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, 2004

                          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. [ ]

Revenues for the issuer's fiscal year ended December 31, 2004 were $358,658.

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: $7,331,789 based on
the closing price of the Company's common stock on March 24, 2005 of $0.087 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 91,038,487
shares of common stock outstanding as of March 21, 2005.

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


<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

General

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

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


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

Products

      E-Quill-AirObic Computer Mouse and E-Qill-Liberator Software

      Our two main products are a computer mouse which we market under the name
Air02bic Mouse (but also sometimes referred to in this report as the AirObic
Mouse, the E-Quill AirObic Mouse and Quill Mouse) and E-Quill-Liberator software
(which includes Nib software for PC's and McNib Software for Macintosh). The
E-Quill-AirObic Mouse is a "grip-less" computer mouse which allows the user to
move a cursor to any point on the screen without having to grip the mouse with
the muscles of the hand. The E-Quill-AirObic Mouse design maintains the hand in
a "functional neutral" position, one in which the muscles of the hand are kept
under a constant, but reduced tension, allowing for normal blood flow and
resulting in less fatigue. We believe that no comparable product is not offered
by any other company.

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

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


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<PAGE>


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

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

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

      We are continuing to improve our E-Quill-Liberator Software through
software enhancements. We believe that our software will help manage injuries
typically associated with using a computer mouse such as cumulative trauma
disease or repetitive strain injury and carpal tunnel syndrome. This mouse
driver software 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 United
States Occupational Safety and Health Administration.

      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 user's personal computer, would be used to suggest
breaks and exercises customized to suit an individual's body mechanics.

Since 2002 we have introduced the following new products:

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

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


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<PAGE>


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

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

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

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

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

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

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

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

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

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


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<PAGE>


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

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

o     In November 2004 the E-Quill-AirObic product was introduced that provided
      customers with a color choice option that in the directors opinion matches
      current system sales trends of Black or White.

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

o     Planned for Introduction in 2005: SooToSee; currently in Alpha (in-house)
      testing, this software is designed as a dynamic magnification system to
      assist those who need such assistance for observing computer screens, so
      as to enhance their accuracy of pointing the computer mouse cursor, or
      help in reading small text as is frequently the case with computer program
      menus and text on the internet. This is as an aid to vision and does not
      replace the need of use of spectacles, though it is envisaged that it will
      find application for those with severe sight impairment. This is part of a
      new software development package.

o     Planned for Introduction in 2005: SooToSpeak; currently in late
      development stage. This software is designed as convert HTML text, such as
      is used on Internet web pages and now more commonly in email systems and
      program menu systems, into an audible speech output, utilizing existing
      and proprietary to others, voice synthesis systems such as the "supplied
      as standard" Windows XP voice "Microsoft SAM".


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<PAGE>


Section 508 Amendments to the 1998 Rehabilitation

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

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

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

Other Products we May Market in the Future

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

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

Telstar II Designer Vacuum Cleaner/Table. This product is a combination of the
Telstar I vacuum cleaner with a glass tabletop accessory. When not in use, the
vacuum cleaner serves as a base for the glass tabletop and the entire unit
appears as an attractive and functional coffee table. This product is designed
for an environment where storage space is at a premium. We are considering


                                       7
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marketing this product under the name "Sputnik" or as the "Telstar Space
Station". The tabletop model has been developed as a working prototype.
Additional expenditures will be required for testing, tooling and packaging.

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

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

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

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

Marketing

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

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

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


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

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

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

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

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

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

Microsoft Assistive technology Vendor ("MATVP")

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


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Hewlett-Packard Assistive Technology Listing

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

Seasonality of Business

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

Competition

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

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

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

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

Intellectual Property

      We hold a United Kingdom utility patent (No. BG2328496) on the
E-Quill-AirObic Mouse and has applied for a U.S. patent on this product.

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

Design                                                    Registration Number
------                                                    -------------------
Telstar I vacuum cleaner design protection                   2066378

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

The combined vacuum and table product                        2085669

The "Mistral" table top fan design                           2066377


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

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


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

Name                       Registration Number
--------                   -------------------
Telstar                        2209241

Sputnik                        2209243

Mistral                        2209473

Wurlitzer                      2209244


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

Employees

      We have two full-time employees, including our executive officers, neither
of whom have employment agreements with us. We have also retained two part-time
consultants. Further recruitment of office support and marketing individuals are
planned in 2005.


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.


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      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.

Risks Related to Our Business:

We have had losses since our inception. Although our loss for the year ended
December 31, 2004 was less than that for the same period in 2003, there still is
a risk we may never become profitable.

      We had a net loss of $246,094 for the fiscal year ended December 31, 2004
relative to a net loss of $874,816 for the fiscal year ended December 31, 2003.
Although we increased revenue and gross profit in 2004, which contributed to the
reduction of the net loss, 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.

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

      Our audited financial statements for the year ended December 31,
2004 reflect a net loss of $246,094, a working capital deficiency of $455,414
and a stockholders' deficiency of $372,149. 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 are not tapped to meet
our working capital needs. We need approximately $500,000 to fund our operations
for the fiscal year ending December 31, 2005. Our ability to continue our
operations, in the absence of significantly increased revenues from sales and a
resulting positive cash flow, is dependent upon receiving sufficient additional
capital financing. If we continue to incur losses and fail in obtaining
additional funding, we may not be able to fund continuing business operations,
which could lead to the curtailment or closure of some or all of our operations.

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

      During the year ended December 31, 2004, we received equity financing from
a director, a product distributor and existing shareholders in an amount of
$186,940. We also borrowed an aggregate of $52,020 from one lender and in
November 2004 borrowed $45,957 from our Chief Executive Officer. We currently
have no legally binding commitments with any third parties to obtain any
material amount of additional equity or debt financing. We may not be able to
obtain any additional financing on acceptable terms or at all. Our ability to
obtain debt financing may be particularly unlikely because we have no assets to
use as collateral security for the loan. As a result, we may not have adequate
capital to implement future expansions, maintain our current levels of operation
or to pursue strategic acquisitions. Our failure to obtain sufficient or any
additional financing could result in the delay or abandonment of some or all of
our development, plans, which could harm our business and the value of our
common stock.


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

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

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

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

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

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


                                       13
<PAGE>


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

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

      We commenced limited sales of our ergonomic products, the Quill
'grip-less' Mouse and related products, in 2002. The products are designed to
justify a premium price in the upper and certain niche sectors of our market. We
sold small amounts of these products during 2002 and 2003 but did not recognize
significant revenue from these sales as total sales of these products in 2002
and 2003 were $3,553 and $137,944, respectively. We had total revenues of
$344,525 for the fiscal year ended December 31, 2004. Although we had increases
in sales and revenue during the year ended December 31, 2004, there can be no
assurance that such increase will continue.

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

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

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

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


                                       14
<PAGE>


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

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

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

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

      Our certificate of incorporation 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.

      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). A meeting of the shareholders to consider approval of the amendment
has not yet been scheduled and such approval has therefore not yet been
obtained.

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

No Cash Dividends Are Expected in the Foreseeable Future.

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


                                       15
<PAGE>


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

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

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

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

Risks Related to Our Common Stock:

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

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


                                       16
<PAGE>


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

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

Our directors and executive officers beneficially own approximately 7% of our
common stock; their interests could conflict with yours; significant sales of
stock held by them could have a negative effect on our stock price.

      As of March 21, 2005, our executive officers, directors and affiliated
persons beneficially owned approximately 7% of our common stock. As a result,
our executive officers, directors and affiliated persons may have significant
influence in:

      o     electing or defeating the election of our directors;

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

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

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

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


                                       17
<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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


                                       18
<PAGE>


ITEM 2. DESCRIPTION OF PROPERTY

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

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

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

ITEM 3. LEGAL PROCEEDINGS

      As of March 21, 2005, we are not a party to any litigation, and management
has no knowledge of any threatened or pending litigation against us.

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

      None.


                                       19
<PAGE>


                                     PART II

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

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

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

Year Ended December 31, 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

Year Ended December 31, 2004

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

Security Holders

      At March 25, 2005, there were 91,038,487 shares of our common stock
outstanding, which were held of record by approximately 389 stockholders, not
including persons or entities who hold the stock in nominee or "street" name
through various brokerage firms.

Dividends

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

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

Equity Compensation Plan Information

      As of March 21, 2005, the Company does not have any equity compensation
plans.


                                       20
<PAGE>


Transfer Agent

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

Penny Stock Regulations

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

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


Recent Sales of Unregistered Securities

      We did not issue any securities during the fourth quarter of the fiscal
year ended December 31, 2004, except that on December 16, 2004 we issued
warrants to purchase an aggregate of 20,500,000 shares of our common stock at
exercise prices ranging from $.03 to $.13 per share. All of such warrants expire
on December 31, 2009. The issuances were made in a private placement transaction
under an exemption from the registration requirements of the Securities Act
afforded by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act").


      On January 21, 2005 we issued and pledged to William F. Bragg, Jr. an
aggregate of 2,000,000 shares of our Common Stock in order to secure payment of
a demand loan of up to $50,000 from Mr. Bragg to the Company. The issuance was
made in a private placement transaction under an exemption from the registration
requirements of the Securities Act afforded by Section 4(2) of the Securities
Act.


                                       21
<PAGE>


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

FORWARD LOOKING STATEMENTS

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

OVERVIEW

      We are a holding company for late-stage developmental, or early-stage
commercial, companies with opportunities in niche markets. We currently own two
subsidiaries, Designer Appliances Ltd., an inactive United Kingdom ("UK")
company, and Designer Appliances, Inc., a Delaware corporation, and will
actively seek additional and appropriate acquisitions, subject to 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.


                                       22
<PAGE>


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

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

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

Gross Profit

      For the year ended December 31, 2004, the Company generated revenue of
$344,525 compared to $137,944 for the year ended December 31, 2003, an increase
of $206,581 or 150%.

      Cost of sales includes amortization of software, which is not
proportionate to gross sales. As a result, an increase in sales will result in
an increase in gross profit percentage. The increase in the Company's revenues
and cost of sales resulted from marketing efforts by the Company leading to
greater consumer awareness of the benefits of the Company's mouse and software
products, system configurations, system components and accessories.


                                       23
<PAGE>


      Gross profit increased 193% and was $240,636 or 70% of net revenues for
the year ended December 31, 2004 relative to $82,204 or 60% of net revenues for
the year ended December 31, 2003.

Operating Expenses

      For the year ended December 31, 2004, operating expenses decreased $36,918
or 6% from $595,755 for the year ended December 31, 2003 to $558,837 for the
year ended December 31, 2004. Consulting and professional fees decreased by
$106,450 and $67,316, respectively. This aggregate decrease of $173,766 was
partially offset by increases in other areas, including rent of $46,279,
telephone charges of $7,371 and non-cash fees of $72,861, which are the result
of an increase in the sales and marketing activity of the Company.

Liquidity and Cash Position

Operating Activities

      For the years ended December 31, 2004 and 2003, the Company used $143,705
and $297,004, respectively, to fund operating activities. The decrease of
$153,299 in cash used was a result of a reduced net loss (exclusive of the
portion of net loss attributable to financing costs - options issued), partially
offset by a net decrease in non-cash items, and a net decrease in cash provided
by operating assets and liabilities, compared to 2003.

Investing Activities

      For the years ended December 31, 2004 and December 31, 2003, the Company
used $38,196 and $24,018, respectively to fund investing activities. These costs
include capital equipment purchase of computer equipment and on-going
development costs for software.


FINANCING ACTIVITIES

      For the year ended December 31, 2004 the Company realized cash of $324,717
from the private placement of restricted stock and under two loan agreements,
which amount was offset by the payment of $126,653 due under the debenture
settlement agreement. This compares to net cash receipts for stock issuance and
notes or loans payable in the year ended December 31, 2003 of $282,000.


                                       24
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

      The Company, including its subsidiaries, during its development stage
incurred start-up costs, including administrative costs and research and
development costs, while realizing limited operating revenue. Revenue commenced
in late 2002 and has continued to grow to the point that the Company is now
becoming less dependent upon funding its operations from the proceeds of sales
of its securities and from loans. The retirement of the debt resulting from the
debenture settlement agreement at the end of March 2005 will further reduce the
cash burden upon the Company and at the sales growth anticipated by management
of the Company, the Company may not need external financing during the next 12
months to fund its operations.

      The Company has had, though small relative to its costs of operations and
maintaining its listing, increasing sales and revenue through December 31, 2004,
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 has been for the Company to develop product and
brand recognition amongst the "professional ergonomic" industry ahead of
investigating "niche" assistive technology markets in the broader retail sector
of the computer peripheral business. The Company is also focused upon any
opportunity to increase its sales to the US Government following clarification
that Section 508 Law does require computer mice to meet the prevailing
standards.

      Access to such new markets necessarily requires partnership with
organizations that have a presence and reputation within those sectors and while
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 the
potential for reduction in margins relative to the costs of access to those
markets in terms of time, employment of personnel and marketing is considered to
likely yield a greater return by the implementation of this strategy. 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.

      At the end of 2002 the Company commenced production and shipment of its
mouse product and has maintained a clear focus upon developing that business and
has no plans to launch other products outside of the computer peripheral market
at this time. It continues to seek to strengthen its Intellectual Property
Rights ("IPR") assets in the area of computer peripherals. To date the Company's
intellectual property rights portfolio includes vacuum cleaner, fans, heaters
and other intellectual property right bearing domestic appliances. The Company
will remain focused on developing sales of its Mouse and Software related
products and developing other "parallel" product technologies into products.

Going Concern Qualification

      The Company's consolidated financial statements as of December 31, 2004
and for the year then ended have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. As reflected in such consolidated
financial statements, for the year ended December 31, 2004 the Company has a net
loss of $1,127,727 and a negative cash flow from operations of $143,705, and as
of December 31, 2004 the Company had a working capital deficiency of $461,294
and a stockholders' deficiency of $329,416. These factors raise substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern is dependent on the Company's ability
to raise additional funds and implement its business plan. The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern. Management's plans include
obtaining additional financing for which they are currently in active
negotiations with several financing institutions and increasing sales of the
AirO2bic computer mouse.


                                       25
<PAGE>


Critical Accounting Policies and Estimates

      Discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States. The preparation of these consolidated financial statements
requires us to make estimates and judgments that affect the amounts reported in
the consolidated financial statements and the accompanying notes. On an on-going
basis, we 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.

Accounts Receivable

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

Inventory

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

Revenue Recognition

The Company's products are sold directly over the internet and through
distributorships. Products sold over the internet require complete payment via
credit card prior to shipment. Products sold through distributors require the
distributor to submit a purchase order and payment (according to terms and
pricing approved by the Company) prior to shipment. Accordingly, revenues from
sales over the internet and through distributors are recognized when the product
is shipped as the price has been determined and collectibility has been
reasonably assured. Consigned 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, 2004 or 2003 since the amount is not material based
on past experience.

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 period in which they are incurred.

Stock Based Compensation

The Company accounts for stock options and warrants issued to employees using
the intrinsic value based method, under which compensation cost is measured as
the excess of the stock's market price at the grant date over the amount an
employee must pay to acquire the stock. Stock options and warrants issued to
non-employees are accounted for using the fair value based method, under which
the expense is measured as the fair value of the security at the date of grant
based on the Black-Scholes pricing model.

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

SECTION 508 AMENDMENTS TO REHABILITATION ACT.

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

      Section 508 compliance has been a requirement of system purchases,
typically large contracts over $2,500, since July, 2001 whereas
"Micropurchases"- purchases less than $2,500 and typically by credit card --
have been exempt from Section 508 compliance. This exemption was due to expire
on October 1, 2004, thereby making all purchases to require Section 508
compliance. This exemption was extended on October 5, 2004 until April 1, 2005
and was designated the "final extension." The Company was made aware by third


                                       26
<PAGE>


parties that its products were no longer listed in the Section 508 website. We
had not been advised of their removal and upon inquiry we were told that
computer mice were not considered as requiring Section 508 compliance and that
our listing, by then some 18 months, was erroneous.

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

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


COMPETITION:

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

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

      The employment of an IPR strategy is considered, but not guaranteed, to
act as a barrier to entry by other providers of computer mice. It is also
considered that the market environment, in regards to the general lack of
recognition by mouse manufacturers of health issues due to mouse product usage,
precludes entries by established organizations who are outside of the directly


                                       27
<PAGE>


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.

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

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

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

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

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

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

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

      Revenues generated by sales of the mouse and software products, where and
when possible will be used to further develop sales until a cash flow positive
and profit positive position can be established at sustainable levels, thus
allowing the Company to access bank financing, thereby reducing the extent to


                                       28
<PAGE>


which the Company must rely on other sources of external financing. In the
absence of sales, the estimated amount of working capital that the Company will
need to expand the commercialization and distribution over the next year of its
products at planned operational levels, is approximately $500,000.

RECENT FINANCINGS

      During the fourth quarter of 2004 an officer advanced $45,957 to the
Company for working capital purposes. The advances are non-interest bearing and
are repayable upon demand.

      On February 17, 2004, the Company and the holders of its outstanding
debentures entered into a Redemption and Settlement Agreement and Mutual General
Release (the "Settlement"). In accordance with the Settlement, all of the
outstanding debentures and related warrants were redeemed by the Company. The
Company issued 6,000,000 shares of common stock having a fair value of $162,000
to the debenture holders, and agreed to pay $200,000 in cash in monthly
installments of $16,667, with a present value of $189,981, commencing May 1,
2004. The Company has recorded a gain of $247,826 related to the extinguishment.
As of December 31, 2004 the balance due on the settlement was $63,328.

      During August 2004, the Company received $52,020 from a financial
institution pursuant to a loan term sheet. The principal balance bears interest
at the prevailing one month LIBOR, plus 3% (4.12% at December 31, 2004) and
matures in one year. The loan is secured by 1,700,000 shares of the Company's
common stock. The collateral shares have been provided by a stockholder of the
Company. The Company incurred costs of $5,200 in connection with obtaining this
financing. This amount is being amortized over the one year term of the loan.

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

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

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

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


                                       29
<PAGE>


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

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

ITEM 7. FINANCIAL STATEMENTS

      The audited consolidated financial statements for the year ended December
31, 2004 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

Evaluation Of Disclosure Controls And Procedures

      Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported, within the time period
specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in the reports filed under the Exchange Act
is accumulated and communicated to management, including our President and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Our Chief Executive Officer and Chief Financial Officer, in
consultation with our other members of management and advisors as appropriate,
carried out an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this annual report pursuant to
Rule 15d-15(b) promulgated under the Exchange Act. Based upon that evaluation,
our Chief Executive Officer and our Chief Financial Officer concluded that our
disclosure controls and procedures are not effective in alerting them in a
timely fashion to all material information required to be included in our
periodic filings with the SEC as a result of the significant deficiency
described below in that subsection captioned "Significant Deficiencies In
Disclosure Controls And Procedures Or Internal Controls".

Changes in Internal Control over Financial Reporting

      The term internal control over financial reporting is defined as a process
designed by, or under the supervision of, our President and Principal Financial
Officer, and effected by our board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Except as noted below in that
subsection captioned "Significant Deficiencies In Disclosure Controls And
Procedures Or Internal Controls", there were no changes in our internal control
over financial reporting identified in connection with our evaluation of these
controls as of the end of the period covered by this annual report that could
have significantly affected those controls subsequent to the date of the
evaluation referred to in the previous paragraph, including any correction
action with regard to significant deficiencies and material weakness.

Significant Deficiencies In Disclosure Controls And Procedures Or Internal
Controls

      Our independent auditors identified that we had not recorded the financial
statement effect of the issuance of 20,500,000 warrants in December 2004. We
therefore subsequently recorded a financing expense related to such issuance. In
addition, our independent auditors identified that our accounts receivable were
overstated at December 31, 2004. Our independent auditors discussed this matter
with our Chief Financial Officer and other members of management, and we
subsequently reevaluated the accounts receivable and recorded an adjustment. The
auditors believe that this adjustment reflected a significant deficiency in our
accounting systems. This deficiency would have resulted in a material
misstatement to the financial statements for the year ended December 31, 2004.
We are taking corrective action to enhance our accounting systems. We believe
that the significant deficiency will be resolved.


                                       30
<PAGE>


ITEM 8B. OTHER INFORMATION

Reports on Form 8-K.

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


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The following are the executive officers and directors of the Company as
of March 21, 2005.

         Name                       Positions                           Age
         ----                       ---------                           ---
         Alexander Gordon Lane      Chairman of the                     62
                                    Board of Directors,
                                    Secretary

         William Thomas Large       CEO, President, Chief Financial
                                    Officer and Director                48

         Thomas A. Marchant         Director                            56

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.

William Thomas Large, 48, has been President, Chief Executive Officer and Chief
Financial 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.


                                       31
<PAGE>


Thomas A. Marchant, 56, has served as a member of our board of directors since
July 11, 2002. Mr. Marchant, joined Ford Motor Company in 1985 as Financial
Sales Manager of Ford Credit Canada. Mr. Marchant directed a sales and marketing
operation to institutional investors in the Commercial Paper and Medium Term
Note Markets. In 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.

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

Section 16 Reporting

      No person who, during the year ended December 31, 2004, was a director,
officer or beneficial owner of more than ten percent of the Company's Common
Stock (which is the only class of securities of the Company registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act") (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year or prior years, except William Thomas
Large and Thomas Marchant who have not filed any reports under Section 16(a) of
the Act. The foregoing is based solely upon a review by the Company of Forms 3
and 4 during such fiscal year as furnished to the Company under Rule 16a-3(d)
under the Act, and Forms 5 and amendments thereto furnished to the Company with
respect to such fiscal year, and any representation received by the Company from
any reporting person that no Form 5 is required.

Code of Ethics

      The Company has not yet adopted a Code of Ethics applying to its executive
officers. The Company intends to adopt a Code of Ethics applying to such persons
during the first quarter of the fiscal year ending December 31, 2005.

ITEM 10. EXECUTIVE COMPENSATION

      The following table sets forth a summary for the three fiscal years ended
December 31, 2004 of the cash and non-cash compensation awarded, paid or accrued
by us to our President and our most highly compensated officer other than the
CEO, who served in such capacities as of December 31, 2004. None of our
executive officers earned in excess of $100,000 in total annual salary.


                                       32
<PAGE>


<TABLE>
<CAPTION>
                           ANNUAL COMPENSATION                                           LONG TERM COMPENSATION
                                                                                     Awards                 Payouts
                                                                  Other      Restricted  Securities
                                                                 Annual         Stock    Underlying                All
                                 Year                            Compen-       Awards     Options/     LTIP       Other
       Name         Position     Ended    Salary($)  Bonus($)   sation($)         $         SARS     Payouts   Compensation
       ----         ---------    -----    ---------  --------   ---------    ----------  ----------  -------   ------------
<S>                 <C>       <C>          <C>           <C>        <C>           <C>        <C>        <C>         <C>
  William Thomas       CEO     12/31/2004  $51,280       0          0             0          0          0           0
     Large

                       CEO    12/31/2003   $52,918       0          0             0          0          0           0


                       CEO    12/31/2002   $47,664       0          0             0          0          0           0

Alexander Gordon    Chairman  12/31/2004   $30,775       0          0             0          0          0           0
      Lane             and
                    Secretary

                    Chairman  12/31/2003   $29,700       0          0             0          0          0           0
                       and
                    Secretary

                    Chairman  12/31/2002   $28,697       0          0             0          0          0           0
                       and
                    Secretary
</TABLE>

EMPLOYMENT AGREEMENTS

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

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

      The following table sets forth as of March 21, 2005, certain information
with respect to the beneficial ownership of the voting securities by (i) any
person or group with more than 5% of the Company's securities, (ii) each
director, (iii) each executive officer and (iv) all executive officers and
directors as a group.


                                       33
<PAGE>

<TABLE>
<CAPTION>
              Name and                                                    Amount and
             Address of                              Title of         Nature of Beneficial      Percent of
          Beneficial Owner                           Class               Ownership (1)           Class (2)
          ----------------                           --------         --------------------      ----------
<S>                                                 <C>                 <C>                       <C>
Nutmeg Group, LLC                                   Common Stock        22,888,889(3)             20.3%
3246 Commercial Avenue
Northbrook, Illinois 60062

William Thomas Large                                Common Stock         5,099,582(4)              5.6%
140 Old Country Road, Suite 105
Mineola, New York 11501

Thomas A. Marchant                                  Common Stock           921,638                 1.0%
140 Old Country Road, Suite 105
Mineola, New York 11501

Alexander Gordon Lane                               Common Stock           743,825                  .8%
140 Old  Country Road, Suite 105
Mineola, New York 11501

All Directors and Officers of the Company           Common Stock         6,765,045                 7.4%
as a group (3 persons)
</TABLE>


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

(2)   Computed based upon a total of 91,038,487 shares of common stock
      outstanding as of March 21, 2005.

(3)   Includes 21,500,000 shares of common stock which may be issued upon
      exercise of currently exercisable warrants.

(4)   Includes 120,000 shares of our common stock owned by Mr. Large's minor
      children. Does not include 880,000 shares which the Company has agreed to
      issue to Mr. Large as described in Item 12, herein.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In November 2004, William Thomas Large, a Director and the Chief Executive
Officer of the Company, sold an aggregate of 880,000 shares of common stock of
the Company for net proceeds of $45,956.65 and immediately loaned such amount to
the Company. In order to repay the loan the Company has agreed to issue to Mr.
Large 880,000 shares of common stock.


                                       34
<PAGE>


ITEM 13. EXHIBITS

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

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

3.1      Certificate of Incorporation of Torbay Holdings, Inc., 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)

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

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

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

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

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

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

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

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

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

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

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


                                       35
<PAGE>


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

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

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

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

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

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

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

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

21.1     List of subsidiaries.*

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

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

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

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

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

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

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

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

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

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

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

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


                                       36
<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       37
<PAGE>


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

INDEPENDENT AUDITOR FEES

The following is a summary of the fees billed to us by Weinberg & Company, P.A.
("Weinberg") for professional services rendered for the fiscal years ended
December 31, 2003 and 2004:

      Fee Category    Fiscal 2003    Fiscal 2004
      ------------      -------        -------
      Audit fees        $48,600        $51,000
      Tax fees                0        $ 1,000
      Other fees              0        $ 7,000
                        -------        -------
      Total fees        $48,600        $59,000

Audit Fees. Consists of aggregate fees billed for professional services rendered
for the audit of our consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by Weinberg in connection with statutory and
regulatory filings or engagements. Fiscal year 2004 fees from Weinberg are
estimated based on three quarterly reviews and the year end audit.

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

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

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

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

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



                                       38
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

                                    CONTENTS


PAGE F-1            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PAGE F-2            CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2004

PAGE F-3            CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER
                    COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2004 AND
                    2003

PAGES F-4           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
                    DEFICIENCY FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

PAGE  F-5           CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
                    DECEMBER 31, 2004 AND 2003

PAGES F-6 - F-18    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF
                    DECEMBER 31, 2004 AND 2003


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying  consolidated balance sheet of Torbay Holdings,
Inc.  and  Subsidiaries  as of December  31,  2004 and the related  consolidated
statements of operations and other  comprehensive loss, changes in stockholders'
deficiency and cash flows for the years ended December 31, 2004 and 2003.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly in all material respects, the financial position of Torbay Holdings, Inc.
and  Subsidiaries  as of December 31, 2004, and the results of their  operations
and  their  cash  flows for the  years  ended  December  31,  2004 and 2003,  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 $1,127,727,
a negative cash flow from operations of $143,705,  a working capital  deficiency
of $461,294 and a  stockholders'  deficiency  of $329,416.  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.

Boca Raton, Florida
March 18, 2005


                                       F-1
<PAGE>


                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004


<TABLE>
<CAPTION>
                                     ASSETS
                                                                                                    2004
                                                                                                  -----------
<S>                                                                                               <C>
CURRENT ASSETS
 Cash                                                                                             $    19,511
 Accounts receivable, less allowance for doubtful accounts of $0                                       36,211
 Inventory                                                                                             25,099
                                                                                                  -----------
     Total Current Assets                                                                              80,821
                                                                                                  -----------

PROPERTY AND EQUIPMENT - NET                                                                           21,968
                                                                                                  -----------

OTHER ASSETS
 Intangible assets - net                                                                               96,252
 Deposits                                                                                               6,795
 Deferred loan costs                                                                                    6,863
                                                                                                  -----------
     Total Other Assets                                                                               109,910
                                                                                                  -----------

TOTAL ASSETS                                                                                      $   212,699
                                                                                                  ===========
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
 Accounts payable and accrued expenses                                                            $   325,030
 Settlement payable                                                                                    63,328
 Loan payable - officer                                                                                45,957
 Notes payable                                                                                        107,800
                                                                                                  -----------
     Total Current Liabilities                                                                        542,115

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
 Convertible preferred stock, $.0001 par value, 20,000,000 shares authorized,
  420,000 shares issued and outstanding                                                                    42
 Common stock, $.0001 par value, 100,000,000 shares authorized,
  88,948,487 issued and outstanding                                                                     8,895
 Common stock to be issued (1,888,889 shares)                                                             189
 Additional paid-in capital                                                                         4,784,190
 Accumulated deficit                                                                               (5,037,897)
 Accumulated other comprehensive loss                                                                 (29,690)
 Deferred equity based expenses                                                                       (55,145)
                                                                                                  -----------
TOTAL STOCKHOLDERS' DEFICIENCY                                                                       (329,416)
                                                                                                  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                    $   212,699
                                                                                                  ===========
</TABLE>

          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, 2004 AND 2003


<TABLE>
<CAPTION>
                                                                2004               2003
                                                            ------------       ------------
<S>                                                         <C>                <C>
SALES, NET                                                  $    344,525       $    137,944

COST OF SALES                                                    103,889             55,740
                                                            ------------       ------------

GROSS PROFIT                                                     240,636             82,204
                                                            ------------       ------------

OPERATING EXPENSES
 Selling                                                         126,742            125,552
 Consulting fees                                                   6,300            112,750
 Professional fees                                               107,942            175,258
 Directors fees and compensation                                  86,103             82,480
 Other general and administrative                                231,750             99,715
                                                            ------------       ------------
       Total Operating Expenses                                  558,837            595,755
                                                            ------------       ------------

LOSS FROM OPERATIONS                                            (318,201)           (513,551)
                                                            ------------       ------------

OTHER INCOME (EXPENSE)
 Interest and financing costs                                 (1,068,326)          (361,265)
 Gain on extinguishment of debt, net                             243,800                 --
 Cancellation of stock issued for consulting fees                 15,000                 --
                                                            ------------       ------------
       Total Other Income (Expense)                             (809,526)           (361,265)
                                                            ------------       ------------

NET LOSS                                                      (1,127,727)           (874,816)

OTHER COMPREHENSIVE LOSS
 Foreign currency translation loss                                (9,039)             (7,994)
                                                            ------------       ------------

COMPREHENSIVE LOSS                                          $ (1,136,766)      $    (882,810)
                                                            ============       ============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED               $      (0.01)       $      (0.02)
                                                            ============       ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING -
 BASIC AND DILUTED                                            87,879,225          48,459,281
                                                            ============        ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F-3
<PAGE>


                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                   Convertible Preferred                                  Common Stock To Be     Additional
                                           Stock                    Common Stock                Issued            Paid-In
                                    Shares       Amount         Shares        Amount      Shares       Amount      Capital
                                   -------      --------      ----------    ---------   ----------    --------   ----------
<S>                                <C>          <C>           <C>           <C>            <C>        <C>        <C>
Balance, December 31, 2002         420,000      $    42       20,912,617    $   2,091      539,568    $    54    $2,652,336
Common shares issued                    --           --          539,568           54     (539,568)       (54)           --
Issuance of common stock
 for software license                   --           --          100,000           10           --         --         5,990
Stock issued for consulting
 services                               --           --        1,501,000          150           --         --        77,350
Issuance of common stock
 for notes payable
 conversions                            --           --       43,152,637        4,315           --         --       237,935
Shares issued for legal
 services                               --           --        1,000,000          100           --         --         9,900
Shares issued for option
 exercised for cash                     --           --        5,583,333          558           --         --        31,442
Shares to be issued for
 consulting and advertising
 services                               --           --               --           --    3,500,000        350        32,150
Options issued for services             --           --               --           --           --         --        47,300
Beneficial conversion
 feature and warrants
 issued as part of
 convertible debentures                 --           --               --           --           --         --       258,450
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    $3,352,853
Common shares issued                    --           --        3,000,000          300   (3,000,000)      (300)           --
Shares sold for cash,
 net of costs                           --           --        2,245,282          225    1,388,889        139       224,909
Shares cancelled                        --           --         (250,000)         (25)          --         --       (14,975)
Issuance of common stock
 for debenture settlement               --           --        6,000,000          600           --         --       161,400
Stock issued for consulting
 services                               --           --            3,000           --           --         --           300
Finance cost - shares sold
 below market                           --           --               --           --           --         --        48,258
Options issued for services             --           --               --           --           --         --       112,240
Options issued for loan
 payment postponement and
 equity funding arrangement             --           --               --           --           --         --       846,033
Shares issued for options
 exercised for cash                     --           --        5,000,000          500           --         --        39,500
Shares issued for officer
 payable                                --           --          161,050           17           --         --        13,672
Amortization of deferred
 compensation expense                   --           --               --           --           --         --            --
Amortization of deferred
 financing expense                      --           --               --           --           --         --            --
Foreign currency
 translation loss                       --           --               --           --           --         --            --
Net loss, 2004                          --           --               --           --           --         --            --
                                   -------     --------       ----------    ---------   ----------    -------    ----------
Balance, December 31, 2004         420,000     $     42       88,948,487    $   8,895   (1,888,889)   $   189    $4,784,190
                                   =======     ========       ==========    =========   ==========    =======    ==========
<CAPTION>
                                                   Accumulated    Deferred
                                                      Other        Equity
                                   Accumulated    Comprehensive    Based
                                     Deficit         (Loss)       Expenses        Total
                                   -----------    ------------   -----------    -----------
<S>                                 <C>           <C>            <C>            <C>
Balance, December 31, 2002          (3,035,354)   $   (12,657)   $  (128,959)   $  (522,447)
Common shares issued                        --             --             --             --
Issuance of common stock
 for software license                       --             --             --          6,000
Stock issued for consulting
 services                                   --             --             --         77,500
Issuance of common stock
 for notes payable
 conversions                                --             --             --        242,250
Shares issued for legal
 services                                   --             --             --         10,000
Shares issued for option
 exercised for cash                         --             --             --         32,000
Shares to be issued for
 consulting and advertising
 services                                   --             --         (6,000)        26,500
Options issued for services                 --             --        (31,533)        15,767
Beneficial conversion
 feature and warrants
 issued as part of
 convertible debentures                     --             --       (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         $(3,910,170)   $   (20,651)   $  (158,718)   $  (729,016)
Common shares issued                        --             --             --             --
Shares sold for cash                        --             --             --        146,940
Shares cancelled                            --             --             --        (15,000)
Issuance of common stock
 for debenture settlement                   --             --             --        162,000
Stock issued for consulting
 services                                   --             --             --            300
Finance cost - shares sold
 below market                               --             --             --         48,258
Options issued for services                 --             --       (112,240)            --
Options issued for loan
 payment postponement and
 equity funding arrangement                 --             --             --        846,033
Shares issued for options
 exercised for cash                         --             --             --         40,000
Shares issued for officer
 payable                                    --             --             --         13,689
Amortization of deferred
 compensation expense                       --             --         94,628         94,628
Amortization of deferred
 financing expense                          --             --        121,185        121,185
Foreign currency
 translation loss                           --         (9,039)            --         (9,039)
Net loss, 2004                      (1,127,727)            --             --     (1,127,727)
                                   -----------    ------------   -----------    -----------
Balance, December 31, 2004         $(5,037,897)   $   (20,651)   $  (158,718)   $  (329,416)
                                   ===========     ==========     ==========     ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F-4
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>
                                                                                       2004              2003
                                                                                    ---------         ---------
<S>                                                                                 <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                                         $(1,127,727)        $(874,816)
 Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation and amortization                                                        40,198            24,414
  Amortization of loan costs                                                            4,117                --
  Gain on extinguishment of debt, net                                                (243,800)               --
  Common stock and warrants issued for services                                           300            93,500
  Deferred equity based costs recognized                                              215,813           308,491
  Financing costs - shares sold below market value                                     81,591                --
  Financing costs - options issued                                                    846,033
  Cancellation of shares issued for services                                          (15,000)               --
 Changes in operating assets and liabilities:
  (Increase) decrease in accounts receivable                                          (32,916)           (1,675)
  (Increase) decrease inventory                                                        12,524            27,830
  (Increase) decrease prepaid expenses                                                     --            15,748
  (Increase) decrease deposits                                                             --            (5,795)
    Increase in accounts payable and accrued expenses                                  75,162           115,299
                                                                                    ---------         ---------
       Net cash used in operating activities                                         (143,705)         (297,004)
                                                                                    ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangibles                                                              (32,750)          (17,150)
 Purchase of property and equipment                                                    (5,446)           (6,868)
                                                                                    ---------         ---------
       Net cash used in investing activities                                          (38,196)          (24,018)
                                                                                    ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                               236,940            32,000
 Proceeds from loans payable officer                                                   45,957                --
 Principal payments on settlement payable                                            (126,653)               --
 Loan and stock subscription costs                                                    (10,200)               --
 Proceeds from issuance of notes and loans payable                                     52,020           250,000
                                                                                    ---------         ---------
       Net cash provided by financing activities                                      198,064           282,000
                                                                                    ---------         ---------

EFFECT OF CHANGES IN EXCHANGE RATES ON CASH                                            (9,039)           (7,994)
                                                                                    ---------         ---------

INCREASE (DECREASE) IN CASH                                                             7,124           (47,016)

BEGINNING OF YEAR                                                                      12,387            59,403
                                                                                    ---------         ---------

CASH - END OF YEAR                                                                  $  19,511         $  12,387
                                                                                    =========         =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                     TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 1 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

      (A) ORGANIZATION AND BUSINESS OPERATIONS

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

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

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

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

      (B) PRINCIPLES OF CONSOLIDATION

      The  consolidated  financial  statements  for 2004 and  2003  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  accepted  in the  United  States  of  America.  The
      consolidated  financial statements are expressed in United States dollars.
      The functional currency of DAL is the British pound sterling.

      (D) USE OF ESTIMATES

      The  preparation of consolidated  financial  statements in conformity with
      accounting  principles  generally accepted in the United States of America
      requires  management  to make  estimates and  assumptions  that affect the
      reported  amounts of assets and  liabilities and disclosures of contingent


                                      F-6
<PAGE>

                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      assets  and  liabilities  at  the  date  of  the  consolidated   financial
      statements  and the reported  amounts of revenues and expenses  during the
      reporting periods. Actual results could differ from those estimates.

      (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, 2004 and 2003, the
      Company  determined  that  there  were  no  long-lived  assets  that  were
      impaired.

      (J) REVENUE RECOGNITION

      The  Company's  products are sold  directly  over the internet and through
      distributorships. Products sold over the internet require complete payment
      via credit card prior to  shipment.  Products  sold  through  distributors
      require the distributor to submit a purchase order and payment  (according
      to  terms  and  pricing  approved  by  the  Company)  prior  to  shipment.
      Accordingly,   revenues   from  sales  over  the   internet   and  through
      distributors  are recognized  when the product is shipped as the price has
      been determined and collectibility has been reasonably assured.  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,  2004  or  2003  since  the  amount  is not  material  based  on  past
      experience.

                                      F-7
<PAGE>

                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      (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 period in which they are
      incurred.  Costs  incurred in  operating  the  website  that have a future
      benefit are capitalized in accordance with SOP 98-1 and amortized over the
      respective future periods that are expected to benefit from the changes.

      (L) INCOME TAXES

      The  Company  accounts  for income  taxes under the  Financial  Accounting
      Standard  Board  ("FASB")  SFAS No.  109,  "Accounting  for Income  Taxes"
      ("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.

      (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 and accrued  expenses,  settlement
      payable and notes payable  approximate their fair value as of December 31,
      2004 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.

                                      F-8
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      (R) LOSS PER SHARE

      Basic and  diluted  loss per common  share for all  periods  presented  is
      computed based on the weighted average number of common shares outstanding
      during the year as defined by SFAS No.  128,  "Earnings  Per  Share".  The
      assumed  exercise of common stock  equivalents  was not utilized since the
      effect would be  anti-dilutive.  At December 31, 2004 and 2003 the Company
      had  25,700,000   and   105,750,000   potentially   dilutive   securities,
      respectively.

      (S) STOCK BASED COMPENSATION

      The Company  accounts for stock  options and warrants  issued to employees
      using the intrinsic value based method,  under which  compensation cost is
      measured as the excess of the stock's  market price at the grant date over
      the amount an employee must pay to acquire the stock.  The Company  issued
      no options or warrants to  employees  during the years ended  December 31,
      2004 or 2003 and had no employee stock options or warrants  outstanding at
      those  dates.  Stock  options and  warrants  issued to  non-employees  are
      accounted for using the fair value based  method,  under which the expense
      is measured  as the fair value of the  security at the date of grant based
      on the Black-Scholes pricing model.

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

      (T) RECLASSIFICATIONS

      Certain  amounts from prior periods have been  reclassified  to conform to
      the current  year  presentation.  For the year ended  December  31,  2003,
      $31,136, representing shipping, amortization and warranty costs, have been
      classified as cost of sales, rather than operating expenses.  Also, travel
      and  entertainment  expenses  for 2003 have been  reclassified  from other
      general and administrative expenses to selling expenses.

      (U) ADVERTISING

      The Company  expenses the production  costs of advertising  the first time
      the advertising takes place. Advertising and marketing expense included in
      the statement of operations for the years ended December 31, 2004 and 2003
      was $67,443 and $94,557, respectively.

      (V) RECENT ACCOUNTING PRONOUNCEMENTS

      In November  2004,  the FASB issued SFAS No.  151,  "Inventory  Costs,  an
      amendment of ARB No. 43, Chapter 4". The amendments  made by Statement 151
      clarify that abnormal amounts of idle facility expense,  freight, handling
      costs,  and wasted  materials  (spoilage)  should be recognized as current
      period charges and require the allocation of fixed production overheads to
      inventory based on the normal capacity of the production  facilities.  The
      guidance is effective for  inventory  costs  incurred  during fiscal years
      beginning  after June 15,  2005.  Earlier  application  is  permitted  for
      inventory  costs incurred during fiscal years beginning after November 23,
      2004.  The Company has  evaluated  the impact of the adoption of SFAS 151,
      and does not  believe  the impact  will be  significant  to the  Company's
      overall results of operations or financial position.


                                      F-9
<PAGE>
                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      In December 2004,  the FASB issued SFAS No.153,  "Exchanges of Nonmonetary
      Assets,  an amendment of APB Opinion No. 29,  Accounting  for  Nonmonetary
      Transactions."  The  amendments  made by  Statement  153 are  based on the
      principle that exchanges of nonmonetary assets should be measured based on
      the fair value of the assets exchanged.  Further, the amendments eliminate
      the narrow  exception  for  nonmonetary  exchanges  of similar  productive
      assets  and  replace  it  with  a  broader   exception  for  exchanges  of
      nonmonetary  assets  that do not have  commercial  substance.  Previously,
      Opinion 29 required  that the  accounting  for an exchange of a productive
      asset for a similar productive asset or an equivalent interest in the same
      or similar  productive asset should be based on the recorded amount of the
      asset  relinquished.  Opinion  29  provided  an  exception  to  its  basic
      measurement  principle  (fair value) for  exchanges of similar  productive
      assets.  The Board believes that exception  required that some nonmonetary
      exchanges,  although commercially substantive,  be recorded on a carryover
      basis.  By  focusing  the  exception  on  exchanges  that lack  commercial
      substance,  the Board believes this Statement produces financial reporting
      that more  faithfully  represents the economics of the  transactions.  The
      Statement is effective for nonmonetary asset exchanges occurring in fiscal
      periods  beginning after June 15, 2005.  Earlier  application is permitted
      for  nonmonetary  asset  exchanges  occurring in fiscal periods  beginning
      after the date of issuance.  The  provisions  of this  Statement  shall be
      applied  prospectively.  The  Company  has  evaluated  the  impact  of the
      adoption of SFAS 152, and does not believe the impact will be  significant
      to the Company's overall results of operations or financial position.

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

      In December 2004 the Financial  Accounting Standards Board issued two FASB
      Staff  Positions--FSP  FAS  109-1,   Application  of  FASB  Statement  109
      "Accounting for Income Taxes" to the Tax Deduction on Qualified Production
      Activities Provided by the American Jobs Creation Act of 2004, and FSP FAS
      109-2  Accounting  and  Disclosure   Guidance  for  the  Foreign  Earnings
      Repatriation  Provision  within the  American  Jobs  Creation Act of 2004.
      Neither of these  affected the Company as it does not  participate  in the
      related activities.

      In January  2003,  the FASB issued  FASB  Interpretation  No.  ("FIN") 46,
      "Consolidation  of Variable  Interest  Entities"  ("FIN 46").  In December
      2003, FIN 46 was replaced by FASB interpretation No. 46(R)  "Consolidation
      of Variable  Interest  Entities." FIN 46(R)  clarifies the  application of
      Accounting Research Bulletin No. 51, "Consolidated  Financial Statements,"
      to  certain   entities  in  which   equity   investors  do  not  have  the

                                      F-10
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      characteristics  of a  controlling  financial  interest  or  do  not  have
      sufficient equity at risk for the entity to finance its activities without
      additional  subordinated  financial support from other parties.  FIN 46(R)
      requires an enterprise to consolidate a variable  interest  entity if that
      enterprise  will absorb a majority of the  entity's  expected  losses,  is
      entitled to receive a majority of the entity's  expected residual returns,
      or both.  FIN 46(R) is effective for entities  being  evaluated  under FIN
      46(R)  for  consolidation  no later  than the end of the  first  reporting
      period that ends after March 15, 2004. The Company does not currently have
      any variable  interest  entities  that will be impacted by adoption of FIN
      46(R).

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

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

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

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

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

      During the year ended  December 31, 2003, a portion of the  Company's  12%
      convertible  debentures  in the  amount of  $242,250  was  converted  into
      43,152,637 shares of common stock.

NOTE 3 PROPERTY AND EQUIPMENT

      Property and equipment as of December 31, 2004 consisted of the following:

      Manufacturing equipment              $ 20,000
      Computer equipment                     11,335
      Office equipment                        4,224
                                           --------
                                             35,559
      Less accumulated depreciation         (13,591)
                                           --------
                                           $ 21,968
                                           ========

      Depreciation  expense for the years ended  December  31, 2004 and 2003 was
      $8,072  and  $4,935,  respectively.  All of the  depreciation  expense  is
      included in general and administrative expenses.


                                      F-11
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 4 INTANGIBLE ASSETS

      Intangible assets as of December 31, 2004 consisted of the following:

      Intellectual property                $  44,000
      Software license                        53,957
      Software development                    49,900
                                           ---------
                                             147,857
      Less accumulated amortization          (51,605)
                                           ---------
                                           $  96,252
                                           =========

      During 2004 and 2003,  the Company  incurred costs of $32,750 and $17,150,
      respectively, for the development of software enhancements.

      Amortization  expense  recorded in the statement of operations was $32,126
      and $19,479 for 2004 and 2003, respectively.

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

         2005        $35,854
         2006         23,207
         2007         15,191
         2008          4,400
         2009          4,400

NOTE 5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      The following  schedule  reflects accounts payable and accrued expenses as
      of December 31, 2004:

      Accounts payable                 $278,478
      Accrued interest payable              680
      Other accrued liabilities          45,772
                                       --------
                                       $324,930
                                       ========

NOTE 6 LOAN PAYABLE - OFFICER

      The Company had received advances from an officer who provided funding for
      working capital  requirements.  As of December 31, 2003, $9,663 was due to
      this officer.  During April 2004,  the Company  issued  161,050  shares of
      common  stock,  having a fair value of $13,689,  to settle  this  payable.
      Accordingly,  the Company has recorded a loss on extinguishment of debt of
      $4,026 (see Note 11B).


                                      F-12
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      During the fourth quarter of 2004 another officer  advanced $45,957 to the
      Company  for working  capital  purposes.  The  advances  are  non-interest
      bearing and are  repayable  upon  demand.  The Company has agreed to issue
      880,000 shares of common stock to repay the advance.

NOTE 7 12% CONVERTIBLE DEBENTURES

      On February 17, 2004, the Company and the debenture holders entered into a
      Redemption  and  Settlement  Agreement  and Mutual  General  Release  (the
      "Settlement").  In accordance with the Settlement,  all of the outstanding
      debentures and related warrants were redeemed by the Company.  The Company
      issued 6,000,000 shares of common stock having a fair value of $162,000 to
      the  debenture  holders,  and  agreed to pay  $200,000  in cash in monthly
      installments of $16,667, with a present value of $189,981,  commencing May
      1,  2004.  The  Company  has  recorded a gain of  $247,826  related to the
      extinguishment.  As of December 31, 2004 the balance due on the settlement
      was $63,328.

NOTE 8 NOTES PAYABLE

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

      During  August  2004,  the  Company  received  $52,020  from  a  financial
      institution  pursuant to a loan term sheet,  with a face value of $57,800.
      The principal  balance bears  interest at the  prevailing one month LIBOR,
      plus 3% (4.12% at December 31, 2004) and matures in one year.  The loan is
      secured by 1,700,000  shares of the Company's common stock. The collateral
      shares have been  provided by a  stockholder  of the Company.  The Company
      incurred costs of $10,980 in connection  with  obtaining  this  financing.
      This amount is being amortized over the one year term of the loan.  On
      December 16, 2004 a default in this note was cured by the issuance of
      common stock purchase warrants (see Note 11(B)).


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,  2004 and 2003 is
      summarized as follows:

                                            2004                   2003
                                       --------------        -----------------
      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, 2004 and 2003  (computed by applying U.S.  Federal  Corporate
      tax rate of 34 percent to income before taxes), as follows:


                                      F-13
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                            2004        2003
                                                         -----------  ---------
      Computed "expected" tax expense (benefit)           $ (23,391)  $(210,154)
      Change in valuation allowance                          23,391     210,154
                                                          ---------   ---------
                                                          $      --   $      --
                                                          =========   =========

      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, 2004 and 2003 are as follows:


                                                     2004              2003
                                                   ---------         ---------
      Deferred tax assets:
           Net operating loss carryforwards        $ 934,320         $ 910,929
           Less valuation allowances                (934,320)         (910,929)
                                                   ---------         ---------
      Net deferred tax assets                      $      --         $      --
                                                   =========         =========


      As of December 31, 2004,  the United States parent  company and its United
      States  subsidiary had net operating loss carry forwards of  approximately
      $2,748,000  for income tax purposes,  available to offset  future  taxable
      income expiring on various dates through 2024. The valuation  allowance as
      of  December  31,  2004 was  $934,320.  The net  change  in the  valuation
      allowance  during the year ended  December  31,  2004 was an  increase  of
      $23,391.

      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, 2004 and 2003. The subsidiary's available
      net operating loss carry forward of  approximately  $534,000  results in a
      deferred tax asset of $160,200  (computed  by applying the United  Kingdom
      tax rate of 30%) which has been fully offset by a valuation allowance. The
      United Kingdom subsidiary is currently not an operating company.

NOTE 10 COMMITMENTS AND CONTINGENCIES

      (A) COMMITMENTS AND CONTINGENCIES

      The Company conducts its operations from facilities occupied pursuant to a
      lease that  commenced in October 2003 and expires on October 31, 2006. The
      Company also pays the lease for an apartment occupied by an officer.  Such
      occupancy is for the benefit of the Company.  The apartment  lease expired
      December 31, 2004 and was  extended for a one year period,  with a monthly
      rent of $2,075. Future minimum lease payments are as follows:


       Year Ending        Amount
       -----------        ------
          2005           $45,964
          2006            18,136


                                      F-14
<PAGE>

                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      Rent  expense for the years ended  December  31, 2004 and 2003 was $60,339
      and $14,060, respectively.

      (B) ROYALTIES

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

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.

      (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.

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


                                      F-15
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

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

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

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

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

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

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

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

      The  Company has  deferred  costs  related to the  issuance of options for
      services to be rendered  through July 2005.  During 2004,  the Company has
      expensed  $88,628 of these costs and $55,145 remains  deferred at December
      31, 2004.

      On December 16, 2004 the Company granted 20,500,000 common stock purchase
      warrants to an investor group. The warrants are exercisable immediately
      and expire if unexercised by December 31, 2009. Upon registration of the
      underlying shares with the Securities and Exchange Commission, the Company
      can force the exercise of the warrants, provided that the investor would
      not be obligated to pay more than $75,000 within any 30 day period. The
      demand for exercise is subject to certain trading price requirements,
      relative to the exercise price of the warrants. The exercise prices of the
      warrants range from $0.03 to $0.13. The weighted average exercise price of
      the warrants is $0.07. The fair value of the warrants has been estimated
      at $846,033, using the Black Scholes pricing model with the following
      weighted average assumptions: estimated life of 1.34 years; dividend yield
      of 0%; volatility of 189%; risk free interest rate of 2.64%. The amount
      has been recorded as a financing expense in the statement of operations.

      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.


                                      F-16
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      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  and  $6,000  has been  recognized  as
      consulting  expense  during the years  ended  December  31, 2004 and 2003,
      respectively.  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.  The 3,000,000
      shares were issued in 2004.

      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.


                                      F-17
<PAGE>


                    TORBAY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      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.  The options had an exercise  price of $.005 per share
      and had a life of ninety  days from  grant  date.  The fair value of these
      options is $47,300,  of which  $15,767 has been  expensed  during 2003 and
      $31,533 has been expensed during 2004. The value has been determined using
      the  Black-Scholes  option pricing model in accordance  with SFAS 123 with
      the following assumptions:  dividend yield of zero, expected volatility of
      178%, risk-free interest rate of 3.5 and an expected life of three months.

      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.

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 $1,127,727, a negative cash flow
      from operations of $143,705,  a working capital deficiency of $461,294 and
      a stockholders'  deficiency of $329,416.  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 CONCENTRATIONS

      At December 31, 2004,  one customer  accounted  for  approximately  90% of
      accounts  receivable.  This customer  accounted for  approximately  35% of
      sales during  2004.  The Company  purchases  its  inventory  from a single
      supplier.

NOTE 14 SUBSEQUENT EVENTS

      During 2005 the Company pledged 2,000,000 shares of common stock to secure
      a demand loan of up to $50,000 pursuant to an oral agreement.


                                      F-18

<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 22, 2005
                                       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 22, 2005
--------------------------        and a Director
Alexander Gordon Lane

/s/ William Thomas Large          President, Chief             April 22, 2005
--------------------------        Executive Officer
William Thomas Large              and Director


/s/ Thomas A. Marchant
--------------------------        Director                     April 22, 2005
Thomas A. Marchant


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