<PAGE> 1
                    SECURITIES AND EXCHANGE COMMISSION
                           Washington D.C.  20549

                                 FORM 10-QSB

[X]     Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934

     For the Quarter Ended:   September 30, 2004

[ ]     Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934

        For the Transition Period from _____________ to ____________

                    Commission File Number   0-25873
                                             -------

                       POWERBALL INTERNATIONAL, INC.
               ----------------------------------------------
               (Name of Small Business Issuer in its charter)

          Utah                                             84-1431425
-------------------------------                    --------------------------
(State or other jurisdiction of                    (I.R.S. Employer I.D. No.)
 incorporation or organization)

                 3001 Knox Street, Suite 407, Dallas, Texas 75205
              -----------------------------------------------------
              (Address of principal executive offices and Zip Code)

                                 (214) 389-2151
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

              135 Waterford Circle, Rancho Mirage, California 92270
           ----------------------------------------------------------
          (Former address of principal executive offices and Zip Code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

(1)  Yes X    No     (2)  Yes X     No
        ---     ---          ---      ---

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Common Stock, Par Value $0.001                         20,951,896
--------------------------------                ----------------------------
       Title of Class                           Number of Shares Outstanding
                                                as of November 5, 2004

<PAGE>
<PAGE> 2
                         PART I FINANCIAL INFORMATION

                        ITEM 1.  FINANCIAL STATEMENTS

                   POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY


                            FINANCIAL STATEMENTS
                                (UNAUDITED)


     The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made.  These
financial statements should be read in conjunction with the accompanying
notes, and with the historical financial information of the Company.


<PAGE>
<PAGE> 3

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
CONSOLIDATED BALANCE SHEETS

                                                September 30, December 31,
                                                   2004          2003
                                                -----------   -----------
          ASSETS

CURRENT ASSETS
     Cash in bank                              $      4,773  $     43,559
                                                -----------   -----------
          Total Current Assets                        4,773        43,559
                                                -----------   -----------
PROPERTY AND EQUIPMENT
     Equipment                                       11,359        11,359
     Leasehold improvements                          23,923        23,923
                                                -----------   -----------
                                                     35,282        35,282
     Less accumulated depreciation                  (31,527)      (30,072)
                                                -----------   -----------
                                                      3,755         5,210
                                                -----------   -----------
OTHER ASSETS
     Patents and assigned technology, net of
      amortization of $14,627 and $12,608            36,576        38,595
                                                -----------   -----------
          Total Other Assets                         36,576        38,595
                                                -----------   -----------
TOTAL ASSETS                                   $     45,104  $     87,364
                                                ===========   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                          $        723  $     13,904
     Accrued and deferred liabilities                     -         1,695
                                                -----------   -----------
          Total Current Liabilities                     723        15,599
                                                -----------   -----------

STOCKHOLDERS' EQUITY
     Common stock; $.001 par value,
      25,000,000 shares authorized,
      5,903,781 and 4,853,781 issued
      and outstanding, respectively                   5,904         4,854
     Capital in excess of par value               3,331,858     3,250,408
     Earnings (deficit) accumulated during
      the development stage                      (3,293,381)   (3,183,497)
                                                -----------   -----------
          Total Stockholders' Equity                 44,381        71,765
                                                -----------   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $     45,104  $     87,364
                                                ===========   ===========

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<PAGE> 4

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>

                                                   For the      For the      For the      For the    (Deficit)
                                                  3 months     3 months     9 months     9 months   Accumulated
                                                   Ended        Ended        Ended        Ended     During the
                                                   Sep 30,      Sep 30,      Sep 30,      Sep 30,   Development
                                                    2004         2003         2004         2003        Stage
                                                 ----------   ----------   ----------   ----------   ----------
<S>                                           <C>          <C>          <C>          <C>          <C>
REVENUE                                         $         -  $         -  $         -  $         -  $         -
                                                 ==========   ==========   ==========   ==========   ==========
EXPENSES
 Equity in loss from limited liability company            -            -            -            -      446,549
 General and administrative                           2,319        6,519       13,614       44,410      739,592
 Professional fees                                   62,630       76,497       73,776      121,287      859,777
 Depreciation and amortization expense                1,158        1,272        3,474        3,816       45,369
 Research and development                             2,364       54,815       18,961      237,322    1,203,192
                                                 ----------   ----------   ----------   ----------   ----------
                                                     68,471      139,103      109,825      406,835    3,294,479
                                                 ----------   ----------   ----------   ----------   ----------
OPERATING LOSS                                      (68,471)    (139,103)    (109,825)    (406,835)  (3,294,479)
                                                 ----------   ----------   ----------   ----------   ----------
OTHER INCOME AND EXPENSE
 Interest and other income                                -          101           41          568       19,540
 Asset writedown                                          -            -            -            -       (3,497)
 Limited sales of tanks, net of direct
  production costs of $1,046                              -            -            -            -       13,003
                                                 ----------   ----------   ----------   ----------   ----------
INCOME (LOSS) BEFORE INCOME TAXES                   (68,471)    (139,002)    (109,784)    (406,267)  (3,265,433)
 Minimum State franchise tax                              -            -          100          122          722
                                                 ----------   ----------   ----------   ----------   ----------
NET INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE                         (68,471)    (139,002)    (109,884)    (406,389)  (3,266,155)

Cumulative effect of accounting change for
organization costs                                        -            -            -            -      (27,226)
                                                 ----------   ----------   ----------   ----------   ----------
NET INCOME (LOSS)                               $   (68,471) $  (139,002) $  (109,884) $  (406,389) $(3,293,381)
                                                 ==========   ==========   ==========   ==========   ==========
EARNINGS (LOSS) PER SHARE BEFORE
ACCOUNTING CHANGE                               $     (0.01) $     (0.03) $     (0.02) $     (0.09) $     (1.17)
                                                 ==========   ==========   ==========   ==========   ==========
CUMULATIVE EFFECT OF ACCOUNTING CHANGE          $     (0.00) $     (0.00) $     (0.00) $     (0.00) $     (0.01)
                                                 ==========   ==========   ==========   ==========   ==========
EARNINGS (LOSS) PER SHARE                       $     (0.01) $     (0.03) $     (0.02) $     (0.09) $     (1.18)
                                                 ==========   ==========   ==========   ==========   ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES          5,310,303    4,624,977    5,008,708    4,508,763    2,794,794
                                                 ==========   ==========   ==========   ==========   ==========
</TABLE>





The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<PAGE> 5

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                            For the      For the    Cumulative
                                                                           9 Months     9 Months    During the
                                                                            Sep 30,      Sep 30,    Development
                                                                             2004         2003        Stage
                                                                          ----------   ----------   ----------
<S>                                                                    <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net (loss)                                                              $  (109,884) $  (406,389) $(3,293,381)
 Adjustments to reconcile net (loss) to net cash provided
  by operating activities
  Cumulative change in accounting principle                                        -            -       27,226
  Stock issued for services                                                   60,000       69,000      771,980
  Expense stockholder loan                                                         -            -        6,294
  Decrease in investment in limited liability company                              -            -      446,548
  Depreciation and amortization                                                3,474        3,816       48,870
 Changes in assets and liabilities
  Decrease (Increase) in prepaid expenses                                          -        1,807            -
  Decrease (Increase) in officer receivable                                        -        7,200            -
  Decrease (Increase) in subscription receivable                                   -       40,000            -
  Decrease (Increase) in refund receivable                                         -          289            -
  Increase in supplies                                                             -            -          972
  Increase in organization costs                                                   -            -      (28,465)
  Increase (Decrease) in accounts payable                                    (13,181)       3,502      (21,195)
  (Decrease) Increase in accounts payable - stockholder                            -         (370)           -
  (Decrease) Increase in accrued expenses                                     (1,695)      (1,260)        (190)
                                                                          ----------   ----------   ----------
    Net cash (used) by operating activities                                  (61,286)    (282,405)  (2,041,341)
                                                                          ----------   ----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES
 Acquisition of joint venture partner - net of cash                                -            -       17,017
 Related party loans                                                               -            -     (509,000)
 Investment in limited liability company                                           -            -     (250,000)
 Purchase of equipment and leasehold improvements                                  -            -      (16,656)
 Additional patent costs                                                           -            -      (31,687)
                                                                          ----------   ----------   ----------
   Net cash provided (used) by investing activities                                -            -     (790,326)
                                                                          ----------   ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES
 Sale of common stock                                                         22,500      309,000    2,887,500
 Direct costs of stock sale                                                        -            -      (51,060)
                                                                          ----------   ----------   ----------
   Net Cash Provided By Financing Activities                                  22,500      309,000    2,836,440
                                                                          ----------   ----------   ----------
NET INCREASE (DECREASE) IN CASH                                              (38,786)      26,595        4,773

CASH - BEGINNING OF PERIOD                                                    43,559       55,067            -
                                                                          ----------   ----------   ----------
CASH - END OF PERIOD                                                     $     4,773  $    81,662  $     4,773
                                                                          ==========   ==========   ==========
SUPPLEMENTAL INFORMATION
 Interest paid during the period                                         $         -  $         -  $         -
                                                                          ==========   ==========   ==========
 Income taxes paid during the period                                     $         -  $       122  $     1,844
                                                                          ==========   ==========   ==========
 Stock issued to pay royalties and expenses of related entity            $         -  $         -  $    97,000
                                                                          ==========   ==========   ==========
 Stock issued to pay finders fee and services rendered                   $    60,000  $    69,000  $   803,274
                                                                          ==========   ==========   ==========
 Stock issued to acquire Powerball Industries, Inc.                      $         -  $         -  $  (370,658)
                                                                          ==========   ==========   ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<PAGE> 6
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - The Company was incorporated on July 9, 1997 under the laws of
the State of Utah. At the present time, the Company and its subsidiary are in
the development stage. The Company was formed for the purpose of raising
capital to invest in a joint venture which acquired a license to certain
technology relating to the production of hydrogen, to generate hydrogen for
sale, and to market hydrogen generating equipment and products. During the
beginning of the second quarter ended June 30, 2000, the Company acquired the
remaining 50% interest in Powerball Technologies, LLC, for 1,500,000 shares of
the Company's common which was issued to the other joint interest member. At
that time, Powerball Technologies, LLC became a wholly owned subsidiary of the
Company.  The Company, through its wholly-owned subsidiary and prior to the
year 2000 its joint venture, is involved in research and development efforts
of commercializing the technology.

Consolidation policy - Prior to the acquisition, the Company accounted for its
investment in the Limited Liability Company using the equity method of
accounting. The acquisition has been accounted for using the purchase method
of accounting.   The consolidated balance sheet, statement of operation, and
statement of cash flows at September 30, 2004 and December 31, 2003, include
the accounts of Powerball International, Inc. (Company) and its wholly-owned
operating subsidiary, Powerball Technologies, LLC.  Intercompany transactions
and balances have been eliminated in consolidation.

Amortization of Organization Costs - The Company was amortizing its
organization costs over a sixty (60) month period using the straight-line
method.  In 1998, the Accounting Standards Executive Committee (AcSEC) of the
American Institute of Certified Public Accountants issued Statement of
Position (SOP) 98-5. "Reporting on the Costs of Start-up Activities."  The SOP
requires costs of start-up activities and organization costs to be expensed as
incurred.  During 1999, the Company adopted the SOP and recognized a charge
for the cumulative effect of accounting change of $27,226.

Intangible Asset - At the time of the acquisition, the patent technology held
by the joint venture was assigned to the Company and was recorded at the
historical cost as recorded on the books of the Subsidiary. This cost plus
additional costs related to the technology obtained are being amortized over
ten years on a straight-line basis.

Income Taxes - The Company provides for income taxes based on the liability
method, which required recognition of deferred tax assets and liabilities
based on differences between financial reporting and tax bases of assets and
liabilities measured using enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse.

Use of Estimates - The preparation of 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 disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.

<PAGE>
<PAGE> 7
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Cash and Cash Equivalents - For purposes of the statement of cash flows, the
Company considers all investment instruments purchased with maturity of three
months or less to be cash equivalents.

Net Income (Loss) Per Common Share - Basic earnings (loss) per common share
(EPS) is calculated by dividing net income (loss) for the period by the
weighted average number of the Company's common shares outstanding and, if
applicable, EPS is computed by dividing net income by diluted common
equivalent shares from stock options and warrants, as calculated using the
treasury stock method.

Fully diluted earnings per common share reflect the calculation of the number
of common equivalent shares based on the stock price at the end of the period.
Fully diluted per common share amounts are not reported because the Company
has had losses for every period since inception and thus a diluted earnings
per share computation would be antidilutive for September 30, 2004 and
December 31, 2003.  Per Financial Accounting Statement No. 128 if there is a
loss from continuing operations, diluted EPS is the same as basic EPS.

Issuance of Shares for Services and Other Expenses - Valuation of shares
issued for royalties, services and expenses of the Company and in behalf of
its joint venture partner, prior to its acquisition, were based on the fair
market value of the above items at the time of issuance

Research and Development Costs - Research and Development costs to both future
and present products are charged to operations as incurred

NOTE 2 - RECEIVABLE - RELATED PARTY

Prior to the business combination, the Company had a receivable from a related
party that was an unsecured non-interest bearing loan, which had no repayment
terms.   The Company now accounts for the related party loan as an
intercompany transfer and is eliminated in consolidation.  The receivable was
due from Powerball Technologies, LLC (A Development Stage Company).  Powerball
International, Inc. was a 50% owner of Powerball Technologies, LLC, until the
second quarter 2000 merger.

NOTE 3 - BUSINESS COMBINATION

The Company in the third quarter ended September 30, 2000 completed its plan
of merger with Powerball Technologies, Inc. (PIC) in a business combination
accounted for as a purchase.  The Company acquired the net assets of PIC for
1,500,000 shares of the Company's common stock.  PIC's only business activity
was its joint interest investment in Powerball Technologies, LLC.   The merger
caused Powerball Technologies, LLC (Tech) to become a wholly-owned subsidiary
of the Company.  The result of operations of Tech is included in the financial
statements since the first day of the quarter ended June 30, 2000.  The merger
was recorded at historical cost values and thus there is no amortization of
the cost of the merger over the fair value of the net assets of PIC.

<PAGE>
<PAGE> 8
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4 - INVESTMENT IN LIMITED LIABILITY COMPANY

The Company and Powerball Industries, Inc. formed a limited liability company
called Powerball Technologies, LLC (LLC) to license the Technology; to further
develop the Technology; to build a sodium hydride pellet recycling plant; to
manufacture tanks in which hydrogen is generated; to demonstrate the
commercial viability of the Technology; and to commercialize the Technology.
Powerball Industries, Inc. assigned the Technology License to the LLC for a
50% ownership interest in the LLC. The Company invested $250,000 in the LLC
for a 50% ownership interest.  The LLC is a development Stage Company.
Through the quarter ended March 31, 2000, equity in the loss of the LLC was
recognized in the Company's financial statements.

NOTE 5 - STOCK OFFERINGS AND COMMON STOCK TRANSACTIONS

On January 22, 2001, the Company completed a subscription agreement for a
private placement of 150,000 units at $4.00 per unit, each unit consisting of
1 unit of common stock and 1 warrant to purchase 1 share of stock at an
exercise price of $6.00, exercisable for two years from the date of issuance.
The total subscription price was $600,000 and was paid by the issuance of a
promissory note for the same amount.  The note was to be paid in monthly
installments of $50,000, $50,000, $50,000, $100,000, $150,000 and $200,000 at
the end each month starting with February 2001.   The note was unsecured,
carried no interest and was subject to prepayment.  The shares under the
subscription would be held in escrow until the note was satisfied.   As of
March 31, 2001 the subscription receivable had a balance of $550,000.  In
connection with the private placement, the Company was to pay a finder's fee
to an individual consisting of 15,000 shares of restricted common stock and a
warrant to purchase up to 15,000 shares of common stock on the same terms as
the above private placement warrants.  This fee was treated as a direct cost
of the private placement.  In June 2001, the Company cancelled the
subscription agreement for nonpayment in the amount of $550,000.  A total of
13,750 shares were issued under agreement for payments prior to the
cancellation, 1,250 of the shares issued represented the finder's fee.  The
recipient of the finder fees became a Officer of the Company.  Direct costs of
this private placement were $5,000.

During October and November of 2001, the Company completed two separate
private placements of its common stock.  Under the October private placement,
it sold 356,000 shares of common stock at $1.00 per share for $356,000.  Under
the November private placement, it sold 161,000 shares of common stock at
$2.50 for $402,500.  Direct costs associated with these private placements
were $6,512.

During February, October and November of 2001, 110,000 warrants were exercised
at a $1.00 per share for a total amount of $110,000.  Of this amount, $10,000
was received in the year 2000 and was treated as a deferred liability for that
year.  Consideration for 20,000 of the above warrants exercised was provided
by services rendered to the Company by an officer and stockholder.

During October 2001, an officer and director of the Company was issued 100,000
shares of common stock valued at $150,000.  During December 2001, another
officer of the Company was issued 10,000 shares of common stock valued at
$33,000.  During October 2001, a vendor was issued 100,000 shares of common
stock for services to be rendered per an agreement between the vendor and the
Company.  The shares issued were valued at $190,000.

<PAGE>
<PAGE> 9
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 - STOCK OFFERINGS AND COMMON STOCK TRANSACTIONS (cont.)
From January to June 2002, warrants for 130,000 shares of common stock were
exercised at $1.00 per share were exercised for a total amount received of
$130,000.

During March, April and June of 2002, 192,500 warrants were exercise at $1.00
per share for a total amount of $192,500.  Of this amount $90,000 was
exercised for cash, a subscription of $40,000, and $62,500 was exercised as
compensation to certain officers and directors of the Company.   During March
2002, 50,000 shares were issued upon exercise of the same number of $1.00
options as compensation to a director of the Company.  During December 2002,
24,031 shares of Common stock were issued to a consultant as payment for
services rendered.  The shares were issued at a fair value of $2.60 per share
for a total compensation of $62,480.

The Board of Directors of the Company approved a private placement of up to
800,000 units priced at $1.90 per unit, each unit consisting of one share of
restricted common stock and one warrant for the purchase of restricted common
stock at $2.50 per share exercisable for two years.  During March of 2003, the
Company sold 110,000 units of the private placement for $209,000.

During August 2003, an officer and director of the Company was issued 100,000
shares of common stock valued at $46,000.  Also, during August 2003, another
officer and director of the Company was issued 50,000 shares of common stock
valued at $23,000.  The 150,000 shares were issued for services rendered to
the Company.  The shares were issued at a fair value of $0.46 per share for a
total compensation of $69,000.
During September 2003, the Company completed a private placement of its common
stock.  Under the September private placement, it sold 200,000 shares of
common stock at $0.50 per share for $100,000.

During May 2004, the Board of Directors of the Company approved a private
placement of up to 2,000,000 shares priced at $0.05 per share.  During May of
2004, the Company sold 450,000 shares to an officer and director for $22,500.

During September 2004, an officer and director of the Company was issued
200,000 shares of common stock valued at $20,000.  Also, during September
2004, another officer and director of the Company was issued 400,000 shares of
common stock valued at $40,000.  The 600,000 shares were issued for services
rendered to the Company.  The shares were issued at a fair value of $0.10 per
share for a total compensation of $60,000.

NOTE 6 - INCOME TAXES
Due to losses at December 31, 2003, the Company had no income tax liability
and thus no provision for taxes was recorded.  The Company had a deferred tax
benefit of $2,479 derived from the amortizing of organization costs for tax
reporting and expensing of organization costs for financial reporting
purposes.  At December 31, 2003, the Company has a net operating loss
carryforward of approximately $3,183,497 which will expire between the years
2012 and 2022.  A Valuation allowance of $955,050 has been established for
those tax credits which are not expected to be realized, therefore no deferred
tax asset has been provided as of December 31, 2003.

The Subsidiary which is a Limited Liability Company is not a tax paying entity
for Federal or State income tax purposes and, thus, no income tax expense has
been recorded. Instead, its earnings and losses since the merger are included
in the Parent's income tax return.

<PAGE>
<PAGE> 10
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 - DEVELOPMENT STAGE COMPANY AND GOING CONCERN

The Company and its subsidiary are development stage companies as defined in
Financial Accounting Standards Board Statement No. 7.  They have yet to
commence full-scale business operations.  From inception through the date of
these financial statements, the Company and its Subsidiary did not have any
net income form operations.  At the current time, the Company has a deficit
accumulated during the development stage of $3,293,381.

Accordingly, the entity's ability to accomplish it business strategy and to
ultimately become profitable is at this time dependent on the success of its
subsidiary's future ability to generate significant revenue and to ultimately
achieve profitable operations.  At present most of the capital the Company has
obtained has been loaned to the subsidiary or prior joint venture.  There can
be no assurance that the Company will be able to obtain additional funding
and, if available, that the funding will be obtained on terms favorable to or
affordable or in adequate amounts needed to complete its current business plan
with its subsidiary.  The Company's management is exploring all of its options
so that if can successfully develop successful operations around its business
plan.  Ultimately, however, the Company will need to achieve profitable
operations in order to continue as a going concern.

NOTE 8 - SUBSEQUENT EVENTS

The Company has been engaged in discussions and negotiations concerning
business alternatives and a possible acquisition.  In connection with these
discussions, the board has determined that it would be advantageous to reduce
the number of the Company's issued and outstanding number of shares by means
of a reverse split in order to have enough authorized shares available for
issuance to consummate a transaction with an entity with adequate assets to be
attractive to the Company's existing shareholders.  Therefore, pursuant to
rule 10b-17 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, the boards declaration of a 2 for
1 reverse split of its issued and outstanding common stock, was effective
October 28, 2004.

Effective October 28, 2004, the Company entered into an acquisition and share
exchange agreement with TKM Oil & Gas, Inc., a Texas corporation("TKM").  As
part of the agreement, the Company effected a 2 for 1 reverse split of its
common stock.  Following the reverse, the Company acquired all of the issued
and outstanding shares of Theseus Resources, Inc. ("Theseus"), a wholly owned
subsidiary of TKM, in exchange for the issuance of 18,000,000 post-split
shares of the Company's restricted common stock. Theseus is a company with
current assets valued in excess of $10,000,000, consisting primarily of 100%
ownership of an oil and gas production company, BC&D Oil & Gas Corporation.
As a result of the share exchange, TKM will have equity ownership of
approximately 85% of the Company and the current shareholders of the Company
will have equity ownership of approximately 15%.  This transaction is
resulting in a change of control of the Company and a change of business focus
from the development of hydrogen generating technology to the production of
oil and natural gas.

<PAGE>
<PAGE> 11

          ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-looking Statements
---------------------------------------------------------
This report may contain "forward-looking" statements.  Examples of forward-
looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives
of our management or Board of Directors; (c) statements of our future economic
performance; (d) statements of assumptions underlying other statements and
statements about us and our business relating to the future; and (e) any
statements using the words "anticipate," "expect," "may," "project," "intend"
or similar expressions.

General
-------
Subsequent to the date of the financial statements included in this report,
effective October 28, 2004, Powerball International, Inc. (the "Company")
entered into an acquisition and share exchange agreement with TKM Oil & Gas,
Inc., a Texas corporation ("TKM").  The full text of the agreement is attached
as an exhibit to the Company's Current Report on Form 8-K filed November 2,
2004.

As part of the agreement, the Company effected a 2 for 1 reverse split of its
common stock on October 28, 2004.  Pursuant to the agreement, the Company will
acquired all of the issued and outstanding shares of Theseus Resources, Inc.
("Theseus"), a wholly owned subsidiary of TKM, in exchange for the issuance of
18,000,000 post-split shares of the Company's restricted common stock. Theseus
is a company with current assets valued in excess of $10,000,000, consisting
primarily of 100% ownership of an oil and gas production company, BC&D Oil &
Gas Corporation.

As a result of the share exchange, TKM has equity ownership of 18,000,000
shares or approximately 85% of the Company and the current shareholders of the
Company have equity ownership of approximately 2,951,896 shares or 15% of the
Company.

This transaction has resulted in a change of control of the Company and a
change of business focus from the development of hydrogen generating
technology to the production of oil and natural gas.  TKM has control of the
Company's existing technology and assets and will consider whether further
development and commercialization is desirable.

The results of operations below reflect the historical operations of the
Company which has been essentially dormant for most of the past fiscal year.
The information below may therefore have little relevance to the future
operations of the Company. Financial information including information on
Theseus and consolidated pro formas will be filed as an amendment to the
Company's Current Report on Form 8-K filed November 2, 2004.  The amendment
must be filed within 60 days of the original filing.



<PAGE>
<PAGE> 12

Results of Operations
---------------------
Three and Nine Months Ended September 30, 2004 compared with 2003
-----------------------------------------------------------------
Revenues.  We had no revenues for the three and nine months ended September
30, 2004 and have had no revenues since July 9, 1997 ("Inception").  Future
revenues are dependent on the business operations of Theseus, the acquired
company described above.

Operating Expenses.  For the three and nine months ended September 30, 2004,
we had operating expenses of $68,471 and $109,825, respectively, compared to
$139,103 and $406,835 for the prior year periods.  The decrease in operating
expenses in 2004 compared to 2003 is attributable to decreases general and
administrative expenses, professional fees, and in research and development
expenses.  The decrease in operating expenses is consistent with our plans to
keep operating expenses to a minimum while we were engaged in seeking a
business partner or business combination opportunity.

We experienced a net losses of $68,471 and $109,884 for the three and nine
months ended September 30, 2004 compared to net losses of $139,002 and
$406,389 for the prior year periods. Our net loss since inception has been
$3,293,381. The net loss per share for the nine months ended September 30,
2004 was $0.02, compared to a net loss per share $0.09 in the prior year
period.  The net loss per share since inception has been $1.18.

Liquidity and Capital Resources
-------------------------------
At September 30, 2004, we had current assets of $4,773 and current liabilities
of $2,245.  At September 30, 2004, we had property and equipment of $723, and
patents and license agreements net of amortization, of $36,576.

Our cash used in operations for the nine months ended September 30, 2004 was
$61,286, compared to $282,405 for the same period the prior year.  Since
inception, our operations have been funded primarily by cash received from
capital contributions and the issuance of common stock for cash.

We did not engage in investing activities for the nine months ended September
30, 2004 or 2003.

Cash from financing activities during the nine months ended September 30, 2004
totaled $22,500, from the issuance of common stock.  In order to obtain funds
for expenses, in May 2004, our board agreed to offer restricted common stock
to our president, Robert Ipson, at $0.05 per share.  Mr. Ipson purchased a
total of 450,000 shares.

To date, our working capital has come mainly through the sale of our
securities.  Proceeds generated from the sale of our securities have funded
our operations, including continued research and development activities.  At
this time, trading activity in our stock is limited and sporadic.



<PAGE>
<PAGE> 13

                   ITEM 3. CONTROLS AND PROCEDURES

Our principal executive and financial officer has participated with management
in the evaluation of effectiveness of the controls and procedures required by
paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act as of the
end of the period covered by this report.  Based on that evaluation, our
principal executive and financial officer believes that our disclosure
controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under
the Exchange Act) are effective as of the end of the period covered by the
report.  There have been no changes in our internal controls that have
materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting during the period covered by this
report.

                          PART II - OTHER INFORMATION
                          ITEM 1.  LEGAL PROCEEDINGS

On November 5, 2004, the Company received notice that it has been named as a
cross-defendant by cross-complainants Omar V. Sanchez and SovCap Advisors,
Inc., in Foster v SovCap, Case No. 04CC08470, as per a filing dated October
15, 2004, in the Superior Court of the State of California for the County of
Orange, Central District Center. The complaint by the cross-defendants alleges
breach of an oral contract, fraud allegations and claims for indemnity in a
suit by one of the Company's shareholders against SovCap and Sanchez.  The
Company believes the cross-complaint is without merit but cannot predict the
outcome of the cross-complaint at this time.

                        ITEM 2.  CHANGES IN SECURITIES

During the quarter ended September 30, 2004, we issued 400,000 shares of our
restricted common stock to Robert Ipson for his services as our CEO, valued at
$40,000.  We also issued 200,000 shares of our restricted common stock to
Phillip McStotts for his services as secretary/treasurer, valued at $20,000.
The shares issued in the foregoing transaction were issued in reliance on the
exemption from registration and prospectus delivery requirements of the Act
set forth in Section 3(b) and/or Section 4(2) of the Securities Act and the
regulations promulgated thereunder.

                   ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.
                           ITEM 5.  OTHER INFORMATION

On November 2, 2004, the Company filed a Schedule 14F-1 Information Statement
with the SEC, and mailed a copy of the filing to shareholders of record as of
October 28, 2004.  This Information Statement fulfills the notice requirements
for a change of the majority of directors of the Company in connection with
the change of control described above in Item 2.  Effective November 12, 2004,
Dennis McLaughlin, Kit Chambers, and John Anderson will replace Robert K.
Ipson, Phillip McStotts and Linda Ipson as directors and officers of the
Company. Biographical information on the new directors is included in the
Information Statement.

<PAGE>
<PAGE> 14

The Company's mailing address and phone number have changed in connection with
the share exchange and change of control.  The new address and phone follow:

    3001 Knox Street, Suite 407
    Dallas, Texas 75205
    (214) 389-2151


               ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits.
        ---------
Exhibit No.     Description
-----------     -----------
   31           Certification of Principal Executive and Financial Officer
                per Section 302 of the Sarbanes-Oxley Act of 2002

   32           Certification of Principal Executive and Financial Officer
                per Section 906 of the Sarbanes-Oxley Act of 2002

 (b) Reports on Form 8-K.

     No reports on Form 8-K were filed during the quarter ended September 30,
2004.

                                 SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                     POWERBALL INTERNATIONAL, INC.

Dated: November 8, 2004             By/S/Robert K. Ipson, Chairman, C.E.O.
                                     and Chief Financial Officer