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 an FM Stereo card that allows a PDA user to listen to FM Stereo while simultaneously running other programs. Our pocketRADIO has 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 on our 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 93% of our consolidated total revenues for the fiscal 2004 third quarter and nine month period, respectively, as compared to 94% 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. The decrease in product sales in the fiscal 2004 third quarter reflects a 47% decrease in sales of our pocketRADIOs . The pocketRADIOs accounted for approximately 70% of our product sales in each fiscal quarter of 2004 and 2003. Sales of our Travel Kits represented 14% ($11,153) of our sales in the 2004 quarter and 8% ($12,238) of our sales in the 2003 quarter. We expect that sales of these two primary products will continue to decrease in the coming quarters.

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. The pocketRADIOs accounted for approximately 54% of our product sales in each fiscal nine-month period of 2004 and 2003. Sales of our Travel Kits represented 9% ($30,366) of our sales in the nine months ended 2004 and 13% ($37,471) of our sales in the nine months ended 2003. Although to a significantly lesser extent, we also realized incremental fiscal 2004 product sales from our XELA Keyboard, which we began shipping to customers in March 2003. 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 the fiscal nine months ended July 31, 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.

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 $21,954 and $59,563, and resulting negative gross margins of 28% 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 ($51,106, or 43% of Cost of Revenues in the fiscal 2004 third quarter; $138,084 or 35% of Cost of Revenues in the fiscal 2004 nine month period) 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. We experienced increases in payroll costs due to the inclusion of the Synosphere employees and consulting and legal fees ($397,539 and $47,356 for the fiscal third quarters 2004 and 2003, respectively) due to our continuing search to expand our operations through acquisitions and /or mergers. A significant majority of these costs in 2004 were paid through the issuance of stock and options (see Note 10 to the July 31, 2004 Condensed Consolidate Financial Statements included herein).

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 a 52% increase in our payroll costs from the nine period ended fiscal 2003 of $586,805 to $892,491. This is a direct result of the inclusion of Synosphere's operations, including $500,000 (paid in stock) in sign-on bonuses for the key officers of Synosphere. We also experienced substantial percentage increases in our consulting and legal fees ($739,388 and $232,274 for the nine month periods ended fiscal 2004 and 2003, respectively) as we continue to pay consultants and attorneys with common stock in order to reduce cash outlays . See discussion below where we have accounted for Consulting Fess paid with stock options as a separate line item in our Condensed Consolidated Statement of Losses included in this filing. 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 to the July 31, 2004 Condensed Consolidated Financial Statements included herein).

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 PDA marketplace. As noted in Note 4 to the July 31, 2004 Condensed Consolidated Financial Statements included in this filing, we have expensed the cost of our acquisition of Synosphere, $1,200,000, as Acquired Research and Development costs.

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 to the July 31, 2004 Condensed Consolidate Financial Statements included herein).

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 Scholes pricing model, which resulted in a charge to operations totaling $583,000 and $6,969,186 during the quarter and nine months ended July 31, 2004, respectively. This cost represents the fair value of stock options issued for services to the following entities:

November 2003

o Options valued at $260,000 to purchase 200 million shares of common stock (at a 40% discount from market, as defined) were issued to D. Scott Elliott for general business and financial consulting services to assist the Company with its expansion plans and entry into other markets.

December 2003

o Options valued at $60,000 to purchase 50 million shares of common stock (at a 15% discount from market, as defined) were issued to Jeffrey Firestone for providing legal counsel on international issues in mergers and acquisitions.

January 2004

o Options valued at $4,450,000 to purchase 100 million shares of common stock (at a 50% discount from market, as defined) were issued to Pangea Investments GmbH for consulting and acquisition services in Europe and Israel. Sam Elimalech, an officer of Enterprise Capital AG, is also a member of Pangea Investments Gmbh.

March 2004

o Options valued at $1,616,186 to purchase 151,045,455 shares of common stock (at a 20% discount from market, as defined) to D. Scott Elliott for general business and financial consulting services to assist the Company with its expansion plans and entry into other markets.

May 2004

o Options valued at $492,000 to purchase 40,000,000 shares of common stock (at a 7.5% discount from market, as defined) were granted to Steven Green for financial management, business management and business optimization through mergers and acquisitions. These consulting services are offered for a term of three years. Options to purchase 35,000,000 shares were exercised in May 2004 resulting in the receipt of approximately $345,000. The remaining 5,000,000 shares were deposited into an escrow account (see Common Stock Held in Escrow above)

o Options valued at $91,000 to purchase 10,000,000 (at a 15.0% discount from market, as defined) shares of common stock were issued in May 2004 to Jeffrey Firestone for providing legal counsel on international issues in mergers and acquisitions.

Based on the uncertainty of any future value of these agreements, the Company expensed the value of the options in the period they were granted.

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 primarily consist of gains on settlements of debenture and vendor obligations and miscellaneous other income. 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. Our non-operating expenses primarily consist of interest expense, including non-cash charges attributable to the non-detachable beneficial conversion feature of newly issued debentures. 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.

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 are currently 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 . . .