U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10QSB
(Mark One)

[X]   Quarterly report under Section 13 or 15(d) of the Securities  Exchange Act
      of 1934 for the quarterly period ended March 31. 2005

[ ]   Transition report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934

For the transition period from ____________ to ______________

                       For the Period Ended March 31, 2005
                        Commission file number 000-33415


                              CYBERLUX CORPORATION
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


                 Nevada                               91-2048178
        ------------------------          ---------------------------------
        (State of Incorporation)          (IRS Employer Identification No.)


                              4625 Creekstone Drive
                                    Suite 100
                             Research Triangle Park
                                Durham, NC 27703
                    ----------------------------------------
                    (Address of Principal Executive Offices)


                                 (919) 474-9000
                            -------------------------
                            Issuer's Telephone Number

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

      Yes  [x]     No [ ]

As of May 2, 2005,  the Company had  33,991,780  shares of its par value  $0.001
common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one):

      Yes  [ ]     No [x]



                              CYBERLUX CORPORATION

                     Quarterly Report on Form 10-QSB for the
                     Quarterly Period Ending March 31, 2005

                                Table of Contents

PART I.     FINANCIAL INFORMATION

      Item 1.     Financial Statements

                  Condensed Consolidated Balance Sheets: March
                  31, 2005 (Unaudited) and December 31, 2004 (
                  Audited)                                                     3

                  Condensed Consolidated Statements of Operations:
                  Three Months Ended March 31, 2005 and 2004
                  (Unaudited)                                                  4

                  Condensed Consolidated Statements of Cash
                  Flows: Three Months Ended March 31, 2005 and
                  2004 (Unaudited)                                             5

                  Notes to Unaudited Condensed Consolidated
                  Financial Information: March 31, 2005                      6-7

      Item 2. Management Discussion and Analysis                               8

      Item 3. Controls and Procedures                                         16

PART II.  OTHER INFORMATION

      Item 1. Legal Proceedings                                               17

      Item 2. Unregistered Sales of Equity Securities and Use of Proceeds     18

      Item 3. Defaults Upon Senior Securities                                 19

      Item 4. Submission of Matters to a Vote of Security Holders             19

      Item 5. Other Information                                               19

      Item 6. Exhibits                                                        19

Signatures                                                                    20


                                       2


                              CYBERLUX CORPORATION
                                 BALANCE SHEETS
                                   (UNAUDITED)




                                                                                      March 31, 2005               December 31, 2004
                                                                                         Unaudited                       Audited
                                                                                        ------------                   ------------
Assets

                                                                                                                 
Current assets:

    Cash & cash equivalents                                                             $     10,460                   $    415,375
    Accounts Receivable                                                                       13,429                             --
    Prepaid expenses                                                                          36,235                         68,404

                                                                                        ------------                   ------------
        Total current assets                                                                  60,124                        483,779

Property, plant and equipment, net of accumulated
depreciation of $ 100,629 and $92,335, respectively                                           35,687                         43,018

Other Assets:

    Patents                                                                                   61,739                         30,544

                                                                                        ------------                   ------------
        Total other assets                                                                    61,739                         30,544

Total Assets                                                                            $    157,550                   $    557,341
                                                                                        ============                   ============


Liabilities and Deficiency in Stockholders' Equity

Current liabilities:

    Accounts payable                                                                    $    166,376                   $    176,094
    Accrued liabilities                                                                      347,320                        323,408
    Short-term notes payable - shareholders                                                  394,595                        399,080
    Short-term notes payable                                                                  27,500                         27,500

                                                                                        ------------                   ------------
        Total current liabilities                                                            935,791                        926,082

Long-term liabilities:

    Notes payable                                                                          1,282,045                      1,355,069

                                                                                        ------------                   ------------
        Total long-term liabilities                                                        1,282,045                      1,355,069


Deficiency Stockholders' equity:

    Preferred stock,  $0.001 par value,  5,000,000 shares  authorized,  Class A,
    113.3606 and 151.8606 shares issued and
    outstanding as of March 31, 2005 and December 31, 2004 respectively                            1                              1

    Preferred stock,  $0.001 par value,  8,000,000 shares  authorized,  Class B,
    800,000 and 0 shares issued and
    outstanding as of March 31, 2005 and December 31, 2004 respectively                          800                            800

    Common stock,  $0.001 par value,  300,000,000 shares authorized,  30,871,338
    and  23,770,233  shares  issued  and  outstanding  as of March 31,  2005 and
    December 31,
    2004 respectively                                                                         30,871                         23,770

    Additional paid-in capital                                                             9,179,386                      9,099,302
    Accumulated deficit                                                                  (11,271,344)                   (10,847,683)
                                                                                        ------------                   ------------

Deficiency in stockholders' equity                                                        (2,060,285)                    (1,723,810)
                                                                                        ------------                   ------------

Total liabilities and (deficiency) in stockholders' equity                              $    157,550                   $    557,341
                                                                                        ============                   ============


    The accompanying notes are an integral part of these financial statements


                                       3


                              CYBERLUX CORPORATION
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)





                                                                                               For the Three Months Ended
                                                                                      March 31, 2005                 March 31, 2004

                                                                                                               
Revenue                                                                                 $     13,568                 $      9,968

Cost of goods sold                                                                            (6,369)                      (8,395)

                                                                                        ------------                 ------------
    Gross margin (loss)                                                                        7,199                        1,573

Operating Expenses:

Marketing and advertising                                                                     21,323                           --
Depreciation and amortization                                                                  8,294                       18,291
Research and development                                                                      18,696
General and administrative expenses                                                          339,840                      268,798

Total operating expenses                                                                     388,153                      287,089
                                                                                        ------------                 ------------

(Loss) from operations                                                                      (380,954)                    (285,516)

Other income/(expense)

    Other Income                                                                              15,000                           --
    Interest income                                                                              300                           --
    Interest expense                                                                         (43,006)                     (49,193)

Net Loss before provision for income taxes
and preferred dividend                                                                      (423,660)                    (319,709)

Income taxes (benefit)                                                                            --                           --
                                                                                        ------------                 ------------

Net loss                                                                                    (423,660)                    (319,709)

Preferred dividend - Beneficial conversion discount
on convertible preferred                                                                          --                      400,000

Net loss available to common stockholders                                               $   (423,660)                $   (719,709)

Weighted average number of common shares
outstanding, basic and fully diluted                                                      27,919,776                   11,907,762

Net loss per share - Basic and fully diluted                                            $      (0.02)                $      (0.06)

Preferred dividend                                                                      $     24,000                 $     24,000


    The accompanying notes are an integral part of these financial statements


                                       4


                              Cyberlux Corporation
                        Condensed Statement of Cash Flows
                                   (Unaudited)




                                                                                               For the Three Months Ended
                                                                                      March 31, 2005               March 31, 2004

                                                                                                              
Cash flows provided by (from-used in) operating activities

     Net (loss) available to common stockholders                                        $   (423,660)               $   (719,709)

     Depreciation and amortization                                                             8,294                      18,291

     Beneficial conversion discount - preferred stock dividend                                    --                     400,000


     Shares issued for previously incurred debt                                               73,024                      27,692

     Warrants issued to consultants for services                                              14,160                          --

     Preferred shares issued for conversion of accrued
     management fees                                                                              --                     723,670

     Preferred shares issued for previously incurred debt                                     76,330

     Shares issued for consulting services                                                    47,225

     Shares issued for research and development

     Decrease (increase) in accounts receivable                                              (13,429)                     (9,816)

     Decrease (increase) in deposits                                                         236,000

     (Increase) decrease in prepaid expenses                                                  32,169                          --

     (Increase)/decrease in other assets                                                     (31,195)                         --

     Increase (decrease) in accrued liabilities                                               23,912                    (142,442)

     (Decrease) increase in management fee payable-
     related party                                                                                --                    (684,670)

     (Decrease) increase in other accounts payable                                            (9,718)                         --

Net cash (used in) operating activities                                                     (326,442)                    (27,429)


Cash flows provided by (used in) investing activities

     Payments for property, plant and equipment                                                 (963)                     (5,174)

Cash (used in) investing activities                                                             (963)                     (5,174)

Cash flows provide by (used in) financing activities

     (Payments for )/proceeds from short-term notes payable, net                                  --                          --

     (Payments for )/proceeds from short-term notes
     payable-shareholders (net)                                                               (4,485)                    (85,000)

     Proceeds from advance deposits                                                               --                      32,403

     (Payments for)/Proceeds from convertible long-term notes                                (73,024)                         --

     Proceeds from issuance of common stock                                                   88,186

Net cash provided by (used in)financing activities                                           (77,510)                     35,589

                                                                                        ------------                ------------
Net increase (decrease) in cash                                                             (404,915)                      2,986

Cash - beginning                                                                             415,375                      16,247

Cash - ending                                                                           $     10,460                $     19,233

Supplemental disclosures:

     Interest Paid                                                                      $         --                $     66,314

     Income Taxes Paid                                                                            --                          --

Non-Cash investing and financing activities:

     Shares issued for research and development and consulting                                47,225

     Shares issued for conversion of debt                                                     73,024                      27,692

     Warrants issued in connection with financing                                                 --                          --

     Warrants issued to consultants for services                                              14,160

     Shares issued in connection with loan                                                        --                     225,000

     Beneficial conversion discount on convertible preferred stock                                --                     400,000

     Convertible preferred shares issued for note payable and accrued interest -              76,330

     Convertible preferred shares issued for accrued management fees                              --                     723,670


    The accompanying notes are an integral part of these financial statements


                                       5


                              CYBERLUX CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)


NOTE A - SUMMARY OF ACCOUNTING POLICIES

General

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America for interim financial  information and the instructions
to Form  10-QSB.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Accordingly,  the results from operations for the three-month period ended March
31, 2005, are not necessarily indicative of the results that may be expected for
the year ended December 31, 2005. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated December 31, 2004
financial statements and footnotes thereto included in the Company's Form 10-KSB
for the year ended December 31, 2004.

Business and Basis of Presentation

Cyberlux Corporation (the "Company") is incorporated under the laws of the State
of  Nevada.  The  Company,  which  has  transitioned  from a  development  state
enterprise,  develops,  manufactures  and markets  long-term  portable  lighting
products for commercial and  industrial  users.  While the Company has generated
revenues  from its sale of  products,  the Company has  incurred  expenses,  and
sustained losses. Consequently, its operations are subject to all risks inherent
in the  establishment  of a new business  enterprise.  As of March 31, 2005, the
Company has accumulated losses of $11,271,344.

Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)

Reclassification

Certain  reclassifications  have been made to conform prior periods' data to the
current presentation. These reclassifications had no effect on reported losses.

Stock-Based Compensation:

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary charge to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of SF AS No.  123  to  require
prominent  disclosures in both armua1 and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No.25 and related interpretations. Accordingly, compensation expense for
stock options is measured as the excess, if any, of the fair market value of the
Company's  stock at the date of the grant over the exercise price of the related
option. The Company has adopted the annual disclosure  provisions of SFAS No.148
in its  financial  reports for the year ended  December  31,2002 and  subsequent
years.


                                       6


                             CYBERLUX CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)


NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)

Had compensation  costs for the Company's stock options been determined based on
the fair value at the grant dates for the  awards,  the  Company's  net loss and
losses  per share  would  have been as  follows  (transactions  involving  stock
options issued to employees and Black-Scholes model assumptions are presented in
Note D):



                                                                For the three months ended March 31,

                                                                      2004                2003
                                                                   ---------           ---------
                                                                                 
Net loss attributable to common stockholders -as reported          $(423,660)          $(719,709)
Add. Total stock based employee compensation  expense as
reported under intrinsic value method (APB No. 25)                      --                  --
Deduct Total stock based employee compensation expense
as reported under fair value based method  (SFAS No. 123)               --                  --
Net loss -Pro Forma                                                $(423,660)          $(719,709)

Net loss attributable to common stockholders - Pro forma           $(423,660)          $(719,709)


Basic (and assuming dilution) loss per share - as reported         $   (0.02)          $   (0.06)

Basic (and assuming dilution) loss per share - Pro forma           $   (0.02)          $   (0.06)


NOTE B - RELATED PARTY TRANSACTIONS

From time to time, the Company's  principal  officers have advanced funds to the
Company for working capital purposes in the form of unsecured  promissory notes,
accruing  interest at 12% per annum. As of March 31, 2005 and December 31, 2004,
the balance due to the officers was $ 394,595 and $399,080, respectively.

NOTE C - SUBSEQUENT EVENTS

In April,  2005,  the Company  issued  1,035,221  shares of its common  stock at
$0.0118 per share on conversion of notes payable.


In April,  2005,  the Company  issued  1,035,221  shares of its common  stock at
$0.011 per share on conversion of notes payable.


In May, 2005, the Company issued 1,035,221 shares of its common stock at $0.0108
per share on conversion of notes payable.

                                       7



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


The following discussion contains forward-looking statements that are subject to
significant risks and uncertainties  about us, our current and planned products,
our current and  proposed  marketing  and sales,  and our  projected  results of
operations.  There are several important factors that could cause actual results
to differ  materially  from  historical  results  and  percentages  and  results
anticipated  by the  forward-looking  statements.  The  Company  has  sought  to
identify the most significant risks to its business,  but cannot predict whether
or to what  extent  any of such  risks  may be  realized  nor can  there  be any
assurance  that the Company has  identified all possible risks that might arise.
Investors  should  carefully  consider  all  of  such  risks  before  making  an
investment   decision  with  respect  to  the  Company's  stock.  The  following
discussion  and  analysis  should  be read in  conjunction  with  the  financial
statements  of the  Company and notes  thereto.  This  discussion  should not be
construed to imply that the results  discussed herein will necessarily  continue
into the future,  or that any  conclusion  reached  herein will  necessarily  be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment from our Management.

Overview

We have  transitioned  from a development stage enterprise to a Company actively
designing, developing manufacturing and marketing advanced lighting systems that
utilize white (and other) light emitting diodes as illumination elements.

We are developing and marketing new product  applications of diodal illumination
(TM) that  demonstrate  added value over  traditional  lighting  systems.  Using
proprietary  technology,  we are creating a family of products for emergency and
security lighting offer extended light life and greater cost  effectiveness than
other existing forms of  illumination.  We are expanding our marketing  activity
into channels of retail, commercial and institutional sales.

Our  target  markets  include   long-term  interim  lighting  needs  in  hotels,
hospitals,  nursing  homes,  airports,  shopping  centers  and  multiple  family
complexes;  long-term  evacuation  solutions  for  theaters,  office  and public
buildings;  reduced  maintenance cost solutions for property managers as applied
to walkway,  corridor or landscape lighting;  and certain sensitive applications
for the military.

During the second  quarter of 2004, we met with  officials from the State of New
York who expressed interest in our long-term interim lighting solutions. We also
met with security  administrators of the Metropolitan  Transit Authority and the
Port  Authority  in the City of New York.  The  Metropolitan  Transit  Authority
requested that we submit a proposal to provide long term interim  lighting pilot
installations in New York City's subway system to include  passenger  platforms,
rail cars and tunnel accesses.  In June 2004, we submitted a proposal to the MTA
for a pilot program. In March 2005, we submitted an implementation  proposal for
subway cars and stairwells. This program is currently being reviewed by the MTA.
As a result of our meeting  with the Port  Authority,  we  anticipate  a similar
proposal  request related to Newark,  LaGuardia and JFK airports and the Holland
Tunnel system,  although we have not received a proposal  request as of the date
of this  filing and no  assurance  can be given that we will  receive a proposal
request.

Results of Operations

Three months  ended March 31, 2005  compared to the three months ended March 31,
2004

REVENUES

Revenues for the three months ended March 31, 2005 were $ 13,568 and compares to
$9,968 for the same  period  ended  March 31,  2004.  Included  in sales for the
quarter is a $10,000  contract  with Kings Park School  District of Long Island,
New York for the installation of our ELS products in a local middle school. This
installation  is being  hailed as a pilot  project that could become a model for
emergency lighting throughout the State of New York.


                                       8


COST OF SALES

Cost of sales for the first  quarter  were $6,369 and produced a gross margin on
sales of 53%.  This  compares to $8,395 in cost of sales for the  quarter  ended
March 31, 2004 which produced a gross margin of 16%.

OPERATING EXPENSES

Operating  expenses  for the  quarter  ended  March 31,  2005 were $ 430,859 and
compares to $321,282 for the same period ended March, 31, 2004.  Included in the
Quarter ended March 31, 2005 are $46,210 in expenses for market  development and
literature. This compares to $32,400 for the first quarter of 2004. Salaries and
wages for the quarter  ended March 31, 2005 were  $238,945  compared to $167,350
for the same period in 2004  reflecting  the addition of staff in the  marketing
segment of the Company.

As a result of limited  capital  resources and minimal  revenues from operations
from its inception,  the Company has relied on the issuance of equity securities
to non-employees in exchange for services.  The Company's management enters into
equity compensation  agreements with non-employees if it is in the best interest
of the Company under terms and conditions  consistent  with the  requirements of
Financial Accounting Standards No. 123, Accounting for Stock Based Compensation.
In  order  conserve  its  limited  operating  capital  resources,   the  Company
anticipates continuing to compensate  non-employees for services during the next
twelve months.  This policy may have a material effect on the Company's  results
of operations during the next twelve months.

Liquidity and Capital Resources

As of March 31,  2005,  we had a  working  capital  deficit  of  $875,666.  This
compares to a working capital deficit of $ 442,303 as of December 31, 2004. As a
result of our operating  losses for the first three months ended March 31, 2005,
we generated a cash flow deficit of $ 427,914 from  operating  activities.  Cash
flows used in investing activities was $963 during the quarter.  Cash flows used
in financing  activities were $4,485 on payment of short-term  notes payable for
the first three months ended March 31, 2005.

While we have raised capital to meet our working  capital and financing needs in
the past,  additional  financing  is  required  in order to meet our current and
projected cash flow deficits from operations and development.

By adjusting our operations and development to the level of  capitalization,  we
believe  we have  sufficient  capital  resources  to meet  projected  cash  flow
deficits  through the next twelve months.  However,  if  thereafter,  we are not
successful  in generating  sufficient  liquidity  from  operations or in raising
sufficient  capital  resources,  on terms  acceptable  to us,  this could have a
material  adverse effect on our business,  results of operations,  liquidity and
financial condition.

Our independent  certified public accountant has stated in their report included
in our  December  31,  2004,  Form  10-KSB,  as amended,  that we have  incurred
operating  losses  in the  last  two  years,  and  that  we are  dependent  upon
management's  ability to develop  profitable  operations.  These  factors  among
others may raise  substantial  doubt  about our  ability to  continue as a going
concern.

To obtain  funding  for our ongoing  operations,  we entered  into a  Securities
Purchase Agreement with four accredited investors on April 22, 2005 for the sale
of (i)  $1,500,000  in  secured  convertible  notes  and  (ii)  warrants  to buy
25,000,000 shares of our common stock. The investors are obligated to provide us
with an aggregate of $1,500,000 as follows:

      o     $600,000 was disbursed on April 22, 2005;

      o     $500,000  will be  disbursed  within  five  days of the  filing of a
            registration statement; and

      o     $400,000 will be disbursed within five days of the  effectiveness of
            a registration statement.

The proceeds  received  from the sale of the secured  convertible  notes will be
used for business development  purposes,  working capital needs,  pre-payment of
interest, payment of consulting and legal fees and purchasing inventory.


                                       9


The secured  convertible notes bear interest at 10%, mature three years from the
date of issuance,  and are convertible  into our common stock, at the investors'
option, at the lower of (i) $0.03 or (ii) 50% of the average of the three lowest
intraday  trading  prices for the common stock on a principal  market for the 20
trading days before but not including the  conversion  date.  The full principal
amount of the secured  convertible  notes is due upon default under the terms of
secured  convertible  notes. The warrants are exercisable  until five years from
the date of issuance at a purchase  price of $0.03 per share.  In addition,  the
conversion price of the secured  convertible notes and the exercise price of the
warrants  will be  adjusted in the event that we issue  common  stock at a price
below the fixed conversion price,  below market price, with the exception of any
securities  issued in connection  with the Securities  Purchase  Agreement.  The
conversion price of the secured  convertible notes and the exercise price of the
warrants  may be  adjusted  in certain  circumstances  such as if we pay a stock
dividend, subdivide or combine outstanding shares of common stock into a greater
or lesser number of shares, or take such other actions as would otherwise result
in dilution of the selling stockholder's position. The selling stockholders have
contractually  agreed to restrict  their  ability to convert or  exercise  their
warrants  and receive  shares of our common stock such that the number of shares
of common  stock  held by them and their  affiliates  after such  conversion  or
exercise  does not  exceed  4.9% of the then  issued and  outstanding  shares of
common stock. In addition,  we have granted the investors a security interest in
substantially  all of our  assets and  intellectual  property  and  registration
rights.

Since the  conversion  price  will be less than the  market  price of the common
stock at the time the  secured  convertible  notes  are  issued,  we  anticipate
recognizing  a charge  relating  to the  beneficial  conversion  feature  of the
secured convertible notes during the quarter in which they are issued, including
the second  quarter of fiscal 2005 when  $600,000 of secured  convertible  notes
were issued.

We will still need  additional  investments  in order to continue  operations to
cash flow break even.  Additional  investments  are being sought,  but we cannot
guarantee  that  we  will  be  able  to  obtain  such   investments.   Financing
transactions  may include the issuance of equity or debt  securities,  obtaining
credit facilities, or other financing mechanisms.  However, the trading price of
our common stock and the downturn in the U.S.  stock and debt markets could make
it more  difficult  to obtain  financing  through the issuance of equity or debt
securities. Even if we are able to raise the funds required, it is possible that
we could  incur  unexpected  costs and  expenses,  fail to  collect  significant
amounts owed to us, or experience  unexpected cash requirements that would force
us to seek alternative financing. Further, if we issue additional equity or debt
securities,  stockholders may experience  additional  dilution or the new equity
securities  may  have  rights,  preferences  or  privileges  senior  to those of
existing  holders of our common stock. If additional  financing is not available
or is not available on acceptable  terms, we will have to curtail our operations
again.

Application of Critical Accounting Policies

On June 30, 2004,  the  Financial  Accounting  Standards  Board (FASB)  issued a
proposed Statement, Share-Based Payment, an amendment of FASB Statements No. 123
and 95, that would require companies to account for stock-based  compensation to
employees using a fair value method as of the grant date. The proposed statement
addresses the accounting for transactions in which a Company  receives  employee
services  in  exchange  for  equity  instruments  such  as  stock  options,   or
liabilities that are based on the fair value of the Company's equity instruments
or that may be settled  through the issuance of such equity  instruments,  which
includes the  accounting  for  employee  stock  purchase  plans.  This  proposed
statement would eliminate a Company's ability to account for share-based  awards
to employees using APB Opinion 25,  Accounting for Stock Issued to Employees but
would not change  the  accounting  for  transactions  in which a company  issues
equity  instruments for services to non-employees or the accounting for employee
stock ownership plans. The proposed  statement,  if adopted,  would be effective
for awards that are  granted,  modified,  or settled in fiscal  years  beginning
after  December  15,  2004.  The  Company  is in the  process of  assessing  the
potential impact of this proposed statement to the financial statements.

Non-GAAP Financial Measures

The financial  statements  appearing in this quarterly  report on Form 10-QSB do
not contain any financial  measures  which are not in accordance  with generally
accepted accounting procedures.


                                       10


Inflation

In the opinion of  management,  inflation  has not had a material  effect on the
Company's financial condition or results of its operations

Off-Balance Sheet Arrangements

The  Company  does  not  maintain  off-balance  sheet  arrangements  nor does it
participate in non-exchange  traded  contracts  requiring fair value  accounting
treatment.

                                  RISK FACTORS

            Much of the information  included in this quarterly  report includes
or is based upon estimates,  projections or other "forward-looking  statements".
Such forward-looking  statements include any projections or estimates made by us
and our  management  in  connection  with our business  operations.  While these
forward-looking  statements,  and any assumptions upon which they are based, are
made in good faith and reflect our current  judgment  regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

            Such estimates,  projections or other  "forward-looking  statements"
involve various risks and uncertainties as outlined below. We caution the reader
that  important  factors in some cases have affected  and, in the future,  could
materially  affect actual results and cause actual results to differ  materially
from  the  results  expressed  in  any  such  estimates,  projections  or  other
"forward-looking statements".

            Our common shares are considered speculative.  Prospective investors
should consider carefully the risk factors set out below.

We Have a History Of Losses Which May Continue,  Which May Negatively Impact Our
Ability to Achieve Our Business Objectives.

            We incurred net losses of $6,025,848 for the year ended December 31,
2004 and $1,494,556  for the year ended December 31, 2003. In addition,  for the
quarter  ended March 31,  2005,  we incurred a net loss of  $423,660.  We cannot
assure you that we can achieve or sustain profitability on a quarterly or annual
basis in the future.  Our  operations  are subject to the risks and  competition
inherent  in  the  establishment  of a  business  enterprise.  There  can  be no
assurance that future  operations will be profitable.  Revenues and profits,  if
any,  will depend upon  various  factors,  including  whether we will be able to
continue  expansion of our revenue.  We may not achieve our business  objectives
and the failure to achieve such goals would have an adverse impact on us.

If We Are Unable to Obtain  Additional  Funding Our Business  Operations Will be
Harmed and If We Do Obtain Additional  Financing Our Then Existing  Shareholders
May Suffer Substantial Dilution.

            We will require additional funds to sustain and expand our sales and
marketing  activities.  We anticipate  that we will require up to  approximately
$900,000 to fund our continued operations for the next twelve months,  depending
on revenue from operations.  Additional  capital will be required to effectively
support the operations and to otherwise implement our overall business strategy.
There can be no  assurance  that  financing  will be  available in amounts or on
terms  acceptable to us, if at all. The inability to obtain  additional  capital
will  restrict  our  ability to grow and may reduce our  ability to  continue to
conduct business operations. If we are unable to obtain additional financing, we
will  likely be  required to curtail our  marketing  and  development  plans and
possibly  cease our  operations.  Any  additional  equity  financing may involve
substantial dilution to our then existing shareholders.

Our Independent  Auditors Have Expressed  Substantial Doubt About Our Ability to
Continue  As a Going  Concern,  Which May  Hinder Our  Ability to Obtain  Future
Financing.

            In their  report  dated March 17,  2005,  our  independent  auditors
stated that our financial  statements  for the year ended December 31, 2003 were
prepared  assuming  that we would  continue as a going  concern.  Our ability to


                                       11


continue  as a going  concern  is an issue  raised as a result of losses for the
years  ended  December  31,  2004  and 2003 in the  amounts  of  $6,025,848  and
$1,494,556,  respectively.  We continue to experience net operating losses.  Our
ability to continue  as a going  concern is subject to our ability to generate a
profit and/or obtain necessary funding from outside sources, including obtaining
additional  funding  from  the  sale  of our  securities,  increasing  sales  or
obtaining loans and grants from various financial  institutions  where possible.
Our continued net operating losses increase the difficulty in meeting such goals
and there can be no assurances that such methods will prove successful.

If We Are Unable to Retain the Services of Messrs.  Evans,  Schmidt or Ringo, or
If We  Are  Unable  to  Successfully  Recruit  Qualified  Managerial  and  Sales
Personnel  Having  Experience  in  Business,  We May Not Be Able to Continue Our
Operations.

            Our  success  depends to a  significant  extent  upon the  continued
service  of Mr.  Donald F.  Evans,  our Chief  Executive  Officer,  Mr.  Mark D.
Schmidt,  our President and Mr. John Ringo, our Secretary and Corporate Counsel.
Loss of the  services of Messrs.  Evans,  Schmidt or Ringo could have a material
adverse effect on our growth,  revenues,  and  prospective  business.  We do not
maintain key-man  insurance on the life of Messrs.  Evans or Ringo. In addition,
in order to  successfully  implement  and manage our business  plan,  we will be
dependent upon, among other things, successfully recruiting qualified managerial
and sales  personnel  having  experience in business.  Competition for qualified
individuals is intense.  There can be no assurance that we will be able to find,
attract and retain existing  employees or that we will be able to find,  attract
and retain qualified personnel on acceptable terms.

Many Of Our  Competitors  Are  Larger  and  Have  Greater  Financial  and  Other
Resources  Than We Do and Those  Advantages  Could Make It  Difficult  For Us to
Compete With Them.

            The lighting and illumination  industry is extremely competitive and
includes  several  companies  that have achieved  substantially  greater  market
shares than we have, and have longer operating  histories,  have larger customer
bases,  and have  substantially  greater  financial,  development  and marketing
resources  than we do. If overall  demand for our  products  should  decrease it
could have a materially adverse affect on our operating results.

Our  Trademark  and Other  Intellectual  Property  Rights May Not be  Adequately
Protected Outside the United States, Resulting in Loss of Revenue.

            We believe that our trademarks, whether licensed or owned by us, and
other  proprietary  rights are  important  to our  success  and our  competitive
position.  In the  course  of our  international  expansion,  we  may,  however,
experience  conflict with various  third parties who acquire or claim  ownership
rights in certain trademarks. We cannot assure that the actions we have taken to
establish  and protect these  trademarks  and other  proprietary  rights will be
adequate to prevent  imitation  of our  products by others or to prevent  others
from seeking to block sales of our products as a violation of the trademarks and
proprietary  rights of others.  Also,  we cannot assure you that others will not
assert rights in, or ownership of,  trademarks and other  proprietary  rights of
ours or that we will be able to successfully resolve these types of conflicts to
our  satisfaction.  In addition,  the laws of certain foreign  countries may not
protect  proprietary  rights to the same  extent,  as do the laws of the  United
States.

Risks Relating to Our Current Financing Arrangement:

            There  Are  a  Large  Number  of  Shares   Underlying   Our  Secured
Convertible  Notes and Warrants  That May be  Available  for Future Sale and the
Sale of These Shares May Depress the Market Price of Our Common Stock.

            As of May 2, 2005, we had  33,991,780  shares of common stock issued
and outstanding,  secured  convertible  notes  outstanding that may be converted
into an estimated 60,000,000 shares of common stock at current market prices and
outstanding   warrants  to   purchase   10,000,000   shares  of  common   stock.
Additionally,  we have an obligation to sell secured  convertible notes that may
be  converted  into an  estimated  90,000,000  shares of common stock at current
market prices and issue warrants to purchase  15,000,000  shares of common stock
in the near future. Additionally, pursuant to a prior financing with the selling
stockholders,  we still have outstanding  secured  convertible notes that may be
converted into an estimated 141,294,800 shares of common stock at current market
prices and outstanding warrants to purchase 2,250,000 shares of common stock. In
addition,  the number of shares of common stock issuable upon  conversion of the
outstanding  secured  convertible  notes may increase if the market price of our
stock  declines.  All of the shares,  including all of the shares  issuable upon


                                       12


conversion of the secured  convertible  notes and upon exercise of our warrants,
may be sold without  restriction.  The sale of these shares may adversely affect
the market price of our common stock.

The Continuously  Adjustable Conversion Price Feature of Our Secured Convertible
Notes Could Require Us to Issue a Substantially  Greater Number of Shares, Which
Will Cause Dilution to Our Existing Stockholders.

            Our  obligation  to issue  shares  upon  conversion  of our  secured
convertible notes is essentially  limitless.  The following is an example of the
amount of shares of our common stock that are issuable,  upon  conversion of our
secured  convertible notes (excluding accrued interest),  based on market prices
25%, 50% and 75% below the market price, as of May 10, 2005 of $0.03.

                                                      Number            % of
% Below        Price Per       With Discount        of Shares        Outstanding
Market          Share              at 50%            Issuable           Stock
-------        ---------       -------------        ---------        -----------

  25%           $.0225           $.01125           133,333,334          79.69%
  50%           $ .015           $ .0075           200,000,000          85.47%
  75%           $.0075           $.00375           400,000,000          92.17%

            As  illustrated,  the number of shares of common stock issuable upon
conversion of our secured convertible notes will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders.

The Continuously  Adjustable Conversion Price Feature of our Secured Convertible
Notes May Have a Depressive Effect on the Price of Our Common Stock.

            The secured  convertible  notes are  convertible  into shares of our
common stock at a 50% discount to the trading price of the common stock prior to
the  conversion.  The significant  downward  pressure on the price of the common
stock as the selling  stockholders  convert and sell material  amounts of common
stock could have an adverse effect on our stock price. In addition, not only the
sale of shares issued upon conversion or exercise of secured  convertible notes,
series A convertible preferred stock and warrants,  but also the mere perception
that these sales  could  occur,  may  adversely  affect the market  price of the
common stock.

The  Issuance of Shares Upon  Conversion  of the Secured  Convertible  Notes and
Exercise of Outstanding Warrants May Cause Immediate and Substantial Dilution to
Our Existing Stockholders.

            The issuance of shares upon  conversion  of the secured  convertible
notes and  exercise  of  warrants  may  result in  substantial  dilution  to the
interests of other  stockholders  since the selling  stockholders may ultimately
convert and sell the full amount issuable on conversion.  Although AJW Partners,
LLC,  AJW  Qualified  Partners,  LLC, AJW  Offshore,  Ltd.,  and New  Millennium
Partners II, LLC may not convert their secured convertible notes and/or exercise
their warrants if such  conversion or exercise would cause them to own more than
4.9% of our  outstanding  common stock,  this  restriction  does not prevent AJW
Partners,  LLC,  AJW  Qualified  Partners,  LLC,  AJW  Offshore,  Ltd.,  and New
Millennium  Partners II, LLC from  converting  and/or  exercising  some of their
holdings  and then  converting  the rest of their  holdings.  In this  way,  AJW
Partners,  LLC,  AJW  Qualified  Partners,  LLC,  AJW  Offshore,  Ltd.,  and New
Millennium  Partners II, LLC could sell more than this limit while never holding
more than this  limit.  There is no upper limit on the number of shares that may
be issued  which  will have the  effect of further  diluting  the  proportionate
equity  interest  and voting  power of holders  of our common  stock,  including
investors in this offering.

In The Event That Our Stock Price Declines, The Shares Of Common Stock Allocated
For Conversion Of The Secured  Convertible Notes and Registered Pursuant To This
Prospectus  May Not Be  Adequate  And We May Be  Required  to File A  Subsequent
Registration  Statement  Covering  Additional  Shares.  If The  Shares  We  Have
Allocated And Are  Registering  Herewith Are Not Adequate And We Are Required To
File An Additional  Registration  Statement,  We May Incur  Substantial Costs In
Connection Therewith.

            Based on our current market price and the potential  decrease in our
market  price as a result of the  issuance  of  shares  upon  conversion  of the


                                       13


secured  convertible  notes, we have made a good faith estimate as to the amount
of shares of common  stock that we are  required to register  and  allocate  for
conversion of the secured convertible notes. Accordingly,  we have allocated and
plan to  register  150,000,000  shares to cover the  conversion  of the  secured
convertible  notes. In the event that our stock price  decreases,  the shares of
common stock we have allocated for conversion of the secured  convertible  notes
and  are  registering  hereunder  may not be  adequate.  If the  shares  we have
allocated to the registration  statement are not adequate and we are required to
file an additional  registration  statement,  we may incur  substantial costs in
connection with the preparation and filing of such registration statement.

If We Are Required for any Reason to Repay Our Outstanding  Secured  Convertible
Notes,  We Would Be Required to Deplete Our Working  Capital,  If Available,  Or
Raise Additional Funds. Our Failure to Repay the Secured  Convertible  Notes, If
Required,  Could Result in Legal Action Against Us, Which Could Require the Sale
of Substantial Assets.

            In April 2005, we entered into a Securities  Purchase  Agreement for
the sale of an aggregate of $1,500,000  principal amount of secured  convertible
notes.  The secured  convertible  notes are due and payable,  with 10% interest,
three years from the date of issuance,  unless sooner  converted  into shares of
our common stock.  Although we currently have $600,000 secured convertible notes
outstanding,   the  investors  are  obligated  to  purchase  additional  secured
convertible  notes in the  aggregate  of  $900,000.  In  addition,  any event of
default  such as our failure to repay the  principal  or interest  when due, our
failure to issue  shares of common  stock upon  conversion  by the  holder,  our
failure  to timely  file a  registration  statement  or have  such  registration
statement declared effective, breach of any covenant, representation or warranty
in the Securities Purchase Agreement or related convertible note, the assignment
or  appointment  of a receiver to control a substantial  part of our property or
business,  the filing of a money  judgment,  writ or similar process against our
company in excess of $50,000,  the  commencement  of a  bankruptcy,  insolvency,
reorganization or liquidation  proceeding  against our company and the delisting
of our common stock could require the early repayment of the secured convertible
notes,  including a default  interest rate of 15% on the  outstanding  principal
balance  of the notes if the  default  is not  cured  with the  specified  grace
period. We anticipate that the full amount of the secured convertible notes will
be converted  into shares of our common stock,  in accordance  with the terms of
the  secured  convertible  notes.  If we were  required  to  repay  the  secured
convertible  notes,  we would be required to use our limited working capital and
raise additional funds. If we were unable to repay the notes when required,  the
note holders could  commence legal action against us and foreclose on all of our
assets to recover the amounts due.  Any such action would  require us to curtail
or cease operations.

Risks Relating to Our Common Stock:

If We Fail to Remain Current on Our Reporting Requirements,  We Could be Removed
From the OTC Bulletin Board Which Would Limit the Ability of  Broker-Dealers  to
Sell Our Securities and the Ability of Stockholders to Sell Their  Securities in
the Secondary Market.

            Companies  trading on the OTC  Bulletin  Board,  such as us, must be
reporting  issuers under Section 12 of the  Securities  Exchange Act of 1934, as
amended,  and must be current in their  reports  under  Section  13, in order to
maintain price  quotation  privileges on the OTC Bulletin  Board.  If we fail to
remain current on our reporting  requirements,  we could be removed from the OTC
Bulletin Board. As a result,  the market  liquidity for our securities  could be
severely  adversely  affected by limiting the ability of  broker-dealers to sell
our securities and the ability of stockholders  to sell their  securities in the
secondary market.

Our  Common  Stock is  Subject  to the  "Penny  Stock"  Rules of the SEC and the
Trading Market in Our  Securities is Limited,  Which Makes  Transactions  in Our
Stock Cumbersome and May Reduce the Value of an Investment in Our Stock.

            The Securities and Exchange  Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes  relevant to us,
as any equity  security  that has a market price of less than $5.00 per share or
with an  exercise  price of less  than  $5.00  per  share,  subject  to  certain
exceptions.  For any  transaction  involving a penny stock,  unless exempt,  the
rules require:

      o     that a broker or dealer approve a person's account for transactions
            in penny stocks; and

      o     the broker or dealer receive from the investor a written agreement
            to the transaction, setting forth the identity and quantity of the
            penny stock to be purchased.


                                       14


In order to approve a person's  account for  transactions  in penny stocks,  the
broker or dealer must:

      o     obtain financial information and investment experience objectives of
            the person; and

      o     make a  reasonable  determination  that  the  transactions  in penny
            stocks are  suitable  for that person and the person has  sufficient
            knowledge  and  experience  in  financial  matters  to be capable of
            evaluating the risks of transactions in penny stocks.

The broker or dealer  must also  deliver,  prior to any  transaction  in a penny
stock, a disclosure  schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form:

      o     sets  forth  the  basis on  which  the  broker  or  dealer  made the
            suitability determination; and

      o     that the broker or dealer received a signed,  written agreement from
            the investor prior to the transaction.

Generally,  brokers may be less willing to execute  transactions  in  securities
subject  to the  "penny  stock"  rules.  This  may  make it more  difficult  for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

            Disclosure also has to be made about the risks of investing in penny
stocks  in  both  public  offerings  and in  secondary  trading  and  about  the
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most  significant  risks to
our business,  but we cannot  predict  whether,  or to what extent,  any of such
risks may be realized nor can we guarantee that we have  identified all possible
risks that might arise.  Investors  should  carefully  consider all of such risk
factors before making an investment decision with respect to our Common Stock.

Cautionary Factors that May Affect Future Results

Our annual  report on December 31, 2004,  Form  10-KSB,  as amended,  includes a
detailed list of cautionary  factors that may affect future results.  Management
believes  that there have been no  material  changes  to those  factors  listed,
however  other  factors  besides  those listed could  adversely  affect us. That
annual report can be accessed on EDGAR.


                                       15


ITEM 3. CONTROLS AND PROCEDURES

a)    Evaluation of Disclosure  Controls and  Procedures.  As of March 31, 2005,
      the Company's management carried out an evaluation,  under the supervision
      of the Company's Chief Executive  Officer and the Chief Financial  Officer
      of the  effectiveness  of the design and operation of the Company's system
      of  disclosure  controls and  procedures  pursuant to the  Securities  and
      Exchange Act, Rule 13a-15(e) and 15d-15(e) under the Exchange Act).  Based
      upon that  evaluation,  the Chief  Executive  Officer and Chief  Financial
      Officer  concluded that the Company's  disclosure  controls and procedures
      were effective,  as of the date of their  evaluation,  for the purposes of
      recording,   processing,   summarizing  and  timely   reporting   material
      information required to be disclosed in reports filed by the Company under
      the Securities Exchange Act of 1934.

b)    Changes in internal  controls.  There were no changes in internal controls
      over financial  reporting,  known to the Chief Executive  Officer or Chief
      Financial  Officer that occurred  during the period covered by this report
      that has  materially  affected,  or is likely to  materially  effect,  the
      Company's internal control over financial reporting.


                                       16


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From  time to time,  we may  become  involved  in  various  lawsuits  and  legal
proceedings which arise in the ordinary course of business.  However, litigation
is subject to inherent  uncertainties,  and an adverse  result in these or other
matters  may  arise  from  time to time  that may harm our  business.  Except as
disclosed  below,  we are currently not aware of any such legal  proceedings  or
claims that we believe will have,  individually or in the aggregate,  a material
adverse affect on our business, financial condition or operating results.

On April 18, 2001, we filed a civil complaint  against Light  Technology,  Inc.,
Ervin J. Rachwal,  Safe-Light Industries, LLC a/k/a JFER Innovations Group, LLC,
James Meyer and John Fleming  alleging fraud,  breach of contract,  monies lent,
misappropriation  of trade  secrets,  conspiracy  and sought  injunctive  relief
against the  defendants to prevent them from  misappropriating  trade secrets as
well as to  recover  monetary  damages  On May 11,  2001,  the  Court  granted a
temporary  injunction  against the  Defendants.  On June 5, 2001, the Defendants
filed  their  Answer  denying  the  allegations  of the  Complaint  and  filed a
counterclaim  alleging fraud,  violation of Trade Secret Act, breach of contract
and money lent.

On January 18, 2002,  the Court granted the  Defendants'  Motion to Dissolve the
Injunction.   On  January  28,  2002,   we  filed  a  Motion  for  Rehearing  or
Clarification  of the Motion to Dissolve.  A hearing on our Motion for Rehearing
or Clarification of the Motion to Dissolve was scheduled for March 18, 2002, but
was cancelled by the Court and has not been  rescheduled.  The injunction  still
remains in effect until the Court rules on this Motion.

Background:

We came into contact with Light  Technology,  Inc. and Rachwal in early 2000. We
were  seeking  someone  with the  knowledge  and  expertise  to assist us in the
development of an emergency light using white LEDs. Light  Technology,  Inc. and
Rachwal  represented  that  they had such  knowledge  and  expertise  and  could
finalize the development of our emergency light by September 30, 2000 so that we
could begin  manufacturing  and selling the  emergency  light by November  2000.
Rachwal and Light Technology, Inc. also advised us that we could acquire all the
assets of Light  Technology,  Inc.  and the rights to Light  Technology,  Inc.'s
flashlight  which also used white LEDs provided  Rachwal was made an officer and
director of our company as well as be in charge of design work.

In order to evaluate this offer, we requested  accounting and financial  records
to verify the  representations  of Light  Technology,  Inc.  and  Rachwal and to
attempt to  ascertain  the value of Light  Technology,  Inc..  Despite  repeated
attempts,  Light  Technology,  Inc. and Rachwal were unable to provide adequate,
verifiable financial records. Nonetheless, in order allow Light Technology, Inc.
and Rachwal to proceed with the  development of the emergency  light in order to
meet the  November  shipping  deadline,  we entered into a Letter of Intent with
Light Technology,  Inc. on June 12, 2000. This Letter of Intent also contained a
confidentiality  clause  protecting  our  interests.  Pursuant  to the Letter of
Intent we paid Light  Technology,  Inc.  $100,000 to develop a  prototype  of an
emergency  storm  light  and  possible   acquisition  of  the  assets  of  Light
Technology, Inc. based upon an independent evaluation of the of the worth of the
assets.  We  hired  the  Sarasota  CPA  firm,  Kerkering,   Barbario  &  Co.  to
independently do an evaluation of the Light Technology,  Inc. assets. Kerkering,
Barbario came to the conclusion  that Light  Technology,  Inc. had no verifiable
assets of any value.  Furthermore,  Light  Technology,  Inc. never developed and
produced a working model of the emergency storm light.  We incurred  meeting and
travel  expenses of $36,401  associated with Light  Technology,  Inc. during the
period June through December 2000. $43,699 was expended for marketing expense in
anticipation  of the  promised  delivery  of the  light.  We also made  loans to
defendant  Safe-Light  in the  amount of $13,188  to assist in  development  and
marketing  of  its  products  based  upon  representation  that  the  assets  of
Safe-Light would be acquired by us.

We instituted our complaint  against the defendants  when we learned,  through a
local newspaper  article that Light  Technology,  Inc. and Safe-Light had merged
and had developed an emergency  light. We had  confidentiality  rights with both
companies.  The defendants  breached their contracts with us by misappropriating


                                       17


trade secrets and we are seeking monetary  damages as well injunctive  relief to
prevent them from capitalizing on the misappropriation of trade secrets. Despite
the news article in which  Rachwal  announced  that Light  Technology,  Inc. had
developed an emergency  light, he did not object to the injunction  stating that
he did not have such a light.

There is no similarity  between our product,  the Home Safety  Light,  and Light
Technology,  Inc.'s product,  known as the Pal Light.  Our product has 10 diodes
and  provides  a  blanket  of light  to light up a room in the  event of a power
outage.  The Light Technology,  Inc. product is a small flashlight that uses one
diode.

Light Technology,  Inc. claims that we breached the contract terms of the letter
of intent  and joint  venture  agreement  by failing  to  maintain  confidential
disclosed to us and intentionally  disclosing confidential  information to third
parties.  Despite receiving $100,000 from us, defendants claim we failed to fund
the development of the light and claim that we owe them in excess of $100,000 by
breaching the letter of intent and joint venture agreement.  Further, defendants
claim we failed to pay fees set forth in the licensing agreement notwithstanding
that the condition  precedent to pay said fees (the  successful  completion of a
private  placement  by us,  which  was  subsequently  withdrawn  due  to  market
conditions).  Defendant Safe-Light alleges that we requested that they assist us
in raising  funding for the  products  discussed in the  complaint.  We actually
loaned them funds for the development of their barricade light.

We intend to fully prosecute our claims and actions  against the Defendants.  We
deny the Defendants  allegations alleged against us in their counterclaim.  This
litigation  is still in the  discovery  stage and the  ultimate  outcome  cannot
presently be determined.

COURT:  Circuit  Court of the  Twelfth  Judicial  District  In and For  Sarasota
County, Florida.

CASE  NAME:  Cyberlux  Corporation,   Plaintiff  v.  Ervin  J.  Rachwal,   Light
Technology,  Inc., Safe-Light Industries, LLC a/k/a JFER Innovations Group, LLC,
James Meyer and John Fleming.

CASE NUMBER: 2001 CA 005309 NC Div. C.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In January 2005,  holders  converted 33.5 shares of our Series A Preferred Stock
into 1,425,000  shares of our Common Stock at $.10 per share.  This issuance was
exempt from registration pursuant to Section 4(2) of the Securities Act.

In February  2005,  holders  converted 5 shares of our Series A Preferred  Stock
into  250,000  shares of our Common Stock at $.10 per share.  This  issuance was
exempt from registration pursuant to Section 4(2) of the Securities Act.

Sales subsequent to quarter ending March 31, 2005

To obtain  funding  for our ongoing  operations,  we entered  into a  Securities
Purchase  Agreement  with AJW Partners,  LLC, AJW Qualified  Partners,  LLC, AJW
Offshore,  Ltd., and New  Millennium  Partners II, LLC on April 22, 2005 for the
sale of (i) $1,500,000 in secured  convertible  notes and (ii) a warrants to buy
25,000,000 shares of our common stock.

The  investors  are  obligated to provide us with an aggregate of  $1,500,000 as
follows:

      o     $600,000 was disbursed on April 22, 2005;

      o     $500,000  will be  disbursed  within five days of the filing of this
            registration statement; and

      o     $400,000 will be disbursed within five days of the  effectiveness of
            this prospectus.

The secured  convertible notes bear interest at 10%, mature three years from the
date of issuance,  and are convertible  into our common stock, at the investors'
option, at the lower of (i) $0.03 or (ii) 50% of the average of the three lowest


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intraday  trading  prices for the common stock on a principal  market for the 20
trading days before but not including the  conversion  date.  The full principal
amount of the secured  convertible notes are due upon default under the terms of
secured convertible notes. In addition, we have granted the investors a security
interest  in  substantially  all of our assets  and  intellectual  property  and
registration rights. The warrants are exercisable until five years from the date
of issuance at a purchase  price of $0.03 per share.  In addition  the  warrants
exercise price gets adjusted in the event we issue common stock at a price below
market,  with the  exception  of any  securities  issued  as of the date of this
warrant.

            * All of the  above  offerings  and sales  were  deemed to be exempt
under rule 506 of Regulation D and Section 4(2) of the  Securities  Act of 1933,
as amended. No advertising or general  solicitation was employed in offering the
securities.  The offerings  and sales were made to a limited  number of persons,
all of whom were  accredited  investors,  business  associates  of  Cyberlux  or
executive  officers  of  Cyberlux,  and  transfer  was  restricted  by  Cyberlux
Corporation in accordance  with the  requirements of the Securities Act of 1933.
In addition to representations  by the  above-referenced  persons,  we have made
independent  determinations  that  all  of  the  above-referenced  persons  were
accredited or sophisticated  investors,  and that they were capable of analyzing
the  merits  and  risks  of  their  investment,  and that  they  understood  the
speculative nature of their investment. Furthermore, all of the above-referenced
persons were  provided  with access to our  Securities  and Exchange  Commission
filings.

There have been no  purchases  of common  stock of the Company by the Company or
its affiliates during the three months ended March 31, 2005.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None

Item 5. Other Information.

None

Item 6. Exhibits

31.1  Certification of Chief Executive  Officer pursuant to Rule 13a-14 and Rule
      15d-14(a),  promulgated  under the Securities and Exchange Act of 1934, as
      amended

31.2  Certification of Chief Financial  Officer pursuant to Rule 13a-14 and Rule
      15d 14(a),  promulgated  under the Securities and Exchange Act of 1934, as
      amended

32.1  Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)

32.2  Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)


                                       19


                                   SIGNATURES


In accordance with  requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.


                                        CYBERLUX CORPORATION

Date:  May 18, 2005                     By: /s/ DONALD F. EVANS
                                           --------------------
                                        Donald F. Evans
                                        Chief Executive Officer (Principal
                                        Executive Officer) and Chairman of the
                                        Board of Directors

Date:  May 18, 2005                     By: /s/ DAVID D. DOWNING
                                           ---------------------
                                        David D. Downing
                                        Chief Financial Officer (Principal
                                        Financial Officer and Principal
                                        Accounting Officer)

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