U.S.SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 FORM 10-QSB
  (Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
      For the quarterly period ended March 31, 2005

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

      For the transition period from _____ to _____

                        Commission file number 0-25417

                              TORBAY HOLDINGS, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)

                DELAWARE                                  52-2143186
     -------------------------------                  ------------------
     (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                   Identification No.)

            140 OLD COUNTRY ROAD, SUITE 205, MINEOLA, NEW YORK 11501
                    (Address of principal executive offices)

                                  516-747-5955
                           (Issuer's Telephone Number)

                                 NOT APPLICABLE
              ----------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 [X] No [_]

The Company had 88,948,487 shares of common stock outstanding as of March 31,
2005.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
Yes [_] No [X]


<PAGE>


                                    INDEX

                                                                        Page No.
                                                                        --------

PART 1 - FINANCIAL INFORMATION

Condensed consolidated balance sheet as of March 31, 2005 (unaudited)........  3

Condensed consolidated statements of operations and other comprehensive income
(loss) for the three months ended March 31, 2005 and 2004 (unaudited)........  4

Condensed consolidated statements of cash flows for the three months ended
March 31, 2005 and 2004 (unaudited)..........................................  5

Notes to condensed consolidated financial statements as of March 31, 2005
and 2004 (unaudited).........................................................  6

Item 2.  Management's Discussion and Analysis or Plan of Operation........... 10

Item 3.  Controls and Procedures............................................. 21

PART 2 - OTHER INFORMATION

Item 1.  Legal Proceedings................................................... 24

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds......... 24

Item 3.  Defaults Upon Senior Securities..................................... 24

Item 4.  Submission of Matters to a Vote of Security Holders................. 24

Item 5.  Other Information................................................... 24

Item 6.  Exhibits............................................................ 24

Signatures................................................................... 25


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2005
                                   (UNAUDITED)

                                     ASSETS
CURRENT ASSETS
 Cash                                                               $    21,788
 Accounts receivable                                                     37,469
 Inventory                                                               13,734
                                                                    -----------
   Total Current Assets                                                  72,991
                                                                    -----------

PROPERTY AND EQUIPMENT - NET                                             21,052
                                                                    -----------

OTHER ASSETS
 Intangible assets - net                                                 96,479
 Deposits                                                                 6,795
 Deferred loan costs                                                      4,118
 Deferred charges                                                        10,450
                                                                    -----------
   Total Other Assets                                                   117,842
                                                                    -----------

TOTAL ASSETS                                                        $   211,885
                                                                    ===========
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
 Accounts payable and accrued expenses                              $   314,131
 Settlement payable                                                      15,833
 Advances payable - stockholders                                         66,586
 Loan payable                                                            16,900
 Notes payable                                                          107,800
                                                                    -----------
   Total Current Liabilities                                            521,250
Advance received for common stock purchase                              100,000
                                                                    -----------
Total Liabilities                                                       621,250
                                                                    -----------

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
 Preferred stock, $.0001 par value, 20,000,000 shares
  authorized, 420,000 issued and outstanding                                 42
 Common stock, $.0001 par value, 100,000,000 shares
  authorized, 91,038,487 shares issued and 88,948,487 shares
  outstanding                                                             8,895
 Common stock to be issued (1,888,889 shares)                               189
 Additional paid-in capital                                           4,784,190
 Accumulated deficit                                                 (5,144,777)
 Accumulated other comprehensive loss                                   (26,392)
 Deferred equity based expense                                          (31,512)
                                                                    -----------
TOTAL STOCKHOLDERS' DEFICIENCY                                         (409,365)
                                                                    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                      $   211,885

     See accompanying notes to condensed consolidated financial statements.


                                        3
<PAGE>


                      TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      AND OTHER COMPREHENSIVE INCOME (LOSS)
                FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (UNAUDITED)

                                                  For the Three   For the Three
                                                   Months Ended    Months Ended
                                                    March 31,        March 31,
                                                      2005            2004
                                                                  (As Restated)
                                                  -------------   -------------

SALES, NET                                         $     95,580    $     77,010

COST OF SALES                                            25,047          22,043
                                                   ------------    ------------

GROSS PROFIT                                             70,533          54,967
                                                   ------------    ------------

OPERATING EXPENSES
 Selling                                                 45,178          24,904
 Consulting fees                                           --             6,300
 Professional fees                                       32,662          12,185
 Compensation                                            32,669          18,752
 Other general and
   administrative                                        60,984          45,990
                                                   ------------    ------------
    Total operating expenses                            171,493         108,131
                                                   ------------    ------------

LOSS FROM OPERATIONS                                   (100,960)        (53,164)
                                                   ------------    ------------

OTHER INCOME (EXPENSE)
 Interest and financing costs                            (5,922)       (132,814)
 Gain on extinguishment of
   debt, net                                               --           247,826
 Cancellation of stock issued
   for consulting fees                                     --            15,000
                                                   ------------    ------------
    Total other income (expense)                         (5,922)        130,012
                                                   ------------    ------------

NET (LOSS) INCOME                                      (106,882)         76,848

OTHER COMPREHENSIVE
  INCOME/(LOSS)
 Foreign currency translation (loss) income               3,298          (3,310)
                                                   ------------    ------------

COMPREHENSIVE (LOSS) INCOME                        $   (103,584)   $     73,538
                                                   ============    ============

NET LOSS PER COMMON SHARE -
BASIC AND DILUTED                                  $       --      $      (0.00)
                                                   ============    ============

WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING -
 BASIC AND DILUTED                                   90,837,376      81,450,946
                                                   ============    ============


      See accompanying notes to condensed consolidated financial statements.


                                        4
<PAGE>


                      TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (UNAUDITED)

                                                           2005         2004
                                                                         (As
                                                                      Restated)
                                                        ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES:

 Net loss                                               $(106,882)   $  76,848
 Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization                            12,994        7,676
  Amortization of loan costs                                2,745         --
  Gain on extinguishment of debt, net                        --       (247,826)
  Common stock and warrants issued for services              --            300
  Deferred equity based costs recognized                   23,633      144,914
  Financing costs - shares sold below market value           --          4,013
  Cancellation of shares issued for services                 --        (15,000)
 Changes in operating assets and liabilities:
  (Increase) decrease in accounts receivable               (1,258)     (13,988)
  Decrease in inventory                                    11,365       14,757
  (Increase) decrease in prepaid expenses                    --         (1,094)
  Increase in accounts payable and accrued expenses       (10,899)      (9,803)
                                                        ---------    ---------
    Net cash used in operating activities                 (68,302)     (39,203)
                                                        ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangibles                                  (11,000)      (9,750)
 Purchase of property and equipment                        (1,305)        --
                                                        ---------    ---------
    Net cash used in investing activities                 (12,305)      (9,750)
                                                        ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                      --         57,000
 Advance received on common stock purchase                 89,550         --
 Principal payments on settlement payable                 (47,495)        --
 Proceeds from issuance of notes and loans payable         16,900         --
 Advances received from stockholder                        20,629         --
                                                        ---------    ---------
    Net cash provided by financing activities              79,584       57,000
                                                        ---------    ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                     3,300       (3,310)
                                                        ---------    ---------

INCREASE IN CASH                                            2,277        4,737

CASH - BEGINNING OF PERIOD                                 19,511       12,387
                                                        ---------    ---------

CASH - END OF PERIOD                                    $  21,788    $  17,124
                                                        =========    =========

Interest paid                                           $   2,505    $    --
                                                        =========    =========


      See accompanying notes to condensed consolidated financial statements.


                                        5
<PAGE>


                      TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF MARCH 31, 2005
                                   (UNAUDITED)


NOTE 1     BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
------     ---------------------------------------------------------

   (A) BASIS OF PRESENTATION
   -------------------------
   The accompanying  condensed  consolidated  financial  statements  include the
   accounts of Torbay Holdings, Inc. and its wholly owned subsidiaries, Designer
   Appliances  Limited  and  Designer  Appliances,   Inc.   (collectively,   the
   "Company").  These  condensed  consolidated  financial  statements  have been
   prepared in accordance with accounting  principles  generally accepted in the
   United  States  of  America  for  interim   financial   information  and  the
   instructions  to Form  10-QSB  and do not  include  all the  information  and
   footnotes required by accounting  principles generally accepted in the United
   States of  America  for  complete  financial  statements.  In the  opinion of
   management,   all  adjustments  (consisting  of  normal  recurring  accruals)
   considered  necessary for a fair  presentation of the results for the interim
   periods  have been  included.  Operating  results for the three  months ended
   March 31, 2005 are not  necessarily  indicative  of the  results  that may be
   expected for the year ended  December 31, 2005.  The  accompanying  condensed
   consolidated  financial  statements  and the  information  included under the
   heading "Management's  Discussion and Analysis" should be read in conjunction
   with the Company's  audited  consolidated  financial  statements  and related
   notes  included in the Company's  Form 10-KSB for the year ended December 31,
   2004.

   (B) USE OF ESTIMATES
   --------------------
   The preparation of condensed  consolidated financial statements in conformity
   with accounting principles generally accepted in the United States of America
   requires  management  to make  estimates  and  assumptions  that  affect  the
   reported  amounts of assets and  liabilities  and  disclosures  of contingent
   assets and  liabilities at the date of the condensed  consolidated  financial
   statements  and the  reported  amounts of revenues  and  expenses  during the
   reporting period. Actual results could differ from those estimates.

   (C) LOSS PER SHARE
   ------------------
   Basic and diluted loss per common share for all periods presented is computed
   based on the weighted average number of common shares  outstanding during the
   periods  presented  as defined by SFAS No. 128,  "Earnings  Per  Share".  The
   assumed  exercise of common stock  equivalents was not utilized for the three
   months ended March 31, 2005 and 2004 since the effect would be anti-dilutive.
   There were  25,700,000  and 4,200,000  common stock  equivalents at March 31,
   2005 and 2004, respectively.

   (D) STOCK OPTIONS AND WARRANTS
   ------------------------------
   The Company accounts for its stock-based  employee  compensation  plans using
   the intrinsic value based method,  under which  compensation cost is measured
   as the excess of the stock's  market  price at the grant date over the amount
   an employee must pay to acquire the stock.  Stock options and warrants issued
   to non-employees  are accounted for using the fair value based method,  under
   which the expense is  measured as the fair value of the  security at the date
   of grant based on the Black-Scholes  pricing model. The Company had 1,000,000
   options and  20,500,000  warrants  outstanding at March 31, 2005, and none at
   March 31, 2004.


                                       6
<PAGE>


                      TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF MARCH 31, 2005
                                   (UNAUDITED)

   (E) RECLASSIFICATIONS
   ---------------------
   Certain items have been reclassified in prior period statements to conform to
   the current  period  presentation.  For the three months ended March 31, 2004
   $8,783,  representing  shipping,  amortization and warranty costs,  have been
   classified as cost of sales, rather than operating expenses. Also, travel and
   entertainment  expenses of $4,643 have been  reclassified  from other general
   and administrative expenses to selling expenses.

   (F) RESTATEMENT
   ---------------
   The March 31, 2004  financial  statements  have been restated to increase the
   gain on  extinguishment  of debt by $10,019,  resulting  from the imputing of
   interest on the settlement payable described in Note 2 and Note 4. The effect
   of the  restatement is to increase net income by $10,019.  There is no effect
   on earnings per share as a result of this adjustment.

NOTE 2   SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
------   -----------------------------------------------------------------------
   During  February,  2005,  the Company  received an advance on a common  stock
   purchase  agreement.  The gross amount of the advance was $100,000.  Costs of
   $10,450 were deducted,  resulting in net proceeds of $89,550.  The costs have
   been deferred and will be applied against additional paid-in capital when the
   stock purchase is completed.

   During  the  three  months  ended  March  31,  2004,  the  Company  reached a
   settlement  to retire its remaining 12%  convertible  debentures  aggregating
   $507,750 and related accrued interest of $92,057 in exchange for the issuance
   of 6,000,000  shares of common  stock  having a fair value of  $162,000,  and
   $200,000 in cash, payable in monthly installments of $16,667,  with a present
   value of  $189,981,  commencing  May 1, 2004.  Accordingly,  the  Company has
   recorded a gain of $247,826  related to the  extinguishment  (see Note 4).

   In February 2004, the Company granted options to purchase an aggregate of
   5,000,000 shares of common stock to two individuals in exchange for
   services to be rendered through August 1, 2005. The fair value of these
   options is $112,240. This amount has been deferred and is being amortized
   over the life of the services agreement (see Note 5).

NOTE 3     INTANGIBLE ASSETS
------     -----------------
   During the three months ended March 31, 2005 and 2004,  the Company  incurred
   costs of $11,000 and 9,750, respectively, for the development of new software
   applications.

   Amortization  expense for the three  months ended March 31, 2005 and 2004 was
   $10,773 and $5,942, respectively.  The amortization expense has been included
   in cost of sales.

NOTE 4     12% CONVERTIBLE DEBENTURES
------     --------------------------
   On February 17, 2004,  the Company and the debenture  holders  entered into a
   Redemption  and  Settlement   Agreement  and  Mutual  General   Release  (the
   "Settlement").  In accordance  with the  Settlement,  all of the  outstanding


                                       7
<PAGE>


                      TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF MARCH 31, 2005
                                   (UNAUDITED)

   debentures  and related  warrants were  redeemed by the Company.  The Company
   issued 6,000,000  shares of common stock having a fair value of $162,000,  to
   the  debenture  holders,  and  agreed  to pay  $200,000  in cash  in  monthly
   installments  of $16,667  commencing  May 1, 2004. The Company has recorded a
   gain of $247,826 related to the extinguishment.

NOTE 5     STOCKHOLDERS' DEFICIENCY
------     ------------------------
   During  February,  2005,  the Company  received an advance on a common  stock
   purchase  agreement.  The gross amount of the advance was $100,000.  Costs of
   $10,450 were deducted,  resulting in net proceeds of $89,550.  The costs have
   been deferred and will be applied against additional paid-in capital when the
   stock purchase is completed. The total amount of the stock purchase agreement
   is $200,000.  Closing of the transaction will occur upon the effectiveness of
   a registration  statement  registering  the underlying  shares.  The purchase
   price of the  shares to be issued  will be the  lesser of $0.04 or 50% of the
   average  closing bid price on the 5 trading  days either  prior to closing or
   prior to the effectiveness of the registration statement.  The purchaser will
   also be issued warrants  exercisable  into such number of shares equal to the
   aggregate  investment  amount  divided by the purchase  price.  Half of these
   warrants will be  exercisable  at 110% of the purchase price and half will be
   exercisable at 150% of the purchase  price.  Upon the  achievement of certain
   conditions,  the Company may force the exercise of the warrants. The warrants
   will expire on December 31, 2008.

   During the three months ended March 31, 2005,  the Company  issued  2,090,000
   shares of common stock as collateral  for the loan described in Note 8. These
   collateral  shares are not  considered to be  outstanding  for loss per share
   calculations.

   During February and March 2004, the Company issued 6,000,000 shares of common
   stock in connection  with the  retirement of its 12%  convertible  debentures
   payable described in Note 4.

   In February  2004,  the Company  granted  options to purchase an aggregate of
   5,000,000  shares of common stock to two individuals in exchange for services
   to be rendered  through  August 1, 2005. The options had an exercise price of
   $.008 per share and had a life of ninety days from grant date. The fair value
   of these  options is  $112,240.  This amount has been  deferred  and is being
   amortized over the life of the services  agreement  (seventeen  months).  The
   value has been  determined  using the  Black-Scholes  option pricing model in
   accordance  with SFAS 123 with the following  assumptions:  dividend yield of
   zero,  expected  volatility of 178%,  risk-free  interest rate of 3.5% and an
   expected  life of three months.  The options were  exercised in February 2004
   and cash proceeds of $40,000 were received by the Company.

   During March 2004, the Company sold 202,614 shares of common stock for cash
   proceeds of $17,000. The cash was received in March and the shares were
   issued in April. The shares were sold at a discount to market value, and a
   financing cost related to the discount of $4,013 has been recognized.

   During the three months ended March 31, 2004 the Company issued 3,000 shares
   of common stock, valued at $300, for services rendered.


                                       8
<PAGE>


                      TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF MARCH 31, 2005
                                   (UNAUDITED)

   The Company has deferred costs related to the issuance of options for
   services to be rendered through July 2005. During the three months ended
   March 31, 2005 and 2004, the Company has expensed $23,633 and $17,729,
   respectively, of these costs and $31,512 remains deferred at March 31, 2005.

NOTE 6     GOING CONCERN
------     -------------
   The  accompanying  condensed  consolidated  financial  statements  have  been
   prepared on a going concern  basis,  which  contemplates  the  realization of
   assets and the settlement of liabilities and commitments in the normal course
   of  business.  As  reflected  in  the  accompanying   condensed  consolidated
   financial  statements,  the Company has a net loss of $106,882 and a negative
   cash flow from  operations  of $68,302 for the three  months  ended March 31,
   2005  and a  working  capital  deficiency  of  $448,259  and a  stockholders'
   deficiency of $409,365 as of March 31, 2005. These factors raise  substantial
   doubt about its ability to  continue as a going  concern.  The ability of the
   Company to continue as a going concern is dependent on the Company's  ability
   to  raise  additional   funds  to  finance  its  operations.   The  condensed
   consolidated  financial  statements do not include any adjustments that might
   be  necessary  if the  Company  is unable  to  continue  as a going  concern.

   Management's plans include obtaining  additional financing for which they are
   currently in active  negotiations  with several  financing  institutions  and
   increasing sales of the Quill computer mouse and related software products.

NOTE 7     LOAN PAYABLE - OFFICER
------     ----------------------
   During February, 2005, an officer advanced $20,629 to the Company for working
   capital purposes. The advances are non-interest bearing and are repayable
   upon demand.

NOTE 8     LOAN PAYABLE
------     ------------

      During 2005 the Company pledged 2,090,000 shares of common stock to secure
      a demand loan from an individual of up to $50,000 pursuant to an oral
      agreement. During February and March, 2005, the Company received loans
      totaling $16,900 for working capital purposes under such agreement. The
      loans are non-interest bearing.


                                       9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Certain information contained in this Report are forward-looking statements
(within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended). Factors set
forth that appear with the forward-looking statements, or in the Company's other
Securities and Exchange Commission filings, could affect the Company's actual
results and could cause the Company's actual results to differ materially from
those expressed in any forward-looking statements made by, or on behalf of, the
Company in this Report. In addition to statements, that explicitly describe such
risks and uncertainties, readers are urged to consider statements labeled with
the terms "believes," "belief," "expects," "intends," "anticipates" or "plans"
to be uncertain and forward-looking. The forward-looking statements contained
herein are also subject generally to other risks and uncertainties that are
described from time to time in the Company's reports and registration statements
filed with the Securities and Exchange Commission. In addition, prior financial
performance and customer orders are not necessarily indicative of the results
that may be expected in the future and the Company believes that such
comparisons cannot be relied upon as indicators of future performance.
Additionally, the Company undertakes no obligation to publicly release the
results of any revisions to these forward-looking statements which may be made
to reflect events or circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. The accompanying notes are an integral
part of the condensed consolidated financial statements.

OVERVIEW

We are a holding company for late-stage developmental, or early-stage
commercial, companies with opportunities in niche markets. We currently own two
subsidiaries, Designer Appliances Ltd., an inactive United Kingdom ("UK")
company, and Designer Appliances, Inc., a Delaware corporation, and will
actively seek additional and appropriate acquisitions, subject to comments
below. We have acquired valuable intellectual property rights including an
exclusive license on proprietary software and a UK patent for a computer mouse
that is thought to be beneficial to computer mice users with regards to the area
of treatment and prevention of repetitive strain injury. The UK patent is the
basis for further patent applications that may result in an extent of the scope
and geography of our current patent position. We have achieved what we believe
are significant technical developments that will be patent protected, though
there is no guarantee that such developments will proceed to a patent.

We sell and market the AirO2bic Mouse computer mouse and software. The Company's
products are designed to justify a premium price in the upper and certain niche
sectors of our markets. There is no assurance that we, through our active
subsidiary, will be able to continue to manufacture or market these items.


                                       10
<PAGE>

The Company intends to market and sell only products that are designed to
attract a premium, niche or upscale market. Management believes that it has
identified several products, including the AirO2bic "Grip-less" Mouse and Nib
"Click-less" software, of an under exploited opportunity in the computer,
household and domestic appliances markets. Because of the Company's precarious
financial condition and limited capital resources, it is currently limiting its
operations to the production and sale of the AirO2bic Mouse and related
software.

Going Concern Qualification

      The Company's consolidated financial statements as of December 31, 2004
and for the year then ended have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. As reflected in such consolidated
financial statements, for the year ended December 31, 2004 the Company has a net
loss of $1,127,727 and a negative cash flow from operations of $143,705, and as
of December 31, 2004 the Company had a working capital deficiency of $461,294
and a stockholders' deficiency of $329,416. For the three months ended March 31,
2005 the Company has a net loss of $106,882 and a negative cash flow from
operations of $68,302, and as of March 31, 2005 the Company had a working
capital deficiency of $448,259 and a stockholders' deficiency of $409,365. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The ability of the Company to continue as a going concern is
dependent on the Company's ability to raise additional funds and implement its
business plan. The consolidated financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern. Management's plans include obtaining additional financing for
which they are currently in active negotiations with several financing
institutions and increasing sales of the AirO2bic computer mouse.


RESULTS OF OPERATIONS FOR THE 3 MONTHS ENDED MARCH 31, 2005 AND 2004


RESULTS OF OPERATIONS

3 MONTHS ENDED MARCH 31, 2005 AND MARCH 31, 2004
------------------------------------------------

GROSS PROFIT
------------

        For the three months ended March 31, 2005 the Company generated revenue
of $95,580 compared to $77,010 for the three months ended March 31, 2004. Cost
of sales was $25,047 for the three months ended March 31, 2005, compared to
$22,043 for the three months ended March 31, 2004. Gross profit was 70,533 or
73.8% of net revenues for the three months ended March 31, 2005 relative to
$54,967 or 71.4% of net revenues for the three months ended March 31, 2004. The
increase in the Company's revenues and cost of sales in the three months ended
March 31, 2005 all resulted from sales and marketing activity by the Company of
its AirO2bic Mouse (pronounced aerobic) product and related system
configurations, software and accessories.


                                       11
<PAGE>

Operating Expenses
------------------

      For the three months ended March 31, 2005, operating expenses increased
$63,362 or 58.6% from $108,131 in the three months ended March 31, 2004 to
171,493 for the three months ended March 31, 2005. The increase in the Company's
operating expenses, is attributable to increased selling expenses, professional
fees and remuneration paid to an additional sales person.

      Expenses also include the investment in a new software product anticipated
to be marketed commencing in the second quarter of 2005.


OTHER INCOME (EXPENSES)
-----------------------

      A negative $5,922 interest and financing expense for the 3 months ended
March 31, 2005 was incurred compared to a $130,012 gain recorded for the 3
months ended March 31, 2004 that was mostly attributable to net gain on the
extinguishment of debt, net of interest and financing costs.

NET LOSS
--------
      The Company incurred a net loss $106,882 for the 3 months ended March 31,
2005 relative to a net profit of $76,848 for the 3 months ended March 31, 2004.

LIQUIDITY AND CASH POSITION
---------------------------

OPERATING ACTIVITIES
--------------------

      For the 3 months ended March 31, 2005, as compared to the 3 months ended
March 31, 2004, the Company used $68,302 and $39,203, respectively, to fund
operating activities. The increase of $29,099 is due to various factors, both
positive and negative, in various categories, including net gains on the
extinguishment of debt and deferred equity based costs recognized during the 3
months ended March 31, 2004 and changes in inventory and accounts receivable and
payable in the comparable quarters.


INVESTING ACTIVITIES
--------------------

      For the 3 months ended March 31, 2005 and March 31, 2004, the Company used
$12,305 and $9,750, respectively, to fund investing activities. These costs in
2005 include capital equipment purchase of computer equipment and other
peripherals as part of on-going development cost for existing and planned
software.


                                       12
<PAGE>

FINANCING ACTIVITIES
--------------------

      For the 3 months ended March 31, 2005 and March 31, 2004, the Company
realized cash of $79,584 and $57,000, respectively, in connection with financing
activities. The increase of $22,584 in the three months ended March 31, 2005 was
primarily due to advanced receipts in the 2005 period on the sale of stock and
other advances received by the Company net of principal payments made by the
Company on the settlement of indebtedness to former debenture holders. The
entire $200,000 originally due under a settlement agreement has now been
extinguished.

LIQUIDITY AND CAPITAL RESOURCES

The Company, including its subsidiaries, during its development stage incurred
start-up costs, including administrative costs and research and development
costs, while realizing limited operating revenue. Revenue commenced in late 2002
and has continued to grow to the point that the Company is now becoming less
dependent upon funding its operations from the proceeds of sales of its
securities and from loans. The retirement at the end of March 2005 of the debt
resulting from the debenture settlement agreement has further reduced the cash
burden upon the Company.

The Company has had, though small relative to its costs of operations and
maintaining its listing, increasing sales and revenue through March 31, 2005,
obtained through direct marketing programs, via its website and indirectly
through an increasing number of distributor/resellers who themselves have their
own websites. Several strategic relationships are currently being explored,
including an informal relationship with an ergonomic keyboard manufacturer.

This strategy has been for the Company to develop product and brand recognition
amongst the "professional ergonomic" industry ahead of investigating "niche"
assistive technology markets in the broader retail sector of the computer
peripheral business. To this end we have retained a sales consultant to develop
strategic relationships, which has resulted so far in the inclusion of our mouse
products through Add On Computer (Peripheral) and distribution through the
Ingram Micro's EDI sales distribution system. This has resulted in the listing
of our products on websites such as Tech Depot and Gateway. Further dialogue is
taking place with other nationally known retailers.

The Company is also focused upon any opportunity to increase its sales to the
U.S. Government following clarification that Section 508 Law does require
computer mice to meet the prevailing standards. We have had ongoing discussions
with partners who have established access to this market. As a result, our
products have been listed under two GSA contracts with Unistar-Sparco and Kare
products. Kare products have just established them upon the GSA advantage
product sites.


                                       13
<PAGE>

In April 2005 we attended the Federal Offices Supplies Exposition in Washington,
D.C. Our Virtually Hands Free mousing system was featured in a demonstration of
certain of Hewlett Packard's products at their booth.

Access to new markets necessarily requires partnership with organizations that
have a presence and reputation within those sectors and while the Company has
developed an increasing reliance upon distributor/resellers as this business is
now in excess of 50% of its overall sales by value the potential for reduction
in margins relative to the costs of access to those markets in terms of time,
employment of personnel and marketing is considered to likely yield a greater
return by the implementation of this strategy. As further opportunities and so
the possibility of entrance into the retail computer market sector is considered
further, reductions in gross margin may be necessary to achieve the pricing
incentives required by such outlets. In such an event it is considered that the
increase in the volume of sales may be beneficial and thereby contribute to the
main objective of attaining profit, within the single year experience in the
pattern of business so far observed, existing distribution channels also showed
seasonality in that a lower business activity was observed during main holiday
season periods; most noticeably during the winter holiday period. This level of
business, at least, immediately returned following the end of the holiday
period.

At the end of 2002 the Company commenced production and shipment of its mouse
product and has maintained a clear focus upon developing that business and has
no plans to launch other products outside of the computer peripheral market at
this time. It continues to seek to strengthen its Intellectual Property Rights
("IPR") assets in the area of computer peripherals. To date the Company's
intellectual property rights portfolio includes vacuum cleaner, fans, heaters
and other intellectual property right bearing domestic appliances. The Company
will remain focused on developing sales of its Mouse and Software related
products and developing other "parallel" product technologies into products.


SECTION 508 AMENDMENTS TO REHABILITATION ACT

The General Services Administration (the "GSA") implemented a program that sets
standards for information technology so as to make such technology accessible to
those with special needs. The standards are applied under what is called Section
508, which are described in full at www.section508.gov. Details pertaining to
our products can be found at www.aerobicmouse.com under the heading GSA Section
508.These standards include a section relating to input devices, such as
computer mice and under item 1194.26, which relates to subsection 1193.26- 2.0 a
standard is prescribed for input devices. Companies that consider their products
to meet the standards can apply to have their products listed within the "Buy
Accessible" section of the section508.gov website and also list a Voluntary
Product Accessibility Template ("VPAT") by which government purchasing officials
can perform their own due diligence so as to ensure the purchases they make are
Section 508 compliant. The GSA Section 508 Group then provides access to the
product and company information on the website. The Company, having evaluated
the standard and believing that its products complied, submitted its
applications for its hardware and software products which were subsequently
processed and listed on the Section 508 website.


                                       14
<PAGE>

Section 508 compliance has been a requirement of system purchases, typically
large contracts over $2,500, since July, 2001 whereas "Micropurchases"-
purchases less than $2,500 and typically by credit card -- have been exempt from
Section 508 compliance. This exemption was due to expire on October 1, 2004,
thereby making all purchases to require Section 508 compliance. This exemption
was extended on October 5, 2004 until April 1, 2005 and was designated the
"final extension.

The Company was made aware by third parties that its products were no longer
listed in the Section 508 website. We had not been advised of their removal and
upon inquiry we were told that computer mice were not considered as requiring
Section 508 compliance and that our listing, by then some 18 months, was
erroneous.

Following review by various bodies, at a meeting in December, 2005 the Company's
interpretation of Section 508 law, that computer mice were subject to the
standards, was confirmed and the Company's products were re-listed on the Buy
Accessible section of the www.section508.gov website. Therefore in regards to
computer mice and Section 508 there has been a positive determination by the GSA
of the requirement for Section 508 compliance at both the standards and
procurement levels. This is a first and our products are probably the first
design innovation that crosses the compliant non-compliant divide.

It has therefore been positively confirmed by the GSA in de-listing and
re-listing our products that mice products are subject to 508 consideration,
both as standalone items and when included as a part of a system purchase.


At this time, to the Company's knowledge, there are no other products listed on
the website by other companies that may be considered to be competitive to the
Company's products, be they niche ergonomic computer mice or mass-market
supplier computer mice. The Company is therefore active in the development of
the potential such a listing has for opportunity to sell products to the U.S.
Government either directly or in partnership with other vendors who sell to the
government. It should be understood that this listing is not an endorsement or
recommendation by the U.S. Government, but an information source for those must
meet the compliance with Section 508 law.


COMPETITION

It is the view of the board that all suppliers of computer mouse products are
potential competition. Within that principle it can be considered that there
exists direct competition, at this time considered to be companies marketing
other niche or small scale Ergonomic Products, and indirect competition or
mass-market retail competitors. The Company considers competition to be any
other company that can potentially divert sales dollars away from those that
could be spent on our products.


                                       15
<PAGE>

At this time the Company believes that it holds a unique position in the
marketplace, as it is the only provider of mouse products that do not require
grip to be used and has an associated software product that removes the need to
be clicked. Likewise, no other competitive products, either direct or indirect
in market presence, have Section 508 compliance claims or have been reviewed and
commended for ease of use for persons with arthritis. While this position could
change, it would require competitors to expend significant product development
costs and risk potential infringement of the intellectual property rights of the
Company. These rights are undergoing extension with additional patents having
been filed on both design and utility basis in the U.S. with the intention to
extend these and other applications contemplated into PCT or world-wide patents
and two additional patents in other countries were filed during the first
quarter of 2005.

The employment of an IPR strategy is considered, but not guaranteed, to act as a
barrier to entry by other providers of computer mice. It is also considered that
the market environment, in regards to the general lack of recognition by mouse
manufacturers of health issues due to mouse product usage, precludes entries by
established organizations who are outside of the directly competitive ergonomic
sector. Their entry would likely raise more risk from the possible litigious
consequence of launching a "health conscious product as, by inference, other and
previous products could be viewed as "not health conscious". Further indications
that might support this argument maybe consider as in a new keyboard product
from Logitech the largest mouse and keyboard manufacturer in the world, are
emphasizing a new keyboard as having a "better design" claim that "enhance
"total comfort experience" the closing paragraph states.

"The information contained in this document is provided AS IS without warranty
of any kind. Some experts believe that the use of any keyboard may cause serious
injury to your hands, wrists, arms, neck or back. For important ergonomic
information about setting up your computer workspace, please read our Comfort
Guidelines, which can be found at www.logitech.com/comfort."

We have recently been told (as yet uncorroborated) that major manufacturers
product disclaimers and ergonomic guides are now being offered in evidence of as
proof of correlation between computer usage and fatigue injury.

While these views and opinions cannot be relied upon as to develop or maintain
an advantage for the Company's in the future, it is considered that the
opportunity for the Company to achieve a market share of 5% of the total new and
replacement U.S. computer mouse market is possible from those impaired or having
some form of disability under this market scenario. It is also the Company's
intent to work with any other who may wish to license our technology.

Since achieving a Section 508 listing, MATvp membership with Microsoft and an
Arthritis Foundation commendation, the Company has redefined its mission to be a
leading supplier of Universally Designed Assistive and Accessible Technology
computer input device products, an area that is not catered to by mass-market
suppliers. The Company believes that this sector is now on the fringe of
opportunity for supply into a bigger market accessible by retail distribution.
Research conducted on behalf of Microsoft and found at
www.microsoft.com/enable/research under "Key Findings" on the first page states.


                                       16
<PAGE>

"57% of computer users are likely or very likely to benefit from the use of
accessible technology."

44% of computer users use some form of accessible technology.

Users seek solutions to make their computers easier to use, not for solutions
based on their health or disability.

Making accessibility options easier to discover and use will result in computers
that are easier, more convenient, and more comfortable for computer users."

To provide an example of the market kinetic in computer input devices: A target
of a 5% share of what is currently considered the annual new and replacement
U.S. computer mouse market would translate into approximately 2 million mice
sales per year, which on a worldwide basis could relate to 10 million pieces per
year. This does not contemplate earlier retirement of computer mice and
therefore possible upside due to an awareness of the issues and our products as
a result of the Company's marketing activities.

At this time there are no other competitors who state they are providers of a
Grip-less or Click-less computer mouse products or have a Section 508 listing or
Arthritis Foundation commendation.

Revenues generated by sales of the AirO2bic mouse and related products, where
possible, will be used to further develop mouse product sales until a cash flow
positive, and profit positive position, can be established at sustainable
levels, thus allowing the Company to access bank financing, and thereby reducing
the extent to which the Company must rely on other sources of external
financing. In the absence of sales, the estimated amount of working capital that
the Company will need, to expand the commercialization and distribution over the
next year of mouse and related products at minimum planned operational levels,
is approximately $500,000. Such amount would be up to $2 million to achieve
accelerated market penetration.. There are no anticipated acquisitions of
additional subsidiaries during the next 12-month period.

It is recognized that revenues do not provide for a sustainable business at
current levels. It is the belief of management that by suitable and adequate
investment a sustainable business can be achieved, and that revenue potential
could be significant upon an expansion of our limited and current marketing
effort.


                                       17
<PAGE>

PRODUCTS

o Introduced in 2002: Quill "grip-less" mouse, which allows the user to mouse
without the need to grip, which is indicated as a contributory factor in those
who develop Functional Impairments such as repetitive strain injury or carpal
tunnel syndrome.

o Introduced in 2003: Nib "click-less" software, which performs a high
percentage of computer mouse button clicks for its users and, subject to its
effective utilization, can aid those with functional impairment due to injury
and is also classified as assistive technology.

o Introduced in 2003: Nib Trial version: This is a 30-day active version of Nib
software which is freely downloaded from the Company's www.quillmouse.com
website.

o Introduced in 2004: The Quill Well Mouse mat: Completes the "system approach"
and helps to promote a permanent visual image of the Company's products in the
user's environment.

o Introduced in 2003: The Virtually Hands Free (VHF) mousing system: A bundle of
the Quill Mouse and Nib Software that allows the user to elect not to use most
of his muscles forward of his elbow, but still mouse and interact with his
computer in a conventionally recognized manner.

o Introduced in 2003: Carpal Management Systems I & II: A bundle of the VHF
system and one (System I) or two (System II) FlexTend orthotic gloves that
facilitate the use of a recognized and medically validated therapy exercise
glove with a mousing system that gives relief from the type of activity that
some consider to cause clawing of the hand due to mousing. This is being
marketed jointly with Balance Systems Inc.

o Introduced in 2004: Nib (for PC's) "click-less" software, with Gesture
technology, which enhances the previous version by allowing the selection of
different click types by the movement of the mouse cursor. To Gesture a Right
click the mouse cursor is moved to the right and back, to Gesture a double
click, to the left and back or to highlight or drag, downwards and back.

o Introduced in 2003: Nib (for PC's) Trial version with Gesture Technology: This
is a 30-day active version of Nib software which is freely downloaded from the
Company's www.quillmouse.com website.

o Introduced in 2004: McNib (for Macintosh computer) "click-less" software, with
the Gesture technology described above.

o Introduced in 2004: McNib (for Macintosh) Trial version with Gesture
Technology: This is a 30-day active version of McNib software which is freely
downloaded from the Company's www.quillmouse.com website.

o Introduced in 2004: The McVirtually Hands Free ("McVHF") mousing system: A
bundle of the Quill Mouse and McNib Software with Gesture technology that allows
the user to elect not to use most of his muscles forward of his elbow, but still
mouse and interact with his computer in a conventionally recognized manner.


                                       18
<PAGE>

o In March of 2004, following an independent review by a designer, health care
professionals and persons with arthritis, the Arthritis Foundation in the US
have given an Ease of Use commendation to the Virtually Hands Free Mousing
system and under a licensing agreement the Company is permitted to use the
Arthritis Foundation's Ease of Use logo as a graphic indication of the
commendation. This commendation makes the VHF System the first to be recognized
as being Assistive to persons with a clinical disability.

o Introduced in 2004 "The Clickless Web": This is a development on the Company's
Clickless software. The Clickless software, an application that performs mouse
button clicks for the user, is a computer resident program that requires
installation upon the user's computer following purchase. One element of the
computer resident software is the ability to click links and other functions,
which enables interaction with the Internet, so as to be able to surf it and
store files etc., from it. This new development, as a product called among other
names, "The Clickless Web", takes the "web surfing and interacting" component of
the computer resident software, and, using a webpage application tool called
"Active X", allows these features to be accessed temporarily when a website,
empowered with the feature, is enabled. This type of application known as "tools
on demand" is considered a future direction and application of the Internet in
which there is less requirement for software to be loaded onto a computer, or
hand held device. Such applications as needed, are accessed on demand, and can
be potentially prepaid as a service, or rented for the duration of their use.
This feature could increase the portability of applications and also decrease
memory requirements and hard disk management of Internet connected devices. The
Clickless Web is the Company's first product in this potential growth area.
Prior to its launch and in keeping with its strategy, the Company filed a
world-wide patent application on this technology.

At this time there exist two demonstration sites for this technology:
www.theclicklessweb.com and www.theassistiveweb.com both of which link to an
identical page.

O In November 2004 the E-Quill-AirO2bic product was introduced that provided
customers with a color choice option that in the directors opinion matches
current system sales trends of Black or White.

The Assistive Web site will be focused upon generating income from large
corporations such as banks, search engines, web retailers, assistive technology
websites and other high traffic websites. Pricing on this product has yet to be
established and no income from either of these websites can be anticipated as
yet.

Marketing is a dynamic that must take advantage of opportunities when they are
recognized. Consequently the SooToSee and SoTooSpeak developments described
below are on hold and will be continued later and incorporated as modules into a
new range of AntiFatigue Software (discussed below).


                                       19
<PAGE>

o SooToSee; currently in Alpha (in-house) testing this software is designed as a
dynamic magnification system to assist those who need such assistance for
observing computer screens, so as to enhance their accuracy of pointing the
computer mouse cursor, or help in reading small text as is frequently the case
with computer program menus and text on the internet. This is as an aid to
vision and does not replace the need of use of spectacles, though it is
envisaged that it will find application for those with severe sight impairment.
This is part of a new software development package.

o SooToSpeak; currently in late development stage. This software is designed to
convert HTML text, such as is used on Internet web pages and now more commonly
in email systems and program menu systems, into an audible speech output,
utilizing existing and proprietary to others, voice synthesis systems such as
the "supplied as standard" Windows XP voice "Microsoft SAM".


oPlanned for introduction in the second quarter of 2005. AntiFatigue Software:
We have identified what we believe is a broad market opportunity of which the
SooToSee and SooToSpeak product concepts will be a part. We believe that many of
the issues of prevention of fatigue related injuries such as Carpal Tunnel
Syndrome and Repetitive Strain Injuries can be minimized, if not eliminated, by
adequate work fatigue management, which includes hardware products such as the
AirO2bic Mouse and the Project Median Keyboard.

Further detail will be announced upon launch as such issues or brand
identification and Intellectual Property Right opportunities are under
consideration at this time.

BABY BOOMER MARKET

Another market sector that is sought to be addressed is the so called Baby
Boomers, those individuals born between 1946 and 1964, who are numerically large
in number, when considered as a single market and are now experiencing the
gradual deterioration of limbs and sensors as is commensurate with their age. A
survey commissioned by the Microsoft Corp.(www.microsoft.com/enable/research)
suggests that approximately 30 million individuals in the U.S. could benefit
from dexterity enhancing technology such as ours.

While there is unlikely to be an early and measurable impact upon our business,
as a result of these studies and in anticipation that further study might
confirm these early findings, we believe popular opinion may be influenced
sufficiently that may lead to a changing market environment that could create a
greater computer user health consciousness that ultimately may be beneficial to
us.


                                       20
<PAGE>

MICROSOFT ASSISTIVE TECHNOLOGY VENDOR PROGRAM (MATVP)

Designer Appliances Inc was recently enrolled into the MATvp program. The
primary purpose of this program is to decrease the time from development to
market for assistive technology products. Quarterly meetings are held with
Microsoft and we anticipate receipt of the "nearer market" beta test versions of
Longhorn shortly.

HEWLETT-PACKARD ASSISTIVE TECHNOLOGY LISTING

The Hewlett-Packard Company ("HP") lists all of the Company's products in their
Small and Medium Business catalogue under the section of Assistive Technology.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles in the United States.
The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the amounts reported in the consolidated
financial statements and the accompanying notes. Item 6. Management's Discussion
and Analysis or Plan of Operation contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 2004 describes these critical
accounting policies.


On an on-going basis, we re-evaluate our estimates, including those related to
intangible assets, equity based compensation and litigation. We base our
estimates on experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.


ITEM 3. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls And Procedures

Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported, within the time period
specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in the reports filed under the Exchange Act
is accumulated and communicated to management, including our President and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Our Chief Executive Officer and Chief Financial Officer, in
consultation with our other members of management and advisors as appropriate,
carried out an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this quarterly report pursuant
to Rule 15d-15(b) promulgated under the Exchange Act. Based upon that
evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures are not effective in
alerting them in a timely fashion to all material information required to be
included in our periodic filings with the SEC as a result of the significant
deficiency described below in that subsection captioned "Significant
Deficiencies In Disclosure Controls And Procedures Or Internal Controls".


                                       21
<PAGE>

Changes in Internal Control over Financial Reporting

The term internal control over financial reporting is defined as a process
designed by, or under the supervision of, our President and Principal Financial
Officer, and effected by our board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Except as noted below in that
subsection captioned "Significant Deficiencies In Disclosure Controls And
Procedures Or Internal Controls", there were no changes in our internal control
over financial reporting identified in connection with our evaluation of these
controls as of the end of the period covered by this annual report that could
have significantly affected those controls subsequent to the date of the
evaluation referred to in the previous paragraph, including any correction
action with regard to significant deficiencies and material weakness.


                                       22
<PAGE>

SIGNIFICANT DEFICIENCIES IN DISCLOSURE CONTROLS AND PROCEDURES OR INTERNAL
CONTROLS

Our independent auditors identified that we had not recorded the financial
statement effect of the issuance of 20,500,000 warrants in December 2004. We
therefore subsequently recorded a financing expense related to such issuance. In
addition, our independent auditors identified that our accounts receivable were
overstated at December 31, 2004. Our independent auditors discussed this matter
with our Chief Financial Officer and other members of management, and we
subsequently reevaluated the accounts receivable and recorded an adjustment. The
auditors believe that this adjustment reflected a significant deficiency in our
accounting systems. This deficiency would have resulted in a material
misstatement to the financial statements for the year ended December 31, 2004.
We are taking corrective action to enhance our accounting systems. We believe
that the significant deficiency will be resolved.


                                       23
<PAGE>

                         PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      As of the date of this Form 10-QSB, we are not a party to any litigation,
and management has no knowledge of any threatened or pending litigation against
us.

      On February 17, 2004, we entered into a Redemption and Settlement
Agreement and Mutual General Release under which we redeemed all of our
outstanding 12% convertible debentures and related warrants by issuing 6,000,000
shares of our common stock to the debenture holders, plus $200,000 in cash,
payable in monthly installments of $16,667. We paid the final installment of
this obligation in April 2005.

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

      During the quarter ended March 31, 2005 did not sell any equity
securities, except that on January 21, 2005 we issued and pledged to William F.
Bragg, Jr. an aggregate of 2,090,000 shares of our Common Stock in order to
secure payment of a loan from Mr. Bragg to the Company. The issuance was made in
a private placement transaction under an exemption from the registration
requirements of the Securities Act afforded by Section 4(2) of the Securities
Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1 Certification of the Chief Executive Officer and Principal Financial
Officer of Torbay Holdings, Inc.pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.1 Certification of the Chief Executive Officer and Principal Financial
Officer of Torbay Holdings, Inc. pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.


                                       24
<PAGE>

                                  SIGNATURES

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


                                                         TORBAY HOLDINGS, INC.

                                                      By: William Thomas Large
                                  --------------------------------------------
                                                    Name: William Thomas Large
                                  Title: President and Chief Executive Officer
                (Principal Executive Officer and Principal Accounting Officer)


Date: May 16, 2005


                                       25