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, 2003

                          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 is not 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. [X]

Revenues for the issuer's fiscal year ended December 31, 2003 were $137,944.

      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:
$6,841,300 based on the closing price of the Company's common stock on March 25,
2004 of $.09 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 83,539,155
shares of common stock outstanding as of April 7, 2004.

Transitional Small Business Disclosure Format (check one):  Yes [ ]   No   [X]


                                       1
<PAGE>

      This report includes  "forward-looking  statements"  within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. For example,  statements included in this report regarding
our financial  position,  business  strategy and other plans and  objectives for
future operations,  and assumptions and predictions about future product demand,
supply,   manufacturing,   costs,   marketing   and  pricing   factors  are  all
forward-looking  statements.  When we use  words  like  "intend,"  "anticipate,"
"believe,"  "estimate,"  "plan"  or  "expect,"  we  are  making  forward-looking
statements.  We believe that the assumptions and expectations  reflected in such
forward-looking statements are reasonable,  based on information available to us
on the date  hereof,  but we  cannot  assure  you  that  these  assumptions  and
expectations  will  prove to have been  correct  or that we will take any action
that we may presently be planning.  We have disclosed  certain important factors
that  could  cause our  actual  results to differ  materially  from our  current
expectations   elsewhere   in  this   report.   You   should   understand   that
forward-looking  statements  made in this report are  necessarily  qualified  by
these  factors.  We are  not  undertaking  to  publicly  update  or  revise  any
forward-looking statement if we obtain new information or upon the occurrence of
future events or otherwise.

                                     PART I

ITEM 1.  DESCRIPTION OF  BUSINESS

We  are  a  company   created  to  act  as  a  holding  company  for  late-stage
developmental or early-stage commercial companies. We were incorporated on March
24, 1999 as a Delaware  corporation  named  Acropolis  Acquisition  Corporation,
which  changed its name to Torbay  Holdings,  Inc. on July 14, 1999. We acquired
Designer  Appliances,  Limited, a United Kingdom corporation which has developed
and anticipates  marketing  household  appliances designed to be attractive to a
premium, upscale market, as a wholly-owned subsidiary on July 19, 1999.

On October 26, 1999, Torbay Acquisition  Corporation,  a reporting company under
the Securities  Exchange Act of 1934, as amended,  merged into Torbay  Holdings.
Torbay  Holdings  became a successor  issuer to Torbay  Acquisition  Corporation
pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities
and Exchange Commission.

All references to "dollars," "U.S.  dollars," "$," or "US$" are to United States
dollars,  and all  references  to "pounds" or  "(pound)"  are to British  pounds
sterling.  As of December  31, 2003,  the  Interbank  exchange  rate was (pound)
1.8245 to $1.00.

BUSINESS AND ACQUISITION STRATEGY

We plan to acquire diversified,  wholly-owned  subsidiaries which are late-stage
development or early-stage  commercial  companies,  with  opportunities in niche
markets.  Additionally,  we intend to own and  manage  assets  from a variety of
locations  each  having  protection  either  by  deed or  intellectual  property
rights(IPR). We intend to purchase subsidiaries on an equity participation basis
and issue convertible preferred stock, which will be convertible to common stock
upon the attainment of a profit  objective of a specified  subsidiary or product
line within a given time frame, in exchange for the outstanding  voting stock of
the subsidiary.  In this way, value is not delivered to the incoming  businesses
until such businesses reach specified profitability targets.

We acquired  Designer  Appliances  Ltd., as part of an IPR acquisition strategy.
Torbay  Holdings  has  completed  agreements  to acquire  intellectual  property
rights. We have  subsequently  filed with the United States Patent and Trademark
Office for registered trademarks and further patents upon the product previously
called  "Project KAT" which was launched  commercially as the Quill and is to be
renamed  Quill-AirO2bic  Mouse as the  benefits of not having to grip a computer
mouse are  anticipated as beneficial to maintaining the hand in a better aerobic
condition.

We have acquired an exclusive  license to software that performs the majority of
the clicking necessary to use a computer mouse and have launched it as a product
called Nib (for PC machines) and McNib (for Macintosh machines).  When purchased
with a  computer  mouse the system is called the  Virtually  Hands Free  mousing
system.

We have  significant  testimony  to suggest that our mouse product and mouse and
software  product  help  alleviate  conditions  in  mouse  users known as Carpal
Tunnel  Syndrome  and  Repetitive  Strain  Injury  and that these  products  are
beneficial  to  persons  with   impairments   or  disability  of  the  hands  in
facilitating a more usual use of a mousing device.

We have acquired  Designer  Appliances,  Inc., a Delaware  company,  as a wholly
owned  subsidiary.  We intend for this subsidiary to be responsible for sales of
the  Company's  products  in the United  States  and to enter into  distribution
agreements in other countries.

DESIGNER APPLIANCES, LTD.

Designer Appliances,  Ltd. is organized under the laws of the United Kingdom and
owns the designs to attractive  appliance products.  Designer Appliances Ltd has
been kept dormant as a trading  company as the primary  market for initial sales
is seen as the US market, via Designer Appliances Inc.


OPERATIONS

Sales of our mouse products were on-going in 2003 during which  distribution was
developed  on  our  website,  www.quillmouse.com  and  through  distributors  of
ergonomic and assistive  products.  Distributors  are now established and active
across the USA, Canada, the UK, The Netherlands,  Belgium,  Luxemburg,  Austria,
Sweden,   Switzerland,   Finland,  Australia  and  Japan.  Coverage  in  further
geographic  regions is anticipated  along with  investigations  of retail outlet
opportunities in the US, Canada and the UK.


                                       2
<PAGE>

The Quill computer mouse.
--------------------------

In  July  2001,  we  entered  into a  definitive  purchase  agreement  with  two
individuals who held the intellectual property rights and a third individual who
was  involved in the design  drawings  for the  software  and  know-how  for the
computer  mouse  product  now  referred to as the Quill  (formally  known as the
"KAT").  Under the  terms of the  agreement,  we  acquired  all of the  sellers'
rights,  title and  interests  in the KAT in exchange  for  220,000  convertible
preferred  shares.  These shares will be convertible  into  2,200,000  shares of
common stock upon the satisfaction of certain financial performance requirements
under  the  agreement's  terms.  Under  this  agreement  an  additional  200,000
convertible preferred shares were also to be issued if and when a patent was
granted.  Such patent  rights were granted in January  2002 and such  additional
220,000 convertible preferred shares were issued in April 2002. These additional
preferred  shares are  convertible  under the  identical  financial  performance
requirements.  In the event that the financial performance  requirements are not
achieved  within  five  years  from the  signing  of the  agreement,  then these
preferred  shares will  convert  into common  stock on a 1:1 basis rather than a
10:1 basis.

The Quill design  mouse  design  maintains  the hand in a  "Functional  Neutral"
position,  one in which the muscles of the hand are kept under constant  tension
so allowing for normal blood flows and less fatigue.  The overall impact of this
design  allows for the user of the Quill Mouse to move any point on the computer
screen  cursor  without  having to grip with the muscles of the hand,  which the
Company  believes  is  unique  and is  not  offered  or  provided  by any  other
manufacturer.

The  uniqueness of this product may be considered  reflected in the fact that it
is currently  the only  conventional  mouse listed under Section 508 of the 1998
Amendments  to  the US  Government's  Rehabilitation  Act  under  which  certain
physical standards are provided in order to achieve compliance.

The Guide to the Section 508 Standards for Electronic and Information Technology
Desktop and Portable Computers  (1194.26) (updated August 1, 2001) provides that
controls  and keys shall be operable  with one hand and shall not require  tight
grasping,  pinching,  or twisting of the wrist.  The force  required to activate
controls and keys shall be 5 lbs. (22.2 N) maximum.

Nib Software

In February  2003 we entered  into an agreement to acquire the rights to certain
software and now have the rights to make developments to this software platform.
We believe that this  software  helps reduce the  mechanical  burden of pressing
mouse  buttons  translating  into  millions of  actuation  reductions a year and
extends further the corporate  objective of low biomechanical load in regards to
the computer  mouse input task.  We intend to use the  combination  of our Quill
Mouse and Nib software  bundled  together as the "VHF system"  (virtually  hands
free) to allow the user  minimal use of the  fingers  muscles of the hand on the
computer mouse.

We are in the  process of  developing  our  E-Quill-Liberator  Software  that we
believe will help manage  injuries  typically  associated  with using a computer
mouse such as Cumulative  Trauma Disease (CTD) or Repetitive Strain Injury (RSI)
and Carpal Tunnel Syndrome (CTS). The mouse driver software supplied will have a
user  de-selectable  default that prompts  users to take a 15 minute break every
two  hours,  which  is a  recommendation  of the  OSHA  and  published  in their
Ergonomic Report: Office and Clerical,  extracts relating to TW921209,  Computer
Layout & Design.  The  E-Quill-Liberator  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 exercises.
The information,  securely  contained on the users personal  computer,  would be
used to suggest breaks and exercises  customized to suit their  individual  body
mechanics.

Other Products We are Developing

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 (HEPA) 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. United
States approvals are  anticipated.

Telstar II Designer  Vacuum  Cleaner/Table.  The Telstar I vacuum  cleaner has 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 may choose to market this product  under the
name  "Sputnik" or as the "Telstar Space  Station".  The tabletop model has been
developed as a working prototype and additional expenditure,  when available, is
planned on testing, tooling and packaging.

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  activations of stop,  start,  speed,
swivel  movement,  hot, and cold.

Wurlitzer  Toaster.  The  Wurlitzer  Toaster  is in  the  design  stage  and  is
anticipated to follow Designer  Appliances'  "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  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.


                                       3
<PAGE>

Heated  Hearth  Screens.  Designer  Appliances  intends  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

Designer  Appliances  Inc. has enacted a strategy of "Marketing  the Science" in
its  products to raise market  awareness of the issues of computer  mouse injury
and of the Assistive  technology  benefits of its  products.  To that end it has
maintained  an  informative  website  that has raised the  awareness of visitors
sufficiently  to create sales of our products  directly to visitors to the site.
It has provided the same type of information to its  distributors  including the
translation into German and Swedish of informative and instructional documents.

It is our belief 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 are
have a co-market existence.

This  strategy  has lead to our mouse  products  being  reviewed  by a number of
magazines,  the placement of technical articles in corporate ergonomic media and
our receipt of an  invitation  to write an article for the  International  Human
Factors and Ergonomics Association on the subject of "Practical Mousing".

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

The Assistive Technology Sector

MAJOR COMPETITORS

As the  primary  area of our  business  activity  is within the  computer  mouse
market, all references are to that specific market.

Competition  in the  "main-stream"  computer  mouse product  sector is typically
global by most product  providers.  Major  players in the computer  mouse supply
sector may include,  but not be limited to,  Logitech,  Kensington and Microsoft
all of whom offer global computer mouse product supplies.

In the "ergonomic" market competition would be defined as the 3M Ergonomic Mouse
and the Contour Design Mouse Products.

In terms of market differentiation,  we are the only provider, to our knowledge,
of a "grip-less" and "Functional  Neutral" mouse product,  while also offering a
click-less software option.


                                       4
<PAGE>

PATENTS AND TRADEMARKS

      The British  Patent Office has granted the following  Design and Trademark
registrations made by the Company:

<TABLE>
<CAPTION>

<S>                                           <C>
Telstar I vacuum cleaner design protection     British design registration No. 2066378
The name "Telstar"                             British trademark registration No. 2209241
The name "Sputnik"                             British trademark registration No. 2209243

The tabletop design for the Telstar II,
Sputnik or Telestar Space Station              British design registration No. 2082459
The combined vacuum and table product          British design registration No. 2085669
The "Mistral" table top fan design             British design registration No. 2066377
The name "Mistral"                             British trademark registration No. 2209473
The name " Wurlitzer"                          British trademark no. 2209244
UK Patent Grant; Hand Held Manipulation
     Device eg Computer Mouse or Joy Stick     British patent No. BG2328496


US Patent and Trademark Office
------------------------------
Trademark "E-Quill-Liberator"                  US trademark Granted No. 78/105096

</TABLE>

Further Design and Utility Patents have been applied for and further patents and
trademarks are planned.

The  British  patents  expire 20 years  after the date of grant.  United  States
patents expire 14 years after the date of grant.  The  trademarks  expire on the
tenth year from the date the trademark was granted.

Recent Events

In March  2003 the  Virtually  Hands  Free  mousing  system  product  received a
commendation for "Ease of Use" from the Arthritis Foundation.

EMPLOYEES

We have two full-time  employees,  including our executive officers,  neither of
which have  formal  employment  agreements  with us. We have also  retained  two
part-time  consultants.  Further  recruitment  of office  support and  marketing
individuals are planned in 2004.


                                       5
<PAGE>

                                  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.

WE HAVE NOT EARNED  SUFFICIENT  REVENUES TO  MAINTAIN  THE  CORPORATION  WITHOUT
FURTHER  FINANCING AND WE HAVE HAD LOSSES SINCE OUR INCEPTION.  WE EXPECT LOSSES
TO CONTINUE IN THE FUTURE AND THERE IS A RISK WE MAY NEVER BECOME PROFITABLE.

We had a net loss of $874,816 for the year ended  December 31, 2003.  Because we
increased our product  development and manufacturing  activities,  we anticipate
that we will incur operating expenses in connection with continued  development,
testing and  manufacturing of our proposed  products,  and expect these expenses
will result in continuing and, perhaps,  significant operating losses until such
time,  if ever,  that we are able to  achieve  adequate  product  sales  levels.
Revenues  and  profits,  if any,  will depend upon  various  factors,  including
whether we will be able to  manufacture  and market our  appliance  and computer
products.

THERE IS UNCERTAINTY AS TO OUR CONTINUATION AS A GOING CONCERN.

We had a net loss of $874,816 for the year ended  December  31, 2003.  We had an
accumulated  deficit  of  $3,910,170  and a  total  stockholders  deficiency  of
$729,016 as of December 31, 2003. These 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  developed to meet our working
capital needs.  We need  approximately  $500,000 to fund our operations  through
2004 if we do not generate any revenues.  If we continue to incur losses, we may
not be able to fund  continuing  business  operations,  which  could lead to the
limitation or closure of some or all of our operations.


                                       6
<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 is competitive as well as the general computer
products   industry  which  includes  several   companies  which  have  achieved
substantially  greater  market  share than we have,  and have  longer  operating
histories,  have larger customer bases, have  substantially  greater  financial,
development  and marketing  resources  than we do. We expect our  competition to
intensify as the Internet continues to grow.  Existing or future competitors may
develop or offer  products  that are  comparable  or superior to ours at a lower
price,  which  could harm our  business,  results of  operations  and  financial
condition.

AS A DEVELOPER IN THE APPLIANCES  INDUSTRY,  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.

In the household  appliances and furnishings  industry the commercial success of
any product is often  dependent  on factors  beyond the control of the  company,
including,  but not limited to, market  acceptance  and  retailers'  prominently
shelving and selling the products.  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,  competition from existing or new manufacturers and distributors, or
lack of acceptance for our products by consumers or retail outlets.

IF WE ARE NOT ABLE TO CONTRACT WITH RETAIL OUTLETS TO SELL OUR PRODUCTS,  WE MAY
NOT BE ABLE TO CONTINUE TO OPERATE.

We  intend to market  our  non-computer  appliance  products  through  ergonomic
distributors, computer distributors and eventually in retail or department store
outlets.  We currently have some  arrangements  with  ergonomic and  small-scale
computer distributors.

WE MAY NOT BE ABLE TO PROTECT OUR PATENTS,  TRADEMARKS  AND  PROPRIETARY  AND/OR
NON-PROPRIETARY  RIGHTS,  AND, WE MAY  INFRINGE  UPON THE  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 British Patent Office,  we may not be able to enforce  against use of any of
our marks or patents.  If we are not able to prevent  competitors from using the
same or similar  names,  marks,  concepts  or  appearances,  we may not have the
financial resources necessary to protect our marks against infringing use.

WE MAY, IN THE FUTURE,  ISSUE ADDITIONAL  SHARES OF OUR COMMON STOCK WHICH WOULD
REDUCE INVESTORS PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.

Our certificate of incorporation  authorizes the issuance of 100,000,000  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.  We may
value any common or preferred stock issued in the future on an arbitrary  basis.
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.


                                       7
<PAGE>

      A DEFAULT BY US UNDER OUR SETTLEMENT AGREEMENT WITH THE HOLDERS OF OUR 12%
DEBENTURES  WOULD ALLOW THEM TO OBTAIN A JUDGMENT  AGAINST US FOR  SUBSTANTIALLY
MORE THAN OUR OUTSTANDING OBLIGATIONS TO THEM.

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

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

THE APPLICATION OF THE "PENNY STOCK REGULATION" COULD HARM THE MARKET PRICE OF
OUR COMMON STOCK

Our  securities may be deemed a penny stock.  Penny stocks  generally are equity
securities  with a price of less  than  $5.00 per share  other  than  securities
registered  on certain  national  securities  exchanges  or quoted on the NASDAQ
Stock Market, provided that current price and volume information with respect to
transactions  in such  securities  is  provided by the  exchange or system.  Our
securities  may be subject to "penny stock 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 income  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  written  consent  to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the "penny stock rules" require the delivery,  prior
to the  transaction,  of a  disclosure  schedule  prescribed  by the  Commission
relating to the penny stock  market.  The  broker-dealer  also must disclose the
commissions payable to both the broker-dealer and the registered  representative
and current quotations for the securities.  Finally,  monthly statements must be
sent disclosing  recent price information on the limited market in penny stocks.
Consequently, the "penny stock rules" may restrict the ability of broker-dealers
to sell our  securities and may have the effect of reducing the level of trading
activity of our common stock in the secondary  market.  The  foregoing  required
penny stock  restrictions  will not apply to our  securities if such  securities
maintain a market price of $5.00 or greater.  We can give no assurance  that the
price of our securities will reach or maintain such a level.

FUTURE SALES OF SHARES THAT ARE CURRENTLY RESTRICTED FROM IMMEDIATE RESALE COULD
CAUSE THE MARKET  PRICE OF OUR COMMON STOCK TO DROP  SIGNIFICANTLY,  EVEN IF OUR
BUSINESS IS DOING WELL.

As of April 7, 2004,  we have  83,539,155  shares of our common stock issued and
outstanding of which 11,522,185 shares are restricted shares. Rule 144 provides,
in essence,  that a person holding  "restricted  securities" for a period of one
year may sell only an amount  every three months equal to the greater of (a) one
percent of a company's issued and outstanding  shares, or (b) the average weekly
volume of sales during the four calendar weeks preceding the sale. The amount of
"restricted  securities"  which a person who is not an  affiliate of our company
may  sell is not so  limited,  since  non-affiliates  may  sell  without  volume
limitation  their shares held for two years if there is adequate  current public
information  available  concerning  our company.  In such an event,  "restricted
securities"  would be eligible  for sale to the public at an earlier  date.  The
sale in the public market of such shares of Common Stock may lower market prices
of our Common Stock.


                                       8
<PAGE>

ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES

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 the such  person,  or to enforce  against our assets or
against such person judgements  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.

ITEM 2. DESCRIPTION OF PROPERTY

We have our executive  offices at 140 Old Country Road, Suite 205,  Mineola,  NY
11501. We lease theses premises,  consisting of approximately  1,060 square feet
of office  space  under a three year lease  expiring on October  31,  2006.  The
monthly  rental is $1,676.75 for the period ending  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.

Designer Appliances Inc.'s offices are also at this location.  On April 16, 2002
we contracted  with  Dynapoint,  Inc.,  located in California,  for Dynapoint to
provide  warehousing and logistics  facilities for our Quill product. 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 the date of this Form 10-KSB,  we are not a party to any litigation,
and management has no knowledge of any threatened or pending  litigation against
us.

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

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


                                       9
<PAGE>

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

         None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      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.

                                            HIGH            LOW
                                           -------         ------
YEAR  ENDED  DECEMBER  31,  2002

First Quarter                              $0.39            $0.11
Second  Quarter                            $0.29            $0.04
Third  Quarter                             $0.16            $0.05
Fourth  Quarter                            $0.28            $0.03

YEAR  ENDED  DECEMBER  31,  2003

First Quarter                              $0.062           $0.036
Second Quarter                             $0.039           $0.016
Third Quarter                              $0.022           $0.009
Fourth Quarter                             $0.008           $0.005

SECURITY HOLDERS

      At April 7,  2004,  there  were  83,539,155  shares  of our  common  stock
outstanding,  which were held of record by approximately 439  stockholders,  not
including  persons or entities  who hold the stock in nominee or  "street"  name
through various brokerage firms.

Dividends

      We have  not  paid a  dividend  since  our  incorporation.  The  Board  of
Directors may consider the payment of cash dividends, dependent upon our results
of operations and financial condition,  tax considerations,  industry standards,
economic considerations,  regulatory restrictions,  general business factors and
other  conditions.  Our  ability  to pay  dividends  may be  dependent  upon the
dividend payments we receive from Designer Appliances.

Recent Sales of Unregistered Securities

      In order to obtain funding for our ongoing  operations,  we entered into a
second Securities Purchase Agreement with four accredited investors on April 16,
2003 for the sale of (i) $250,000 in convertible debentures and (ii) warrants to
buy 500,000  shares of our common stock.  We believe that such  transaction  was
exempt  from the  registration  requirements  of the  Securities  Act of 1933 by
virtue of Section 4(2) thereof and Regulation D promulgated thereunder.

      In August 2003 we issued and sold  583,333  shares of our common  stock to
Mr.  William Bragg upon exercise of options for an aggregate  purchase  price of
$7,000.  We  believe  that such  transaction  was exempt  from the  registration
requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and
Regulation D promulgated thereunder.

      In October and  November  2003 we issued and sold an  aggregate  5,000,000
shares of our  common  stock to two  people  upon  exercise  of  options  for an
aggregate  purchase  price of $25,000.  We believe that such  transactions  were
exempt  from the  registration  requirements  of the  Securities  Act of 1933 by
virtue of Section 4(2) thereof and Regulation D promulgated thereunder.

      In  March  2004  we  issued  500,000  shares  of our common  stock  to TVA
Productions in partial  payment for promotional  services.  We believe that such
transaction was exempt from the registration  requirements of the Securities Act
of 1933  by  virtue  of  Section  4(2)  thereof  and  Regulation  D  promulgated
thereunder.


                                       10
<PAGE>

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

FORWARD LOOKING STATEMENTS

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

OVERVIEW

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

We sell and market the Quill 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 Quill  "Grip-less"  Mouse and Nib
"Click-less"  software,  of an  under  exploited  opportunity  in the  computer,
household and domestic appliances markets.  Because of the Company's  precarious
financial condition and limited capital resources,  it is currently limiting its
operations to the production and sale of the Quill Mouse and related software.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                                       11
<PAGE>

Gross Profit

For the year ended December 31, 2003, the Company  generated revenue of $137,944
compared  to $3,553 for the year  ended  December  31,  2002,  revenues  in 2002
commencing in October. Cost of sales was $24,604 for the year ended December 31,
2003,  compared to $513 for the year ended  December 31, 2003.  Gross profit was
$113,340 or 82% of net revenues for the year ended December 31, 2003 relative to
$3,040 or 86% of net revenues for the year ended December 31, 2002. The increase
in the Company's  revenues and cost of sales resulted from the  commencement  of
sales  by  the   Company  of  its  Quill  Mouse   product  and  related   system
configurations, system components and accessories.

Operating Expenses

For the year ended December 31, 2003,  operating  expenses decreased $345,061 or
32% from $971,952 for the year ended  December 31, 2002 to $626,891 for the year
ended December 31, 2003. The decrease in the Company's operating expenses,  at a
time when it is  increasing  its  selling  expenses  ($54,799)  and  general and
administrative  expenses  ($37,624),  is primarily  attributable to decreases in
non-recurring consultancy fees of $437,812.

Liquidity and Cash Position

Operating Activities

For the year ended December 31, 2003, as compared to the year ended December 31,
2002,  the Company used $297,004 and $497,417,  respectively,  to fund operating
activities.  The  decrease of $200,413 was as a result of reduced net losses and
increasing revenues offset by the cost of selling and administration.

Investing Activities

For the years ended  December 31, 2003 and  December 31, 2002,  the Company used
$24,018 and $25,245,  respectively  to fund  investing  activities.  The primary
acquisition cost in 2003 was the consideration  paid by the Company for entering
into an exclusive license to what is now the Company's software products.

FINANCING ACTIVITIES

For the year ended December 31, 2003 and December 31, 2002, the Company realized
cash of $282,000  and  $598,774,  respectively,  in  connection  with  financing
activities. The decrease of $316,774 in the year ended December 31, 2003 was the
result of a  decrease  in  financing  received  in 2003 from the sale of secured
convertible debentures and shares of common stock.

LIQUIDITY AND CAPITAL RESOURCES

The Company, including its subsidiaries,  has incurred start-up costs, including
administrative costs and research and development costs, while realizing limited
operating  revenue.  Revenue  commenced in late 2002.  To date,  the Company has
funded  operations  primarily  from the proceeds of sales of its  securities and
from loans.

                                       12
<PAGE>

The Company  has had,  though  small  relative  to its costs of  operations  and
maintaining its listing, increasing sales and revenue through December 31, 2003,
obtained  through  direct  marketing  programs,  via its website and  indirectly
through an increasing number of distributor/resellers  who themselves have their
own websites.  This strategy is part of the development program that the Company
has  initiated  for product  and brand  recognition  amongst  the  "professional
ergonomic"  industry.  The Company has  developed an  increasing  reliance  upon
distributor/resellers  as this  business  is now in excess of 50% of its overall
sales by value.  This business also impacts  gross margin,  as the  distribution
business requires additional margin to be provided compared to direct sales. The
impact of this margin  decrease  was offset in 2003 with the  increase in margin
seen as a result  of the  introduction  of  software  products  resulting  in an
overall  gross  margin  of 82% for the year  ended  December  31,  2003.  As the
possibility  of entrance  into the retail  computer  market sector is considered
further,  reductions  in gross  margin may be  necessary  to achieve the pricing
incentives  required by such outlets. In such an event it is considered that the
increase in the volume of sales may be beneficial and thereby  contribute to the
main  objective of attaining  profit,  within the single year  experience in the
pattern of business so far observed,  existing distribution channels also showed
seasonality in that a lower business  activity was observed  during main holiday
season periods,  most noticeably during the winter holiday period. This level of
business,  at  least,  immediately  returned  following  the end of the  holiday
period.

Since  inception,  the  Company  has focused on  organizational  activities  and
research  and  development  of the  Company's  products and the  development  of
marketing  strategies.  At the end of 2002 the Company commenced  production and
shipment of its Quill mouse product.  Management estimates that it would require
between $6.5 million and $18.2 million over the first two years of operations to
support  manufacturing  and  marketing  operations  should the Company  commence
production of all the products in the  Company's  intellectual  property  rights
portfolio.  This portfolio  includes  vacuum  cleaner,  fans,  heaters and other
intellectual property right bearing domestic appliances. The Company has no view
or  expectation  of raising  this level of  financing  and so will  consequently
maintain and remain  focused on developing  sales of its Quill Mouse and related
products and, to this end, introduced several new products during 2003:

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

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

      o     The Virtually Hands Free (VHF) mousing system:  - Is 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     Carpal  Management  Systems I & II: - Is 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.


                                       13
<PAGE>

The Company  entered into a  co-marketing  agreement  with Balance  Systems Inc,
maker of the  FlexTend  Orthotic  Exercise  Glove,  to  produce  hybrid  product
offering called the Carpal Management  System. It further developed  software to
integrate the exercise  routines into the Company's  E-Quill-Liberator  suite so
that the  software  provides a reminder for the  exercises  to be performed  and
offers video images of the exercises.  This and copies of the Nib Trail software
are now part of a CD that is distributed  with Flextend glove shipped by Balance
Systems Inc.

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.

SECTION 508 AMENDMENTS TO THE 1998  REHABILITATION ACT.

The  General  Services  Administration  (GSA)  implemented  a program  that sets
standards for information technology so as to make such technology accessible to
those with special needs. The standards are applied under what is called Section
508,which are described in full at www.section508.gov  details pertaining to our
products can be found at  www.quillmouse.com  under the heading GSA Section 508.
These standards  include a section  relating to input devices,  such as computer
mice and under item 1194.26,  subsection  2.0 a standard is 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 the Quill
Mouse and the Virtually  Hands Free Mousing System (mouse and software  bundle),
which were subsequently  processed and are now listed on the Section 508 website
as being compliant. 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 product
to the US 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.

Subsequent  "Marketing" Event. In March of 2004, following an independent review
by a  designer,  health  care  professionals  and persons  with  arthritis,  the
Arthritis  Foundation  in the US have given an Ease of Use  commendation  to the
Virtually Hands Free Mousing system and under a licensing  agreement the Company
is permitted  to use the  Arthritis  Foundation's  Ease of Use logo as a graphic
indication of the commendation.

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.


                                       14
<PAGE>

Since achieving a Section 508 listing and the Arthritis Foundation  commendation
the Company has redefined  its mission as to be a leading  supplier of Assistive
Technology  Mouse  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. A
target  of a 5%  share  of what  is  currently  considered  the  annual  new and
replacement  U.S.  computer mouse market would  translate into  approximately  2
million  mice sales per year,  which on a  worldwide  basis  could  relate to 10
million  pieces  per  year.  This does not  contemplate  earlier  retirement  of
computer  mice and therefore  possible  upside due to an awareness of the issues
and our products as a result of the Company's intended marketing activities.

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

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

RECENT FINANCING

MAY 2002 FINANCING

The Company entered into a second Securities  Purchase Agreement on May 15, 2002
with  several  institutional  investors  (the  "Investors")  for the sale of the
Company's 12% secured convertible debentures in the principal amount of $500,000
and in connection therewith the Company issued warrants to purchase an aggregate
of up to 1,500,000  shares of the Company's  common stock. The modified terms of
the  convertible  debentures  provide for full  payment of the initial  $250,000
funding on or before October 16, 2003. As of September 30, 2003, $204,150 of the
principal  amount of these  debentures  had been  converted  into common  stock,
leaving a principal  balance of $45,850.  The remainder of the debentures issued
in 2002 are due $55,000 on August 21, 2003 and  $195,000 on December  10,  2003.
The debentures,  including accrued and unpaid interest,  may be converted at any
time at the  lesser  of (i) $.05 or (ii) the  average  of the  lowest  three (3)
trading  prices  during the 20 trading  days  immediately  prior to the date the
conversion notice is sent, divided by two. The warrants entitle each investor to
purchase  shares  of the  Company's  common  stock at a price  equal to $.05 per
share.  The Company  utilized  the net proceeds  generated  from the sale of the
secured convertible debentures for working capital and marketing purposes.

Under a related  registration  rights agreement,  the Company agreed to register
all of the shares  underlying  such  convertible  debentures  and  warrants on a
registration statement on Form SB-2 to be filed with the Securities and Exchange
Commission. The actual number of shares of common stock issuable upon conversion
of the  debentures  and exercise of the related  warrants is  indeterminate,  is
subject to  adjustment  and could depend on factors which cannot be predicted by
the Company at this time,  including,  among other  factors,  the future  market
price of the common  stock and the  anti-dilution  provisions  contained  in the
agreement.  The Company has reserved  28,000,000  shares of its common stock for
issuance upon conversion of the convertible debentures and the related warrants.


                                       15
<PAGE>

Under the terms of the debentures and the related  warrants,  the debentures are
convertible  and the warrants are  exercisable  by the holder only to the extent
that the number of shares of common stock issuable  pursuant to such securities,
together  with the number of shares of common stock owned by such holder and its
affiliates  (but not  including  shares of common stock  underlying  unconverted
shares of debentures or unexercised  portions of the warrants)  would not exceed
4.9% of the then  outstanding  common stock as  determined  in  accordance  with
Section 13(d) of the Exchange Act.

The  Securities  Purchase  Agreement  also places  certain  restrictions  on the
Company's ability to obtain additional  financing.  The agreement  prohibits the
Company  until the later of 270 days from the date of  closing  or 180 days from
the date of an effective  registration  statement from obtaining financing which
would  involve the issuance of additional  common stock without first  obtaining
the  consent of the  investors.  In  addition,  the Company is  prohibited  from
entering  into any  financial  arrangements  which would involve the issuance of
common  stock  for a period  of two (2)  years  from  the date the  registration
statement becomes effective,  without first giving the investors the opportunity
to purchase an equal number of shares of common  stock to maintain  their equity
position with the Company.

APRIL 2003 FINANCING

      To obtain funding for our ongoing operations, we entered into a Securities
      Purchase  Agreement with four  accredited  investors on April 16, 2003 for
      the sale of (i) $250,000 in  convertible  debentures  and (ii) warrants to
      buy 500,000  shares of our common stock.  The  investors  have provided us
      with an aggregate of $250,000 as follows:

      o     $50,000 was disbursed on April 16, 2003;

      o     $25,000 was disbursed on May 13, 2003;

      o     $35,000 was disbursed on June 20, 2003; and

      o     $140,000 was disbursed on July 18, 2003.

Accordingly,  we have  received a total of $250,000  pursuant to the  Securities
Purchase  Agreement.  The Company  utilized the net proceeds  generated from the
sale of the secured  convertible  debentures  for working  capital and marketing
purposes.

The debentures bear interest at 12% per annum,  mature one year from the date of
issuance, and are convertible,  including accrued and unpaid interest,  into our
common stock, at the selling  stockholders' option, at the lower of (i) $0.05 or
(ii) 50% of the  average of the three  lowest  intraday  trading  prices for the
common  stock on a  principal  market  for the 20  trading  days  before but not
including the  conversion  date.  Accordingly,  there is in fact no limit on the
number of shares into which the debentures may be converted. Except as otherwise
noted, the investors were accredited investors and transfer was restricted by us
in accordance  with the  requirements of the Securities Act of 1933. In addition
the  investors  were  provided  with  access  to  our  Securities  and  Exchange
Commission filings.

In November 2003 the Company entered into discussions with the debenture holders
following  the  issuance  of a summons in the High Court  ahead of the file of a
complaint.  Further  issuances of stock under the agreements were suspended from
November 5, 2003.  On February  17, 2004 the Company and the  debenture  holders
entered into a Redemption  and Settlement  Agreement and Mutual General  Release
under which the Company has issued to the debenture holders in full satisfaction
of all  indebtedness  and obligations  under the  debentures,  an aggregate of 2
million shares of the Company's  common stock and the Company  further agreed to
issue to the debenture  holders an additional 4 million  shares of the Company's
common  stock  within 5 days  after  notice to the  Company  that the  initial 2
million  shares have been sold.  The Company also agreed to pay to the debenture
holders an aggregate of $200,000 in eight  consecutive  monthly  installments of
$16,666.66 each, the first of which shall be on May 1, 2004.

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

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


                                       16
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

      The consolidated  audited financial statements for the year ended December
31, 2003 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.

ITEM 8A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

      We  carried  out  an  evaluation,  under  the  supervision  and  with  the
participation  of  our  Chairman  and  Chief  Executive  Officer  and  Principal
Financial  Officer,  of the  effectiveness  of the design and  operation  of our
disclosure  controls and  procedures  pursuant to Rule 13a-15 of the  Securities
Exchange  Act of 1934  (the  "Exchange  Act"),  which  disclosure  controls  and
procedures are designed to insure that information required to be disclosed by a
company  in the  reports  that it files  under  the  Exchange  Act is  recorded,
processed, summarized and reported within required time periods specified by the
SEC's rules and forms and is accumulated  and  communicated  to our  management,
including our principal  executive officer and principal  financial officer,  as
appropriate, to allow timely decisions regarding required disclosure. Based upon
that  evaluation,  the Chairman and the Principal  Financial  Officer  concluded
that,  as of December 31, 2003,  our  disclosure  controls  and  procedures  are
effective  in timely  alerting  them to  material  information  relating  to our
company (including our consolidated subsidiaries) required to be included in our
periodic SEC filings.

     (b) Changes in Internal Control.

     Based on the evaluation  described in  subparagraph  (a) above,  during the
quarter  ended  December  31,  2003  there  were no  significant  changes in our
internal controls over financial reporting that have materially affected, or are
likely to materially affect our internal controls over financial reporting.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT DIRECTORS AND EXECUTIVE OFFICERS

      The table  below  sets  forth  certain  information  with  respect  to our
directors and executive officers as of March 25, 2004.


        Name                            Position
-------------------------       -----------------------

Alexander Gordon Lane           Chairman, Director and acting Secretary

William Thomas Large            Chief Executive Officer, President and Director

Thomas A. Marchant              Director

      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.

      Alexander   Gordon  Lane,   62,   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.


                                       17
<PAGE>

      William Thomas Large,  48, 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,  56, has served as a member of our board of directors
since July 11, 2002.  Thomas A.  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 1991 Mr.  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.

ITEM 10. EXECUTIVE COMPENSATION

SALARY COMPENSATION

The following table sets forth a summary for the fiscal years ended, 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  at the  end of  fiscal  2003  (collectively,  the  "Named  Executive
Officers"). None of our executive officers earned in excess of $100,000 in total
annual salary.

                 SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION
                 ----------------------------------------------

Name and Principal                                               All Other
Positions                         Year    Salary($)  Bonus($)   Compensation($)
-------------------------------   ------  -------------------------------------

                                  2003      52,918      --           --
                                  2002      47,664
William Thomas Large              2001      (1)         --           --
Chief Executive Officer

                                  2003      29,700      --           --
Alexander Gordon Lane             2002      28,697
Chairman and Secretary            2001           0      --           --
-------------------------------

(1) Mr. Large is eligible for a  performance-related  bonus of up to 100% of his
annual salary. In 2001 we issued 1,200,000 shares of common stock valued at $.10
per  share  to Mr.  Large.  We also  paid to Mr.  Large  $30,815  in the form of
Directors compensation.


                                       18
<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 certain  information  as of April 7, 2004
regarding  the  beneficial  ownership  of our  common  stock held by each of our
executive officers and directors, individually and as a group and by each person
who beneficially owns in excess of five percent of the common stock. In general,
beneficial  ownership includes those shares that a person has the power to vote,
sell, or otherwise  dispose.  Beneficial  ownership also includes  thatnumber 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  personsmay be
considered  the  beneficial  owner of the same shares.  In this Annual Report on
Form 10-KSB, "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.

                                                 Amount and
                                                 Nature Of       Percent of
                           Position with        Beneficial         Common
Stock Name and Address     Torbay Holdings      Ownership (1)   Outstanding (1)
--------------------------------------------------------------------------------
Alexander Gordon Lane      Secretary, Director    982,777             1.18%
4 Milford Place
Hempstead, New York 11550

William Thomas Large       President, Chief     5,599,582(2)          6.70%
c/o 91 Tulip Avenue        Executive Officer
 Lily Building., Apt. A4   and Director
Floral Park, NY 11001

Thomas A. Marchant         Director               602,353             0.72%
c/o Torbay Holdings, Inc.
4 Milford Place
Hempstead, New York 11550

All Directors and Executive                    7,184,712(2)           8.60%
Officers as a Group
(3 persons)
-----------------------------------

(1)   Based upon 83,539,155 shares outstanding as of April 7, 2004.

(2)   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.

                                       19
<PAGE>

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED TRANSACTIONS

      Gordon Lane, the Chairman of the Company,  having loaned to the Company an
amount of $35,647 on March 26, 2002  converted  such loan into 297,063 shares of
the Company's  restricted common stock.

      In July,  2002,  the Company sold 562,353  shares of the Company's  common
stock to Mr. Thomas A.  Marchant,  now a director of the Company,  at a purchase
price of $.085 per share for an aggregate purchase price of $47,800. Such shares
were physically delivered by the transfer agent on or about October 21, 2002.

      In October 2002,  the Company issued 571,249 shares of its common stock to
William  Thomas Large and 285,714  shares to Alexander  Gordon Lane for services
rendered to the Company. Such restricted shares were valued at $.21 per share.


                                       20
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

      (a)  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., as amended(2)

3.2   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)

10.1  Manufacturing  Agreement  between the Company and  Dynapoint,  Inc.  dated
      April 16, 2002(6)

10.2  Redemption and Settlement  Agreement and Mutual General Release,  dated As
      of February 17, 2004 (7)

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

31.1  Certification of Chief Executive Officer and Principal Financial Officer.

32.1  Certification of Chief Executive Officer and Principal Financial Officer
----------------------------------

(1)   Incorporated  by  reference  to Exhibit 2.1 to the 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 by reference to Exhibit 10.3 to our Form 10-KSB filed with the
     Commission on April 29, 2002.

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

      (b)   Reports on Form 8-K.

      The  Company  did not file a  Current  Report  on Form 8-K for the  fourth
quarter of the fiscal year ended December 31, 2003.

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.
for professional  services rendered for the fiscal years ended December 31, 2003
and 2002:

     Fee Category       Fiscal 2003                         Fiscal 2002
     ------------       -----------                         -----------

     Audit fees         $  48,600                           $   64,505
     Tax fees                   0                                1,736
                        ---------                           ----------
     Total fees         $  48,600                           $   66,241

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 2003 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.

The Audit  Committee  considers  whether  the  provision  of these  services  is
compatible with maintaining the auditor's independence,  and has determined such
services for fiscal 2003 and 2002 were compatible.

AUDIT COMMITTEE POLICY ON PRE-APPROVAL OF SERVICES OF INDEPENDENT AUDITORS

The Audit  Committee's  policy  is to  pre-approve  all  audit  and  permissible
non-audit  services  provided by the  independent  auditors.  These services may
include audit services, audit-related services, tax services and other services.
Pre-approval  is generally  provided for up to one year. The Audit Committee may
also pre-approve particular services on a case-by-case basis.


                                       21
<PAGE>

INDEX TO FINANCIAL STATEMENTS


PAGE        F-1         INDEPENDENT AUDITORS' REPORT

PAGE        F-2         CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2003

PAGE        F-3         CONSOLIDATED   STATEMENTS   OF   OPERATIONS   AND  OTHER
                        COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2003
                        AND 2002

PAGES       F-4 - F-5   CONSOLIDATED   STATEMENT  OF  CHANGES  IN  STOCKHOLDERS'
                        DEFICIENCY  FOR THE YEARS  ENDED  DECEMBER  31, 2003 AND
                        2002

PAGES       F-6         CONSOLIDATED  STATEMENTS  OF CASH  FLOWS  FOR THE  YEARS
                        ENDED DECEMBER 31, 2003 AND 2002

PAGES       F-7 - F-24  NOTES  TO  CONSOLIDATED   FINANCIAL   STATEMENTS  AS  OF
                        DECEMBER 31, 2003 AND 2002

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

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,  2003 and the related  consolidated
statements of operations and other  comprehensive loss, changes in stockholders'
deficiency and cash flows for the years ended December 31, 2003 and 2002.  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 auditing standards generally accepted
in the  United  States of  America.  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, 2003, and the results of their  operations
and  their  cash  flows for the  years  ended  December  31,  2003 and 2002,  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 $874,816, a
negative cash flow from operations of $297,004,  a working capital deficiency of
$856,033  and a  stockholders'  deficiency  of  $729,016.  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
March 26, 2004


                                      F-1
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2003

                                     ASSETS

                                                                    2003
                                                                ------------
CURRENT ASSETS
 Cash                                                   $             12,387
 Accounts receivable                                                   3,295
 Inventory                                                            37,623
                                                                ------------
     Total Current Assets                                             53,305
                                                                ------------
PROPERTY AND EQUIPMENT - NET                                          24,594
                                                                ------------
OTHER ASSETS

 Intangible assets - net                                              95,628
 Deposits                                                              6,795
                                                                ------------
      Total Other Assets                                             102,423

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

      TOTAL ASSETS                                              $    180,322
                                                                ============
        LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
 Accounts payable and accrued expenses                          $    341,925
 Loan payable - officer                                                9,663
 12% convertible debentures                                          507,750
 Note payable                                                         50,000
                                                                ------------
TOTAL CURRENT LIABILITIES                                            909,338

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
 Preferred stock, $.0001 par
  value, 20,000,000 shares authorized,
  420,000 shares issued and outstanding                                   42
 Common stock, $.0001 par value,
  100,000,000 shares authorized,
  72,789,155 issued and outstanding.                                   7,278
 Common stock to be issued (3,500,000 shares)                            350
 Additional paid-in capital                                        3,352,853
 Accumulated deficit                                              (3,910,170)
 Accumulated other comprehensive loss                                (20,651)
 Deferred equity based expense                                      (158,718)
                                                                ------------

TOTAL STOCKHOLDERS' DEFICIENCY                                      (729,016)
                                                                ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                  $    180,322
                                                                ============

          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, 2003 AND 2002

                                                     2003          2002
                                                ------------    ------------

SALES, NET                                      $    137,944    $      3,553

COST OF SALES                                         24,604             513
                                                ------------    ------------

GROSS PROFIT                                         113,340           3,040
                                                ------------    ------------
OPERATING EXPENSES
 Selling                                             118,044          63,245
 Consulting fees                                     112,750         550,562
 Professional fees                                   175,258         181,043
 Directors fees and compensation                      82,480          76,367
 Other general and administrative                    138,359         100,735
                                                ------------    ------------
       Total Operating Expenses                      626,891         971,952
                                                ------------    ------------

LOSS FROM OPERATIONS                                (513,551)       (968,912)
                                                ------------    ------------


OTHER EXPENSES
 Interest and financing costs                        361,265         602,941
                                                ------------    ------------
       Total Other Expenses                          361,265         602,941
                                                ------------    ------------

NET LOSS                                            (874,816)     (1,571,853)

OTHER COMPREHENSIVE LOSS
 Foreign currency translation loss                    (7,994)        (13,105)
                                                ------------    ------------

COMPREHENSIVE LOSS                              $   (882,810)   $ (1,584,958)
                                                                ------------
                                                ============    ============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED   $      (0.02)   $      (0.08)
                                                ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING - BASIC AND DILUTED           48,459,281      18,899,861
                                                ============    ============

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

<TABLE>
<CAPTION>
                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                             Preferred Stock        Common Stock
                                             Shares    Amount     Shares     Amount
                                           ---------  ---------  ---------  ---------

<S>                                          <C>        <C>       <C>            <C>
BALANCE, DECEMBER 31, 2001                        --  $      --  16,400,000     1,640

Issuance of common stock for
cash and warrants exercised                       --         --    935,686         93

Common stock issued for
 placement fee                                    --         --    300,000         30

Issuance of common stock
 issued for professional
 services                                         --         --  1,646,535        165

Common shares issued                              --         --    500,000         50

Amortization of deferred
 consulting expense                               --         --         --         --

Preferred stock issued in
 acquisition of intangible
 assets                                      420,000         42         --         --


ISSUANCE OF COMMON STOCK TO
 SETTLE NOTE PAYABLE                              --         --    833,333         83

Issuance of common stock to
 settle officer loan                              --         --    297,063         30

Stock to be issued for
 computer software and
 service contract                                 --         --         --         --

Beneficial conversion feature
on convertible debentures                         --         --         --         --

Warrants issued as part of
convertible debentures for
financing costs                                   --         --         --         --

Warrants issued to a director                     --         --         --         --

Warrants issued to a
consultant                                        --         --         --         --

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

Net loss for the year ended
December 31, 2002                                 --         --         --         --
                                           ---------  ---------  ---------  ---------
Balance, December 31, 2002                   420,000  $      42  20,912,617     2,091


                                           Common Stock To Be    Additional
                                                 Issued           Paid-In     Accumulated
                                           Shares       Amount    Capital       Deficit
                                          ----------  ---------  ----------    -----------

BALANCE, DECEMBER 31, 2001                $  500,000  $      50 $1,128,326 $(1,463,501)

Issuance of common stock for
cash and warrants exercised                        -          -     92,707          -

Common stock issued for
 placement fee                                     -          -     26,970          -

Issuance of common stock
 issued for professional
 services                                          -          -    337,147          -

Common shares issued                        (500,000)       (50)         -          -

Amortization of deferred
 consulting expense                                -          -          -          -

Preferred stock issued in
 acquisition of intangible assets                  -          -     41,958          -


ISSUANCE OF COMMON STOCK TO
 SETTLE NOTE PAYABLE                               -          -     99,917          -

Issuance of common stock to
 settle officer loan                               -          -     35,617          -

Stock to be issued for
 computer software and
 service contract                            539,568         54     64,694          -

Beneficial conversion feature
on convertible debentures                          -          -    500,000          -

Warrants issued as part of
convertible debentures for
financing costs                                    -          -    209,000          -

Warrants issued to a director                      -          -     95,000          -

Warrants issued to a consultant                    -          -     21,000          -

Foreign currency translation loss                  -          -          -          -

Net loss for the year ended
December 31, 2002                                  -          -          - (1,571,853)
                                          ----------  --------- ---------- ----------
Balance, December 31, 2002                $  539,568  $      54 $2,652,336 $(3,035,354)


                                         Accumulated
                                            Other      Deferred
                                        Comprehensive   Equity
                                           Income       Based
                                           (Loss)      Expenses    Total
                                          ----------  --------- ----------

BALANCE, DECEMBER 31, 2001                       448  $ (37,500) $(370,537)

Issuance of common stock for
cash and warrants exercised                       --         --     92,800

Common stock issued for
placement fee                                     --         --     27,000

Issuance of common stock
issued for professional
services                                          --         --    337,312

Common shares issued                              --         --         --

Amortization of deferred
consulting expense                                --     37,500     37,500

Preferred stock issued in
acquisition of intangible
assets                                            --         --     42,000



ISSUANCE OF COMMON STOCK TO
SETTLE NOTE PAYABLE                               --         --    100,000

Issuance of common stock to
settle officer loan                               --         --     35,647

Stock to be issued for
computer software and
service contract                                  --         --     64,748

Beneficial conversion feature
on convertible debentures                         --         --    500,000

Warrants issued as part of
convertible debentures for
financing costs                                   --   (128,959)    80,041

Warrants issued to a director                     --         --     95,000

Warrants issued to a
consultant                                        --         --     21,000

Foreign currency translation
loss                                         (13,105)        --       (13,105)

Net loss for the year ended
December 31, 2002                                 --         --    (1,571,853)
                                          ----------  --------- ----------
Balance, December 31, 2002                   (12,657) $(128,959) $(522,447)

</TABLE>
          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

<TABLE>


                                                                                 Common Stock
                                    Preferred Stock         Common Stock         To Be Issued
                                  Shares     Amount     Shares        Amount    Shares       Amount
                                  ------     ------     ------        ------    ------       ------

<S>                              <C>          <C>       <C>              <C>   <C>               <C>
Common shares issued               --          --       539,568          54    (539,568)         (54)

Issuance of common stock
 for software license              --          --       100,000          10        --           --

Stock issued for consulting
 services                          --          --     1,501,000         150        --           --

Issuance of common stock

 for notes payable
 conversions                       --          --    43,152,637       4,315        --           --

Shares issued for legal
 services                          --          --     1,000,000         100        --           --

Shares issued for option
 exercised for cash                --          --     5,583,333         558        --           --



SHARES TO BE ISSUED FOR
 CONSULTING AND ADVERTISING
 SERVICES                          --          --          --          --     3,500,000          350

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

Beneficial conversion
 feature and warrants
 issued as part of
 convertible debentures            --          --          --          --          --           --

Amortization of deferred
interest  and financing
expense                            --          --          --          --          --           --

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

Net loss, 2003                     --          --          --          --          --           --
                             ----------  ----------  ----------  ----------  ----------   ----------

BALANCE, DECEMBER 31, 2003      420,000  $       42  72,789,155 $     7,278   3,500,000   $      350
                             ----------  ==========  ==========  ==========  ==========   ==========

</TABLE>

<TABLE>
<CAPTION>
                                                             Accumulated
                                                                Other     Deferred
                               Additional                   Comprehensive  Equity
                                Paid-In        Accumulated     Income       Based
                                Capital          Deficit       (Loss)     Expenses       Total
                                -------          -------       ------     --------       -----

<S>                              <C>               <C>           <C>         <C>        <C>
Common shares issued               --                --          --           --           --

Issuance of common stock
 for software license             5,990              --          --           --          6,000

Stock issued for consulting
 services                        77,350              --          --           --         77,500

Issuance of common stock


 for notes payable
 conversions                    237,935              --          --           --        242,250

Shares issued for legal
 services                         9,900              --          --           --         10,000

Shares issued for option
 exercised for cash              31,442              --          --           --         32,000



SHARES TO BE ISSUED FOR
 CONSULTING AND ADVERTISING
 SERVICES                        32,150              --          --         (6,000)      26,500

Options issued for services      47,300              --          --        (31,533)      15,767

Beneficial conversion
 feature and warrants
 issued as part of
 convertible debentures         258,450              --          --       (121,185)     137,265

Amortization of deferred
interest  and financing
expense                            --                --          --        128,959      128,959

Foreign currency
translation loss                   --                --        (7,994)        --         (7,994)

Net loss, 2003                     --            (874,816)       --           --       (874,816)
                             ----------     -------------  ----------   ----------   ----------

BALANCE, DECEMBER 31, 2003   $3,352,853    $   (3,910,170) $  (20,651)  $ (158,718)  $ (729,016)
                             ==========    ==============  ==========   ==========   ==========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002



                                                                                   2003         2002
                                                                              -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                           <C>           <C>
 Net loss                                                                     $  (874,816)  $(1,571,853)
 Adjustments to reconcile net loss to
   net cash used in operating activities:
  Depreciation and amortization                                                    24,414         1,634
  Common stock and warrants issued for services                                    93,500       469,062
  Deferred financing costs and services recognized                                308,491        80,041
  Deferred consulting                                                                --          37,500
  Beneficial conversion feature on convertible debt                                  --         500,000
 Changes in operating assets and liabilities:
  (Increase) decrease in accounts receivable                                       (1,675)       (1,620)
  (Increase) decrease inventory                                                    27,830       (65,453)
  (Increase) decrease prepaid expenses                                             15,748         6,293
  (Increase) decrease deposits                                                     (5,795)         --
    Increase in accounts payable and accrued expenses                             115,299        46,979
                                                                              -----------   -----------
       Net cash used in operating activities                                     (297,004)     (497,417)
                                                                              -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangibles                                                          (17,150)       (2,000)
 Purchase of property and equipment                                                (6,868)      (23,245)
                                                                              -----------   -----------
                                                                                            -----------
       Net cash used in investing activities                                      (24,018)      (25,245)
                                                                              -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Payments under capital leases                                                       --         (14,351)
 Proceeds from issuance of common stock                                            32,000        92,800
 Proceeds from loans payable stockholders                                            --          20,325
 Proceeds from issuance of notes and loans payable                                250,000       500,000
                                                                              -----------   -----------
       Net cash provided by financing activities                                  282,000       598,774
                                                                              -----------   -----------

EFFECT OF CHANGES IN EXCHANGE RATES ON CASH                                        (7,994)      (16,754)
                                                                              -----------   -----------

(DECREASE) INCREASE IN CASH                                                       (47,016)       59,358

BEGINNING OF PERIOD                                                                59,403            45
                                                                              -----------   -----------

CASH - END OF PERIOD                                                          $    12,387   $    59,403
                                                                              ===========   ===========
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

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.
     Sales of the QUILL mouse commenced in the fourth quarter of 2002.

     (B) PRINCIPLES OF CONSOLIDATION

     The  consolidated  financial  statements  for  2003 and  2002  include  the
     accounts  of  Torbay  Holdings,  Inc.  and its  wholly  owned  subsidiaries
     Designer Appliances Limited and Designer  Appliances,  Inc.  (collectively,
     the "Company"). All significant 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

         See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     accepted in the United  States of America.  The  financial  statements  are
     expressed in United States dollars.  The functional  currency of DAL is the
     British pound sterling.

     (D) MANAGEMENT'S 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
     period. Actual results could differ from those estimates.

     (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 capitalizes the costs to acquire  intellectual  property rights
     and amortizes them over their estimated useful life of 10 years, commencing
     in 2003.

     (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,  2003 and 2002,  the
     Company determined that there were no long-lived assets that were impaired.

         See accompanying notes to consolidated financial statements.

                                       F-8
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     (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.   Consigned  inventory
     (amounting  to  less  than  2% of the  Company's  total  inventory)  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,
     2003 or 2002 since the amount is not material based on past experience.

     (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 software costs. Accordingly, costs
     to obtain  computer  software from third parties  obtained for internal use
     are capitalized and amortized over their estimated  useful life of 5 years,
     commencing  in  2003.  Enhancements  to  software  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 current  period.  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"
     ("Statement 109"). Under Statement 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  Statement  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.

         See accompanying notes to consolidated financial statements.

                                       F-9
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     (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,  accounts payable,  accrued expenses,
     and notes payable  approximate their fair value as of December 31, 2003 and
     2002 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"  ("Statement  130").   Statement  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 statements of operations and
     as  Accumulated  Other  Comprehensive  Income  (Loss) in the  statement of
     changes in stockholders' deficiency.

     (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.

     (S) STOCK OPTIONS AND WARRANTS

     The Company accounts for its stock-based employee compensation plans using
     the  intrinsic  value  based  method,  under  which  compensation  cost is
     measured as the excess of the stock's  market price at the grant date over
     the amount an employee must pay to acquire the stock. Stock

         See accompanying notes to consolidated financial statements.

                                      F-10
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     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.

     (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, except for direct-response advertising, which
     is capitalized and amortized over the expected period of future  benefits.
     Advertising and marketing  expense included in the statement of operations
     for the years ended  December  31, 2003 and 2002 was $94,557 and  $63,192,
     respectively.

     (V) RECENT ACCOUNTING PRONOUNCEMENTS

     In January 2003,  (as revised in December  2003) The Financial  Accounting
     Standards Board ("FASB") issued  Interpretation No. 46,  "Consolidation of
     Variable Interest  Entities",  an  interpretation  of Accounting  Research
     Bulletin   ("ARB")   No.   51,   "Consolidated    Financial   Statements".
     Interpretation No. 46 addresses  consolidation by business  enterprises of
     variable  interest  entities,  which  have  one or both  of the  following
     characteristics:  (i) the equity  investment at risk is not  sufficient to
     permit  the  entity  to  finance   its   activities   without   additional
     subordinated  support from other parties,  which is provided through other
     interest  that  will  absorb  some or all of the  expected  losses  of the
     entity;  (ii)  the  equity  investors  lack  one or more of the  following
     essential  characteristics of a controlling financial interest: the direct
     or  indirect  ability  to make  decisions  about the  entities  activities
     through voting rights or similar  rights;  or the obligation to absorb the
     expected  losses of the entity if they occur,  which makes it possible for
     the entity to finance its  activities;  the right to receive the  expected
     residual  returns of the entity if they occur,  which is the  compensation
     for the risk of absorbing the expected losses.

     Interpretation No. 46, as revised,  also requires expanded  disclosures by
     the primary  beneficiary (as defined) of a variable interest entity and by
     an  enterprise  that holds a significant  variable  interest in a variable
     interest entity but is not the primary beneficiary.

     Interpretation  No. 46, as revised,  applies to small business  issuers no
     later than the end of thefirst  reporting  period that ends after December
     15,  2004.   This   effective   date  includes  those  entities  to  which
     Interpretation  46 had  previously  been  applied.  However,  prior to the
     required  application of Interpretation  No. 46, a public entity that is a
     small business issuer shall apply Interpretation 46 or this Interpretation
     to those  entities that are considered to be  special-purpose  entities no
     later  than as of the end of the first  reporting  period  that ends after
     December 15, 2003.

         See accompanying notes to consolidated financial statements.

                                      F-11
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     Interpretation No. 46 may be applied prospectively with a cumulative-effect
     adjustment  as of the date on which it is  first  applied  or by  restating
     previously  issued  financial  statements  for  one or  more  years  with a
     cumulative-effect  adjustment  as  of  the  beginning  of  the  first  year
     restated.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     Derivative  Instruments  and Hedging  Activities".  SFAS No. 149 amends and
     clarifies  financial  accounting and reporting for derivative  instruments,
     including  certain  derivative  instruments  embedded  in  other  contracts
     (collectively  referred to as derivatives) and for hedging activities under
     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities".  The changes in SFAS No. 149 improve  financial  reporting  by
     requiring that contracts with comparable  characteristics  be accounted for
     similarly.  This  statement  is  effective  for  contracts  entered into or
     modified  after June 30, 2003 and all of its  provisions  should be applied
     prospectively.

     In May  2003,  the FASB  issued  SFAS No.  150,  "Accounting  For  Certain
     Financial   Instruments  with  Characteristics  of  both  Liabilities  and
     Equity".  SFAS No.  150  changes  the  accounting  for  certain  financial
     instruments  with  characteristics  of both  liabilities  and equity that,
     under previous  pronouncements,  issuers could account for as equity.  The
     new  accounting  guidance  contained in SFAS No. 150  requires  that those
     instruments be classified as  liabilities  in the balance sheet.

     SFAS  No.  150  affects  the  issuer's   accounting  for  three  types  of
     freestanding  financial  instruments.  One type is mandatorily  redeemable
     shares, which the issuing company is obligated to buy back in exchange for
     cash or other  assets.  A second  type  includes  put  options and forward
     purchase contracts,  which involves instruments that do or may require the
     issuer  to buy  back  some of its  shares  in  exchange  for cash or other
     assets.  The third type of  instruments  that are  liabilities  under this
     Statement is  obligations  that can be settled  with shares,  the monetary
     value of which is fixed,  tied solely or  predominantly to a variable such
     as a market  index,  or varies  inversely  with the value of the  issuers'
     shares.  SFAS No. 150 does not apply to  features  embedded in a financial
     instrument that is not a derivative in its entirety.

     Most of the  provisions of Statement 150 are  consistent  with the existing
     definition of  liabilitiesin  FASB Concepts  Statement No. 6,  "Elements of
     Financial  Statements".  The  remaining  provisions  of this  Statement are
     consistent  with the FASB's proposal to revise that definition to encompass
     certain  obligations  that a reporting entity can or must settle by issuing
     its own shares. This Statement shall be effective for financial instruments
     entered  into or  modified  after  May 31,  2003  and  otherwise  shall  be
     effective at the beginning of the first interim period beginning after June
     15, 2003,  except for  mandatorily  redeemable  financial  instruments of a
     non-public  entity,  as to which the effective  date is for fiscal  periods
     beginning  after  December 15,  2004.

     The  implementation  of  these  recent  accounting  pronouncements  is not
     expected  to  have a  significant  effect  on the  Company's  consolidated
     financial statements presentation.

         See accompanying notes to consolidated financial statements.

                                      F-12
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002


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

     During the year ended  December 31, 2003, a portion of the notes payable in
     the amount of  $242,250  was  converted  into  43,152,637  shares of common
     stock.

     During 2002, the Company  received  approval for the  previously  acquired
     British  patent  rights on  intellectual  property.  Pursuant to the asset
     acquisition  agreement,  the  Company  issued in April 2002 an  additional
     200,000 Series 1 Convertible Preferred Shares valued at $20,000,  which is
     included as an intangible asset and in preferred stock.

     During 2002,  the Company  issued 833,333 shares of common stock valued for
     financial  accounting  purposes  at $.12 per share based upon a recent cash
     offering  price to  settle a  $100,000  note  payable.  No gain or loss was
     recognized on the  transaction.

     During 2002,  the Company issued 297,063 shares of common stock valued for
     financial  accounting  purposes at $.12 per share based upon a recent cash
     offering  price to settle  $35,647 of an officer loan. No gain or loss was
     recognized on the  transaction.

     During 2002,  the Company  entered into an agreement to acquire a software
     license  agreement  with an  estimated  useful  life of  three  years  and
     one-year  maintenance contract in exchange for 539,568 common shares to be
     issued. The shares were valued for financial  accounting  purposes at $.12
     per  share  based  on the  closing  price  on the  effective  date  of the
     agreement for an aggregate value of $64,748,  which the Company  allocated
     $53,957 to the software  license  agreement and $10,791 to the maintenance
     contract.

     During  2002,  the  Company  issued  500,000  shares of  common  stock for
     consulting  services to be rendered.  Per the  agreement,  the shares were
     valued based on the average  closing price of the  Company's  stock during
     the month  preceding the effective  date of the agreement for an aggregate
     value of $86,250. The Company recognized $75,000 as an expense and $11,250
     as a prepaid expense in 2002.

     During  2002,  the  Company  issued  warrants  to acquire an  aggregate  of
     1,500,000 shares of the Company's common stock having an aggregate value of
     $209,000,  of which,  $128,959  and 80,041 was  recognized  during the year
     ended December 31, 2003 and 2002.

         See accompanying notes to consolidated financial statements.

                                      F-13
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002


NOTE 3 PROPERTY AND EQUIPMENT

     Property and equipment as of
      December 31, 2003 consisted of the following:
       Manufacturing equipment                                 $    20,000
       Computer equipment                                            5,889
       Office equipment                                              6,748
                                                               -----------
                                                                    32,637
       Less accumulated depreciation                                (8,043)
                                                               -----------
                                                               $    24,594
                                                               ===========

Depreciation  expense for the years ended  December 31, 2003 and 2002 was $4,935
and $1,634, respectively.

NOTE 4    INTANGIBLE ASSETS

     In  2001,  the  Company  entered  into  a  purchase  agreement  to  acquire
     intellectual property rights,  software and know-how to a computer mouse in
     exchange for  preferred  stock  having an aggregate  fair value of $42,000.
     Also in 2002, the Company paid $2,000 to protect the intellectual  property
     rights (see Note 11(A)).

     In 2002, the Company entered into an agreement to acquire computer software
     and licenses for a website in exchange for common stock having an aggregate
     fair value of $53,957 (see Note 11(B)).

     During 2003, the Company  incurred costs of $17,150 for the development of
     software  enhancements.

     The intellectual  property  rights and software licenses are amortized over
     10 years.  The software  enhancements  are  being amortized over two years.
     Amortization  commenced  in 2003 and the  amortization  expense recorded in
     the  statement of  operations  was $19,479 for 2003.  The estimated  annual
     future amortization expense of intangible assets is as follows:

                   2004                                          $  18,370
                   2006                                          $  14,084
                   2007                                          $   9,796
                   2008                                          $   9,796
                   2009 and thereafter                           $  43,582

NOTE 5    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

               The following schedule reflects accounts payable
                 and accrued expenses as of December 31, 2003:
                   Accounts payable                            $   214,070
                   Accrued interest payable                         84,441
                   Other accrued liabilities                        43,414
                                                               -----------
                                                               $   341,925
                                                               ===========

         See accompanying notes to consolidated financial statements.

                                      F-14
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

NOTE 6   LOAN PAYABLE - OFFICER

     The Company has received  advances from an officer who provided funding for
     working capital requirements used to pay operating expenses incurred by the
     Company.  During 2002,  $35,647 of this payable was converted  into 297,063
     shares of the Company's common stock. The advances are non-interest bearing
     and due on demand. As of December 31, 2003 and 2002, $9,663 was due to this
     officer.

NOTE 7   12% CONVERTIBLE DEBENTURES

     On May 15, 2002, the Company entered into a securities  purchase  agreement
     and related  agreements with four accredited  investors (the  "Purchasers")
     for the purchase of $500,000 of the Company's 12% convertible debentures in
     two traunches of $250,000 each.  The debentures  bear interest at a rate of
     12% per annum,  payable  either  quarterly or at the time of  conversion in
     common stock or cash at the option of the Purchasers.  On May 15, 2002, the
     Company  received the first  traunche of $250,000.  On August 21, 2002, the
     agreement was amended  whereby the Company  received  $55,000 of the second
     traunche  on August 21 with the  balance of  $195,000 to be received by the
     Company  within five  business days  following  the  effective  date of the
     registration statement filed to register the common shares discussed in the
     fourth  paragraph of this Note.  The  remaining  $195,000 (net of legal and
     consulting  fees of $56,250) was  received on December  10, 2002.  Interest
     expense  on the  debentures,  in the amount of  $22,900,  was  accrued  and
     charged to operations for the year ended December 31, 2002.
     As part of the agreement,  the Purchasers received three-year term warrants
     to purchase 3 shares of the Company's common stock for each $1.00 invested,
     exercisable  at $.05 per share.  The fair value of the  warrants  issued in
     May,  August and  December  amounted  to  $111,000,  $10,000  and  $88,000,
     respectively,  using the  Black-Scholes  option pricing model in accordance
     with  SFAS 123  with the  following  assumptions:  dividend  yield of zero,
     expected volatility of 258%, 167% and 413%,  risk-free interest rate of 4%,
     3% and 3%, respectively,  and an expected life of three years. Accordingly,
     an aggregate of $128,959  and $80,041 has been  recognized  as interest and
     financing   costs  for  the  years  ended   December  31,  2003  and  2002,
     respectively. The debentures are convertible into shares of common stock at
     the lesser of $0.05 per share or the average of the lowest  three  intraday
     trading  prices of a share of common stock  during the twenty  trading days
     immediately  preceding  conversion date discounted by 50%.  Pursuant to the
     rules and regulations of the SEC regarding beneficial  conversion features,
     the Company has expensed as interest and financing  costs the excess of the
     fair market value of the common stock at the  debenture  issuance date over
     the conversion price which amounted to an aggregate of $500,000 (limited to
     total equity  raised) and has been included in additional  paid-in  capital
     for the year ended December 31, 2002.

         See accompanying notes to consolidated financial statements.

                                      F-15
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     The Company has reserved  28,000,000  shares of  authorized  but  un-issued
     common  stock  for  issuance  to the  convertible  debenture  holders  upon
     exercise  in full of the  entire  principal  amount  of  $500,000  plus the
     accrued  interest upon conversion into shares of common stock.  The Company
     will also, on a best efforts  basis,  register 200% of the shares of common
     stock  underlying  the warrants to be issued and the shares of common stock
     into which the convertible  debentures may be converted.

     During  the  second  and third  quarters  of 2003,  the  Company  received
     $110,000 and $140,000,  respectively,  pursuant to a debenture offering to
     various  investors.  The  debentures  bear  interest  at 12% per  year and
     interest is payable,  at the option of the holder,  either quarterly or at
     the  time of  conversion.  They are  convertible  at the  lesser  of a 50%
     discount  to fair  market  value or $0.05  and are due in one  year.  As a
     result of the conversion provision,  the Company has recorded a beneficial
     conversion feature of $250,000,  which is being amortized over the term of
     the notes. Additionally,  the Company issued 500,000 common stock purchase
     warrants.  The warrants are exercisable at $0.03 per share for a period of
     five years. These warrants have been valued at $8,450 in the aggregate and
     this amount is being amortized over the term of the notes. Accordingly, an
     aggregate of $137,265 has been  recognized as interest and financing costs
     and an aggregate of $121,185 has been recorded as deferred financing costs
     (which  shall be  amortized  over the  remaining  life of the  convertible
     debentures  for  the  year  ended  December  31,  2003).

     The  Convertible  Debentures  contained a  beneficial  conversion  feature
     computed  at its  intrinsic  value  that  is the  difference  between  the
     conversion price and the fair value on the debenture  issuance date of the
     common stock into which the debt is convertible,  multiplied by the number
     of shares into which the debt is convertible  at the commitment  date. The
     amount attributable to the beneficial  conversion feature will be recorded
     as a discount on the debt,  deferred  and  amortized  over the life of the
     convertible  debenture as interest expense in accordance with paragraph 19
     of EITF 00-27.

     Certain of the Company's  debentures  came due during the second and third
     quarters  of 2003.  The  Company  had  previously  received  a  five-month
     extension of the maturity date of the  debentures  issued on May 15, 2002,
     to October 16, 2003.  During the year ended December 31, 2003,  certain of
     the May 15, 2002  debentures  were  converted  into common stock (See Note
     11(B)).  The remaining  outstanding  balance of $7,750 of these debentures
     has not been  paid.  Also,  the  debentures  due on  August  21,  2003 and
     December 10, 2003 were not paid at maturity. Because of the non-payment of
     the August  debentures at maturity,  all of the debentures  issued in 2002
     are in default as of December 31, 2003.

     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

         See accompanying notes to consolidated financial statements.

                                      F-16
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     Settlement,  all of the outstanding debentures and related warrants will be
     redeemed by the Company. The redemption will be consummated pursuant to the
     issuance  by the  Company  of  6,000,000  shares  of  common  stock  to the
     debenture holders,  plus $200,000 in cash, payable in monthly  installments
     of $16,667 commencing May 1, 2004.
     The debentures are secured by a security  agreement under which the Company
     pledged  substantially  all  of  its  assets,  including  goods,  fixtures,
     equipment,  inventory,  contract  rights,  and  receivables.  The following
     schedule reflects convertible  debentures as of December 31, 2003 (in order
     of original issue date):

<TABLE>
<CAPTION>
                                                                                    2003
                                                                                  ----------

     <S>                                                                         <C>
     12% convertible debenture, interest payable quarterly, due                   $    7,750
      October 16, 2003 (net of conversions of $242,250 See Note 11(B))

     12% convertible debenture, interest payable quarterly, due
      August 21, 2003                                                                 55,000

     12% convertible debenture, interest payable quarterly, due
      December 10, 2003                                                              195,000

     12% convertible debenture, interest payable quarterly, due
      April 16, 2004                                                                  50,000

     12% convertible debenture, interest payable quarterly, due
      May 15, 2004                                                                    25,000

     12% convertible debenture, interest payable quarterly, due
      June 20, 2004                                                                   35,000

     12% convertible debenture, interest payable quarterly, due
      July 18, 2004                                                                  140,000
                                                                                  ----------

         Total                                                                    $  507,750
                                                                                  ==========
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-17
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

NOTE 8 NOTE PAYABLE

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

NOTE 9 INCOME TAXES

      The United States parent company and its United States  subsidiary and its
      United Kingdom  subsidiary  file separate  income tax returns.  Income tax
      expense  (benefit)  for the  years  ended  December  31,  2003 and 2002 is
      summarized as follows:

                                                 2003          2002
                                               --------      ---------
               Current:
                    Federal                    $      -      $       -
                    State                             -              -
                    Foreign                           -              -

               Deferred:
                    Federal and State                 -              -
                    Foreign                           -              -
                                               ---------     ---------
               Income tax expense (benefit)    $      -      $       -
                                               =========     =========

     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, 2003 and 2002 (computed by applying U.S. Federal Corporate tax
     rate of 34 percent to income before taxes), as follows:

                                                 2003          2002
                                              ---------     ----------
        Computed "expected"
         tax expense (benefit)                $(302,710)    $ (527,708)

        Effect of non-deductible items           92,556              -

        Effect of unused net
         operating loss carryforwards           210,154        527,708
                                              ---------     ----------
                                              $       -     $        -
                                              =========     ==========

         See accompanying notes to consolidated financial statements.


                                      F-18
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     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, 2003 and 2002 are as follows:

                                                2003            2002
                                              ---------       --------
       Deferred tax assets:
            Net operating loss carryforwards  $ 910,929      $ 700,775
            Less valuation allowances          (910,929)      (700,775)
                                              ---------      ---------

       Net deferred tax assets                $       -      $       -
                                              =========      =========

     As of December 31, 2003,  the United States  parent  company and its United
     States  subsidiary had net operating  loss carry forwards of  approximately
     $2,679,000  for income tax  purposes,  available to offset  future  taxable
     income  expiring on various dates through 2023. The valuation  allowance as
     of  December  31,  2003  was  $910,929.  The net  change  in the  valuation
     allowance  during the year  ended  December  31,  2003 was an  increase  of
     $210,154.

     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, 2003 and 2002. The subsidiary's  available
     net operating  loss carry forward of  approximately  $522,000  results in a
     deferred tax asset of $157,720 (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 commenced
     in December  2003 and expires  December  31,  2004.  Future  minimum  lease
     payments are as follows:

                          Year Ending           Amount

                             2004             $  44,355
                             2005                21,064
                             2006                18,136

     Rent expense  included in the statement of  operations  for the years ended
     December 31, 2003 and 2002 was $14,060 and $11,485, respectively


         See accompanying notes to consolidated financial statements.

                                      F-19
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     (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 year
     ended December 31, 2003, the Company recorded the minimum royalties expense
     of $3,500. (See Note 11 (B)).

NOTE 11  STOCKHOLDERS' DEFICIENCY

     (A) PREFERRED STOCK

     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 (See Note 4).


         See accompanying notes to consolidated financial statements.

                                      F-20
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     (B) COMMON STOCK

     On August 1, 2003,  the Board of Directors  authorized  an amendment to the
     Company's 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 520,000,000  shares  (500,000,000 of common and 20,000,000 of
     preferred)  subject to shareholder  approval.  The shareholder vote has not
     yet been scheduled.

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

     February  6,  2003,  the  Company  entered  into a  one-year  non-exclusive
     agreement with a consultant to provide  strategic  planning  services.  The
     agreement  calls for the consultant to receive 250,000 shares of restricted
     common  stock upon the  effective  date of the  agreement  for the  initial
     period. The 250,000 shares were valued for financial accounting purposes at
     $15,000, the fair market value of the common stock on the effective date of
     the agreement based on concurrent  cash  offerings,  and were issued in the
     second quarter of 2003. The consultant is entitled to an additional 500,000
     shares upon the  consultant  identifying  and  introducing  and the Company
     closing on agreements  with European  community  contacts.  This  agreement
     terminated in February 2004 and there is no other amount owed.

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

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

         See accompanying notes to consolidated financial statements.


                                     F-21
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     based expense.  The chief executive  officer has rendered  3,000,000 freely
     trading shares of his common stock that were transferred to the consultant.
     These  shares  are to be  repaid  to the chief  executive  officer  and are
     reflected as to be issued as of December 31, 2003.

     On June 5, 2003,  the Company  finalized  an  agreement  through  which the
     Company is to receive a media package.  The consideration  includes 500,000
     shares of  common  stock to be issued as of  December  31,  2003  having an
     aggregate  fair market value of $8,500 (based on the closing  trading price
     on the date the  agreement was  finalized)  for  advertising  communication
     costs.  The expense related to the shares was recognized the first time the
     advertising  occurred,  which was in August 2003.

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

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

     During the year ended  December 31, 2003,  an aggregate of $242,250 of the
     notes payable issued on May 15, 2002 were converted into 43,152,637 shares
     of common stock. The aggregate  amounts  converted and average  conversion
     price per share  during  each  month is as  follows:  January - $20,000 at
     $.0169;  February - $10,000 at $.0145;  March - $30,000 at $.0079; April -
     $16,050 at $.0035; May - $29,200 at $.0043; June - $21,500 at $.0053; July
     - $30,100 at $.0057;  August - $25,800 at $.0058;  September  - $21,500 at
     $.0058; October - $34,100 at $.0047, and November - $4,000 at $.0031.

     In September 2003, the Company granted options to purchase an aggregate of
     5,000,000  shares of  common  stock to two  individuals  in  exchange  for
     services rendered and to be rendered. The options had an exercise price of
     $.005 per share and were exercisable ninety days from grant date. The fair
     value of these options is $47,300,  of which $15,767 has been expensed and
     $31,533  has been  deferred.  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.
     During the fourth  quarter of 2003,  the options  were  exercised  and the
     Company  issued  5,000,000  share of common stock for proceeds of $25,000.
     During 2002,  the Company  entered into an agreement to acquire a software
     license  agreement  with an  estimated  useful  life of  three  years  and
     one-year  maintenance contract in exchange for 539,568 common shares to be
     issued. The shares were valued for financial accounting purposes

         See accompanying notes to consolidated financial statements.


                                      F-22
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     at $.12 per share based on the closing price on the  effective  date of the
     agreement for an aggregate  value of $64,748,  which the Company  allocated
     $53,957 to the software  license  agreement and $10,791 to the  maintenance
     contract.

     During 2002, the Company received an aggregate of $47,800 for the purchase
     of shares under an option agreement effective October 29, 2002.

     On October 17, 2002, the Company authorized the issuance of an aggregate of
     1,085,535  common shares for services  rendered by several  individuals (of
     which 856,963 shares were to two officers)  valued for accounting  purposes
     at $.21 per share (the most recent closing  price) for an aggregate  amount
     of $227,962, which was recognized as an expense during 2002.

     On October 23, 2002, the Company entered into a six-month agreement with a
     consultant  whereby the consultant shall (1) distribute via targeted email
     a two-page  "Highlighter" to attract new investors and (2) design, develop
     and market a website for the  Company.  In return,  the  consultant  shall
     receive for each month: (1) for months one through three,  $30,000 (at the
     average trading price of the previous month) of restricted common stock of
     the Company and (2) for months four  through  six,  $30,000 in the form of
     half cash and half stock or all cash or all stock by  agreement.  Payments
     shall be made  quarterly  and 500,000  common  shares shall be issued upon
     execution of the  agreement.  The  commencement  date of this contract has
     been delayed as the Company contends the services have not yet begun.

     In May 2002, the Company issued 40,000 shares of common stock for $5,000.

     In May 2002,  the Company  issued 300,000 common shares having a fair value
     of  $27,000  as  a  consultant  fee  in  connection  with  the  convertible
     debentures  issued  in May 2002 (See Note 6).  In March  2002,  a  $100,000
     long-term  note payable was  converted  into 833,333  shares of  restricted
     common  stock at $0.12 per  share.

     In March 2002,  the President of the Company  purchased  333,333 shares of
     restricted  common  stock for a total price of $40,000 in  exchange  for a
     subscription  receivable.  The Company  received  the  $40,000  during the
     second quarter of 2002.

     In March 2002,  loans payable to a stockholder  amounting to $35,647 as of
     that date were converted into 297,063 shares of restricted common stock.

     In January  2002,  the Company  issued  61,000  shares of common  stock for
     services having a fair value of $23,100.

         See accompanying notes to consolidated financial statements.


                                      F-23
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

     (C) WARRANTS

     Pursuant to the  Settlement  described  in Note 7, all  warrants  issued in
     connection with the debentures will be cancelled (See Note 13).

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 $874,816, a negative cash flow from operations of
     $297,004,  a working  capital  deficiency  of $856,033 and a  stockholders'
     deficiency of $729,016.  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  consolidated
     financial statements do not include any adjustments that might be necessary
     if the Company is unable to continue as a going concern. Management's plans
     include  obtaining  additional  financing  for which they are  currently in
     active  negotiations  with several  financing  institutions  and increasing
     sales of the Quill computer mouse.

NOTE 13  SUBSEQUENT EVENTS

     During  February  2004,  the Company  issued  options to acquire  5,000,000
     shares of common stock for services rendered.  These options were exercised
     in February  2004.  Proceeds to the Company were  $40,000.

     On February 17, 2004, the Company and the debenture  holders  described in
     Note 7 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 will be redeemed by the
     Company.  The redemption  will be consummated  pursuant to the issuance by
     the Company of 6,000,000 shares of common stock to the debenture  holders,
     plus  $200,000  in  cash,  payable  in  monthly  installments  of  $16,667
     commencing May 1, 2004.

         See accompanying notes to consolidated financial statements.


                                      F-24
<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 9, 2004
                                   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 9, 2004
--------------------------        and a Director
Alexander Gordon Lane

/s/ William Thomas Large          President, Chief                 April 9, 2004
--------------------------        Executive Officer
William Thomas Large              and Director


/s/ Thomas A. Marchant
--------------------------        Director                         April 9, 2004
Thomas A. Marchant


         See accompanying notes to consolidated financial statements.


                                      F-25