For the three month period ended June 30, 2004 and 2003

The Company recorded a net loss for the three month period ended June 30, 2004 of $317,042 ($0.0035 per share) compared to a net loss of $313,217 ($0.0049 per share) during the comparative period in the prior year. The loss from continuing operations during the three month period ended June 30, 2004 was $319,041 compared to a net loss of $205,543 in the prior year period. Earnings from discontinued operations was $2,449 during the three month period ended June 30, 2004 compared to a loss of $107,674 in the comparative period a year ago.

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

Total operating expenses were $319,745 during the quarter ended June 30, 2004 compared to $167,178 in the prior year. The increase is primarily the result of the costs to complete the Phantom Fiber acquisition and non-cash charges associated with issuing common stock for investor and public relations consulting services.

General and administrative expenses during the three month period ended June 30, 2004 totaling $315,553 consisted of; 1) legal fees to prepare the necessary documentation to complete the Phantom Fiber acquisition of $101,820, 2) non-cash charges issuing 6,000,000 common shares or investor and public relations services, of which $100,500 was amortized during the

period, 3) printing, mailing and transfer agent fees totaling $40,958 for the annual shareholders' meeting, 4) $30,616 accounting fees, 5) $30,000 of executive level management fees, and 6) $11,659 of various miscellaneous costs.

General and administrative expenses during the three month period ended June 30, 2003 consisted of; 1) wages and consulting costs of $63,782, 2) a bad debt provision of $40,000, 3) professional fees, including transfer agent fees of $26,286, and 3) $17,373 of miscellaneous costs.

Occupancy costs consisted of rent of $1,436 paid to a related party during the three month period ended June 30, 2004 and rent and utilities of $7,209 during the comparative period in the prior year.

Interest expense during the three month period ended June 30, 2004 was $2,756 compared to $12,528 during the three month period ended June 30, 2003. The decrease in interest expense is the result of repayment of certain notes payable earlier in the quarter.

The Company recorded a foreign exchange gain of $254 during the three month period ended June 30, 2004 compared to a loss of $16,124 in the comparative period in the prior year. Foreign exchange losses arise from the translation of the Company's Canadian dollar denominated debt into US dollars during periods of weakening of the US dollar vis-à-vis the Canadian dollar.

During the three month period ended June 30, 2003, pursuant to certain loan agreements the Company issued warrants to purchase 6,000,000 shares of the Company's common stock at exercise prices of $0.01 per share. The Company has opted to amortize the non-cash financing expense arising from the valuation of these warrants effectively over four years, reflective of the term to expiry of the warrants and the share resale restrictions upon exercise of the warrants. Non-cash financing expense totaled $22,241 during the current quarter.

During the three month period ended June 30, 2004 the Company recorded a foreign exchange translation gain of $5,207 arising from the translation of the Canadian dollar denominated subsidiary financial statement to US dollars and a $6,200 unrealized holding gain on its available for sale securities.

Discontinued Operations

The Company has classified the operating results of Prime Battery as discontinued operations in the Consolidated Statement of Operations. The Company is in the process of disposing of Prime Battery subsequent to the acquisition of Phantom Fiber.

Prime Battery

The operating results of Prime Battery during the three month period ended June 30, 2004 and 2003 are summarized as follows:

                                                          Three      Three
                                                         months      months
                                                          2004        2003

        Revenues
        Sales                                            $     -   $  433,700
        Royalties                                         15,593            -
        Total revenues                                    15,593      433,700
        Less:
        Cost of sales                                          -      368,360
        Gross profit                                      15,593       65,340

        Operating expenses                                   106      149,948
        Operating income (loss)                           15,487      (84,608 )

        Depreciation                                         813           40
        Interest                                          12,225       23,026
        Net income (loss) from discontinued operations   $ 2,449   $ (107,674 )

During the three month period ended June 30, 2004 discontinued operations of Prime Battery resulted in earnings of $2,449 compared to a loss of $107,674 in the comparative period a year ago. The Company sublicensed 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's inability to repay a note payable as originally contemplated and therefore incurred significant penalties and interest during the second quarter of fiscal 2004.

For the six month period ended June 30, 2004 and 2003

The Company recorded a net loss for the six month period ended June 30, 2004 of $203,741 ($0.002 per share) compared to a net loss of $474,873 ($0.0076 per share) during the comparative period in the prior year. The loss from continuing operations during the six month period ended June 30, 2004 was $175,085 compared to a net loss of $367,300 in the prior year period. The net loss from discontinued operations was $28,656 during the six month period ended June 30, 2004 compared to a loss of $107,573 in the comparative period a year ago.

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

Total operating expenses were $436,176 during the six month period ended June 30, 2004 compared to $298,334 in the prior year. The increase is primarily the result of the costs to complete the Phantom Fiber acquisition and non-cash charges associated with issuing common stock for investor and public relations consulting services.

General and administrative expenses during the six month period ended June 30, 2004 totaling $366,690 consisted of; 1) legal fees to prepare the necessary documentation to complete the Phantom Fiber acquisition of $101,820, 2) non-cash charges issuing 6,000,000 common shares or investor and public relations services, of which $100,500 was amortized during the

period, 3) $60,000 of executive level management fees, 4) printing, mailing and transfer agent fees totaling $45,239 for the annual shareholders' meeting, 5) $38,116 accounting fees, 6) financial accounting wages and benefits of $9,871 and 7) $11,144 of various miscellaneous costs.

General and administrative expenses during the six month period ended June 30, 2003 consisted of; 1) wages and consulting costs of $135,830, 2) professional fees, including transfer agent fees of $46,965, 3) a bad debt provision of $40,000, 4) travel, meals and entertainment costs of $13,857, and 5) $23,133 of miscellaneous costs.

Occupancy costs consisted of rent of $4,856 paid to a related party during the six month period ended June 30, 2004 and rent and utilities of $14,752 during the comparative period in the prior year.

Interest expense during the six month period ended June 30, 2004 was $64,630 compared to $23,797 during the six month period ended June 30, 2003. Interest expense will be reduced on a go forward basis due to certain notes payable repaid early in the current fiscal year.

The Company recorded a foreign exchange loss of $934 during the six month period ended June 30, 2004 compared to a loss of $35,661 in the comparative period in the prior year. Foreign exchange losses arise from the translation of the Company's Canadian dollar denominated debt into US dollars during periods of weakening of the US dollar vis-à-vis the Canadian dollar.

During the six month period ended June 30, 2003, pursuant to certain loan agreements the Company issued warrants to purchase 13,000,000 shares of the Company's common stock at exercise prices of $0.01 or $0.02 per share. The Company was opted to amortize the non-cash financing expense arising from the valuation of these warrants effectively over four years, reflective of the term to expiry of the warrants and the share resale restrictions upon exercise of the warrants. Non-cash financing expense totaled $33,305 during the six month period ended June 30, 2003.

During the six month period ended June 30, 2004 the Company recorded a foreign exchange gain of $9,774 arising from the translation of the Canadian dollar denominated subsidiary financial statement to US dollars and a $910,825 unrealized holding loss on its available for sale securities.

Discontinued Operations

The Company has classified the operating results of Prime Battery and Prime Wireless as discontinued operations in the Consolidated Statement of Operations. The Company disposed of Prime Wireless during fiscal 2003 and is in the process of disposing of Prime Battery subsequent to the acquisition of Phantom Fiber.

Prime Battery

The operating results of Prime Battery during the six month period ended June 30, 2004 and 2003 are summarized as follows:

                                                    Six         Six
                                                  months       months
                                                   2004         2003

Revenues
Sales                                            $   2,224   $  863,875
Royalties                                           22,190            -
Total revenues                                      24,414      863,875
Less:
Cost of sales                                        2,224      725,834
Gross profit                                        22,190      138,041

Operating expenses                                     257      236,620
Operating income (loss)                             21,933      (98,579 )

Depreciation                                         1,646          818
Interest                                            48,943       29,290
Net income (loss) from discontinued operations   $ (28,656 ) $ (128,687 )

During the six month period ended June 30, 2004 discontinued operations of Prime Battery resulted in a net loss of $28,656 compared to a loss of $128,687 in the comparative period a year ago. The Company sublicensed 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's inability to repay a note payable as originally contemplated and therefore incurred significant penalties and interest during the first half of fiscal 2004.

Prime Wireless



The operating results of Prime Wireless during the six month period ended
June 30, 2003 are summarized as follows:



                                            2003

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 six month period ended June 30, 2003 consisting of commissions earned on sales of Vertex Standard two way radios in Canada.

General and administrative expenses of Prime Wireless during the six month period ended March 31, 2003 were $11,474. Selling, general and administrative expenses included salaries and benefits for one sales employee and other various selling expenses. Depreciation of equipment totaled $48 during the period and the company recorded a foreign exchange translation gain of $430.

Critical Accounting Policies and Estimates

The discussion and analysis of results of operations and financial condition are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates the estimates 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 historical experience and on various other assumptions that they believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Note 2 of the "Notes to Consolidated Financial Statements" of the Company's Annual Audited Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements. The following is a brief description of the more significant accounting policies and methods the Company uses.

Investment

The Company's investment in marketable securities is classified as available for sale securities. Unrealized holding gains and losses are reported as a net amount in a separate component of shareholders' equity until realized.

Revenue Recognition

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

Allowance for Doubtful Accounts

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

Intangible Assets

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

Financial Condition

Total assets increased from $1,237,087 at March 31, 2004 to $1,374,433 as at June 30, 2004. The increase is primarily due to an increase in other current assets, cash and marketable securities offset by declines in notes receivable and assets of discontinued operations.

Other current assets includes the unamortized value of 6,000,000 shares of the Company's common stock issued for investor and public relations consulting services. The Company entered into a one year consulting agreement under which a total of 6,000,000 common shares are issuable based on performance under the contract. The Company has valued these services at $402,000 and is amortizing the costs to expense at $100,500 per quarter.

At June 30, 2004, the Company held 620,000 common shares of Wireless Age Communications, Inc., a publicly traded entity whose share price is quoted on the NASD's Over-The-Counter Bulletin Board under the symbol "WLSA". The securities were obtained in the sale of the Prime Wireless subsidiary on March 13, 2003. The Company has valued these securities at $930,000 ($1.50 per share). On December 31, 2003 the Company held 750,000 shares of Wireless Age and during the six month period ended June 30, 2004 utilized 130,000 shares to repay $281,200 of notes payable to related parties including principal and accrued interest.

Cash balances increased from $2,120 on March 31, 2004 to $5,541 as at June 30, 2004, primarily due to additional funds raised by equity private placements.

Current assets of discontinued operations decreased from $55,467 at March 31, 2004 to $39,868 at June 30, 2004. The decrease is attributable to reductions in certain intercompany amounts. In addition, a $180,000 note receivable classified as continuing operations was reclassified to discontinued operations at June 30, 2004.

Total liabilities decreased from $696,586 at March 31, 2004 to $622,051 as at June 30, 2004. The decrease in liabilities of $74,535 is the result of; 1) a reduction in liabilities of discontinued operations of $189,612 arising from notes payable repayments in Prime Battery, 2) a $25,000 reduction in subordinated debentures, arising from a conversion to common stock, 3) a $19,516 reduction in accrued professional fees, arising from invoices received and therefore transferred to accounts payable, 4) a reduction of $6,860 in accrued interest, also arising from a conversion of subordinated debentures into common stock, and 5) a reduction in miscellaneous accrued expenses of $2,963 offset by an increase of $169,416 in accounts payable.

Stockholders' equity increased from $540,501 at March 31, 2004 to $752,382 at June 30, 2004. The increase is the result of:

1. 5,445,000 common shares issued in private placements for gross proceeds of $108,900 ($33,000 of which was received in the first quarter),

2. 158,465 common shares issued for conversion of subordinated debentures having a face value of $30,000 plus accrued and unpaid interest of $9,616,

3. 6,000,000 common shares issued for investor and public relations consulting

services provided, for a one year period, valued at $402,000. $100,500 has been amortized to expense during the three month period ended June 30, 2004,

4. Unrealized foreign exchange translation gains of $5,207 (recorded in accumulated other comprehensive income), and

5. Unrealized gain on available for sale marketable securities of $6,200.

offset by

1. The net loss of $317,042 during the quarter.

The financial statements of the Company are prepared in conformity with generally accepted accounting principles, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the significant estimates required to be made by management include the realizable value of intangible assets and the fair value of common stock and common stock equivalents issued for services or in settlement of obligations. Actual results could differ from those estimates.

Liquidity and Capital Resources

For the six month period ended June 30, 2004, cash used in operating activities amounted to $189,540 primarily as a result of operating losses. Cash provided by financing activities during the six month period ended June 30, 2004 amounted to $102,889 resulting from $17,441 net reduction in notes payable offset by an increase in common stock issued and/or subscribed of $120,330.

The Company plans to begin liquidating its investment in Wireless Age Communications, Inc. common shares. These securities, which have been valued at $930,000 for balance sheet purposes, have certain resale restrictions. Management believes that it will be in a position to sell all of these securities within the next twelve months and utilize the proceeds for working capital purposes in the battery business and settle certain historic liabilities of the parent entity. The Company also plans to dispose of the battery business and will rely on the proceeds of disposition to fund future growth requirements.

In addition the Company has been successful in raising capital through private placements of its common shares. Although, this type of financing continues to be dilutive to the existing common shareholders, it may be necessary to continue to do so in the interim before certain resale restrictions on its marketable securities lapse.

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