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 June 30, 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 90,637,376 shares of common stock outstanding as of
July 29, 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 June 30, 2005 (unaudited)........ F-1

Condensed consolidated statements of operations and other comprehensive
Income (loss) for the three and six months ended June 30, 2005 and 2004
(unaudited)................................................................. F-2

Condensed consolidated statements of cash flows for the six months ended
June 30, 2005 and 2004 (unaudited) ......................................... F-3

Notes to condensed consolidated financial statements as of June 30, 2005
and 2004 (unaudited) ....................................................... F-4

Item 2.  Management's Discussion and Analysis or Plan of Operation ........... 3

Item 3.  Controls and Procedures ............................................ 15

PART 2 - OTHER INFORMATION

Item 1.  Legal Proceedings .................................................. 16

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

Item 3.  Defaults Upon Senior Securities .................................... 17

Item 4.  Submission of Matters to a Vote of Security Holders ................ 17

Item 5.  Other Information .................................................. 17

Item 6.  Exhibits  .......................................................... 17

Signatures................................................................... 18


<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2005
                                   (UNAUDITED)


                                     ASSETS
CURRENT ASSETS
 Cash                                                               $    37,997
 Accounts receivable                                                     11,014
 Deposit for inventory                                                   22,500
 Inventory                                                                3,595
                                                                    -----------
   Total Current Assets                                                  75,106
                                                                    -----------

PROPERTY AND EQUIPMENT - NET                                             18,798
                                                                    -----------

OTHER ASSETS
 Intangible assets - net                                                 85,069
 Deposits                                                                 6,795
 Deferred loan costs                                                      1,373
 Deferred charges                                                        10,450
                                                                    -----------
   Total Other Assets                                                   103,687
                                                                    -----------

TOTAL ASSETS                                                        $   197,591
                                                                    ===========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
 Accounts payable and accrued expenses                              $   304,125
 Advances payable - stockholders                                         66,586
 Loan payable                                                            32,900
 Notes payable                                                          107,800
                                                                    -----------
   Total Current Liabilities                                            511,411
Advance received for common stock purchase                              200,000
                                                                    -----------
Total Liabilities                                                       711,411
                                                                    -----------

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, 92,527,376 shares issued and 90,437,376 shares
  outstanding                                                             9,044
 Common stock to be issued (500,000 shares)                                  50
 Additional paid-in capital                                           4,788,180
 Accumulated deficit                                                 (5,282,007)
 Accumulated other comprehensive loss                                   (21,250)
 Deferred equity based expense                                           (7,879)
                                                                    -----------
TOTAL STOCKHOLDERS' DEFICIENCY                                         (513,820)
                                                                    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                      $   197,591
                                                                    ===========

    See accompanying notes to condensed consolidated financial statements.

                                       F-1

<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      AND OTHER COMPREHENSIVE INCOME (LOSS)
          FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                      For the         For the
                                       Three           Three          For the         For the
                                       Months          Months        Six Months      Six Months
                                     Ended June      Ended June      Ended June      Ended June
                                      30, 2005        30, 2004        30, 2005        30, 2004
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>
SALES, NET                          $     76,285    $     82,527    $    171,865    $    159,537

COST OF SALES                             23,384          23,689          48,431          45,732
                                    ------------    ------------    ------------    ------------

GROSS PROFIT                              52,901          58,838         123,434         113,805
                                    ------------    ------------    ------------    ------------

OPERATING EXPENSES
 Selling                                  24,761          48,410          69,939          73,312
 Consulting fees                              --              --              --           6,300
 Professional fees                        60,454          43,628          93,116          55,813
 Compensation                             18,614          24,258          51,283          43,010
 Other general and administrative         82,023          72,912         143,007         118,904
                                    ------------    ------------    ------------    ------------
     Total operating expenses            185,852         189,208         357,345         297,339
                                    ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                    (132,951)       (130,370)       (233,911)       (183,534)
                                    ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
 Interest and financing costs             (4,279)        (45,915)        (10,201)       (178,729)
 Gain (loss) on extinguishment of
 debt, net                                    --          (4,026)             --         243,800
 Cancellation of stock issued for
 consulting fees                              --              --              --          15,000
                                    ------------    ------------    ------------    ------------
     Total other income (expense)         (4,279)        (49,941)        (10,201)         80,071
                                    ------------    ------------    ------------    ------------

NET LOSS                                (137,230)       (180,311)       (244,112)       (103,463)

OTHER COMPREHENSIVE INCOME/(LOSS)
 Foreign currency translation
  income (loss)                            5,142           1,284           8,440          (2,026)
                                    ------------    ------------    ------------    ------------

COMPREHENSIVE LOSS                  $   (132,088)   $   (179,027)   $   (235,672)   $   (105,489)
                                    ============    ============    ============    ============

NET LOSS PER COMMON SHARE - BASIC
AND DILUTED                         $         --    $         --    $         --    $         --
                                    ============    ============    ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING - BASIC AND
 DILUTED                              90,861,552      89,063,734      90,849,531      85,257,340
                                    ============    ============    ============    ============
</TABLE>


    See accompanying notes to condensed consolidated financial statements.

                                       F-2

<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    2005          2004
                                                                 ---------     ---------
<S>                                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

 Net loss                                                        $(244,112)    $(103,463)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization                                     26,660        16,876
  Amortization of loan costs                                         5,490            --
  Gain on extinguishment of debt, net                                   --      (243,800)
  Common stock issued for services                                   1,000           300
  Deferred equity based costs recognized                            47,266       168,547
  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                       25,197       (13,705)
   Decrease in inventory                                            21,504        26,393
   Increase in deposit for inventory                               (22,500)           --
   (Decrease) increase in accounts payable and accrued
   expenses                                                        (17,905)       19,534
                                                                 ---------     ---------
     Net cash used in operating activities                        (157,400)      (96,060)
                                                                 ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Increase in intangible assets                                     (11,000)      (20,750)
 Purchase of property and equipment                                 (1,305)       (5,447)
                                                                 ---------     ---------
     Net cash used in investing activities                         (12,305)      (26,197)
                                                                 ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                 --       183,940
 Advance received on common stock purchase                         189,550            --
 Principal payments on settlement payable                          (63,328)      (31,663)
 Proceeds from issuance of notes and loans payable                  32,900            --
 Advances received from stockholder                                 20,629            --
                                                                 ---------     ---------
     Net cash provided by financing activities                     179,751       152,277
                                                                 ---------     ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                              8,440        (2,026)
                                                                 ---------     ---------

INCREASE IN CASH                                                    18,486        27,994

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

CASH - END OF PERIOD                                             $  37,997     $  40,381
                                                                 =========     =========

Interest paid                                                    $   3,339     $   1,670
                                                                 =========     =========
</TABLE>



    See accompanying notes to condensed consolidated financial statements.

                                       F-3
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 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 six months
      ended June 30, 2005 are not necessarily indicative of the results that may
      be expected for the year ending 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 six and three month periods ended June 30, 2005 and 2004 since the
      effect would be anti-dilutive. There were 25,700,000 and 4,200,000 common
      stock equivalents at June 30, 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 21,500,000 warrants outstanding at June 30, 2005, and none
      at June 30, 2004.


                                      F-4
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2005
                                   (UNAUDITED)

      (E)   Recent Accounting Pronouncements

      In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
      Corrections" ("SFAS 154") which replaces Accounting Principles Board
      Opinions No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting
      Changes in Interim Financial Statements-An Amendment of APB Opinion No.
      28." SFAS 154 provides guidance on the accounting for and reporting of
      accounting changes and error corrections. It establishes retrospective
      application, or the latest practicable date, as the required method for
      reporting a change in accounting principle and the reporting of a
      correction of an error. SFAS 154 is effective for accounting changes and
      corrections of errors made in fiscal years beginning after December 15,
      2005 and is required to be adopted by the Company in the first quarter of
      fiscal 2007. The Company is currently evaluating the effect that the
      adoption of SFAS 154 will have on its consolidated results of operations
      and financial condition.

      In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
      Payment". SFAS 123(R) will provide investors and other users of financial
      statements with more complete and neutral financial information by
      requiring that the compensation cost relating to share-based payment
      transactions be recognized in financial statements. That cost will be
      measured based on the fair value of the equity or liability instruments
      issued. SFAS 123(R) covers a wide range of share-based compensation
      arrangements including share options, restricted share plans,
      performance-based awards, share appreciation rights, and employee share
      purchase plans. SFAS 123(R) replaces FASB Statement No. 123, "Accounting
      for Stock-Based Compensation", and supersedes APB Opinion No. 25,
      "Accounting for Stock Issued to Employees". SFAS 123, as originally issued
      in 1995, established as preferable a fair-value-based method of accounting
      for share-based payment transactions with employees. However, that
      statement permitted entities the option of continuing to apply the
      guidance in Opinion 25, as long as the footnotes to financial statements
      disclosed what net income would have been had the preferable
      fair-value-based method been used. Public entities (other than those
      filing as small business issuers) will be required to apply SFAS 123(R) as
      of the first interim or annual reporting period that begins after June 15,
      2005. SFAS 123(R) is applicable for the Company effective the first
      interim period that starts after December 15, 2005. The Company has
      evaluated the impact of the adoption of SFAS 123(R), and believes that the
      impact may be significant to the company's future overall results of
      operations and financial position.

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

      During the six months ended June 30, 2005, the Company received advances
      on a common stock purchase agreement. The gross amount of the advances was
      $200,000. Costs of $10,450 were deducted, resulting in net proceeds of
      $189,550. The costs have been deferred and will be applied against
      additional paid-in capital when the stock purchase is completed.

      In June 2005, the Company issued 100,000 shares of common stock, valued at
      $4,000, for services provided. Of the amount, $3,000 offset an outstanding
      payable, and the remaining $1,000 was charged to expense.


                                      F-5
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2005
                                   (UNAUDITED)

      During the six months ended June 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 5).

      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 5).

NOTE 3 INTANGIBLE ASSETS

      During the six months ended June 30, 2005 and 2004, the Company incurred
      costs of $11,000 and $20,750, respectively, for the development of new
      software applications.

      Amortization expense for the six months ended June 30, 2005 and 2004 was
      $22,183 and $13,180, respectively. Amortization expense for the three
      months ended June 30, 2005 and 2004 was $11,410 and $7,238, 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 STOCKHOLDERS' DEFICIENCY

      During the six months ended June 30, 2005, the Company received advances
      on a common stock purchase agreement. The gross amount of the advances was
      $200,000. Costs of $10,450 were deducted, resulting in net proceeds of
      $189,550. The costs have been deferred and will be applied against
      additional paid-in capital when the stock purchase is completed. 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.


                                      F-6
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2005
                                   (UNAUDITED)

      During the six months ended June 30, 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.

      In June 2005, the Company issued 100,000 shares of common stock, valued at
      $4,000, for services provided. Of the amount, $3,000 offset an outstanding
      payable, and the remaining $1,000 was charged to expense.

      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.

      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.

      The Company has deferred costs related to the issuance of options for
      services to be rendered through July 2005. During the six months ended
      June 30, 2005 and 2004, the Company has expensed $47,266 and $41,362,
      respectively, of these costs and $7,879 remains deferred at June 30, 2005.


                                      F-7
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2005
                                   (UNAUDITED)

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 $244,112
      and a negative cash flow from operations of $157,400 for the six months
      ended June 30, 2005 and a working capital deficiency of $436,305 and a
      stockholders' deficiency of $513,820 as of June 30, 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 to raise such funds include obtaining additional
      financing for which they are currently in negotiations with several
      financing institutions and increasing sales of the Quill computer mouse
      and related software products.

NOTE 7 ADVANCES PAYABLE - STOCKHOLDERS

      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 the six months ended June 30, 2005, the Company received loans
      totaling $32,900 from an individual for working capital purposes. The
      loans are non-interest bearing and are repayable upon demand. The Company
      has issued 2,090,000 shares of common stock as collateral for the loan.


                                      F-8
<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 the 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 expansion 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. 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.


                                       3
<PAGE>

RESULTS OF OPERATIONS FOR THE 3 MONTHS ENDED JUNE 30, 2005 AND 2004

Gross Profit

      For the 3 months ended June 30, 2005, the Company generated revenue from
sales of $76,285 compared to $82,527 for the 3 months ended June 30, 2004, a
decrease of $6,242, or 7.6%. . Cost of sales were $23,384 for the 3 months ended
June 30, 2005, compared to $23,689 for the 3 months ended June 30, 2004, a
decrease of $305. Gross profit was $52,901 or 69.3%% of net revenues for the 3
months ended June 30, 2005 relative to $58,838 or 71.3% of net revenues for the
3 months ended June 30, 2004. All revenues were from sales of the Company's
AirO2bic Mouse (pronounced aerobic) product and related system configurations,
software and accessories.

      The decreases in the Company's revenues and cost of sales in the 3 months
ended June 30, 2005 is attributable to the exhaustion of white mice inventory to
fulfill orders in the quarter. The Company had planned its inventory of white
mice based on its sales experience for such product in the United States.
However, during the quarter, European customers placed relatively more orders
for white mice product and there were less orders placed for black mice product
than anticipated. The Company has increased production of its white AirO2bic
Mouse in order to fulfill backlog and anticipates that as a result, revenues for
the quarter ending September 30, 2005 will be positively impacted.

Operating Expenses

      Operating expenses decreased to $185,852 for the 3 months ended June 30,
2005 from $189,208 for the 3months ended June 30, 2004, a decrease of $3,356 or
1.8%. This was due to decreases in selling expenses and compensation paid which
were partially offset by increases in professional fees and general and
administration.

Other Income (Expenses)

      For the 3 months ended June 30, 2005 interest and financing costs were
$4,279 compared to $49,941 for the 3 months ended June 30, 2004. The primary
component of the 2004 expense was a financing cost attributable to common shares
being sold below market value. There was no comparable expense in 2005.


                                       4
<PAGE>

Net Loss

      The Company incurred a net loss $137,230 for the 3 months ended June 30,
2005 relative to a net loss of $180,311 for the 3 months ended June 30, 2004.
The reduction in the net loss between the two periods was primarily due to a
reduction in finance charges resulting from the sale of common stock below
market value in 2004.

RESULTS OF OPERATIONS FOR THE 6 MONTHS ENDED JUNE 30, 2005 AND 2004

Gross Profit

      For the 6 months ended June 30, 2005 the Company generated revenue of
$171,865 compared to $159,537 for the 6 months ended June 30, 2004. Cost of
sales was $48,431 for the 6 months ended June 30, 2005, compared to $45,732 for
the 6 months ended June 30, 2004. Gross profit was 123,434 or 71.8% of net
revenues for the six months ended June 30, 2005 relative to $113,805 or 71.3% of
net revenues for the six months ended June 30, 2004.

Operating Expenses

      For the 6 months ended June 30, 2005, operating expenses increased $60,006
or 20.1% from $297,339 for the 6 months ended June 30, 2004 to $357,345 for the
6 months ended June 30, 2005. This was primarily due to a $37,303 increase in
professional fees primarily relating to the preparation and filing of a
registration statement relating to the resale of the Company's stock which the
Company had agreed to file and a $24,103 increase in other general and
administrative expense.

Other Income (expenses)

      The Company had total other income of $80,071 for the 6 months ended June
30, 2004 as a result of a gain on extinguishment of debt of $243,800 and $15,000
for cancellation of stock issued for consulting fees which was partially offset
by interest and financing charges of $178,729. The Company had total other
expenses of $10,201 for the 6 months ended June 30, 2005, all of which consisted
of interest and financing costs.

Net Loss

      The Company incurred a net loss $244,112 for the 6 months ended June 30,
2005 relative to a net loss of $103,463 for the 6 months ended June 30, 2004, an
increase of $140,649. The additional loss in the 6 months ended June 30, 2005 is
attributable to the Company incurring $10,201 in other expenses as compared to
having $80,071 in other income in the prior period, which in turn was the result
of the Company recording a gain upon the extinguishment of debt in the 6 months
ended June 30, 2004.


                                       5
<PAGE>

LIQUIDITY AND CASH POSITION

Operating Activities

      For the 6 months ended June 30, 2005 and the 6 months ended June 30, 2004,
the Company used $157,400 and $96,060, respectively, to fund operating
activities. The increase of $61,340 in the 6 months ended June 30, 2005 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 6 months ended June 30, 2004 and changes in inventory and
accounts receivable and payable in the comparable 6-month period.

Investing Activities

      For the 6 months ended June 30, 2005 and June 30, 2004, the Company used
$12,305 and $26,197, respectively, to fund investing activities. The decrease in
cash used in investing activities in the 6 months ended June 30, 2005 was
primarily due to a decrease in intangible costs relating to software development
in the later period.

Financing Activities

      For the 6 months ended June 30, 2005 and June 30, 2004, the Company
realized cash of $179,751 and $152,277, respectively, in connection with
financing activities. The increase of $27,474 in the 6 months ended June 30,
2005 was primarily due to $189,550 of advances received on common stock
purchases in 2005 as compared to proceeds of $183,940 received in 2004 on common
stock issuances as well as, proceeds from notes and loans payable and advances
from stockholders received in 2005 which were partially offset by increases in
principal payments made in the 2005 period on a settlement.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern Qualification

      For the six months ended June 30, 2005 the Company has a net loss of
$244,112 and a negative cash flow from operations of $157,400, and as of June
30, 2005 the Company had a working capital deficiency of $436,305 and a
stockholders' deficiency of $513,820. 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 (the availability and sufficiency of which to support
operation of the Company during the next 12 months is not assured) and achieve
continued growth in sales. 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,
increasing sales of the AirO2bic computer mouse and seeking to expand sales of
related software products to be marketed under an Anti.Fatigue(TM) theme.


                                       6
<PAGE>

      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 April 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 Securities Exchange Act of 1934 registration and OTC Bulletin
Board listing, generally increasing sales and revenue through June 30, 2005
(although revenues slightly decreased in the quarter ended June 30, 2005 due to
a lack of inventory to fulfill orders) 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. The services of a sales consultant once retained
are no longer employed.

      The Company has invested in a pilot-scale clinical study that is being
conducted on its behalf. The study is to investigate the use of a clinical
diagnostic test, called Nerve Conduction Velocity testing, to diagnose the
condition called Carpal Tunnel Syndrome, as a monthly marker of the impact of
the use of the AirO2bic mouse upon subjects with or without Carpal Tunnel
Syndrome ("CTS"). This study is to establish the usefulness of any data that may
be provided in tracking effects of the use of the AirO2bic mouse product. The
Company believes that the early data supports the premise that monthly interval
testing does provide such data.

      The Company continues its focus 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 has just established itself upon the GSA advantage
product sites.

      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.


                                       7
<PAGE>

      Access to new markets necessarily requires partnership with organizations
that have a presence and reputation within those sectors. The Company has
developed an increasing reliance upon distributor/resellers. (This business is
now in excess of 50% of the Company's sales.) The Company believes that there is
great potential for reduction in costs of access to markets served by
distributors and resellers in terms of time, employment of personnel and
marketing. Reductions in gross margin may be necessary to achieve the pricing
incentives required by the retail computer market. 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.

      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") in the area of computer peripherals. To date the Company's IPR
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.

RECENT ACCOUNTING PRONOUNCEMENTS

      In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board Opinions
No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting
principle and the reporting of a correction of an error. SFAS 154 is effective
for accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005 and is required to be adopted by the Company in the
first quarter of fiscal 2007. The Company is currently evaluating the effect
that the adoption of SFAS 154 will have on its consolidated results of
operations and financial condition.

      In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
Payment". SFAS 123(R) will provide investors and other users of financial
statements with more complete and neutral financial information by requiring
that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. SFAS 123(R) covers a wide
range of share-based compensation arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights, and
employee share purchase plans. SFAS 123(R) replaces FASB Statement No. 123,
"Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees". SFAS 123, as originally issued in
1995, established as preferable a fair-value-based method of accounting for
share-based payment transactions with employees. However, that statement
permitted entities the option of continuing to apply the guidance in Opinion 25,
as long as the footnotes to financial statements disclosed what net income would
have been had the preferable fair-value-based method been used. Public entities
(other than those filing as small business issuers) will be required to apply
SFAS 123(R) as of the first interim or annual reporting period that begins after
June 15, 2005. SFAS 123(R) is applicable for the Company effective the first
interim period that starts after December 15, 2005. The Company has evaluated
the impact of the adoption of SFAS 123(R), and believes that the impact may be
significant to the company's future overall results of operations and financial
position.


                                       8
<PAGE>

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.

      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 expired on April 1,
2005, at which time making all purchases subject to Section 508 compliance.

      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, 2004 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.


                                       9
<PAGE>

      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 Company's 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 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". For example, Logitech, the largest mouse and keyboard manufacturer
in the world is promoting a new keyboard product as having a "better design"
that "enhances total comfort experience."


                                       10
<PAGE>

      Logitech stated "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.

      "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.


                                       11
<PAGE>

      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.

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.aerobicmouse.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.


                                       12
<PAGE>

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.

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.


                                       13
<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-AirO2bic product was introduced that provided
      customers with a color choice option that in management's 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 Anti.Fatigue(TM) Software (discussed below).

o     Planned for introduction in the third quarter of 2005. Brakemoor(TM)
      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.

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.


                                       14
<PAGE>

      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.

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, the allowance for doubtful accounts, 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.

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 were effective in alerting
him in a timely manner to information relating to the Company required to be
disclosed in this report.


                                       15
<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.

      In connection with their review of our financial statements as of March
31, 2005 and for the three months then ended our independent auditors identified
that our accounts receivable were overstated at December 31, 2004. We
subsequently reevaluated our accounts receivable and recorded an adjustment. The
auditors advised us that this adjustment reflected a significant deficiency in
our accounting systems. During the three months ended June 30, 2005 we
implemented an automatic sales order processing system which we believe has
cured the deficiency noted by our auditors.

      There were no other 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 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.


                           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.


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<PAGE>

      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 June 30, 2005 we did not sell any 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: August 10, 2005


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