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

                                    FORM 10-Q
                                   (Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934.

                       For the transition period from to .

                         COMMISSION FILE NUMBER 0-10999

                        COMPOSITE TECHNOLOGY CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)



          NEVADA                                        59-2025386
       -------------                                    ----------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)


                       2026 McGaw Avenue Irvine, CA 92614
                    (Address of Principal Executive Offices)
                                   (Zip Code)

                                 (949) 428-8500
              (Registrant's Telephone Number, Including Area 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.

                                 YES [X] NO [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 YES [X] NO [ ]

Indicate the number of shares outstanding of the issuer's common stock as of
February 8, 2005:



            CLASS                              NUMBER OF SHARES OUTSTANDING
            -----                              ----------------------------
   Common Stock, par value                         114,178,914 shares
       $0.001 per share

================================================================================
<PAGE>
                        COMPOSITE TECHNOLOGY CORPORATION
                Form 10-Q for the Quarter ended December 31, 2004
                                Table of Contents
<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                  <C>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements                                                                            3
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations          13
Item 3 Quantitative and Qualitative Disclosures About Market Risk                                     31
Item 4 Controls and Procedures                                                                        31

PART II - OTHER INFORMATION
Item 1 Legal Proceedings                                                                              32
Item 2 Unregistered Sales of Equity Securities and the Use of Proceeds                                35
Item 3 Defaults Upon Senior Securities                                                                35
Item 4 Submission of Matters to a Vote of Security Holders                                            35
Item 5 Other Information                                                                              35
Item 6 Exhibits                                                                                       36
SIGNATURE                                                                                             38
</TABLE>

<PAGE>

ITEM 1
                          PART 1 - FINANCIAL STATEMENTS
                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                      CONDENSED, CONSOLIDATED BALANCE SHEET
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                              December 31,    September 30,
                                                                                  2004           2004
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
ASSETS

CURRENT ASSETS
Cash and cash equivalents                                                     $  9,700,117    $  2,930,615
Restricted Cash                                                                       --        10,010,060
Accounts receivable, net                                                         2,500,000       2,501,994
Inventory                                                                        1,132,742         788,799
Prepaid expenses and other current assets                                          372,241         378,052
                                                                              ------------    ------------
Total current assets                                                            13,705,100      16,609,520

PROPERTY AND EQUIPMENT, net                                                      1,510,428       1,253,123
OTHER ASSETS                                                                       206,279         218,600
                                                                              ------------    ------------
TOTAL ASSETS                                                                  $ 15,421,807    $ 18,081,243
                                                                              ============    ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade                                                      $  1,171,560    $  1,371,631
Accrued legal settlement                                                              --           469,904
Accrued payroll and related expenses                                               119,003         122,621
Deferred revenue                                                                   564,750         564,750
Accrued officer compensation                                                       255,619         264,561
Deferred gain on sale of fixed assets                                               28,903          49,569
Lease obligation - current                                                         319,782         251,782
                                                                              ------------    ------------
Total current liabilities                                                        2,459,617       3,094,818
                                                                              ------------    ------------
LONG TERM LIABILITIES
Convertible notes, net of unamortized debt
   discount                                                                      9,431,446       8,901,106
Lease obligation - long-term                                                       596,306         482,600
                                                                              ------------    ------------
Total long-term liabilities                                                     10,027,752       9,383,706
                                                                              ------------    ------------
                  Total Liabilities                                           $ 12,487,369      12,478,524
                                                                              ------------    ------------
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock, $0.001 par
value 200,000,000 shares authorized
113,506,341 shares issued and outstanding                                          113,505         110,841
Deferred compensation - stock options                                             (322,600)       (362,925)
Additional paid-in capital                                                      34,896,362      31,929,883
Deficit accumulated during the development stage                               (31,752,829)    (26,075,080)
                                                                              ------------    ------------
Total shareholders' equity                                                       2,934,438       5,602,719
                                                                              ------------    ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                    $ 15,421,807    $ 18,081,243
                                                                              ============    ============
</TABLE>

The accompanying notes are an integral part of these financial statements


                                       3
<PAGE>



                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS
                     FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
                                   (UNAUDITED)
               AND FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION)
                              TO DECEMBER 31, 2004
                                   (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                        Three          Three               For the
                                        Months         Months              Period
                                        Ended          Ended             from March
                                        December       December           28,2001
                                        31,2004        31,2003           (Inception)
                                                                       to December 31,2004
                                       ------------    ------------    ------------------
                                        (unaudited)    (unaudited)       (unaudited)
Revenue:
<S>                                    <C>             <C>             <C>
         Product Sales                 $     46,485    $       --      $     46,485
         Consulting Revenue                    --              --         2,500,000
                                       ------------    ------------    ------------
Total Revenue                          $     46,485            --      $  2,546,485

Cost of product sales sold                   30,894            --            30,894
Cost of consulting revenue                     --              --           314,548
                                       ------------    ------------    ------------
Gross margin                           $     15,591    $       --      $  2,201,043


OPERATING EXPENSES
Officer compensation                         55,385          95,000         902,543
General and administrative                1,440,692         745,736       8,596,548
Legal, professional, and
consulting                                  785,495         572,083       8,683,605
Research and development                    501,167         251,305       3,826,415
Reorganization                                 --              --            30,000
Depreciation                                111,376           9,192         287,590
Compensation expense related to
fair value of stock warrants-
Consultants                                    --              --         1,792,510
Stock issued for legal settlement              --              --           739,000
Compensation expense related to
fair value of stock warrants -
legal                                          --              --         1,058,000
Compensation expense related to
fair value of stock warrants -
financing                                 2,079,523            --         2,079,523
Compensation expense related to
issuance of common stock -
consulting                                     --              --         1,265,165
Compensation expense related to
fair value of stock warrants                   --              --         1,540,000
Compensation expense related to
issuances of common stock at
less than fair value                           --              --           603,500
Compensation expense related to
fair value of stock options -
legal                                          --            64,125         563,900
Compensation expense related to
fair value of stock options -
research and development                       --            40,325         737,449
                                       ------------    ------------    ------------
Total operating expenses                  4,973,638       1,777,766      32,705,748
                                       ------------    ------------    ------------
LOSS FROM OPERATIONS                     (4,958,047)     (1,777,766)    (30,504,705)
                                       ------------    ------------    ------------
OTHER INCOME/EXPENSE
Interest expense                           (751,219)           --        (1,165,783)
Interest income                              27,260            --            41,157
Gain on sale of assets                        4,256            --            13,732
Carrying value impairment adjustment
on investments in other
companies                                      --              --          (137,230)
                                       ------------    ------------    ------------
Total other income/expense                 (719,703)           --        (1,248,124)
                                       ------------    ------------    ------------

NET LOSS                               $ (5,677,750)   $ (1,777,766)   $(31,752,829)
PREFERRED STOCK DIVIDENDS                      --             5,000            --
                                       ------------    ------------    ------------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS                           $ (5,677,750)   $ (1,782,766)   $(31,752,829)
                                       ============    ============    ============
BASIC AND DILUTED
LOSS PER SHARE                         $       (.05)   $      (0.02)
Loss per share                                                  --
                                       =============   =============
TOTAL BASIC AND DILUTED
 LOSS PER SHARE
AVAILABLE TO COMMON
SHAREHOLDERS                           $        (.05)  $       (0.02)
                                       =============   =============
WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING                       111,814,117       99,398,246
                                       =============   =============
</TABLE>

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



                                       4
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION
                                 AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)
                CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
                                   (UNAUDITED)
              AND FOR THE PERIOD FROM MARCH 28, 2001 (INCEPTION) TO
                                December 31, 2004
                                   (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           For the
                                                                         Period from
                                              For the Three             March 28,2001
                                          Months Ended December 31,    (Inception)to
                                        ----------------------------    December 31,
                                          2004              2003             2004
                                       (unaudited)       (unaudited)    (unaudited)
                                       ------------     ------------   ------------
<S>                                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                $ (5,677,750)   $ (1,777,766)   $(31,764,131)
Adjustments to reconcile
net loss to net cash used in
operating activities
Gain on sale of fixed assets                  (4,256)           --           (13,732)
Depreciation                                 111,376           9,192         287,590
Amortization of prepaid expenses
originally paid with common stock                --          190,000         218,993
Amortization of debt discount                530,340            --           795,509
Expense related to fair value of
vested options                                40,325            --         1,879,146
Issuance of common stock for
services                                        --            28,050       8,136,810
Issuance of common stock for legal
services                                        --              --           832,750
Issuance of warrants for services
rendered for research and
development                                     --              --            61,250
Issuance of warrants for legal
settlement                                      --              --            11,750
Compensation expense related to
issuances of common stock at
less than fair value                            --              --           603,500
Compensation expense related to
fair value of stock options                     --           104,451       1,002,529
Issuance of warrants for services          2,079,523            --         3,872,033
Carrying value impairment adjustment
on investments in other companies               --              --           137,230

(Increase) decrease in Assets
Inventory                                   (343,943)           --        (1,132,742)
Accounts Receivable                            1,994            --        (2,500,000)
Prepaid expenses                              66,053          74,036         (16,763)
Capitalized construction costs                  --              --          (206,279)
Other Assets                                 (47,921)           --          (257,521)
Increase (decrease) in
Accounts payable - trade                    (200,071)        110,072       1,177,861
Accrued legal settlement                    (469,904)        (42,665)           --
Accrued payroll and related
expenses                                      (3,618)         79,911         119,003

Accrued interest payable                        --              --            13,101
Accrued officer compensation                  (8,942)           --           225,691
Deferred Revenue                                --              --           564,750
                                        ------------    ------------    ------------
Net cash used in operating
activities                                (3,926,794)     (1,224,719)    (15,951,672)
                                        ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash advanced by (to) officers, net             --              --            29,928
Purchase of property and equipment          (230,716)       (151,363)     (1,301,009)
Sale of property and equipment                93,015            --           593,015
Investments in other companies                  --              --           (40,000)
                                        ------------    ------------    ------------
Net cash provided by (used in)
Investing activities                        (137,701)       (151,363)       (718,066)
                                        ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock subscription
receivable                                      --           (98,522)        (50,000)
Proceeds from sale of
committed stock                                 --              --           194,375
Payment for costs associated with
the sale of common stock                        --          (220,030)       (237,030)
Proceeds from issuance of convertible
debenture                                       --              --        15,000,000
Proceeds from notes payable                     --              --           253,000
Payments on capital lease assets             (65,684)           --          (131,302)
Proceeds from sale of preferred stock           --              --           132,000
Proceeds from exercise of options             30,000            --           129,006
Proceeds from exercise of warrants           859,620         153,125       4,100,395
Proceeds from sale of common stock              --         3,346,662       6,979,411
                                        ------------    ------------    ------------
Net cash provided by financing
 activities                                  823,936       3,181,235      26,369,855
                                        ------------    ------------    ------------
Net increase/(decrease) in cash and
cash equivalents                        $ (3,240,559)   $  1,805,153    $  9,700,117
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD                                 12,940,676       1,130,498            --
                                        ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD                                  $  9,700,117    $  2,935,651    $  9,700,117
                                        ============    ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
INTEREST PAID                           $    220,879    $       --      $    629,927
INCOME TAX PAID                         $      1,600            --      $      1,600
                                        ============    ============    ============
</TABLE>

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



                                       5
<PAGE>

Supplemental Schedule for Non Cash Financing Activities

During the first quarter of fiscal 2005, the Company approved for issuance
82,417 Series U warrants to two entities in connection with obtaining equipment
lease financing for the Company.

In addition, during the first quarter of fiscal 2005, the Company issued
1,083,592 warrants in connection with obtaining an amendment to the Debenture
held by Midsummer Investment, Ltd, Bristol Investment Fund, Ltd, Islandia L.P.
and Omicron Master Trust.

During the three months ended December 31, 2004, 16,666 Series K warrants were
exercised on a cashless exercise basis.

During the three months ended December 31, 2004, 250,000 Series L warrants were
exercised on a cashless exercise basis.

During the three months ended December 31, 2004, the Company acquired fixed
assets under a capital lease agreement in the amount of $247,390.

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
Composite Technology Corporation, incorporated in Florida and reincorporated in
Nevada, is an Irvine, CA based company providing advanced composite core
conductor ("ACCC") cables for electric transmission and distribution lines. The
Company operates under four wholly owned subsidiaries incorporated in the State
of Nevada: CTC Wind Systems Corporation, CTC Cable Corporation, CTC Towers &
Poles Corporation, and Transmission Technology Corporation. The Company's first
product is high performance ACCC cable for electric transmission and
distribution lines.

ACCC cable is commercially available in the United States and Canada through
distribution and purchase agreements between General Cable Industries, Inc. and
the Company's wholly owned subsidiary, CTC Cable Corporation.

NOTE 2 - GOING CONCERN
The Company has received a report from its independent auditors for the year
ended September 30, 2004 that includes an explanatory paragraph describing the
uncertainty as to the Company's ability to continue as a going concern. These
consolidated financial statements contemplate the ability to continue as such
and do not include any adjustments that might result from this uncertainty.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The accompanying unaudited consolidated financial statements of Composite
Technology Corporation (the "Company" or "Composite Technology") have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not contain all of the information and footnotes required for complete financial
statements. Interim information is unaudited; however, in the opinion of the
Company's management, the accompanying unaudited, consolidated financial
statements reflect all adjustments (consisting of normal, recurring adjustments)
considered necessary for a fair presentation of the Company's interim financial
information. These financial statements and notes should be read in conjunction
with the audited financial statements of the Company included in the Company's
Annual Report on Form 10-KSB for the year ended September 30, 2004 filed with
the Securities and Exchange Commission on December 23, 2004.

The results of operations for the three months ended December 31, 2004 are not
necessarily indicative of the operating results that may be reported for the
fiscal year ending September 30, 2005 or for any other future period.



                                       6
<PAGE>

Development Stage Enterprise
The Company is a development stage company as defined in Statement of Financial
Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development
Stage Enterprises." The Company is devoting substantially all of its present
efforts to establish a new business, and its planned principal operations have
not yet commenced. All losses accumulated since inception, have been considered
as part of the Company's development stage activities.

Stock-Based Compensation
SFAS No. 123, "Accounting for Stock Compensation," as amended by SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure," defines a
fair value based method of accounting for stock-based compensation. However,
SFAS No. 123 allows an entity to continue to measure compensation cost related
to stock and stock options issued to employees using the intrinsic method of
accounting prescribed by Accounting Principles Board ("APB") Opinion No.
25,"Accounting for Stock Issued to Employees." Entities electing to remain with
the accounting method of APB No. 25 must make pro forma disclosures of net
income and earnings per share as if the fair value method of accounting defined
in SFAS No. 123 had been applied. The Company has elected to account for its
stock-based compensation to employees using the intrinsic value method under APB
No. 25. In December 2004, SFAS No. 123 was revised and eliminated the ability to
account for share-based compensation transactions using the intrinsic value
method under APB Opinion No. 25, effective the first interim or annual period
beginning after June 15, 2005 for public companies. The effective date for the
Company will be beginning fourth quarter of fiscal 2005.

The Company has adopted the disclosure-only provisions of SFAS No. 123.
Accordingly, no compensation cost other than that required to be recognized by
APB No. 25, the difference between the fair value of the Company's common stock
at the grant date and the exercise price of the options has been recognized. Had
compensation cost for the Company's Stock Plan been determined based on the fair
value at the grant date for awards consistent with the provisions of SFAS No.
123, the Company's net loss and loss per share for the three months ended
December 31, 2004 and 2003 would have been increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                 Three months     Three months
                                                    ended             ended
                                               December 31,2004  December 31,2003
                                              ------------------  ---------------
<S>                                              <C>                <C>
Net loss, as reported                            $(5,677,750)       $(1,777,766)
Add stock based employee compensation
expense included in net income, net of tax
Deduct total stock based employee compensation
Expense determined under fair value method
 for all awards, net of tax                         (419,242)           (75,242)
                                                 -----------        -----------
Net loss, pro forma                              $(6,096,992)       $(1,853,008)
                                                 ===========        ===========

Earnings per common share
Basic, as reported                               $     (0.05)       $     (0.02)
Basic, pro forma                                 $     (0.05)       $     (0.02)
Diluted, as reported                             $     (0.05)       $     (0.02)
Diluted, pro forma                               $     (0.05)       $     (0.02)
</TABLE>


Principles of Consolidation
The consolidated financial statements include the accounts of CTC and its wholly
owned subsidiaries (collectively, the "Company"). All significant inter-company
accounts and transactions are eliminated in consolidation.

Research and Development Expenses
Research and development expenses are charged to operations as incurred.



                                       7
<PAGE>

Accounts Receivable
The Company has a $2,500,000 account receivable from one entity relating to
engineering services provided during fiscal 2004 for an electrical line project
in Kansas. The Company expects receipt of payment by the end of the second
quarter of fiscal 2005.

Loss Per Share
The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per share is
computed by dividing loss available to common shareholders by the
weighted-average number of common shares outstanding. Diluted loss per share is
computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Common equivalent shares are excluded from the
computation if their effect is anti-dilutive.

The following common stock equivalents were excluded from the calculation of
diluted loss per share for the three months ended December 31, 2004 and 2003
since their effect would have been anti-dilutive:

                                                              December 31
                                                      ------------------------
                                                         2004          2003
                                                      ----------    ----------
          Series B convertible preferred stock                --        80,000
          Options for common stock                     7,175,336     7,897,740
          Warrants                                    11,748,282    13,189,569

Concentration of Credit Risk
The Company has an $2,500,000 account receivable from one entity relating to
engineering services provided during fiscal 2004. The Company expects receipt of
payment by the end of the second quarter of fiscal 2005.

Recently Issued Accounting Pronouncements

SFAS No. 151

In November 2004, the FASB issued SFAS No. 151,"Inventory Costs". SFAS No. 151
amends the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage) under the guidance in ARB No. 43,
Chapter 4,"Inventory Pricing". Paragraph 5 of ARB No. 43, Chapter 4, previously
stated that ". . . under some circumstances, items such as idle facility
expense, excessive spoilage, double freight, and rehandling costs may be so
abnormal as to require treatment as current period charges. . . ." This
Statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. This statement is effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. Management does not expect adoption
of SFAS No. 151 to have a material impact on the Company's financial statements.

SFAS No. 152

In December 2004, the FASB issued SFAS No. 152,"Accounting for Real Estate
Time-Sharing Transactions". The FASB issued this Statement as a result of the
guidance provided in AICPA Statement of Position (SOP) 04-2,"Accounting for Real
Estate Time-Sharing Transactions". SOP 04-2 applies to all real estate
time-sharing transactions. Among other items, the SOP provides guidance on the
recording of credit losses and the treatment of selling costs, but does not
change the revenue recognition guidance in SFAS No. 66,"Accounting for Sales of
Real Estate", for real estate time-sharing transactions. SFAS No. 152 amends
Statement No. 66 to reference the guidance provided in SOP 04-2. SFAS No. 152
also amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of
Real Estate Projects", to state that SOP 04-2 provides the relevant guidance on
accounting for incidental operations and costs related to the sale of real
estate time-sharing transactions. SFAS No. 152 is effective for years beginning
after June 15, 2005, with restatements of previously issued financial statements
prohibited. This statement is not applicable to the Company.




                                       8
<PAGE>

SFAS No. 153

In December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary
Assets," an amendment to Opinion No. 29,"Accounting for Nonmonetary
Transactions". Statement No. 153 eliminates certain differences in the guidance
in Opinion No. 29 as compared to the guidance contained in standards issued by
the International Accounting Standards Board. The amendment to Opinion No. 29
eliminates the fair value exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. Such an exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
nonmonetary asset exchanges occurring in periods beginning after June 15, 2005.
Earlier application is permitted for nonmonetary asset exchanges occurring in
periods beginning after December 16, 2004. Management does not expect adoption
of SFAS No. 153 to have a material impact on the Company's financial statements.

SFAS No. 123(R)

In December 2004, the FASB issued SFAS No. 123(R),"Share-Based Payment". SFAS
123(R) amends SFAS No. 123,"Accounting for Stock-Based Compensation", and APB
Opinion 25,"Accounting for Stock Issued to Employees." SFAS No.123(R) requires
that the cost of share-based payment transactions (including those with
employees and non-employees) be recognized in the financial statements. SFAS No.
123(R) applies to all share-based payment transactions in which an entity
acquires goods or services by issuing (or offering to issue) its shares, share
options, or other equity instruments (except for those held by an ESOP) or by
incurring liabilities (1) in amounts based (even in part) on the price of the
entity's shares or other equity instruments, or (2) that require (or may
require) settlement by the issuance of an entity's shares or other equity
instruments. This statement is effective for the Company as of the first interim
period or fiscal year beginning after June 15, 2005, or beginning its fourth
quarter of fiscal 2005. Management is currently assessing the effect of SFAS No.
123(R) on the Company's financial statement.


NOTE 4 - PROPERTY AND EQUIPMENT

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

          Manufacturing equipment                             1,155,733
          Office furniture equipment                            237,533
          Leasehold improvements                                352,193
                                                              ---------
                                                              1,745,459

             Less accumulated depreciation                     (235,031)
                                                              ----------

                      TOTAL                                   1,510,428
                                                              =========

                                       9
<PAGE>

Depreciation expense was $111,376, $9,192, and $287,590 for the three months
ended December 31, 2004 and 2003 and the period from March 28, 2001 (inception)
to December 31, 2004, respectively.

NOTE 5 - COMMITMENT AND CONTINGENCIES

In November 2004, the Company committed to a $450,000 capital lease with a
financial institution. The lease was partially funded during the quarter, with
the balance expected to be funded during the second quarter of fiscal 2005. When
fully funded, the Company will be obligated to pay total monthly lease payments
of $14,197 for a total of 42 months and will have the option to purchase the
equipment for fair market value, subject to a minimum of 10% and maximum of 20%
of equipment cost. The Company has paid a deposit of $20,857 relating to the
$208,570 balance of the lease commitment and is awaiting delivery of the
equipment. The Company allocated 12,362 Series U warrants as part of the lease
terms (See Note 6- Common Stock).

As part of this capital lease, the Company entered into a $93,015 sale leaseback
of one piece of manufacturing equipment. Under the terms of the Master Lease
Agreement, the Company received $83,714, which was net of a 10% security
deposit, and is to make payments of $2,896 per month for 42 months. At the end
of the lease term, the Company has the right to renew the lease for an
additional 12 months, terminate the lease and return the equipment or purchase
the equipment at fair value, subject to a minimum of 10% and a maximum of 20% of
the original capitalized cost. The Company recognized a loss in the amount of
$15,656 from this transaction which will be applied against the deferred gain on
sale of fixed assets that were leased back by the Company.

The Company has a $3 million commitment for equipment lease financing, subject
to completing due diligence, from a financial institution. The lease is for a
term of 42 months, has total monthly payments of $84,240 if fully funded and, at
the end of the lease term, the Company has the option of purchasing the
equipment for fair market value, subject to a minimum and maximum of 20% of
equipment cost. As part of this commitment, the Company made a deposit of $5,000
and allocated 70,055 Series U warrants to be paid upon lease funding as part of
the lease terms (See Note 6- Common Stock).

NOTE 6- SHAREHOLDERS' EQUITY

COMMON STOCK

During the first quarter of fiscal 2005, the Company approved for issuance
82,417 Series U warrants to two entities in connection with obtaining equipment
lease financing for the Company. Each Series U warrant entitles the holder to
purchase one share of unregistered, restricted common stock at $1.83 per share
and expires on August 18, 2008. The Company may, subject to a 20 day notice,
call the warrants if the common stock price is equal to or exceeds 200% of the
exercise price. The Company recognized $85,714 of compensation expense for
services rendered.

In addition, during the first quarter of fiscal 2005, the Company issued
1,083,592 warrants in connection with obtaining an amendment to the Debenture
held by Midsummer Investment, Ltd, Bristol Investment Fund, Ltd, Islandia L.P.
and Omicron Master Trust. Each warrant entitles the holder to purchase one share
of unregistered, restricted common stock at $3.23 per share and expires on
November 19, 2008. The Company recognized $1,993,809 of compensation expense for
services rendered.

We relied upon the exemption from registration as set forth in Section 4(2) of
the Securities Act of 1933 for the issuance of these securities. All of the
recipients took their securities for investment purposes without a view to
distribution and had access to information concerning the Company and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.




                                       10
<PAGE>

Cashless Exercises
During the three months ended December 31, 2004, 16,666 Series K warrants were
exercised on a cashless exercise basis.

During the three months ended December 31, 2004, 250,000 Series L warrants were
exercised on a cashless exercise basis.

Cash
During the three months ended December 31, 2004, 322,242 warrants issued in 2002
were exercised for total cash consideration of $161,121, at $0.25 per share.

During the three months ended December 31, 2004, 1,338,000 Series E warrants
were exercised for total cash consideration of $334,500, at $0.25 per share.

During the three months ended December 31, 2004, 500,000 Series N warrants were
exercised for total cash consideration of $250,000, at $0.50 per share.

During the three months ended December 31, 2004, 142,500 Series P warrants were
exercised for total cash consideration of $114,000, at $0.80 per share.


STOCK OPTIONS
Stock Plan
During the three month period ending December 31, 2004 the Company issued to one
employee 100,000 options to purchase an equivalent number of shares registered
under the Company's Form S-8, filed in January 2005 at an exercise price of
$1.68. These options expire December 31, 2011.

During the three months ended December 31, 2004, 120,000 options were exercised
to purchase common stock for total cash consideration of $30,000, at $0.25 per
share.

On October 28, 2004, the Company's shareholders approved an increase of 15
million shares subject to the 2002 Non-Qualified Stock Compensation Plan.

The following table summarizes all Stock Plan activity through December 31,
2004.

<TABLE>
<CAPTION>
                                                                          Weighted-
                                                                          average
                                                         Number           Exercise
                                                       of Shares           Price
                                                      -----------        ---------
<S>                                                    <C>              <C>
          Outstanding, March 18, 2001 (inception)          --           $       --
            Granted                                    1,357,740        $     0.35
                                                       ----------

          Outstanding, September 30, 2001              1,357,740        $     0.35
            Granted                                    5,950,000        $     0.35
            Exercised                                 (2,000,000)       $     0.24
                                                       ----------

          Outstanding, September 30, 2002              5,307,740        $     0.39
            Granted                                    3,950,000        $     0.46
            Exercised                                   (110,000)       $     0.25
            Canceled                                  (1,000,000)       $     0.69
                                                       ----------

          Outstanding, September 30, 2003              8,147,740        $     0.39
            Granted                                      969,904        $     1.00
            Exercised                                   (497,220)       $     0.11
            Cancelled                                 (1,425,088)       $     0.30
                                                       ----------

          Outstanding, September 30, 2004              7,195,336        $     0.37
               Granted                                   100,000        $     1.68
               Exercised                                (120,000)       $     0.25
                                                       ----------


        OUTSTANDING, December 31, 2004                 7,175,336         $    0.39
                                                       ==========

        EXERCISABLE, December 31, 2004                 3,354,248         $    0.39
                                                       ==========
</TABLE>



                                       11
<PAGE>

WARRANTS

The following table summarizes all Warrant activity through December 31, 2004:

                                                                   Weighted-
                                                                    Average
                                                        Number     Exercise
                                                       of Shares     Price
                                                      ----------   --------
          Outstanding, March 18, 2001 (inception)            --    $    --
            Granted                                   1,905,600    $   1.26
                                                      ---------

          Outstanding, September 30, 2001             1,905,600    $   1.26
            Granted                                     848,630    $   0.50
            Exercised                                    (7,940)   $   1.26
                                                      ---------

          Outstanding, September 30, 2002             2,746,290    $   1.03
            Granted                                  14,568,834    $   0.46
            Exercised                                  (267,500)   $   0.29
                                                      ---------

          Outstanding, September 30, 2003            17,398,457    $   0.55
            Granted                                   7,359,446    $   1.58
            Exercised                                (6,785,222)   $   0.42
            Cancelled                                (4,821,000)   $   0.49
                                                      ---------

          Outstanding, September 30, 2004            13,151,681    $   0.81
            Granted                                   1,166,009    $   3.13
               Exercised                             (2,569,408)   $   0.38
                                                      ---------

          OUTSTANDING, DECEMBER 31, 2004             11,748,282    $   1.45

          EXERCISABLE, December 31, 2004             11,748,282    $   1.45
                                                     ==========



                                       12
<PAGE>

NOTE 7 - SUBSEQUENT EVENTS

On January 11, 2005, the Company announced the resignation of Mr. William
Arrington, as President and Chief Operating Officer, effective as of January 5,
2005, to take up a new position as Senior Vice President, Office of the CEO that
will enable him to focus on public relations and strategic marketing of the
Company's products in addition to assisting the CEO in the fulfillment of his
duties. On January 5, 2005, the board of directors of the Company appointed a
consultant as Acting COO.

Effective January 1, 2005, the Company committed to a sale and leaseback of
$21,500 of manufacturing equipment as part of the $450,000 capital lease
financing discussed in Note 5 - Commitments and Contingencies.

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

You should read the following discussion and analysis of our financial condition
and results of operations together with our interim financial statements and the
related notes appearing at the beginning of this report. The interim financial
statements and this Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with the financial
statements and notes thereto for the year ended September 30, 2004 and the
related Management's Discussion and Analysis of Financial Condition and Results
of Operations, both of which are contained in our Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission on December 23, 2004.

The following discussion and other parts of this Form 10-Q contain
forward-looking statements that involve risks and uncertainties. Forward-looking
statements can be identified by words such as "anticipates," "expects,"
"believes," "plans," and similar terms. Our actual results could differ
materially from any future performance suggested in this report as a result of
factors, including those discussed in "Factors That May Affect Future Operating
Results" and elsewhere in this report and in our Annual Report on Form 10-KSB
for the fiscal year ended September 30, 2004. All forward-looking statements are
based on information currently available to Composite Technologies and we assume
no obligation to update such forward-looking statements, except as required by
law. Service marks, trademarks and trade names referred to in this Form 10-Q are
the property of their respective owners.

OVERVIEW

Composite Technology is a technology company focused on the development and
commercialization of products relating to the electrical utility industry using
new materials that extend the design and performance possibilities of existing
utility infrastructure. Our first product is our new proprietary composite core
overhead bare conductor cable, the Aluminum Conductor Composite Core ("ACCC")
Cable for the electric transmission and distribution industry. We have been
developing this product over the past 3 fiscal years and believe it is an
enabling material that will enhance the electric transmission and distribution
industry.

ACCC Cable is now commercially available for sale in the U.S. and Canadian
markets through a strategic partnership with an existing cable manufacturer,
General Cable Industries, Inc. Our marketing strategy is to penetrate the
domestic U.S. and Canadian markets through our strategic partnership with
General Cable and to negotiate similar partnerships globally to market our
products internationally. Our development strategy is to develop and market
follow-on products serving the utility industry using our proprietary composite
materials technologies.



                                       13
<PAGE>

At the beginning of the first quarter of Fiscal 2005, on October, 2, 2004, our
wholly owned subsidiary, CTC Cable Corporation ("CTC Cable") entered into two
separate agreements for the manufacture and distribution of our proprietary bare
overhead conductor ACCC cable with General Cable Industries, Inc. ("General
Cable"), the principal U.S. operating subsidiary of General Cable Corporation.

Under the "Manufacturing Agreement," General Cable will apply aluminum strand
around our composite core providing a finished ACCC conductor cable in Canada
and the U.S. They will utilize the utility cable industry standard
specifications and manufacturing processes in carrying out the work.

Under the "Distribution Agreement", General Cable is appointed a non-exclusive
distributor for the ACCC cable for the U.S. and Canadian markets only. General
Cable has built an extensive sales and marketing infrastructure dedicated to the
support of the utility market. In its century long experience supporting the
utility market, General Cable has also developed the relationships with utility
companies that we believe will facilitate the commercialization of ACCC cable.

These agreements represent the conclusion of the initial phase of the
introduction of our bare overhead conductor ACCC product range in that they
provide the framework for the products to be made available in commercial
quantities produced by General Cable. We believe the General Cable relationship
provides an important level of comfort to customers regarding the stability of
supply and consistency and viability of production since they are an established
manufacturer and distributor with long standing market relationships. The
agreements also mark the beginning of a new phase of our operations in which the
focus will be on production of the core for supply to cable manufacturers
worldwide and sales of the ACCC products to end users.

Throughout the first quarter of 2005, we have concentrated on improving the
operational mechanics of our relationship with General Cable, culminating,
subsequent to the quarter end, on January 18, 2005, with the announcement of the
introduction of the TransPowr ACCC/TW bare overhead conductor. The TransPowr
ACCC/TW bare overhead conductor integrates General Cable's ACSS/TW technology
and our carbon and glass fiber core technology that is at the center of our ACCC
product range.

TransPowr ACCC/TW bare overhead conductor is the product with which we intend to
begin full scale commercial introduction of the ACCC product into the
transmission and distribution conductor market.

In addition, we provide consulting services relating to the planning of overhead
electrical transmission power lines and utility services, including undertaking
preliminary feasibility analysis and strategic advice regarding location and for
scope as well as advice regarding the establishment of production facilities for
the production of products used in the Electrical Transmission Industry. We
currently, however, are not concentrating our efforts to increase our consulting
business and instead are focused on the commercialization of the ACCC Cable.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations
is based upon the condensed consolidated financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles
("GAAP"). The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities as of the date of the financial statements, and the reported amounts
of revenue and expense during the periods. These estimates are based on
historical experience and various other assumptions that we believe to be
reasonable under the circumstances. We have identified those critical accounting
policies used in reporting our financial position and results of operations
based upon a consideration of those accounting policies that involve the most
complex or subjective decisions or assessment. We consider the following to be
our critical policies.



                                       14
<PAGE>

Development Stage Enterprise

The Company is a development stage company as defined in Statement of Financial
Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development
Stage Enterprises." The Company is devoting substantially all of its present
efforts to establish a new business, and its planned principal operations have
not yet commenced. All losses accumulated since inception, have been considered
as part of the Company's development stage activities.


Stock-Based Compensation

SFAS No. 123, "Accounting for Stock Compensation," as amended by SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure," defines a
fair value based method of accounting for stock-based compensation. However,
SFAS No. 123 allows an entity to continue to measure compensation cost related
to stock and stock options issued to employees using the intrinsic method of
accounting prescribed by Accounting Principles Board ("APB") Opinion No.
25,"Accounting for Stock Issued to Employees." Entities electing to remain with
the accounting method of APB No. 25 must make pro forma disclosures of net
income and earnings per share as if the fair value method of accounting defined
in SFAS No. 123 had been applied. The Company has elected to account for its
stock-based compensation to employees using the intrinsic value method under APB
No. 25. In December 2004, SFAS No. 123 was revised and eliminated the ability to
account for share based compensation transactions using the intrinsic value
method under APB Opinion No. 25, effective the first interim or annual period
beginning after June 15, 2005 for public companies. The effective date for the
Company will be beginning fourth quarter of fiscal 2005.

The Company has adopted the disclosure-only provisions of SFAS No. 123.
Accordingly, no compensation cost other than that required to be recognized by
APB No. 25, the difference between the fair value of the Company's common stock
at the grant date and the exercise price of the options has been recognized. Had
compensation cost for the Company's Stock Plan been determined based on the fair
value at the grant date for awards consistent with the provisions of SFAS No.
123, the Company's net loss and loss per share for the three months ended
December 31, 2004 and 2003 would have been increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                 Three months     Three months
                                                    ended             ended
                                               December 31,2004  December 31,2003
                                               ----------------  ----------------
<S>                                              <C>               <C>
Net loss, as reported                            $(5,677,750)      $(1,777,766)
Add stock based employee compensation
expense included in net income, net of tax
Deduct total stock based employee compensation
Expense determined under fair value method
 for all awards, net of tax                         (419,242)          (75,242)
                                                 ------------      ------------
Net loss, pro forma                              $(6,096,992)     $ (1,853,008)
                                                 ============      ============

Earnings per common share
Basic, as reported                                 $ (0.05)         $ (0.02)
Basic, pro forma                                   $ (0.05)         $ (0.02)
Diluted, as reported                               $ (0.05)         $ (0.02)
Diluted, pro forma                                 $ (0.05)         $ (0.02)
</TABLE>



                                       15
<PAGE>

Principles of Consolidation

The consolidated financial statements include the accounts of CTC and its wholly
owned subsidiaries (collectively, the "Company"). All significant inter-company
accounts and transactions are eliminated in consolidation.

Research and Development Expenses

Research and development expenses are charged to operations as incurred.

Accounts Receivable

The Company has a $2,500,000 account receivable from one entity relating to
engineering services provided during fiscal 2004 for an electrical line project
in Kansas. The Company expects receipt of payment by the end of the second
quarter of fiscal 2005.

Loss Per Share

The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per share is
computed by dividing loss available to common shareholders by the
weighted-average number of common shares outstanding. Diluted loss per share is
computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Common equivalent shares are excluded from the
computation if their effect is anti-dilutive.

The following common stock equivalents were excluded from the calculation of
diluted loss per share for the three months ended December 31, 2004 and 2003
since their effect would have been anti-dilutive:

                                                              December 31
                                                      ------------------------
                                                         2004          2003
                                                      ----------    ----------
          Series B convertible preferred stock                --        80,000
          Options for common stock                     7,175,336     7,897,740
          Warrants                                    11,748,282    13,189,569

Concentration of Credit Risk

The Company has a $2,500,000 account receivable from one entity relating to
engineering services provided during fiscal 2004. The Company expects receipt of
payment by the end of the second quarter of fiscal 2005.

RESULTS OF OPERATION

Three Months Ended December 31, 2004 and December 31, 2003

PRODUCT REVENUES. Product revenues for the three months ending December 31, 2004
consist of revenue from the sale of ACCC Cable products to utility companies on
a "trial" basis so these customers can verify our claims that the ACCC Cable is
technologically superior to existing cable technology. The cable sold does not
have a right of return. Product revenues increased from $0 for the three months
ending December 31, 2003 to $46,485 for the three months ending December 31,
2004. The dollar increase was due to increased ACCC cable trials by utility
companies. Revenue of $564,750 from one project has been deferred, with
associated costs capitalized, pending completion of the project.

CONSULTING REVENUES. Consulting revenues since inception consisted of $2,500,000
for a single consulting contract that was completed during the three months
ending September 30, 2004. No consulting contracts were completed during either
the three months ended December 31, 2003 or 2004. While this contract provided
us with significant revenues, we currently are not concentrating our efforts to
increase our consulting business and instead are focused on increasing our
product revenues through commercialization of the ACCC Cable. As a result, we do
not believe that consulting revenues will be maintained or grow.



                                       16
<PAGE>

COST OF PRODUCT REVENUES. Cost of product revenues for the three months ending
December 31, 2004 represented materials costs to produce ACCC cable. Cost of
product revenues increased from $0 for the three months ending December, 2003 to
$30,894 for the three months ending December, 2004. The dollar increase was due
to increased ACCC cable trials by utility companies.

COST OF CONTRACT REVENUE. Cost of contract revenue consists primarily of
salaries for engineers and expenses for consultants, supplies, equipment,
depreciation and facilities associated with contract projects. Our total
engineering costs are allocated between cost of contract revenue and research
and development expense. In a given period, the allocation of engineering costs
between cost of contract revenue and research and development is a function of
the level of effort expended on each.

Cost of contract revenue since inception consisted of costs related to the
single consulting contract that was completed during the three months ending
September 30, 2004. No consulting contracts were completed during either the
three months ended December 31, 2003 or 2004 and accordingly, no costs of
contract revenue was recorded for the respective quarters.

OFFICER COMPENSATION. Officer compensation expense consisted of salaries and
employee benefits for our Chief Executive and Chief Operating Officers. Officer
compensation expenses decreased 42% from $95,000 in the first quarter of fiscal
2004 to $55,385 in the current year quarter. For the three month period, the
dollar decrease was due to additional officer compensation expense recorded in
the fiscal 2004 quarter relating to balances due from quarters prior to the
quarter ending December 31, 2003.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense consisted
primarily of salaries and employee benefits for administrative personnel,
facilities costs, financing and stock exchange fees and insurance expenses.
General and administrative expense increased 93% from $745,736 in the first
quarter of fiscal 2004 to $1,440,692 in the first fiscal 2005 quarter. For the
three month period ended December 31, 2004, the dollar increase was primarily
due to an increase in payroll and employee costs of $167,000 due to employee
headcount and benefits increase, an increase in rent and overhead of $282,000
due to increased rents and utilities related to our new manufacturing facility,
and an increase of $363,000 due to financial finders fees, offset by a $215,000
decrease in consulting fees.

LEGAL, PROFESSIONAL, AND CONSULTING EXPENSE. Legal, professional, and consulting
expense consisted primarily of legal fees and consultants in marketing and
business development. Legal, professional, and consulting expenses increased 37%
from $572,083 in the first quarter of fiscal 2004 to $785,495 in the first
fiscal 2005 quarter. For the three month period ended December 31, 2004, the
dollar increase was primarily due to an increase in professional fees of $84,000
and increases in marketing and business development consultants of $119,000.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense consisted
primarily of salaries for engineers and expenses for consultants, recruiting,
supplies, equipment, depreciation and facilities related to engineering projects
to enhance and extend our composite materials intellectual property offerings,
and our composite materials product technology.

Research and development expense increased 99% from $251,305 in the first
quarter of fiscal 2004 to $501,167 in the first quarter of fiscal 2005. The
dollar increase in the three month period was primarily due to increases of
$91,000 for salary and fringe benefits due to increased employee headcounts,
$233,000 related to supplies and expensed equipment related to optimization of
our ACCC Cable core manufacturing processes offset by a decrease in consulting
expenses of $68,000. During the quarter, there was increased focus on
optimization of our manufacturing processes and equipment in anticipation of
increased production during the second quarter of fiscal 2005.



                                       17
<PAGE>

DEPRECIATION EXPENSE. Depreciation expense consisted of depreciation on
capitalized equipment, leasehold improvements, and other capital assets.
Depreciation expense increased by 1,111% from $9,192 to $111,376 in the first
quarter of fiscal 2005. The dollar increase in the three month period ended
December 31, 2004 was primarily due to increases in the balance of equipment and
for the leasehold improvements related to the new manufacturing facility.

COMPENSATION EXPENSE RELATED TO FAIR VALUE OF STOCK OPTIONS AND WARRANTS.
Compensation expense related to fair value of stock options and warrants
represented the economic value of stock options and warrants issued to
consultants, legal counsel, and investors in exchange for services. During the
three months ended December 31, 2004, we negotiated the release of the remaining
$10,000,000 in cash that had been previously held in a custodial account
pursuant to the terms of the Convertible Debentures issued August 17, 2004. In
exchange for the release of the cash, we issued warrants to purchase 1,083,592
shares of our common stock with an exercise price of $3.23 per share and we
recorded $1,993,809 in expense for this consideration. In addition, $85,714 of
compensation expense was recognized in connection with the issuance of 82,417
warrants are part of obtaining capital lease commitments during the quarter.
During the three months ended December 31, 2003, we issued stock options to a
research and development consultant and to legal counsel in exchange for
services. Compensation expenses related to these stock options were $64,125 and
$40,325 for legal counsel and the research and development consultant
respectively.

INTEREST INCOME. Interest income increased to $27,260 in the first quarter of
fiscal 2005 from $0 in the prior year quarter. The increase was due to interest
earned on substantially higher cash balances.

INTEREST EXPENSE. Interest expense increased to $751,219 in the first quarter of
fiscal 2005 from $0 in the prior year quarter. The increase was due to cash
interest expense and amortization of the debt discount related to the
Convertible Subordinated Debentures that closed on August 17, 2004.

INCOME TAXES. We made no provision for income taxes in the three months ending
December 31, 2004 and 2003 due to net losses incurred. In 2002, we determined
that due to our continuing operating losses as well as the uncertainty of the
timing of profitability in future periods, we should fully reserve our deferred
tax assets. As of December 31, 2004, our deferred tax assets continued to be
fully reserved. We will continue to evaluate, on a quarterly basis, the positive
and negative evidence affecting the realizability of our deferred tax assets.

Net Loss

Our net loss increased to $5.7 million in the three months ended December 31,
2004 compared to $1.7 million during the corresponding period in 2003. The
increase in 2004 from 2003 of $4.0 million was due primarily to expense
increases consisting of $0.85 million in increased employee headcount,
consulting, supplies, equipment, and additional overhead expenses related to
preparation for full production of our core product, $2.45 million of
non-recurring finance and warrant expenses related to our $15 million
debentures, and $0.7 million in interest expense on our $15.0 million
debentures.



                                       18
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

SFAS No. 151
In November 2004, the FASB issued SFAS No. 151,"Inventory Costs". SFAS No. 151
amends the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage) under the guidance in ARB No. 43,
Chapter 4,"Inventory Pricing". Paragraph 5 of ARB No. 43, Chapter 4, previously
stated that ". . . under some circumstances, items such as idle facility
expense, excessive spoilage, double freight, and rehandling costs may be so
abnormal as to require treatment as current period charges. . . ." This
Statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. This statement is effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. Management does not expect adoption
of SFAS No. 151 to have a material impact on the Company's financial statements.

SFAS No. 152
In December 2004, the FASB issued SFAS No. 152,"Accounting for Real Estate
Time-Sharing Transactions". The FASB issued this Statement as a result of the
guidance provided in AICPA Statement of Position (SOP) 04-2,"Accounting for Real
Estate Time-Sharing Transactions". SOP 04-2 applies to all real estate
time-sharing transactions. Among other items, the SOP provides guidance on the
recording of credit losses and the treatment of selling costs, but does not
change the revenue recognition guidance in SFAS No. 66,"Accounting for Sales of
Real Estate", for real estate time-sharing transactions. SFAS No. 152 amends
Statement No. 66 to reference the guidance provided in SOP 04-2. SFAS No. 152
also amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of
Real Estate Projects", to state that SOP 04-2 provides the relevant guidance on
accounting for incidental operations and costs related to the sale of real
estate time-sharing transactions. SFAS No. 152 is effective for years beginning
after June 15, 2005, with restatements of previously issued financial statements
prohibited. This statement is not applicable to the Company.

SFAS No. 153
In December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary
Assets," an amendment to Opinion No. 29,"Accounting for Nonmonetary
Transactions". Statement No. 153 eliminates certain differences in the guidance
in Opinion No. 29 as compared to the guidance contained in standards issued by
the International Accounting Standards Board. The amendment to Opinion No. 29
eliminates the fair value exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. Such an exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
nonmonetary asset exchanges occurring in periods beginning after June 15, 2005.
Earlier application is permitted for nonmonetary asset exchanges occurring in
periods beginning after December 16, 2004. Management does not expect adoption
of SFAS No. 153 to have a material impact on the Company's financial statements.

SFAS No. 123(R)
In December 2004, the FASB issued SFAS No. 123(R),"Share-Based Payment". SFAS
123(R) amends SFAS No. 123,"Accounting for Stock-Based Compensation", and APB
Opinion 25,"Accounting for Stock Issued to Employees." SFAS No.123(R) requires
that the cost of share-based payment transactions (including those with
employees and non-employees) be recognized in the financial statements. SFAS No.
123(R) applies to all share-based payment transactions in which an entity
acquires goods or services by issuing (or offering to issue) its shares, share
options, or other equity instruments (except for those held by an ESOP) or by
incurring liabilities (1) in amounts based (even in part) on the price of the
entity's shares or other equity instruments, or (2) that require (or may
require) settlement by the issuance of an entity's shares or other equity
instruments. This statement is effective for the Company (1) for public
companies qualifying as SEC small business issuers, as of the first interim
period or fiscal year beginning after December 15, 2005, or (2) for all other
public companies, as of the first interim period or fiscal year beginning after
June 15, 2005, or beginning its fourth quarter of fiscal 2005., or (3) for all
nonpublic entities, as of the first fiscal year beginning after December 15,
2005. Management is currently assessing the effect of SFAS No. 123(R) on the
Company's financial statement.



                                       19
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of working capital have been private debt issuances and
equity financings.

For the three months ended December 31, 2004, we had a net loss of $5.7 million.
At December 31, 2004, we had $9.7 million of cash and cash equivalents, which
represented an increase of $6.8 million from September 30, 2004. The increase
was due to the transfer of $10.0 million of cash from restricted cash related to
the convertible subordinated debentures offset by $3.2 million of net change in
cash.

Cash used in operations during the three months ended December 31, 2004 of
$3,926,794 was primarily the result of operating losses, offset by depreciation,
amortization, and non-cash compensation expenses and working capital
requirements. Cash used for investing activities of $137,701 was primarily
related to the purchase of computer hardware and software, and equipment put in
service in anticipation of manufacturing activities offset by the sale of
equipment. Cash provided by financing of $823,936 was primarily due to the cash
proceeds from option and warrant exercises net of principal payments made on
capital lease obligations.

In November 2004, we reached an agreement with the investors that purchased
debentures in our $15 million financing of August 17, 2004 to release $10
million that was held in a custodian account. Following the release of the $10
million, we believe that we have sufficient operating capital to carry out our
plans for the near to medium term. We anticipate that we will begin generating
sales in fiscal year ending September 30, 2005 sufficient to cover operating
costs. Central to our financial strategy for fiscal 2005 is the securing of
sufficient equipment lease financing to support the ramp up of our core
production in larger production facilities. During the quarter, we obtained
approximately $455,000 in long term lease financing commitments and we are in
negotiation for an additional $3.0 million in long term equipment lease
financing.

CAPITAL EXPENDITURES

The Company does not have any material commitments for capital expenditures.

EFFECTS OF INFLATION

We are subject to inflation and other price risks arising from price
fluctuations in the market prices of the various raw materials that we use to
produce our products. Price risks are managed through cost-containment measures.
We do not believe that inflation risk or other price risks with respect to raw
materials used to produce our products are material to our business, financial
position, results of operations or cash flows.

DEVELOPMENTS THIS QUARTER

We continue to develop and refine the ACCC product. During this quarter,
refinements to the product and production process have resulted in processing
optimizations, including increasing line speed. In addition, funds were expended
for further development work for various conductor ancillaries, such as
connection hardware, which we anticipate will facilitate the installation of
ACCC cable in the field using conventional installation tools.

A number of changes have been made to our operations capabilities, both in terms
of systems implementation and human resources.



                                       20
<PAGE>

We have purchased additional information technology systems supporting finance,
sales, marketing and administration. We believe these infrastructure
improvements will improve efficiency and form the back bone of our compliance
with the requirements of the Sarbanes Oxley.

During this quarter, we sought to strengthen our operational management
specifically in relation to increasing our production capabilities and in the
strategic marketing arena. These efforts culminated, subsequent to the end of
the first quarter, in the appointment of a new Acting Chief Operating Officer,
Brian Brittsan, who has had considerable experience in managing companies as
they take new technology products into the commercial production stage of
operations. It is hoped that following a probationary period Mr. Brittsan will
be appointed COO and become an officer of the Company. In addition, we
strengthened our financial management with the engagement of Bradford Wheatley
as a consultant to assist the Acting Chief Financial Officer, Benton Wilcoxon,
in the fulfillment of his duties. It is hoped that following a probationary
period Mr. Wheatley will be appointed to the position of CFO and become an
officer of the Company. Mr. Wheatley has extensive experience in accessing
capital markets, as well as in accounting and financial management, important
background as we commit resources to ramping up production and prepare for
Sarbanes-Oxley compliance.

Mr. William Arrington, our former Chief Operating Officer, has been appointed
Senior Vice President, Office of the CEO, a new position that will enable Mr.
Arrington to focus on public relations and strategic marketing of our products
in addition to assisting the CEO in the fulfillment of his duties.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS There are no off
balance sheet arrangements.

The following table summarizes our contractual obligations (including interest
expense) and commitments as of December 31, 2004:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Contractual
Obligations             Total                Less than 1 Year     1-3 Years            3-5 Years           More than 5 Years
-------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                  <C>                  <C>                  <C>                   <C>
Long-Term Debt
Obligations             $17,392,500          $  900,000           $16,492,500               --                  --
-------------------------------------------------------------------------------------------------------------------------------
Capital Lease
Obligations             $ 1,097,375          $  408,959           $   688,416               --                  --
-------------------------------------------------------------------------------------------------------------------------------
Operating Lease
Obligations             $ 6,904,208          $1,005,903           $ 3,244,767          $2,653,538               --
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

While we can not assure you that we will not require additional financing, or
that such financing will be available to us, we believe that our cash and cash
equivalents and investments will be sufficient to fund our operations for at
least the next twelve months.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

WE ARE A "START-UP" COMPANY AND HAVE A LIMITED OPERATING HISTORY.

We are a "start-up" company and have a limited operating history. We are subject
to business risks that are typical of "start-up" companies and "lead-time"
factors are expected to affect the timing of our receipt of revenues. There can
be no assurance that we will be able to generate any significant revenues. Until
we generate significant revenues, we will experience negative cash flows and
financial losses. Our ability to generate revenues may be affected by numerous
factors. No assurance can be given that a demand for our product will develop
or, if it does develop, that it will be sufficient to justify our investment in
developing our intended business.



                                       21
<PAGE>

WE EXPECT FUTURE LOSSES AND WE MAY NOT BECOME PROFITABLE.

Prior to acquiring Transmission Technology Corporation ("TTC"), we were a shell
corporation having no operating history, revenues from operations, or assets
since December 31, 1989. We have not had any bookable revenues from operations
subsequent to acquiring TTC through June 30, 2004. We may experience significant
quarterly and annual losses for the foreseeable future.

We may not ever become profitable. If we do achieve profitability, we may not be
able to sustain or increase profitability on a quarterly or annual basis. We
expect the need to significantly increase our general administrative and product
prototype and equipment prototype production expenses, as necessary. As a
result, we will need to generate significant revenues to achieve and maintain
profitability.

OUR INDEPENDENT AUDITORS HAVE ISSUED A QUALIFIED REPORT WITH RESPECT TO OUR
ABILITY TO CONTINUE AS A GOING CONCERN.

In previous filings, our accountants have issued a report relating to our
audited financial statements which contains a qualification with respect to our
ability to continue as a going concern because, among other things, our ability
to continue as a going concern is dependent upon our ability to generate
profitable operations in the future and/or to obtain the necessary financing to
meet our obligations and repay our liabilities from normal business operations
when they come due. This is natural because during the product development
phase, a company must rely on the promise of future revenues (if the product
under development gains acceptance) to secure financing from the capital markets
so that it can complete the development of its products. There is no guarantee
that the product will be completed, accepted or provide a marketable advantage
and therefore no guarantee that the development will ever be profitable.

For the three months ended December 31, 2004, we had a net loss of ($5,677,750)
and negative cash flows from operations of ($3,926,794). For the fiscal year
ended September 30, 2004, we had a net loss of $(14,323,597) and negative cash
flows from operations of $(9,022,676). For the fiscal years ended September 30,
2003 and 2002, we had net losses of $(6,771,252) and $(4,523,953), respectively.
For the same periods, we had negative cash flows from operations of $(2,022,935)
and $(715,923), respectively.

As of December 31, 2004, our accumulated deficit was $(31,752,829).

OUR INABILITY TO RAISE ADDITIONAL WORKING CAPITAL AT ALL OR TO RAISE IT IN A
TIMELY MANNER COULD NEGATIVELY IMPACT OUR ABILITY TO FUND OUR OPERATIONS, TO
GENERATE REVENUES, AND TO OTHERWISE EXECUTE OUR BUSINESS PLAN, LEADING TO THE
REDUCTION OR SUSPENSION OF OUR OPERATIONS AND ULTIMATELY OUR GOING OUT OF
BUSINESS. SHOULD THIS OCCUR, THE VALUE OF YOUR INVESTMENT IN OUR COMMON STOCK
COULD BE ADVERSELY AFFECTED, AND YOU COULD EVEN LOSE YOUR ENTIRE INVESTMENT.

While the Company has raised significant capital through its debenture offering,
it is possible that we will need to raise cash and additional working capital to
cover a possible shortfall in our cash and working capital until such time as we
become cash flow positive based solely on our revenues less operating and other
costs. Should the financing we require to sustain our working capital needs be
unavailable or prohibitively expensive when we require it, the consequences
would be a material adverse effect on our business, operating results, financial
condition and prospects.

OUR FAILURE TO RAISE NECESSARY CAPITAL COULD RESTRICT OUR GROWTH, LIMIT OUR
ABILITY TO DEVELOP AND MARKET OUR PRODUCT AND HINDER OUR ABILITY TO COMPETE.

In order to fully exploit our business plan, we may need to raise significant
additional funds. Failure to obtain adequate capital may: (i) restrict our
growth; (ii) limit our ability to market our product; (iii) limit the
development of our product; (iv) hinder our ability to compete; and (v) may
affect our ability to continue our business operations as planned. Any of these
consequences would have a material adverse effect on our business, results of
operations and financial condition.



                                       22
<PAGE>

TO SATISFY OUR CAPITAL REQUIREMENTS, WE MAY SEEK TO RAISE FUNDS IN THE PUBLIC OR
PRIVATE CAPITAL MARKETS.

Our ability to raise additional funds in the public or private markets will be
adversely affected if the results of our business operations are not favorable,
if any products developed are not well-received or if our stock price or trading
volume is low. We may seek additional funding through corporate collaborations
and other financing vehicles or from loans or investments from new or existing
stockholders. There can be no assurance that any such funding will be available
to us, or if available, that it will be available on acceptable terms. If
adequate funds are not available, we will not be able to complete the
commercialization of any products that we may have developed. As a result, we
may be required to discontinue our operations without obtaining any value for
our products under development, thereby eliminating stockholder equity, or we
could be forced to relinquish rights to some or all of our products under
development in return for an amount substantially less than we expended to
develop such products. If we are successful in obtaining additional financing,
the terms of the financing may have the effect of diluting the holdings or
adversely affecting the rights of the holders of common stock.

OUR PRODUCT MAY NOT BE ACCEPTED BY OUR POTENTIAL CUSTOMERS.

While we have received numerous serious inquiries about our products and
technology, there can be no assurance that we will be able to profit from the
development or manufacture of our products as planned, or that we will be
successful in consummating sales of our products to our potential customers. Our
ability to successfully commercialize our products will depend in part on the
acceptance of our products by our potential customers, primarily the major
utility companies. The failure of utility companies to purchase our products
would have a material adverse effect on our business, results of operations and
financial condition. Any unfavorable publicity concerning us or any of our
products could have an adverse effect on our ability to achieve acceptance of
our products by utility companies and to commercialize our products, which could
have a material adverse effect on our business, results of operations and
financial condition.

WE MAY NOT BE ABLE TO MANAGE OUR GROWTH EFFECTIVELY.

The transition from a small company focused on research and development of our
products to a company with the additional focus on commercial production,
marketing, and sales has placed and will continue to place a significant strain
on our managerial, operational, and financial resources. Failure to manage our
growth effectively could have a material adverse effect on our business, results
of operations and financial condition. Significant additional growth will be
necessary for the Company to achieve its plan of operation.

WE MAY NOT BE ABLE TO DIVERSIFY OUR OPERATIONS INTO OTHER INDUSTRIES.

Because of the limited financial resources that we have, we may not be able to
diversify our activities into other areas outside the development, production,
and commercialization of cable and support systems for use in electrical power
transmission and distribution systems. Our inability to diversify our products
into other areas will subject us to economic fluctuations within this industry
and therefore increase the risks associated with our operations.



                                       23
<PAGE>

WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND MAY INFRINGE ON THE
PROPRIETARY RIGHTS OF OTHERS.

Establishment of patents and other proprietary rights is important to our
success and our competitive position. Accordingly, we intend to devote
substantial resources to the establishment and protection of patents and other
proprietary rights. There can be no assurance that the actions taken by us to
establish and protect any patents or other proprietary rights will be adequate
to prevent imitation of our products by others or to prevent others from
prohibiting sales of any products we may develop in violation of the patents and
proprietary rights of others. Moreover, no assurance can be given that others
will not assert rights in, or ownership of, patents and other proprietary rights
we may establish or acquire or that we will be able to successfully resolve such
conflicts.

There can be no assurance that any of our pending patents for our technologies
and products will be issued. There can be no assurance that any patents related
to the technology licensed under the License Agreement with W. Brandt
Goldsworthy & Associates, Inc. will be issued.

WE DEPEND ON KEY PERSONNEL AND WE MAY NOT BE ABLE TO ATTRACT AND RETAIN
QUALIFIED EMPLOYEES.

Our success will be largely dependent, in particular, upon the continuing
services of Benton H Wilcoxon, our Chief Executive Officer, and Brian Brittsan,
our acting Chief Operating Officer. If Mr. Wilcoxon or Mr. Brittsan were unable
to provide services to us for whatever reason, our business would be adversely
affected. Mr. Wilcoxon has not entered into an employment agreement with the
Company. Mr. Brittsan has entered into a consulting agreement. The term of such
consulting agreement is from January 3, 2005 through June 30, 2005.

In addition, our ability to develop and market our products and to achieve
profitability will depend on our ability to attract and retain highly talented
personnel. We face intense competition for personnel from other companies. There
can be no assurance that we will be successful in attracting and retaining key
personnel. The loss of key personnel or the inability to attract and retain the
additional, highly-talented employees required for the development and
commercialization of our products, could adversely affect our results of
operations and our business.

A FAILURE TO ESTABLISH AND MAINTAIN RELATIONSHIPS WITH STRATEGIC PARTNERS MAY
HARM OUR BUSINESS.

We will depend on establishing and maintaining relationships with strategic
partners. Our ability to develop, produce, and market our products is dependent
upon our ability to establish and maintain relationships with other companies
and individuals. We may not be able to enter into relationships with these
companies on commercially reasonable terms or at all. Even if we enter into
these relationships, not all such relationships may result in benefits for our
company.

WE CANNOT CONTROL THE COST OF OUR RAW MATERIALS.

Our principal raw materials will be glass and carbon fibers, plus various
polymer resins and high-grade aluminum. The prices for these raw materials are
subject to market forces largely beyond our control, including energy costs,
organic chemical feed stocks, market demand, and freight costs. The prices for
these raw materials have varied significantly and may vary significantly in the
future. We may not be able to adjust our product prices, especially in the
short-term, to recover the costs of increases in these raw materials. Our future
profitability may be adversely affected to the extent we are unable to pass on
higher raw material and energy costs to our customers.



                                       24
<PAGE>

INTERRUPTIONS OF SUPPLIES FROM OUR KEY SUPPLIERS MAY AFFECT OUR RESULTS OF
OPERATIONS AND FINANCIAL PERFORMANCE.

Interruptions or shortages of supplies from our key suppliers of raw materials
could disrupt production or impact our ability to increase production and sales.
We use a limited number of sources for most of the other raw materials that we
use. We do not have long-term or volume purchase agreements with most of our
suppliers, and may have limited options in the short-term for alternative supply
if these suppliers fail, for any reason, including their business failure or
financial difficulties, to continue the supply of materials or components.
Moreover, identifying and accessing alternative sources may increase our costs.

WE ARE CONTROLLED BY A SMALL NUMBER OF STOCKHOLDERS.

As at the date of this Form 10-Q, two stockholders in the aggregate beneficially
own or control approximately 36.2% of the outstanding common stock. As a result,
these persons will have the ability to control substantially all matters
submitted to our stockholders for approval and to control our management and
affairs.

WE WILL LIKELY EXPERIENCE CUSTOMER CONCENTRATION.

Until and unless we secure multiple customer relationships, it is likely that we
will experience periods during which we will be highly dependent on one or a
limited number of customers. Dependence on a single or a few customers will make
it difficult to satisfactorily negotiate attractive prices for our products and
will expose us to the risk of substantial losses if a single dominant customer
stops conducting business with us.

OUR BUSINESS MAY BE SUBJECT TO INTERNATIONAL RISKS.

We are pursuing international business opportunities, including in China,
Mexico, Brazil, Europe, Russia, the Middle East, certain far eastern countries
and Africa. Risks inherent in international operations include unexpected
changes in regulatory requirements, export restrictions, tariffs and other trade
barriers; challenges in staffing and managing foreign operations; differences in
technology standards, employment laws and business practices; longer payment
cycles and problems in collecting accounts receivable; political instability;
changes in currency exchange rates; currency exchange controls; and potentially
adverse tax consequences.

WE MUST COMPLY WITH ENVIRONMENTAL REGULATIONS.

Our intended operations are subject to various Federal, state, and local laws
and regulations relating to the protection of the environment. These
environmental laws and regulations, which have become increasingly stringent,
are implemented principally by the Environmental Protection Agency and
comparable state agencies, and govern the management of hazardous wastes, the
discharge of pollutants into the air and into surface and underground waters,
and the manufacture and disposal of certain substances. There are no material
environmental claims currently pending or, to our knowledge, threatened against
us. In addition, we believe our planned operations will be implemented in
compliance with the current laws and regulations. We estimate that any expenses
incurred in maintaining compliance with current laws and regulations will not
have a material effect on our earnings or capital expenditures. However, there
can be no assurance that current regulatory requirements will not change, that
currently unforeseen environmental incidents will not occur, or that past
non-compliance with environmental laws will not be discovered.



                                       25
<PAGE>

CHANGES IN INDUSTRY STANDARDS AND REGULATORY REQUIREMENTS MAY ADVERSELY AFFECT
OUR BUSINESS.

As a manufacturer and distributor of wire and cable products we are subject to a
number of industry standard-setting authorities, such as the "Institute of
Electrical and Electronic Engineers" (IEEE), the European based "International
Council on Large Electric Systems" ("CIGRE"), the "American Society of Testing
and Materials" (ASTM) and the Canadian Standards Association. In addition, many
of our products may become subject to the requirements of Federal, state and
local or foreign regulatory authorities. Changes in the standards and
requirements imposed by such authorities could have an adverse effect on us. In
the event we are unable to meet any such standards when adopted our business
could be adversely affected. In addition, changes in the legislative environment
could affect the growth and other aspects of important markets served by us.
While certain legislative bills and regulatory rulings are pending in the energy
and telecommunications sectors which could improve our markets, any delay or
failure to pass such legislation and regulatory rulings could adversely affect
our opportunities and anticipated prospects may not arise. It is not possible at
this time to predict the impact that any such legislation or regulation or
failure to enact any such legislation or regulation, or other changes in laws or
industry standards that may be adopted in the future, could have on our
financial results, cash flows or financial position.

WE WILL EXPERIENCE COMPETITION FROM OTHER COMPANIES IN THE INDUSTRY.

Our competitors include makers of traditional bare overhead wire and other
companies with developmental-stage products that have the potential to compete
with ACCC cable. While we are not aware of any existing competing manufacturers
that have been able to significantly and cost effectively increase the
performance of the current electrical power transmission and distribution
cables, there is no certainty that unique technological advances won't be
achieved by our competition, with better capital resources, in the future. We
believe our competitors will continue to improve the design and performance of
their products and to introduce new products with competitive price and
performance characteristics. We expect that we will be required to continue to
invest in product development, productivity improvements and customer service
and support in order to compete in our markets. Such competitors could develop a
more efficient product or undertake more aggressive and costly marketing
campaigns than us which may adversely affect our marketing strategies which
could have a material adverse effect on our business, results of operations or
financial condition. In addition, as we introduce new products, we will compete
directly with a greater number of companies. There can be no assurance that we
can compete successfully against current or future competitors nor can there be
any assurance that competitive pressures faced by us will not result in
increased marketing costs, loss of market share or otherwise will not materially
adversely affect our business, results of operations and financial condition.
See "Competition" under the section of this prospectus entitled "Description of
Business."

WE ARE RESPONSIBLE FOR THE INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS.

Our Bylaws provide for the indemnification of our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of the Company. This
indemnification policy could result in substantial expenditures, which we may be
unable to recoup.

TERRORIST ATTACKS AND OTHER ATTACKS OR ACTS OF WAR MAY ADVERSELY AFFECT THE
MARKETS IN WHICH WE OPERATE, OUR OPERATIONS AND OUR PROFITABILITY.

The attacks of September 11, 2001, and subsequent events, including the military
action in Iraq, have caused and may continue to cause instability in our markets
and have led and may continue to lead to, further armed hostilities or further
acts of terrorism worldwide, which could cause further disruption in our
markets. Acts of terrorism may impact our operations or those of our customers
or suppliers and may further limit or delay purchasing decisions of our
customers. Depending on their magnitude, acts of terrorism or war could have a
material adverse effect on our business, financial results, cash flows and
financial position.



                                       26
<PAGE>

RISKS RELATED TO INVESTMENT IN OUR SECURITIES

THERE IS CURRENTLY A LIMITED TRADING MARKET FOR OUR COMMON STOCK.

Our common stock is traded in the OTC market through the OTC Bulletin Board.
There is currently an active trading market for the common stock; however there
can be no assurance that an active trading market will be maintained. Trading of
securities on the OTC Bulletin Board is generally limited and is effected on a
less regular basis than that effected on other exchanges or quotation systems
(such as the NASDAQ Stock Market), and accordingly investors who own or purchase
common stock will find that the liquidity or transferability of the common stock
is limited. Additionally, a stockholder may find it more difficult to dispose
of, or obtain accurate quotations as to the market value, of common stock. There
can be no assurance that the common stock will ever be included for trading on
any stock exchange or through any other quotation system (including, without
limitation, the NASDAQ Stock Market).

THE APPLICATION OF THE "PENNY STOCK" RULES COULD ADVERSELY EFFECT THE MARKET
PRICE OF OUR COMMON STOCK.

As long as the trading price of our common stock is below $5.00 per share, the
open-market trading of our common stock will be subject to the "penny stock"
rules. The "penny stock" rules impose additional sales practice requirements on
broker-dealers who sell securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of securities and have received the
purchaser's written consent to the transaction before the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
broker-dealer must deliver, before the transaction, a disclosure schedule
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. These additional burdens
imposed on broker-dealers may restrict the ability of broker-dealers to sell the
common stock and may affect a stockholder's ability to resell the common stock.

Stockholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) boiler room practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differential and markups by selling broker-dealers; and (v)
the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.

THE PRICE OF OUR COMMON STOCK IS VOLATILE.

The market price of the common stock may be subject to significant fluctuations
in response to our operating results, announcements of new products or market
expansions by us or our competitors, changes in general conditions in the
economy, the financial markets, the electrical power transmission and
distribution industry, or other developments and activities affecting us, our
customers, or our competitors, some of which may be unrelated to our
performance. The sale or attempted sale of a large amount of common stock into
the market may also have a significant impact on the trading price of common
stock. The closing bid prices for the common stock have fluctuated from a high
of $6.24 to a low of $0.87 since September 30, 2003.



                                       27
<PAGE>

WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE.

We have not paid dividends on the common stock and do not anticipate paying such
dividends in the foreseeable future.

WE ISSUED DULY AUTHORIZED SHARES TO EMPLOYEES AND CONSULTANTS UNDER OUR 2002
NON-QUALIFIED STOCK COMPENSATION PLAN UNDER THE INCORRECT ASSUMPTION THAT WE HAD
REGISTERED THE SHARES PURSUANT TO FEDERAL SECURITIES LAWS. HOWEVER, WE
SUBSEQUENTLY REALIZED THAT THESE SHARES HAD NOT BEEN REGISTERED PRIOR TO
ISSUANCE. AS A RESULT, OUR ISSUANCE MAY HAVE VIOLATED FEDERAL AND STATE
SECURITIES LAWS, AND MAY RESULT IN OUR LIABILITY TO CERTAIN SUBSEQUENT
PURCHASERS OF THESE SHARES.

Between March 18, 2003 and February 4, 2004 we issued common stock and options
representing 1,504,780 shares of common stock to nine employees and consultants
pursuant to our 2002 Non-Qualified Stock Compensation Plan. Although we believed
that we and our counsel had filed the appropriate registration statement on Form
S-8, on February 5, 2004, it came to our attention that such registration
statement had not been filed. It may be determined that such issuances were not
exempt from registration or qualification under Federal and state securities
laws, and we did not obtain the required registrations or qualifications. As a
result, we may be subject to contingent liabilities from these investors, as
well as subsequent purchasers of the shares directly and indirectly issued.
These liabilities may include an obligation to make a rescission offer to the
holders of these shares and options. If rescission is required and accepted, we
could be required to make payments to the holders of these shares and options.
In addition, Federal securities laws do not expressly provide that a rescission
offer will terminate a purchaser's right to rescind a sale of stock that was not
registered as required. If rescission is required, and any or all of the
offerees reject the rescission offer, we may continue to be liable under Federal
and state securities laws. See our disclosure titled "Stock Compensation
Issuances."

A LARGE NUMBER OF COMMON SHARES ARE ISSUABLE UPON EXERCISE OF OUTSTANDING
OPTIONS, WARRANTS AND CONVERTIBLE DEBENTURES. THE EXERCISE OR CONVERSION OF
THESE SECURITIES COULD RESULT IN THE SUBSTANTIAL DILUTION OF THE COMPANY IN
TERMS OF A PARTICULAR PERCENTAGE OWNERSHIP IN THE COMPANY AS WELL AS THE BOOK
VALUE OF THE COMMON SHARES. THE SALE OF A LARGE AMOUNT OF COMMON SHARES RECEIVED
UPON EXERCISE OF THESE OPTIONS OR WARRANTS ON THE PUBLIC MARKET TO FINANCE THE
EXERCISE PRICE OR TO PAY ASSOCIATED INCOME TAXES, OR THE PERCEPTION THAT SUCH
SALES COULD OCCUR, COULD SUBSTANTIALLY DEPRESS THE PREVAILING MARKET PRICES FOR
OUR SHARES.

The exercise price or conversion price of outstanding options, warrants and
convertible debentures may be less than the current market price for our common
shares. In the event of the exercise of these securities, a shareholder could
suffer substantial dilution of his/her investment in terms of the percentage
ownership in the Company as well as the book value of the common shares held.

We believe that the occurrence of any one or some combination of the following
risk factors could seriously harm our business.

OUR QUARTERLY RESULTS ARE UNPREDICTABLE AND MAY FLUCTUATE SIGNIFICANTLY

Our quarterly revenue and operating results are difficult to predict and may
fluctuate significantly from quarter to quarter. Because we have not had any
substantial ACCC product revenues to date, we can have no assurance that our
revenues will materialize. Since our revenues may fluctuate and are difficult to
predict, and our expenses are largely independent of revenues in any particular
period, it is difficult for us to accurately forecast revenues and
profitability.



                                       28
<PAGE>

Our business is subject to a variety of additional risks, which could materially
adversely affect quarterly and annual operating results, including:

o  market acceptance of our composite technologies by utility companies;

o  the extent and timing of new cable transactions with utility companies;

o  the loss of a strategic relationship or termination of a relationship with a
   cable partner;

o  announcements or introductions of new technologies or products by us or our
   competitors;

o  delays or problems in the introduction or performance of enhancements or of
   future generations of our technology;

o  failures or problems in our utility cable product;

o  delays in the adoption of new industry standards or changes in market
   perception of the value of new or existing standards;

o  competitive pressures resulting in lower revenues;


o  personnel changes, particularly those involving engineering and technical
   personnel;

o  costs associated with protecting our intellectual property;

o  the potential that customers could fail to make payments under their current
   contracts;

o  market-related issues, including lower ACCC Cable demand brought on by excess
   cable inventory and lower average selling prices for ACCC Cable as a result
   of market surpluses;

o  increased costs or shortages of key raw materials including carbon fiber and
   glass fiber;

o  regulatory developments; and

o  general economic trends and other factors.

WE EXPERIENCED NET LOSSES

We have had net losses during since inception. We expect that we will have a net
loss for the current year. We may continue to experience losses in the future if

o  the utility cable market does not adopt our new technologies into their
   infrastructure;

o  new and existing customers do not choose to purchase our ACCC Cable; or

o  our additional products in development do not become marketable.

WE HAVE A UNIQUE BUSINESS MODEL

The success of our business model depends upon our ability to negotiate and
maintain current and future agreements with existing cable vendors, and their
willingness and ability to sell products that incorporate our technology so that
we may receive significant revenues that are consistent with our plans and
expectations.

We face numerous risks in successfully obtaining suitable partners on terms
consistent with our business model, including, among others:

o  we must typically undergo a lengthy and expensive process of building a
   relationship with a potential partner before there is any assurance of an
   agreement with such party;

o  we must persuade cable manufacturers with significant resources to rely on us
   for critical technology on an ongoing basis rather than trying to develop
   similar technology internally;

o  we must persuade potential partners to bear retooling costs associated with
   producing our products; and

o  we must successfully transfer technical know-how to our partners.

Moreover, the success of our business model also depends on the acceptance of
our products by the utility companies who have historically been conservative in
their adoption of new products and technologies into their infrastructure.
Further, our partners will be selling our products that may compete with their
existing or future cable products. Our partners are not required to sell our
products and they are not prohibited from discounting the prices of their
products below our prices.



                                       29
<PAGE>

Our business could be seriously harmed if:

o  we cannot obtain suitable partners;

o  our partners fail to achieve significant sales of ACCC cable or products
   incorporating our technology; or

o  we otherwise fail to implement our business strategy successfully.

THE CABLE TECHNOLOGY THAT WE ARE TRYING TO REPLACE IS HIGHLY PRICE COMPETITIVE

We anticipate that the selling price per mile of our ACCC Cable will be higher
than the current and existing cable technology alternatives. We believe that the
increased inherent value of our products will be recognized by the utility
companies in the form of decreased installation, transmission and distribution
costs. However, due to the competitive nature of the industry, there can be no
assurance that our partners or their competitors will not reduce their prices
accordingly.

OUR INTELLECTUAL PROPERTY IS SUBJECT TO LIMITED PROTECTION

Because we are a technology provider, our ability to protect our intellectual
property and to operate without infringing the intellectual property rights of
others is critical to our success. We regard our technology as proprietary, and
we have a number of patents and pending patent applications. We also rely on a
combination of trade secrets, copyright and trademark law and non-disclosure
agreements to protect our unpatented intellectual property. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use our technology without authorization.

In the future, we may choose to bring legal action to enforce our intellectual
property rights. Any such litigation could be costly and time-consuming for us,
even if we were to prevail. Moreover, even if we are successful in protecting
our proprietary information, our competitors may independently develop
technologies substantially equivalent or superior to our technology. The
misappropriation of our technology or the development of competitive technology
could seriously harm our business.

Our technology or products may infringe the intellectual property rights of
others. Third parties may assert patent, copyright and other intellectual
property rights to technologies that are important to our business. In the past,
we have received claims from other companies that our technology infringes their
patent rights. Intellectual property rights can be uncertain and can involve
complex legal and factual questions. We may infringe the proprietary rights of
others, which could result in significant liability for us. If we were found to
have infringed any third party's patents, we could be subject to substantial
damages and an injunction preventing us from conducting our business.

WE MUST MAKE JUDGMENTS IN THE PROCESS OF PREPARING OUR FINANCIAL STATEMENTS

We prepare our financial statements in accordance with generally accepted
accounting principles and certain critical accounting polices that are relevant
to our business. The application of these principles and policies requires us to
make significant judgments and estimates. In the event that judgments and
estimates we make are incorrect, we may have to change them, which could
materially affect our financial position and results of operations.

Moreover, accounting standards have been subject to rapid change and evolving
interpretations by accounting standards setting organizations over the past few
years. The implementation of new standards requires us to interpret and apply
them appropriately. If our current interpretations or applications are later
found to be incorrect, our financial position and results of operations could be
materially affected.



                                       30
<PAGE>

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk relates primarily to our cash balances and the
effect that changes in interest rates have on the interest earned on that
portfolio. Our convertible debentures bear a fixed rate of interest.

As of December 31, 2004 we did not hold any derivative financial instruments for
speculative or trading purposes. The primary objective of our investment
activities is the preservation of principal while maximizing investment income
and minimizing risk. As of December 31, 2004, we had $9.7 million in cash, cash
equivalents and short-term investments that mature in twelve months or less. Due
to the short duration of these financial instruments, we do not expect that a
change in interest rates would result in any material loss to our investment
portfolio.

ITEM 4:  CONTROLS AND PROCEDURES

Based on an evaluation under the supervision and with the participation of the
Company's management, including the Chief Executive Officer, the financial
consultant assisting the acting Chief Financial Officer, and the acting Chief
Operating Officer, the Company's principal executive officer and principal
financial officer has concluded that the Company's disclosure controls and
procedures (as defined under the Securities Exchange Act of 1934, as amended
(Exchange Act)) were effective as of December 31, 2004 to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

There were no significant changes in the Company's internal control over
financial reporting identified in management's evaluation during the first
quarter of fiscal 2005 that have materially affected or are reasonably likely to
materially affect the Company's internal control over financial reporting.



                                       31
<PAGE>

                          PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

                                       32
<PAGE>

COMPOSITE TECHNOLOGY CORPORATION V. ACQUVEST, INC., PAUL KOCH, VICTORIA KOCH,
PATRICIA MANOLIS, AND MICHAEL TARBOX

The Orange County Superior Court Case No.03-CC-12640 was filed on October 16,
2003. CTC alleges causes of action for declaratory relief, breach of contract,
fraudulent inducement, rescission, and economic duress arising out of certain
alleged subscription and investment agreements executed between CTC, Acquvest,
Inc., and Patricia Manolis. Purported "finder's fee" agreements are also at
issue involving Paul Koch and Michael Tarbox. The Defendants deny CTC's material
allegations, and Acquvest, Koch, and Manolis filed a Cross-Complaint on
September 16, 2004. The parties stipulated to permit Cross-Complainants to amend
the Cross-Complaint, which was filed on December 17, 2004. CTC has filed a
demurrer to the Amended Cross-Complaint of Acquvest. Trial date has been set for
May 9, 2005.

ASCENDIANT CAPITAL GROUP, LLC, MARK BERGENDAHL, AND BRADLEY WILHITE V. COMPOSITE
TECHNOLOGY CORPORATION AND BENTON H. WILCOXON

The Orange County Superior Court Case No. 03CC13314 was filed on November 4,
2003. Ascendiant, Bergendahl, and Wilhite allege causes of action against
defendants for breach of contract, specific performance, fraud and deceit,
negligent misrepresentations, breach of covenant of good faith and fair dealing,
and declaratory relief arising out of a business advisory and consulting
agreement (the "Agreement") allegedly executed between CTC and Ascendiant. CTC
denies the material allegations, and on November 10, 2003, CTC filed a case in
Orange County Superior Court against Ascendiant, Bergendahl, and Wilhite,
alleging causes of action for declaratory relief, breach of contract, fraudulent
inducement, and economic coercion arising out of the Agreement as well as
various unrelated business agreements between the plaintiffs and Wilcoxon. The
principal parties are Ascendiant, Bergendahl, Wilhite, CTC, and Wilcoxon. On
November 24, 2003, the court entered an order consolidating the cases. On
January 15, 2004, the parties agreed to submit all claims and cross-claims
arising out of the Agreement to binding arbitration before a neutral arbitrator
at JAMS-Orange County. The remaining claims and cross-claims not arising out of
the Agreement remain pending in Orange County Superior Court. The arbitration
commenced on February 9, 2005.


                                       33
<PAGE>

J.P. TURNER & COMPANY, L.L.C. V. COMPOSITE TECHNOLOGY CORPORATION

J.P. Turner & Company, L.L.C. ("J.P. Turner") initiated an arbitration before
the National Association of Securities Dealers in February 2004 alleging
Composite Technology Corporation ("CTC") breached a finder's agreement by
failing to pay certain fees to J.P. Turner. CTC disputes that any breach of the
agreement took place and denies that J.P. Turner made any introductions of
investors to CTC which directly lead to financing. CTC has filed a counterclaim
against J.P. Turner alleging claims of fraud against J.P. Turner arising out of
misrepresentations made by J.P. Turner concerning an investment opportunity.
J.P. Turner seeks $200,000 in monetary damages, a warrant to purchase $200,000
common shares of CTC at an exercise price equal to the closing bid on December
17, 2003, pre-judgment interest as of December 18, 2003, reasonable attorneys'
fees and costs. CTC seeks compensatory damages in an amount according to proof,
punitive damages, and reasonable attorneys' fees and costs based upon its
counterclaims. CTC filed its Statement of Answer and Counterclaims on May 17,
2004. The matter is presently set for hearing at the end of February 2005.

ADAM DEVONE V. COMPOSITE TECHNOLOGY CORPORATION, ET AL.

On September 10, 2004, Adam Devone filed a Complaint in Orange County Superior
Court (Case No. 04-CC-09321) against Donner, Evan Wride and Global Research,
Inc., Nutek, Inc., Zeta Centauri, Inc., Sherpa Financial & Investigations, Inc.
and Multiplyingchurches.org, Inc. (collectively, the "Donner Parties") and CTC.
Devone alleges a variety of claims against the Donner Parties based upon alleged
contractual breaches and tortuous conduct related to a $200,000 loan made
between Devone and the Donner Parties. CTC is only party to the last two causes
of action for Imposition of Constructive Trust and Declaratory Relief. Devone
did not seek monetary damages or costs against CTC. On October 8, 2004, CTC
filed an Answer to the Complaint. On October 20, 2004, Multiplyingchurches.org,
Inc. ("MC Org") filed a Cross-Complaint against CTC, Adam Devone, Sheryl Lyn
Devone (Plaintiff's wife) and Roes 1-100 alleging claims for breach of contract
against CTC and Roes 51-100 and tortious interference with contract against
Plaintiff, his wife and Roes 1-50. MC Org alleges that CTC breached a warrant
agreement by failing to issue shares thereunder and sought unspecified damages
and an injunction compelling CTC to issue shares under the warrant agreement.
CTC filed an Answer to MC Org's Cross-Complaint on November 19, 2004. On
December 30, 2004, MC Org filed a request for dismissal of all claims against
CTC pursuant to a settlement reached between MC Org and CTC. Pursuant to a
confidential settlement agreement entered into by all parties named in this
matter, a Notice of Settlement was filed on February 1, 2005 indicating that a
dismissal of the Complaint would be filed within 10 days.

MICHAEL TARBOX V. COMPOSITE TECHNOLOGY CORPORATION, ET AL.

Michael Tarbox ("Tarbox") filed this action on October 13, 2004 in Orange County
Superior Court (Case No. 04-CC-10345) against Paul Koch, Acquvest, CTC and Doe
Defendants. Tarbox alleges that Koch made fraudulent transfers to Acquvest and
the Doe defendants for the purpose of avoiding the debt owed to Tarbox. Tarbox
alleges that CTC securities were intended to serve as security for a debt owed
by Koch to Tarbox. Tarbox alleges that Defendants were not bona fide purchasers
of the CTC securities since they were receiving such securities for the benefit
of Tarbox. Tarbox further alleges that CTC breached an agreement to pay him a
finder's fee in connection with investments made by Koch. Tarbox alleges that
CTC's breach has caused him to suffer damages in excess of $750,000. CTC denies
Tarbox's material allegations. On November 14, 2004, CTC filed a demurrer to the
Complaint. Tarbox filed a First Amended Complaint. CTC filed an Answer to the
First Amended Complaint.

JEREMIAH O'KEEFFE VS. C. WILLIAM ARRINGTON AND COMPOSITE TECHNOLOGY CORPORATION:

On December 31, 2004, Jeremiah O'Keeffe ("Plaintiff") filed suit against C.
William Arrington and Composite Technology Corporation ("Defendants") in the
District Court of Dallas, Texas (Case No. 04-13004-A). Plaintiff alleges causes
of action for breach of agreement and quantum meruit, arising out of an alleged
failure to compensate Plaintiff for unspecified services provided to Defendants.
Plaintiff seeks compensatory damages, attorneys' fees, interest and costs. The
Company and Mr. Arrington deny the claims and intend to vigorously defend
against them.

                                       34
<PAGE>

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

During the first quarter of fiscal 2005, the Company issued 82,417 Series U
warrants to two entities in connection with obtaining equipment lease financing
for the Company. Each Series U warrant entitles the holder to purchase shares of
unregistered, restricted common stock at $1.83 per share and expires on August
18, 2008. The Company may, subject to a 20 day notice, call the warrants if the
common stock price is equal to or exceeds 200% of the exercise price.

In addition, during the first quarter of fiscal 2005, the Company issued
1,083,592 warrants to four entities in connection with an amendment to the
Company's outstanding Debenture issue. Each warrant entitles the holder to
purchase shares of common stock at $3.23 per share and expires on November 19,
2008.

We relied upon the exemption from registration as set forth in Section 4(2) of
the Securities Act of 1933 for the issuance of these securities. All of the
recipients took their securities for investment purposes without a view to
distribution and had access to information concerning the Company and our
business prospects, as required by the Securities Act. In addition, there was no
general solicitation or advertising for the acquisition of these securities.

ITEM 3 - DEFAULTS ON SENIOR SECURITIES

None

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

Our 2004 annual meeting of stockholders (the "2004 Annual Meeting") was held on
October 28, 2004 at our offices at 2026 McGaw Avenue, Irvine, California 92614.
Three proposals, as described in our Proxy Statement dated September 23, 2004,
were voted on at the meeting. Following is a brief description of the matters
voted upon and the results of the voting:

              1. Election of Directors:

              Nominee:                               Number of Shares:

              Benton H Wilcoxon                      For 85,628,589
                                                     Withheld 650,355
                                                     Against  391,005

              C. William  Arrington                  For 85,628,589
                                                     Withheld 650,355
                                                     Against  391,005

              2. Approval of an increase in the number of shares subject to the
                 2002 Non-Qualified Stock Compensation Plan by 15 million shares

              For            Against                 Abstain
              54,736,200     5,963,476               25,970,323

              3.  Ratification of selection of Singer Lewak Greenbaum &
                  Goldstein LLP, as the independent auditor for Composite
                  Technology

              For            Against                 Abstain
              85,655,736     173,621                 840,642


ITEM 5 - OTHER INFORMATION

None

                                       35
<PAGE>

ITEM 6 - EXHIBITS

(a) Index to Exhibits

Number           Description

2.1(3)      Articles of Merger of ElDorado Financial Group, Inc., a Florida
            corporation, into ElDorado Financial Group, Inc., a Nevada
            corporation.

2.2(1)      Agreement and Plan of Reorganization By and Among Transmission
            Technology Corporation, Certain of its Stockholders, and ElDorado
            Financial Group, Inc. dated November 3, 2001.

3.1(3)      Articles of Incorporation of the Registrant.

3.2(12)     Bylaws of Registrant.

4.1         (9) Form of Securities Purchase Agreement including form of the
            Debenture attached as Exhibit A, form of the Registration Rights
            Agreement attached as Exhibit B thereto, form of the Common Stock
            Purchase Warrant attached as Exhibit C thereto, form of legal
            opinion attached as Exhibit D, form of Custodial and Security
            Agreement attached as Exhibit E, dated August 17, 2004.

10.1(3)     2001 Transmission Technology Corporation Incentive Compensation
            Stock Option Plan.

10.2(2)     Technology License Agreement by and between W.B.G., Inc. and
            Transmission Technology Corporation dated May 7, 2001.

10.3(4)     Composite Technology Corporation 2002 Non-Qualified Stock
            Compensation Plan.

10.4(9)     Composite Technology Corporation Option Agreement - Dominic J.
            Majendie dated August 11, 2003.

10.5(5)     Composite Technology Corporation Option Agreement - Benton Wilcoxon
            dated August 13, 2003.

10.6(5)     Composite Technology Corporation Option Agreement - William
            Arrington dated August 13, 2003.

10.7(5)     Composite Technology Corporation Option Agreement - Brent N. Robbins
            dated August 13, 2003.

10.8(9)     Employment Agreement between Composite Technology Corporation and
            Dominic J. Majendie, dated October 1, 2003.

10.9(5)     Lease Agreement between Composite Technology Corporation and CNH,
            LLC dated November 7, 2003.

10.10(6)    Form of Securities Purchase Agreement, Registration rights Agreement
            and Common Stock Purchase Warrants, dated as of December 16, 2003.

10.11(9)    Form of Securities Purchase Agreement including form of the
            Debenture attached as Exhibit A, form of the Registration Rights
            Agreement attached as Exhibit B thereto, form of the Common Stock
            Purchase Warrant attached as Exhibit C thereto, form of legal
            opinion attached as Exhibit D, form of Custodial and Security
            Agreement attached as Exhibit E, dated August 17, 2004.

10.12(13)   Letter Agreement between the Registrant and the city of Kingman,
            Kansas, dated November 11, 2003.

10.13(11)   Engagement Agreement between Composite Technology Corporation and
            Brian Brittsan, dated December 18, 2004.

10.14(8)    Manufacturing Agreement between Composite Technology Corporation and
            General Cable Corp dated October 2,2004.

                                       36
<PAGE>

10.15(8)    Distribution Agreement between Composite Technology Corporation and
            General Cable Corp dated October 2, 2004.

10.16(10)   Letter agreement between Composite Technology Corporation and
            Feldman Weinstein LLP, dated November 23, 2004.

10.17       Letter Agreement between Composite Technology Corporation and
            Midsummer Investment, Ltd., Bristol Investment Fund, Ltd., Islandia,
            L.P. and Omicron Trust dated January 21, 2005.

21(7)       Subsidiaries of the Registrant.

31.1        Rule13a-14(a) / 15d-14(a) Certification of Chief Executive Officer
            and Acting Chief Financial Officer

32.1        Section 1350 Certification of Chief Executive Officer and Chief
            Financial Officer

----------

(1) Incorporated herein by reference to Form 8-K filed with the U. S. Securities
and Exchange Commission on November 20, 2001.

(2) Incorporated herein by reference to Form 8-K filed with the U. S. Securities
and Exchange Commission on January 11, 2002.

(3) Incorporated herein by reference to Form 10-KSB filed with the U. S.
Securities and Exchange Commission on February 14, 2002.

(4) Incorporated herein by reference to Definitive Schedule 14C filed with the
U.S. Securities and Exchange Commission on January 27, 2003.

(5) Incorporated herein by reference to Form 10-KSB filed with the U.S.
Securities and Exchange Commission on February 4, 2004.

(6) Incorporated herein by reference to Form 8-K filed with the U.S. Securities
and Exchange Commission on December 19, 2003.

(7) Incorporated herein by reference to Form SB-2 filed with the U.S. Securities
and Exchange Commission on February 13, 2004.

(8) Incorporated herein by reference to Form 8-K filed with the U.S. Securities
and Exchange Commission on October 7, 2004.

(9) Incorporated herein by reference to Form SB-2/A (File No. 333-118991) filed
with the U.S. Securities and Exchange Commission on October 29, 2004.

(10) Incorporated herein by reference to Form 8-K filed with the U.S. Securities
and Exchange Commission on November 24, 2004.

(11) Incorporated by reference to Form 8-K filed with the U.S. Securities and
Exchange Commission on January 11, 2005.

(12) Incorporated herein by reference to Form 8-K filed with the U.S. Securities
and Exchange Commission on January 18, 2005.

(13) Incorporated herein by reference to Form SB-2 filed with the U.S.
Securities and Exchange Commission on January 25, 2005.

                                       37
<PAGE>

                                    SIGNATURE

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

                                  COMPOSITE TECHNOLOGY CORPORATION
                                  (Registrant)

                                   By: /s/ Benton H Wilcoxon
                                   -------------------------
                                   Benton H Wilcoxon
                                   Chief Executive Officer


February 14, 2005



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