U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2005

                          Commission File No.: 0-25417

                              TORBAY HOLDINGS, INC.
                 (Name of small business issuer in its charter)

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

                        140 Old Country Road, Suite 205,
                               Mineola, NY, 11501
                    (Address of principal executive offices)

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

       Securities Registered under Section 12(b) of the Exchange Act: None
         Securities Registered under Section 12(g) of the Exchange Act:

                         Common Stock, $.0001 par value
                                (Title of Class)

      Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. Yes |X| No
|_|

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.|_|

      Revenues for the issuer's fiscal year ended December 31, 2005 were
$343,478.

      State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, as of a specified date within the last 60 days: $274,175
based on the closing price of the Company's common stock on April 13, 2006 of
$0.025 per share.

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. The Company had 131,674,439
shares of common stock outstanding as of April 13, 2006.

      Transitional Small Business Disclosure Format (check one): Yes |_| No |X|


<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

      We are a  holding  company  for  late-stage  development,  or  early-stage
commercial  companies with opportunities in niche markets. We have acquired what
we believe to be valuable intellectual  property rights,  including an exclusive
license on proprietary software and a United Kingdom patent for a computer mouse
that we believe to be  beneficial to computer mice users with regard to treating
and  preventing  repetitive  strain  injury.  We sell and market the Quill Mouse
computer  mouse and  software.  Our  products  are designed to justify a premium
price in the upper and certain  niche  sectors of our  markets.  Our  management
believes  that they have  identified  several  products,  including the AirO2bic
(formerly,  the Quill)  "Grip-less" Mouse and Nib "Click-less"  software,  in an
under exploited  opportunity in the computer,  household and domestic appliances
markets.  Because of our  precarious  financial  condition  and limited  capital
resources,  we are currently  limiting our operations to the production and sale
of the AirO2bic Mouse and related software.  However,  when and if our financial
condition  warrants it, we plan to acquire  controlling  interests in late-stage
development or early-stage  commercial  companies,  with  opportunities in niche
markets.

      Our executive offices are located at 140 Old Country Road, Mineola, New
York 11501 and our telephone number is 516-747-5955.

      We were incorporated on March 24, 1999 as a Delaware corporation named
Acropolis Acquisition Corporation. We changed our name to Torbay Holdings, Inc.
on July 14, 1999. On October 26, 1999, Torbay Acquisition Corporation ("TAC"), a
reporting company under the Securities Exchange Act of 1934, as amended, merged
into us. In the merger we issued our common stock to the former stockholders of
TAC and our common stock automatically became registered under the Securities
and Exchange Act of 1934 as a result of such transaction.

Products

      AirO2bic Computer Mouse and Nib, McNib & Brakemoor Software

      Our two main product areas are a computer mouse which we market under the
name AirO2bic Mouse and software, including Nib software for PC's, McNib
software for Macintosh computers and Brakemoor anti-fatigue software. The
AirO2bic Mouse is a "grip-less" computer mouse which allows the user to move a
cursor to any point on the screen without having to grip the mouse with the
muscles of the hand. The AirO2bic Mouse design maintains the hand in a
"functional neutral" position, one in which the muscles of the hand are kept
under a constant, but reduced tension, allowing for normal blood flow and
resulting in less fatigue. We believe that no comparable product is not offered
by any other company.


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<PAGE>

      The Nib/McNib Software AirO2bic enables the user to operate any mouse or
input device without having to click mouse or device buttons. This helps reduce
the mechanical burden of pressing mouse buttons. A combination of our mouse and
software is bundled together as the "VHF system" (virtually hands free) to allow
the user to control the cursor through minimal use of the fingers muscles of the
hand. The Virtually Hands Free mousing system allows for conventional mousing
techniques without the need for muscle activity forward of the elbow. This
enables those with reduced dexterity of most kinds to be able to use the full
features of their software, including and especially an easier and fuller
Internet experience. With the VHF System, upper arm muscles are used to move and
point the mouse. There is no need to grip or click. Some persons with tremors
may find that they can avoid unintentional clicking, since using the VHF System
they are able to maneuver without fingers being in close proximity to mouse
buttons.

      The AirO2bic Mouse will help to alleviate the strain of computer mouse
usage by untwisting the wrist and avoiding what is called static posture. This
is when a constant grip is maintained, the excessive use of which is now
reported as correlating with computer mouse related injuries. We believe that in
many cases the VHF System can break the cycle of a user receiving therapy and
then returning to work to perform a task, like mousing, that is likely to negate
or delay the impact of the benefits of the treatment just received. We believe
that with our products many people can heal sooner, saving pain and money.

      Some experts consider that using an ordinary mouse for more than 20 hours
a week will likely lead to an injury within 2-5 years. Muscles that are tensed
and then relaxed over short time intervals as when typing are considered as at
less risk, as they are in what is called a dynamic posture. When muscles are
tensed blood is squeezed out and they can require up to 50 times more oxygen.
Only when a muscle relaxes can full blood flow resume and oxygen concentrations
return to an "at rest" level. As with all physical work and in the absence of
other factors that can affect some individuals, while dynamic postures can and
do cause hands to tire, they are less likely to lead to injury if that posture
were the only one employed while computing.

      Muscles that are tensed and held tense for longer periods of time (maybe
minutes or more; continuous and contiguously) are said to be in static posture.
This is the posture that has to be used to some degree in order to grip an
ordinary mouse including other so-called "vertical mice". This "non-neutral"
posture is the basis for an expectation of injury and that is supported by the
observation that many computer users start with problems in their mousing arm.

      As a result of mousing, flexibility in the wrist can be reduced and the
ability to twist the wrist decreases. The body then compensates by sticking out
the elbow, which, due to a wrist twist limitation, mechanically re-orientates
the hand so as to allow it to be placed flat on a palm down mouse. This
"postural compensation" as it is called, in forcing the arm/elbow further away
from the body, places extra "physical load" on the shoulder joint that can
develop into conditions across the neck and shoulders that are not always
associated with, but are often due to, mousing palm down.


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<PAGE>

      We are continuing to develop our software product range and introduced in
December 2005 Brakemoor Anti-Fatigue software. Brakemoor calls up a break that
then seeks to de-fatigue by re-aerating users, relaxing them and then allowing
them to re-equilibrate their muscle biochemistry. This is a patent pending
technique which we believe is unlike any other break timer software available in
the market today. It applies what are called the 3 R's of Anti-Fatigue(TM),
Re-Aeration, Relaxation and Recovery. This is an orchestrated process that
recognizes and deals with fatigue at the physiological level. We believe that
dealing with fatigue in this way is as important as tool design as a user may be
able to use more fatigue inducing tools if the user is prepared to stop and take
a break more often.

      A free shareware version called BrakemoorShare is downloadable from the
www.brakemoor.com website. This version has limited functionality in terms of
relaxation modes and break detection software compared to the purchase version
of Brakemoor which currently sells at $49.95. BrakemoorShare also periodically
displays advertising for the Company's other products and also for the operator
of the weatherbug.com website which provides a cross link from its website to
the Brakemoor website. We are seeking other cross linking arrangements and to
eventually use our product websites for paid advertising.

      We believe that Brakemoor software can help manage injuries typically
associated with using a computer mouse such as cumulative trauma disease or
repetitive strain injury and carpal tunnel syndrome.

      PROCID (PRevention of muscle disorders in Operation of Computer Input
Devices) was a European Concerted Action, ending in March 2001, that for three
years brought ten research organizations from Denmark, Italy, Sweden and
Switzerland together to carry out research on muscle disorders in the upper
extremities from computer work. One specific aim of the three-year activity was
to present the results of the research activities in such a way that they could
be of practical help to end-users in preventing computer-related muscle
disorders from developing. The result is a set of six recommendations aimed
towards operators and employers, as well as manufacturers of computer equipment.
The recommendations are scientifically based and should be considered as
supplementary to existing guidelines.

      PROCID's fourth recommendation states:

      "Breaks from computer work must be frequent and allow for mental
relaxation. Operators must be educated how to achieve full mental and muscular
relaxation."

      Brakemoor software suite will extend fatigue management and make
recommendations as to how users might seek to alleviate observed sensations in
specific limb zones by offering a series of relaxation steps that heighten user
awareness to the possibility of developing soreness or potential for injury.


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<PAGE>

      Since 2002 we have introduced the following additional new products:

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

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

o     Introduced in 2003: Nib Trial version: This is a 30-day active version of
      Nib software which is freely downloaded from our website.

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

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

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

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

o     Introduced in 2004: Nib (for PC's) Trial version with Gesture Technology:
      This is a 30-day active version of Nib software which is freely downloaded
      from our website.

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

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


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<PAGE>

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

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

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

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

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

O In November 2004 the E-Quill-AirObic product was introduced that provided
customers with a color choice option that in the management's opinion matches
current system sales trends of Black or White. The product was renamed in 2005
to be called simply the AirO2bic mouse.


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<PAGE>

Section 508 Amendments to the 1998 Rehabilitation Act

      The General Services Administration ("GSA") implemented a program that
sets standards for information technology so as to make such technology
accessible to those with special needs. The standards are applied under what is
called Section 508, which are described in full at www.section508.gov details
pertaining to our products can be found at www.aeerobicmouse.com under the
heading GSA Section 508.

      These standards include a section relating to input devices, such as
computer mice and under item 1194.26 and 1194.23 standards are prescribed for
input devices. Companies that consider their products to comply to such
standards can apply to have their products listed on the section508.gov website
by completion of disclosure forms that are then inspected and their information
then listed if considered compliant. The GSA then provides access to the product
and company information on the website. The Company, having evaluated the
standard and believing that its products complied, submitted its applications
for its mouse and the Virtually Hands Free Mousing System (mouse and software
bundle), which were subsequently processed and as of April 2003, were listed on
the Section 508 website under the Company's assertions as to compliance.

      To our knowledge, there have been no other products listed on the website
by other companies that may be considered to be competitive to our products, be
they niche ergonomic computer mice or mass-market supplier computer mice. We
were therefore active in the development of the potential such a listing has for
opportunity to sell product to the U.S. Government under this provision. It
should be understood that this listing is not an endorsement or recommendation
but an information source for those who work or have needs in this are to help
them make their decisions thereby.

Other Products we may Market in the Future

      We are developing certain other products discussed below. However, due to
our current lack of capital, we are not focusing on such development at this
time.

      Telstar I Designer Vacuum Cleaner. The Telstar I Designer Vacuum Cleaner
is a rocket shaped cylinder vacuum cleaner made of polished aluminum and
incorporating the latest in filtration technology. It is bagless and features
the High Efficiency Particle Arrester medical grade filter that removes
allergens in dirt associated with asthma. It has a large (50ft.) cleaning radius
that typically allows cleaning an entire floor without stopping. Early versions
of the Telstar have obtained British and European approvals for German TUV
standards, which relate to electrical safety and manufacturing practices.

      Telstar II Designer Vacuum Cleaner/Table. This product is a combination of
the Telstar I vacuum cleaner with a glass tabletop accessory. When not in use,
the vacuum cleaner serves as a base for the glass tabletop and the entire unit
appears as an attractive and functional coffee table. This product is designed
for an environment where storage space is at a premium. We are considering
marketing this product under the name "Sputnik" or as the "Telstar Space
Station". The tabletop model has been developed as a working prototype.
Additional expenditures will be required for testing, tooling and packaging.


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<PAGE>

      Mistral I Desktop Fan. This is a desktop fan, cased in polished aluminum,
which utilizes a design similar to the Telstar I Vacuum Cleaner. The Mistral I
fan is designed and ready for manufacturing development. Further innovations
being considered for the Mistral I include voice control activations for
functions such as stop, start, speed, swivel movement, hot and cold.

      Wurlitzer Toaster. The Wurlitzer Toaster is in the design stage and we
anticipate that it will have a "retro" theme, while incorporating modern
technology. The product is expected to have two chrome ends in the shape of fins
with central glass panels to allow for the toasting process to be observed.
Designer Appliances is also considering incorporating an FM radio with this
product for practicality.

      Thalia Kettle. The Thalia Kettle will also incorporate a "retro" design in
order to be marketed with the Wurlitzer Toaster. The product is anticipated to
have instant heat delivery, rapid boil and other potentially patentable design
aspects.

      Heated Hearth Screens. We intend to develop and market designer, heated
hearth screens using chrome and glass in conjunction with a flat heating element
to offer background convection heat when the fire is not being used. The concept
of heated hearth screen may also be expanded to encompass a space heater product
in the future.

Marketing

      We sell our products through distributors as well as directly to the
consumer. We have adopted a strategy of "Marketing the Science" in marketing our
products in order to raise market awareness of the issues of computer mouse
injury and of the assistive technology benefits of our products. We maintain a
website (www.aerobicmouse.com) which we sell our products directly to consumers
and provide information to our distributors including the translation into
German and Swedish of informative and instructional documents.

      We believe that being seen as the market innovator and an authority on
issues relating to the use of computer mice, brand recognition can be achieved
and sales to professional bodies, therapists and ergonomists can be achieved. We
also anticipate that such recognition will enable us to form strategic
relationships with other companies who do not possess such expertise, but have a
co-market existence.

      We believe that our strategy has lead to our mouse products being reviewed
by a number of magazines and the placement of technical articles in corporate
ergonomic media.


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<PAGE>

      Our marketing initiatives are focused on the Assistive Technology and the
Functional Impairment markets.

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

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

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

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

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

Microsoft Assistive Technology Vendor ("MATVP")

      Designer Appliances Inc. was recently enrolled into the MATvp program. The
primary purpose of this program is to decrease the time from development to
market for assistive technology products.


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<PAGE>

Hewlett-Packard Assistive Technology Listing

      The Hewlett-Packard Company ("HP") has listed all of our products in their
Small and Medium Business catalogue under the section of Assistive Technology.
We believe that this is a significant development as it is the first trading
relationship established with a major and mainstream computer supplier.

Seasonality of Business

      In the limited time that the Company has sold its products it appears that
product sales have declined during main holiday season periods, most noticeably
during the winter holiday period.

Competition

      The Company considers competition to be any other company that can
potentially divert sales dollars away from those that could be spent on our
products.

      At this time the Company believes that it holds a unique position in the
computer mouse marketplace, as it is the only provider of mouse products that do
not require grip to be used and which have an associated software product that
removes the need for the mouse to be clicked.

      Competition in the conventional computer mouse sector is typically global
by most product providers. The major producers of computer mice include, but are
not limited to, Logitech, Kensington and Microsoft.

      In the "ergonomic" market, the 3M ergonomic mouse and the Contour Design
mouse products are the major computer mouse products.


Intellectual Property

      We hold a United Kingdom utility patent (No. BG2328496) on the AirO2bic
Mouse and has applied for a U.S. patent on this product and patent applications
have now been extended out into further geographies.

      In addition, the British Patent Office has granted to us the following
design patents:


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<PAGE>

Design                                                Registration Number
------                                                -------------------

Telstar I vacuum cleaner design protection                2066378

The tabletop design for the Telstar II,
Sputnik or Telestar Space Station                         2082459

The combined vacuum and table product                     2085669

The "Mistral" table top fan design                        2066377

      The British patents expire 20 years after the date of grant.

      We have applied for an additional utility patent on our clickless web
software.

      The British Patent Office has also granted the following trademark
registrations to the Company:

Name                       Registration Number

Telstar                           2209241

Sputnik                           2209243

Mistral                           2209473

Wurlitzer                         2209244


      In addition, we were granted a United States registration on the trademark
"E-Quill-Liberator" (No. 78/105096).

Employees

      We have two full-time employees, including our executive officers, neither
of whom have employment agreements with us. We have also retained two part-time
consultants.

Risk Factors

      An investment in our common stock is speculative in nature and involves a
high degree of risk. You should carefully consider the following risks and the
other information contained in this report. The price of our common stock could
decline due to any of these risks, and you could lose all or part of your
investment. You also should refer to the other information included in this
report, including the financial statements and related notes thereto. In
addition, the risks described below are not the only ones facing us. We have
described only the risks we consider material. However, there may be additional
risks that we view as not material or of which we are not presently aware.

      If any of the events described below were to occur, our business,
prospects, financial condition or results of operations or cash flow could be
materially adversely affected. When we say that something could or will have a
material adverse effect on it, we mean that it could or will have one or more of
these effects.


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<PAGE>

Risks Related to Our Business:

We have had losses since our inception. Although our loss for the year ended
December 31, 2005 was less than that for the same period in 2004, there still is
a significant risk we may never become profitable.

      We had a net loss of $555,070 for the fiscal year ended December 31, 2005
relative to a net loss of $1,127,727 for the fiscal year ended December 31,
2004. Sales revenues year on year were flat, but our net loss decreased in 2005
from 2004, primarily as a result of a reduction in interest and financing costs.

There is uncertainty as to our continuation as a going concern.

      Our audited financial statements for the year ended December 31, 2005
reflect a net loss of $555,070, a working capital deficiency of $296,250 and a
stockholders' deficiency of $208,578. These results and conditions raise
substantial doubt about our ability to continue as a going concern if sufficient
additional funding is not acquired or alternative sources of capital are not
tapped to meet our working capital needs. Our ability to continue our
operations, in the absence of significantly increased revenues from sales and a
resulting positive cash flow, is dependent upon receiving sufficient additional
equity and/or debt financing. If we continue to incur losses and fail in
obtaining additional funding, we may not be able to fund continuing business
operations, which could lead to the curtailment or closure of some or all of our
operations.

Funding for our capital needs is not assured, and we may have to curtail our
business if we cannot find adequate funding.

      During the year ended December 31, 2005 we received a $200,000 advance on
a common stock purchase agreement, $105,000 upon the exercise of warrants to
purchase an aggregate of 6,500,000 shares of our common stock (an additional
$20,000 on account of such warrant exercise was received in 2006), a $20,629
advance from one of our directors and officers, which we later agreed to convert
into 697,083 shares of our common stock and a $25,000 loan from the wife of one
of our directors. We currently have no legally binding commitments with any
third parties to obtain any material amount of additional equity or debt
financing, except that subject to certain conditions and limitations (including
that the market price of our common stock is at least 50% more than the exercise
price of the warrant for a period of 30 days before exercise), we may require
the holder of outstanding warrants to purchase an aggregate of 15 million shares
of our common stock to exercise such warrants. We may not be able to obtain any
additional financing on acceptable terms or at all. Our ability to obtain debt
financing may be particularly unlikely because we have no assets to use as
collateral security for the loan. As a result, we may not have adequate capital
to implement future expansions, maintain our current levels of operation or to
pursue strategic acquisitions. Our failure to obtain sufficient or any
additional financing could result in the delay or abandonment of some or all of
our development, plans, which could harm our business and the value of our
common stock.


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<PAGE>

Our current and potential competitors, some of whom have greater resources and
experience than we do, may develop products and technologies that may cause
demand for, and the prices of, our products to decline.

      The general appliances industry as well as the general computer products
industry include numerous companies which have achieved substantially greater
market share than we have, have longer operating histories, have larger customer
bases, and have substantially greater financial, development and marketing
resources than we do. Although at this time there are no other competitors who
state they are providers of a Grip-less or Click-less computer mouse products as
we do, we expect our competition to intensify as new research and development is
going on. Existing or future competitors may develop or offer products that are
comparable or superior to ours at a lower price, which could negatively affect
our business, results of operations and financial condition.

As a developer in the computer appliance industry, we may experience substantial
cost overruns in manufacturing and marketing products, and we may not have
sufficient capital to successfully complete the development and marketing of any
of our products.

      In the general appliances industry and general computer products industry
the commercial success of any product is often dependent on factors beyond the
control of the company attempting to market the product, including, but not
limited to, market acceptance of the product and whether or not retailers
promote the products through prominent shelving and other methods of promotion.
We may experience substantial cost overruns in manufacturing and marketing our
products, and may not have sufficient capital to successfully complete any of
our projects. We may not be able to manufacture or market our products because
of industry conditions, general economic conditions and competition from
existing or new manufacturers and distributors.

We are largely dependent on key personnel, the loss of which could harm our
prospects.

      We depend, to a large extent, on the abilities and participation of our
current management team, including William Thomas Large, our President, Chief
Executive Officer and Chief Financial Officer. The loss of the services of any
of our key personnel, for any reason, may have a material adverse effect on our
prospects. There can be no assurance in this regard nor any assurance that we
will be able to find a suitable replacement for such persons. We carry a $1.0
million life insurance policy covering Mr. Large, but do not carry life
insurance for any other key personnel.

If we are not able to contract with retail outlets to sell our products, we may
not be able to continue to operate.


                                       13
<PAGE>

      We market our AirO2bic Mouse and Software products through distributors,
upscale department stores, boutiques and designer outlets. We do not currently
have any arrangements or agreements with any such stores to carry our products
once produced. We may not be able to locate retail outlets to stock our
products, and even if we are successful in doing so, such outlets may not give
our products sufficient marketing support such as shelving space prominence.

If we do not continue to succeed in establishing effective sales, marketing and
distribution systems, we will not expand our business sufficiently to achieve
profitability.

      To increase market awareness and expand our products, we must establish
effective sales and marketing for our product offerings. To date, we have a
limited number of personnel devoted to sales of these products, and have made
only limited sales, primarily based on efforts by members of management. We
intend to expand our customer base through sales of the AirO2bic Mouse and
related products. Our future profitability depends, in part, on increasing sales
of our products abovementioned and developing new products and having the
marketing resource or the development of marketing partnerships.

We may be sued for product liability and our product liability insurance may not
be adequate.

      We carry product liability insurance coverage in the aggregate amount of
$1 million for our subsidiary, Designer Appliances, Inc. There can be no
assurance, however, that such insurance policies will be sufficient to fully
indemnify us against any asserted claims or that such insurance will continue to
be available.

      While we have limited product liability insurance to protect against this
risk, adequate insurance coverage may not be available at an acceptable cost, if
at all, in the future and a product liability claim or product recall could
materially and adversely affect our business. Inability to obtain sufficient
insurance coverage at an acceptable cost or otherwise to protect against
potential product liability claims could prevent or inhibit the
commercialization of our products. If we are sued for any injury allegedly
caused by our products, our liability could exceed our total assets and our
ability to pay the liability.

We may not be able to protect our patents, trademarks and proprietary and/or
non-proprietary rights, and, we may infringe upon patents, copyrights,
trademarks and proprietary rights of others.

      Notwithstanding the pending registration of certain trade names with the
United States Patent and Trademark Office, and the grant of a patent and trade
marks by the United Kingdom Patent Office, we may not have the resources to or
otherwise be able to enforce our rights against infringers. If we are not able
to prevent competitors from using the same or similar names, marks, concepts or
appearances, our business and financial conditions may be negatively impacted.


                                       14
<PAGE>

      Our software products were developed by independent contractors. However,
we have no confidentiality agreements, invention assignment agreements, conflict
of interest declarations or non-competition agreements with the contractors. The
lack of the above mentioned agreements raises the risk of potential infringement
of our intellectual property rights by others including the independent
contractors and may limit our ability to enforce our intellectual property
rights.

We may, in the future, issue additional shares of our common stock which would
reduce the percentage ownership of our existing shareholders.

      Our certificate of incorporation, as amended, authorizes the issuance of
250,000,000 shares of common stock, par value $.0001 per share, and 20,000,000
shares of preferred stock, par value $.0001 per share.

      The future issuance of all or part of our remaining authorized common
stock may result in substantial dilution in the percentage of our common stock
held by our then existing shareholders. Our existing shareholders do not have
any preemptive rights to purchase shares that may be offered. The value of any
common or preferred stock we may issue in the future shall be determined by our
Board of Directors and may be less than the current market value or book value
of such shares. The issuance of common stock for future services or acquisitions
or other corporate actions may have the effect of diluting the value of the
shares held by our investors, and may lower the price of our common stock.

No Cash Dividends Are Expected in the Foreseeable Future.

      We have never declared or paid any cash dividends. We do not intend to
declare or pay cash dividends in the foreseeable future. We intend to retain all
earnings, if any, that we may realize in the future to finance our operations.
The payment of any future dividends will be subject to the discretion of the
Board of Directors and will depend upon the Company's results of operations,
financial position and capital requirements, general business conditions,
restrictions imposed by financing arrangements, if any, legal restrictions on
the payment of dividends and other factors the Board of Directors deems
relevant.

Since our common stock is listed on the OTC Bulletin Board, which can be a
volatile market, our investors may realize a loss on the disposition of their
shares.

      Our common stock is quoted on the OTC Bulletin Board, which is a more
limited trading market than the Nasdaq SmallCap Market. Timely and accurate
quotations of the price of our common stock may not always be available and
trading volume in this market is relatively small. Consequently, the activity of
trading only a few shares may affect the market and result in wide swings in
price and in volume. The price of our common stock may fall below the price at
which an investor purchased shares, and an investor may receive less than the
amount invested if the investor sells its shares. Our shares of common stock may
be subject to sudden and large falls in value, and an investor could experience
the loss of the investor's entire investment.


                                       15
<PAGE>

Investors may not be able to enforce securities or other claims against one of
our officers and directors or against our assets.

      One of our officers and directors has a primary residence outside the
United States. We anticipate that a substantial portion of the assets that may
be developed or acquired by us will be located outside the United States and, as
a result, it may not be possible for investors to effect service of process
within the United States upon such person, or to enforce against our assets or
against such person judgments obtained in United States courts predicated upon
the liability provisions, and most particularly the civil liability provisions,
of the United States securities laws or state corporation or other laws.

Risks Related to Our Common Stock:

Because the Price of Our Common Stock May Vary Widely, When You Decide to Sell
It, You May Encounter a Delay or Have to Accept a Reduced Price.

The price of our common stock may fluctuate widely, depending on many factors.
Some of these factors have little to do with our operating results or the
intrinsic worth of our products. For example, the market value of our common
stock may be affected by the trading volume of the shares, announcements of
expanded business by us or our competitors, operating results of our
competitors, general trends in the general computer products industry, general
price and volume fluctuations in the stock market, acquisition of related
companies or variations in quarterly operating results. Also, if the trading
market for our common stock remains limited, that may exaggerate changes in
market value, leading to more price volatility than would occur in a more active
trading market. As a result, if you want to sell your common stock, you may
encounter a delay or have to accept a reduced price.

If we fail to remain current in our reporting requirements, we could be removed
from the OTC Bulletin Board which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.

      Companies trading on the OTC Bulletin Board, such as us, must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports under Section 13 of such Act, in order to
maintain price quotation privileges on the OTC Bulletin Board. If we fail to
remain current on our reporting requirements, we could be removed from the OTC
Bulletin Board. As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell
our securities and the ability of stockholders to sell their securities in the
secondary market.


                                       16
<PAGE>

Our directors and executive officers beneficially own approximately 17.4% of
our common stock; their interests could conflict with yours; significant sales
of stock held by them could have a negative effect on our stock price.

      As of April 11, 2006, our executive officers, directors and affiliated
persons beneficially owned approximately 17.4% of our common stock. As a result,
our executive officers, directors and affiliated persons may have significant
influence in:

      o     electing or defeating the election of our directors;

      o     amending or preventing amendment of our certificate of incorporation
            or bylaws;

      o     effecting or preventing a merger, sale of assets or other corporate
            transaction; and

      o     controlling the outcome of any other matter submitted to the
            stockholders for vote.

      As a result of their ownership and positions, our directors and executive
officers collectively are able to significantly influence all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. In addition, sales of significant amounts of
shares held by our directors and executive officers, or the prospect of these
sales, could adversely affect the market price of our common stock. Management's
stock ownership may discourage a potential acquirer from making a tender offer
or otherwise attempting to obtain control of us, which in turn could reduce our
stock price or prevent our stockholders from realizing a premium over our stock
price.

Our common stock is subject to the "Penny Stock" rules of the SEC and the
trading market in our securities is limited, which makes transactions in our
stock cumbersome and may reduce the value of an investment in our stock.

      The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:

      o     that a broker or dealer approve a person's account for transactions
            in penny stocks; and

      o     the broker or dealer receive from the investor a written agreement
            to the transaction, setting forth the identity and quantity of the
            penny stock to be purchased.


                                       17
<PAGE>

In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:

      o     obtain financial information and investment experience objectives of
            the person; and

      o     make a reasonable determination that the transactions in penny
            stocks are suitable for that person and the person has sufficient
            knowledge and experience in financial matters to be capable of
            evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form:

      o     sets forth the basis on which the broker or dealer made the
            suitability determination; and

      o     that the broker or dealer received a signed, written agreement from
            the investor prior to the transaction.

      Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.

      Generally, brokers may be less willing to execute transactions in
securities subject to the "penny stock" rules. This may make it more difficult
for investors to dispose of our common stock and cause a decline in the market
value of our stock.


ITEM 2. DESCRIPTION OF PROPERTY

      We lease our executive offices at 140 Old Country Road, Suite 205,
Mineola, New York 11501 under a three year lease expiring on October 31, 2006.
These premises consist of approximately 1,060 square feet of office space. The
monthly rental is $1,676.75 for the period ended October 31, 2004, $1,743.82 for
the period November 1, 2004 to October 31, 2005 and $1,813.57 for the period
from November 1, 2005 to October 31, 2006.


                                       18
<PAGE>

      On April 16, 2002 we contracted with Dynapoint, Inc. for Dynapoint to
provide warehousing and logistics facilities at a facility in City of Industry,
California which we currently use for our AirObic Mouse.

      We believe that our properties are adequate for our current and
immediately foreseeable operating needs. We do not have any policies regarding
investments in real estate, securities or other forms of property.

ITEM 3. LEGAL PROCEEDINGS

      As of April 13, 2006, we are not a party to any litigation, and management
has no knowledge of any threatened or pending litigation against us.

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

      None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES

      Our common stock was authorized to trade on December 23, 2000 on the
over-the-counter market with quotations available on the OTC Electronic Bulletin
Board under the symbol "TRBY." No trades occurred until January 3, 2001.

      The following table sets forth the range of high and low bid quotations of
our common stock for the periods indicated. The prices represent inter-dealer
quotations, which do not include retail markups, markdowns or commissions, and
may not represent actual transactions.


Year Ended December 31, 2004

First Quarter                              $    0.13       $     0.01
Second Quarter                             $    0.12       $     0.05
Third Quarter                              $    0.09       $     0.03
Fourth Quarter                             $    0.07       $     0.03


Year Ended December 31, 2005

First Quarter                              $    0.082      $     0.048
Second Quarter                             $    0.048      $     0.046
Third Quarter                              $    0.024      $     0.020
Fourth Quarter                             $    0.024      $     0.0185


                                       19
<PAGE>

Security Holders

      At April 13, 2006, there were 131,674,439 shares of our common stock
outstanding, which were held of record by 404 stockholders, not including
persons or entities who hold the stock in nominee or "street" name through
various brokerage firms.

Dividends

      The payment of dividends, if any, is to be within the discretion of the
Company's Board of Directors. The Company presently intends to retain all
earnings, if any, for use in its business operations and accordingly, the Board
of Directors does not anticipate declaring any dividends in the near future.

      Dividends, if any, will be contingent upon the Company's revenues and
earnings, capital requirements and financial condition.

Equity Compensation Plan Information

      As of April 13, 2006, the Company does not have any equity compensation
plans.

Transfer Agent

      Stocktrans, Inc., with offices at 44 West Lancaster Avenue, Ardmore,
Pennsylvania 19003 is the registrar and transfer agent for the Company's common
stock.

Penny Stock Regulations

      The SEC has adopted regulations which generally define "penny stock" to be
an equity security that has a market price of less than $5.00 per share. The
Company's common stock falls within the definition of penny stock and is subject
to rules that impose additional sales practice requirements on broker-dealers
who sell such securities to persons other than established customers and
accredited investors (generally those with assets in excess of $1,000,000, or
annual incomes exceeding $200,000 or $300,000, together with their spouse).

      For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's prior written consent to the transaction. Additionally,
for any transaction, other than exempt transactions, involving a penny stock,
the rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's common stock and
may affect the ability of investors to sell our common stock in the secondary
market.


                                       20
<PAGE>

Recent Sales of Unregistered Securities

      We did not issue any securities that were not registered under the
Securities Act of 1933, as amended (the "Securities Act") during the fourth
quarter of the fiscal year ended December 31, 2005, except as follows:

      During 2005, the Company issued 700,000 shares of common stock for
proceeds of $20,000.

      During 2005 the Company received $200,000 of advances on a common stock
purchase agreement. The Company issued 9,000,000 shares of common stock in
settlement of this advance.

      On November 28, 2005 we issued 175,000 shares of common stock to the wife
of an officer for services rendered to the Company.

      On June 9, 2005 we issued 100,000 shares of common stock to an
accountant for services rendered to the Company.

      During 2005 the Company issued 80,000 shares of common stock to the wife
of an officer in payment of interest on a loan made to the Company  by such
person.

      On November 28, 2005 we issued to William Thomas Large, a director and the
Chief Executive Officer of the Company, an aggregate of 2,580,000 shares of the
Company's common stock in repayment of certain advances made by Mr. Large to or
on behalf of the Company. On November 28, 2005 we also issued to Alexander
Gordon Lane, the Chairman of the Board and Secretary of the Company, an
aggregate of 697,063 shares of the Company's common stock in repayment of
certain advances made by Mr. Lane to the Company. On December 9, 2005 we issued
to Mr. Large, Mr. Lane and Thomas Marchant (a director of the Company), an
aggregate of 8,000,000, 4,640,000 and 600,000 shares, respectively, of the
Company's common stock as compensation for services as directors.

      All of the foregoing issuances of our common stock were made pursuant to
an exemption from the registration requirements under the Securities Act
afforded by Section 4(2) of the Securities Act for transactions by an issuer not
involving a public offering. There were no underwriters used by the Company in
connection with any of the above described transactions.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

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


                                       21
<PAGE>

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

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


RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

Gross Profit

      For the year ended December 31, 2005, the Company generated revenue of
$343,478 compared to $344,525 for the year ended December 31, 2004, a decrease
of $1,047 or 0.3%. Flat sales year on year reflect our limited resources for
marketing.

      Gross profit was $250,484 or 72.9% of net revenues for the year ended
December 31, 2005 relative to $240,636 or 69.8% of net revenues for the year
ended December 31, 2004.

Operating Expenses

      For the year ended December 31, 2005, operating expenses increased
$184,837 or 33.1% from $558,837 for the year ended December 31, 2004 to $743,674
for the year ended December 31, 2005. This increase was primarily due to
recognition of compensation to officers when they were issued Company common
stock in lieu of unpaid salary and expenses. Professional fees increased by
$70,486, primarily due to higher accounting and auditing fees.

Liquidity and Cash Position

Operating Activities


                                       22
<PAGE>

      For the years ended December 31, 2005 and 2004, the Company used $341,959
and $143,705, respectively, to fund operating activities. For the year ended
December 31, 2005 a loss of $555,070 was partially offset by non-cash charges of
$49,648 of depreciation and amortization expense and $166,813 of stock based
compensation and other equity related expense. For the year ended December 31,
2004 a loss of $1,127,727 was partially offset by non-cash charges of $40,198 of
depreciation and amortization expense, $1,128,737 of stock based compensation
and other equity related expense, increased by a non-cash gain of $243,800.

Investing Activities

      For the years ended December 31, 2005 and December 31, 2004, the Company
used $12,305 and $38,196, respectively to fund investing activities. These costs
include capital equipment purchase of computer equipment and on-going
development costs for software.


FINANCING ACTIVITIES

      For the year ended December 31, 2005 the Company realized cash of $323,501
primarily attributable to the proceeds of sale of common stock. This compares to
net cash receipts for stock issuance and notes or loans payable in the year
ended December 31, 2004 of $198,064.


LIQUIDITY AND CAPITAL RESOURCES

      The Company, including its subsidiaries, during its development stage
incurred start-up costs, including administrative costs and research and
development costs, while realizing limited operating revenue. The Company has
had negative cash flow from operations since its inception. In the year ended
December 31, 2005 such negative cash flow was $341,959.

      During the year ended December 31, 2005 we received a $200,000 advance on
a common stock purchase agreement, $105,000 upon the exercise of warrants to
purchase an aggregate of 6,500,000 shares of our common stock (an additional
$20,000 on account of such warrant exercise was received in 2006), a $20,629
advance from one of our directors and officers, which we later agreed to convert
into 697,063 shares of our common stock and a $25,000 loan from the wife of one
of our directors. We also sold an aggregate of 700,000 shares of our common
stock for cash proceeds of $20,000 and we settled certain obligations by issuing
shares of our common stock in lieu of cash. We currently have no legally binding
commitments with any third parties to obtain any material amount of additional
equity or debt financing, except that, subject to certain conditions and
limitations (including that the market price of our common stock is at least 50%
more than the exercise price of the warrant for a period of 30 days before
exercise), we may require the holder of outstanding warrants to purchase an
aggregate of 15 million shares of our common stock to exercise such warrants.


                                       23
<PAGE>

      Management of the Company estimates that to fund operations at current
levels in the fiscal year ending December 31, 2006, the Company will need
approximately $400,000 more than the amount projected to be generated through
operations. We may not be able to obtain any additional financing on acceptable
terms or at all. Our ability to obtain debt financing may be particularly
unlikely because we have little or no tangible assets to use as collateral
security for the loan. As a result, we may not have adequate capital to
implement future expansions, maintain our current levels of operation or to
pursue strategic acquisitions. Our failure to obtain sufficient or any
additional financing could result in the delay or abandonment of some or all of
our development, plans, which could harm our business and the value of our
common stock.


Going Concern Qualification

      The Company's consolidated financial statements as of December 31, 2005
and for the year then ended have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. As reflected in such consolidated
financial statements, for the year ended December 31, 2005 the Company has a net
loss of $555,070 and a negative cash flow from operations of $341,959, and as of
December 31, 2005 the Company had a working capital deficiency of $296,250 and a
stockholders' deficiency of $208,578. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the Company's ability to
raise additional funds and implement its business plan. The Company plans to
increase it sales by further expanding its distributor base in the "ergonomic"
market sector and is investigating opportunities to license its intellectual
property rights in order to generate additional revenues. To this end the
Company is seeking to extend its patents for its "grip-less" mouse across Europe
and the Far East. The consolidated financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern. Management's plans include obtaining additional financing for
which they are currently in active negotiations with several financing
institutions and increasing sales of the AirO2bic computer mouse.


Critical Accounting Policies and Estimates

Discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles in the United States.
The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the amounts reported in the consolidated
financial statements and the accompanying notes. On an on-going basis, we
evaluate our estimates, including those related to intangible assets, equity
based compensation and litigation. We base our estimates on experience and on
various assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.


                                       24
<PAGE>

Accounts Receivable

Accounts receivable consist primarily of receivables from individuals and
distributors. The Company records a provision for doubtful accounts, when
appropriate, to allow for any amounts which may be unrecoverable and is based
upon an analysis of the Company's prior collection experience, customer
creditworthiness, and current economic trends.

Inventory

Inventory is stated at the lower of cost or market using the first-in first-out
method. Cost includes expense of freight-in transportation. Inventory consists
entirely of finished goods, which include left-handed and right-handed computer
mice for sale to customers. The inventory is produced by an overseas vendor
using the Company's equipment.

Revenue Recognition

The Company's products are sold directly over the internet and through
distributorships. Products sold over the internet require complete payment via
credit card prior to shipment. Products sold through distributors require the
distributor to submit a purchase order and payment (according to terms and
pricing approved by the Company) prior to shipment. Accordingly, revenues from
sales over the internet and through distributors are recognized when the product
is shipped as the price has been determined and collectibility has been
reasonably assured. Consigned is not recognized as revenue until the product has
been sold by the consignee. The Company provides a warranty on goods for two
years from the date of sale. The Company has not established a warranty reserve
as of December 31, 2005 or 2004 since the amount is not material based on past
experience.

Website and Computer Software Costs

The Company follows the AICPA's Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"),
in accounting for its website and internal software costs. Accordingly, costs to
obtain computer software from third parties obtained for internal use have been
capitalized and amortized over their estimated useful life of 5 years. The
Company follows SFAS No. 86, "Accounting for the Costs of Computer Software to
be Sold, Leased, or Otherwise Marketed ("SFAS No. 86") in accounting for its
software enhancements. Pursuant to SFAS No. 86, enhancements to existing
software product that are intended to extend the life or improve significantly
the marketability of the original product are amortized over an estimated useful
life of 2 years. Costs incurred in operating a website that have no future
benefits are expensed in the period in which they are incurred. Costs incurred
in operating the website that have a future benefit are capitalized in
accordance with SOP 98-1 and amortized over the respective future periods that
are expected to benefit from the changes.


                                       25
<PAGE>

Stock Based Compensation

The Company accounts for stock options and warrants issued to employees using
the intrinsic value based method, under which compensation cost is measured as
the excess of the stock's market price at the grant date over the amount an
employee must pay to acquire the stock. The Company issued no options or
warrants to employees during the years ended December 31, 2005 or 2004 and had
no employee stock options or warrants outstanding at those dates. Stock options
and warrants issued to non-employees are accounted for using the fair value
based method, under which the expense is measured as the fair value of the
security at the date of grant based on the Black-Scholes pricing model.

Common stock issued as compensation is recorded based on the fair value of the
stock issued on the date of grant.


SECTION 508 AMENDMENTS TO REHABILITATION ACT.

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

      Section 508 compliance has been a requirement of system purchases,
typically large contracts over $2,500, since July, 2001 whereas
"Micropurchases"- purchases less than $2,500 and typically by credit card --
have been exempt from Section 508 compliance. This exemption was due to expire
on October 1, 2004, thereby making all purchases to require Section 508
compliance. This exemption was extended on October 5, 2004 until April 1, 2005
and was designated the "final extension." The Company was made aware by third
parties that its products were no longer listed in the Section 508 website. We
had not been advised of their removal and upon inquiry we were told that
computer mice were not considered as requiring Section 508 compliance and that
our listing, by then some 18 months, was erroneous.


                                       26
<PAGE>

      Following review by various bodies, at a meeting in December, 2005 the
Company's interpretation of Section 508 law, that computer mice were subject to
the standards, was confirmed and the Company's products were re-listed on the
Buy Accessible section of the www.section508.gov website.

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


COMPETITION:

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

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

      The employment of an IPR strategy is considered, but not guaranteed, to
act as a barrier to entry by other providers of computer mice. It is also
considered that the market environment, in regards to the general lack of
recognition by mouse manufacturers of health issues due to mouse product usage,
precludes entries by established organizations who are outside of the directly
competitive ergonomic sector. Their entry would likely raise more risk from the
possible litigious consequence of launching a "health conscious product as, by
inference, other and previous products could be viewed as "not health
conscious". While this is opinion and cannot be relied upon as to maintain the
Company's advantage in the future, it is considered that the opportunity for the
Company to achieve a market share of 5% of the total new and replacement U.S.
computer mouse market is possible from those impaired or having some form of
disability under this market scenario. It is also the Company's intent to work
with any other who may wish to license our technology.


                                       27
<PAGE>

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

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

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

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

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

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

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

      Revenues generated by sales of the mouse and software products, where and
when possible will be used to further develop sales until a cash flow positive
and profit positive position can be established at sustainable levels, thus
allowing the Company to access bank financing, thereby reducing the extent to
which the Company must rely on other sources of external financing. In the
absence of sales, the estimated amount of working capital that the Company will
need to expand the commercialization and distribution over the next year of its
products at planned operational levels, is approximately $600,000.


                                       28
<PAGE>

RECENT FINANCINGS

      During August 2004, the Company received $52,020 from a financial
institution pursuant to a loan term sheet, with a face value of $57,800. The
principal balance bore interest at the prevailing one month LIBOR, plus 3%
(4.12% at December 31, 2004) and matured in one year. The loan was secured by
1,700,000 shares of the Company's common stock. The collateral shares were
provided by a stockholder of the Company. The lender retained the collateral
shares in settlement of the debt during 2005. The Company incurred costs of
$10,980 in connection with obtaining this financing.

      During 2005, the Company received advances on a common stock purchase
agreement. The gross amount of the advances was $200,000. The Company issued
9,000,000 shares of common stock in settlement of this advance. Costs of $10,450
were deducted, resulting in net proceeds of $189,550. The costs have been
applied against additional paid-in capital. In connection with such financing,
the purchaser will be issued warrants to purchase 9 million shares. Half of
these warrants will be exercisable at $.0224 per share and half will be
exercisable at $.033 per share. Upon the achievement of certain conditions, the
Company may force the exercise of the warrants. The warrants will expire on
December 31, 2008.

      During 2005, the Company issued an aggregate of 700,000 shares of common
stock for aggregate proceeds of $20,000. The Company has recorded a finance cost
of $5,000 related to certain of these stock sales.

      During 2005, the Company received loans totalling $32,900 from an
individual for working capital purposes. The loans were non-interest bearing and
were repayable upon demand. The Company issued 2,090,000 shares of common stock
as collateral for the loan. These collateral shares were retained as payment of
the loan.

      During 2005, the Company issued 6,500,000 shares of common stock upon
exercise of warrants, for gross proceeds of $125,000. Of this amount, $20,000
was received in 2006 and is shown as a receivable at December 31, 2005.

      During August 2005 the wife of an officer of the Company advanced $25,000
to the Company for working capital purposes. During 2005, the Company issued
80,000 shares of common stock, valued at $2,400, as interest on such loan.

      In February 2005, an officer loaned to the Company $20,629. On November
28, 2005 the Company issued 697,063 shares of its common stock to such officer
in full repayment of such advance.

      In June 2005 the Company issued 100,000 shares of common stock to an
accountant for services rendered.

      During the fourth quarter of 2004 an officer advanced $45,957 to the
Company for working capital purposes. The advances were non-interest bearing and
repayable upon demand. On November 28, 2005 the Company issued 880,000 shares of
its common stock to such officer in full repayment of such advance.

      On February 17, 2004, the Company and the holders of its outstanding
debentures entered into a Redemption and Settlement Agreement and Mutual General
Release (the "Settlement"). In accordance with the Settlement, all of the
outstanding debentures and related warrants were redeemed by the Company. The
Company issued 6,000,000 shares of common stock having a fair value of $162,000
to the debenture holders, and agreed to pay $200,000 in cash in monthly
installments of $16,667, with a present value of $189,981, commencing May 1,
2004. The Company has recorded a gain of $247,826 related to the extinguishment.
The entire amount of cash payable under the Settlement was paid by the end of
April 2005.


                                       29
<PAGE>

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

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

      During April 2004, the Company issued 161,050 shares of common stock
having a fair value of $13,689 to settle a payable to an officer in the amount
of $9,663. Accordingly, the Company has recorded a loss on extinguishment of
debt of $4,026. During April and May 2004, the Company sold 2,005,168 shares of
common stock for cash proceeds of $126,940. The shares were sold at a discount
to market value, and a financing cost related to the discount of $44,245 has
been recognized.

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

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


ITEM 7. FINANCIAL STATEMENTS

      The consolidated audited financial statements for the year ended December
31, 2005 are included in this Annual Report on Form 10-KSB following Item 14.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      None.

                                       30
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management to allow timely decisions regarding required
disclosure. Management necessarily applied its judgment in assessing the costs
and benefits of such controls and procedures, which, by their nature, can
provide only reasonable assurance regarding management's control objectives.

      In connection with this report, William Thomas Large, our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the design
and operation of our disclosure controls and procedures. Based upon that
evaluation he concluded that our disclosure controls and procedures were
effective in alerting him in a timely manner to information relating to the
Company required to be disclosed in this report.

ITEM 8B. OTHER INFORMATION

Reports on Form 8-K.

      During the period commencing the last quarter of the period covered by
this Report until the date of filing of this Report, we did not file and were
not required to file any Current Reports on Form 8-K.


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The following are the executive officers and directors of the Company as
of April 11, 2006.

     Name                                    Positions                  Age
     ---------------------          -------------------------           ---
     Alexander Gordon Lane          Chairman of the                      64
                                    Board of Directors,
                                    Secretary
     William Thomas Large           CEO, President, Chief Financial
                                      Officer and Director               50
     Thomas A. Marchant             Director                             58


                                       31
<PAGE>

Alexander Gordon Lane, 64, Secretary and a Director of Torbay Holdings, Inc. has
served in such capacities since October 1999. Mr. Lane has been a Financial
Consultant since 1998 and continues in such capacity. Mr. Lane has been in the
financial services business for over 30 years. From 1976 to 1983 he served as
Treasurer of Grindlays Bank PLCC, New York, and in 1983 he was a founding member
of International Money Brokers which was acquired by Traditional North America.
From 1993 to 1998, he was a principal of Intercontinental Exchange Partners, New
York, as a capital markets broker in the interest and foreign exchange areas.
Mr. Lane has an aeronautics degree from Wandsworth Technical College in London.

William Thomas Large, 50, has been President and Chief Executive Officer since
September 2000 and a Director of Torbay Holdings, Inc. and Chief Executive
Officer of Designer Appliances since October 1998. From October 1996 until
October 1998, Mr. Large was Chairman, Chief Executive Officer, a Director and a
major stockholder of DeltaTheta Ltd., a heating and cooling technology company
in Cheshire, England. From February 1997 until September 1999, Mr. Large also
served as a director of DeltaMonitor Ltd., a medical devices company in
Cheshire, England. From December 1996 until June 1997, Mr. Large also served as
a director of SoundAlert Ltd., a company that manufactured emergency vehicle
sirens. From September 1994 until July 1996, Mr. Large was a Director of
AromaScan plc, a publicly listed instrumentation and technology company in
Cheshire, England. Mr. Large graduated from Manchester Metropolitan University,
in Manchester, England, and is the author or co-author of eight articles and two
books relating to biochemical analysis.

Thomas A. Marchant, 58, has served as a member of our board of directors since
July 11, 2002. Mr. Marchant, joined Ford Motor Company in 1985 as Financial
Sales Manager of Ford Credit Canada. Mr. Marchant directed a sales and marketing
operation to institutional investors in the Commercial Paper and Medium Term
Note Markets. In 1991Mr. Marchant transferred to Ford World Headquarters in
Dearborn, Michigan and assumed responsibility for consolidation and launch of
the Canadian Treasury funding operation. Prior to joining Ford, Mr. Marchant
held various positions with Greenshields Incorporated, one of Canada's foremost
investment banking firms, First National Bank of Chicago, Grindlays Bank and
Merrill Lynch.

      All directors hold office until the next annual meeting of stockholders
and until their successors are elected. Officers are elected to serve, subject
to the discretion of the Board of Directors, until their successors are
appointed. Directors do not receive cash compensation for their services to us
as directors, but are reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors.

Section 16 Reporting

      No person who, during the year ended December 31, 2005, was a director,
officer or beneficial owner of more than ten percent of the Company's Common
Stock (which is the only class of securities of the Company registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act") (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year or prior years, except William Thomas
Large and Thomas Marchant who have not filed any reports under Section 16(a) of
the Act. and Gordon Lane has not filed a Form 4 with respect to the issuance of
697,063 shares of the Company's common stock issued to him on November 28, 2006
in repayment of cash advances Mr. Lane made to the Company and an aggregate of
4,640,000 shares of the Company's common stock issued to him on December 29,
2006 as compensation for services to the Company as a director and officer.
issued The foregoing is based solely upon a review by the Company of Forms 3 and
4 during such fiscal year as furnished to the Company under Rule 16a-3(d) under
the Act, and Forms 5 and amendments thereto furnished to the Company with
respect to such fiscal year, and any representation received by the Company from
any reporting person that no Form 5 is required.


                                       32
<PAGE>

Code of Ethics

      The Company has adopted a Code of Ethics applying to its executive
officers which is filed herewith as Exhibit 14.1 to this Annual Report.

ITEM 10. EXECUTIVE COMPENSATION

      The following table sets forth a summary for the three fiscal years ended
December 31, 2005 of the cash and non-cash compensation awarded, paid or accrued
by us to our President and our most highly compensated officer other than the
CEO, who served in such capacities as of December 31, 2005. None of our
executive officers earned in excess of $100,000 in total annual salary.

<TABLE>
<CAPTION>
                           ANNUAL COMPENSATION                                            LONG TERM COMPENSATION

                                                                                      Awards                Payouts

                                                                   Other       Restricted   Securities
                                                                   Annual          Stock    Underlying                  All
                                   Year                           Compen-        Awards      Options/        LTIP       Other
       Name         Position      Ended     Salary($)  Bonus($)   sation($)          $         SARS        Payouts   Compensation
  --------------    --------   ----------   ---------  --------   ---------    ----------   ----------     -------   ------------
<S>                    <C>       <C>          <C>           <C>          <C>           <C>          <C>         <C>         <C>
  William Thomas       CEO       12/31/05      71,298(2)     0            0             0            0           0           0
     Large (1)                                               -            -             -            -           -           -

                       CEO       12/31/04      51,280        0            0             0            0           0           0

                       CEO       12/31/03      52,918        0            0             0            0           0           0


Alexander Gordon    Chairman     12/31/05      50,561(3)     0            0             0            0           0           0
Lane                   and
                    Secretary
                    Chairman     12/31/04      30,775        0            0             0            0           0           0
                       and
                    Secretary
                    Chairman     12/31/03      29,700        0            0             0            0          0            0
                       and
                    Secretary
</TABLE>

(1) Mr. Large is eligible for a performance-related bonus of up to 100% of his
annual salary.

(2) Includes $32,000 in value of the Company's common stock (1,600,000 shares
valued at $.02 per share) paid in shares of common stock for services performed
in 2005.

(3) Includes $18,600 in value of the Company's common stock (930,000 shares
valued at $.02 per per share) paid in shares of common stock for services
performed in 2005.

                                       33
<PAGE>

EMPLOYMENT AGREEMENTS

      We have not entered into any employment agreements with our executive
officers or other employees to date. We may enter into employment agreements
with them in the future.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

      The following table sets forth as of April 13, 2006, certain information
with respect to the beneficial ownership of the voting securities by (i) any
person or group with more than 5% of the Company's securities, (ii) each
director, (iii) each executive officer and (iv) all executive officers and
directors as a group.

<TABLE>
<CAPTION>
          Name and                                              Amount and
         Address of                           Title of     Nature of Beneficial    Percent of
      Beneficial Owner                         Class            Ownership (1)       Class (2)
-----------------------------------------   ------------   --------------------    -----------
<S>                                         <C>                   <C>                     <C>
Nutmeg Group, LLC                           Common Stock          12,023,389(3)            9.1%
3646 Commercial Avenue
Northbrook, Illinois 60062

Alexander Gordon Lane                       Common Stock           5,783,827               4.4%
140 Old  Country Road, Suite 105
Mineola, New York 11501

William Thomas Large                        Common Stock          15,599,582(4)           11.8%
140 Old Country Road, Suite 105
Mineola, New York 11501

Thomas A. Marchant                          Common Stock           1,521,638               1.2%
140 Old Country Road, Suite 105
Mineola, New York 11501

All Directors and Officers of the Company   Common Stock          22,905,047              17.4%
as a group (3 persons)
</TABLE>

* Less than 1%

(1) In general, beneficial ownership includes those shares that a person has the
power to vote, sell, or otherwise dispose. Beneficial ownership also includes
that number of shares, which an individual has the right to acquire within 60
days (such as stock options) of the date this table was prepared. Two or more
persons may be considered the beneficial owner of the same shares. "Voting
power" is the power to vote or direct the voting of shares, and "investment
power" includes the power to dispose or direct the disposition of shares. The
inclusion in this section of any shares deemed beneficially owned does not
constitute an admission by that person of beneficial ownership of those shares.


                                       34
<PAGE>

(2) Computed based upon a total of 131,674,439 shares of common stock
outstanding as of April 11, 2006.

(3) Under a stock subscription agreement made by Nutmeg Group, LLC ("Nutmeg")
and accepted by the Company in August 2004, Nutmeg was granted an aggregate of
21,500,000 shares of Common Stock issuable upon exercise of currently
exercisable warrants and was issued 1,388,889 shares of common stock (of which
Nutmeg has sold 62,500 shares, leaving a total of 1,326,389 shares of common
stock owned by Nutmeg). Nutmeg is a U.S. Virgin Islands limited liability
company of which Randall Goulding and Michael Montaigne each own 50% of the
outstanding membership interests. Nutmeg Group, LLC is managed by a Board of
four persons, including Randall Goulding, Michael Montaigne, Brandon Goulding
and Randi White. Such persons share the voting and investment power over the
securities owned by Nutmeg, including the Company's securities.

(4) Includes 120,000 shares of our common stock owned by Mr. Large's minor
children. Such figure does not include 3,000,000 shares of our common stock
issuable to Mr. Large to reimburse Mr. Large for 3,000,000 shares transferred by
him to a consultant in August 2003 in payment of an obligation of the Company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In November 2004, William Thomas Large, a Director and the Chief Executive
Officer of the Company, sold shares of common stock for net proceeds of
$45,956.65 of the Company and immediately loaned such amount to the Company. In
order to repay the loan the Company agreed to issue to Mr. Large a number of
shares of the Company's common stock equivalent to the number of shares Mr.
Large sold to fund the loan. Accordingly, on November 28, 2005 the Company
issued to Mr. Large 880,000 shares of the Company's common stock.

      On August 21, 2005 Mr. Large transferred to Nutmeg Group, LLC and
aggregate of 1,620,000 shares of the Company's common stock in payment of an
obligation of the Company. On November 28, 2005 the Company issued to Mr. Large
1,620,000 shares of the Company's common stock in reimbursement for such
transfer to Nutmeg Group, LLC.

      In February 2005 Mr. Gordon Lane, the Chairman and Secretary of the
Company, loaned to the Company $20,629. On November 28, 2005 Mr. Lane and the
Company agreed to the conversion of such loan into an aggregate of 697,063
shares of the Company's common stock.

      During August 2005 Mr. Lane's wife advanced $25,000 to the Company for
working capital purposes. During 2005 the Company issued 80,000 shares of common
stock to Mr. Lane's wife in payment of interest on such loan.

      On November 28, 2005 the Company sold an aggregate of 500,000 shares of
common stock to Mr. Lane's wife for proceeds of $10,000. On such date the
Company also issued to Mr. Lane's wife 175,000 shares of common stock for
services rendered to the Company.

                                       35
<PAGE>

      On December 29, 2005 the Company issued to Mr. Large, Mr. Lane and Thomas
Marchant (another director of the Company), an aggregate of 8,000,000, 4,640,000
and 600,000 shares, respectively, of the Company's common stock as compensation
for services as directors.


ITEM 13. EXHIBITS

      The following exhibits are either filed as part of this report or are
incorporated herein by reference:

2.1   Agreement and Plan of Merger between Torbay Acquisition Corporation and
      Torbay Holdings, Inc. (1)

3.1   Certificate of Incorporation of Torbay Holdings, Inc. and Certificate of
      Amendment thereto filed in June 1999. (2)

3.2   Certificate of Amendment to Certificate of Incorporation of Torbay
      Holdings, Inc. filed on October 18, 2005.*

3.3   By-Laws of Torbay Holdings, Inc. (3)

4.1   Certificate of Designation with respect to Series 1 Convertible Preferred
      Stock of Torbay Holdings, Inc. (4)

4.2   Form of Common Stock Certificate (5)

4.3   Warrant to Purchase 500,000 Shares of Common Stock, dated August 24, 2004
      (6)

4.4   Warrant to Purchase 500,000 Shares of Common Stock, dated August 24, 2004
      (7)

4.5   Warrant to Purchase 3,000,000 Shares of Common Stock dated December 16,
      2004 (8)

4.6   Warrant to Purchase 2,500,000 Shares of Common Stock dated December 16,
      2004 (9)

4.7   Warrant to Purchase 2,000,000 Shares of Common Stock dated December 16,
      2004 (10)

4.8   Warrant to Purchase 2,000,000 Shares of Common Stock dated December 16,
      2004 (11)


                                       36
<PAGE>

4.9   Warrant to Purchase 2,000,000 Shares of Common Stock dated December 16,
      2004 (12)

4.10  Warrant to Purchase 2,000,000 Shares of Common Stock dated December 16,
      2004 (13)

4.11  Warrant to Purchase 2,000,000 Shares of Common Stock dated December 16,
      2004 (14)

4.12  Warrant to Purchase 2,000,000 Shares of Common Stock dated December 16,
      2004 (15)

4.13  Warrant to Purchase 1,000,000 Shares of Common Stock dated December 16,
      2004 (16)

4.14  Warrant to Purchase 1,000,000 Shares of Common Stock dated December 16,
      2004 (17)

4.15  Warrant to Purchase 1,000,000 Shares of Common Stock dated December 16,
      2004 (18)

10.1  Manufacturing Agreement between the Company and Dynapoint, Inc. dated
      April 16, 2002 (19)

10.2  Redemption and Settlement Agreement and Mutual General Release, dated as
      of February 17, 2004 (20)

10.3  Lease, dated October 22, 2003 between 140 OCR, LLC and the Company (21)

10.4  Nutmeg Term Sheet for $50,000 Financing (22)

10.5  Nutmeg Term Sheet for $30,000 Financing (23)

10.6  Agreement, dated December 16, 2004 between the Company and The Nutmeg
      Group (24)

14.1  Code of Ethics.*

21.1  List of subsidiaries.*

23.1  Consent of Weinberg & Company, P.A.*

31.1  Certification of Chief Executive Officer and Principal Financial Officer.*

32.1  Certification of Chief Executive Officer and Principal Financial Officer.*


                                       37
<PAGE>

-----------------------
*Filed herewith.

(1) Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K, filed with the Securities and Exchange Commission (the Commission") on
November 12, 1999 (the "1999 8-K").

(2) Incorporated by reference to Exhibit 3.1 to the 1999 8-K.

(3) Incorporated by reference to Exhibit 3.2 to the 1999 8-K.

(4) Incorporated by reference to Exhibit 3.4 to the 1999 8-K.

(5) Incorporated herein by reference to Exhibit 4.2 to the Registration
Statement on Form SB-2 (Registration No. 333-93847), filed with the Commission
on December 30, 1999.

(6) Incorporated herein by reference to Exhibit 4.3 to the Registration
Statement on Form SB-2 (Registration No. 333-122773), filed with the Commission
on February 11, 2005 (the "2005 SB-2").

(7) Incorporated herein by reference to Exhibit 4.4 to the 2005 SB-2.

(8) Incorporated herein by reference to Exhibit 4.5 to the 2005 SB-2.

(9) Incorporated herein by reference to Exhibit 4.6 to the 2005 SB-2.

(10) Incorporated herein by reference to Exhibit 4.7 to the 2005 SB-2.

(11) Incorporated herein by reference to Exhibit 4.8 to the 2005 SB-2.

(12) Incorporated herein by reference to Exhibit 4.9 to the 2005 SB-2.

(13) Incorporated herein by reference to Exhibit 4.10 to the 2005 SB-2.

(14) Incorporated herein by reference to Exhibit 4.11 to the 2005 SB-2.

(15) Incorporated herein by reference to Exhibit 4.12 to the 2005 SB-2.

(16) Incorporated herein by reference to Exhibit 4.13 to the 2005 SB-2.

(17) Incorporated herein by reference to Exhibit 4.14 to the 2005 SB-2.

(18) Incorporated herein by reference to Exhibit 4.15 to the 2005 SB-2.

(19) Incorporated by reference to Exhibit 10.3 to our Form 10-KSB filed with the
Commission on April 29, 2002.


                                       38
<PAGE>

(20) Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K
filed with the Commission on February 18, 2004.

(21) Incorporated by reference to Exhibit 10.3 to our Form 10-KSB filed with the
Commission on April 14, 2004.

(22) Incorporated by reference to Exhibit 10.4 to the 2005 SB-2.

(23) Incorporated by reference to Exhibit 10.5 to the 2005 SB-2.

(24) Incorporated by reference to Exhibit 10.6 to the 2005 SB-2.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

INDEPENDENT AUDITOR FEES

The following is a summary of the fees billed to us by Weinberg & Company, P.A.
("Weinberg") for professional services rendered for the fiscal years ended
December 31, 2005 and 2004:

Fee Category       Fiscal 2005         Fiscal 2004
------------       -----------         -----------

Audit fees         $76,585             $51,000
Tax fees                 0             $ 1,000
Other fees               0             $ 7,000
                   -------             -------
Total fees         $76,585             $59,000

Audit Fees. Consists of aggregate fees billed for professional services rendered
for the audit of our consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by Weinberg in connection with statutory and
regulatory filings or engagements. Fiscal year 2005 fees from Weinberg are
estimated based on three quarterly reviews and the year end audit.

Tax Fees. Consists of aggregate fees billed for professional services for tax
compliance, tax advice and tax planning. These services included assistance
regarding federal and state tax compliance.

Other Fees. Consists of fees in connection with the review of a registration
statement on Form SB-2 filed by the Company.


                                       39
<PAGE>

We do not currently have an Audit Committee. Our full Board of Directors
considers whether the provision of these services is compatible with maintaining
the auditor's independence, and has determined such services for fiscal 2003 and
2004 were compatible.

BOARD OF DIRECTORS POLICY ON PRE-APPROVAL OF SERVICES OF INDEPENDENT AUDITORS

The Board of Directors' policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors on a case-by-case basis.
These services may include audit services, audit-related services, tax services
and other services.


                                       40
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES


                                TABLE OF CONTENTS

Page(s)
-------

F-1         REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-2         CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2005

F-3         CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
            FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

F-4-F-5     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY FOR
            THE YEARS ENDED DECEMBER 31, 2005 AND 2004

F-6         CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER
            31, 2005 AND 2004

F-7-F-19    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2005
            AND 2004

                                       41
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

To the Board of Directors of:
Torbay Holdings, Inc. and Subsidiaries

We have audited the accompanying  consolidated balance sheet of Torbay Holdings,
Inc.  and  Subsidiaries  as of December  31,  2005 and the related  consolidated
statements of operations and other  comprehensive loss, changes in stockholders'
deficiency and cash flows for the years ended December 31, 2005 and 2004.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly in all material respects, the financial position of Torbay Holdings, Inc.
and  Subsidiaries  as of December 31, 2005, and the results of their  operations
and  their  cash  flows for the  years  ended  December  31,  2005 and 2004,  in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 12 to
the consolidated financial statements, the Company has a net loss of $555,070, a
negative cash flow from operations of $341,959,  a working capital deficiency of
$296,250  and a  stockholders'  deficiency  of  $208,578.  These  factors  raise
substantial doubt about its ability to continue as a going concern. Management's
plans  concerning  this matter are also  described in Note 12. The  accompanying
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

WEINBERG & COMPANY, P.A.
/s/ Weinberg & Company, P.A
Boca Raton, Florida
April 18, 2006


                                       F-1
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2005
                                -----------------


                  ASSETS
                  ------
                                                                        2005
                                                                    -----------
CURRENT ASSETS
 Cash                                                               $     3,007
 Accounts receivable, less allowance for
  doubtful accounts of $0                                                26,100
 Receivable on sale of common stock                                      20,000
 Inventory                                                               50,031
                                                                    -----------
     Total Current Assets                                                99,138
                                                                    -----------

PROPERTY AND EQUIPMENT - NET                                             14,291
                                                                    -----------

OTHER ASSETS
 Intangible assets - net                                                 66,586
 Deposits                                                                 6,795
                                                                    -----------
     Total Other Assets                                                  73,381
                                                                    -----------

TOTAL ASSETS                                                        $   186,810
------------                                                        ===========

      LIABILITIES AND STOCKHOLDERS' DEFICIENCY
      ----------------------------------------

CURRENT LIABILITIES
 Accounts payable and accrued expenses                              $   326,638
 Loan payable - related party                                            18,750
 Notes payable                                                           50,000
                                                                    -----------
     Total Current Liabilities                                          395,388
                                                                    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
 Convertible preferred stock, $.0001 par value,
  20,000,000 shares authorized,
  420,000 shares issued and outstanding                                      42
 Common stock, $.0001 par value, 250,000,000 shares
  authorized, 125,499,439 issued and outstanding                         12,550
 Common stock to be issued (500,000 shares)                                  50
 Additional paid-in capital                                           5,599,018
 Accumulated deficit                                                 (5,592,967)
 Deferred equity based expenses                                        (211,840)
 Accumulated other comprehensive loss                                   (15,431)
                                                                    -----------
TOTAL STOCKHOLDERS' DEFICIENCY                                         (208,578)
                                                                    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                      $   186,810
----------------------------------------------                      ===========


          See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------
<TABLE>
<CAPTION>
                                                             2005            2004
                                                         ------------    ------------
<S>                                                      <C>             <C>
SALES, NET                                               $    343,478    $    344,525

COST OF SALES                                                  92,994         103,889
                                                         ------------    ------------

GROSS PROFIT                                                  250,484         240,636
                                                         ------------    ------------

OPERATING EXPENSES
 Selling                                                      128,537         126,742
 Consulting fees                                                6,250           6,300
 Professional fees                                            178,428         107,942
 Directors fees and compensation                              154,509          86,103
 Other general and administrative                             275,950         231,750
                                                         ------------    ------------
       Total Operating Expenses                               743,674         558,837
                                                         ------------    ------------

LOSS FROM OPERATIONS                                         (493,190)       (318,201)
                                                         ------------    ------------

OTHER INCOME (EXPENSE)
 Interest and financing costs                                 (61,880)     (1,068,326)
 Gain on extinguishment of debt, net                               --         243,800
 Cancellation of stock issued for consulting fees                  --          15,000
                                                         ------------    ------------
       Total Other Income (Expense)                           (61,880)       (809,526)
                                                         ------------    ------------

NET LOSS                                                     (555,070)     (1,127,727)

OTHER COMPREHENSIVE INCOME (LOSS)
 Foreign currency translation gain (loss)                      14,259          (9,039)
                                                         ------------    ------------

COMPREHENSIVE LOSS                                       $   (540,811)   $ (1,136,766)
------------------                                       ============    ============


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

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING -
 BASIC AND DILUTED                                         94,308,407      87,879,225
                                                         ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------
<TABLE>
<CAPTION>
                                Convertible Preferred Stock           Common Stock                  Common Stock To Be Issued
                                  Shares          Amount           Shares           Amount           Shares          Amount
                                -----------     -----------      ----------      -----------       ----------      -----------
<S>               <C>               <C>         <C>              <C>             <C>                <C>            <C>
Balance, December 31, 2003          420,000     $        42      72,789,155      $     7,278        3,500,000      $       350

Common shares issued                     --              --       3,000,000              300       (3,000,000)            (300)

Shares sold for cash, net
of costs                                 --              --       2,245,282              225        1,388,889              139

Shares cancelled                         --              --        (250,000)             (25)              --               --

Issuance of common stock
 for
  debenture settlement                   --              --       6,000,000              600               --               --

Stock issued for consulting
 services                                --              --           3,000               --               --               --

Finance cost - shares sold
 below market                            --              --              --               --               --               --

Options issued for services              --              --              --               --               --               --

Options issued for loan
 payment
postponement and equity
 funding arrangement                     --              --              --               --               --               --

Shares issued for options
 exercised for cash                      --              --       5,000,000              500               --               --

Shares issued for officer
 payable                                 --              --         161,050               17               --               --

Amortization of deferred
compensation expense                     --              --              --               --               --               --

Amortization of deferred
financing expense                        --              --              --               --               --               --

Foreign currency
translation loss                         --              --              --               --               --               --

Net loss, 2004                           --              --              --               --               --               --
                                                -----------     -----------      -----------      -----------      -----------
BALANCE, DECEMBER 31, 2004          420,000     $        42      88,948,487      $     8,895        1,888,889      $       189
                                ===========     ===========     ===========      ===========      ===========      ===========

<CAPTION>
                                                                     Accumulated
                                 Additional                             Other            Deferred
                                  Paid-In         Accumulated        Comprehensive     Equity Based
                                  Capital            Deficit         Income (Loss)       Expenses          Total
                                -----------      -------------       ------------      -----------      -----------
<S>               <C>           <C>              <C>            <C>                    <C>              <C>
Balance, December 31, 2003      $ 3,352,853      $  (3,910,170) $         (20,651)     $  (158,718)     $  (729,016)

Common shares issued                     --                 --                 --               --               --

Shares sold for cash, net
of costs                            224,909                 --                 --               --          225,273

Shares cancelled                    (14,975)                --                 --               --          (15,000)

Issuance of common stock
 for
  debenture settlement              161,400                 --                 --               --          162,000

Stock issued for consulting
 services                               300                 --                 --               --              300

Finance cost - shares sold
 below market                        48,258                 --                 --               --           48,258

Options issued for services         112,240                 --                 --         (112,240)              --

Options issued for loan
 payment
postponement and equity
 funding arrangement                846,033                 --                 --               --          846,033

Shares issued for options
 exercised for cash                  39,500                 --                 --               --           40,000

Shares issued for officer
 payable                             13,672                 --                 --               --           13,689

Amortization of deferred
compensation expense                     --                 --                 --           94,628           94,628

Amortization of deferred
financing expense                        --                 --                 --          121,185          121,185

Foreign currency
translation loss                         --                 --             (9,039)              --           (9,039)

Net loss, 2004                           --         (1,127,727)                --               --       (1,127,727)
                                -----------      -------------        -----------      -----------      -----------
BALANCE, DECEMBER 31, 2004      $ 4,784,190      $  (5,037,897)      $    (29,690)     $   (55,145)     $  (329,416)
                                ===========      =============        ===========      ===========      ===========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------
<TABLE>
<CAPTION>
                                Convertible Preferred Stock           Common Stock               Common Stock To Be Issued
                                  Shares          Amount           Shares           Amount        Shares          Amount
                                -----------     -----------      ----------      -----------    ----------      -----------
<S>               <C>              <C>         <C>               <C>        <C>                 <C>            <C>
Balance, December 31, 2004         420,000     $       42        88,948,487      $   8,895      1,888,889      $      189

Common shares issued                    --             --         1,388,889            139     (1,388,889)           (139)

Shares sold for cash, net
of costs                                --             --         9,700,000            970             --              --

Shares issued for
compensation                            --             --        13,415,000          1,341             --              --

Issuance of common stock
 for
  loan settlements                      --             --         3,790,000            379             --              --

Stock issued for
 professional services                  --             --           100,000             10             --              --

Finance cost - shares sold
 below market                           --             --                --             --             --              --

Shares issued for interest              --             --            80,000              8             --              --

Shares issued for repayment
 of
  advances from officers                --             --         1,577,063            158             --              --

Shares issued for options
 exercised for cash                     --             --         6,500,000            650             --              --

Repricing of options                    --             --                --             --             --              --

Amortization of deferred
compensation expense                    --             --                --             --             --              --

Foreign currency
translation gain                        --             --                --             --             --              --

Net loss, 2005                          --             --                --             --             --              --
                                               ----------       -----------      ---------     ----------      ----------
BALANCE, DECEMBER 31, 2005         420,000     $       42       125,499,439      $  12,550        500,000      $       50
                                ==========     ==========      ============      =========     ==========      ==========

<CAPTION>
                                                                     Accumulated
                                 Additional                             Other            Deferred
                                  Paid-In         Accumulated        Comprehensive     Equity Based
                                  Capital            Deficit         Income (Loss)       Expenses          Total
                                -----------      -------------       ------------      -----------      -----------
<S>               <C>            <C>             <C>               <C>                  <C>             <C>
Balance, December 31, 2004       $4,784,190      $  (5,037,897)    $  (29,690)          $  (55,145)     $ (329,416)

Common shares issued                     --                 --             --                   --              --

Shares sold for cash, net
of costs                            208,580                 --             --                   --         209,550

Shares issued for
compensation                        268,709                 --             --             (211,840)         58,210

Issuance of common stock
 for
  loan settlements                   90,321                 --             --                   --          90,700

Stock issued for
 professional services                3,990                 --             --                   --           4,000

Finance cost - shares sold
 below market                         5,000                 --             --                   --           5,000

Shares issued for interest            2,392                 --             --                   --           2,400

Shares issued for repayment
 of
  advances from officers             66,428                 --             --                   --          66,586

Shares issued for options
 exercised for cash                 124,350                 --             --                   --         125,000

Repricing of options                 45,058                 --             --                   --          45,058

Amortization of deferred
compensation expense                     --                 --             --               55,145          55,145

Foreign currency
translation gain                         --                 --         14,259                   --          14,259

Net loss, 2005                           --           (555,070)            --                   --        (555,070)
                                 ----------      -------------     ----------          -----------      ----------
BALANCE, DECEMBER 31, 2005       $5,599,018      $ (5,592,967)     $ (15,431)          $  (211,840)     $ (208,578)
                                 ==========      =============     ==========          ===========      ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
<TABLE>
<CAPTION>
                                                                                   2005            2004
                                                                                -----------     -----------
<S>                                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                                       $  (555,070)    $(1,127,727)
 Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation and amortization                                                      49,648          40,198
  Bad debts                                                                           9,062
  Amortization of loan costs                                                          6,863           4,117
  Gain on extinguishment of debt, net                                                    --        (243,800)
  Common stock and warrants issued for services                                      59,210             300
  Deferred equity based costs recognized                                             55,145         215,813
  Shares issued for interest                                                          2,400              --
  Financing costs - shares sold below market value                                    5,000          81,591
  Financing costs - options issued                                                       --         846,033
  Financing costs - options repriced                                                 45,058              --
  Cancellation of shares issued for services                                             --         (15,000)
 Changes in operating assets and liabilities:
  Decrease (increase) in accounts receivable                                          1,049         (32,916)
  (Increase) decrease in inventory                                                  (24,932)         12,524
  Increase in accounts payable and accrued expenses                                   4,608          75,162
                                                                                -----------     -----------
       Net cash used in operating activities                                       (341,959)       (143,705)
                                                                                -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangibles                                                            (11,000)        (32,750)
 Purchase of property and equipment                                                  (1,305)         (5,446)
                                                                                -----------     -----------
       Net cash used in investing activities                                        (12,305)        (38,196)
                                                                                -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                             314,550         236,940
 Proceeds from loans payable officer and related party                               45,629          45,957
 Payments on loans from related party                                                (6,250)             --
 Principal payments on settlement payable                                           (63,328)       (126,653)
 Loan and stock subscription costs                                                       --         (10,200)
 Proceeds from issuance of notes and loans payable                                   32,900          52,020
                                                                                -----------     -----------
       Net cash provided by financing activities                                    323,501         198,064
                                                                                -----------     -----------

EFFECT OF CHANGES IN EXCHANGE RATES ON CASH                                          14,259          (9,039)
                                                                                -----------     -----------

(DECREASE) INCREASE IN CASH                                                         (16,504)          7,124

BEGINNING OF YEAR                                                                    19,511          12,387
                                                                                -----------     -----------

CASH - END OF YEAR                                                              $     3,007     $    19,511
------------------                                                              ===========     ===========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

NOTE 1 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

      (A) ORGANIZATION AND BUSINESS OPERATIONS

      Torbay Holdings,  Inc. ("THI") was incorporated in Delaware under the name
      Acropolis Acquisition  Corporation on March 24, 1999 to serve as a vehicle
      to effect a merger, exchange of capital stock, asset acquisition, or other
      business combination with a domestic or foreign private business.

      In July 1999, THI effected an Agreement and Plan of Reorganization whereby
      THI  acquired  all of the issued and  outstanding  securities  of Designer
      Appliances Limited ("DAL"), a United Kingdom  Corporation.  As a result of
      the  agreement,  DAL  became  a wholly  owned  subsidiary  of THI.  DAL is
      currently not an operating company.

      On October 26, 1999, THI entered into and  consummated a merger  agreement
      whereby THI  acquired  all of the  outstanding  shares of common  stock of
      Torbay Acquisition Corp. ("TAC").  The acquisition was accounted for using
      the purchase  method of  accounting.  At the time of the merger TAC was an
      inactive  Delaware  shell  corporation  and a reporting  company under the
      Securities Exchange Act of 1934, as amended. THI remained as the surviving
      entity and became the  successor  issuer  pursuant to rule 12g-3(a) of the
      General Rules and Regulations of the Securities and Exchange Commission.

      On November 10, 2002,  THI  authorized  the purchase of 200 shares (all of
      the authorized and outstanding shares at the time) of Designer Appliances,
      Inc.  ("DAI"),  a Delaware  company  incorporated  June 17, 2002, for a de
      minimus  purchase  price and DAI became a wholly owned  subsidiary of THI.
      DAI was acquired to market and sell the Company's products  (currently the
      QUILL mouse,  a  left-handed  and  right-handed  computer  mouse) in North
      America.

      (B) PRINCIPLES OF CONSOLIDATION

      The  consolidated  financial  statements  for 2005 and  2004  include  the
      accounts  of Torbay  Holdings,  Inc.  and its  wholly  owned  subsidiaries
      Designer Appliances Limited and Designer Appliances,  Inc.  (collectively,
      the  "Company").   Intercompany   transactions   and  balances  have  been
      eliminated in consolidation.

      (C) BASIS OF PRESENTATION

      The  consolidated  financial  statements  are prepared in accordance  with
      accounting  principles generally accepted in the United States of America.
      The basis of  accounting  differs  from that  used in the  United  Kingdom
      statutory financial  statements of DAL.  Adjustments are made to translate
      the  statutory  financial  statements  of DAL  to  conform  to  accounting
      principles  generally  accepted  in the  United  States  of  America.  The
      consolidated  financial statements are expressed in United States dollars.
      The functional currency of DAL is the British pound sterling.

      (D) USE OF ESTIMATES

      The  preparation of consolidated  financial  statements in conformity with
      accounting  principles  generally accepted in the United States of America
      requires  management  to make  estimates and  assumptions  that affect the
      reported  amounts of assets and  liabilities and disclosures of contingent
      assets  and  liabilities  at  the  date  of  the  consolidated   financial
      statements  and the reported  amounts of revenues and expenses  during the
      reporting  periods.  Actual  results  could  differ from those  estimates.
      Specifically,  our management has estimated the expected economic life and
      value of our  intangible  assets,  our net operating loss for tax purposes
      and our stock,  option and warrant  expenses  related to  compensation  to
      employees, directors,  consultants and others. Actual results could differ
      from those estimates.


                                      F-7
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      (E) CASH

      Cash includes cash on deposit at financial institutions.

      (F) INVENTORY

      Inventory  is stated at the  lower of cost or  market  using the  first-in
      first-out  method.  Cost includes  expense of  freight-in  transportation.
      Inventory consists entirely of finished goods,  which include  left-handed
      and  right-handed  computer mice for sale to  customers.  The inventory is
      produced by an overseas vendor using the Company's equipment.

      (G) PROPERTY AND EQUIPMENT

      Property and equipment are stated at cost less  accumulated  depreciation.
      Expenditures  for  maintenance  and  repairs  are  charged  to  expense as
      incurred. Depreciation is computed using the straight-line method over the
      estimated useful lives of three to five years.

      (H) INTELLECTUAL PROPERTY RIGHTS

      The Company has  capitalized  the costs to acquire  intellectual  property
      rights and amortizes  them over their  estimated  useful life of 10 years.
      The amounts are included in the balance sheet as intangible assets.

      (I) IMPAIRMENT OF LONG-LIVED ASSETS

      The Company reviews  long-lived  assets for impairment  under Statement of
      Financial  Accounting  Standards  ("SFAS")  No. 144,  "Accounting  for the
      Impairment or Disposal of Long-Lived Assets." Long-lived assets to be held
      and used are  reviewed  for  impairment  whenever  events  or  changes  in
      circumstances  indicate  that the  carrying  amount of an asset may not be
      recoverable.  The carrying amount of a long-lived asset is not recoverable
      if it exceeds the sum of the  undiscounted  cash flows  expected to result
      from the use and eventual  disposition of the asset.  Long-lived assets to
      be disposed of are reported at the lower of carrying  amount or fair value
      less cost to sell.  During the years ended December 31, 2005 and 2004, the
      Company  determined  that  there  were  no  long-lived  assets  that  were
      impaired.

      (J) REVENUE RECOGNITION

      The  Company's  products are sold  directly  over the Internet and through
      distributorships. Products sold over the internet require complete payment
      via credit card prior to  shipment.  Products  sold  through  distributors
      require the distributor to submit a purchase order and payment  (according
      to  terms  and  pricing  approved  by  the  Company)  prior  to  shipment.
      Accordingly,   revenues   from  sales  over  the   internet   and  through
      distributors  are recognized  when the product is shipped as the price has
      been determined and collectibility has been reasonably assured.The Company
      provides  a  warranty  on goods for two years  from the date of sale.  The
      Company has not established a warranty  reserve as of December 31, 2005 or
      2004 since the warranty expense is de minimus.


                                      F-8
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      (K) WEBSITE AND COMPUTER SOFTWARE COSTS

      The Company  follows the AICPA's  Statement of Position 98-1,  "Accounting
      for the Costs of Computer Software Developed or Obtained for Internal Use"
      (SOP 98-1),  in accounting  for its website and internal  software  costs.
      Accordingly, costs to obtain computer software from third parties obtained
      for internal use have been  capitalized and amortized over their estimated
      useful life of 5 years.  The Company follows "SFAS No 86,  "Accounting for
      the Costs of Computer Software to be Sold, Leased, or Otherwise  Marketed"
      ("SFAS No. 86") in accounting  for its software  enhancement.  Pursuant to
      SFAS No. 86,  enhancements to existing  software product that are intended
      to extend  the life or  improve  significantly  the  marketability  of the
      original  product are amortized over an estimated  useful life of 2 years.
      Costs  incurred in  operating a website  that have no future  benefits are
      expensed  in the  period in which they are  incurred.  Costs  incurred  in
      operating  the  website  that have a future  benefit  are  capitalized  in
      accordance with SOP 98-1 and amortized over the respective  future periods
      that are expected to benefit from the changes.

      (L) INCOME TAXES

      The  Company  accounts  for income  taxes under the  Financial  Accounting
      Standard Board ("FASB") SFAS No. 109, "Accounting for Income Taxes" ("SFAS
      No. 109").  Under SFAS No. 109,  deferred tax assets and  liabilities  are
      recognized  for the future tax  consequences  attributable  to differences
      between the financial  statement  carrying  amounts of existing assets and
      liabilities  and their  respective  tax  basis.  Deferred  tax  assets and
      liabilities  are  measured  using  enacted tax rates  expected to apply to
      taxable  income  in the years in which  those  temporary  differences  are
      expected to be  recovered  or settled.  Under SFAS No. 109,  the effect on
      deferred tax assets and liabilities of a change in tax rates is recognized
      in income in the period that includes the enactment date.

      (M) SEGMENTS

      SFAS No. 131,  "Disclosures  about  Segments of an Enterprise  and Related
      Information",  requires that a public business enterprise report a measure
      of segment profit or loss, certain specific revenue and expense items, and
      segment assets.  The Company has only one product consisting of its "Quill
      Computer   Mouse"  and  does  not  operate  in  more  than  one   segment.
      Accordingly, segment information has not been provided.

      (N) FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying  amounts of certain  financial  instruments,  including cash,
      accounts receivable,  receivable on sale of common stock, accounts payable
      and accrued expenses,  and notes and loans payable  approximate their fair
      value  as of  December  31,  2005  because  of the  relatively  short-term
      maturity of these instruments.

      (P) FOREIGN CURRENCY TRANSLATION

      The functional  currency of DAL is the British pound  sterling.  Financial
      statements  for this entity are  translated  into United States dollars at
      year-end  exchange rates as to assets and liabilities and weighted average
      exchange  rates  as  to  revenues  and  expenses.   Capital  accounts  are
      translated   at  their   historical   exchange   rates  when  the  capital
      transactions occurred.

      (Q) COMPREHENSIVE LOSS

      The Company accounts for  comprehensive  income (loss) under SFAS No. 130,
      "Reporting   Comprehensive   Income"  ("SFAS  No.  130").   SFAS  No.  130
      establishes  standards  for  reporting  and the  display of  comprehensive
      income and its components.  The foreign  currency  translation gain (loss)
      resulting  from  the  translation  of  the  financial  statements  of  DAL
      expressed in British pound  sterling to United States  dollars is reported
      as Other  Comprehensive  Income (Loss) in the  Consolidated  Statements of
      Operations and as  Accumulated  Other  Comprehensive  Income (Loss) in the
      Consolidated Statement of Changes in Stockholders' Deficiency.


                                      F-9
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      (R) LOSS PER SHARE

      Basic and  diluted  loss per common  share for all  periods  presented  is
      computed based on the weighted average number of common shares outstanding
      during the year as defined by SFAS No.  128,  "Earnings  Per  Share".  The
      assumed  exercise of common stock  equivalents  was not utilized since the
      effect would be  anti-dilutive.  At December 31, 2005 and 2004 the Company
      had   19,200,000   and   25,700,000   potentially   dilutive   securities,
      respectively.

      (S) STOCK BASED COMPENSATION

      The Company  accounts for stock  options and warrants  issued to employees
      using the intrinsic value based method,  under which  compensation cost is
      measured as the excess of the stock's  market price at the grant date over
      the amount an employee must pay to acquire the stock.  The Company  issued
      no options or warrants to  employees  during the years ended  December 31,
      2005 or 2004 and had no employee stock options or warrants  outstanding at
      those  dates.  Stock  options and  warrants  issued to  non-employees  are
      accounted for using the fair value based  method,  under which the expense
      is measured  as the fair value of the  security at the date of grant based
      on the Black-Scholes pricing model.

      Common stock issued as compensation is recorded based on the fair value of
      the stock issued on the date of grant.

      (T) RECLASSIFICATIONS

      Certain  amounts from prior periods have been  reclassified  to conform to
      the current year  presentation.  (U) ADVERTISING The Company  expenses the
      production  costs of  advertising  the first  time the  advertising  takes
      place.  Advertising  and  marketing  expense  included in the statement of
      operations  for the years ended December 31, 2004 and 2003 was $78,017 and
      $67,443, respectively.

      (U) ADVERTISING

      The Company  expenses the production  costs of advertising  the first time
      the advertising takes place. Advertising and marketing expense included in
      the Consolidated  Statement of Operations for the years ended December 31,
      2005 and 2004 was $78,017 and $67,443 respectively.

      (V) RECENT ACCOUNTING PRONOUNCEMENTS

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
      SFAS No. 153, " Exchanges  of  Nonmonetary  Assets,  an  amendment  of APB
      Opinion No. 29, Accounting for Nonmonetary  Transactions ". The amendments
      made  by SFAS  No.  153 are  based  on the  principle  that  exchanges  of
      nonmonetary  assets  should  be  measured  based on the fair  value of the
      assets exchanged.  Further,  the amendments eliminate the narrow exception
      for nonmonetary exchanges of similar productive assets and replace it with
      a broader  exception for exchanges of nonmonetary  assets that do not have
      commercial substance.  Previously, APB No. 29 required that the accounting
      for an exchange of a productive asset for a similar productive asset or an
      equivalent  interest  in the same or similar  productive  asset  should be
      based  on the  recorded  amount  of the  asset  relinquished.  APB No.  29
      provided an exception to its basic measurement  principle (fair value) for
      exchanges of similar  productive  assets. The FASB believes that exception
      required   that  some   nonmonetary   exchanges,   although   commercially
      substantive,  be recorded on a carryover  basis. By focusing the exception
      on  exchanges  that lack  commercial  substance,  the FASB  believes  this
      statement produces financial reporting that more faithfully represents the
      economics of the  transactions.  SFAS No. 153 is effective for nonmonetary
      asset exchanges occurring in fiscal periods beginning after June 15, 2005.
      Earlier application is permitted for nonmonetary asset exchanges occurring
      in fiscal periods beginning after the date of issuance.  The provisions of
      SFAS No. 153 shall be applied prospectively.  We have evaluated the impact
      of the  adoption  of SFAS No.  153,  and do not believe the impact will be
      significant  to the Company's  overall  results of operations or financial
      position.

                                      F-10
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      In  December  2004,  the  FASB  issued  SFAS No.  123  (revised  2004),  "
      Share-Based  Payment ". SFAS No.  123(R) will provide  investors and other
      users of financial  statements  with more  complete and neutral  financial
      information   by  requiring  that  the   compensation   cost  relating  to
      share-based  payment  transactions be recognized in financial  statements.
      That  cost  will be  measured  based on the fair  value of the  equity  or
      liability  instruments  issued.  SFAS No.  123(R)  covers a wide  range of
      share-based compensation arrangements including share options,  restricted
      share plans,  performance-based  awards,  share  appreciation  rights, and
      employee share purchase plans. SFAS No. 123(R) replaces FASB Statement No.
      123, " Accounting  for  Stock-Based  Compensation  ", and  supersedes  APB
      Opinion No. 25, "  Accounting  for Stock  Issued to  Employees ". SFAS No.
      123,  as  originally   issued  in  1995,   established   as  preferable  a
      fair-value-based method of accounting for share-based payment transactions
      with employees.  However,  that statement permitted entities the option of
      continuing  to apply the guidance in Opinion 25, as long as the  footnotes
      to financial  statements disclosed what net income would have been had the
      preferable  fair-value-based method been used. Public entities (other than
      those filing as small  business  issuers)  were required to apply SFAS No.
      123(R) as of the first interim or annual reporting period that began after
      June 15, 2005. SFAS No. 123(R) is applicable for the Company effective the
      first interim  period that starts after December 15, 2005. The Company has
      evaluated the impact of the adoption of SFAS No. 123(R), and believes that
      the impact will not be significant to the Company's future overall results
      of operations and financial position.

      In March 2005, the staff of the SEC issued Staff  Accounting  Bulletin No.
      107 (" SAB 107 "). The  interpretations  in SAB 107  express  views of the
      staff  regarding the  interaction  between SFAS No. 123(R) and certain SEC
      rules  and  regulations  and  provide  the  staff's  views  regarding  the
      valuation of share-based  payment  arrangements for public  companies.  In
      particular  SAB 107  provides  guidance  related  to  share-based  payment
      transactions with nonemployees,  the transition from public entity status,
      valuation methods (including  assumptions such as expected  volatility and
      expected   term),   the  accounting  for  certain   redeemable   financial
      instruments   issued   under   share-based   payment   arrangements,   the
      classification  of  compensation  expense,  non-GAAP  financial  measures,
      first-time   adoption   of  SFAS  No.   123(R)  in  an   interim   period,
      capitalization  of  compensation  cost  related  to  share-based   payment
      arrangements, the accounting for income tax effects of share-based payment
      arrangements  upon  adoption  of SFAS  No.  123(R),  the  modification  of
      employee share options prior to adoption of SFAS 123(R) and disclosures in
      Management's  Discussion  and Analysis  subsequent to adoption of SFAS No.
      123(R).

      In May 2005, the FASB issued SFAS No. 154, " Accounting  Changes and Error
      Corrections  " ("SFAS 154") which  replaces  Accounting  Principles  Board
      Opinions  No.  20 "  Accounting  Changes  " and  SFAS No.  3, "  Reporting
      Accounting  Changes in Interim  Financial  Statements-An  Amendment of APB
      Opinion No. 28 ". SFAS 154  provides  guidance on the  accounting  for and
      reporting of  accounting  changes and error  corrections.  It  establishes
      retrospective application, or the latest practicable date, as the required
      method for reporting a change in accounting principle and the reporting of
      a correction of an error. SFAS 154 is effective for accounting changes and
      corrections  of errors made in fiscal years  beginning  after December 15,
      2005 and is required to be adopted by the Company in the first  quarter of
      2006.  The Company has  evaluated the effect that the adoption of SFAS 154
      will have on its results of operations  and  financial  condition and does
      not expect it to have a material impact.

                                      F-11
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

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

      During 2005,  costs of $10,450 were deducted  from the proceeds  resulting
      from the sale of 9,000,000 shares of common stock (see Note 11).

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

      During 2005, a lender  retained  1,700,000  shares of common stock,  which
      originally  had been held as  collateral,  in full  settlement of the loan
      payable in the amount of $57,800.

      During 2005, a lender  retained  2,090,000  shares of common stock,  which
      originally  had been held as  collateral,  as full payment for the loan in
      the amount of $32,900.

      During  2005,  the  Company  issued  1,577,063  shares of common  stock as
      repayments  of an aggregate  amount of $66,586 in advances  received  from
      officers (see Note 6).

      During  2005,  the Company  issued an aggregate  of  13,240,000  shares of
      common stock to officers and directors for services.  The shares have been
      valued at $264,800. Of this amount, $52,960 has been expensed and $211,840
      has been deferred and will be expensed in 2006.

      During  2005,  the  Company  issued  175,000  shares of common  stock to a
      related party for administrative services in the amount of $5,250.

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

      In February 2004, the Company  granted options to purchase an aggregate of
      5,000,000  shares of  common  stock to two  individuals  in  exchange  for
      services to be rendered  through  August 1, 2005.  The fair value of these
      options is $112,240.  This amount has been deferred and is being amortized
      over the life of the services agreement (see Note 11B).

      During  April 2004,  the Company  issued  161,050  shares of common  stock
      having a fair value of $13,689 to an officer to settle a payable to him of
      $9,663. Accordingly,  the Company has recorded a loss on extinguishment of
      debt of $4,026 (see Notes 6 and 11B).

      During  August  2004,  the  Company  received  $52,020  from  a  financial
      institution  pursuant to a loan term sheet.  The face value of the debt is
      $57,800; costs of $5,780 were deducted from the proceeds.


                                      F-12
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

NOTE 3 PROPERTY AND EQUIPMENT

      Property and equipment as of December 31, 2005 consisted of the following:

        Manufacturing equipment                               $ 20,000
        Computer equipment                                      11,335
        Office equipment                                         5,529
                                                              --------
                                                                36,864
        Less accumulated depreciation                          (22,573)
                                                              --------
                                                              $ 14,291
                                                              ========

      Depreciation  expense for the years ended  December  31, 2005 and 2004 was
      $8,982  and  $8,072,  respectively.  All of the  depreciation  expense  is
      included in general and administrative expenses.

NOTE 4 INTANGIBLE ASSETS

      Intangible assets as of December 31, 2005 consisted of the following:

              Intellectual property            $  44,000
              Software license                    53,957
              Software development                60,900
                                               ---------
                                                 158,857
              Less accumulated amortization      (92,271)
                                               ---------
                                               $  66,586
                                               =========

      During 2005 and 2004,  the Company  incurred costs of $11,000 and $32,750,
      respectively,  for the development of software enhancements.

      Amortization  expense  recorded in the statement of operations was $40,666
      and $32,126 for 2005 and 2004, respectively.

      Amortization  of the above  costs  for each of the next  five  years is as
      follows:

               2006                    28,707
               2007                    15,879
               2008                     4,400
               2009                     4,400
               2010                     4,400


                                      F-13
<PAGE>

                   TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

NOTE 5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      The following  schedule  reflects accounts payable and accrued expenses as
      of December 31, 2005:

                   Accounts payable             $286,083
                   Other accrued liabilities      40,555
                                                --------
                                                $326,638
                                                ========

NOTE 6 LOAN PAYABLE - OFFICERS AND RELATED PARTIES

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

      During the  fourth  quarter  of 2004 an  officer  advanced  $45,957 to the
      Company  for working  capital  purposes.  The  advances  are  non-interest
      bearing and are repayable upon demand.
      In December 2005, the Company issued  1,577,063  shares of common stock as
      repayments  of the above  advances.

      During August 2005, the wife of an officer advanced $25,000 to the Company
      for  working  capital  purposes.  The  advance  will be repaid over twelve
      months, with monthly payments of $2,083 commencing  September 2005. During
      2005, the Company issued 80,000 shares of common stock,  valued at $2,400,
      as interest on the loan.

      The Company had received advances from an officer who provided funding for
      working capital  requirements.  As of December 31, 2003, $9,663 was due to
      this officer.  During April 2004,  the Company  issued  161,050  shares of
      common  stock,  having a fair value of $13,689,  to settle  this  payable.
      Accordingly,  the Company has recorded a loss on extinguishment of debt of
      $4,026 for the year ended December 31, 2004.

NOTE 7 12% CONVERTIBLE DEBENTURES

      On February 17, 2004, the Company and the debenture holders entered into a
      Redemption  and  Settlement  Agreement  and Mutual  General  Release  (the
      "Settlement").  In accordance with the Settlement,  all of the outstanding
      debentures and related warrants were redeemed by the Company.  The Company
      issued 6,000,000 shares of common stock having a fair value of $162,000 to
      the  debenture  holders,  and  agreed to pay  $200,000  in cash in monthly
      installments of $16,667, with a present value of $189,981,  commencing May
      1,  2004.  The  Company  has  recorded a gain of  $247,826  related to the
      extinguishment for the year ended December 31, 2004.

NOTE 8 NOTES PAYABLE

      The  Company  had  issued  a  $50,000  note due to an  individual  that is
      non-interest  bearing,  convertible to shares of common stock at $1.50 per
      share and unsecured,  which was due March 23, 2003. This note is currently
      being renegotiated.

      During  2005,  the  Company  received  loans  totalling  $32,900  from  an
      individual  for  working  capital  purposes.  The loans were  non-interest
      bearing and were repayable upon demand.  The Company has issued  2,090,000
      shares of common stock as collateral for the loan. These collateral shares
      were retained as payment of the loan. (See Note 11(B))

      During  August  2004,  the  Company  received  $52,020  from  a  financial
      institution  pursuant to a loan term sheet,  with a face value of $57,800.
      The  principal  balance bore interest at the  prevailing  one month LIBOR,
      plus 3% (4.12% at December 31, 2004) and matured in one year. The loan was
      secured by 1,700,000  shares of the Company's common stock. The collateral
      shares were provided by a stockholder of the Company.  The lender retained
      the  collateral  shares in  settlement  of the debt  during 2005 (see Note
      11(B)). The Company incurred costs of $10,980 in connection with obtaining
      this  financing.  This amount is being amortized over the one year term of
      the loan.

      During  2005,  the  Company  received  loans  totalling  $32,900  from  an
      individual  for  working  capital  purposes.  The loans were  non-interest
      bearing and were  repayable  upon  demand.  The Company  issued  2,290,000
      shares of common stock as collateral for the loan. These collateral shares
      were retained as payment of the loan.

                                      F-14
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

NOTE 9 INCOME TAXES

      The United States parent company and its United States  subsidiary and its
      United Kingdom  subsidiary  file separate  income tax returns.

      The United States parent  company and its United States  subsidiary's  tax
      expense  differs  from the  "expected"  tax  expense  for the years  ended
      December 31, 2005 and 2004  (computed by applying U.S.  Federal  Corporate
      tax rate of 34 percent to income before taxes), as follows:

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

        Computed "expected" tax expense (benefit)    $(180,371)    $ (23,391)
        Change in valuation allowance                  180,371        23,391
                                                     ---------     ---------
                                                     $     --      $      --
                                                     =========     =========

      The tax effects of  temporary  differences  that give rise to  significant
      portions of deferred tax assets for the United States  parent  company and
      its United States subsidiary at December 31, 2005 and 2004 are as follows:


                                                    2005            2004
                                                -----------     -----------
       Deferred tax assets:
            Net operating loss carryforwards    $ 1,114,691     $   934,320
            Less valuation allowances            (1,114,691)       (934,320)
                                                -----------     -----------
       Net deferred tax assets                  $        --     $        --
                                                ===========     ===========


                                      F-15
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      As of December 31, 2005,  the United States parent  company and its United
      States  subsidiary had net operating loss carry forwards of  approximately
      $3,279,000  for income tax purposes,  available to offset  future  taxable
      income  expiring on various  dates  through  2025.  Based on the weight of
      available  evidence,  it is more likely than not that all of the  deferred
      tax assets will not be realized.  The  valuation  allowance as of December
      31, 2005 was $1,114,691.  The net change in the valuation allowance during
      the year ended December 31, 2005 was an increase of $180,371.

      The United Kingdom subsidiary has also incurred  substantial net operating
      losses in prior years which  result in no income tax expense or  (benefit)
      for the years ended December 31, 2005 and 2004. The subsidiary's available
      net operating loss carry forward of  approximately  $534,000  results in a
      deferred tax asset of $160,200  (computed  by applying the United  Kingdom
      tax rate of 30%) which has been fully offset by a valuation allowance. The
      United Kingdom subsidiary is currently not an operating company.

NOTE 10 COMMITMENTS AND CONTINGENCIES

      (A) COMMITMENTS AND CONTINGENCIES

      The Company conducts its operations from facilities occupied pursuant to a
      lease that  commenced in October 2003 and expires on October 31, 2006. The
      Company also pays the lease for an apartment occupied by an officer.  Such
      occupancy is for the benefit of the Company.  The apartment  lease expired
      December 31, 2005 and was  extended for a one year period,  with a monthly
      rent of $2,075. Future minimum lease payments for the year ending December
      31, 2006 are $43,036.

      Rent  expense for the years ended  December  31, 2005 and 2004 was $64,687
      and $60,339,  respectively.

      (B) ROYALTIES

      The Company is  required to pay royalty  payments at a rate of $3 per copy
      of  certain  software  that is  distributed  in any  manner.  The  minimum
      royalties  are $500 for the second  quarter of 2003,  $1,000 for the third
      quarter  for 2003,  $2,000 for the  fourth  quarter of 2003 and $3,000 per
      quarter  thereafter.  The term of the agreement is perpetual  provided the
      Company  continues to pay the royalty  payments  within 120 days after the
      end of each quarter and abides by the other terms of the agreement. During
      the years ended  December  31, 2005 and 2004,  the  Company  recorded  the
      minimum royalties expense of $12,000 and $12,000, respectively.

NOTE 11 STOCKHOLDERS' DEFICIENCY

      (A) PREFERRED STOCK


                                      F-16
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      The Company  designated 700,000 shares of its preferred stock as "Series 1
      Convertible  Preferred Stock". The par value of the series is $.0001. Each
      preferred  share is  convertible  into ten  shares of common  stock of the
      Company.  Each share of the Series 1 stock is  entitled to one vote on all
      matters on which such stockholders were lawfully entitled to vote and were
      not entitled to receive dividends.

      In July 2001,  the  Company  entered  into a purchase  agreement  with two
      individuals  who held  the  intellectual  property  rights,  software  and
      know-how to a computer mouse known as the "QUILL".  Under the terms of the
      agreement,  the Company  acquired  all of the sellers'  rights,  title and
      interest  in the  QUILL in  exchange  for  220,000  Series  1  convertible
      preferred  shares.  The  agreement  also  called  for the  issuance  of an
      additional  200,000 shares of Series 1 convertible  preferred  shares upon
      the Company  receiving an approval for the United Kingdom patent rights to
      the QUILL,  which was granted in January 2002. These preferred shares will
      convert  1:10  into  4,200,000  shares  of  common  stock  upon the  QUILL
      generating  $1,000,000  net profit  after tax  averaged  over four  fiscal
      quarters within five years from the signing of the agreement.  However, if
      the  $1,000,000  net profit  requirement is not met within five years from
      the signing of the agreement, then these preferred shares will convert 1:1
      into  420,000  shares of common  stock.  Since the  $1,000,000  net profit
      requirement is a contingency, the convertible preferred shares were valued
      based on the 1:1 conversion  ratio using the value of recent cash sales of
      the common stock at $.10 per share, for a total fair value of $42,000,  of
      which $20,000 and $22,000 was  recognized in 2002 and 2001,  respectively.
      The 420,000 preferred shares were issued on April 22, 2002.

      (B) COMMON STOCK

      During  2005 the Company  amended  its  Certificate  of  Incorporation  to
      increase  the  number  of  authorized   shares  from  120,000,000   shares
      (100,000,000 of common and 20,000,000 of preferred) to 270,000,000  shares
      (250,000,000  of common and  20,000,000  of  preferred)  with  shareholder
      approval.

      During 2005,  the Company  received  advances on a common  stock  purchase
      agreement.  The gross  amount of the advances  was  $200,000.  The Company
      issued  9,000,000  shares of common stock in  settlement  of this advance.
      Costs of $10,450 were deducted, resulting in net proceeds of $189,550. The
      costs have been applied against additional paid-in capital.  The purchaser
      will also be issued warrants  exercisable  into 9,000,000 shares of common
      stock.  Half of these warrants will be exercisable at $0.024 and half will
      be  exercisable   at  $0.033.   The  warrants  will  be  issued  upon  the
      effectiveness  of a  registration  statement  covering  the shares and the
      warrants.  Upon the  achievement  of certain  conditions,  the Company may
      force the exercise of the  warrants.  The warrants will expire on December
      31, 2008.

      During  2005,  the  Company  issued  2,090,000  shares of common  stock as
      collateral for the loan described in Note 8. These collateral  shares were
      retained as payment of the loan.

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

      During  2005,  the  Company  issued  700,000  shares of  common  stock for
      proceeds of $20,000.  The  Company has  recorded a finance  cost of $5,000
      related to certain of these stock sales.

      During  2005,  the Company  issued  6,500,000  shares of common stock upon
      exercise of  warrants,  for gross  proceeds of  $125,000.  Of this amount,
      $20,000 was received in 2006 and is shown as a receivable  at December 31,
      2005.  The terms of the warrants had been  modified to reduce the exercise
      price. As a result of the repricing,  the Company has recorded a financing
      cost of $45,058 during 2005.


                                      F-17
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

      In December 2005, the Company issued  1,577,063  shares of common stock as
      repayments  of the  advances  from  officers  described  in Note 6.

      During  November and  December  2005,  the Company  issued an aggregate of
      13,415,000 shares of common stock,  valued at $270,050,  for services.  Of
      this  amount,  $211,840  has been  deferred  and will be expensed in 2006.


      During 2005, the lender  described in Note 8 retained  1,700,000 shares of
      common stock,  which had been held as collateral,  in settlement of a loan
      payable in the amount of $57,800.  The collateral shares had been provided
      by an officer of the Company,  and these shares were issued to the officer
      in November 2005.

      During 2005, the Company  issued 80,000 shares of common stock,  valued at
      $2,400, as interest on a loan from the wife of an officer.

      During  February and March 2004,  the Company issued  6,000,000  shares of
      common stock in  connection  with the  retirement  of its 12%  convertible
      debentures  payable  described  in Note 7.

      In February 2004, the Company  granted options to purchase an aggregate of
      5,000,000  shares of  common  stock to two  individuals  in  exchange  for
      services  to be  rendered  through  August 1,  2005.  The  options  had an
      exercise price of $.008 per share and had a life of ninety days from grant
      date.  The fair value of these  options is $112,240.  This amount has been
      deferred and is being  amortized  over the life of the services  agreement
      (seventeen  months).  Of the total fair value of the options,  $57,095 was
      expensed in 2004 and $55,145 is deferred at December 31,  2004.  The value
      has been  determined  using  the  Black-Scholes  option  pricing  model in
      accordance with SFAS 123 with the following assumptions: dividend yield of
      zero, expected volatility of 178%,  risk-free interest rate of 3.5% and an
      expected life of three months. The options were exercised in February 2004
      and cash  proceeds of $40,000 were  received by the Company.

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

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

      During  April 2004,  the Company  issued  161,050  shares of common  stock
      having a fair  value of  $13,689  to settle a payable to an officer in the
      amount  of  $9,663.  Accordingly,  the  Company  has  recorded  a loss  on
      extinguishment of debt of $4,026.

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

                                      F-18
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

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

      During  August  2004 the  Company  received  $50,000  pursuant  to a stock
      subscription.  As of December 31, 2004,  1,388,889  shares pursuant to the
      subscription  were  classified as shares to be issued on the  Consolidated
      Statements of Changes in Stockholders' Deficiency. The shares to be issued
      were  determined  at 60% of the  average  closing  bid  price  on the five
      trading  days prior to closing.  Accordingly,  the Company has  recorded a
      financing  cost of $33,333  related to this  discount.  Additionally,  the
      purchasers  received  1,000,000  common stock purchase  warrants.  500,000
      warrants  with an exercise  price of $0.08 per share and 500,000  warrants
      with an  exercise  price of $0.12 per  share.  The  warrants  will  expire
      December 31, 2008.

      The  Company has  deferred  costs  related to the  issuance of options and
      common stock for services to be rendered  through July 2005.  During 2004,
      the Company  expensed  $94,628 of these costs and $55,145 remains deferred
      at December 31, 2004.

      On December 16, 2004 the Company granted  20,500,000 common stock purchase
      warrants to an investor group.  The warrants were granted in consideration
      of a  postponement  of an  interest  payment  related to the  August  2004
      obligation  described in Note 8, and in  anticipation of an equity funding
      expected to occur in 2005. The warrants are  exercisable  immediately  and
      expire if  unexercised  by December 16,  2009.  Upon  registration  of the
      underlying shares with the Securities and Exchange Commission, the Company
      can force the exercise of the warrants,  provided that the investor  would
      not be obligated to pay more than  $75,000  within any 30 day period.  The
      demand for  exercise  is subject to certain  trading  price  requirements,
      relative to the exercise price of the warrants. The exercise prices of the
      warrants range from $0.03 to $0.13. The weighted average exercise price of
      the warrants is $0.07.  The fair value of the warrants has been  estimated
      at  $846,033,  using the Black  Sholes  pricing  model with the  following
      weighted average assumptions: estimated life of 1.34 years; dividend yield
      of 0%;  volatility of 189%; risk free interest rate of 2.64%.  This amount
      has been recorded a a financing  expense in the Consolidated  Statement of
      Operations.

NOTE 12 GOING CONCERN

      The accompanying consolidated financial statements have been prepared on a
      going concern basis,  which contemplates the realization of assets and the
      settlement  of  liabilities  and  commitments  in  the  normal  course  of
      business.  As  reflected  in  the  accompanying   consolidated   financial
      statements,  the Company has a net loss of $555,070,  a negative cash flow
      from operations of $341,959,  a working capital deficiency of $296,250 and
      a stockholders'  deficiency of $208,578.  These factors raise  substantial
      doubt about its ability to continue as a going concern. The ability of the
      Company to  continue  as a going  concern is  dependent  on the  Company's
      ability to raise  additional  funds and implement its business  plan.  The
      Company plans to increase it sales by further  expanding  its  distributor
      base in the "ergonomic"  market sector and is investigating  opportunities
      to  license  its  intellectual   property  rights  in  order  to  generate
      additional  revenues.  To this end the  Company  is  seeking to extend its
      patents for its  "grip-less"  mouse  across  Europe and the Far East.  The
      consolidated  financial  statements  do not include any  adjustments  that
      might be  necessary  if the  Company  is  unable  to  continue  as a going
      concern.

      Management's plans include obtaining  additional  financing for which they
      are currently in active  negotiations with several financing  institutions
      and increasing sales of the Aerobicmouse.

NOTE 13 CONCENTRATIONS

      At December 31, 2005,  one customer  accounted  for  approximately  96% of
      accounts receivable balance. This customer accounted for approximately 22%
      of the sales during 2005.  One other  customer  accounted for 14% of sales
      for 2005.  The Company  purchases  its inventory  from a single  supplier,
      located in China.

      The  loss of  these  significant  customers  and  suppliers  could  have a
      material adverse impact in the Company's financial position and results of
      operations.

                                      F-19
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                 ----------------------------------------------

NOTE 14 SUBSEQUENT EVENTS

      During  April 2006 the Company  received  $50,000 as an advance  against a
      stock  purchase  agreement.  Terms of the stock purchase have not yet been
      finalized.

      During January 2006 the Company filed a Registration Statement on Form S-8
      covering  3,000,000  shares of common  stock to be issued  for  consulting
      services.


                                      F-20
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: April 28, 2006                TORBAY HOLDINGS, INC.

                                     By: /s/ William Thomas Large
                                         -------------------------------------
                                         President and Chief Executive Officer
                                         Principal Executive Officer and
                                         Principal Accounting Officer

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Name                                         Title                    Date
--------------------------        ----------------------          --------------

/s/ Alexander Gordon Lane         Chairman, Secretary             April 28, 2006
--------------------------          and a Director
Alexander Gordon Lane


/s/ William Thomas Large             President, Chief             April 28, 2006
--------------------------          Executive Officer,
William Thomas Large              Chief Financial Officer
                                      and Director


/s/ Thomas A. Marchant
--------------------------              Director                  April 28, 2006
Thomas A. Marchant


                                       42