Yes I bought more!

PHOENIX, June 22 /PRNewswire-FirstCall/ -- iBIZ Technology Corp. (OTC Bulletin Board: IBZT), an innovative manufacturer and distributor of accessories for personal digital assistants (PDAs) and other handheld devices, announced today it filed a suit in Tel Aviv, Israel against Pangea Investments GmbH, Enterprise Capital AG, Enterprise Capital AG Israel Ltd., Mr. Sam (Shlomo) Elimelech and Mr. Gai Mar-Chaim.

iBIZ's claims in the law suit include one against Enterprise Capital AG Israel for breach of contract and claims against all of the defendants for fraud/misrepresentation, unjust enrichment, and business torts (unfair competition).

Since January the defendants have caused recurring delays in production; these delays were coupled with the defendants' demand for prepayment of goods. After several demand notices issued by iBIZ for information and assurances were not responded to, iBIZ was forced to take legal action in the Magistrates Court of Tel-Aviv - Jaffa, and a suit was filed today. iBIZ is represented by, Adv. Eric Sherby, 3 Abba Hillel Silver Street, Ramat Gan, Israel. A copy of the statement of claim (complaint) will be available on our web site June 23, 2004.

About iBIZ Technology Corp.:

iBIZ Technology Corp. is a leading manufacturer and distributor of accessories for personal digital assistant (PDA) and other handheld devices. iBIZ is recognized for innovative, high-quality, competitively priced products that are available through major retailers. For more information on iBIZ products and services, please visit www.ibizcorp.com or call 1-800 234-0707.

For further information, please contact: Media, Belinda Banks of S&S Public Relations, +1-718-320-4898, Belinda@sspr.com , or Investor Relations, Ed Lewis of CEOcast +1-212-732-4300

"Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward- looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications that may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above. The company cautions that these forward looking statements are further qualified by other factors including, but not limited to those, set forth in the company's Form 10-KSB filing and other filings with the United States Securities and Exchange Commission (available at www.sec.gov ). The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise."

SOURCE iBIZ Technology Corp.
-0- 06/22/2004
/CONTACT: media, Belinda Banks of S&S Public Relations, +1-718-320-4898,
or Belinda@sspr.com ; or investor relations, Ed Lewis of CEOcast,
+1-212-732-4300, both for iBIZ Technology Corp./
/Web site: http://www.ibizcorp.com /
(IBZT)

CO: iBIZ Technology Corp.; Pangea Investments GmbH; Enterprise Capital AG;
Enterprise Capital AG Israel Ltd.
ST: Arizona, Israel
IN: CPR CSE OTC
SU: LAW

quote:

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Originally posted by mainstay:
Saying this company is trading at bargain levels is an understatement. We should be trading around the 0.05 mark due to the financials alone. Sad to see so many uneducated people making negative comments on the other thread, when they don't seem to understand the platform IBIZ is working off of.

---

Mainsstay!

Many have been scared off. That suit makes me sad. I only hope Synosphere can bring Blue Dock & the satilite card to market.

But I strongly suggest anyone with any profits or money they could spair with to invest in ibzt.

I honestly, have started not caring what happens with the vkb as long as they don't kill investors. They are showing signs of leadership and even if their is a lawsuit and it all goes to the lawyers, we will make that money back in investors confidence in the company. Justice will be served!!!!

The biggest product in ibzt history in not the vkb. Its an overhyped technology in the first place. It will help ibzt revenue a lot! But you haven't seen any revenue growth until you see the blue dock. The blue dock will be manufactured by us and will help us profit a ton.

quote:

---

Originally posted by mretrade:
I personally refuse to buy more, just for safety reasons as Im already over weight in this position.

But I strongly suggest anyone with any profits or money they could spair with to invest in ibzt.

I honestly, have started not caring what happens with the vkb as long as they don't kill investors. They are showing signs of leadership and even if their is a lawsuit and it all goes to the lawyers, we will make that money back in investors confidence in the company. Justice will be served!!!!

The biggest product in ibzt history in not the vkb. Its an overhyped technology in the first place. It will help ibzt revenue a lot! But you haven't seen any revenue growth until you see the blue dock. The blue dock will be manufactured by us and will help us profit a ton.

Most of the value within ibzt is synosphere.

---

I agree. But that VKB would have good jolt.

SEC Conducts Informal Inquiry Regarding IBZT
6/23/2004 3:30:00 PM
PHOENIX, Jun 23, 2004 /PRNewswire-FirstCall via COMTEX/ -- iBIZ Technology Corp. ( IBZT ), an innovative manufacturer and distributor of accessories for personal digital assistants (PDAs) and other handheld devices, advised that the Securities and Exchange Commission ("SEC") is conducting an informal inquiry. The SEC has asked IBZT to voluntarily produce documents pursuant to a written request. In addition, the SEC has spoken, and requested to speak, with certain officers of IBZT on an informal basis.

Further, the SEC has indicated that this inquiry should neither be construed as an indication that the Commission or its staff believes any violation of law has occurred, nor should IBZT consider it an adverse reflection upon any person, entity, or security. IBZT intends to cooperate and assist in the SEC's inquiry as well as keep our shareholders informed.

About iBIZ Technology Corp.:

iBIZ Technology Corp. is a leading manufacturer and distributor of accessories for personal digital assistant (PDA) and other handheld devices. iBIZ is recognized for innovative, high-quality, competitively priced products that are available through major retailers. For more information on iBIZ products and services, please visit www.ibizcorp.com or call 1-800 234-0707.

For further information, please contact: Media, Belinda Banks of S&S Public Relations, +1-718-320-4898, Belinda@sspr.com; or Investor Relations, Ed Lewis of CEOcast +1-212-732-4300, both for iBIZ Technology Corp.

Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications that may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above. The company cautions that these forward looking statements are further qualified by other factors including, but not limited to those, set forth in the company's Form 10-KSB filing and other filings with the United States Securities and Exchange Commission (available at www.sec.gov). The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.

SOURCE iBIZ Technology Corp.

Media, Belinda Banks of S&S Public Relations, +1-718-320-4898,
Belinda@sspr.com; or Investor Relations, Ed Lewis of CEOcast +1-212-732-4300,
both for iBIZ Technology Corp.
http://www.ibizcorp.com

Synosphere Secures Partnership With Midwest Computing Solutions
via COMTEX

June 23, 2004

PHOENIX, Jun 23, 2004 /PRNewswire-FirstCall via COMTEX/ --

Synosphere, Inc., a wholly owned subsidiary of iBIZ Technology Corporation (OTC Bulletin Board: IBZT), a developer of innovative PDA technologies, announced today that the company has partnered with Midwest Computing Solutions L.L.C. to assist with sale of the Blue Dock(TM) and future products.

This partnership will allow Synosphere Inc. to leverage the close relationships Midwest Computing Solutions L.L.C. has built during their tenure in the handheld industry, which will aid Synosphere Inc. in penetrating the enterprise, healthcare and education markets. In addition, this relationship will aid Synosphere in establishing a foundation for its future products.

"We are excited to work with Mr. Rafferty and his seasoned team of handheld guru's at Midwest Computing Solutions. Most importantly is their proven track record of securing relationships within our target markets and delivering solutions that meet or exceed their customer's expectations," commented Ramon Perales, Vice President of Marketing and Sales at Synosphere.

"Synosphere's Blue Dock(TM) is an exciting new product that will create substantial value within our current customer base. We envision this technology will proliferate and shall become a competitive alternative to current computing solutions," commented David Rafferty, President of Midwest Computing Solutions L.L.C. "Overall the Blue Dock(TM) has been well received and our customers are looking forward to implementing this unique product that merges handheld and desktop computing into a single platform.

About Midwest Computing L.L.C.

Midwest Computing Solutions, L.L.C. is a company specializing in accessing, implementing, and deploying handheld solutions for education, healthcare, and enterprise markets. Midwest Computing L.L.C. was founded by David Rafferty and Chris Fuller, CTO of Midwest Computing Solutions L.L.C. Mr. Rafferty and Mr. Fuller are both formerly of PalmOne(TM) and led sales and engineering teams respectively. For more information visit http://www.mwcomputing.com or contact Midwest Computing Solutions L.L.C., info@mwcomputing.com .

About Synosphere, Inc.

Synosphere -- a wholly owned subsidiary of iBIZ, Technology Corporation http://www.ibizcorp.com -- is a developer of innovative PDA technologies that expand and enhance the PDA experience. For more information visit http://www.synosphere.com or contact Synosphere at info@synosphere.com .

For further information, please contact: Investor Relations, Ed Lewis of CEOcast, +1-212-732-4300, for Synosphere, Inc.

"Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications that may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above. The company cautions that these forward looking statements are further qualified by other factors including, but not limited to those, set forth in the company's Form 10-KSB filing and other filings with the United States Securities and Exchange Commission (available at http://www.sec.gov ). The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise."

SOURCE Synosphere, Inc.

Investor Relations, Ed Lewis of CEOcast for Synosphere, Inc., +1-212-732-4300 /Web Site: http://www.synosphere.com http://www.mwcomputing.com http://www.ibizcorp.com (IBZT)

Copyright (C) 2004 PR Newswire. All rights reserved.

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Quarterly Report

ITEM 2. OUR MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion includes certain forward-looking statements within the meaning of the safe harbor protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include words such as "believe," "expect," "should," intend," "may," "anticipate," "likely," "contingent," "could," "may," or other future-oriented statements, are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our business plans, strategies and objectives, and, in particular, statements referring to our expectations regarding our ability to continue as a going concern, generate increased market awareness of, and demand for, our current products, realize profitability and positive cash flow, and timely obtain required financing. These forward-looking statements involve risks and uncertainties that could cause actual results to differ from anticipated results. The forward-looking statements are based on our current expectations and what we believe are reasonable assumptions given our knowledge of the markets; however, our actual performance, results and achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Factors, within and beyond our control, that could cause or contribute to such differences include, among others, the following: those associated with our marketing of a relatively new PDA accessories for consumers in an evolving marketplace, consumer preferences, perceptions and receptiveness with respect to our PDA accessories, our critical capital raising efforts in an uncertain and volatile economical environment, our ability to maintain an existing relationships with critical customers and vendors, including related licensing and marketing arrangements, our cash-preservation and cost-containment efforts, our ability to retain key management personnel, our relative inexperience with advertising, our competition and the potential impact of technological advancements thereon, the impact of changing economic, political, and geo-political environments on our business, as well as those factors discussed elsewhere in this Form 10-QSB and in "Item 1 - Our Business," "Item 6 - Our Management's Discussion and Analysis," particularly the discussion under "Risk Factors - Substantial Doubt as to our Ability to Continue as a Going Concern" and elsewhere in our most recent Form 10-KSB for our fiscal year ended October 31, 2003, as amended, filed with the United States Securities and Exchange Commission. Readers are urged to carefully review and consider the various disclosures made by us in this report, in the aforementioned Form 10-KSB, as amended, and those detailed from time to time in our reports and filings with the United States Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that are likely to affect our business.

Our fiscal year ends on October 31. References to a fiscal year refer to the calendar year in which such fiscal year ends.

INTRODUCTION
We are a marketer and distributor of various accessories primarily intended for use with PDAs. Our current line of products principally consists of over eighty individual accessories for a wide array of PDAs. These accessories range in complexity and price from simple connector cables with suggested retail prices starting at $9.99 at the low end to our multi-faceted XELA Keyboard with a suggested retail price of $69.99 at the high end. However, during the three and nine months ended July 31, 2004 and 2003, and as reported herein, our product sales revenues were substantially attributable to the following principal products (See Item 1. Our Business - Our Principal Products in our most recently filed Form 10-KSB for the fiscal year ended October 31, 2003, as amended, for further details):

DATA INPUT DEVICES:

o Our Keysync Keyboard - We introduced our Keysync Keyboard to the consumer marketplace in November 1998 as a more practicable and user-friendly alternative to the traditional PDA stylus for inputting significant amounts of data. Our Keysync Keyboard has a suggested retail price of $69.00.

o Our XELA Keyboard - We introduced our XELA Keyboard to the consumer marketplace in March 2003 as another more practicable and user-friendly alternative to the traditional PDA stylus for inputting significant amounts of data. Our XELA Keyboard has a suggested retail price of $69.00.

POWER DEVICES:

o Our Travel Kits - We introduced our first Travel Kit to the consumer marketplace in March 2002. We currently offer fifteen such Travel Kits to accommodate a wide array of PDAs. Each of our Travel Kits includes an AC charger, a 12-volt automobile adapter/charger, a USB charging cable, and a synchronization cable. Our Travel Kits have a suggested retail price of $39.99.

ENTERTAINMENT DEVICES:

o Our pocketRADIO - We introduced our pocketRADIO to the consumer marketplace in October 2003. Our pocketRADIO is a FM Stereo card that allows a PDA user to listen to FM Stereo while simultaneously running other programs. Our pocketRADIO have a suggested retail price of $49.99.

With the exception of the free technical support services we provide as part of the one year parts and labor warranty that accompanies each of our products, the only other services we performed during the fiscal periods reported herein were pursuant to maintenance agreements associated with our technical servicing and support of computer terminals and printers for financial institutions, which business we no longer actively market or pursue. Our maintenance service revenues, which constituted 6.5% of our total consolidated revenues for the fiscal year ended October 31, 2003, will continue to decrease in future fiscal years.

OUR RECENT SIGNIFICANT DEVELOPMENTS

There are no recent significant developments.

OUR CRITICAL ACCOUNTING POLICIES
The following discussions of our consolidated results of operations and financial condition, including our liquidity and capital resources, are based upon our consolidated financial statements as included elsewhere in this filing. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. Our actual results have differed, and will likely continue to differ, to some extent from our initial estimates and assumptions. We currently believe that the following significant accounting policies entail making particularly difficult, subjective or complex judgments of inherently uncertain matters that, given any reasonably possible variance therein, would make such policies particularly critical to a materially accurate portrayal of our historical or reasonably foreseeable financial condition or results of operations:

o Revenue Recognition for Product Sales and Related Allowances for Sales Returns and Rebates. In accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," we recognize a product sale, including related shipping and handling income, and the cost of the sale, upon product shipment provided that all material risks and rewards of ownership are concurrently transferred from us to our customer, the price is fixed or readily determinable, collection of the related receivable by us is reasonably assured, and we are able to reliably estimate appropriate allowances for probable sales returns and rebates based on our relevant historical experience and future expectations. We unconditionally accept product returns during the initial thirty days following the date of sale. We periodically offer promotional rebates of a limited duration, typically one week, on certain product sales, for which we outsource the processing and tracking of related customer submissions. The periodic provisions made by us to establish and maintain appropriate allowances for sales returns and rebates are charged to our results of operations via offsets to our gross product sales. Actual sales returns and rebates realized by us are charged against the related allowances with any favorable or unfavorable experience, as compared to our preceding estimates, having a correspondingly impact on our results of operations.

o Accounts Receivable and Related Allowance for Doubtful Accounts. In addition to corresponding reductions made for the allowances for sales returns and rebates, as discussed above, we further reduce our consolidated accounts receivable by an appropriate allowance for accounts where doubt exists in our opinion, based on known specifics or the passage of time, as to their ultimate collectability. We routinely offer our customers payment terms that range from 30 to 60 days. We do not access interest on, nor do we require any securing collateral of, past due customer balances. The periodic provisions made by us to establish and maintain an appropriate allowance for doubtful accounts are charged to our results of operations via increases to our selling, general and administrative expenses. Actual collection experience realized by us on previously designated doubtful accounts, including final determinations of uncollectability, is charged against the allowance for doubtful accounts with any favorable or unfavorable experience, as compared to our preceding estimates, having a correspondingly impact on our results of operations.

o Inventories. Our consolidated inventories, which consist solely of finished products available for sale, are stated at the lower of average cost or market, reduced by an appropriate allowance estimated by us for probable obsolescence. We record an allowance for obsolescence based on our historical experience and future expectations. The periodic provisions made by us to establish and maintain an appropriate allowance for obsolescence are charged to our results of operations via increases to our cost of goods sold. Actual disposition experience realized by us on previously designated obsolete inventory is charged against the allowance for obsolescence with any favorable or unfavorable experience, as compared to our preceding estimates, having a corresponding impact our its results of operations.

o Impairment of Long-Lived Assets. We evaluate, on at least a quarterly basis, each of our long-lived assets for impairment by comparing our then estimate of its related future cash flows, on an undiscounted basis, to its net book value. If impairment is indicated, we reduce the net book value of the asset to an amount equal to our estimate of related future cash flows, on an appropriately discounted basis, with a corresponding impairment charge to our results of operations.

o Convertible Debt Securities. We have periodically issued debentures that have non-detachable conversion features. In those instances where the stated conversion price reflects a discount from the then prevailing market price for our common stock, we make, at the date of the debenture issuance, an estimate as to the fair value of this beneficial conversion feature. The value assigned to the beneficial conversion feature is then immediately recognized in our results of operations via an interest/financing charge with a corresponding incremental credit to additional paid-in capital.

OUR CONSOLIDATED RESULTS OF OPERATIONS
Our consolidated total revenues for the three months ended July 31, 2004 ("fiscal 2004 third quarter") were $79,407, a decrease of $67,038, or 46%, as compared to $146,445 for the three months ended July 31, 2003 ("fiscal 2003 third quarter"). Our consolidated total revenues for the nine months ended July 31, 2004 ("fiscal 2004 nine month period") were $322,223, an increase of $39,831, or 14%, as compared to $282,392 for the nine months ended July 31, 2003 ("fiscal 2003 nine month period"). Our product sales constituted 97% and 94% of our consolidated total revenues for the fiscal 2004 third quarter and nine month period, respectively, as compared to 93% and 90% of our consolidated total revenues for the fiscal 2003 third quarter and nine month period, respectively. Our maintenance revenues, which constituted the balance of our consolidated total revenues for each respective fiscal period, will continue to decrease in future fiscal periods as we no longer actively market or pursue maintenance services.

Our product sales were $77,116 for the fiscal 2004 third quarter, a decrease of $59,475, or 44%, as compared to $136,591 in product sales for the fiscal 2003 third quarter. Our product sales were $301,765 for the fiscal 2004 nine month period, an increase of $46,816, or 18%, as compared to $254,949 in product sales for the fiscal 2003 nine month period. We substantially attribute the preceding increase to sales of our pocketRADIOs, which we began shipping to customers in late October 2002. Although to a significantly lesser extent, we also realized incremental fiscal 2003 product sales from our XELA Keyboard, which we began shipping to customers in March 2003. Partially offsetting the preceding product sales increases principally were sales decreases of varying degrees realized in our accessories for non-PDA hand-held computing devices, the marketing of which we continue to de-emphasize as we focus our currently limited operating and financial resources on the PDA accessories marketplace. We also realized a significant decrease in sales of our Keysync Keyboard which we primarily attribute to the introduction of competing products into the marketplace. Sales of our Travel Kits also decreased slightly, which we believe generally corresponded to the overall softening of sales realized by the underlying PDA manufacturers. Variances in the average prices realized by us on products in existence during both fiscal periods did not have a significant impact, favorably or unfavorably, on the overall net increase in our product sales for fiscal 2004. It must be noted that, absent significant contributions from the introduction of new products, our future revenues will be materially dependent upon sales of our pocketRADIOs and, to a significantly lesser extent, our Travel Kits and XELA Keyboard.

We incurred consolidated gross losses of $39,276 and $76,101 for the fiscal 2004 third quarter and nine month period, respectively, and consolidated gross losses of $23,531 and $36,201 for the fiscal 2003 third quarter and nine month period, respectively. In turn, these consolidated gross losses equated to negative gross margins of 49% and 24% for the fiscal 2004 third quarter and nine month period, respectively, and negative gross margins of 16% and 13% for the fiscal 2003 third quarter and nine month period, respectively. Our fiscal 2004 consolidated gross losses and negative gross margins were attributable to gross losses of $17,547 and $59,563, and resulting negative gross margins of 23% and 20%, on our product sales during the fiscal 2004 third quarter and nine month period, respectively. Similarly, Our fiscal 2003 consolidated gross losses and negative gross margins were attributable to gross losses of $32,079 and $60,085, and resulting negative gross margins of 23% and 24%, on our product sales during the fiscal 2003 third quarter and nine month period, respectively. We principally attribute the preceding gross losses and negative gross margins on our product sales during each of the above fiscal periods to our inability, given our continuing modest amount of product sales, to leverage our allocable direct labor and, to a lesser extent, overhead.

Our consolidated total operating expenses were $2,163,642 for the fiscal 2004 third quarter, an increase of $1,310,478, or 154%, from the $853,164 incurred during the fiscal 2003 third quarter. Our consolidated total operating expenses were $11,165,418 for the fiscal 2004 nine month period, an increase of $9,408,781, or 536%, from the $1,756,617 incurred during the fiscal 2003 nine month period.

Our consolidated selling, general and administrative ("SG&A") expenses were $964,135 for the fiscal 2004 third quarter, an increase of $515,796, or 115%, from the $448,339 incurred during the fiscal 2003 third quarter. Our consolidated SG&A expenses were $2,283,799 for the fiscal 2004 nine month period, an increase of $1,078,117, or 89%, from the $1,205,682 incurred during the fiscal 2003 nine month period. We incurred substantial dollar and percentage increases in our advertsing expenses and travel expenses as a result of

marketing activities associated with the introductions of our pocketRADIOs and XELA Keyboards, and in our sales expenses as a result of our transitioning to incrementally more expensive, yet more variable in nature, external commissioned field sales representatives. We also experienced substantial percentage increases in our consulting and legal fees as we continue to pay consultants and attorneys with common stock in order to reduce cash outlays . The expenses for consultants and attorneys have increased as a result of our efforts to expand our business and search for new opportunities.

During our fiscal 2004 third quarter, we recognized a $100,000 non-performance penalty incurred by our sales agent for which the Company is required to provide indemnification. This penalty relates to the inability to deliver one of the products requested in the purchase order from a major retailer. (See Note 4 of our July 31, 2004 financial statements.)

Our consolidated research and development ("R&D") expenses were $164,226 and $260,152 for the fiscal 2004 third quarter and for the fiscal 2004 nine month period, respectively. These research and development costs are directly related to the acquisition of Synosphere and their continuing efforts to develop new products for introduction in the the PDA marketplace.

During its fiscal second quarter ended April 30, 2004, the Company advanced a $400,000 deposit (consisting of $225,000 in cash and the application of $175,000 from the exercise of an option- see Note 10) to Enterprise Capital AG ("Enterprise") pursuant to an initial purchase order for virtual keyboards. When Enterprise subsequently failed to perform, the Company's management filed a lawsuit in Israel against Enterprise, ultimately resulting in the Company formally terminating its relationship with Enterprise on June 23, 2004. At such time, the Company requested Enterprise immediately refund the above deposit. Nevertheless, as it has been unsuccessful in its subsequent efforts to recover this deposit and significant uncertainties remain, the Company wrote-off the entire deposit as unrealizable as of July 31, 2004.

During the three months ended July 2004, the Company was served with a lawsuit by Ttools, Inc. alleging breach of contract. The Company has equipment and intellectual property rights associated with the Ttools product line amounting to $52,281 at July 31, 2004. Based on this lawsuit, the Company has determined that the remaining asset value has become impaired and has written-off the balance at July 31, 2004 (see Note 14).

We have incurred substantial costs relating to Consulting fees during the quarter and nine months ended July 31, 2004. We entered into several consulting contracts for business and management services for various terms. The options were granted to consultants at a discount from market and based on the uncertainty of any future value of these agreements; the Company expensed the value of the options in the period granted. We used the Black Scholles pricing model, which resulted in a charge to operations totaling $583,000 and $6,969,186 during the quarter and none months ended July 31, 2004, respectively.

Our resulting losses from operations for the fiscal 2004 third quarter and nine month period fiscal 2003 were $2,202,918 and $11,241,519, respectively. The preceding compares to losses from operations for the fiscal 2003 third quarter and nine month period fiscal 2003 of $876,695and $1,792,818, respectively.

Our non-operating other income and expenses primarily consist of interest expense, including non-cash charges attributable to the non-detachable beneficial conversion feature of newly issued debentures, and, to a significantly lesser extent, gains on settlements of obligations to vendors and miscellaneous other income. Our interest expense was $30,432 for the fiscal 2004 third quarter, a decrease of $459,415, or 94%, from the $489,847 incurred during the fiscal 2003 third quarter. Our interest expense was $172,093 for the fiscal 2004 nine month period, a decrease of $1,468,406, or 90%, from the $1,640,499 incurred during the fiscal 2003 nine month period. This decrease is due to $393,938 and $1,379,077 of beneficial conversion features of debentures issued during the three and nine months of fiscal 2003, respectively. These charges were not repeated during fiscal 2004. During the fiscal 2004 nine month period we realized non-cash aggregate gains of $197,017 on settlements of debenture obligations. The balance of our non-operating income and expenses items, including interest income, were inconsequential to our consolidated results of operations.

Primarily as a result of the foregoing, we incurred losses of $2,230,301 ($0.00) per basic and diluted share) and $11,186,825 ($0.00) per basic and diluted share) for the fiscal 2004 third quarter and nine month period, respectively. The preceding compares to losses of $1,354,095 ($0.00) per basic and diluted share) and $3,420,058 ($0.02) per basic and diluted share) for the fiscal 2003 third quarter and nine month period, respectively.

Our future ability to achieve profitability in any given future fiscal period remains highly contingent upon our realizing significantly increased product sales sufficient to leverage our non-variable, likely to be recurring expenses. For instance, our ability to achieve gross profits and positive gross margins in any given future fiscal period remains highly contingent upon us being able to leverage through significant incremental product sales the significant non-variable direct labor and overhead components of our costs of goods sold. Similarly, our ability to realize income from operations is further dependent upon our ability to additionally leverage through significant incremental sales our SG&A expenses, the majority of which currently are non-variable and recurring in nature. To the extent that we incur other less frequent or non-recurring operating expenses, as in fiscal 2004, we will require additional incremental product sales in order to leverage them. Lastly, our ability to realize net income and net income per common share remains highly contingent upon us being able to leverage through incremental product sales any significant net non-operating expenses, such as charges for the beneficial conversion features of any issued debentures and our interest expense on any outstanding debt. Correspondingly, our ability to realize significant incremental product sales in any given future fiscal period remains highly contingent upon us obtaining significant equity infusions and/or long-term debt financing sufficient to fund the increased and sustained campaign of marketing and advertising activities we believe necessary to build broad consumer awareness of, and demand for, our PDA accessories. Even if we were to be successful in procuring such funding, there can be no assurance that we will be successful in our marketing and advertising efforts, and that we will subsequently realize the significant incremental product sales we require.

OUR CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES
Overview

We have historically sustained our operations through an ongoing combination of trade credit arrangements, short-term financings, and debt and equity issuances. As our working capital requirements generally precede the realization of product sales and related accounts receivable, we routinely draw upon our existing cash and cash equivalent balances and seek short and long-term financing to fund our procurement of inventory. We currently have no established credit facilities in place for future borrowings.

During the course of transitioning our company over the last several years from our discontinued computer service businesses to our current business of marketing and distributing various accessories primarily intended for use with PDAs, we have incurred substantial operating and net losses, as well as negative operating cash flows. As of our fiscal quarter ended July 31, 2004, our working capital deficit was $2,797,058 and our stockholders' deficit was $2,341,702. Such reflects a decrease from our preceding fiscal year ended October 31, 2003 when our working capital deficit was $6,093,514 and our stockholders' deficit was $6,716,685. We had a nominal unrestricted cash balance of only $5,811 at July 31, 2004, as compared to $2,140 at October 31, 2003.

We had outstanding convertible debentures with an aggregate principal face amount of $1,413,675 at July 31, 2004, of which $1,413,675 was to become due and payable during our fiscal year ending October 31, 2004. During August 2004, debentures totaling $550,000 were converted into common stock. We had outstanding convertible debentures with an aggregate principal face amount of $4,015,837 at October 31, 2003, of which $3,265,837 and $750,000 was to become due and payable during our fiscal years ending October 31, 2004 and 2005, respectively.

Our Consolidated Cash Flows

Our operating activities utilized $2,202,529 in cash during the fiscal 2004 nine month period, an increase of $1,528,136, or 227%, from the $674,393 in cash utilized during the fiscal 2003 nine month period. Our increased utilization substantially reflects a $6,781,551, or 294%, net increase in our non-cash charges, being substantially offset by the $7,714,486 increase in our net loss. The most significant reductions in our non-cash charges were a $1,379,077

reduction in the charges associated with the beneficial conversion features of issued convertible debentures. This reduction is offset by increases of $1,200,000 and $6,969,186 in our non-cash acquisition of in-process research and development and services rendered in exchange for common stock options, respectively. Partially offsetting these non-cash charge items were a $50,215 decrease in accounts receivable, a $209,044 increase in inventories and an $18,603 decrease in accounts payable.

Our investing activities used a total of $321,299 during the fiscal 2004 nine month period to fund the acquisition of Synoshere in the amount of $18,833, the investment in Virtual Devices, $300,000 and the additional patent costs incurred of $2,466. There was no cash used in investing activities during the fiscal 2003 nine month period.

Our financing activities provided $2,527,499 in cash during the fiscal 2004 third quarter, an increase of $1,854,054, or 275%, from the $673,445 in cash provided by financing activities during the fiscal 2003 nine month period. Our fiscal 2004 nine month period reflects cash inflows primarily from our issuances . . .

Quarterly Report

ITEM 2. OUR MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion includes certain forward-looking statements within the meaning of the safe harbor protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include words such as "believe," "expect," "should," intend," "may," "anticipate," "likely," "contingent," "could," "may," or other future-oriented statements, are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our business plans, strategies and objectives, and, in particular, statements referring to our expectations regarding our ability to continue as a going concern, generate increased market awareness of, and demand for, our current products, realize profitability and positive cash flow, and timely obtain required financing. These forward-looking statements involve risks and uncertainties that could cause actual results to differ from anticipated results. The forward-looking statements are based on our current expectations and what we believe are reasonable assumptions given our knowledge of the markets; however, our actual performance, results and achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Factors, within and beyond our control, that could cause or contribute to such differences include, among others, the following: those associated with our marketing of a relatively new PDA accessories for consumers in an evolving marketplace, consumer preferences, perceptions and receptiveness with respect to our PDA accessories, our critical capital raising efforts in an uncertain and volatile economical environment, our ability to maintain an existing relationships with critical customers and vendors, including related licensing and marketing arrangements, our cash-preservation and cost-containment efforts, our ability to retain key management personnel, our relative inexperience with advertising, our competition and the potential impact of technological advancements thereon, the impact of changing economic, political, and geo-political environments on our business, as well as those factors discussed elsewhere in this Form 10-QSB and in "Item 1 - Our Business," "Item 6 - Our Management's Discussion and Analysis," particularly the discussion under "Risk Factors - Substantial Doubt as to our Ability to Continue as a Going Concern" and elsewhere in our most recent Form 10-KSB for our fiscal year ended October 31, 2003, as amended, filed with the United States Securities and Exchange Commission. Readers are urged to carefully review and consider the various disclosures made by us in this report, in the aforementioned Form 10-KSB, as amended, and those detailed from time to time in our reports and filings with the United States Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that are likely to affect our business.

Our fiscal year ends on October 31. References to a fiscal year refer to the calendar year in which such fiscal year ends.

INTRODUCTION
We are a marketer and distributor of various accessories primarily intended for use with PDAs. Our current line of products principally consists of over eighty individual accessories for a wide array of PDAs. These accessories range in complexity and price from simple connector cables with suggested retail prices starting at $9.99 at the low end to our multi-faceted XELA Keyboard with a suggested retail price of $69.99 at the high end. However, during the three and nine months ended July 31, 2004 and 2003, and as reported herein, our product sales revenues were substantially attributable to the following principal products (See Item 1. Our Business - Our Principal Products in our most recently filed Form 10-KSB for the fiscal year ended October 31, 2003, as amended, for further details):

DATA INPUT DEVICES:

o Our Keysync Keyboard - We introduced our Keysync Keyboard to the consumer marketplace in November 1998 as a more practicable and user-friendly alternative to the traditional PDA stylus for inputting significant amounts of data. Our Keysync Keyboard has a suggested retail price of $69.00.

o Our XELA Keyboard - We introduced our XELA Keyboard to the consumer marketplace in March 2003 as another more practicable and user-friendly alternative to the traditional PDA stylus for inputting significant amounts of data. Our XELA Keyboard has a suggested retail price of $69.00.

POWER DEVICES:

o Our Travel Kits - We introduced our first Travel Kit to the consumer marketplace in March 2002. We currently offer fifteen such Travel Kits to accommodate a wide array of PDAs. Each of our Travel Kits includes an AC charger, a 12-volt automobile adapter/charger, a USB charging cable, and a synchronization cable. Our Travel Kits have a suggested retail price of $39.99.

ENTERTAINMENT DEVICES:

o Our pocketRADIO - We introduced our pocketRADIO to the consumer marketplace in October 2003. Our pocketRADIO is a FM Stereo card that allows a PDA user to listen to FM Stereo while simultaneously running other programs. Our pocketRADIO have a suggested retail price of $49.99.

With the exception of the free technical support services we provide as part of the one year parts and labor warranty that accompanies each of our products, the only other services we performed during the fiscal periods reported herein were pursuant to maintenance agreements associated with our technical servicing and support of computer terminals and printers for financial institutions, which business we no longer actively market or pursue. Our maintenance service revenues, which constituted 6.5% of our total consolidated revenues for the fiscal year ended October 31, 2003, will continue to decrease in future fiscal years.

OUR RECENT SIGNIFICANT DEVELOPMENTS

There are no recent significant developments.

OUR CRITICAL ACCOUNTING POLICIES
The following discussions of our consolidated results of operations and financial condition, including our liquidity and capital resources, are based upon our consolidated financial statements as included elsewhere in this filing. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. Our actual results have differed, and will likely continue to differ, to some extent from our initial estimates and assumptions. We currently believe that the following significant accounting policies entail making particularly difficult, subjective or complex judgments of inherently uncertain matters that, given any reasonably possible variance therein, would make such policies particularly critical to a materially accurate portrayal of our historical or reasonably foreseeable financial condition or results of operations:

o Revenue Recognition for Product Sales and Related Allowances for Sales Returns and Rebates. In accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," we recognize a product sale, including related shipping and handling income, and the cost of the sale, upon product shipment provided that all material risks and rewards of ownership are concurrently transferred from us to our customer, the price is fixed or readily determinable, collection of the related receivable by us is reasonably assured, and we are able to reliably estimate appropriate allowances for probable sales returns and rebates based on our relevant historical experience and future expectations. We unconditionally accept product returns during the initial thirty days following the date of sale. We periodically offer promotional rebates of a limited duration, typically one week, on certain product sales, for which we outsource the processing and tracking of related customer submissions. The periodic provisions made by us to establish and maintain appropriate allowances for sales returns and rebates are charged to our results of operations via offsets to our gross product sales. Actual sales returns and rebates realized by us are charged against the related allowances with any favorable or unfavorable experience, as compared to our preceding estimates, having a correspondingly impact on our results of operations.

o Accounts Receivable and Related Allowance for Doubtful Accounts. In addition to corresponding reductions made for the allowances for sales returns and rebates, as discussed above, we further reduce our consolidated accounts receivable by an appropriate allowance for accounts where doubt exists in our opinion, based on known specifics or the passage of time, as to their ultimate collectability. We routinely offer our customers payment terms that range from 30 to 60 days. We do not access interest on, nor do we require any securing collateral of, past due customer balances. The periodic provisions made by us to establish and maintain an appropriate allowance for doubtful accounts are charged to our results of operations via increases to our selling, general and administrative expenses. Actual collection experience realized by us on previously designated doubtful accounts, including final determinations of uncollectability, is charged against the allowance for doubtful accounts with any favorable or unfavorable experience, as compared to our preceding estimates, having a correspondingly impact on our results of operations.

o Inventories. Our consolidated inventories, which consist solely of finished products available for sale, are stated at the lower of average cost or market, reduced by an appropriate allowance estimated by us for probable obsolescence. We record an allowance for obsolescence based on our historical experience and future expectations. The periodic provisions made by us to establish and maintain an appropriate allowance for obsolescence are charged to our results of operations via increases to our cost of goods sold. Actual disposition experience realized by us on previously designated obsolete inventory is charged against the allowance for obsolescence with any favorable or unfavorable experience, as compared to our preceding estimates, having a corresponding impact our its results of operations.

o Impairment of Long-Lived Assets. We evaluate, on at least a quarterly basis, each of our long-lived assets for impairment by comparing our then estimate of its related future cash flows, on an undiscounted basis, to its net book value. If impairment is indicated, we reduce the net book value of the asset to an amount equal to our estimate of related future cash flows, on an appropriately discounted basis, with a corresponding impairment charge to our results of operations.

o Convertible Debt Securities. We have periodically issued debentures that have non-detachable conversion features. In those instances where the stated conversion price reflects a discount from the then prevailing market price for our common stock, we make, at the date of the debenture issuance, an estimate as to the fair value of this beneficial conversion feature. The value assigned to the beneficial conversion feature is then immediately recognized in our results of operations via an interest/financing charge with a corresponding incremental credit to additional paid-in capital.

OUR CONSOLIDATED RESULTS OF OPERATIONS
Our consolidated total revenues for the three months ended July 31, 2004 ("fiscal 2004 third quarter") were $79,407, a decrease of $67,038, or 46%, as compared to $146,445 for the three months ended July 31, 2003 ("fiscal 2003 third quarter"). Our consolidated total revenues for the nine months ended July 31, 2004 ("fiscal 2004 nine month period") were $322,223, an increase of $39,831, or 14%, as compared to $282,392 for the nine months ended July 31, 2003 ("fiscal 2003 nine month period"). Our product sales constituted 97% and 94% of our consolidated total revenues for the fiscal 2004 third quarter and nine month period, respectively, as compared to 93% and 90% of our consolidated total revenues for the fiscal 2003 third quarter and nine month period, respectively. Our maintenance revenues, which constituted the balance of our consolidated total revenues for each respective fiscal period, will continue to decrease in future fiscal periods as we no longer actively market or pursue maintenance services.

Our product sales were $77,116 for the fiscal 2004 third quarter, a decrease of $59,475, or 44%, as compared to $136,591 in product sales for the fiscal 2003 third quarter. Our product sales were $301,765 for the fiscal 2004 nine month period, an increase of $46,816, or 18%, as compared to $254,949 in product sales for the fiscal 2003 nine month period. We substantially attribute the preceding increase to sales of our pocketRADIOs, which we began shipping to customers in late October 2002. Although to a significantly lesser extent, we also realized incremental fiscal 2003 product sales from our XELA Keyboard, which we began shipping to customers in March 2003. Partially offsetting the preceding product sales increases principally were sales decreases of varying degrees realized in our accessories for non-PDA hand-held computing devices, the marketing of which we continue to de-emphasize as we focus our currently limited operating and financial resources on the PDA accessories marketplace. We also realized a significant decrease in sales of our Keysync Keyboard which we primarily attribute to the introduction of competing products into the marketplace. Sales of our Travel Kits also decreased slightly, which we believe generally corresponded to the overall softening of sales realized by the underlying PDA manufacturers. Variances in the average prices realized by us on products in existence during both fiscal periods did not have a significant impact, favorably or unfavorably, on the overall net increase in our product sales for fiscal 2004. It must be noted that, absent significant contributions from the introduction of new products, our future revenues will be materially dependent upon sales of our pocketRADIOs and, to a significantly lesser extent, our Travel Kits and XELA Keyboard.

We incurred consolidated gross losses of $39,276 and $76,101 for the fiscal 2004 third quarter and nine month period, respectively, and consolidated gross losses of $23,531 and $36,201 for the fiscal 2003 third quarter and nine month period, respectively. In turn, these consolidated gross losses equated to negative gross margins of 49% and 24% for the fiscal 2004 third quarter and nine month period, respectively, and negative gross margins of 16% and 13% for the fiscal 2003 third quarter and nine month period, respectively. Our fiscal 2004 consolidated gross losses and negative gross margins were attributable to gross losses of $17,547 and $59,563, and resulting negative gross margins of 23% and 20%, on our product sales during the fiscal 2004 third quarter and nine month period, respectively. Similarly, Our fiscal 2003 consolidated gross losses and negative gross margins were attributable to gross losses of $32,079 and $60,085, and resulting negative gross margins of 23% and 24%, on our product sales during the fiscal 2003 third quarter and nine month period, respectively. We principally attribute the preceding gross losses and negative gross margins on our product sales during each of the above fiscal periods to our inability, given our continuing modest amount of product sales, to leverage our allocable direct labor and, to a lesser extent, overhead.

Our consolidated total operating expenses were $2,163,642 for the fiscal 2004 third quarter, an increase of $1,310,478, or 154%, from the $853,164 incurred during the fiscal 2003 third quarter. Our consolidated total operating expenses were $11,165,418 for the fiscal 2004 nine month period, an increase of $9,408,781, or 536%, from the $1,756,617 incurred during the fiscal 2003 nine month period.

Our consolidated selling, general and administrative ("SG&A") expenses were $964,135 for the fiscal 2004 third quarter, an increase of $515,796, or 115%, from the $448,339 incurred during the fiscal 2003 third quarter. Our consolidated SG&A expenses were $2,283,799 for the fiscal 2004 nine month period, an increase of $1,078,117, or 89%, from the $1,205,682 incurred during the fiscal 2003 nine month period. We incurred substantial dollar and percentage increases in our advertsing expenses and travel expenses as a result of

marketing activities associated with the introductions of our pocketRADIOs and XELA Keyboards, and in our sales expenses as a result of our transitioning to incrementally more expensive, yet more variable in nature, external commissioned field sales representatives. We also experienced substantial percentage increases in our consulting and legal fees as we continue to pay consultants and attorneys with common stock in order to reduce cash outlays . The expenses for consultants and attorneys have increased as a result of our efforts to expand our business and search for new opportunities.

During our fiscal 2004 third quarter, we recognized a $100,000 non-performance penalty incurred by our sales agent for which the Company is required to provide indemnification. This penalty relates to the inability to deliver one of the products requested in the purchase order from a major retailer. (See Note 4 of our July 31, 2004 financial statements.)

Our consolidated research and development ("R&D") expenses were $164,226 and $260,152 for the fiscal 2004 third quarter and for the fiscal 2004 nine month period, respectively. These research and development costs are directly related to the acquisition of Synosphere and their continuing efforts to develop new products for introduction in the the PDA marketplace.

During its fiscal second quarter ended April 30, 2004, the Company advanced a $400,000 deposit (consisting of $225,000 in cash and the application of $175,000 from the exercise of an option- see Note 10) to Enterprise Capital AG ("Enterprise") pursuant to an initial purchase order for virtual keyboards. When Enterprise subsequently failed to perform, the Company's management filed a lawsuit in Israel against Enterprise, ultimately resulting in the Company formally terminating its relationship with Enterprise on June 23, 2004. At such time, the Company requested Enterprise immediately refund the above deposit. Nevertheless, as it has been unsuccessful in its subsequent efforts to recover this deposit and significant uncertainties remain, the Company wrote-off the entire deposit as unrealizable as of July 31, 2004.

During the three months ended July 2004, the Company was served with a lawsuit by Ttools, Inc. alleging breach of contract. The Company has equipment and intellectual property rights associated with the Ttools product line amounting to $52,281 at July 31, 2004. Based on this lawsuit, the Company has determined that the remaining asset value has become impaired and has written-off the balance at July 31, 2004 (see Note 14).

We have incurred substantial costs relating to Consulting fees during the quarter and nine months ended July 31, 2004. We entered into several consulting contracts for business and management services for various terms. The options were granted to consultants at a discount from market and based on the uncertainty of any future value of these agreements; the Company expensed the value of the options in the period granted. We used the Black Scholles pricing model, which resulted in a charge to operations totaling $583,000 and $6,969,186 during the quarter and none months ended July 31, 2004, respectively.

Our resulting losses from operations for the fiscal 2004 third quarter and nine month period fiscal 2003 were $2,202,918 and $11,241,519, respectively. The preceding compares to losses from operations for the fiscal 2003 third quarter and nine month period fiscal 2003 of $876,695and $1,792,818, respectively.

Our non-operating other income and expenses primarily consist of interest expense, including non-cash charges attributable to the non-detachable beneficial conversion feature of newly issued debentures, and, to a significantly lesser extent, gains on settlements of obligations to vendors and miscellaneous other income. Our interest expense was $30,432 for the fiscal 2004 third quarter, a decrease of $459,415, or 94%, from the $489,847 incurred during the fiscal 2003 third quarter. Our interest expense was $172,093 for the fiscal 2004 nine month period, a decrease of $1,468,406, or 90%, from the $1,640,499 incurred during the fiscal 2003 nine month period. This decrease is due to $393,938 and $1,379,077 of beneficial conversion features of debentures issued during the three and nine months of fiscal 2003, respectively. These charges were not repeated during fiscal 2004. During the fiscal 2004 nine month period we realized non-cash aggregate gains of $197,017 on settlements of debenture obligations. The balance of our non-operating income and expenses items, including interest income, were inconsequential to our consolidated results of operations.

Primarily as a result of the foregoing, we incurred losses of $2,230,301 ($0.00) per basic and diluted share) and $11,186,825 ($0.00) per basic and diluted share) for the fiscal 2004 third quarter and nine month period, respectively. The preceding compares to losses of $1,354,095 ($0.00) per basic and diluted share) and $3,420,058 ($0.02) per basic and diluted share) for the fiscal 2003 third quarter and nine month period, respectively.

Our future ability to achieve profitability in any given future fiscal period remains highly contingent upon our realizing significantly increased product sales sufficient to leverage our non-variable, likely to be recurring expenses. For instance, our ability to achieve gross profits and positive gross margins in any given future fiscal period remains highly contingent upon us being able to leverage through significant incremental product sales the significant non-variable direct labor and overhead components of our costs of goods sold. Similarly, our ability to realize income from operations is further dependent upon our ability to additionally leverage through significant incremental sales our SG&A expenses, the majority of which currently are non-variable and recurring in nature. To the extent that we incur other less frequent or non-recurring operating expenses, as in fiscal 2004, we will require additional incremental product sales in order to leverage them. Lastly, our ability to realize net income and net income per common share remains highly contingent upon us being able to leverage through incremental product sales any significant net non-operating expenses, such as charges for the beneficial conversion features of any issued debentures and our interest expense on any outstanding debt. Correspondingly, our ability to realize significant incremental product sales in any given future fiscal period remains highly contingent upon us obtaining significant equity infusions and/or long-term debt financing sufficient to fund the increased and sustained campaign of marketing and advertising activities we believe necessary to build broad consumer awareness of, and demand for, our PDA accessories. Even if we were to be successful in procuring such funding, there can be no assurance that we will be successful in our marketing and advertising efforts, and that we will subsequently realize the significant incremental product sales we require.

OUR CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES
Overview

We have historically sustained our operations through an ongoing combination of trade credit arrangements, short-term financings, and debt and equity issuances. As our working capital requirements generally precede the realization of product sales and related accounts receivable, we routinely draw upon our existing cash and cash equivalent balances and seek short and long-term financing to fund our procurement of inventory. We currently have no established credit facilities in place for future borrowings.

During the course of transitioning our company over the last several years from our discontinued computer service businesses to our current business of marketing and distributing various accessories primarily intended for use with PDAs, we have incurred substantial operating and net losses, as well as negative operating cash flows. As of our fiscal quarter ended July 31, 2004, our working capital deficit was $2,797,058 and our stockholders' deficit was $2,341,702. Such reflects a decrease from our preceding fiscal year ended October 31, 2003 when our working capital deficit was $6,093,514 and our stockholders' deficit was $6,716,685. We had a nominal unrestricted cash balance of only $5,811 at July 31, 2004, as compared to $2,140 at October 31, 2003.

We had outstanding convertible debentures with an aggregate principal face amount of $1,413,675 at July 31, 2004, of which $1,413,675 was to become due and payable during our fiscal year ending October 31, 2004. During August 2004, debentures totaling $550,000 were converted into common stock. We had outstanding convertible debentures with an aggregate principal face amount of $4,015,837 at October 31, 2003, of which $3,265,837 and $750,000 was to become due and payable during our fiscal years ending October 31, 2004 and 2005, respectively.

Our Consolidated Cash Flows

Our operating activities utilized $2,202,529 in cash during the fiscal 2004 nine month period, an increase of $1,528,136, or 227%, from the $674,393 in cash utilized during the fiscal 2003 nine month period. Our increased utilization substantially reflects a $6,781,551, or 294%, net increase in our non-cash charges, being substantially offset by the $7,714,486 increase in our net loss. The most significant reductions in our non-cash charges were a $1,379,077

reduction in the charges associated with the beneficial conversion features of issued convertible debentures. This reduction is offset by increases of $1,200,000 and $6,969,186 in our non-cash acquisition of in-process research and development and services rendered in exchange for common stock options, respectively. Partially offsetting these non-cash charge items were a $50,215 decrease in accounts receivable, a $209,044 increase in inventories and an $18,603 decrease in accounts payable.

Our investing activities used a total of $321,299 during the fiscal 2004 nine month period to fund the acquisition of Synoshere in the amount of $18,833, the investment in Virtual Devices, $300,000 and the additional patent costs incurred of $2,466. There was no cash used in investing activities during the fiscal 2003 nine month period.

Our financing activities provided $2,527,499 in cash during the fiscal 2004 third quarter, an increase of $1,854,054, or 275%, from the $673,445 in cash provided by financing activities during the fiscal 2003 nine month period. Our fiscal 2004 nine month period reflects cash inflows primarily from our issuances . . .