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

                                   FORM 10-QSB

            |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period Ended September 30, 2005

            |_| TRANSITION PERIOD REPORT UNDER SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from ____ to _____.

                          Commission File No. 000-30486

                          ACTIVECORE TECHNOLOGIES, INC.
             (Exact Name of Registrant as specified in its charter)

              NEVADA                                   65-6998896
---------------------------------         ------------------------------------
 (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
  Incorporation or Organization)

       156 Front Street West, Suite 210, Toronto, Ontario, Canada M5J 2L6
                    (Address of principal Executive Offices)

                                 (416) 252-6200 (Registrant's Telephone Number,
              Including Area Code)

      Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

                                  Yes |X| No|_|

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 under the Exchange Act).

                                 Yes |_| No |X|

      Transitional Small Business Disclosure Format (Check one):

                                 Yes |_| No |X|

         State the number of shares outstanding of each of the issuer's classes
of common equities as of the latest practicable date: as of November 3, 2005,
there were 76,937,692 outstanding shares of the issuer's common stock. ,
$0.001par value.


<PAGE>

       ACTIVECORE TECHNOLOGIES, INC. (formerly IVP TECHNOLOGY CORPORATION)

                                   FORM 10-QSB

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
PART I.......................................................................................3
   ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS................................................3
   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.......................30
   ITEM 3.  CONTROLS AND PROCEDURES.........................................................44
PART II.....................................................................................46
   ITEM 1.  LEGAL PROCEEDINGS...............................................................46
   PART 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS......................47
   ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.................................................47
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................47
   ITEM 5.  OTHER INFORMATION...............................................................47
   ITEM 6.  EXHIBITS AND REPORT FOR FORM 8-K................................................48
 SIGNATURES.................................................................................49
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002*................50
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002*................51
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO  SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002.......................................................52
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO  SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002.......................................................53
</TABLE>


                                       2
<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

      ACTIVECORE TECHNOLOGIES, INC. (FORMERLY IVP TECHNOLOGY CORPORATION.)
                            As of September 30, 2005

                          INDEX TO FINANCIAL STATEMENTS

Page       4         Condensed Consolidated Balance Sheets as of September 30,
                     2005 (Unaudited) and December 31, 2004

Page       5         Condensed Consolidated Statements of Operations for the
                     Three and Nine Months Ended September 30, 2005 and 2004
                     (Unaudited)

Page       6         Condensed Consolidated Statement of Stockholders' Equity
                     for the Nine Months Ended September 30, 2005 (Unaudited)

Pages      7 - 8     Condensed Consolidated Statements of Cash Flows for the
                     Three and Nine Months Ended September 30, 2005 and 2004
                     (Unaudited)

Pages      9 - 29    Notes to Condensed Consolidated Financial Statements as of
                     September 30, 2005 (Unaudited)


                                       3
<PAGE>

                        ACTIVECORE TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS

<TABLE>
<CAPTION>
                                                                             September 30,
                                                                                2005         December 31,
                                                                              (Unaudited)        2004
                                                                             ------------    ------------
<S>                                                                          <C>             <C>
CURRENT ASSETS

Cash                                                                         $     32,105    $     53,351
Accounts receivable, net (note 4)                                               3,495,200       2,390,549
Other receivables                                                                      --          20,992
Taxes recoverable                                                                 124,713              --
Deferred compensation (note 21)                                                   516,250              --
Prepaid expenses and other current assets                                         242,745         137,035
                                                                             ------------    ------------
     Total Current Assets                                                       4,411,013       2,601,927
                                                                             ------------    ------------

CAPITAL ASSETS  (NOTE 5)                                                          374,123         312,460
                                                                             ------------    ------------

OTHER ASSETS
Goodwill and other intangible assets, net (note 6)                              5,074,018         868,854
Investments at cost (note 7)                                                           --         262,648
Deferred costs                                                                     16,108         175,009
Deferred compensation (note 21)                                                   165,000
Deferred equity line commitment fees                                                   --          16,092
Net assets from discontinued operations                                                --         593,409

                                                                             ------------    ------------
     Total Other Assets                                                         5,255,126       1,916,012
                                                                             ------------    ------------

TOTAL ASSETS                                                                 $ 10,040,262    $  4,830,399
                                                                             ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank Overdraft                                                               $    155,384    $     17,566
Line of credit (note 10)                                                        1,184,666              --
Accounts payable                                                                2,545,421         702,672
Accrued liabilities                                                             1,094,684         354,077
Taxes payable (note 13)                                                           812,936         957,011
Leases payable                                                                     17,752          22,093
Long-term debt, current portion (note 8)                                          398,409         857,161
Due to related parties (note 11)                                                   24,448         132,364
Redeemable preferred shares (note 9)                                              125,000              --
Deferred tax liability                                                            100,005              --
Other current liabilities                                                         174,689          27,247
                                                                             ------------    ------------
     Total Current Liabilities                                                  6,633,394       3,070,191
                                                                             ------------    ------------

LONG-TERM LIABILITIES
Long-term debt (note 8)                                                           254,661         491,622
Redeemable preferred shares (note 9)                                              281,250
Accrued liabilities                                                                26,484          30,447
Deferred tax liability                                                            250,012              --
                                                                             ------------    ------------
     Total Long-Term Liabilities                                                  812,407         522,069
                                                                             ------------    ------------

TOTAL LIABILITIES                                                               7,445,801       3,592,260
                                                                             ------------    ------------

COMMITMENTS AND CONTINGENCIES (note 14)

STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, 50,000,000 shares authorized
Preferred Stock issued and outstanding (note 15)
Series A, 8,333.333 shares as of September 30, 2005 and December 31, 2004           8,333           8,333
respectively
Series B, 4,167,667 shares as of September 30, 2005 and December 31, 2004           4,168           4,168
respectively
Common stock, $0.01 par value, 500,000,000 shares authorized, 78,337,692
and 46,711,708 shares issued and outstanding at December 31,2004 and 2003,
respectively
outstanding as of September 30, 2005 and December 31, 2004, respectively          783,378         467,117
(note 15)
Common stock to be returned                                                       (68,783)        (68,783)
Treasury Stock                                                                   (112,000)             --
Warrants                                                                           74,463              --
Additional paid-in capital                                                     43,433,395      39,137,498
Accumulated deficit                                                           (40,619,541)    (37,892,002)

Accumulated other comprehensive loss                                             (773,952)       (256,204)
Subscription Receivable - Preferred                                                    --        (150,000)
Deferred compensation                                                            (135,000)        (11,988)
                                                                             ------------    ------------
     Total Stockholders' Equity                                                 2,594,461       1,238,139
                                                                             ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                   $ 10,040,262    $  4,830,399
                                                                             ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                 For the
                                                                                                   nine
                                                             For the three     For the three      months
                                                                 months            months          ended     For the nine
                                                                 ended             ended         September    months ended
                                                              September 30,     September 30,       30,       September 30,
                                                                  2005             2004            2005           2004
                                                               ------------    ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>             <C>
REVENUES                                                       $  2,708,373    $  1,432,810    $  4,665,541    $  2,730,059

COST OF SALES
Direct wages                                                      1,593,180         273,460       2,850,559         584,591
Amortization of licensing agreements and other costs                121,215          19,412         224,618         105,139
                                                               ------------    ------------    ------------    ------------
Total Cost of Sales                                               1,714,395         292,872       3,075,177         689,730
                                                               ------------    ------------    ------------    ------------

GROSS PROFIT (LOSS)                                                 993,978       1,139,938       1,590,364       2,040,329
                                                               ------------    ------------    ------------    ------------

OPERATING EXPENSES
Salaries and wages                                                  515,702         394,380         937,411       1,144,904
Consulting fees                                                     131,096          35,215         511,126         197,179
Research and development                                             55,000              --         165,000              --
Legal and accounting                                                281,182          95,026         628,745         258,481
General and administrative                                          289,288         148,524         996,239         539,439
Financial advisory fees                                              16,043           2,662          65,679          10,292
Depreciation & amortization of intangible assets                     84,045          14,614         300,472          19,931
                                                               ------------    ------------    ------------    ------------

Total Operating Expenses                                          1,372,356         690,421       3,604,672       2,170,226
                                                               ------------    ------------    ------------    ------------

INCOME (LOSS) FROM OPERATIONS                                      (378,378)        449,517      (2,014,308)       (129,897)
                                                               ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
Gain (loss) on extinguishment of debt                               (74,463)             --         (74,463)          2,000
Interest income                                                          --          25,480              --          55,456
Interest expense                                                    (74,070)        (33,204)       (189,974)        (88,180)
Foreign exchange gain (loss)                                         31,367          37,626          (5,928)         19,735
                                                               ------------    ------------    ------------    ------------
Total Other Income (Expense)                                       (117,166)         29,902        (270,365)        (10,989)
                                                               ------------    ------------    ------------    ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES       (495,544)        479,419      (2,284,673)       (140,886)
                                                               ------------    ------------    ------------    ------------
Income tax recovery                                                 (18,600)             --         (18,600)             --
                                                               ------------    ------------    ------------    ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS                           (476,944)        479,419      (2,266,073)       (140,886)
                                                               ------------    ------------    ------------    ------------
                                                                    (15,165)        120,490        (461,466)        (20,901)
Gain (loss) from discontinued operations - net (note 2)

NET INCOME (LOSS)                                              $   (492,109)   $    599,909    $ (2,727,539)   $   (161,787)
                                                               ============    ============    ============    ============
Preferred Stock Dividend                                             12,500              --          36,092

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                   $   (504,609)   $    599,909    $ (2,763,631)   $   (161,787)

LOSS PER COMMON SHARE FROM CONTINUING
    OPERATIONS - BASIC AND DILUTED                             $      (0.01)   $       0.00    $      (0.05)   $       0.00
                                                               ------------    ------------    ------------    ------------

LOSS  PER COMMON SHARE FROM DISCONTINUED
    OPERATIONS - BASIC AND DILUTED                             $         --            0.00    $         --    $       0.00
                                                               ------------    ------------    ------------    ------------

NET LOSS PER COMMON  SHARE - BASIC AND DILUTED                 $      (0.01)   $       0.00    $      (0.05)   $       0.00
                                                               ------------    ------------    ------------    ------------

WEIGHTED AVERAGE NUMBER OF SHARES  OUTSTANDING-
      BASIC AND DILUTED                                          61,313,668      45,490,996      55,918,440      38,781,040
                                                               ============    ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

                 ACTIVECORE TECHNOLOGIES, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                  FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2005
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                       SHARES SERIES  AMOUNT        SHARES SERIES AMOUNT
                                                                             A        SERIES A          B         SERIES B
                                                                    ----------------------------------------------------------

<S>                                                                     <C>           <C>          <C>           <C>
Balance, December 31, 2004                                               8,333,333     $ 8,333      4,167,667     $ 4,168

Stock issued for employment services
Stock issued for director fees
Stock issued for consulting services
Stock issued for financing services
Stock issued for settlement of debt
Warrants issued in conjunction with debt conversion
Stock issued for redemption of preference shares
Stock issued for beneficial owner roundup on reverse split
Stock consideration received through sale of Twincentric
Stock to be issued on acquisition
Stock issued on Cratos acquisition
Stock issued to vendor
Deferred cost recognized
Preferred stock subscription received
Net loss  for period
Preferred Stock Dividend
Cumulative translation adjustment
 Balance, September 30, 2005                                             8,333,333     $ 8,333      4,167,667     $ 4,168

<CAPTION>

                                                                                       COMMON STOCK
                                                                    COMMON SHARES      AMOUNT          SHARES              AMOUNT
                                                                    ----------------------------------------------------------------

<S>                                                                  <C>              <C>              <C>           <C>
Balance, December 31, 2004                                           46,711,708       $ 467,117        (252,725)     $ (68,783)

Stock issued for employment services                                    750,000           7,500
Stock issued for director fees                                          480,000           4,800
Stock issued for consulting services                                    975,000           9,750
Stock issued for financing services                                   5,000,000          50,000
Stock issued for settlement of debt                                   8,508,285          85,083
Warrants issued in conjunction with debt conversion
Stock issued for redemption of preference shares                      1,720,026          17,200
Stock issued for beneficial owner roundup on reverse split               50,010             500
Stock consideration received through sale of Twincentric
Stock to be issued on acquisition                                     1,200,000          12,000
Stock issued on Cratos acquisition                                    9,021,030          90,210
Stock issued to vendor                                                3,921,633          39,217
Deferred cost recognized
Preferred stock subscription received
Net loss  for period
Preferred Stock Dividend
Cumulative translation adjustment
 Balance, September 30, 2005                                         78,337,692       $ 783,378        (252,725)     $ (68,783)


<CAPTION>

                                                                      WARRANTS        TREASURY STOCK   CAPITAL           DEFICIT
                                                               ---------------------------------------------------------------------

<S>                                                               <C>                    <C>         <C>              <C>
Balance, December 31, 2004                                                               $ -         $ 39,137,498     $(37,892,002)

Stock issued for employment services                                                                                      105,000
Stock issued for director fees                                                                                            139,200
Stock issued for consulting services                                                                                      136,500
Stock issued for financing services                                                                                       540,000
Stock issued for settlement of debt                                                                                       801,568
Warrants issued in conjunction with debt conversion               74,463
Stock issued for redemption of preference shares                                                                          136,992
Stock issued for beneficial owner roundup on reverse split
Stock consideration received through sale of Twincentric                            (112,000)
Stock to be issued on acquisition                                                                                         252,000
Stock issued on Cratos acquisition                                                                                      1,857,577
Stock issued to vendor                                                                                                    363,152
Deferred cost recognized
Preferred stock subscription received
Net loss  for period
Preferred Stock Dividend                                                                                                  (36,092)
Cumulative translation adjustment
 Balance, September 30, 2005                                    $ 74,463          $ (112,000)        $ 43,433,395     $(40,619,541)


<CAPTION>

                                                                       INCOME (LOSS)     STOCK         COMPENSATION
                                                                    -----------------------------------------------

<S>                                                                     <C>            <C>               <C>
Balance, December 31, 2004                                              $ (256,204)    $ (150,000)       $ (11,988)

Stock issued for employment services
Stock issued for director fees
Stock issued for consulting services
Stock issued for financing services
Stock issued for settlement of debt
Warrants issued in conjunction with debt conversion
Stock issued for redemption of preference shares
Stock issued for beneficial owner roundup on reverse split
Stock consideration received through sale of Twincentric
Stock to be issued on acquisition
Stock issued on Cratos acquisition
Stock issued to vendor
Deferred cost recognized
Preferred stock subscription received                                                                     150,000
Net loss  for period                                                  (2,727,539)
Preferred Stock Dividend
Cumulative translation adjustment                                                         (517,748)
 Balance, September 30, 2005                                            $ (773,952)           $ -       $ (135,000)

<CAPTION>

                                                                      TOTAL
                                                                   ------------

<S>                                                                   <C>
Balance, December 31, 2004                                            1,238,139

Stock issued for employment services                                    (75,000)
Stock issued for director fees                                         (120,000)
Stock issued for consulting services
Stock issued for financing services
Stock issued for settlement of debt
Warrants issued in conjunction with debt conversion                      74,463
Stock issued for redemption of preference shares
Stock issued for beneficial owner roundup on reverse split
Stock consideration received through sale of Twincentric               (112,000)
Stock to be issued on acquisition
Stock issued on Cratos acquisition
Stock issued to vendor
Deferred cost recognized                                                 71,988
Preferred stock subscription received
Net loss  for period
Preferred Stock Dividend
Cumulative translation adjustment
 Balance, September 30, 2005                                          2,594,462
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          For the nine     For the nine
                                                          months ended     months ended
                                                          September 30,    September 30,
                                                              2005            2004
                                                            -----------    -----------

<S>                                                         <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) for the period                            $(2,727,539)   $  (161,787)
Adjustments to reconcile net loss from continuing
operations to net cash used in operating activities:
Depreciation                                                    108,113         34,947
Amortization of intangible assets                               330,638         84,712
Amortization of other deferred charges                          244,366        267,926
Stock issued for compensation                                   154,000        238,738
(Gain) loss on extinguishment of debt                            74,463         (2,000)
Loss on disposal of discontinued operations                      16,434             --

Changes in operating assets and liabilities excluding
business acquisition:
Decrease (increase) in receivables                              219,989     (1,947,413)
Decrease (increase) in prepaid expenses and other current      (154,748)       121,417
assets
(Increase) decrease in other receivables                         22,237             --
(Increase) decrease in other assets                                  --
Increase (decrease) in accounts payable                        (926,523)       115,738
Increase (decrease) in accrued liabilities                      874,020         64,962
Increase (decrease) in taxes payable                            111,933        336,444
Increase (decrease) in other current liabilities                105,873         12,020
Change in deferred consulting fees                                3,105             --

                                                            -----------    -----------
 Net Cash Used In Operating Activities                       (1,543,639)      (834,296)
                                                            -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of capital assets                                      (66,154)      (273,138)
Proceeds from sale of investment in ePocket, Inc.               250,000
Proceeds, net of bank indebtedness assumed  from                     --
disposition of Twincentric Limited
Business acquisition costs                                      (35,000)
Acquisition of Cratos Technology Solutions, Inc.               (143,249)            --
Acquisition of Disclosure Plus                                 (125,000)            --
                                                            -----------    -----------
 Net Cash (Used In) Provided by Investing Activities           (119,403)      (273,138)
                                                            -----------    -----------
</TABLE>


                                       7
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                             For the nine   For the nine
                                                                             months ended   months ended
                                                                             September 30,  September 30,
                                                                                2005            2004
                                                                             -----------    -----------
<S>                                                                          <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit                                                    1,449,657             --
Increase in due to related parties                                                 88,881        433,171
Advance of notes payable                                                                         530,000
Proceeds (repayments) received from (to) related parties                               --
Repayments made to related parties                                                (65,253)            --
Repayment of notes payable                                                        (35,407)       (82,590)
Change in bank overdraft                                                          129,744             --
Repayment of debt                                                                      --
Preferred stock dividend                                                          (48,280)            --
Proceeds from preferred shares subscription                                                       150,000
Proceeds from issuance of common stock                                             51,217
Proceeds from issuance of series A preferred stock                                               250,000
Payment on leases                                                                 (29,081)       (20,081)
                                                                              -----------    -----------
Net Cash Provided By Financing Activities                                       1,640,261      1,161,717
                                                                              -----------    -----------

                                                                              -----------    -----------
FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY                              1,150        (45,122)
                                                                              -----------    -----------

NET INCREASE (DECREASE) IN CASH FOR THE PERIOD                                    (21,631)         9,161

CASH - BEGINNING OF PERIOD                                                         53,736             --
                                                                              -----------    -----------

CASH - END OF PERIOD                                                          $    32,105    $     9,161
                                                                              ===========    ===========

Non-Cash Transactions:
   Equipment purchase under capital leases                                    $    16,703    $    28,475
   Issuance of shares related to acquisition of Cratos Technology Solutions   $ 1,947,787    $        --
   Issuance of shares to vendors                                              $   811,579    $        --
   Issuance of shares for compensation                                        $   232,500    $        --
  Issuance of stock to satisfy Common Stock to be issued                      $        --    $   380,000
  Issuance of stock for acquisitions                                          $   264,000    $ 1,081,209
  Issuance of stock for payment of accrued liabilities                        $              $    48,000
  Issuance of stock for payment of debt and accrued interest thereon          $   736,860    $   658,168
  Issuance of stock for payment of amounts due to related parties             $              $   610,325
  Common stock issued for share exchange agreement                            $              $   240,000
  Issuance of shares to satisfy mandatorily redeemable preferred shares       $   154,192    $
  Issuance of shares to secure financing arrangements                         $   590,000    $
  Share subscription receivable for sale of Series B preferred stock          $              $   250,000
  Treasury stock rescinded                                                    $              $   770,000
  Note Receivable for sale of SilverBirch Studios Division                    $              $   749,000
</TABLE>


                                       8
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

      Basis of Presentation and Going Concern

      The accompanying  unaudited interim consolidated financial statements have
      been prepared  pursuant to the rules and regulations for reporting on Form
      10-QSB.  Accordingly,  certain  information  and  disclosures  required by
      generally accepted accounting principles for complete financial statements
      are  not  included  herein.  The  interim  statements  should  be  read in
      conjunction  with the financial  statements and notes thereto  included in
      the Company's  latest  Annual  Report on Form 10-KSB.  The results for the
      three and nine month  periods may not be indicative of the results for the
      entire year.

      Interim statements are subject to possible  adjustments in connection with
      the annual audit of the  Company's  accounts for the fiscal year 2005.  In
      the Company's opinion,  all adjustments  necessary for a fair presentation
      of these  interim  statements  have been  included and are of a normal and
      recurring nature.

      The  consolidated  financial  statements  are  expressed in United  States
      dollars and have been prepared in accordance  with  accounting  principles
      generally accepted in the United States of America.

      The Company's  independent auditors have issued a going concern opinion on
      the Company's  consolidated  financial  statements as at December 31, 2004
      that raises substantial doubt about the Company's ability to continue as a
      going concern.

      The accompanying consolidated financial statements have been prepared on a
      going concern basis,  which contemplates the realization of assets and the
      satisfaction  of  liabilities  and  commitments  in the  normal  course of
      business.  The Company has experienced negative cash flows from operations
      and has an accumulated  deficit at September 30, 2005 of $40,619,541.  The
      Company has funded its activities to date almost exclusively from debt and
      equity  financings.  Management's plan to continue  operations is to raise
      additional  debt or equity  capital until such time as the Company is able
      to generate sufficient operating revenues through its new acquisitions.

      The  Company's  ability to continue as a going concern is dependent on its
      ability to raise additional debt and equity financing and to implement its
      business  plan to market  and sell its  various  enterprise  software  and
      services.

      The consolidated  financial statements do not include any adjustments that
      might result from the outcome of this uncertainty.


                                       9
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION - (Continued)

      Recent Accounting Pronouncements

      In December  2004 the FASB issued SFAS No. 123  (revised  2004),  Shares -
      Based  Payment,  ("SFAS No. 123 R"), which amends,  "Accounting  for Stock
      Based  Compensation,  and  supersedes  APB Opinion No. 25,  Accounting for
      Stock Issued to Employees.  SFAS No. 123 (R) requires compensation expense
      to be recognized for all share based  payments made to employees  based on
      the  fair  value  of the  award  at the  date of  grant,  eliminating  the
      intrinsic  value  alternative  allowed  by SFAS No.  123.  Generally,  the
      approach to determining  fair value under the original  pronouncement  has
      not changed.  However,  there are revisions to the  accounting  guidelines
      established,  such as  accounting  for  forfeitures  that will  change our
      accounting for stock-based awards in the future.

      SFAS No. 123 (R) must be adopted in the annual period beginning after June
      15, 2005.  The statement  allows  companies to adopt its  provision  using
      either of the following transition alternatives:

      (i) The modified  prospective method,  which results in the recognition of
      compensation  expense using SFAS 123(R) for all share-based awards granted
      after the effective date and the recognition of compensation expense using
      SFAS 123 for all  previously  granted  share - based  awards  that  remain
      unvested at the effective date; or

      (ii) The  modified  retrospective  method,  which  results in applying the
      modified prospective method and restating prior periods by recognizing the
      financial statement impact of share-based  payments in a matter consistent
      with the pro forma  disclosure  requirements of SFAS No. 123. The modified
      retrospective  method  may be applied to all prior  periods  presented  or
      previously reported interim periods of the year of adoption.

      The  Company has not yet  determined  either the method of adoption or the
      impact  that  the new  standard  is  expected  to  have  on our  financial
      statements.

      In March 2005, the Securities and Exchange Commission ("SEC") released SEC
      Staff Accounting  Bulletin No. 107,  Share-Based  Payment ("SAB 107"). SAB
      107 provides the SEC staff  position  regarding  the  application  of SFAS
      123R. SAB 107 contains  interpretive  guidance  related to the interaction
      between  SFAS  123R and  certain  SEC rules  and  regulations,  as well as
      provides the staff's views regarding the valuation of share-based  payment
      arrangements for public companies.  SAB 107 also highlights the importance
      of  disclosures  made related to the accounting  for  share-based  payment
      transactions.  The  Company is  currently  evaluating  SAB 107 and will be
      incorporating it as part of its adoption of SFAS 123R.


                                       10
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      In May 2005,  the FASB issued SFAS No. 154,  Accounting  Changes and Error
      Corrections  ("SFAS 154") which supersedes APB Opinion No. 20,  Accounting
      Changes and SFAS No. 3, Reporting  Accounting Changes in Interim Financial
      Statements.  SFAS 154 changes the  requirements for the accounting for and
      reporting of changes in accounting  principle.  The statement requires the
      retroactive  application to prior periods' financial statements of changes
      in accounting  principles,  unless it is impracticable to determine either
      the period specific effects or the cumulative  effect of the change.  SFAS
      154 does not change the guidance for reporting the  correction of an error
      in previously  issued financial  statements or the change in an accounting
      estimate.  SFAS 154 is effective for accounting changes and corrections of
      errors  made in fiscal  years  beginning  after  December  15,  2005.  The
      Corporation  does not expect the  adoption  of SFAS 154 to have a material
      impact on its consolidated results of operations and financial condition.

      New accounting policies

      Rebate Accrual

      The Company has a significant  customer  associated  with its SIM division
      for which it operates a rebate program.  This program allows this customer
      to earn rebates which can be redeemed  towards  consulting  engagements in
      the  subsequent  fiscal year.  The customer  earns these  rebates based on
      remitting payment for current projects within a specified time period. The
      Company has recorded an accrual, based on its best estimate of this future
      liability, which has been included on its Consolidated Balance Sheet as an
      accrued  liability.  In determining the appropriate amount of this accrual
      at reporting dates, the Company considers numerous factors, including this
      customer's history at both earning these rebates and redeeming them within
      the required period before they expire.

      Investments

      Equity  investments in which the Company exercises  significant  influence
      but does not control and is not the primary  beneficiary are accounted for
      using the equity  method.  Investments in which the Company is not able to
      exercise  significant  influence over the investee are accounted for under
      the cost method.


                                       10
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 2 DISCONTINUED OPERATIONS

      During fiscal 2004 and 2005, the Company disposed of two components of its
      business which constituted  discontinued  operations - SilverBirch Studios
      and  Twincentric  Limited.  The gain (loss) on the Company's  consolidated
      statements  of  operations  for the three  and nine  month  periods  ended
      September 30, 2004 and 2005 is summarized as follows:

<TABLE>
<CAPTION>
                                 Three month         Three month        Nine month          Nine month
                                    period             period             period              period
                                    ended              ended               ended              ended
                                 September 30,        September          September         September 30,
                                     2005             30, 2004           30, 2005              2004
                                ---------------    ---------------    ---------------    ---------------
<S>                             <C>                <C>                <C>                <C>
SilverBirch Studios

Loss from discontinued
operations                      $            --    $          (954)   $            --    $      (129,450)

Twincentric Limited

Loss on Disposal                        (16,434)                --            (16,434)                --

Gain (loss) from
discontinued operations                   1,269            121,444           (445,032)           108,549
                                ---------------    ---------------    ---------------    ---------------

                                        (15,165)           121,444           (461,466)           108,549
                                ---------------    ---------------    ---------------    ---------------

Gain (loss) from discontinued
operations - net                $       (15,165)   $       120,490    $      (461,466)   $       (20,901)
                                ===============    ===============    ===============    ===============
</TABLE>

      SilverBirch Studios

      Effective February 29, 2004, the Company entered into an agreement to sell
      certain assets and  liabilities  of the Company's  cellular phone game and
      ring tone  development  group,  SilverBirch  Studios,  and the web portals
      Recessgames.com,      Bladeofzorro.com     and      Silverbirchstudios.com
      (collectively,   the  "Games   Division")  to  SilverBirch   Studios  Inc.
      SilverBirch  Studios  Inc.  is  majority  owned by a former  employee  and
      officer of the Company.


                                       11
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The purchase price  initially  consisted of a promissory note for $830,300
      (CAD $1,000,000),  a 4-year royalty agreement based on 2% of SilverBirch's
      gross revenues,  a 5% equity interest in SilverBirch,  and a non-exclusive
      grant  of the  right  to use  certain  of the  SilverBirch  technology  on
      preferential terms.

      Due to the fact that the  recoverability  of the  aforementioned  note was
      dependent  upon the future  successful  operations  of the division  sold,
      management had  previously  determined  that the  recognition of the sales
      proceeds  was not  appropriate.  Accordingly,  the value of the note which
      amounted to $830,300 (CAD $1,000,000) was not included in the consolidated
      results for the fiscal quarter ended March 31, 2004.

      During the quarter ended June 30, 2005, SilverBirch Studios Inc. announced
      its intention to enter into a reverse  take-over  transaction  (the "RTO")
      which  would  result in it becoming a publicly  traded  company on the TSX
      Venture Exchange ("TSXV").  On June 30, 2005, the Company restructured the
      above  consideration with SilverBirch  Studios Inc. such that the original
      purchase  consideration as described above will be waived in consideration
      for the following:

            (a)   Silverbirch Studios Inc. will pay the Company CAD $125,000 (US
                  $102,000) upon completion of the RTO.

            (b)   The Company will be granted 1,750,000 common shares in the new
                  public company that SilverBirch Studios Inc. reverses into.

            (c)   The Company  will  receive  1,000,000  warrants  priced at CAD
                  $0.36 with an expiry date of January 31, 2006 upon  completion
                  of the RTO.

      The Company will  recognize the above  consideration  in its  consolidated
      statement of  operations  during the quarter  ending  December 31, 2005 as
      this consideration was received subsequent to the end of the quarter ended
      September 30, 2005 (See note 22).

      Following is a summary of the results of operations of the Games  Division
      for the period from January 1, 2004 through September 30, 2004.

                                                                      2004
                                                                ---------------

Salaries and wages                                              $       131,433
Other                                                                    (1,983)
                                                                ---------------
Net loss from discontinued operations                           $       129,450
                                                                ===============

      Twincentric, Limited

      On August 13,  2005,  the Company  entered  into an  agreement to sell its
      wholly owned U.K. subsidiary,  Twincentric Limited ("Twincentric") to Tony
      McGurk. Mr. McGurk was the majority shareholder of Twincentric at the time
      it was acquired during fiscal 2004 by the Company, and he had continued to
      operate the Twincentric business since that time.  Consideration  received
      by the Company was  1,400,000 of its common  shares.  These common  shares
      represented the same shares originally issued by the Company to Mr. McGurk
      in the  transaction  which  resulted in the Company  originally  acquiring
      Twincentric.  Twincentric  had been part of the  Company's  SIM  operating
      segment.  For  the  purpose  of  calculating  the  loss  realized  on this
      transaction,  the common shares received by the Company were valued at the
      closing  share price on the date this  transaction  was  consummated.  The
      Company  incurred  a loss of $16,434 on this  transaction,  calculated  as
      follows:

Consideration received                                                $ 112,000
Less:
Net book value of Twincentric at the date of disposition                (94,434)
Direct transaction costs                                                (34,000)
                                                                      ---------
Loss on disposition of subsidiary                                     $ (16,434)
                                                                      ---------


                                       12
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      Additionally,  the Company incurred the following losses from discontinued
      operations  for the three and nine month periods ended  September 30, 2004
      and 2005:

<TABLE>
<CAPTION>
                                 Three month      Three month      Nine month       Nine month
                                period ended     period ended      period ended     period ended
                                  September        September       September 30,    September 30,
                                   30, 2005        30, 2004           2005             2004
                                -------------    -------------    -------------    -------------
<S>                             <C>              <C>              <C>              <C>
Revenue                         $      50,767    $     261,642    $     527,398    $     264,420
Salaries and Wages                    (47,385)         (61,892)        (552,531)         (72,548)
General and administrative             (1,811)         (43,214)        (410,097)         (45,115)
Amortization                               --          (31,385)              --          (34,501)
Interest expense                         (302)          (3,707)          (9,802)          (3,707)
                                -------------    -------------    -------------    -------------
Gain (Loss) from discontinued
operations                      $       1,269    $     121,444    $    (445,032)   $     108,549
                                =============    =============    =============    =============
</TABLE>


                                       13
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 3 ACQUISITIONS AND DISPOSITIONS

      Cratos Technology Solutions, Inc.

      On  May  19,  2005,  the  Company  completed  the  acquisition  of  Cratos
      Technology Solutions Inc., an Ontario corporation ("Cratos").  The Company
      effected  the  acquisition  of  Cratos  pursuant  to the  terms of a Share
      Purchase  Agreement dated effective  February 22, 2005, as amended May 19,
      2005.  Under the terms of the Share  Purchase  Agreement,  the  Registrant
      acquired  from  Andrew  Wickett   ("Wickett")   and  Debbie   Gracie-Smith
      ("Gracie-Smith")  all of  the  stock  of  Cratos  in  exchange  for  total
      consideration  of  approximately  $2.1  million,   comprised  of  cash,  a
      promissory  note due August 2005, and common stock of the Company.  Cratos
      is a solutions-oriented organization specializing in international banking
      and financial  transaction  processing.  The majority of Cratos' customers
      specialize  in card  products  such as Visa(R),  MasterCard(R),  Eurocard,
      Smart cards, Debit cards, Credit cards, Store cards,  Private label cards,
      and  Loyalty-based  products.  The Company  accounted for this acquisition
      using the purchase  method of accounting in accordance with the provisions
      of SFAS No. 141, and began  consolidating  the results of Cratos effective
      May 1, 2005.

      Under  the terms of the  Share  Purchase  Agreement,  the  Company  issued
      9,021,030  shares (the  "Purchaser  Shares") of its common stock (in equal
      proportions  to Wickett and  Gracie-Smith)  and paid cash in the amount of
      $79,560 (in equal  proportions  to Wickett and  Gracie-Smith),  and issued
      promissory notes in the amount of $79,560 (in equal proportions to Wickett
      and  Gracie-Smith).   The  Company  valued  the  common  stock  issued  in
      accordance with this transaction  based on a simple average of the closing
      share  price  of the  Company  for 2 days  prior  and  subsequent  to this
      transaction  being  announced.  On this basis,  the common stock issued in
      connection with this transaction was valued at $1,947,787.

      The  purchase  price is  subject  to an  adjustment  mechanism  which will
      require (i) the  Company to issue up to an  additional  800,000  shares to
      Wickett  and  Gracie-Smith  (in equal  proportions)  in the  event  Cratos
      exceeds  certain  specified  profitability  targets  for  Cratos for the 8
      successive  quarters following the close of this transaction.  The Company
      will  account  for any  additional  consideration  earned in the period in
      which such additional  consideration  is determined.  The Company is still
      assessing the impact,  if any,  which such  additional  consideration,  if
      earned, will have on its future consolidated statements of operations.

      The Company also issued 3,921,633 shares of its common stock to a supplier
      in  consideration  for its agreement to (i) enter into renewed  agreements
      with Cratos,  and (ii) terminate any existing security  agreements between
      such party and Cratos as well as  discharge  any  registered  security and
      agree to subordinate  any future  security to that of any senior lender of
      the Company. No gain or loss was recorded on this transaction.

            The preliminary purchase price allocation set forth below represents
      management's best estimate of the allocation of the purchase price and the
      fair  value  of  net  assets  acquired.  The  valuation  of  the  acquired
      intangible  assets and the assessment of their  expected  useful lives are
      based on a  preliminary  assessment  undertaken by  management.  The final
      valuation may differ from the  preliminary  purchase price  allocation and
      these differences may be material.

            The following  table  summarizes  the  estimated  fair values of the
      assets  acquired  and  liabilities  assumed  as of the date of the  Cratos
      acquisition:

                                       14
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Current assets                 $     1,251,514
Long term assets                       111,032
Customer assets                      1,023,380
Goodwill                             3,336,286
                               ---------------
   Total assets acquired             5,722,212
   Total liabilities assumed        (3,615,305)
                               ---------------
   Net assets acquired               2,106,907
                               ===============

      The customer assets of $1,023,380 have been assigned a life of five years.
      The useful lives assigned represent management's preliminary estimates and
      changes may occur from these  preliminary  estimates and these changes may
      be  material.  The  Company  also  recorded a deferred  tax  liability  of
      $368,000  in  respect of the  temporary  difference  associated  with this
      intangible asset.

      The portion of the  purchase  price  allocated to goodwill was assigned to
      the Company's Systems Integration and modernization  reporting segment. No
      amount of the goodwill is expected to be deductible for tax purposes.

      As  part  of  the  purchase  price  allocation,   the  Company  recognized
      liabilities  associated with completing this  transaction of $72,000.  The
      Company  expects  that these  costs will be  discharged  by the end of the
      current fiscal year.

      DisclosurePlus Inc.

      On February 25, 2005,  the Company  acquired  all the  outstanding  common
      stock of DisclosurePlus Inc. ("DP") a privately held Canadian  Corporation
      which provides publicly traded  corporations with the foundation and tools
      to enhance the scope of corporate  disclosure  on-line with a standardized
      regulatory   compliant   web-based   solution.   Consideration   for  this
      acquisition  represented  1,200,000  shares  of the  Company's  restricted
      common stock  valued at $264,000 in addition to $125,000  payable in cash.
      The  1,200,000  shares have been  classified as shares to be issued on the
      Company's consolidated balance sheet and were issued subsequent to the end
      of the quarter.  As of September  30, 2005,  the entire amount of the cash
      portion of the  consideration  had been paid.  The Company  also  acquired
      intellectual  property  relating  to  the  DP  business  in  a  concurrent
      transaction.  The consideration  above represents the total  consideration
      for this entire  acquisition.  The value was allocated to the common share
      consideration  and was based on the  weighted  average  share price of the
      Company's  common shares for the two trading days before,  the day of, and
      the two days  after  the day the  Company  entered  into the  terms of the
      acquisition  agreement.  The Company  accounted for this acquisition using
      the purchase  method of accounting in  accordance  with the  provisions of
      SFAS No. 141, and accordingly,  DP's operating  results have been included
      in  the  Company's   consolidated   statement  of   operations   from  the
      acquisition.  The Company  acquired net tangible  liabilities  of $29,000,
      though the transaction  provided the Company with  intellectual  property,
      customers,  and a set of employees who had operated this business prior to
      the  acquisition.  Goodwill  recorded  in  connection  with this  business
      combination is not deductible for tax purposes.

      The  preliminary  purchase  price  allocation  set forth below  represents
      management's best estimate of the allocation of the purchase price and the
      fair  value  of  net  assets  acquired.  The  valuation  of  the  acquired
      intangible  assets and the assessment of their  expected  useful lives are
      based on a  preliminary  assessment  undertaken by  management.  The final
      valuation may differ from the  preliminary  purchase price  allocation and
      these differences may be material.

                                       15
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The Company will account for the purchased goodwill in accordance with the
      provisions  of SFAS 142. The entire  balance of goodwill  recorded on this
      transaction  will be allocated to the Company's  Corporate  Disclosure and
      Messaging segment.

      The  Company's  preliminary  purchase  price  allocation  recorded for the
      acquisition of DP is as follows:

Technology assets       $       250,000

Goodwill                        168,000

Total assets acquired           418,000

Liabilities assumed             (29,000)

Net assets acquired     $       389,000


      The above  purchase  price  allocation  is  subject  to  adjustment  these
      adjustments may be material.

      Pro forma results

            The following  pro forma results of operations  reflect the combined
      results of Activecore and Cratos  (acquired on May 1, 2005), for the three
      and  nine-month  periods  ended  September  30,  2005  and  2004 as if the
      business  combination  occurred at the  beginning of  Activecore's  fiscal
      year. Pro forma financial  information giving effect to the acquisition of
      DP has not been provided on the basis that its results of  operations  for
      the three and nine months ended  September  30, 2005 and 2004 would not be
      material to the Company.

<TABLE>
<CAPTION>
                                                Three months ended              Nine months ended
                                                   September 30                   September 30
                                          ----------------------------   ----------------------------
                                              2005            2004           2005            2004
                                          ------------    ------------   ------------    ------------
<S>                                       <C>             <C>            <C>             <C>
Revenue                                   $  2,708,373    $  2,207,823   $  6,941,526    $  5,420,411
Net income (loss)                         $   (479,921)   $    171,279   $ (2,489,004)   $   (733,764)
Net income (loss) per share, basic and
diluted                                   $      (0.01)   $       0.00   $      (0.04)   $      (0.22)
                                          ============    ============   ============    ============
Shares used in basic and diluted income
(loss) per share calculation                61,313,668      54,511,027     59,934,658      47,801,071
                                          ============    ============   ============    ============
</TABLE>

      These pro forma results are not necessarily  indicative of what would have
occurred if the acquisitions had actually been completed as of the assumed dates
and for the periods  presented.  The pro forma  results  represent  Activecore's
preliminary  assessment of the intangible  assets and are subject to change and,
therefore,  the final values may differ  substantially  from these amounts.  The
actual results for the quarter ended  September 30, 2005 include the results for
Cratos beginning May 1, 2005.

                                       16
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 4 ACCOUNTS RECEIVABLE

      The components of accounts  receivable,  net, as of September 30, 2005 and
      December 31, 2004 consist of:

                                                     2005              2004
                                                 -----------        -----------

Trade receivables                                $ 3,679,071        $ 2,490,549
Imputed interest discount                            (82,685)          (100,000)
Allowance for doubtful accounts                     (101,186)                --
                                                 -----------        -----------
Accounts receivable, net                         $ 3,495,200        $ 2,390,549
                                                 ===========        ===========

      Trade receivables  consist primarily of vendor  receivables for enterprise
      software and  information  technology  services sold. An imputed  interest
      discount is included in the value of accounts receivable.

NOTE 5 CAPITAL ASSETS

      As of September  30, 2005 and December  31, 2004,  property and  equipment
      consisted of:

                                                         2005           2004
                                                   -------------   -------------
Computer equipment                                 $     608,380   $     476,990
Office equipment and furniture                           114,448          87,371
Computer software                                         54,731          33,378
Leasehold improvements                                    43,157          41,185
Vehicles                                                  12,839              --
                                                   -------------   -------------
                                                         833,555         638,924
                                                   -------------   -------------

Less: accumulated depreciation and amortization          459,432         326,464
                                                   -------------   -------------

Property and Equipment, net                        $     374,123   $     312,460
                                                   =============   =============

      Assets held under  capital lease in the amount of $84,236 (2004 - $64,584)
      with  accumulated  depreciation  in the amount of $38,888 (2004 - $22,802)
      are included in computer equipment.


                                       17
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 6     GOODWILL AND OTHER INTANGIBLE ASSETS

      Goodwill and other  intangibles  assets  consisted of the  following as of
      September 30, 2005 and December 31, 2004:

<TABLE>
<CAPTION>
                                                           2005           2004
                                                       -----------    -----------
<S>                                                    <C>            <C>
Other intangible assets subject to amortization:
   Customer contracts                                  $ 1,023,380    $        --
   Customer lists                                          275,000        275,000
   Capitalized software                                    115,701        115,701
   Technology assets                                       250,000             --
   Licenses                                                 51,242         51,242
                                                       -----------    -----------

                                                         1,715,323        441,943
                                                       -----------    -----------
Less:  Accumulated amortization
   Customer contracts                                     (158,432)            --
   Customer lists                                         (183,333)      (114,583)
   Capitalized software                                    (77,136)       (48,210)
   Technology assets                                       (27,504)            --
   Licenses                                                (51,240)       (32,299)
                                                       -----------    -----------
                                                          (497,645)      (195,092)
                                                       -----------    -----------

Other intangible assets subject to amortization, net     1,217,678        246,851
Goodwill                                                 3,856,340        622,003
                                                       -----------    -----------

Goodwill and other intangible assets, net              $ 5,074,018    $   868,854
                                                       ===========    ===========
</TABLE>

      The activity in goodwill for the nine months ended  September  30, 2005 is
      as follows:

Balance, December 31, 2004                                          $   622,003
Plus: Goodwill recorded for Disclosureplus acquisition                  168,000
Plus: Goodwill recorded for Cratos acquisition                        3,336,286
Effect of foreign exchange rate fluctuation                            (269,949)
                                                                    -----------

Balance, September 30, 2005                                         $ 3,856,340
                                                                    -----------

      Of the above goodwill balance as of September 30, 2005, $3,336,286 relates
      to the Company's SIM division and the  remaining  $520,054  relates to the
      Company's CDM division.

                                       18
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The activity in identifiable  intangible  assets for the nine months ended
      September 30, 2005 is as follows:

Balance, December 31, 2004                                          $   246,851
Plus: Customer assets recorded for Cratos acquisition                 1,023,380
Plus: Technology assets recorded for DP acquisition                     250,000
Less: Amortization for the 9 month period ended September 30, 2005     (330,638)
Effect of foreign exchange rate fluctuation                              27,575
                                                                    -----------

Balance, September 30, 2005                                         $ 1,217,678
                                                                    -----------

      Estimated future amortization of other intangible assets based on balances
      existing at September 30, 2005 is as follows:

2005 remainder of the year                                            $   92,232
2006                                                                     336,363
2007                                                                     238,691
2008                                                                     238,691
2009                                                                     238,691
2010 and beyond                                                           73,010
                                                                      ----------
Total                                                                 $1,217,678
                                                                      ==========


                                       19
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 7 INVESTMENT

      On June 26, 2003, the Company  purchased  300,000 common shares,  equal to
      approximately  5% of the then issued  share  capital of ePocket,  Inc. for
      1,000,000  shares of the Company's common stock. The shares were valued at
      $0.25 per share or an aggregate of $250,000, representing the market value
      at the date of  issuance.  During the quarter  ended  September  30, 2005,
      ePocket Inc. was acquired by Global Sterling Payment Services ("GSPS"),  a
      company controlled by a director of the Company. As consideration for this
      sale,  the  Company  received  its initial  investment  amount of $250,000
      during  the  quarter,  as well as a 0.4%  equity  interest  in GSPS  which
      represented  the  same  pro  rate   consideration  as  all  other  ePocket
      shareholders.

      Also during the quarter,  the company  received an additional  4.2% equity
      interest in GSPS in exchange for services  rendered by  management  of the
      Company  to  GSPS.  As  ePocket  is a  private  company  with  no  readily
      determinable  market  value,  the  Company  has valued its  combined  4.6%
      interest in GSPS at nil in the accompanying consolidated balance sheet.

      Additionally,  the Company has determined that it can exercise significant
      influence  over ePocket.  This  determination  was made based on review of
      several factors, including the fact that 2 members of the Company's senior
      management  represent 50% of the ePocket board of directors.  As such, the
      Company is required to equity  account for this  investment  which entails
      recording, in its consolidated statement of operations, its pro rata share
      of ePocket's net income for each reporting  period.  As ePocket recorded a
      net loss in the  quarter  ended  September  30,  2005,  no amount has been
      recorded  for the  current  period.  However,  at such time  that  ePocket
      generates  cumulative net income from July 1, 2005, the Company will begin
      to record its pro rata share of ePocket's net income.

NOTE 8   LONG-TERM DEBT

      Long-term  debt  consists of the  following as of  September  30, 2005 and
      December 31, 2004:

<TABLE>
<CAPTION>
                                                                2005               2004
                                                           ---------------   ---------------
<S>                                                         <C>               <C>
Note payable to IBEW Local Union 105, five year term, no
 principal payments until August 2004,bearing interest
 at 12% (1)                                                $            --   $       500,000

Note payable to SCI Healthcare Group, unsecured (2)                 63,784           130,915

Short term loans (3)                                               239,241           543,901

Bank term loan, seven year term with monthly equal
principal payments, bearing interest at the Canadian
prime plus 3% (4)                                                  158,840           173,967
Bank Term Loan, 3 year term with monthly equal principal
payments, bearing interest at 5.4% (5)                             191,205                --
                                                           ---------------   ---------------
                                                                   653,070         1,348,783

Less current portion                                               398,409           857,161
                                                           ---------------   ---------------
Long term portion                                          $       254,661   $       491,622
                                                           ---------------   ---------------
</TABLE>


                                       20
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(1)   On  July  31,  2003,  the  Company's  wholly  owned  Canadian   subsidiary
      ActiveCore  Technologies  Limited,  received a $500,000 term loan from the
      International   Brotherhood  of  Electrical  Workers  union  in  Hamilton,
      Ontario,  Canada. Under the terms of the agreement, the first year accrued
      interest  at the  rate of 12%  and  the  principal  was  repayable  over a
      five-year term with no principal nor interest payments required during the
      first  12  months,  principal  payments  were  to be  amortized  over  the
      remaining  48 months of the loan.  The loan was  convertible  into  common
      stock of the  Company  at the rate of 4.5 shares for every 1 dollar of the
      loan balance, excluding interest,  remaining at the time of conversion. As
      additional  consideration for the loan, the Company issued warrants to the
      lender for the  purchase  of 50,000  shares of common  stock at a purchase
      price of $0.312 per share which  expired on July 31, 2004.  The fair value
      assigned to the warrants  amounted to $0. The Company  estimated  the fair
      value  of the  warrant  at the  grant  date  by  using  the  Black-Scholes
      option-pricing  model with the following weighted average assumptions used
      for this grant;  no dividend yield for all years;  expected  volatility of
      9.3%;  risk-free  interest rate of 1.12%,  and an expected life of 1 year.
      The loan is  collateralized  by  substantially  all of the  assets  of the
      subsidiary  Company.  During the year ended  December 31, 2004 the Company
      and the union agreed to exchange  the  outstanding  loan into  mandatorily
      redeemable  convertible  preferred  shares  (series C) in exchange for the
      note payable and the release of its security over ActiveCore  Technologies
      Limited.  The series C shares were not issued as at December 31, 2004, but
      had been by September 30, 2005 (see note 9).


                                       21
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(2)   The promissory  note relating to the  acquisition of SCI Healthcare  Group
      bears  interest  at  10%.  SCI  Healthcare  is  acting  as a  billing  and
      collection  agent for the Company with  respect to a specific  customer in
      the  healthcare  industry.  Amounts  collected by SCI  Healthcare  are not
      remitted  back to the Company but rather  serve to reduce this  promissory
      note.

(3)   During 2004,  various arm's length parties loaned the Company,  on a short
      term basis,  funds to assist with working capital.  Certain of these loans
      were converted into equity during the quarter ended September 30, 2005.

(4)   On August 17, 2004 one of the Company's Canadian  subsidiaries  obtained a
      term loan with a Canadian  Chartered Bank in the amount of (CAD) $220,000.
      Under the terms of the agreement,  the loan is repayable over a seven year
      term with  principal  and interest  payments due monthly.  Interest on the
      borrowings is the bank's prime rate plus 3%.

(5)   During fiscal 2005 one of the Company's Canadian  subsidiaries  obtained a
      term loan with a Canadian  Chartered Bank in the amount of (CAD) $250,000.
      Under the terms of the agreement,  the loan is repayable over a three year
      term with  principal  and interest  payments due monthly.  Interest on the
      borrowings is at 5.4%.

(6)   Future maturities of short and long-term notes payable as of September 30,
      2005 are as follows:

2005                                                                  $ 332,697
2006                                                                     95,216
2007                                                                     99,025
2008                                                                     57,444
2009                                                                     25,758
Thereafter                                                               42,930
                                                                      ---------
                                                                      $ 653,070
                                                                      =========

NOTE 9 REDEEMABLE PREFERRED SHARES

      The  Company  has  outstanding   series  C  preferred   shares  which  are
      mandatorily redeemable over 16 quarters. The initial value of these shares
      was $500,000, and the quarterly redemption values are $31,250.  During the
      quarter ended  September 30, 2005, the Company issued shares to redeem the
      first 3 quarterly redemption amounts which had been in arrears.

NOTE 10  LINE OF CREDIT

      In  conjunction  with the close of the  Cratos  acquisition,  the  Company
      secured a line of credit  with a  Canadian  chartered  bank.  This line of
      credit  allows for  maximum  borrowings  under it of $1.5  million CAD and
      bears interest at the rate of prime plus 1%. Security for this facility is
      comprised of a general  security  agreement  over all of the assets of the
      Company's subsidiary which entered into this facility, as well as personal
      guarantees by two of the Company's  senior  executives.  Borrowings  under
      this  facility may not exceed 85% of specified  receivables  as defined in
      the respective credit agreement.  As of September 30, 2005,  approximately
      $95,000 was available under this line of credit.

                                       22
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 11  DUE TO RELATED PARTIES

      The Company's  officers and directors have loaned  various  amounts to the
      Company and its subsidiaries to meet operating cash flow requirements. The
      amounts  due to  related  parties  are  non-interest  bearing  and have no
      specific  repayment  terms.  The  balances  due to them were  $24,448  and
      $132,364 as of September 30, 2005 and December 31 2004, respectively,  and
      are  classified as current  liabilities in the  accompanying  consolidated
      balance sheet.

      During  2004  Ardrossan  Investments  Inc. a Canadian  Controlled  Private
      Corporation  owned and  operated  by the  spouse of a former  officer  and
      director of the Company loaned the Company,  on a short term basis,  funds
      to assist with working  capital.  This loan was paid in full during fiscal
      2005.

NOTE 12  REVERSE STOCK SPLIT

      In order to satisfy the terms of the Cratos share purchase  agreement (see
      note 3), the  Company  conducted  a reverse  split of its shares on a 10:1
      basis  effective  March 1, 2005. All share  information  contained in this
      Form 10-QSB has given effect to this transaction.

NOTE 13  TAXES PAYABLE

      The  Company  has  various tax  liabilities  outstanding  which  relate to
      several different taxing  jurisdictions.  These amounts relate principally
      to payroll and related taxes- Activecore  Technologies Limited, a Canadian
      subsidiary of Activecore Technologies,  Inc. has a liability to the Canada
      Customs and Revenue Agency  ("CCRA") which  includes  un-remitted  payroll
      taxes,  and a  fiscal  CCRA  employee  audit  assessment  whereby  several
      contract  employees  were deemed to be eligible for statutory  pension and
      unemployment  premiums not  previously  recorded,  as well as interest and
      penalties.  The  Company  has  accrued  these  liabilities  together  with
      appropriate  interest and  penalties,  which  approximate  $100,000.  This
      liability is included in taxes payable in the current  liabilities section
      of the accompanying  consolidated  balance sheet as of September 30, 2005.
      The  Company is in the  process of  negotiating  a payment  plan with CCRA
      Failure to continue to make  payments on a timely basis could result in an
      aggressive  collection  effort by the CCRA which could have a  significant
      negative effect on the Company's operations.

NOTE 14       COMMITMENTS AND CONTINGENCIES

      (a)   On June 13, 2002,  the Company  canceled its "Power Audit"  software
            distribution agreement with Orchestral (the "licensor"). In November
            2002, the licensor commenced a proceeding in Ontario, Canada against
            the Company  which was  discontinued  while the parties  discussed a
            settlement.  That proceeding  alleged that the Company had infringed
            upon the copyright  that the licensor  maintained,  and further that
            the Company had breached the distribution  contract claiming damages
            of CAD $4,000,000.  The licensor also claimed punitive and exemplary
            damages in the amount of CAD  $1,000,000.  When a settlement was not
            concluded,  Orchestral  commenced  a  second,  identical  action  in
            August, 2003. The Company retained legal counsel to defend itself on
            the basis  that  there is no merit to the case and even if there was
            merit,  the  time  frame in which  to  bring  an  action  under  the
            distribution   agreement  has  expired.  The  Company  has  not  yet
            determined if it will counter-sue for return of all proceeds paid to
            Orchestral during the period of time between 1999 and 2001.

                                       23
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

            Compulsory  mediation has occurred in the second  lawsuit.  The next
            step would  normally be  "examination  for  discovery"  then on to a
            trial.  Instead of  proceeding  with the  prosecution  of its second
            lawsuit,  Orchestral  commenced  an  Application  before the Ontario
            courts to enforce a settlement which it alleges was reached with the
            Company  during  the  negotiations  between  its  first  and  second
            lawsuits.  The court ordered that a settlement was  enforceable  and
            that $226,824 was owed by the Company to the licensor.  An appeal by
            the Company of this  judgment is pending.  An allocation of $226,000
            has  been  made  on  the  Company's  financial  statements  for  the
            settlement  claim  which  is  under  appeal,  however,  the  Company
            maintains that all of Orchestral's  claims and legal proceedings are
            frivolous.

      (b)   On March 17, 2000, the Company  entered into a consulting  agreement
            with TPG Capital  Corporation  regarding an inactive reporting shell
            company that the Company acquired. The consulting agreement provides
            that one year after the execution of the agreement,  ("reset date"),
            350,000  common  shares  issued by the Company  under the  agreement
            would be increased or decreased  based upon the average  closing bid
            for the  Company's  stock 30 days  prior to the reset  date,  so the
            value of the 350,000 shares will equal $500,000. The average closing
            price of the stock was $14.87 per share. The Company is obligated to
            issue an additional  30,284  common  shares to the  consultant as an
            additional fee.

            On June 14,  2004,  James  Cassidy  filed a demand  for  arbitration
            against the Company seeking,  among other things,  the reset shares.
            The Company  believes  the  consultant  is not entitled to the reset
            shares  due to the  SEC  and  regulatory  problems  relating  to the
            acquisition  of the shell  company and as such has not  provided any
            accrual for this matter in the accompanying  consolidated  financial
            statements.  The arbitration is proceeding but no final decision has
            been rendered.

      (c)   From  December  2003 to April  2004,  the  Company  was  engaged  in
            discussions with certain major shareholders of Infolink Technologies
            Limited  with  regard  to  the  potential  acquisition  of  Infolink
            Technologies  Ltd.,  a public  company  listed on the Toronto  Stock
            Exchange venture board under the symbol "IFL".  During the course of
            discussions, an offer to purchase was rebuffed by Cesar Correia, the
            former Chairman of the Board, President and CEO, and 34% shareholder
            of  Infolink.  At the time,  Mr.  Correia  was told that the Company
            would  purchase  another  competitor  to  Infolink,  C Comm  Network
            Corporation.  In May of 2004, the Company  purchased C Comm. In July
            of 2004, an unrelated minority  shareholder of Infolink commenced an
            action in Ontario alleging that Mr. Correia has mismanaged  Infolink
            and amongst other things that he had inappropriately  obtained funds
            from Infolink and converted them to his own purposes.  The day prior
            to the court hearing with regard to the minority  shareholder action
            against Infolink,  Infolink Technology commenced a proceeding in the
            same Ontario court against the Company  alleging unfair  competition
            as a result  of an  alleged  improper  acquisition  of  confidential
            information  from Infolink and numerous other causes of action.  The
            Company  has  not yet had to  file a  defence  to any of  Infolink's
            claims against the Company. Meanwhile, the court appointed a monitor
            and  investigator to look into the allegations  against Mr. Correia.
            The court  appointed  monitor  and  investigator  issued an  interim
            report in October 2004 which found that  several of the  allegations
            against Mr. Correia were substantiated. Mr. Correia was removed from
            the position of Chairman,  President  and CEO of Infolink and is now
            an employee of Infolink.  The Company  believes  that  Infolink as a
            corporate  entity  will not  proceed  with any  action  against  the
            Company as the Company  believes  that the action was commenced as a
            defensive  move by Mr. Correia and now that he has been removed from
            management  of  Infolink  there is little  basis  for the  action to
            continue.

      (d)   On September 14, 2005, the Company entered into a guarantee pursuant
            to  which  the  Company  agreed  to  guarantee  payment  of  amounts
            outstanding  from  time to time  which  were due from the  Company's
            Cratos  subsidiary  to  a  certain  trade  creditor.  As  additional
            security  for amounts  outstanding  and due to this trade  creditor,
            ActiveCore agreed,  effective September 14, 2005, to pledge its 4.2%
            equity interest in Global Sterling Payment Systems Ltd.

                                       24
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 15  COMMON AND PREFERRED SHARES

      Common Shares

      On  February 9, 2005,  the Company  issued  400,000  restricted  shares of
      Common stock to two directors as  Director's  fee. The fair value of these
      shares,  based on the  market  value  on the date  they  were  issued  was
      $120,000.

      80,000  restricted  shares of Common stock were also issued to two outside
      parties to pay for  services  rendered  to the  Company.  The  Company has
      recorded,  in its  Consolidated  Statement  of  Operations,  an expense of
      $24,000  representing the fair market value of these shares on of the date
      they were issued.

      During the nine months  ended  September  30,  2005,  the  Company  issued
      3,921,633  common shares to a vendor of one of the Company's  wholly-owned
      subsidiaries in order to settle a debt for services rendered prior to that
      subsidiary  being acquired by the Company.  The fair value of these common
      shares,  based on the  market  value  on the date  they  were  issued  was
      $402,369.

      During the nine months ended September 30, 2005, the Company issued 50,010
      restricted  shares of  Common  stock for  beneficial  owner  round up as a
      result of the reverse stock split on March 1, 2005.

      On September 23, 2005, the Company issued  3,334,980 to a member of senior
      management.  Of this amount,  1,084,980  common shares  related to amounts
      advanced by this individual to the Company, 2,000,000 common shares relate
      to services  provided by that individual to personally  guarantee  certain
      indebtedness  of the Company  over the next two years and  250,000  common
      shares  related to  employment  services.  The fair value of these  common
      shares,  based on the market  value on the date they were  approved by the
      Company's  board  of  directors,  was  $108,098,   $220,000,  and  $37,500
      respectively.

      On September 23, 2005, the Company issued  4,750,000 to an other member of
      senior  management.  Of this amount,  2,500,000  common shares  related to
      amounts  advanced by this  individual  to the  Company,  2,000,000  common
      shares  relate to  services  provided  by that  individual  to  personally
      guarantee certain  indebtedness of the Company over the next two years and
      250,000  common shares related to employment  services.  The fair value of
      these  common  shares,  based on the  market  value on the date  they were
      approved by the Company's board of directors, was $250,000,  $220,000, and
      $37,500 respectively.

      On September 23, 2005,  the Company issued  1,000,000  common shares to an
      unrelated  party in exchange for provided  financial  consulting  services
      over the next year to assist the Company in obtaining  further  financing.
      The fair value of these  common  shares,  based on the market value on the
      date they were approved by the Company's board of directors, was $150,000.

                                       25
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      On September 23, 2005,  the Company  issued  850,500  common shares to two
      unrelated  parties as  settlement  for  previously  provided  professional
      services. The fair value of these common shares, based on the market value
      on the date they were  approved by the Company's  board of directors,  was
      $85,050.

      On September 23, 2005,  the Company  issued  975,000  common shares to two
      unrelated parties in exchange for services to be provided.  The fair value
      of these  common  shares,  based on the market value on the date they were
      approved by the Company's board of directors, was $258,750.

      On September  23, 2005,  the Company  issued  3,787,619  common  shares to
      various unrelated parties who agreed to convert various loans and advances
      made to the Company.  The fair value of these common shares,  based on the
      market  value on the date they were  approved  by the  Company's  board of
      directors, was $378,762.

      On September 23, 2005,  the Company  issued  250,000  common shares to one
      member of its  senior  management  team in  consideration  for  employment
      services  rendered.  The fair value of these common  shares,  based on the
      market  value on the date they were  approved  by the  Company's  board of
      directors, was $37,500.

      On September 23, 2005, the Company issued  1,720,026  common shares to the
      holder of its Series C Preferred  Shares.  Of this amount,  257,370 common
      shares  related to interest  and  penalties  relating to late  payment and
      1,462,656 relate to the mandatory  redemption of those Series C shares for
      common shares.

      On September 23, 2005,  the Company  issued  285,186  common shares to the
      holder of its Series A and B Preferred  Shares in respect of dividends due
      to that holder under the terms of those preference shares.

      All amounts  issued during the nine month period ended  September 30, 2005
      were valued  based on the closing  market  price of the  Company's  common
      stock on the date which the  Company  committed  itself to the  respective
      transaction.

      Preferred Shares

      The Company has issued or  committed  to issue three  series of  preferred
      shares:

      Series A and B

      On September 14, 2004,  the board of directors  authorized the issuance of
      8,333,333  Series A and  4,167,667  Series B preferred  shares which had a
      purchase price of $0.03 and $0.06,  respectively  totaling $500,000.  With
      respect to the Series A shares,  the Company may force  conversion  if the
      trading  price of the Company's  common shares  exceeds $2.00 for 30 days.
      With regard to the Series B shares,  the Company may force  conversion  if
      the trading  price of the  Company's  common  shares  exceeds $4.00 for 30
      days. These shares have a right of redemption  whereby if the stock is not
      converted within 5 years, the Company, at its option, shall have the right
      to redeem all outstanding but unconverted  shares of series A (same for B)
      Preferred  Stock held by such person by paying to the holder thereof $0.30
      (for B, $0.60) per share plus all accrued but unpaid dividends thereon, if
      any.  These  shares  are  not   manditorily   redeemable.   The  preferred
      shareholders will be paid a dividend at the rate of 10% per annum.

      Series C

      In 2004,  the  Company and the  International  Brotherhood  of  Electrical
      Worker's  Union  (See Note 8) agreed to  settle  the  outstanding  loan of
      $500,000  into Series C  convertible  preferred  shares.  The terms of the
      Series C  preferred  stock  require  the  Company to redeem the  preferred
      shares over 16 quarters,  commencing  on December  31,  2004.  The Company
      shall have the option of paying the quarterly  redemptions  in the form of
      cash or common  shares.  Also the preferred  shares will have a 12% annual
      dividend rate payable  quarterly  based on the number of preferred  shares
      outstanding at the end of the quarter.

                                       26
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 16  WARRANTS

      The Company's Board of Directors has granted  warrants to non-employees of
      the Company.  The  following is a summary of activity  under these warrant
      provision.

<TABLE>
<CAPTION>
                                                       Non-Employee     Weighted
                                                        Options and      Average
                                                         Warrants     Exercise Price
                                                       ------------   ------------
<S>                                                     <C>         <C>
Warrants outstanding at December 31, 2003                    88,000   $       1.47
   Expired                                                   51,500           0.45
  Granted                                                   400,000           0.18
                                                       ------------   ------------

Warrants outstanding at December 31, 2004                   436,500           0.42

    Issued                                                3,545,883           0.14
                                                       ------------   ------------

Warrants outstanding at September 30, 2005                3,982,383   $       0.17
                                                       ============   ============
</TABLE>

      During the nine month period ended  September 30, 2005, the Company issued
      3,545,883 warrants to parties to whom the Company was previously  indebted
      to and who,  during  this  period,  agreed to settle  their debt to common
      shares of the Company.  These warrants were issued at a 40% premium to the
      market  price  of  the  Company's  common  stock  as of  the  date  of the
      settlement.  These  warrants  expire in September,  2006. The Company used
      Black-Scholes  to value these  warrants  using the following  assumptions:
      dividend  yield - nil;  risk-free  interest  rate  3%;  volatility  - 80%;
      expected  life - 1 year.  The fair value of these  warrants was charged to
      the  Company's   Consolidated   Statement  of  Operations  as  a  loss  on
      extinguishment  of debt during the three month period ended  September 30,
      20005.

      As of September  30, 2005 and December 31, 2004,  all warrants  were fully
      vested and exercisable.

NOTE 17  INCOME TAXES

      No provision for Federal, state and foreign income taxes has been recorded
      as the Company  has net  operating  loss carry  forwards to offset any net
      income for the three and nine month periods  ended  September 30, 2005. As
      of September 30, 2005,  the Company has  significant  net  operating  loss
      carry forwards for income tax purposes  available to offset future taxable
      income.  The Company is in arrears on filing many of its statutory  income
      tax filings and is therefore  unable to determine the amount of such carry
      forwards  at this time.  Under the Tax Reform Act of 1986,  the amounts of
      and benefits from net operating  losses and capital losses carried forward
      may be impaired  or limited in certain  circumstances.  Events,  which may
      cause  limitations in the amount of net operating  losses that the Company
      may utilize in any one year, include, but are not limited to, a cumulative
      ownership change of more than 50% over a three-year  period.  Deferred tax
      assets as of September 30, 2005 and December 31, 2004 consist primarily of
      the tax effect of net operating  loss carry forwards and  amortization  of
      intangibles.  The Company has provided a full  valuation  allowance on the
      deferred  tax assets as of  September  30, 2005 and  December  31, 2004 to
      reduce such deferred tax assets to zero, as it is management's belief that
      realization of such amounts is not considered more likely than not.

                                       27
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The Company has recorded on its Consolidated  Balance Sheet a deferred tax
      liability   relating  to  the   temporary   difference   associated   with
      specifically  identifiable  intangible assets recorded in conjunction with
      one of its  business  combinations.  This  temporary  difference  is being
      amortized  into the Company's  tax  provision  over the same period as the
      related  intangible  asset.  For the nine month period ended September 30,
      2005, the Company's  entire tax provision  related to the  amortization of
      this temporary difference.

NOTE 18  TOTAL COMPREHENSIVE INCOME (LOSS)

      The following  table  presents the Company's  total  comprehensive  income
      (loss) for the three and nine month periods  ended  September 30, 2005 and
      2004 respectively:

<TABLE>
<CAPTION>
                              Three months     Three months     Nine months      Nine months
                                  ended           ended            ended            ended
                              September 30,   September 30,     September 30,    September 30,
                                  2005             2004             2005             2004
                              -------------    -------------    -------------    -------------
<S>                           <C>              <C>              <C>              <C>
Net income (loss) for the
period                        $    (479,921)   $     599,909    $  (2,715,351)   $    (161,787)
Other comprehensive  income
(loss) for the period         $    (254,905)   $    (101,266)   $    (517,748)   $     (45,122)
                              -------------    -------------    -------------    -------------
Comprehensive net income
(loss) for the period         $    (734,826)   $     498,643    $  (2,197,603)   $    (206,909)
                              =============    =============    =============    =============
</TABLE>

NOTE 19  SEGMENT INFORMATION

            The Company has two reportable  segments:  Systems  Integration  and
      Modernization  ("SIM") and Corporate Disclosure and Messaging ("CDM"). For
      detailed  descriptions  of the Company's two operating  segments  refer to
      Management's  Discussion  and  Analysis  beginning on page 32. The Company
      evaluates  operating  segment  performance  based on  revenues  and direct
      operating  expenses  of  the  segment.  The  accounting  policies  of  the
      operating segments are the same as those set forth in the Company's Annual
      Report on Form 10-KSB for the year ended December 31, 2004.

            Contribution   margin  from  operating  segments  does  not  include
      amortization of intangible assets,  depreciation,  interest,  other income
      (expense) and provision  for income taxes.  Goodwill and other  intangible
      assets have been included in segment assets.

            Prior to the quarter  ended June 30, 2005,  the Company  operated in
      only one  operating  segment  - the  delivery  of  software  products  and
      services. Consequently,  segment operating results have only been provided
      for the three months ended  September  30, 2005,  and segment  assets have
      been  provided  only as of September  30, 2005.  Prior year and prior year
      comparatives  have not been provided on the basis that the  acquisition of
      Cratos during the quarter ended June 30, 2005 caused these  segments to be
      created, and hence these segments did not exist in the prior year.

                                       28
<PAGE>

            A reconciliation  of the totals reported for the operating  segments
      to the  applicable  line  items in the  unaudited  condensed  consolidated
      financial  statements for the three months ended  September 30, 2005 is as
      follows:

<TABLE>
<CAPTION>
                                                   Three Months Ended September 30, 2005
                                                SIM               CDM               Total
                                          ---------------   ---------------   ---------------
<S>                                          <C>               <C>              <C>
Revenue                                         2,378,513           329,860         2,708,373
Operating Costs                                 2,043,109           364,954         2,408,063
                                          ---------------   ---------------   ---------------
Contribution Margin                               335,404           (35,094)          300,310
Less: Corporate expenses                                                             (469,630)
Less: Interest expense                                                                (61,882)
Less: Depreciation and amortization                                                  (147,176)
Less: Other expense and taxes                                                        (101,543)
                                                                              ---------------
Net loss for the period                                                              (479,921)
                                                                              ===============

Segment assets as of September 30, 2005         8,649,333         1,390,929        10,040,262
                                          ===============   ===============   ===============
</TABLE>

NOTE 20       SIGNIFICANT CUSTOMER AND VENDOR

      A  single  customer  accounted  for 50% and 42% of the  Company's  revenue
      during  the  three  and  nine  month  periods  ended  September  30,  2005
      respectively.  This  customer  did not account for any revenue  during the
      three or nine month period ended  September  30, 2004.  This same customer
      accounted  for  41%  of  the  Company's  accounts  receivable  balance  at
      September 30, 2005 and nil as of December 31, 2004.

      In addition,  the Company uses  consultants to deliver many of the service
      contracts for its  customers.  These  consultants  are procured  primarily
      through  one  significant  consulting  agency.  Amounts  recorded  in  the
      Company's  Statements  of  Operations  as direct wages almost  exclusively
      represent consulting services incurred through this significant vendor.

NOTE 21  DEFERRED COMPENSATION

      During the nine month period ended  September 30, 2005, the Company issued
      shares to certain  individuals  for  services  to be  performed  in future
      periods (see note 15).  These  amounts have been recorded on the Company's
      Consolidated  Balance  Sheet  as  deferred   compensation,   and  will  be
      recognized  on a  straight-line  basis  over  the  term of the  respective
      service agreement in the Company's Consolidated Statement of Operations.

NOTE 22  SUBSEQUENT EVENTS

      SilverBirch Studio RTO Completed

      In October,  2005 SilverBirch  Studios completed its RTO transaction,  and
      issued the Company the consideration  agreed to in June 2005 (see note 2).
      This  consideration  comprised  $125,000 CAD of cash,  1,750,000 shares in
      SilverBirch  Studios,  and 1,000,000 warrants to purchase common shares of
      Silverbirch  Studios.   This  consideration  will  be  recognized  in  the
      Company's Statement of Operations in the quarter ending December 31, 2005.


                                       29
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

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

      Forward-Looking  Statements and  Associated  Risks.  This Report  contains
forward-looking  statements.  Such forward-looking statements include statements
regarding,   among  other  things,   (a)  the  Company's   projected  sales  and
profitability,  (b) the Company's growth  strategies,  (c) anticipated trends in
the  Company's  industry,  (d) the Company's  future  financing  plans,  (e) the
Company's  anticipated  needs for working  capital,  (f) the benefits related to
ownership of the  Company's  common  stock.  Forward-looking  statements,  which
involve  assumptions and describe the Company's  future plans,  strategies,  and
expectations,  are  generally  identifiable  by use of the words "may,"  "will,"
"should," "expect," "anticipate,"  "estimate," "believe," "intend," or "project"
or the negative of these words or other  variations on these words or comparable
terminology.   This   information   may  involve   known  and   unknown   risks,
uncertainties,  and other factors that may cause the Company's  actual  results,
performance, or achievements to be materially different from the future results,
performance,  or  achievements  expressed  or  implied  by  any  forward-looking
statements.  These  statements may be found under  "Management's  Discussion and
Analysis or Plan of Operations" as well as in this Report generally.  You should
not  place  undue  reliance  on our  forward-looking  statements.  Further,  any
forward-looking  statement  speaks  only as of the date on which it is made and,
except as otherwise  required by law, we undertake no  obligation  to update any
forward-looking  statement to reflect events or circumstances  after the date on
which it is made or to reflect the occurrence of  anticipated  or  unanticipated
events or circumstances. New factors emerge from time to time that may cause our
business  not to develop as we expect,  and it is not possible to predict all of
them.Actual  events or results may differ  materially  from those  discussed  in
forward-looking  statements as a result of various factors,  including,  without
limitation, the risks outlined under "Certain Business Risk Factors" and matters
described in this Report generally.  In light of these risks and  uncertainties,
there can be no assurance that the forward-looking  statements contained in this
Report will in fact occur as projected.

Overview

      ActiveCore Technologies,  Inc. ("ActiveCore" or the "Company") is a Nevada
registered  Company with its head office in Toronto,  Canada,  and operations in
the United  States and the  United  Kingdom.  The  Company  operates  within the
enterprise  software and services market in a sector which has been described by
the Gartner  Group as that group of vendors of software and  services  that sell
and install  "Smart  Enterprise  Suites" and related  products.  The Company has
organized  itself  into two  distinct  divisions  to deliver  its  products  and
services.  The Systems Integration and Migration (SIM) division focuses on large
projects  in  the  financial  services,  insurance,  healthcare,  education  and
manufacturing industries.  These projects are aimed at protecting the customer's
investment in,  improving the  functionality  of, and extending the life span of
their  existing  information  technology  systems.  The  acquisition  of  Cratos
Technologies Solutions Inc. ("Cratos") during the quarter ended June 30, 2005 is
expected to begin to give this division critical mass. The Corporate  Disclosure
and  Messaging  (CDM)  division  is  focused  on  working  with  these  same and
additional  customers  to  provide  them  with  a  range  of  communication  and
information  distribution  based  products that allow them to leverage  existing
corporate  information  and share it with their  customers,  employees and other
stakeholders and facilitates their move towards a Smart Enterprise.

      The Company's  products  encompass  application  integration,  application
modernization,  application migration, content management,  vertical application
portals,  a  corporate  disclosure  portal and an outbound  corporate  messaging
portal.  This product set gives ActiveCore the capability to deliver  effective,
efficient and  economical  integration,  modernization,  migration and corporate
messaging  services or complete solutions to clients seeking to enable or extend
their existing systems to stakeholders and customers  without  wholesale changes
to their  systems.  ActiveCore's  products are designed to enable the  Company's
clients to extend the functions of their current  systems,  often called "legacy
systems",  by using  the  Company's  integration,  modernization  and  migration
product sets that are sold and delivered by the SIM division.  For organizations
wanting  to take the  next  step in  achieving  what  ActiveCore  terms "A Smart
Enterprise"  the Company offers its  disclosure and messaging  products that are
sold and delivered by the CDM division.  By  concentrating on the improvement of
the    customers     existing    systems    and    providing    an    additional
communication/messaging product layer the Company is able to offer its customers
a cost  effective way to rapidly  improve the overall  capability and extend the
life of their existing information technology assets.

                                       30
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The two divisions of the Company have very different revenue models and it
is important that this is clearly  understood.  See Note 19 to the  consolidated
financial  statements  for  segmented  information  which  provide more granular
reporting by division so that shareholders can develop a better understanding of
the Company's  revenue  sources and how the revenue mix within the two divisions
affects the gross profit margin at a consolidated level.

      The SIM  division  derives its revenue  from the sale of value added labor
and software  licenses.  This  division  has repeat  customers  and  maintenance
revenue  but to grow it must find new  customers  on a regular  basis to replace
revenue from completed  projects.  Projects in this division  usually range from
one to two years in length and can exceed one  million  dollars in value.  These
projects  tend  to have  long  sell  cycles  and are  predominantly  with  large
customers.  The gross profit percentage of this division varies based on the mix
of sales as  product  revenue  tends to  yield a  higher  margin  than  services
revenue.  The Company  considers  this  division to be a  "solutions  provider",
therefore,  there will always be a mix of both  product and service  revenue but
normally the mix will be weighted towards services. In this division the Company
competes with a variety of System Integration "SI" vendors but has the advantage
of having  ownership of most of the products it uses to develop client  specific
and industry specific solutions.

      The CDM  division  of the Company  derives  its  revenue  from the sale of
product based  services and usually  delivers  these services via an Application
Service  Provider (ASP) model. The size of the individual sales in this division
are much  smaller  than in the SIM  division  but the revenue  generated by this
division is recurring in nature.  Contracts in this division can vary from a one
time job to three  years and the length is  determined  by the target  customer.
Customers that purchase the  DisclosurePlus  product set usually sign three year
contracts that consist of an initial setup fee and monthly payments and once the
customer has committed to use this product set they become long term  customers.
Customers that purchase the Messaging product set tend to sign shorter contracts
or choose to use the service as required.  This division has shorter sell cycles
and employs both telephone and direct sales  representatives.  The  contribution
margin from this division  will vary based on the mix of Messaging  sales versus
DisclosurePlus  sales.  DisclosurePlus sales will yield a higher margin once the
division has reached a critical mass of repeat customers.

      The  Company  has set up a "service  bureau"  operation  under the product
identity  "ActiveCast"  to implement the Messaging ASP service whereby it offers
broadcast  services to customers on an  outsourced  basis using its own internal
installation  of ActiveLINK and DynaPortal.  The Company is actively  increasing
the scope and revenue  earning  capacity of this operation by investing in fixed
assets and  personnel  to grow the revenue and client  base.  It should be noted
that as of September 30, 2005 the CDM business had only been existence for a few
quarters and following a fairly  substantial  investment in this division it was
just approaching  break-even from an operating income perspective (see segmented
information).  The expenses in this division  currently exceed its revenue,  but
over the next quarter the Company  anticipates  that this trend will reverse and
this  division  will be  producing  operating  income by the end of the  current
fiscal year.

      The Company completed the DisclosurePlus  acquisition in the first quarter
to add  additional  revenue  opportunities  to this division and to increase the
amount of recurring  revenue for the overall Company.  The Company  continues to
search  for  potential  acquisition  candidates  that can  expand  the  range of
products and  services  that the Company can offer within the context of the CDM
division.  In this area of operations,  the Company competes with such companies
as Infolink Technologies Limited in Canada, J2 Global Communications,  Inc., and
Xpedite Corporation.

                                       31
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The Company has  developed a clear  vision of how it intends to expand the
business in the future.  Expansion will be  accomplished  by growing the SIM and
the CDM  divisions  organically  as well as  developing  markets  via  strategic
acquisitions  in either  division.  The Company  will also expand its  marketing
program to increase the  "upselling"  and "cross  selling"  opportunities  which
naturally exist between the two divisions.

      The  Company  continues  to  hold  a  minority  interest  in  ePocket,  an
organization currently completing a major round of funding that will allow it to
enter the "electronic payment" market with a revolutionary  product. The Company
maintains  strong  business  relationships  with  both  companies.  The  Company
envisions  significant  benefits from the Cratos acquisition as the relationship
and  synergies  between  ePocket and  ActiveCore  become more  developed  in the
upcoming quarters.

Market Positioning Summary

The Company's "Smart Enterprise Suite"

      The Company  provides  organizations  of all sizes with the  capability to
integrate,  enable,  and  extend  their  "legacy  systems"  to  connect  to  and
communicate with their customers,  employees and  stakeholders.  Therefore,  the
Company's   products  and  services   facilitate  the  creation  of  the  "Smart
Enterprise".

      The Company's  products  encompass  application  integration,  application
modernization,  application migration, content management,  vertical application
portals,  a  corporate  disclosure  portal and an outbound  corporate  messaging
portal.  In addition the Company  delivers  its  DisclosurePlus  and  ActiveCast
product sets via an "Application  Service  Provider" (ASP) model using a Company
hosted corporate  messaging service bureau.  The Company's  products can be sold
individually  or as a  combination  to form  customized  solutions  based on the
customers'  most immediate  need. This approach allows the customer to deal with
information  technology  problems in a tactical  manner and can often  alleviate
customer capital expenditure restrictions.

      ActiveLINK is the Company's core  application  integration  product and is
used to create solutions that integrate  disparate  databases and  applications,
creating a hub through  which  legacy  system  functionality  can be enabled and
extended. The other products owned by the Company are ActiveCast, DisclosurePlus
and MD LINK.  In addition the Company  sells and services  third party  products
that complete its "Smart Enterprise Suite".  These include DynaPortal,  Caravel,
and Micro Focus.

      ActiveCore normally sells its products and services to companies that want
to improve  their  existing  "legacy  systems",  however,  the  Company has also
identified three other target markets: software resellers,  independent software
vendors and system integrators.

                                       32
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      MDI Solutions sells a vertically  optimized version of ActiveLINK known as
MD LINK to health care  facilities to support their systems  integration  needs.
The MDI group also  sells  consulting  support  services  for other  integration
products  resulting  in  recurring  income  from  support  contracts.   The  MDI
acquisition  provided  the Company  with the  knowledge  to  vertically  enhance
ActiveLINK and create MD LINK.

      ActiveCast,  the Company's corporate messaging software product is sold to
companies  that want to extract data from internal  "legacy  systems" and use it
for outbound messaging. These opportunities have short sales cycles resulting in
rapid cash flow and recurring revenue from organizations  sending information to
dedicated  lists.  This product is also directly  marketed to all companies that
need to communicate "stand alone" information to their customers,  employees and
stakeholders.  The C Comm  acquisition  provided  the base  product  from  which
ActiveCast evolved.

      DisclosurePlus  provides  corporations  with a  standard  methodology  for
reporting and distributing  information related to public disclosure required by
public companies.  This division is adding additional products to their offering
to expand the functionality available within the DisclosurePlus product.

      Cratos is a technology solution provider that focuses on payment solutions
for the financial services industry and on the migration of mainframe systems to
a Microsoft  environment.  Its expertise in various payment technologies is well
known  globally as evidenced by its blue chip  customers.  Cratos uses the Micro
Focus product set to perform system migrations for large customers and they have
a well  trained  consulting  group that  manages and  delivers  complex  payment
integration  projects.  There is an  opportunity  to  introduce  several  of the
Company owned products into Cratos projects.

Recent Developments

      In the  MDI  Solutions  group,  further  progress  has  been  made  in the
development of the MD LINK product and the company recently released version 4.1
at the end of June 2005. During the last few months, the Company has secured and
shipped  several orders for the new version of MD LINK. The Company  expects the
number of MD Link product sales to rise during the balance of 2005 and this is a
direct  result of the new product  features  and the  marketing  efforts of this
group in 2004 and early 2005.

      In the Company's  ActiveCore and ActiveCast business lines, the Company is
continuing to obtain additional  clients.  On the ActiveCast side of operations,
the Company is also adding  additional sales personnel to accelerate the rollout
of  the  Company's  innovative  messaging  portal  product.  This  division  has
generated  new revenue in the first quarter and continues to improve the margins
on this business.  We expect revenues from this division to continue to increase
throughout the remainder of 2005. For the nine month period ended  September 30,
2005, the Company made relatively  large  investments in equipment and new staff
in this area of the business.

      The Company  continues  to acquire new  organizations  and  completed  the
acquisition  of  DisclosurePlus  in the first  quarter of 2005 and completed the
acquisition   of  Cratos  during  the  second   quarter  ended  June  30.  These
acquisitions  continue  to add  significant  revenue to the  Company  during the
balance of 2005. The DisclosurePlus group is actively selling the DisclosurePlus
product and if the Company is able to add the "press  release"  product to their
offering, we expect that this development will also enhance sales.

      Acquisitions and Reorganizations

      The  Company   maintains  an  active  interest  in  acquisitions  and  the
reorganization of its component parts to better service clients. The Company has
undertaken an internal  restructuring  to facilitate  better  customer  service,
increased  sales  and  reduced  costs.  Investment  in its  existing  operations
augmented by growth through  acquisitions  is a key goal of management as is the
effective  use of  capital  to  drive  acceptable  returns  on  investment.  The
following  paragraphs briefly describe recent  acquisitions and  reorganizations
that have occurred.

      Acquisition of DisclosurePlus

      Prior to being  acquired  by the  Company,  DisclosurePlus  operated  as a
private  company  developing  its  intellectual  property and test  marketed its
product to several clients before agreeing to be acquired by ActiveCore.

      On  February  25,  2005,  the  Company  entered  into a purchase  and sale
agreement  with the  shareholders  of  DisclosurePlus  whereby the Company  paid
1,200,000  shares of the  Company's  common  stock  representing  $264,000  plus
$125,000 in cash for a total value of  $389,000  for 100% of the  DisclosurePlus
common shares. In connection with this acquisition the Company also entered into
management contracts with Gord Sutton and Dean Peloso.

                                       33
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      DisclosurePlus  offers a unique  set of  products  to the  public  company
market.  These  products  are offered as an ASP model and are targeted at public
companies  that want to provide  better  disclosure of corporate  information to
their shareholders,  customers and other  stakeholders.  This division will also
add press  release  dissemination  to the  product  set later this year which is
expected to have a positive impact on revenue opportunities.

      Acquisition of Cratos Technology Solutions

      Prior to being  acquired  by the  Company,  Cratos  operated  as a private
company  providing  technical  consulting  services and  mainframe  migration to
companies in the financial services sector in many countries.

      During the  quarter  ended  June 30,  2005,  the  Company  entered  into a
purchase and sale agreement with the  shareholders of Cratos  Solutions  whereby
the Company paid 9,021,030  shares of the Company's  common stock in addition to
cash and debt consideration of $159,120 representing total consideration of $2.1
million in exchange for 100% of the shares of Cratos.  In conjunction  with this
acquisition  the Company paid CAD  $470,000 of debt owed to SQL Tech.  by Cratos
along with 3,921,633  Common Shares of  ActiveCore.  The Company also arranged a
bank credit facility to help finance Cratos' debt that was personally secured by
the senior mangers of ActiveCore.

      Cratos is a service based company that  specializes  in providing  project
management and delivery to large companies in the financial  service,  education
and insurance market place.

      Twincentric, Limited

      On August 13,  2005,  the Company  entered  into an  agreement to sell its
wholly  owned  U.K.  subsidiary,  Twincentric  Limited  ("Twincentric")  to Tony
McGurk.  Mr. McGurk was the majority  shareholder  of Twincentric at the time it
was acquired during fiscal 2004 by the Company,  and he had continued to operate
the Twincentric business since that time.  Consideration received by the Company
was 1,400,000 of its common  shares.  These common shares  represented  the same
shares  originally  issued by the Company to Mr. McGurk in the transaction which
resulted in the Company originally acquiring Twincentric.

Going Concern

      The accompanying  Consolidated  Financial Statements have been prepared on
the  basis  that  the  Company  is  a  going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company  incurred a loss from  operations  of $378,378 for the
three months ended  September 30, 2005 and a loss from  operations of $2,014,308
for the nine months ended September 30, 2005. The Company incurred negative cash
flow from  operations of $175,770 and  $1,543,639  for the three and nine months
ended September 30, 2005  respectively,  and has a working capital deficiency of
$2,222,381 at September 30, 2005.  There is  substantial  doubt that the Company
will  continue as a going  concern and will likely  still incur a going  concern
note as at December 31,  2005.  The  Consolidated  Financial  Statements  do not
include any adjustments that might result from the outcome of this  uncertainty.
Management's  plan to continue  operations is to raise additional debt or equity
capital until such time as the Company is able to generate sufficient  operating
revenues through its new acquisitions.

Critical Accounting Policies

Significant Accounting Policies and Critical Accounting Estimates

                                       34
<PAGE>

                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The Company's Consolidated Financial Statements are prepared in accordance
with U.S. GAAP.  The  preparation of the  Consolidated  Financial  Statements in
accordance with U.S. GAAP necessarily requires the Company to make estimates and
judgments that affect the reported amounts of assets, liabilities,  revenues and
expenses,  and related  disclosure of contingent  assets and liabilities.  On an
on-going basis, the Company evaluates its estimates,  including those related to
revenues, bad debts, investments, intangible assets, income taxes, contingencies
and litigation.  The Company bases its estimates on historical experience and on
various other  assumptions  that are believed at the time to be reasonable under
the circumstances. Under different assumptions or conditions, the actual results
will differ,  potentially materially,  from those previously estimated.  Many of
the  conditions  impacting  these  assumptions  and estimates are outside of the
Company's control.

      The Company believes the following critical accounting policies affect its
more  significant  judgments  and  estimates  used  in  the  preparation  of its
Consolidated Financial Statements.

      Revenue:  A  significant  portion  of all of the  Company's  net sales are
derived from commercial  software  development and sales  activities,  which are
subject to  increasing  competition,  rapid  technological  change and  evolving
customer  preferences,  often  resulting  in the  frequent  introduction  of new
products and short product lifecycles.  Accordingly, the Company's profitability
and growth prospects depend upon its ability to continually acquire, develop and
market  new,  commercially  successful  software  products  and obtain  adequate
financing.  If the Company is unable to continue to acquire,  develop and market
commercially  successful software products,  its operating results and financial
condition could be materially adversely affected in the near future.

      The Company  recognizes  revenue for  software  sales in  accordance  with
Statement of Position ("SOP") 97-2 "Software Revenue Recognition", as amended by
SOP 98-9 "Modification of SOP 97-2 Software Revenue  Recognition with respect to
Certain Transactions." SOP 97-2 provides guidance on applying generally accepted
accounting principles in recognizing revenue on software transactions.  SOP 98-9
deals with the determination of vendor specific  objective  evidence ("VSOE") of
fair value in multiple  element  arrangements,  such as  maintenance  agreements
soldin conjunction with software packages. For the fiscal year 2004 and 2003 the
Company does not have any  multi-element  arrangements  that would require it to
establish  VSOE for each element,  nor does the Company have any sales  activity
that  requires  the  contract  method  of  accounting.  The  Company's  software
transactions  generally include only one element,  the interactive software game
or commercial  software under license.  The Company  recognizes revenue when the
price is fixed and determinable, there is persuasive evidence of an arrangement,
the fulfillment of its obligations under any such arrangement, and determination
that collection is probable. Accordingly, revenue is recognized when the license
or title  and all  risks  of loss  are  transferred  to the  customer,  which is
generally upon receipt by customer.

      The Company's  payment  arrangements  with its customers provide primarily
multi month terms unless the purchase  price is  relatively  low. As a result of
the multi-month  terms, an imputed  interest cost accounting for the net present
value of the terms was  deducted  in  determining  the  amount  of  revenue  and
receivable recognized.

      The  Company  recognizes  revenue  in the  period in which the  service is
performed and collection is reasonably assured.

      Allowance for Doubtful  Accounts.  The Company  maintains  allowances  for
doubtful  accounts for  estimated  losses  resulting  from the  inability of its
customers  to make  required  payments.  The  Company  performs  ongoing  credit
evaluations of its customer's financial condition and if the financial condition
of the Company's  customers were to  deteriorate,  resulting in an impairment of
their ability to make payments,  additional allowances would likely be required.
Actual collections could differ materially from our estimates.

      Income  Taxes.  The  Company  has  currently  recorded  a  full  valuation
allowance  against all of its deferred income tax assets as management  believes
it is more likely than not that all of the  deferred  income tax assets will not
be realized.  In making this  determination,  management has considered  factors
such as the  reversal  of deferred  income tax  liabilities,  projected  taxable
income,  the  character of the income tax asset and tax planning  strategies.  A
change to these  factors  could impact the  estimated  valuation  allowance  and
income tax expense.

                                       35
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      Litigation.  The  Company  is  a  party,  from  time  to  time,  in  legal
proceedings. In these cases, management assesses the likelihood that a loss will
result, as well as the amount of such loss and the financial  statements provide
for the Company's best estimate of such losses.  To the extent that any of these
legal  proceedings  are resolved and result in the Company being required to pay
an amount in excess of what has been provided for in the  financial  statements,
the Company would be required to record,  against  earnings,  the excess at that
time. If the resolution  resulted in a gain to the Company,  or a loss less than
that provided for, such gain is recognized when received or receivable.

      Valuation  of  Intangible  Assets.  The Company has a history of acquiring
other  businesses,  and  expects  that this trend will  likely  continue  in the
future.  As part of the completion of any business  combination,  the Company is
required to value any  intangible  assets  acquired at the date of  acquisition.
This valuation is inherently subjective,  and necessarily involves judgments and
estimates  regarding  future cash flows and other  operational  variables of the
entity  acquired.  However,  there can be no assurance  that the  judgments  and
estimates made at the date of acquisition will reflect future performance of the
acquired  entity.  If management  makes  judgments or estimates that differ from
actual  circumstances,  the Company may be required to write-off  certain of its
intangible assets. Similarly, in accordance with SFAS No. 142 Goodwill and Other
Intangible  Assets,  the Company is  required to annually  test the value of its
goodwill  as well as its  acquired  intangible  assets.  This  testing  requires
management  to make  estimates  of the  market  value of its  various  operating
segments.  Changes in estimates  could result in different  conclusions  for the
value of goodwill.  The Company  performs its annual  impairment  testing on its
goodwill at December 31st of each fiscal year, provided that circumstances don't
arise during the year that would necessitate an earlier evaluation.

                                       36
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Results of Operations

      Results of Operations for the Three and Nine Month Periods Ended September
      30, 2005 Compared to the Same Periods Ended September 30, 2004

Overview

During the quarter ended  September 30, 2005, the Company  recorded  revenues of
$2.8 million, and a loss from operations of $0.4 million.  These amounts compare
to revenue of $1.9 million during the previous quarter ended June 30, 2005, when
a loss from  operations  of $1.2 million was  incurred.  The increase in revenue
from the prior  quarter  was the  result of  several  factors.  Firstly,  as the
Company began  consolidating the results of Cratos effective May 1, 2005, during
the quarter ended September 30, 2005 the Company  consolidated an entire quarter
of operations as compared with only 2 months in the quarter ended June 30, 2005.
Additionally  however,  organic  growth  was  generated  by  the  Company's  CDM
division,  as both the ActiveCast  and  DisclosurePlus  businesses  demonstrated
significant percentage increases in revenue as compared with the prior quarter.

The Company incurred numerous  one-time  expenses  totaling $300,000  associated
with restructuring its organization and management in the quarter ended June 30,
2005,  which were not present in the quarter  ended  September  30, 2005.  These
amounts had related to consulting expense, legal and accounting, and general and
administrative  expenses. The Company feels that its operating expenses incurred
during the quarter  ended  September 30, 2005 are fairly  representative  of the
cost structure it will carry in the foreseeable future. As a result,  should the
Company be able to continue to grow its revenue in future quarters,  the Company
can expect to see improved profitability.

Revenues

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

  Three months ended September 30      Nine months ended September 30
------------------------------------- ----------------------------------

    2005        2004      % Change      2005        2004      % Change
------------- ---------- ------------ ---------- ----------- -----------

   2,708,373  1,432,810          89%  4,665,541   2,730,059         71%
------------- ---------- ------------ ---------- ----------- -----------

      During the three months  ended  September  30, 2005 the Company  generated
$2.7  million in revenue  from the sale of  products  and  services  versus $1.4
million in revenue in the same three month period ended  September 30, 2004. For
the nine month period ended September 30, 2005,  total revenue was $4.7 million,
which  represented  a 71% from the $2.7 million  recorded  during the nine month
period ended  September 30, 2004.  From a revenue source  perspective,  the vast
majority  of the revenue  recorded  in both 2005 and 2004 was  service  related,
while product related revenue  represented only a small percentage of the total.
In the three months ended  September  30,  2005,  the majority of the  Company's
revenue was generated from services work and product  installation  performed by
the Company's SIM division (see note 19 to the notes to the Unaudited  Financial
Statements for segmented information).  Specifically, the Cratos acquisition was
completed  during  the  quarter  ended  June  30,  2005,  and  the  Company  has
consolidated their operations in its consolidated financial statements beginning
May 1, 2005.  Over the 5 month period during which Cratos' results of operations
have been consolidated with the Company, Cratos has generated approximately $3.3
million of revenue,  and approximately $0.3 million of contribution margin. Also
of note is the fact that  during the 3 month  period  ended  September  30, 2005
Cratos signed a master  services  agreement with ePocket to become its exclusive
implementation  partner for software  installations.  As of September  30, 2005,
only nominal  amounts of revenue have been earned under this  agreement,  though
the Company is  optimistic  that  beginning in the first  quarter of 2006,  more
significant amounts of revenue will be earned under this agreement. As a result,
the Company expects  revenues in its SIM division to continue to increase as the
ePocket business becomes commercialized. In the shorter term, the quarter ending
December  31,  2005 may results in a slight  decrease  in  revenues  for the SIM
division as compared  with the quarter  ended  September 30, 2005 as a result of
the fact  that the SIM  division  generates  revenues  largely  off of  billable
consultants,  and the month of December tends to have far fewer billable days at
client locations than the months of July through November.

                                       37
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      The Company has also seen  revenue  growth over the past  quarter from its
CDM division - a division  that did not formally  exist until  mid-2004 when the
Company completed a small  acquisition of C-Comm Networks.  Since that time, the
Company  has added to that  business  through  significant  investments  of both
capital  and  personnel,  and  that  business  has  now  been  rebranded  as the
ActiveCast. It appears these investments are beginning to pay off. Although this
division's total revenues remain small relative to the overall corporate totals,
they are growing very quickly in percentage terms. Specifically, revenues in the
CDM business  grew 34% from the quarter ended June 30, 2005 to the quarter ended
September  30, 2005.  As the CDM division has a relatively  fixed  expense base,
once  that  division  crosses  break-even  the  profitability  margins  have the
potential to be very strong.  Incremental  revenues  recorded  once the division
achieves  break-even are expected to be in the 40-50% range. It is the Company's
expectation  that this growth will  continue to the point that the division will
acheive break-even in the fourth quarter from a contribution  margin perspective
given that during the quarter ended  September 30, 2005 it incurred only a small
loss of $35,000.

      The acquisition of  DisclosurePlus in the first quarter of 2005 also added
a revenue  source  that did not  exist  during  fiscal  2004.  Revenue  for this
division remains quite small, but customer opportunities remain very encouraging
and the Company  feels that this  division is still two to three  quarters  away
from generating more substantial  amounts of revenue.  At the current time, this
division  continues to round out its product offering.  During the quarter ended
September 30, 2005 DisclosurePlus announced the introduction of two new products
- Whistleblower and SedarPush.

      As   evidenced   by  the  above,   the  Company  has   undergone  a  major
transformation over the past 12 months due to the acquisitions that it has made.
The  integration of these  acquisitions  is progressing  well and represents the
main reason for the additional  revenue generated during both the three and nine
month periods ended September 30, 2005.

Cost of Sales

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

  Three months ended September 30      Nine months ended September 30
------------------------------------- ---------------------------------

    2005        2004      % Change      2005       2004     % Change
------------- ---------- ------------ ---------- --------- ------------

   1,714,395    292,872         521%  3,075,177   689,730         346%
------------- ---------- ------------ ---------- --------- ------------

                                       38
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      Cost of sales for the three month  period  ended  September  30, 2005 were
$1.7  million,  which  consisted  primarily of direct  wages paid to  consulting
services  staff  of  $1.6  million,   and  amortization  of  software  licensing
agreements   and  other  direct  costs  of  $0.1  million.   These  amounts  are
significantly  higher than fiscal 2004 when the Company's  cost of sales for the
three month period  ended  September  30, 2004  totaled  $0.3 million  which was
principally  comprised of direct wages for consulting  staff. For the nine month
period ended  September  30, 2005,  cost of sales  totaled $3.1  million,  which
represented  an increase of 346% from the nine month period ended  September 30,
2004.  The vast majority of the increase in cost of sales in 2005 as compared to
2004 relates the recent addition of Cratos.  Cratos is a services business,  and
the majority of their operating  expenses  relate to compensation  costs paid to
its consultants.  This differs  substantially  from fiscal 2004 when the Company
generated most of its revenue through software licensing agreements. As the cost
of sale on software licenses is much lower than that for services  revenue,  the
Company's  gross margin has decreased  significantly  from fiscal 2004 to fiscal
2005.  Specifically,  the  September  30, 2005 three month period led to a gross
margin of $1.0 million, or 37%, versus a gross margin of $1.1 million, or 80% in
the three  months  ended  September  30,  2004.  For the nine month period ended
September 30, 2005 the  Company's  gross margin  percentage  was 34% as compared
with 75% during the nine month period ended September 30, 2004. The gross margin
percentages  reflect the  addition of the Cratos  acquisition  which has brought
with it significant revenue growth but given the nature of that business does so
at a lower gross margin.  The Company  expects that its gross profit  percentage
will begin to increase in future periods as the Company's CDM revenue  continues
to increase,  and as that division becomes a more  substantial  component of the
Company's overall revenue mix.

Operating Expenses

      Total  operating  expenses for the three months ended  September  30, 2005
were $1.4 million  versus $0.7 million in the three months ended  September  30,
2004. Operating expenses also increased considerably for the nine month periods,
up from $2.2 million in 2004 to $3.6 million in 2005. After these expenses,  the
Company  recognized a loss from  operations  of $0.4 million in the three months
ended  September 30, 2005 versus  income from  operations of $0.4 million in the
same quarter ended September 30, 2004. For the nine month period ended September
30,  2005,  the  Company  incurred  a loss from  operations  of $2.0  million as
compared with a loss of $0.1 million in fiscal 2004.

      The recent  significant  investments  which the  Company  has made in both
acquired and organically  developed  businesses are reflected in the above noted
operating  expense totals.  Although these  investments  have resulted in larger
operating  losses  than have been  incurred in the prior  year,  management  has
determined that these  investments  were required in order to lay the foundation
for  the  Company's  two  operating  divisions  -  SIM  and  CDM  -  to  develop
successfully.

      The largest  components of operating expenses for the first three quarters
of 2005  fiscal  year  were  salaries  and  wages,  consulting  fees,  legal and
accounting  and other general and  administration  expenses.  These expenses are
discussed below.

Salaries and Wages

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

  Three months ended September 30      Nine months ended September 30
------------------------------------- ---------------------------------

   2005        2004       % Change      2005      2004      % Change
------------ ---------- ------------- --------- ---------- ------------

 515,702    394,380           31%     937,411  1,144,904         18%
------------ ---------- ------------- --------- ---------- ------------

                                       39
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      Salaries and wages in 2005 represent the cost of administration  and sales
and marketing  staff except for certain  contractors who are shown as consulting
costs.  For the three month period ended September 30, 2005,  salaries and wages
were $0.5 million as compared  with $0.4  million  during the three month period
ended  September 30, 2004.  For the nine month period ended  September 30, 2005,
this  increase  was 18% given that  salaries and wages for the nine month period
ended September 30, 2005 was $0.9 million as compared to $1.1 million during the
nine months ended  September  30, 2004.  Most of the increase in the three month
period  ended  September  30, 2005 as compared to the same period in fiscal 2004
reflects  the  additions  made to the CDM  business  in terms of  personnel.  As
mentioned previously, the Company acquired C-Comm Networks in mid-2004 to become
the foundation for its messaging business, although the Company has continued to
invest in this part of the business  since that time.  This factor also accounts
for the growth in salaries and wages for the nine month  period ended  September
2005 as compared with 2004.  From a sequential  perspective,  salaries and wages
were effectively constant between the three month period ended June 30, 2005 and
the three  month  period  ended  September  30,  2005 and the  Company  does not
anticipate adding significant costs in this area in the immediate future.

Consulting fees

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

  Three months ended September 30      Nine months ended September 30
------------------------------------- ---------------------------------

    2005       2004      % Change       2005      2004      % Change
------------- -------- -------------- --------- ---------- ------------

  131,096     35,215          272%   511,126    197,179         159%
------------- -------- -------------- --------- ---------- ------------

      For the three month  period ended  September  30,  2005,  consulting  fees
increased  272% to $0.1 million from $0.0 million  during the three month period
ended  September 30, 2004.  For the nine month period ended  September 30, 2005,
this  increase  was 159% given that  consulting  fees for the nine month  period
ended  September  30, 2005 were $0.5 million as compared to $0.2 million  during
the nine months ended  September  30, 2004.  Most of the increase in  consulting
fees paid during the three month period ended  September  30, 2005,  as compared
with the same period in 2004 relates to the amortization of deferred  consulting
costs which relate to assistance in securing certain financing transactions. The
related costs are being amortized over the period which the financing will be in
place.  The  increase  in  consulting  expense for the nine month  period  ended
September  30, 2005 as compared  with the nine month period ended  September 30,
2004 relate largely to one-time  termination costs incurred to exit a consulting
contract which the Company determined was no longer producing acceptable returns
to the  organization.  During the  quarter  ended  June 30,  2005,  the  Company
incurred  consulting  fees of $0.2  million,  and  therefore  from a  sequential
perspective the Company has managed to lower its expenses in this area.

Legal and Accounting

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

  Three months ended September 30      Nine months ended September 30
------------------------------------- ---------------------------------

    2005       2004      % Change       2005      2004      % Change
------------- -------- -------------- --------- ---------- ------------

     281,182   95,026            96%   628,745   258,481          142%
------------- -------- -------------- --------- ---------- ------------

                                       40
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      For the three month period ended September 30, 2005,  legal and accounting
expenses  increased 96% to $0.3 million from $0.1 million during the three month
period ended  September 30, 2004. For the nine month period ended  September 30,
2005,  this increase was 142% given that legal and  accounting  expenses for the
nine month period ended September 30, 2005 were $0.6 million as compared to $0.3
million  during the nine months ended  September 30, 2004.  Legal and accounting
expense includes legal costs associated with using third party lawyers to act on
behalf of the Company in current  legal matters (see Note 14 of the Notes to the
Unaudited  Financial  Statements).   Additionally,   the  Company  has  incurred
significant  legal costs over the past year in an attempt to gain  control  over
Infolink.  During the three month  period ended  September  30, 2005 the Company
incurred approximately $0.2 million relating to the Infolink transaction.  Going
forward,  the  Company  does not expect  legal cost to continue at this rate and
should be able to  experience a decline in this area.  Accounting  costs include
audit fees and related  costs as well as costs  incurred  to  complete  periodic
regulatory  filings and these  expenses  comprise  the balance of this  expense.
Legal and accounting costs were $0.3 million during the three month period ended
June 30, 2005 and therefore have remained stable over the past quarter.

General and Administrative

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

  Three months ended September 30      Nine months ended September 30
------------------------------------- ---------------------------------

   2005        2004       % Change      2005      2004      % Change
------------ ---------- ------------- --------- ---------- ------------

    289,288    148,524           95%   996,239    539,439          85%
------------ ---------- ------------- --------- ---------- ------------

      For  the  three  month  period  ended  September  30,  2005,  general  and
administrative  expenses  increased 95% to $0.3 million from $0.1 million during
the three month period ended September 30, 2004. For the nine month period ended
September 30, 2005, this increase was 85% given that general and  administrative
expenses  for the nine months  ended  September  30,  2005 were $1.0  million as
compared to $0.5 million  during the nine months ended  September 30, 2004.  The
large  increase  in general  and  administrative  expenses  from 2004 to 2005 is
related partially to the Company's 2005 acquisitions  which resulted in a larger
infrastructure.  General and  administrative  expenses  include amounts spent to
operate the Company's  various  facilities,  including  rent,  office  expenses,
insurance,  and  communications,  as well as travel  expenses.  During  the nine
months ended September 30, 2005, the Company has incurred certain expenses which
it does not  expect  to incur  in  future  periods.  Specifically,  the  Company
incurred bad debts of approximately  $360,000 to date in fiscal 2005, almost all
of which relates to one large customer who went  bankrupt.  The Company does not
have a history of experiencing  bad debts and as a result,  the Company does not
view  this  occurrence  as  being   indicative  of  expected  future   expenses.
Additionally,  during nine-months ended September 30, 2005, the Company incurred
one-time  expenses  relating to restructuring  certain elements of is management
team totaling approximately  $150,000.  General and administrative expenses were
$0.7 million  during the three month  period  ended June 30, 2005 and  therefore
have decreased substantially for the quarter ended September 30, 2005.

                                       41
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Other Income/Expenses

<TABLE>
<CAPTION>
---------------------------- ------------------------------------ ----------------------------------

                              Three months ended  September 30     Nine months ended September 30
---------------------------- ------------------------------------ ----------------------------------

                                2005        2004      % Change       2005       2004      % Change
---------------------------- ----------- ----------- ------------ ----------- ---------- -----------
<S>                            <C>         <C>              <C>    <C>         <C>             <C>
Gain (loss) on                (74,463)       -              100%    (74,463)      2,000     38,231%
extinguishment of debt
---------------------------- ----------- ----------- ------------ ----------- ---------- -----------

Interest Income                       -      25,480         100%           -     55,456        100%
---------------------------- ----------- ----------- ------------ ----------- ---------- -----------

Interest Expense               (74,070)    (33,204)         123%   (189,974)   (88,180)        115%
---------------------------- ----------- ----------- ------------ ----------- ---------- -----------

Foreign Exchange Gain            31,367      37,626          17%     (5,928)     19,735        130%
(loss)
---------------------------- ----------- ----------- ------------ ----------- ---------- -----------
</TABLE>

      During  the three  month  period  ended  September  30,  2005 the  Company
incurred a loss on  extinguishment of debt of $74,463.  This amount  represented
the fair value of  warrants  issued  during  that  period to parties to whom the
Company  was  previously  indebted  to and who agreed to  convert  their debt to
common shares of the Company.  As part of this  transaction,  the Company issued
these parties  warrants to purchase common shares of the Company which expire in
September 2006.

      In the quarter ended September 30, 2005, the Company  expended  $74,070 in
financial  interest which was significantly  higher than the $33,204 expensed in
the quarter ended September 30, 2004. Interest expense for the nine month period
ended September 30, 2005 totaled  $189,974 as compared with $88,180 for the nine
month period ended September 30, 2004. The increase in interest  expense in 2005
as compared with 2004 is a result of interest incurred on a loan from a Canadian
chartered  bank along with interest  incurred in relation to certain  short-term
loans the Company entered into towards the end of 2004 and into 2005.

      Foreign  exchange  gains were  $31,367  for the three month  period  ended
September  30, 2005 and  represented  a loss of $5,928 for the nine month period
ended  September  30, 2005.  This compared with gains of $37,626 and $19,735 for
the three and nine month periods ended  September 30, 2004  respectively.  These
balances are a result of the fluctuation of the U.S. dollar relative to the U.K.
pound  and  the  Canadian  dollar.  Going  forward,  given  the  disposition  of
Twincentric,  the  Company  will not  continue  to be  significantly  exposed to
fluctuations of the U.K. pound.

Discontinued Operations

      In the quarter ended September 30, 2005, the Company  recorded a loss from
discontinued  operations  of  $15,165  which  included  a loss  on  disposal  of
Twincentric  of  $16,434 as well as a gain from  operations  of  Twincentric  of
$1,269.  During the nine month  period  ended  September  30,  2005 the  Company
recorded the same loss on disposal of $16,434 but the loss from  operations  was
$445,032  which  provided  for a total  loss  from  discontinued  operations  of
$461,466.

                                       42
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      For the three month period ended September 30, 2004, the Company  incurred
a loss from  operations of SilverBirch of $954 along with a gain from operations
of  Twincentric  such  that the  total  gain from  discontinued  operations  was
$120,490.  For the nine month  period  ended  September  30,  2004,  the Company
incurred a loss from  operations of  SilverBirch of $129,450 which was partially
offset by a gain from  operations from  Twincentric  such that the net loss from
discontinued operations was $20,901.

Liquidity and Capital Resources

      At September  30, 2005,  the Company's  need for cash included  satisfying
$6,633,394 of current liabilities.  The Company's ability to continue as a going
concern  is  dependent  on its  ability  to  raise  additional  funding  through
expansion of its current bank facility, an equity injection,  a convertible loan
and increased sales revenue.  The Company  anticipates  that its cash needs over
the next 12 months will consist of $2,500,000 for general  working  capital.  At
September  30,  2005,  the  Company had  $32,105 of cash on hand.  In  addition,
certain  shareholders have also supported the Company by deferring the timing of
certain payments from time-to-time or converting shareholders loans into equity.
While there is no legal  commitment for them to do so, the Company believes that
certain shareholders will continue to support the Company in a similar manner.

      The failure of the Company to obtain  additional  debt and equity  funding
will have a material adverse effect on the Company's  business and may force the
Company to reorganize,  reduce its investment in, or otherwise  divest of one or
more of the Company's  operations,  or to reduce the cost of all operations to a
lower level of expenditure  thereby reducing the Company's expected revenues and
net income in 2005 and 2006.

Consolidated Statement of Cash Flows

      Cash on the unaudited consolidated balance sheet decreased from $53,736 in
the period ended December 31, 2004 to $32,105 at September 30, 2005.

Net Cash Used in Operating Activities

      Net cash used in operating  activities were $1,543,639 and $834,296 in the
nine months ended September 30, 2005 and 2004  respectively.  In the nine months
ended  September 30, 2005,  the Company had non cash charges in its statement of
operations  totaling $928,014.  This accounts for most of the difference between
the  Company's  loss for the nine  month  period  ended  September  30,  2005 of
$2,727,539  and its use of cash  from  operations  during  the  same  period  of
$1,543,639.  Over this period the Company also  experienced a variety of changes
in its various working capital accounts which largely had an offsetting  effect,
but which in total represented a net source of cash of $360,524.

                                       43
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Net Cash Provided in Investing Activities

      Net cash used in  investing  activities  was  $119,403  for the nine month
period ended  September 30, 2005.  This period's use of cash is largely a result
of the  DisclosurePlus  acquisition  and  Cratos  acquisitions,  which  together
represented a combined use of cash of $268,249.  During this period, the Company
also purchased  capital assets totaling  $66,154,  incurred  $35,000 of business
combination   costs,  and  received  the  proceeds  of  its  ePocket  investment
referenced  above  totaling  $250,000.  For the nine months ended  September 30,
2004, the Company used $273,138 from investing  activities  which all related to
the purchase of capital assets.

Net Cash Provided by Financing Activities

      Net cash  provided by  financing  activities  was  $1,640,261  in the nine
months  ended  September  30,  2005,  largely a result of the line of credit the
Company  secured in order to finance  some of the debts of Cratos as well as the
issuance for  preferred  shares.  In the nine month period ended  September  30,
2004, net cash provided by financing activities totaled $1,161,717,  primarily a
result of advances  received  from  related  parties as well as the advance of a
note payable and proceeds received from the issuance of preferred stock.

Certain Business Risk Factors

      A  significant  portion of the  Company's  net sales are derived from data
integration services and from the sale of enterprise software, which are subject
to increasing  competition,  rapid  technological  change and evolving  customer
preferences,  often  resulting in the frequent  introduction of new products and
short product lifecycles.  Accordingly,  the Company's  profitability and growth
prospects  depend upon its ability to  continually  acquire,  develop and market
new, commercially successful software products and obtain adequate financing. If
the Company is unable to continue  to acquire,  develop and market  commercially
successful  software  products,  its operating  results and financial  condition
could be materially adversely affected in the near future.

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and  liabilities  at the dates of the financial
statements and the reported amounts of revenues and expenses during the reported
periods.   The  most  significant   estimates  and  assumptions  relate  to  the
recoverability of intangible  assets,  realization of deferred income taxes, and
doubtful  accounts.   Actual  amounts  could  differ  significantly  from  these
estimates.

ITEM 3.  CONTROLS AND PROCEDURES

(A) Evaluation of Disclosure Controls and Procedures

      As of the end of the  period  covered  by this  Quarterly  Report  on Form
10-QSB,  the Company  carried out an evaluation,  under the supervision and with
the  participation of the Company's Chief Executive  Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls and procedures (as defined in Rules 13a - 15(e) promulgated
under the Securities Exchange Act of 1934, as amended.  The Company's disclosure
controls and procedures are designed to provide a reasonable  level of assurance
of achieving the Company's disclosure control objectives.

                                       44
<PAGE>


                          ACTIVECORE TECHNOLOGIES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

      Conclusions:  The Company's  Chief  Executive  Officer has concluded that,
subject to the limitation  noted above,  the Company's  disclosure  controls and
procedures  are effective at this  reasonable  assurance  level as of the period
covered to timely  alert  management  to  material  information  relating to the
Company.

(B) Changes in Internal Controls Over Financial Reporting

      In connection with the evaluation of the Company's internal controls there
have been no changes to the Company's internal controls over financial reporting
that have materially  affected,  or one reasonably likely to materially  effect,
the Company's internal controls over financial reporting.


                                       45
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

James Cassidy and TPG Corporation

On March 17, 2000,  the Company  entered into a  consulting  agreement  with TPG
Capital  Corporation  regarding  an inactive  reporting  shell  company that the
Company  acquired.  The  consulting  agreement  provides that one year after the
execution of the agreement,  ("reset date"), 350,000 common shares issued by the
Company  under the  agreement  would be increased  or  decreased  based upon the
average  closing bid for the Company's stock 30 days prior to the reset date, so
the value of the 350,000 shares will equal  $500,000.  The average closing price
of the  stock was  $14.87  per  share.  The  Company  is  obligated  to issue an
additional 30,284 common shares to the consultant as an additional fee.

      On June 14, 2004, James Cassidy filed a demand for arbitration against the
Company seeking,  among other things, the reset shares. The Company believes the
consultant  is not  entitled to the reset  shares due to the SEC and  regulatory
problems  relating to the  acquisition  of the shell company and as such has not
provided any accrual for this matter in the accompanying  consolidated financial
statements.  The  arbitration  is  proceeding  but no  final  decision  has been
rendered.

Orchestral Corporation

On June 13, 2002, the Company  canceled its "Power Audit" software  distribution
agreement  with  Orchestral  (the  "licensor").  In November  2002, the licensor
commenced  a  proceeding  in  Ontario,  Canada  against  the  Company  which was
discontinued  while the parties discussed a settlement.  That proceeding alleged
that the Company had infringed upon the copyright that the licensor  maintained,
and further  that the Company had breached the  distribution  contract  claiming
damages of CAD  $4,000,000.  The licensor  also claimed  punitive and  exemplary
damages in the amount of CAD  $1,000,000.  When a settlement  was not concluded,
Orchestral  commenced a second,  identical  action in August,  2003. The Company
retained  legal  counsel to defend itself on the basis that there is no merit to
the case and even if there was merit, the time frame in which to bring an action
under the distribution agreement has expired. The Company has not yet determined
if it will counter-sue for return of all proceeds paid to Orchestral  during the
period of time between 1999 and 2001.

Compulsory  mediation  has occurred in the second  lawsuit.  The next step would
normally  be  "examination  for  discovery"  then  on  to a  trial.  Instead  of
proceeding with the prosecution of its second lawsuit,  Orchestral  commenced an
Application  before the Ontario courts to enforce a settlement  which it alleges
was  reached  with the  Company  during the  negotiations  between its first and
second  lawsuits.  The court ordered that a settlement was  enforceable and that
$226,824  was owed by the Company to the  licensor.  An appeal by the Company of
this  judgment  is  pending.  An  allocation  of  $226,000  has been made on the
Company's  financial  statements for the settlement claim which is under appeal,
however,  the  Company  maintains  that all of  Orchestral's  claims  and  legal
proceedings are frivolous.

                                       46
<PAGE>

Cesar Correia and InfoLink Technologies Ltd.

From December 2003 to April 2004,  the Company was engaged in  discussions  with
certain major shareholders of Infolink  Technologies  Limited with regard to the
potential  acquisition of Infolink Technologies Ltd., a public company listed on
the Toronto Stock  Exchange  venture  board under the symbol  "IFL".  During the
course of discussions,  an offer to purchase was rebuffed by Cesar Correia,  the
former  Chairman  of the  Board,  President  and  CEO,  and 34%  shareholder  of
Infolink.  At the time,  Mr.  Correia was told that the Company  would  purchase
another competitor to Infolink, C Comm Network Corporation.  In May of 2004, the
Company purchased C Comm. In July of 2004, an unrelated minority  shareholder of
Infolink commenced an action in Ontario alleging that Mr. Correia has mismanaged
Infolink and amongst  other things that he had  inappropriately  obtained  funds
from Infolink and converted them to his own purposes. The day prior to the court
hearing  with  regard  to the  minority  shareholder  action  against  Infolink,
Infolink Technology commenced a proceeding in the same Ontario court against the
Company  alleging  unfair  competition  as  a  result  of  an  alleged  improper
acquisition of confidential  information from Infolink and numerous other causes
of action.  The Company  has not yet had to file a defence to any of  Infolink's
claims  against  the  Company.  Meanwhile,  the court  appointed  a monitor  and
investigator  to look  into the  allegations  against  Mr.  Correia.  The  court
appointed  monitor and  investigator  issued an interim  report in October  2004
which  found  that  several  of  the   allegations   against  Mr.  Correia  were
substantiated.  Mr. Correia was removed from the position of Chairman, President
and CEO of Infolink  and is now an employee of  Infolink.  The Company  believes
that Infolink as a corporate entity will not proceed with any action against the
Company as the Company  believes  that the action was  commenced  as a defensive
move by Mr. Correia and now that he has been removed from management of Infolink
there is little basis for the action to continue.

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

      On September 23, 2005,  the Company  issued  3,334,980  common shares to a
member of senior management.  Of this amount, 1,084,980 common shares related to
amounts  advanced by this  individual  to the Company,  2,000,000  common shares
relate to services  provided by that individual to personally  guarantee certain
indebtedness  of the Company over the next two years and 250,000  common  shares
related to employment services.  The fair value of these common shares, based on
the  market  value on the date  they were  approved  by the  Company's  board of
directors, was $108,098,  $220,000, and $37,500 respectively.  These shares were
sold  pursuant to an  exemption  from  registration  under  Section  4(2) of the
Securities Act.

      On September  23, 2005,  the Company  issued  4,750,000  common  shares to
another member of senior  management.  Of this amount,  2,500,000  common shares
related to amounts advanced by this individual to the Company,  2,000,000 common
shares relate to services  provided by that  individual to personally  guarantee
certain  indebtedness  of the Company over the next two years and 250,000 common
shares  related to employment  services.  The fair value of these common shares,
based on the market value on the date they were approved by the Company's  board
of directors,  was $250,000,  $220,000,  and $37,500 respectively.  These shares
were sold pursuant to an exemption from  registration  under Section 4(2) of the
Securities  Act and Rule 506 of Regulation D in an offering made  exclusively to
accredited investors, as that term is defined in Rule 501.

      On September 23, 2005,  the Company issued  1,000,000  common shares to an
unrelated party in exchange for provided financial  consulting services over the
next year to assist the Company in obtaining further  financing.  The fair value
of these common shares, based on the market value on the date they were approved
by the  Company's  board of  directors,  was  $150,000.  These  shares were sold
pursuant to an exemption from registration  under Section 4(2) of the Securities
Act.

      On September 23, 2005,  the Company  issued  850,500  common shares to two
unrelated parties as settlement for previously provided  professional  services.
The fair value of these  common  shares,  based on the market  value on the date
they were  approved by the  Company's  board of  directors,  was $85,050.  These
shares were sold pursuant to an exemption from  registration  under Section 4(2)
of the Securities Act.

      On September 23, 2005,  the Company  issued  975,000  common shares to two
unrelated  parties in exchange for  services to be  provided.  The fair value of
these common shares, based on the market value on the date they were approved by
the Company's board of directors,  was $258,750. These shares were sold pursuant
to an exemption from registration under Section 4(2) of the Securities Act.

      On September 23, 2005, the Company issued 3,787,619 common shares to three
unrelated  parties who agreed to convert  various loans and advances made to the
Company. The fair value of these common shares, based on the market value on the
date they were approved by the Company's board of directors, was $378,762. These
shares were sold pursuant to an exemption from  registration  under Section 4(2)
of the Securities Act.

      On September 23, 2005,  the Company  issued  250,000  common shares to one
member of its senior  management team in consideration  for employment  services
rendered.  The fair value of these common  shares,  based on the market value on
the date they were  approved by the Company's  board of directors,  was $37,500.
These shares were sold pursuant to an exemption from registration  under Section
4(2) of the Securities Act.

      On September 23, 2005, the Company issued  1,720,026  common shares to the
holder of its Series C Preferred Shares.  Of this amount,  257,370 common shares
related to interest and penalties  relating to late payment and 1,462,656 relate
to the mandatory  redemption of those Series C shares for common  shares.  These
shares were sold pursuant to an exemption from  registration  under Section 4(2)
of the Securities Act.

      On September 23, 2005,  the Company  issued  285,186  common shares to the
holder of its Series A and B  Preferred  Shares in respect of  dividends  due to
that holder under the terms of those preference  shares. The fair value of these
common  shares,  based on the market value on the date they were approved by the
Company's board of directors, was $35,648. These shares were sold pursuant to an
exemption from registration under Section 4(2) of the Securities Act.

Purchases of Equity Securities


During the quarter ended September 30, 2005, the Company  repurchased  1,400,000
of its common shares in the connection with its sale of Twincentric Limited:

<TABLE>
<CAPTION>
                                                                                                                      (d) Maximum
                                                                                          (c) Total number of       number of Shares
                                                                                            Shares Purchased         that May Yet Be
                                                                                          as Part of Publicly        Purchased Under
                                     (a) Total number         (b) Average Price             Announced Plans            the Plans or
                                        of Shares               Paid per Share                 or Programs              Programs

<S>                                       <C>                          <C>                           <C>                      <C>
Month #1 (July 1, 2005                   1,400,000                    $0.08                         0                        0
through July 31, 2005                                                   (1)



Month#2 (August 1, 2005                          0                        0                         0                        0
through August 31, 2005

Month #3 (September 1,                           0                        0                         0                        0
2005 through September
30, 2005
</TABLE>

(1)  Indicates  the per share value of 1,400,000  shares  received in connection
with the Sale of Twincentric, Limited. Consideration paid by the Company for the
shares consisted of all of the stock of Twincentric.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

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

      None.

ITEM 5. OTHER INFORMATION

      None.


                                       47
<PAGE>

ITEM 6.  EXHIBITS AND REPORT FOR FORM 8-K

      (a) Exhibits:

Exhibit No.     Description                                    Location
-----------     -----------                                    --------

                Certification by Principal Executive Officer   Provided herewith
                pursuant to 15 U.S.C. Section 7241, as
31.1            adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.

                Certification by Principal Financial Officer   Provided herewith
31.2            pursuant to 15 U.S.C. Section 7241, as
                adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.

                Certification by Principal Executive Officer   Provided herewith
32.1            pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002

                Certification by Principal Financial Officer   Provided herewith
32.2            pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002


                                       48
<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.


November 14, 2005                    ACTIVECORE TECHNOLOGIES, INC.

                                     By: /s/Peter J. Hamilton
                                         -------------------------------------
                                         President and Chief Executive Officer


                                       49