective Registration Statement on Form S-1 (File No. 333-118000)
      filed with the Securities and Exchange Commission.

      ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      We currently have no floating rate indebtedness, hold no derivative
      instruments, and do not earn foreign-sourced income. Accordingly, changes
      in interest rates or currency exchange rates do not have a direct effect
      on our financial position. To date the effects of inflation on us have
      been immaterial.

      ITEM 4. CONTROLS AND PROCEDURES

      We maintain "disclosure controls and procedures," as such term is defined
      under Exchange Act Rule 13a-14(c), that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is
      recorded, processed, summarized, and reported within the time periods
      specified in the SEC's rules and forms, and that such information is
      accumulated and communicated to our management, including our Chief
      Executive Officer and Chief Financial Officer, as appropriate, to allow
      timely decisions regarding required disclosures. We have carried out an
      evaluation, as of the end of the period covered by this report, under the
      supervision and with the participation of our management, including our
      Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of the design and operation of our disclosure controls and procedures.
      Based upon his evaluation and subject to the foregoing, our Chief
      Executive Officer and Chief Financial Officer concluded that the Company's
      disclosure controls and procedures are effective in timely making known to
      him information relating to the Company required to be disclosed in the
      Company's reports filed or submitted under the Exchange Act.

      There was no change in the Company's internal control over financial
      reporting that occurred during the third quarter of 2004, that has
      materially affected, or is reasonably likely to materially affect, the
      Company's internal control over financial reporting.

                                     - 16 -
<PAGE>

      As described in the Company's registration statement on Form S-1, declared
      effective by the Commission on August 20, 2004, and elsewhere in this
      report, the Company currently has one director, Mr. Martin P. Gilmore. The
      Company has nominated three independent persons for membership on the
      board of directors, each of whom has agreed to serve on the board of
      directors upon the completion of the Company's initial public offering. As
      such, the Company's sole director, who is also the Company's Chief
      Executive Officer and Chief Financial Officer, currently oversees
      disclosure controls and procedures and the Company's internal control over
      financial reporting. Upon the completion of our public offering, such
      oversight will become the responsibility of the audit committee.

      PART II - OTHER INFORMATION

      ITEM 1. LEGAL PROCEEDINGS

      We have an outstanding tax liability, including assessed penalties, of
      approximately $1,108,000 as of September 30, 2004 for unpaid FICA,
      Medicare, state and federal employment taxes. This tax liability arose
      because certain of our employees were initially characterized as being
      self-employed when they should have been characterized as our employees.
      We incurred the tax liability between May 2001 and June 2003, and it
      includes approximately $391,000 of penalties and interest. The balance of
      approximately $717,000 represents the amount under current tax law that
      should have been withheld from employees' checks as well as our matching
      contributions to FICA, Medicare and Social Security taxes. On July 22,
      2003, the State of Illinois filed a tax lien against us for approximately
      $62,000, which represents Illinois' portion of the tax liability. To date,
      the Internal Revenue Service has not filed a lien against us, but it could
      do so in the future. We intend to use a portion of the proceeds from our
      public offering to satisfy our tax liability.

      We are not a party to any other material legal proceedings.

      ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      (a) Not applicable.

      (b) The Company filed a Registration Statement on Form S-1 (File No.
      333-107769) with the Commission, which was declared effective by the
      Commission on February 13, 2004. Shortly thereafter, the Company commenced
      an initial public offering, on a best efforts basis, of 2,000,000 shares
      of the Company's common stock at a price of $10 per share. The offering
      period for this offering lasted for 150 days from effectiveness, or until
      July 11, 2004. As the Company did not sell the required minimum number of
      shares of its common stock (1,200,000 shares) by the expiration of the
      offering period, the offering terminated and the Company refunded all
      proceeds it had received for the offering, without interest. The Company
      filed a new Registration Statement on Form S-1 (File No. 333-118000),
      which the Commission declared effective on August 20, 2004, to serve the
      purpose of commencing a new offering of the Company's stock.

      During the period from February 13, 2004 to September 30, 2004, the
      Company incurred approximately $100,000 in expenses related to its public
      offering. These expenses consisted of

                                     - 17 -
<PAGE>

      legal fees due to the Company's law firm, and printing, filing, and
      production costs. No payments for offering-related expenses have been paid
      directly or indirectly to any underwriter or broker, to directors or
      officers the Company or their associates, to persons owning ten (10)
      percent or more of any class of equity securities of the Company, or to
      affiliates of the Company.

      (c) Not applicable.

      ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

      (a) None

      (b) None

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

      There were no matters submitted to a vote of security holders during the
      nine months ended September 30, 2004.

      ITEM 5. OTHER INFORMATION.

      (a) None

      (b) Not applicable.

      ITEM 6. EXHIBITS

      31.1 Certification of Chief Executive Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002

      31.2 Certification of Chief Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002

      32.1 Certification of Chief Executive Officer and Chief Financial Officer
      pursuant to Section 902 of the Sarbanes-Oxley Act of 2002

                                     - 18 -
<PAGE>

                                   SIGNATURES

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

                                      LIGHTFIRST INC.
                                      (Registrant)

                                      By:  /s/ Martin P. Gilmore
                                          --------------------------------------
                                           Martin P. Gilmore
                                           President and Chief Executive Officer
                                           November 15, 2004

Pursuant to the requirements of the Securities Act of 1933, this report has been
signed by the following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
     Signature                        Title                         Date
<S>                    <C>                                     <C>
/s/ Martin P. Gilmore  President, Chief Executive Officer and  November 15, 2004
---------------------    Chairman of the Board of Directors
  Martin P. Gilmore        (Principal Executive Officer)

/s/ Martin P. Gilmore         Chief Financial Officer          November 15, 2004
---------------------     (Principal Financial Officer and
  Martin P. Gilmore        Principal Accounting Officer)
</TABLE>

                                     - 19 -