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 September 30, 2004

[_] 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 September
30, 2004.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
Yes __ No X

<PAGE>


                                      INDEX

PART 1 - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
<S>                                                                                        <C>
Condensed consolidated balance sheet as of September 30, 2004 (unaudited) ...............   3

Condensed consolidated statements of operations and other comprehensive income
(loss) for the three and nine months ended September 30, 2004 and 2003 (unaudited) .......  4

Condensed consolidated statements of cash flows for the nine months ended
September 30, 2004 and 2003 (unaudited) ..................................................  5

Notes to condensed consolidated financial statements as of September 30, 2004
and 2003(unaudited) ......................................................................  6

Item 2.  Management's Discussion and Analysis or Plan of Operation ....................... 11

Item 3.  Controls and Procedures ......................................................... 24

PART 2 - OTHER INFORMATION

Item 1.  Legal Proceedings ............................................................... 25

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds ..................... 25

Item 3.  Defaults Upon Senior Securities ................................................. 25

Item 4.  Submission of Matters to a Vote of Security Holders ............................. 25

Item 5.  Other Information ............................................................... 25

Item 6.  Exhibits ........................................................................ 25

Signatures ............................................................................... 26
</TABLE>


<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                     ASSETS
<S>                                                                                            <C>
CURRENT ASSETS
 Cash                                                                                          $    21,755
 Prepaid expense                                                                                    19,000
 Inventory                                                                                           3,261
                                                                                               -----------
     Total Current Assets                                                                           44,016
                                                                                               -----------

PROPERTY AND EQUIPMENT - NET                                                                        24,157
                                                                                               -----------

OTHER ASSETS
 Intangible assets - net                                                                           100,288
 Deposits                                                                                            6,795
 Deferred loan costs                                                                                 4,550
 Deferred charges                                                                                    5,000
                                                                                               -----------
     Total Other Assets                                                                            116,633
                                                                                               -----------

TOTAL ASSETS                                                                                   $   184,806
                                                                                               ===========
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
 Accounts payable and accrued expenses                                                         $   276,686
 Settlement payable                                                                                110,823
 Notes payable                                                                                     102,020
                                                                                               -----------
     Total Current Liabilities                                                                     489,529
Common stock subscribed                                                                             50,000
                                                                                               -----------
TOTAL LIABILITIES                                                                                  539,529
                                                                                               -----------

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, 88,948,487
  shares issued and outstanding                                                                      8,895
 Common stock to be issued (500,000 shares)                                                             50
 Additional paid-in capital                                                                      3,859,963
 Accumulated deficit                                                                            (4,122,769)
 Accumulated other comprehensive loss                                                              (22,126)
 Deferred equity based expense                                                                     (78,778)
                                                                                               -----------

TOTAL STOCKHOLDERS' DEFICIENCY                                                                    (354,723)
                                                                                               -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                 $   184,806
                                                                                               ===========
</TABLE>

     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 AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           For the Three       For the Three       For the Nine        For the Nine
                                                           Months Ended        Months Ended        Months Ended        Months Ended
                                                           September 30,       September 30,       September 30,       September 30,
                                                               2004                2003                2004                2003
                                                           ------------        ------------        ------------        ------------
<S>                                                        <C>                 <C>                 <C>                 <C>
SALES, NET                                                 $     37,887        $     54,524        $    197,424        $     98,151

COST OF SALES                                                    18,961              18,594              64,693              38,653
                                                           ------------        ------------        ------------        ------------

GROSS PROFIT                                                     18,926              35,930             132,731              59,498
                                                           ------------        ------------        ------------        ------------

OPERATING EXPENSES
 Selling                                                         21,800              28,184              95,112              83,039
 Consulting fees                                                     --               6,000               6,300             106,750
 Professional fees                                               16,037              47,499              71,850             137,793
 Compensation                                                    29,399              24,733              72,409              57,164
 Other general and administrative                                57,403              24,869             176,307              70,766
                                                           ------------        ------------        ------------        ------------
       Total operating expenses                                 124,639             131,285             421,978             455,512
                                                           ------------        ------------        ------------        ------------

LOSS FROM OPERATIONS                                           (105,713)            (95,355)           (289,247)           (396,014)
                                                           ------------        ------------        ------------        ------------

OTHER INCOME (EXPENSE)
 Interest and financing costs                                    (3,423)           (117,056)           (182,152)           (266,181)
 Gain on extinguishment of debt, net                                 --                  --             243,800                  --
 Cancellation of stock issued for consulting fees                    --                  --              15,000                  --
                                                           ------------        ------------        ------------        ------------
       Total other income (expense)                              (3,423)           (117,056)             76,648            (266,181)
                                                           ------------        ------------        ------------        ------------

NET LOSS                                                       (109,136)           (212,411)           (212,599)           (662,195)

OTHER COMPREHENSIVE INCOME/(LOSS)
 Foreign currency translation income (loss)                         551              (1,165)             (1,475)               (333)
                                                           ------------        ------------        ------------        ------------

COMPREHENSIVE LOSS                                         $   (108,585)       $   (213,576)       $   (214,074)       $   (662,528)
                                                           ============        ============        ============        ============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED              $         --        $         --        $         --        $      (0.02)
                                                           ============        ============        ============        ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
 - BASIC AND DILUTED                                         89,443,596          56,309,221          86,662,944          40,258,672
                                                           ============        ============        ============        ============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>


                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     2004              2003
                                                                                   ---------        ---------
<S>                                                                                <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                                          $(212,599)       $(662,195)
 Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation and amortization                                                       27,974           17,024
  Amortization of loan costs                                                             650               --
  Gain on extinguishment of debt, net                                               (243,800)              --
  Common stock and warrants issued for services                                          300          108,000
  Deferred equity based costs recognized                                             192,180          186,944
  Financing costs - shares sold below market value                                    48,258               --
  Cancellation of shares issued for services                                         (15,000)              --
 Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable                                         3,295           (3,550)
    Decrease in inventory                                                             34,362           20,469
    (Increase) decrease in prepaid expenses                                          (19,000)          12,948
    Increase in accounts payable and accrued expenses                                 26,818           58,793
                                                                                   ---------        ---------
       Net cash used in operating activities                                        (156,562)        (261,567)
                                                                                   ---------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangibles                                                             (26,750)              --
 Purchase of property and equipment                                                   (5,447)         (11,150)
                                                                                   ---------        ---------
       Net cash used in investing activities                                         (32,197)         (11,150)
                                                                                   ---------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                              186,940            7,000
 Common stock subscribed                                                              50,000               --
 Principal payments on settlement payable                                            (79,158)              --
 Proceeds from issuance of notes and loans payable                                    52,020          250,000
 Loan and stock subscription costs                                                   (10,200)              --
                                                                                   ---------        ---------
       Net cash provided by financing activities                                     199,602          257,000
                                                                                   ---------        ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               (1,475)            (333)
                                                                                   ---------        ---------

INCREASE (DECREASE) IN CASH                                                            9,368          (16,050)

CASH - BEGINNING OF PERIOD                                                            12,387           59,403
                                                                                   ---------        ---------

CASH - END OF PERIOD                                                               $  21,755        $  43,353
                                                                                   =========        =========

Interest paid                                                                      $   4,175        $      --
                                                                                   =========        =========
</TABLE>



     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2004
                                   (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 nine months
      ended September 30, 2004 are not necessarily indicative of the results
      that may be expected for the year ended December 31, 2004. 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, 2003.

      (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 and nine months ended September 30, 2004 and 2003 since the
      Company sustained losses during these periods and the effect would be
      anti-dilutive. There were 5,000,000 common stock equivalents issued and
      exercised in February 2004. There were no common stock equivalents
      outstanding at September 30, 2004.

      (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 no options or warrants outstanding at September 30, 2004.



                                       6
<PAGE>

      (E) RECLASSIFICATIONS

      Certain items have been reclassified in prior period statements to conform
      to the current period presentation. For the three months ended September
      30, 2004 and 2003, $10,993 and $9,453, respectively, representing
      shipping, amortization and warranty costs, have been classified as cost of
      sales, rather than operating expenses. For the nine months ended September
      30, 2004 and 2003 these costs were $29,228 and $20,932, respectively.
      Also, travel and entertainment expenses have been reclassified from other
      general and administrative expenses to selling expenses.

      (F) RECENT ACCOUNTING PRONOUNCEMENTS

      In March 2004, the U.S. Securities and Exchange Commission's Office of the
      Chief Accountant and the Division of Corporate Finance released Staff
      Accounting Bulletin ("SAB") No. 105, "Loan Commitments Accounted for as
      Derivative Instruments". This bulletin contains specific guidance on the
      inputs to a valuation-recognition model to measure loan commitments
      accounted for at fair value, and requires that fair-value measurement
      include only differences between the guaranteed interest rate in the loan
      commitment and market interest rate, excluding any expected future cash
      flows related to the customer relationship or loan servicing. In addition,
      SAB 105 requires the disclosure of the accounting policy for loan
      commitments, including methods and assumptions used to estimate the fair
      value of loan commitments, and any associated hedging strategies. SAB 105
      is effective for derivative instruments entered into subsequent to March
      31, 2004 and should also be applied to existing instruments as
      appropriate.

      The Company has not yet completed its evaluation of SAB 105, but does not
      anticipate a material impact on the financial statements.

NOTE 2 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

      During the nine months ended September 30, 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 6). During April 2004, the Company issued 161,050 shares of
      common stock to an officer to settle a payable to him of $9,663. The
      shares were issued at a discount to market value and the Company has
      recorded a loss on extinguishment of debt of $4,026 (see Note 6). During
      the nine months ended September 30, 2003, an aggregate of $204,150 of the
      notes payable issued on May 15, 2002 were converted into 34,578,006 shares
      of common stock (see Note 6).



                                       7
<PAGE>

NOTE 3 INTANGIBLE ASSETS

      During the nine months ended September 30, 2004, the Company incurred
      costs of $26,750 for the development of new software applications.
      Intellectual property rights and software licenses are being amortized
      over ten and five years, respectively. Software enhancements are being
      amortized over two years. Amortization commenced in 2003 and amortization
      expense for the nine months ended September 30, 2004 and 2003 was $22,090
      and $13,537, respectively. Amortization expense for the three months ended
      September 30, 2004 and 2003 was $8,910 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
      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 NOTES PAYABLE

      During August 2004, the Company received $52,020 pursuant to a loan term
      sheet. The principal balance bears interest at the prevailing one month
      LIBOR, plus 3% (currently 4.12%) and matures in one year. The loan is
      secured by 1,700,000 shares of common stock. The collateral shares have
      been provided by a stockholder of the Company. The Company incurred costs
      of $5,200 in connection with obtaining this financing. This amount is
      being amortized over the one year term of the loan.

NOTE 6 STOCKHOLDERS' DEFICIENCY

      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 July 2004, the Company sold 37,500 shares of common stock for cash
      proceeds of $3,000.

      During August 2004 the Company received $50,000 pursuant to a stock
      subscription. Upon closing, the purchasers will be issued common stock at
      60% of the average closing bid price on the five trading days prior to
      closing. Additionally, the purchasers will receive 1,000,000 common stock
      purchase warrants. 500,000 warrants will have an exercise price of $0.08
      per share and 500,000 warrants will have an exercise price of $0.12 per
      share. The warrants will expire December 31, 2008.



                                       8
<PAGE>

      During April and May 2004, the Company sold 2,005,168 shares of common
      stock for cash proceeds of $126,940. The shares were sold at a discount to
      market value, and a financing cost related to the discount of $44,245 has
      been recognized.

      During April 2004, the Company issued 161,050 shares of common stock to
      settle a payable to an officer in the amount of $9,663. The shares were
      issued at a discount to market value and the Company has recorded a loss
      on extinguishment of debt of $4,026.

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

      The Company has deferred costs related to the issuance of options for
      services to be rendered through July 2005. During the nine months ended
      September 30, 2004, the Company has expensed $64,995 of these costs and
      $78,778 remains deferred at September 30, 2004.

      On February 5, 2003, the Company entered into a two-month non-exclusive
      agreement with a consultant to provide strategic planning services. The
      agreement called for the consultant to receive up to 2,000,000 shares
      whereby 1,251,000 shares of S-8 registered shares were issued upon the
      effective date of the agreement for the initial period. This agreement
      expired on April 4, 2003, and has not been extended. The 1,251,000 shares
      were issued on February 5, 2003, and valued for financial accounting
      purposes at $62,500, the fair market value of the common stock on the
      effective date of the agreement based on concurrent cash offerings.

      On February 6, 2003, the Company entered into a one-year non-exclusive
      agreement with a consultant to provide strategic planning services. Under
      the agreement, the consultant received 250,000 shares of restricted common
      stock upon the effective date of the agreement for the initial period. The
      250,000 shares were valued for financial accounting purposes at $15,000,
      the fair market value of the common stock on the effective date of the
      agreement based on concurrent cash offerings, and were issued in the
      second quarter of 2003. This agreement terminated in February 2004 and
      there is no other amount owed. Additionally, the parties agreed to cancel
      the 250,000 shares originally issued in 2003 and the Company recorded a
      credit of $15,000 in other income in February 2004.

      On February 7, 2003, the Company entered into an agreement whereby the
      Company received the exclusive license of software named NIB Version 1.0,
      which automatically actuates contextual menus in computer programs without
      the need to use or click a computer mouse button. In consideration, the
      Company issued 100,000 shares of common stock valued for financial
      accounting purposes at $6,000, the fair market value of the common stock
      on the effective date of the agreement based on concurrent cash offerings.

      During the nine months ended September 30, 2003, an aggregate of $204,150
      of the notes payable issued on May 15, 2002 were converted into 34,578,006
      shares of common stock. The aggregate amounts converted and average
      conversion price per share during each month is as follows: January -
      $20,000 at $.0169; February - $10,000 at $.0145; March - $30,000 at
      $.0079; April - $16,050 at $.0035; May - $29,200 at $.0043; June - $21,500
      at $.0053; July - $30,100 at $.0057; August - $25,800 at $.0058; and
      September - $21,500 at $.0058.



                                       9
<PAGE>

      On April 21, 2003, the Company entered into an agreement with a consultant
      whereby the consultant is to analyze and provide advice and introductions
      as to both short and long-term strategic business plans, business
      development, marketing and communications. In consideration, the Company
      has agreed to issue 3,000,000 shares of common stock valued for financial
      accounting purposes at $24,000 (the fair market value of the common stock
      on the effective date of the agreement based on concurrent cash
      offerings), of which $6,000 has been recognized as consulting expense and
      $18,000 has been included in equity as deferred equity based expense. The
      chief executive officer has made available 3,000,000 shares of his common
      stock to be transferred to the consultant. These shares were repaid to him
      in 2004.

      During April 2003, the Company issued 1,000,000 shares of common stock,
      valued for financial accounting purposes at $10,000, the fair market value
      of the common stock, as consideration for legal services.

      During June 2003, the Company issued 583,333 shares of restricted common
      stock for options exercised for cash proceeds of $7,000.

NOTE 7 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 $212,599
      and a negative cash flow from operations of $156,562 for the nine months
      ended September 30, 2004 and a working capital deficiency of $445,513 and
      a stockholders' deficiency of $354,723 as of September 30, 2004. 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.


                                       10
<PAGE>

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

Certain information contained in this Quarterly 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 Quarterly 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 development, 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 the comments
below. We have acquired what we believe to be valuable intellectual property
rights, including an exclusive license on proprietary software and a UK patent
for a computer mouse that we believe to be beneficial to computer mice users
with regard to treating and preventing repetitive strain injury. The UK patent
is the basis for further patent applications that may enlarge the scope and
geography of our current patent position. We have achieved what we believe are
significant technical improvements to our products that we intend to protect
with further patents, although we can give no assurance that patent applications
will be filed or, if filed, that such applications will result in our obtaining
patents.

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 will be able
to continue to manufacture or market these items.



                                       11
<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 E-Quill-AirObic "Grip-less" Mouse and
Nib "Click-less" software, in an under exploited opportunity in the computer,
household and domestic appliances markets. Because of the Company's limited
financial condition and limited capital resources, it is currently restricting
its operations to the production and sale of the E-Quill-AirObic Mouse and
related products.

We sell and market a computer mouse and related software. Formerly marketed
under the name "The Quill Mouse", our computer mouse is now marketed under the
name "E-Quill-AirObic Mouse." The name change reflects our opinion that our
computer mouse benefits all users (those who have voluntary control over their
muscles and those who may not) by enabling them to maintain better or more
aerobic conditions in the tissues of the hand when using the product. The
primary product website of the Company will also become www.aerobicmouse.com as
part of the development of a focused marketing campaign that provides
recognition of the objectives we have for our products within those product
names. In our view, the expression "aerobic" has intrinsic and positive
benefits, because the meaning of the expression is understood and translates
internationally. We anticipate that marketing expenditures on brand recognition
will also help communicate the practical aspects of our mouse products.

RESULTS OF OPERATIONS FOR THE 3 MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

REVENUES

For the three months ended September 30, 2004, due to exceptional circumstances
in regards to inventory detailed below, the Company generated revenue of$37,887,
a decrease of $16,637, or 30.5%, as compared to the three months ended September
30, 2003. Since the commencement of sales of the Company's mouse products,
orders have been fulfilled from the shipment of product from warehoused
inventory. Consequently, revenues have generally been recognized within the
quarter that the order was received. Due to a decision by management to increase
the size of the Company's orders to its manufacturer to enable the Company to
fulfill the anticipated greater demand for the Company's computer mouse products
into the first quarter of 2005, delivery of inventory to the Company was delayed
by several weeks. The impact of this was that hardware inventory for right
handed product, the majority of our order volume, was exhausted during mid-
August 2004. As a consequence, order backlog grew during the quarter from
virtually nil at the beginning of the quarter to $79,699 at the end of the
quarter and therefore less revenues were recognized. New product inventory was
received early in November 2004 and the backlog of orders was shipped soon
thereafter. We anticipate that such shipments will generate revenues during the
quarter ending December 31, 2004.


                                       12
<PAGE>

GROSS PROFIT

For the 3 months ended September 30, 2004, and for the reasons explained above
the Company generated revenue from sales of $37,887 compared to $54,524 for the
3 months ended September 30, 2003, a decrease of $16,637. Cost of sales were
$18,961 for the 3 months ended September 30, 2004, compared to $18,594 for the 3
months ended September 30, 2003, an increase of $367. Gross profit was $18,926
or 50% of net revenues for the 3 months ended September 30, 2004 as compared to
$35,930 or 66% of net revenues for the 3 months ended September 30, 2003. Gross
profit during the 3 months ended September 30, 2004 was negatively impacted by
fixed costs associated with sales (amortization of software development costs)
relative to reduced revenues, including reduced shipments of higher margin
software associated with mouse orders. Despite the impact on revenues and gross
profit created by delayed product deliveries during the 3 months ended September
30, 2004, the Company believes that margins will return to previously posted
levels. The impact on gross profit, within the mix of product sales between
hardware products only, integrated hardware and software products and standalone
software products, will be variable.

The Company believes that although it currently has limited marketing resources,
sales of the Company's products will continue to increase as a result of a
growing acceptance of the Company's products and the time that the Company's
management has spent in developing potential alliances as well as new marketing,
packaging and software product delivery and fulfillment systems.

OPERATING EXPENSES

Operating expenses decreased by $6,646 to $124,639 for the 3 months ended
September 30, 2004 compared to $131,285 for the 3 months ended September 30,
2003. The decrease was primarily the result of a $37,462 reduction in consulting
and professional fees which was partially offset by a $32,534 increase in other
selling, general and administration expense.

OTHER INCOME (EXPENSES)

For the 3 months ended September 30, 2004 expenses associated with financing
costs decreased by $113,633 due to the settlement between the Company and the
former holders of the Company's convertible debentures.

NET LOSS

The Company incurred a net loss of $109,136 for the 3 months ended September 30,
2004 relative to a net loss of $212,411 for the 3 months ended September 30,
2003. The reduction in the net loss between the two periods was primarily due to
a $113,633 reduction in interest and other costs related to the former debenture
agreement, partially offset by a reduction in gross profit.



                                       13
<PAGE>

RESULTS OF OPERATIONS FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

REVENUE

For the nine months ended September 30, 2004, the Company generated revenue of
$197,424, an increase of $99,273, or 101.1%, as compared to the nine months
ended September 30, 2003.

GROSS PROFIT

For the nine months ended September 30, 2004 had a gross profit of $132,731 or
67% of sales relative to the nine months ended September 30, 2003 in which the
Company had a gross profit of $59,498 or 60% of sales.

Cost of sales were $64,693 for the 9 months ended September 30, 2004, compared
to $38,653 for the 9 months ended September 30, 2003, an increase of $26,040.
The increase was related to the greater sales

The Company believes that the impact on gross profit of the mix of product sales
between hardware products only, integrated hardware and software products and
stand alone software products will continue to be variable.

The Company believes that although it currently has limited marketing resources,
sales of the Company's products will continue to increase as a result of a
growing acceptance of the Company's products and the time that the Company's
management has spent in developing potentially alliances as well as new
marketing, packaging and software product delivery and fulfillment systems.

OPERATING EXPENSES

Operating expenses decreased to $421,978 for the 9 months ended September 30,
2004 from $455,512 for the 9 months ended September 30, 2003, a decrease of
$33,534 or 7%. The decrease is attributable to reduced professional fees and
consulting fees which were partially offset by increases in marketing,
compensation and administrative expenses.

OTHER INCOME (EXPENSES)

For the nine months ended September 30, 2004 other income was $76,648 as
compared to other expense of $266,181 for the nine months ended September 30,
2003. The change was primarily the result of a $243,800 gain recognized in 2004
as a result of the settlement with the holders of the Company's convertible
debentures as well as decrease in interest and financing costs.



                                       14
<PAGE>

NET LOSS

The Company incurred a net loss $212,599 for the 9 months ended September 30,
2004 relative to a net loss of $662,195 for the 9 months ended September 30,
2003, a reduction of $449,596. The reduction in the net loss between the two
periods was primarily the result of the Company realizing a $243,800 gain on
extinguishment of debt as a result of its settlement with its debenture holders
and a $106,767 reduction in loss from operations.

LIQUIDITY AND CASH POSITION

OPERATING ACTIVITIES

For the 9 months ended September 30, 2004 and 2003 the Company used $156,562 and
$261,567, respectively, to fund operating activities. The decrease of $105,005
is due to various factors both positive and negative across the categories of
the extinguishment of debt, deferred equity costs, common stock and warrants
issued for services and changes in inventory and accounts receivable.

INVESTING ACTIVITIES

For the 6 months ended September 30, 2004 and 2003 the Company used $32,197 and
$11,150, respectively, to fund investing activities. These costs include capital
equipment purchase of computer equipment and on-going development costs for
software.

FINANCING ACTIVITIES

For the 9 months ended September 30, 2004 the Company realized cash of $199,602
from the private placement of restricted stock and under a loan against stock
agreement offset by the payment of $79,158 due under the debenture settlement
agreement. This compares to net cash receipts for stock issuance and notes or
loans payable in the 9 months ended September 30, 2003 of $257,000.

The Company, including its subsidiaries, has incurred start-up costs, including
administrative costs and research and development costs, while realizing limited
operating revenue. Revenue commenced in late 2002. To date, the Company has been
and continues to be dependent upon funded operations, primarily from the
proceeds of sales of its securities and from loans to support the operating
losses it has incurred. These losses have reduced significantly as sales of the
Company's products continue to grow and margins have been held or enhanced. The
compliance costs associated with the Company being a reporting company under the
U.S. securities laws, including accounting and legal fees, continue to be a
predominant expense which contributes to the Company's operating losses.



                                       15
<PAGE>

The Company has generally had consistent increases in sales and revenue through
September 30, 2004 compared to the same periods in 2003 despite being out of
inventory for a time during the quarter ended September 30, 2004. These
increases are as a result of increased sales through existing distribution
routes. Management time and activities in the quarter ended September 30, 2004
have been predominantly in pursuit of strategic objectives that are hoped to
have an impact on future income.

The sales achieved have been through direct marketing programs, via the
Company's website and indirectly through distributor/resellers who themselves
have their own websites, catalogues and sales personnel. This strategy is part
of the development program that the Company has initiated for product and brand
recognition amongst the "professional ergonomic" industry. The Company has
developed an increasing reliance upon distributor/resellers and this business is
now in excess of 50% of its overall sales by value. This business also impacts
gross margin, as the distribution business requires discounts to the retail
selling price to be given to distributors.

Evidence for support of the opinion that the Company's marketing initiatives and
customer satisfaction are being achieved are borne out by the increasing sales
as described above. In addition, during the last quarter one Fortune 500 company
specified the Quill Mouse as a "standard option" and alternative to other mice
for its employees. This has resulted in the Quill Mouse being listed and
displayed on that company's internal website. Additionally a major oil company
has also commenced specification of our products including evaluation of our nib
click-less software for consideration as to "approval" for that company's
software profile. Orders and repeat orders from other major corporations,
including major utilities, healthcare, insurance companies and even large
computer manufacturers continue to provide optimism as to the success of the
Company's limited marketing activities and an expectation of future sales.

The Company's preparations for a retail packaged product are complete and
repackaged product is available for shipment. Some reduction in gross margin may
be necessary to achieve the pricing incentives required by such outlets. The
Company has also invested significantly in past quarters to streamline its
software order fulfillment process. To this end it has now developed a single
version of its Nib Clickless software for PC, compared to a demo version and a
separate purchased version, activated by a "software key code", supplied against
each order. This means that this single version of software can now be
distributed with each mouse on the CD provided with it. As a result, every mouse
purchaser can now trial the Clickless software and the software key will be
available by email or in their order acknowledgement package so that it is no
longer necessary to refer to the Company's website in order to obtain the
purchased software. The impact will have immediate order fulfillment upon
delivery, which is particularly important in anticipation of establishing a
retail presence. The same capability has also been developed, a single demo and
fully working version, for the McNib software for Macintosh.



                                       16
<PAGE>

Since inception through most of 2002, the Company focused on organizational
activities and research and development of the Company's products and the
development of marketing strategies. At the end of 2002, the Company commenced
production and shipment of its Quill Mouse product.

Management estimates that it would require between $6.5 million and $18.2
million over the first two years of operations to support manufacturing and
marketing operations, should the Company commence production of all the products
in the Company's intellectual property rights portfolio. This portfolio includes
vacuum cleaners, fans, heaters and other intellectual property rights regarding
domestic appliances. The Company has no view or expectation of raising this
level of financing, and so as a consequence, will maintain and remain focused on
developing sales of its Quill Mouse and related products. Since 2002 the Company
has introduced the following new 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. In a joint marketing
program 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.



                                       17
<PAGE>

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.

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.



                                       18
<PAGE>

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-AirObic 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.

o Planned for Introduction in 2005: 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 Planned for Introduction in 2005: SooToSpeak; currently in late development
stage. This software is designed as 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".

SECTION 508 AMENDMENTS TO THE 1998 REHABILITATION ACT.

The General Services Administration ("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.quillmouse.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 and 1194.23 standards are prescribed for input
devices. Companies that consider their products to comply to such standards can
apply to have their products listed on the section508.gov website by completion
of disclosure forms that are then inspected and their information then listed if
considered compliant. The GSA 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 mouse
and the Virtually Hands Free Mousing System (mouse and software bundle), which
were subsequently processed and as of April 2003, were listed on the Section 508
website under the Company's assertions as to compliance.



                                       19
<PAGE>

To the Company's knowledge, there have been 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 was therefore active in the development of
the potential such a listing has for opportunity to sell product to the U.S.
Government under this provision. It should be understood that this listing is
not an endorsement or recommendation but an information source for those who
work or have needs in this are to help them make their decisions thereby.

In October 2004 the Section 508 Group of the GSA removed the Company's mouse
products from the Section 508 website (www.section508.gov).

The Company's management learned of the delisting when links to the 508 website
were found to be inactive. Upon their investigation the Company's officers were
told that in the opinion of the Section 508 Group, computer mice do not fall
under a compliance requirement and that the GSA had listed the products in
error.

The delisting does not constitute a position by the GSA that the Company's
products are not efficacious and the GSA has cited specifically that they are
Section 504 compliant in that they are Assistive Technology. It merely reflects
the GSA's current position that Section 508 does not cover conventional mouse
products, even if such products employ assistive technology.

While the Company's management does not believe that the product delisting, as
of today, has a material adverse effect on sales of the Company's products or
its business, they do believe that the Company's mouse products do comply with
the accessible technology standards. Management further believes that the
standards are applicable to computer mice as peripherals. A vendor that complies
with the standards may use its own compliance to block awards to a noncompliant
competitor.

Management has had discussions and meetings with the staff of the GSA regarding
the reason for the delisting and a further meeting is scheduled for December 14,
2004. If the matter is not resolved to the Company's satisfaction the Company
may consider formally appealing the action at the agency level, as well as
seeking a declaratory judgment in federal court, if necessary. The Company's
decision to pursue such remedies will be based on its assessment of the
likelihood of success and the benefits of a favorable result versus the
anticipated costs of undertaking the action.

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 30M individuals in the US could benefit from
dexterity enhancing technology such at ours.



                                       20
<PAGE>

Scientific developments we believe are of significance to our business:
Researchers in the U.S. have developed an "animal model" for the investigation
of the pathology of repetitive use injuries or "Negligible Force" injuries as
they describe them. The lack of clinical validation, by way of recognition of
the pathological consequences of repetitive injuries, we believe, impacts the
opinions and therefore the actions of legislators, employers, insurers and
product manufacturers.

The initial results from 2 studies performed at Temple University, PA, so far
indicate clearly definable and potentially adverse changes in the pathology of
the bones and tissues of laboratory rats studied. The researchers attribute
these changes to repetitive reaching and grasping (gripping) movements and their
pathological analysis has observed significant and, in their view, detrimental
changes in histology and immunology. The results are early research, on
non-human subjects, using analyses that cannot, by their invasive nature, be
performed on live human subjects.

The arguments for and against the existence of repetitive strain injuries have
been on the basis of statistical argument and reporting of symptoms. This, much
like the smoking and lung cancer debate of the sixties (without implying the
same degree of significance) has afforded in many cases the opportunity for
denial.

In a more recent development scientist in Japan are now suggesting a correlation
between intensive computer usage and the development of glaucoma, an eye
condition. This supports even further the evidence that extensive and extended
computer work is being increasingly recognized to have unforeseen health impact
upon computer users.

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
this corporation.

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.

HEWLETT-PACKARD ASSISTIVE TECHNOLOGY LISTING
During this quarter and following dialogue with them the Hewlett-Packard Company
("HP") listed all of the Company's products in their Small and Medium Business
catalogue under the section of Assistive Technology. We believe that this is a
significant development as it is the first trading relationship established with
a major and mainstream computer supplier.



                                       21
<PAGE>

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.

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.

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.

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, as we continue to assert, 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.

The employment of an IPR strategy is considered, though 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". While
this is opinion and cannot be relied upon as to maintain the Company's advantage
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.



                                       22
<PAGE>

It is also of interest to note the recent market messages of others with a
presence in the computer mouse sector. In recent press releases Logitech make
specific mention of "comfort: as part of their "product design. Also in an early
August press release Mr. Gates of Microsoft made reference to the Microsoft
attention to, amongst other things, "natural interfaces" as development areas in
the future. There is no inference in these references other than our perception
of emerging market awareness amongst those who could be competition, or allies,
that comfort and interface design are factors for consideration.

With developments such as the Arthritis Foundation commendation we have
redefined our mission, so as to be a leading supplier of Assistive and
Preventative Technology mouse products - an area that is, in our opinion, 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. 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 intended 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.

Revenues generated by sales of the E-QUILL-AirObic 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 and up to $2M in a fully funded and accelerated market
penetration model. 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.



                                       23
<PAGE>

GOING CONCERN QUALIFICATION

The Company's ability to continue its operations, in the absence of adequate
revenues from sales, is dependent upon receiving sufficient additional capital
financing until such levels of sales are achieved to generate a positive cash
flow. The Company may raise capital by the sale of its equity securities,
through an offering of debt securities, or from borrowing from a financial
institution. The Company's financial statements raise substantial doubt about
its ability to continue as a going concern if sufficient revenues are not
generated or additional funding is not acquired or alternative sources of
capital developed to meet its working capital needs

RECENT FINANCING

During the nine months ended September 30, 2004 the Company received financing
in the aggregate amount of $278,760. This was comprised of $186,940 from the
issuance of stock, $50,000 in common stock subscribed and $52,020 as proceeds
from a short term note less aggregate costs of $10,200.

During November 2004, the Company sold 880,000 shares of common stock in a
private placement , for the net proceeds of $45,964.

The Company is not aware of any other material trend, event or capital
commitment, which would potentially adversely affect liquidity.

ITEM 3. CONTROLS AND PROCEDURES

         As of September 30, 2004, an evaluation was performed under the
supervision and with the participation of the Company's management, including
the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on that evaluation, the Company's management, including
the Chief Executive Officer and the Chief Financial Officer, concluded that the
Company's disclosure controls and procedures were effective as of September 30,
2004. There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to September 30, 2004.


                                       24
<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.

      At the time of the execution of the settlement, we delivered to the former
debenture holders a fully executed Affidavit of Confession of Judgment
("Judgment"), in the amount of $350,000, plus accrued interest, late fees,
liquidated damages, and attorneys' fees and costs. The Judgment will be held in
escrow by Brune & Richard LLP pending our performance of the obligations set
forth in this Judgment. If we become in default of the Judgment, the former
debenture holders will become entitled to file the Judgment in the New York
State Supreme Court.

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

      During July 2004 the Company sold 37,500 shares of its common stock for
cash proceeds of $3,000. The sale was made in a private placement transaction
under an exemption from the registration requirements of the Securities Act of
1933, as amended afforded by Section 4(2) of such Act. The Company did not use a
placement agent in connection with such sale and did not pay any underwriting
discount or commissions. During the quarter ended September 30, 2004 did not
sell any other equity securities.

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.



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<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: November 19, 2004



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