OVERVIEW

Certain matters discussed in this Quarterly Report may constituteforward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995 and as such may involve risks and uncertainties.These forward-looking statements relate to, among other things, expectations ofthe business environment in which the Company operates, projections of futureperformance, perceived opportunities in the market and statements regarding theCompany's goals. The Company's actual results, performance, or achievementsexpressed or implied in such forward-looking statements may differ.

RESULTS OF OPERATIONS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2004 AND 2003

The Company recorded income for the three month period ended March 31,2004 of $113,301 ($0.0014 per share) compared to a net loss of $161,656 ($0.0026per share) during the comparative period in the prior year. The income fromcontinuing operations during the three month period ended March 31, 2004 was$144,406 compared to a net loss of $141,430 in the prior year period. Loss fromdiscontinued operations was $31,105 during the three month period ended March31, 2004 compared to a loss of $20,226 in the comparative period a year ago.

The year over year swing from a continuing operations loss a year agoto earnings in 2004 is primarily the result of the Company recording a gain ondisposal of 130,000 shares of Wireless Age.

All of the Company's revenues were from discontinued operations.

Total operating expenses were $116,431 during the quarter ended March31, 2004 compared to $110,829 in the prior year. The decrease is primarily theresult of reduced levels of general, administrative and occupancy costs. TheCompany has been preparing for the proposed Phantom Fiber acquisition and allcorporate costs have been paired to a minimum.

General and administrative expenses during the three month period endedMarch 31, 2004 totaling $51,137 consisted of; 1) wages, benefits and consultingfees of $34,198 (which includes $30,000 in executive management fees accrued toa related party), 2) professional fees including transfer agent fees of $11,781,and 3) various miscellaneous costs totaling $5,158.

General and administrative expenses during the three month period endedMarch 31, 2003 consisted of; 1) wages and consulting costs of $71,047, 2)professional fees, including transfer agent fees of $19,360, and 3)$1,610 of miscellaneous costs.

Occupancy costs consisted of rent of $3,420 paid to a related partyduring the three month period ended March 31, 2004 and $2,927 in rent and $4,616in utilities during the comparative period in the prior year.

Interest expense during the three month period ended March 31, 2004 was$61,874 compared to $11,269 during the three month period ended March 31, 2003.The increase in interest expense is the result of revaluing certain relatedparty notes payable by $52,211 to the value of marketable securities received ondate of repayment

The Company recorded a foreign exchange loss of $1,188 during the threemonth period ended March 31, 2004 compared to $19,357 in the comparative periodin the prior year. Foreign exchange losses arise from the translation of theCompany's Canadian dollar denominated debt into US dollars during periods ofweakening of the US dollar vis-a-vis the Canadian dollar.

During the three month period ended March 31, 2003, pursuant to certainloan agreements the Company issued warrants to purchase 7,000,000 shares of theCompany's common stock at exercise prices of $0.01 or $0.02 per share. TheCompany has determined that the non-cash financing expense associated with theissuance of these warrants was $461,000. In addition the Company opted toamortize these costs effectively over four years, reflective of the term toexpiry of the warrants and the share resale restrictions upon exercise of thewarrants. Non-cash financing expense totaled $11,064 during the current quarter.

The Company recorded a gain on disposal of marketable securities of$262,025 during the current quarter. The Company settled notes payable includingprincipal and accrued interest totaling $281,200 by transferring 130,000Wireless Age common shares (marketable securities) having a cost basis of$19,175.

During the three month period ended March 31, 2004 the Company recordeda foreign exchange gain of $4,567 arising from the translation of the Canadiandollar denominated subsidiary financial statement to US dollars and a $917,025unrealized holding loss on its available for sale securities.

DISCONTINUED OPERATIONS

The Company has classified the operating results of Prime Wireless andPrime Battery as discontinued operations in the Consolidated Statement ofOperations. Prime Wireless was disposed of on March 13, 2003 and the Company isin the process of disposing of Prime Battery in preparation of its acquisitionof Phantom Fiber.

PRIME WIRELESS

The operating results of Prime Wireless during the three month periodended March 31, 2003 are summarized as follows:

Revenues Commission income $ 26,322 Sales 16 --------------- Total revenues 26,338 Less: Cost of sales - --------------- Gross profit 26,338 ---------------

Operating expenses 11,474 --------------- Operating income 14,864

Depreciation 48 Foreign exchange gain (430) --------------- Net income from discontinued operations $ 15,246 ===============

Revenues of the Prime Wireless subsidiary were $26,338 during the threemonth period ended March 31, 2003 consisting of commissions earned on sales ofVertex Standard two way radios in Canada.

General and administrative expenses of Prime Wireless during the threemonth period ended March 31, 2003 were $11,474. Selling, general andadministrative expenses included salaries and benefits for one sales employeeand other various selling expenses. Depreciation of equipment totaled $48 duringthe period and the company recorded a foreign exchange translation gain.

PRIME BATTERY

The operating results of Prime Battery during the three month periodended March 31, 2004 and 2003 are summarized as follows:

2004 2003

RevenuesSales $ 2,259 $433,700

Royalties 6,597 - ---------- ----------Total revenues 8,856 433,700Less:Cost of sales 2,259 368,360 ---------- ----------Gross profit 6,597 65,340 ---------- ----------

Operating expenses 151 83,614 ---------- ----------Operating income 6,446 (18,274)

Depreciation 833 40Interest 36,718 23,026 ---------- ----------Net income from discontinued operations $(31,105) $(41,340) ========== ==========

During the three month period ended March 31, 2004 discontinued operations of Prime Battery resulted in a loss of $31,105 compared to a loss of $41,340 in the comparative period a year ago. The Company granted a sublicense, to a related party, the Canadian distribution rights of the battery business effective July 1, 2003. Therefore the revenues declined significantly between 2003 and 2004 as did the operating costs. Post June 30, 2003 Prime Battery earned royalties from the related party and was not responsible for any appreciable operating costs.

Interest expense continued to be substantial due to Prime Battery'sinability to repay a note payable as originally contemplated and thereforeincurred significant penalties and interest during the first quarter of fiscal2004.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of results of operations and financialcondition are based upon the consolidated financial statements, which have beenprepared in accordance with accounting principles generally accepted in theUnited States of America (GAAP). The preparation of these consolidated financialstatements requires management to make estimates and judgments that affect thereported amounts of assets, liabilities, revenues and expenses, and relateddisclosure of contingent assets and liabilities. Management evaluates theestimates on an on-going basis, including those related to bad debts,inventories, investments, customer accounts, intangible assets, income taxes,and contingencies and litigation. Management bases its estimates on historicalexperience and on various other assumptions that they believe to be reasonableunder the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are notreadily apparent from othe r sources. Actual results may differ from theseestimates under different assumptions or conditions. Note 2 of the "Notes toConsolidated Financial Statements" of the Company's Annual Audited ConsolidatedFinancial Statements includes a summary of the significant accounting policiesand methods used in the preparation of the consolidated financial statements.The following is a brief description of the more significant accounting policiesand methods the Company uses.

Investment

The Company's marketable securities are classified as available-for-sale and are recorded at fair value. Available for sale unrealized gains and losses based on year end market prices, net of tax are recorded in stockholders' equity. Realized gains or losses and other than temporary declines in value, if any are reported in other income or expense as incurred.

Revenue Recognition

Revenue from product sale is recognized when the rights of ownership of theproduct are transferred to the purchaser on shipment or delivery and collectionis reasonably assured.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specificallyidentified amounts that management believes to be uncollectible. The criteriafor allowance provision are determined based on historical experience and theCompany's assessment of the general financial conditions affecting its customerbase. If the Company's actual collections experience changes, revisions to theallowance may be required.

Intangible Assets

Long-lived assets, including intangible assets, are reviewed when facts andcircumstances indicate that the carrying value of the asset may not berecoverable. When necessary, impaired assets are written down to estimated fairvalue based on the best information available. Fair value is determined byestimated future cash flows and appraised value of the assets.

FINANCIAL CONDITION

Total assets decreased from $2,371,622 at December 31, 2003 to$1,237,087 at March 31, 2004. The decrease is primarily due to a decline in thecarrying value of the Company's marketable securities and a depletion of theCompany's cash balances.

At March 31, 2004, the Company held 620,000 common shares of WirelessAge Communications, Inc., a publicly traded entity whose share price is quotedon the NASD's Over-The-Counter Bulletin Board under the symbol "WLSA". Thesecurities were obtained in the sale of the Prime Wireless subsidiary on March13, 2003. The Company has valued these securities at $923,800 ($1.49 per share).On December 31, 2003 the Company held 750,000 shares of Wireless Age and duringthe three month period ended March 31, 2004 utilized 130,000 shares to repay$281,200 of notes payable to related parties including principal and accruedinterest.

Cash balances declined from $92,192 on December 31, 2003 to $2,120 onMarch 31, 2004, primarily due to funding of cash operating losses.

Current assets of discontinued operations decreased from $122,452 atDecember 31, 2003 to $55,467 at March 31, 2004. The decrease is attributable tothe Company transferring certain intellectual property rights to a related partyin exchange for a promissory from a related party of $180,000 due on December31, 2004 (see Battery Business Operations). The intellectual property rightsconsisted on Canadian dollar store customer lists which were recorded as longterm intangible assets.

Total liabilities decreased from $1,076,394 at December 31, 2003 to$696,586 at March 31, 2004. The decrease in liabilities is the result ofretiring notes payable (including principal and accrued interest) of $228,989with 130,000 shares of the Company's marketable securities during the firstquarter and a reduction in liabilities of discontinued operations from $380,853to $318,263.

Common stock and additional paid in capital, increased from $8,725,359at December 31, 2003 to $8,797,789 at March 31, 2004. The increase was due to;1) 500,000 common shares issued for intangible assets acquired in 2003 (andrecorded in common stock subscribed at December 31, 2003) valued at $10,000, 2)a private placement of 343,030 common shares at $0.01 per share, and 3) privateplacements for a total of 2,950,000 common shares at $0.02 per share. Commonstock subscribed decreased by $28,000 from $90,200 at December 31, 2003 to$62,200 at March 31, 2004. The reason for the decrease is the amount of commonstock under private placements for which certificates were issued during thequarter exceeded the amount of new subscriptions received.

The accumulated deficit decreased by the earnings for the three monthperiod ended march 31, 2004 of $113,301. The Company also recorded a foreignexchange translation gain of $4,567 and a $917,025 unrealized holding loss onavailable for sale securities.

The financial statements of the Company are prepared in conformity withgenerally accepted accounting principles, which require management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period. Some of the significant estimates required to bemade by management include the realizable value of intangible assets and thefair value of common stock and common stock equivalents issued for services orin settlement of obligations. Actual results could differ from those estimates.

LIQUIDITY AND CAPITAL RESOURCES

For the three month period ended March 31, 2004, cash used in operatingactivities amounted to $117,061 primarily as a result of operating losses. Cashprovided by financing activities during the three month period ended March 31,2004 amounted to $26,989 resulting from $17,441 net reduction in notes payableoffset by an increase in common stock issued and/or subscribed of $44,430

The Company plans to begin liquidating its investment in Wireless AgeCommunications, Inc. common shares. These securities, which have been valued at$923,800 for balance sheet purposes, have certain resale restrictions.Management believes that it will be in a position to sell all of thesesecurities within the next twelve months and utilize the proceeds for workingcapital purposes in the battery business and settle certain historic liabilitiesof the parent entity. The Company also plans to dispose of the battery businessand will rely on the proceeds of disposition to fund future growth requirements.

In addition the Company has been successful in raising capital throughprivate placements of its common shares. Although, this type of financingcontinues to be dilutive to the existing common shareholders, it may benecessary to continue to do so in the interim before certain resale restrictionson its marketable securities lapse.

The Company does not have any material sources of liquidity of offbalance sheet arrangements or transactions with unconsolidated entities.