3SOF

EYII after hours news release

EYI Industries Announces Key Personnel to Visit China and Hong Kong to Expand Sales Channels

August 16, 2005 16:05:13 (ET)

BURNABY, British Columbia, Aug 16, 2005 (PRIMEZONE via COMTEX) -- EYI Industries Inc. (EYII, Trade), (http://www.stopdrinkingpoison.com), a marketer of products that promote well-being and a healthy lifestyle, is pleased to announce its executive management team comprised of Dori O'Neill, Chief Operating Officer, and Eliza Fung, Chief Consultant for Asian Development, will be traveling to China to meet with officials from Guangzhou CEIEC on August 25th, to discuss details of the US$210 million Letter of Intent announced last week. In addition, the EYI team plans to meet with various other potential strategic partners in Hong Kong who have expressed great interest in purchasing and acquiring the rights to sell the Patented Code Blue(tm) water filtration systems.

The Asian marketplace, currently over 1 billion people strong, represents the fastest growing consumer economy in the world and provides an incredible opportunity for the sale of the Code Blue(tm) filtration system, as already evidenced by the US$210 million Letter of Intent.

In addition to meeting with Guangzhou CEIEC and other interested parties, Mr. O'Neill and Mrs. Fung will be establishing the necessary infrastructure to support future sales in both Hong Kong and China and will be establishing the foundation for network marketing sales. As such, the EYI team will be meeting with various banking officials and will secure office space to establish an EYI office in Hong Kong which is anticipated to be up and running in the fall of 2005.

EYI Industries Chief Consultant for Asian Development, Eliza Fung, stated, "This trip to Asia will also allow us to introduce a number of other EYI product lines to the Asian marketplace, such as Calorad and Prosoteine. Our experience tells up that these, and other EYI nutritionals, are well received by the Chinese." Mrs. Fung added, "I would recommend that investors review our nutritional products website at http://www.eyibusiness.com for our complete product line."

Upon the conclusion of the scheduled meetings, Mr. O'Neill will return to North America to execute any sales negotiated during his trip, while Eliza Fung will remain in Hong Kong for an indefinite period to focus on building additional sales in Hong Kong and within the rest of China.

EYI Industries Chief Operations Officer, Dori O'Neill stated, "The opportunities available to us at this time in Asia are simply incredible. The Code Blue(tm) filtration system is exactly the right product at the right time in the right market. The Code Blue(tm) filtration system is not a luxury, but rather a necessity for many living in the rural areas whose drinking water is simply unfit for human consumption." Mr. O'Neill added, "We have already made critical inroads into the Asian marketplace through our strategic alliances and believe that once we open a permanent office in Hong Kong in the fall of 2005, we will see a further boost in sales."

This press release is available on the company's official online investor relations site for investor commentary, feedback and questions. Investors are asked to visit the EYI Industries IR Hub located at http://www.agoracom.com/IR/EYI. Alternatively, investors can e-mail AGORA Investor Relations directly at [email protected].

About EYI (http://www.stopdrinkingpoison.com)

EYI Industries Inc., through our subsidiary Essentially Yours Industries, Inc. (EYI), markets products that promote health and well-being. Recently, EYI launched a consumer product that removes arsenic and other contaminates to a negligible level from drinking water. The portable water filtration product's name is Code Blue(TM) and is exclusively provided to EYI. In addition, EYI sells dietary supplements and personal care products. A large portion of our sales are from CALORAD(R), a liquid protein supplement that has brought weight loss benefits to our customers. More than six million bottles of CALORAD(R) have been sold since EYI was founded in 1995. Our newest product, PROSOTEINE, is experiencing similar success to CALORAD(R) and bringing our customers the benefits of a natural energy drink.

EYI markets its products through an extensive network of Independent Business Associates. Our sales force is staffed by knowledgeable, experienced men and women and supported by our comprehensive training programs.

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. With the exception of historical information contained herein, the matters discussed in this press release involve risk and uncertainties. Actual results could differ materially from those expressed in any forward-looking statement.

SOURCE: EYI Industries Inc

David, decided to add position of 7000sh at .10 today.........selling at .26....should do it! tom nice DD, although the maker might be good also for long run....?

Thanks for your posts, good questions and informations.

Well, I'm buying HYRF today for the 3 Pennies on Fire Portfolio: HYRF joining the $1,000,000, so this answers some questions and dilemmas.

QuoteHas anybody determined what the net earnings to EYII are from the sale of HYRF MARTI product ?

Gross revs mean nothing if the producer (HYRF) is making more than the reseller (EYII) off this deal.

Perhaps we need clarification here ?

listener has a good point here. I made some math and it looks like HYRF sells the filters to EYII at about $21 a unit. I see that EYII sells the filters at about $70 to US consumers. I take that the Chinese will negotiate the final price, and it will end somewhere below $70, say $50. I consider EYII will pay $18 to HYRF and get $32 for itself (all profit? No, of course it has its costs too)

Anyway, yesterday after the close EYII released another press release showing the enthusiasm around the company. No doubt the LOI is true. Let's hope it will turn into a signed contract. The company will open an office in Hong Kong right away to expand opportunities in China and Southeast Asia.

EYI Industries Announces Key Personnel to Visit China and Hong Kong to Expand Sales Channels

My technical considerations are on the chart below. I'll sell only at $0.32 or not at all.

Wish me luck 

The Market obviously doesen't place much value on a letter of intent

After all it is not binding and the market wants a signed contract

I don't blame them.. I want a signed contract too.. I guess its just a waiting game now.. wait for great news or wait for terrible news.. just like betting on a football game.. not for the faint of heart

I sometimes think that betting on football games is an easier game than the stock market. I believe there are too many crooks in this game. I bought EYII at .115 yesterday and if the letter of intent gets into a contract, this thing will fly, if not, it will be worth about .05, if that.

well I think you have all hit the nail squarely on the head with the LOI/ contract ideas.. very reminiscent of CAFE if you know what I mean.

I am in on both EYII and HYRF and even averaged down a bit today again on EYII. I think this will be a good one.

Dave: Looking at the declining volume for EYII the last 3 days... ... ST flag

This EYII and HYRF play is very interesting in that the letter of intent deal with the Chinese is so large (relative to their business / values) that the risk reward here is just fantastic. No one should watch the intraday blips on these stocks, if you only have a small % allocated here it won't materially affect you so let the market work.
Personally I think 100% gain might only be the tip of the iceberg.

I agree with aussietrader (nice to see ya  ).

Volume has been declining but a base is building. It's hard to get a bullish day when you start with a 20% positive open after a red candle, it doesn't work that way.

The stock is trying to build a base, making a candlestick pattern which is called a matching low, but as aussie says, don't lose much time thinking about the short term, put just a small amount of money in it and let the market work this thing higher with you on board.

Anyway, whatever happens, the only price I'll sell is $0.32. Those are the rules of the game, 100% or nothing.

EYI Industries President Interviewed by AGORA
Aug 19, 2005 8:00:00 AM
2005 PrimeZone Media Network
BURNABY, British Columbia, Aug. 19, 2005 (PRIMEZONE) -- EYI Industries Inc. (OTCBB:EYII) (http://www.stopdrinkingpoison.com), a marketer of products that promote well-being and a healthy lifestyle, is pleased to announce its President and CEO, Mr. Jay Sargeant, has been interviewed by AGORA Investor Relations on its popular "CEO Interview" show. The interview is now available to the public and can be found at www.Agoracom.com

EYI Industries recently entered into a Letter of Intent ("LOI") worth approximately US$210 million, for the sale of the Code Blue(tm) filtration system to a large multinational firm based in China. To learn more and hear the interview, please use the link provided (http://www.agoracom.com/nonmemforum/broadcast.asp).

This press release is available on the company's official online investor relations site for investor commentary, feedback and questions. Investors are asked to visit the EYI Industries IR Hub located at http://www.agoracom.com/IR/EYI. Alternatively, investors can e-mail AGORA Investor Relations directly at [email protected].

About EYI (http://www.stopdrinkingpoison.com)

EYI Industries Inc., through our subsidiary Essentially Yours Industries, Inc. (EYI), markets products that promote health and well-being. Recently, EYI launched a consumer product that removes Arsenic and other contaminates to a negligible level from drinking water. The portable water filtration product's name is Code Blue(tm) and is exclusively provided to EYI. In addition, EYI sells dietary supplements and personal care products. A large portion of our sales are from CALORAD(r), a liquid protein supplement that has brought weight loss benefits to our customers. More than six million bottles of CALORAD(r) have been sold since EYI was founded in 1995. Our newest product, PROSOTEINE, is experiencing similar success to CALORAD(r) and bringing our customers the benefits of a natural Energy drink.

EYI markets its products through an extensive network of Independent Business Associates. Our sales force is staffed by knowledgeable, experienced men and women and supported by our comprehensive training programs.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. With the exception of historical information contained herein, the matters discussed in this press release involve risk and uncertainties. Actual results could differ materially from those expressed in any forward-looking statement.

CONTACT:  EYI Industries Inc.
          Investor Relations
          Jennifer Trevitt
          (604) 759-5017
          [email protected]

          AGORA Investor Relations
          [email protected]
          http://www.agoracom.com/IR/EYI

I've listened to the interview and I believe it's clear the company doesn't depend on the success of the $210M letter of intent for future growth. Code Blue sales in the US are stagering (that's confirmed by the order flow on HYRF, the producer of the product).

I've learned that the filter is like a machine which costs about $70 but then needs to be recharge every month or so with a little filter that costs about $1 or less. So, everyone who buys the product will need to recharge it monthly, creating more and more revenues for the company. That's what I got from reading their website and listening to the interview, correct me if I'm wrong.

Let me give you the link to the website: http://www.stopdrinkingpoison.com/ (also listen to the radio ads, I believe they are very appealing).

And the link to the interview with the CEO of the company: http://www.agoracom.com/nonmemforum/broadcast.asp

Everything points to a growth story based on a product with worldwide demand.

I'm glad the stock held $0.099 on close, as you can see on the chart below that's a short term support area.

Anyway, you know what's my trading plan, wish me luck 

I would like to follow Dav to buy the stock - 10,000 shares
and costs about $900.

Just consider it as buying an option (could be worthless).

Just saw this on HYRF, which I'm sure most of you may have already, but the interview should be interesting....currently i'm waiting for my funds to settle, but am eager to buy into this company on Tuesday....

RALEIGH, NC, Aug 18, 2005 (MARKET WIRE via COMTEX) -- HydroFlo, Inc. (HYRF) announced the company's Chief Executive Officer, Dennis L. Mast, is featured today in an interview in the Wall Street Reporter. The topics of discussion include HydroFlo's five portfolio companies and all patented technologies that are marketed by the corporation. The interview also centered on the objectives and expectations for corporate expansion into the next calendar year.

During the interview Mr. Mast explains the latest agreement amendment with Essentially Yours Industries, Inc. (EYII) and the $210 million letter of intent received by EYII. He also discusses his projections and outlook for substantial financial growth of HydroFlo in the next 2-3 years.

To hear the entire interview, visit www.wallstreetreporter.com. The interview can be accessed by locating the ticker symbol (HYRF) on the right hand column under the OTCBB exchange heading.

EYII/HYRF........HYRF/EYII........................

LIESSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS??

Form 10QSB for EYI INDUSTRIES INC.


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19-Aug-2005

Quarterly Report



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding EYI Industries, Inc.'s (the "Company") capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in the Risk Factors section below, and, from time to time, in other reports the Company files with the Securities and Exchange Commission (the "SEC"). These factors may cause the Company's actual results to differ materially from any forward-looking statement.

OVERVIEW

We are in the business of selling, marketing, and distributing a product line consisting of approximately 30 nutritional products in two categories, dietary supplements and personal care products. Our most successful product is Calorad, a liquid collagen-based dietary supplement presently available on the market. These products are marketed through a network marketing program in which IBAs (Independent Business Associates) purchase products for resale to retail customers as well as for their own personal use. We have a list of over 380,000 IBAs, of which approximately 9,500 we consider "active". An "active" IBA is one who purchased our products within the preceding 12 months. Over 1,300 of these IBAs are considered "very active". A "very active" IBA is one who is on our automatic Auto-ship Program and is current with their annual administration fee. Our Auto-ship Program allows our IBAs to set up a reoccurring order that is automatically shipped to them each month.

The IBAs in our network are encouraged to recruit interested people to become new distributors of our products. New IBAs are placed beneath the recruiting IBA in the "network" and are referred to as being in that IBA's "down-line" organization. Our marketing plan is designed to provide incentives for IBAs to build, maintain and motivate an organization of recruited distributors in their down-line organization to maximize their earning potential. IBAs generate income by purchasing our products at wholesale prices and reselling them at retail prices. IBAs also earn commissions on product purchases generated by their down-line organization.

On an ongoing basis we review our product line for duplication and sales trends and make adjustments accordingly. As of June 30, 2005, our product line consisted of: (i) 22 dietary supplement products; and (ii) 8 personal care products consisting primarily of cosmetic and skin care products. Our products are primarily manufactured by Nutri-Diem, Inc., a related party, and sold by us under a license and distribution agreement with Nutri-Diem. Certain of our own products are manufactured for us by third party manufacturers pursuant to formulations developed for us. Our products are sold to our IBAs located in the United States and Canada.

We believe that our network marketing system is suited to marketing dietary supplement and personal care products, because sales of such products are strengthened by ongoing personal contact between IBAs and their customers. We also believe that our network marketing system appeals to a broad cross-section of people, particularly those looking to supplement family income or who are seeking part-time work. IBAs are given the opportunity, through our sponsored events and training sessions, to network with other distributors, develop selling skills and establish personal goals. We supplement monetary incentives with other forms of recognition, in order to motivate IBAs.

Recent Corporate Developments

We experienced the following significant developments since our last fiscal quarter ended March 31, 2005:

We entered into an investor relations agreement (the "IR Agreement") dated as of July 28, 2005 with AGORA Investor Relations Corp. ("Agora"), a private company incorporated under the laws of Ontario, Canada. Pursuant to the terms of the agreement Agora agreed to provide certain services including marketing, branding and investor communications services, in consideration of which we agreed to:
(i) pay Agora a fee of $2,500 per month commencing August 1, 2005; and (ii) issue to Agora warrants to be registered by us to purchase 350,000 shares of our common stock exercisable at a price of $0.06 per share and vesting over a twelve month period. The Agreement is for an initial term of August 1, 2005 to July 31, 2006 and is renewable at EYI's option for an additional term of 12 months under the same terms and conditions. We are presently negotiating an amendment to certain of the terms of the IR Agreement to provide for the issuance of restricted shares of our common stock in place of the warrants to be received by Agora under the IR Agreement.

On August 1, 2005, we received a loan from Cornell Capital Partners, LP ("Cornell") of $1,000,000 secured by a promissory note with Cornell and payable in nineteen equal weekly installments of $50,000 and one additional installment of $85,013 starting on September 5, 2005. Interest accrues on the note at a rate of twelve percent (12%) per annum.

We entered into a letter of intent with Guangzhou CEIEC Enterprise (Group) Co. Ltd. (CEIEC), a Chinese company. Pursuant to the terms of the letter of intent CEIEC agreed commencing in September, 2005, subject to further negotiations respecting the terms and price of the purchase orders, to enter into certain purchase commitments to purchase up to 30,000,000 of EYI's water filtration systems for the removal of nitrates and arsenic from potable water (the "Filtration System") and to acquire the master agency rights to market and distribute the Filtration System in China. The parties agreed to sign an initial purchase order in September, 2005 and CEIEC agreed to purchase not less than $10,000 of the Filtration Systems as samples. The letter of intent is subject to the negotiation of a final agreement outlining the terms and price of the purchase orders.

On May 13, 2005 we entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP ("Cornell") pursuant to which we entered into the following agreements: a Registration Rights Agreement, an Escrow Agreement, and a Placement Agent Agreement. Pursuant to the terms of the Standby Equity Distribution Agreement, we may, at our discretion, periodically issue and sell shares of our common stock for a total purchase price of $10 million. If we request advances under the new Standby Equity Distribution Agreement, Cornell will purchase shares of our common stock for 98% of the lowest volume weighted average price on the Over-the-Counter Bulletin Board or other principal market on which our common stock is traded for the 5 days immediately following the advance notice date. Cornell will retain 5% of each advance under the new Standby Equity Distribution Agreement. We may not request advances in excess of a total of $10 million. Pursuant to the terms of our Registration Rights Agreement and the Standby Equity Agreement with Cornell, we agreed to register and qualify, among other things, the additional shares due to Cornell under the Standby Equity Agreement under a registration statement filed with the SEC. We signed a Termination Agreement on May 13, 2005, for the purpose of terminating our Standby Equity Distribution Agreement, Registration Rights Agreement and Escrow Agreement previously entered into with Cornell on June 22, 2004.

On May 27, 2005 we filed a registration statement on Form SB-2 (Registration No. 333-125344) registering the resale of 97,264,558 shares of our common stock held or to be sold by certain of our stockholders, including Cornell, which intends to sell up to an aggregate of 85,000,000 shares of our common stock pursuant to our Standby Equity Distribution Agreement with Cornell. The registration statement was subsequently declared effective by the SEC on July 29, 2005

During our fiscal quarter ended June 30, 2005, we ceased warehousing and distributing our products through Halo Distribution LLC ("Halo"), our wholly owned subsidiary and elected to discontinue the operations of Halo. On April 22, 2005 EYII entered into a Fulfillment Services Agreement with Source 1 Fulfillment ("Source One") to warehouse and ship our products. Pursuant to the terms of the agreement, Source One agreed to provide certain storage and fulfillment services to EYII at the rates set out in the schedules to the agreement. Source One also agreed to pay a referral commission of 10% of all handling fees for any client EYII brings to Source One. The agreement is for a term of one year and automatically renews each year unless terminated by either party in accordance with the terms of the agreement. We presently intend to continue warehousing and shipping our products through Source One.

On April 29, 2005 Essentially Yours Industries, Inc., our wholly owned subsidiary ("EYI") signed a letter of intent with Metals & Arsenic Removal Technology, Inc. ("MARTI") for the purpose of marketing certain of MARTI's products provided to EYII on a consignment basis and assigning marketing rights to certain of MARTI's product lines to EYII, subject to EYII's entry into a definitive agreement with MARTI by November 1, 2005. Subsequently, on May 11, 2005 EYII entered into a Reseller Agreement (the "Reseller Agreement") with MARTI for a term of five (5) years, pursuant to which MARTI appointed EYII as the exclusive distributor of certain specially formulated MARTI products on a consignment basis and provide EYII with 1000 units of inventory for sale to its customers, proceeds of which are subject to fee payments to MARTI as set out in the schedules accompanying the agreement. The Reseller Agreement was subsequently by way of an Addendum dated for reference June 1, 2005 (the "Addendum"). Pursuant to the terms of the Addendum, MARTI agreed to provide EYII with: (i) a unit for removal of nitrates, nitrites and arsenic from water, (ii) an exclusively designed pitcher; and (iii) funding of up to a maximum of $10,000 for the production of a promotional DVD demonstrating the arsenic removal unit. On July 14, 2005 EYII entered into a non-circumvention and non-disclosure agreement with MARTI for the purpose of protecting the parties on a world wide basis against the circumvention of one by the other through unauthorized contacts with the other party's business sources during the term of the Reseller Agreement and provide for joint protection of proprietary information of the parties. The agreement contains standard terms respecting confidentiality and non-circumvention and is for a term of: (i) five years from the date of the execution, or (ii) the duration of the Reseller Agreement, whichever is longer.

On April 4, 2005 we entered into a redemption agreement with TAIB Bank E.C. ("TAIB") pursuant to which TAIB agreed to acquire by assignment a two year 5% secured convertible debenture issued to Cornell in the amount of $245,000, and a two year 5% convertible debenture in the amount of $5,000 held by Kent Chou, in consideration of which we agreed not to modify or renegotiate the terms of our Standby Equity Distribution Agreement ("SEDA") with Cornell, and to use any proceeds obtained by EYI under the SEDA to make payments on the debentures. The debentures were assigned to TAIB on April 4, 2005.

We intend over the next twelve months to undertake the following:

New Product Introduction. In May 2005, we entered into a 5 year exclusive Reseller Agreement with Metals & Arsenic Removal Technology, Inc ("MARTI"). The Reseller Agreement offers EYI exclusive network marketing rights of a reformulated version of the MARTI products. The MARTI units are a portable water filtration product that have been tested in an EP accredited laboratory and tests concluded that the filtration unit effectively treats and removed arsenic from water supplies. In June 2005, we initiated our pre-launch program for the MARTI products, now named Code Blue (TM). We anticipate shipments of this product to begin in August 2005.

International Sales. We see international sales as a key component for our growth in the next 5 years. During our second quarter of fiscal 2004, we entered into a joint venture agreement (the "JV Agreement") with World Wide Buyers' Club Inc. ("WWBC") and Supra Group, Inc. ("Supra Group"), dated as of May 28, 2004, for the purpose of jointly marketing and distributing our products through the existing Supra Group distribution system in the Latin American countries identified in the JV Agreement and the products of Supra Group using the existing EYI distribution system to residents in the U.S. We believe Supra Group has significant international experience, expertise and contacts and that this alliance will assist in our ability to expand into Spanish-speaking countries.

Over the next twelve months we intend to expand our operations into the Asian market. In June 2005, we secured the consulting services of Ms. Eliza Fung who will primarily assist in the entry and development of EYI into the Asian market. It is expected that sales will commence in Hong Kong in the fall of 2005.

Network Support. We intend to expand the marketing of our Calorad product by internet direct and the distribution network. We also intend to support the growth and expansion of the Sales Communication department. Their success is measured on the number of inactive IBAs who, through the efforts of the Sales Communication department, become current with their membership fees and purchase our products. As the revenues generated by this department grow, we intend to add additional staff. Also, over the next twelve months we intend to promote our Autoship Program by offering one or more of the following: initial incentives, purchase discounts, and long-term commitment rewards. We believe that our automated ordering system supports on-going sales.


RESULTS OF OPERATIONS

Second Quarter and Six Months Summary

                                           Second Quarter Ended June 30                     Six Months Ended June 30
                                   ---------------------------------------------- ---------------------------------------------
                                        2005             2004        Percentage        2005           2004        Percentage
                                                                     Increase /                                   Increase /
                                                                     (Decrease)                                   (Decrease)
Revenue                              $1,225,216       $1,928,630      (36.47%)      $2,514,283     $3,420,438      (26.49%)
Cost of Goods Sold                    $254,402         $668,933       (61.97%)       $489,936      $1,082,693      (54.75%)
Gross Profit before commission        $970,814        $1,259,697      (22.93%)      $2,024,347     $2,337,745      (13.41%)
expense
Commission expense                    $450,857         $664,290       (32.13%)       $922,462      $1,078,895      (14.50%)
Gross Profit                          $519,957         $595,407       (12.67%)      $1,101,885     $1,258,850      (12.47%)
Gross Profit Margin                    42.44%           30.87%         37.46%         43.83%         36.80%         19.08%




Revenues

During the three months ended June 30, 2005 we had total revenues of $1,225,216 as compared to revenues of $1,928,630 for the same period in 2004 which represents a decline of $703,414 or 36%. The year-to-date results for 2005 compared with 2004 indicate a revenue decline of $906,155 or 26%. The decrease in our revenues can be primarily attributed to the following factors:

o Our inability to attract new IBA's
o Lack of IBA participation in our auto-ship program
o our inability to fund marketing initiatives and programs that may promote growth within new markets and existing ones

Gross Profit

During the three months ended June 30, 2005 as compared to the same period in 2004, we had gross profits of $519,957 and $595,407 respectively. This represents a decline of $75,450 or 13%. The year-to-date results for 2005 compared with 2004 indicate that the gross profit has declined $156,965 or 12%. The decline in our gross profit is primarily attributed to our decreased sales.


Expenses

Operating expenses:

The following table summarizes operating expenditures for the periods indicated:

Operating Expenses

                                -------------------------------------------    ------------------------------------------------
                                       Second Quarter Ended June 30                       Six Months Ended June 30
                                -------------------------------------------    ------------------------------------------------
                                                               Percentage                                         Percentage
                                    2005          2004         Increase /          2005            2004           Increase /
                                                               (Decrease)                                         (Decrease)
Consulting fees                     $240,848      $255,374       (5.69%)            $478,810         $505,894       (5.35%)
Legal and professional               $80,512      $147,072      (45.26%)            $146,757         $166,374      (11.79%)
Customer service                     $65,471      $253,078      (74.13%)            $152,005         $377,417      (59.72%)
Finance and administration          $155,398       $47,730      225.58%             $363,478         $266,953       36.16%
Sales and marketing                   $1,273        $8,253      (84.58%)              $4,991          $35,809      (86.06%)
Telecommunications                  $124,890       $90,369       38.20%             $242,258         $193,067       25.48%
Wages and benefits                  $371,526      $270,599       37.30%             $743,152         $486,669       52.70%
Warehouse expense                    $16,819      $119,036      (85.87%)             $61,846         $157,142      (60.64%)
Operating Expenses                $1,056,737    $1,191,511      (11.31%)          $2,193,297       $2,189,325        0.18%




We incurred operating expenses in the amount of $1,056,737 during the three months ended June 30, 2005, compared to $1,191,511 for the three months ended June 30, 2004. The following explains the most significant changes for the periods presented:

Customer Service - For the three months ended June30, 2005, customer services fees totaled $65,471 and represented 6% of our total operating expenditures, as compared to $253,078 or 21% of the total operating expenditures for the three months ended June 30, 2004. Until April 2004, we acquired our customer service support department through a management agreement with EYI Corp. In April 2004, we hired our own employees to perform this function and therefore, the related expenses are included under "Wages and benefits", below.

Finance and administration - For the three months ended June 30, 2005, finance and administration fees totaled $155,398 and represented 15% of our total operating expenditures, as compared to $47,730 or 4% of the total operating expenditures for the three months ended June 30, 2004. A majority of the increased expenditures realized during the June 2005 quarter relates to depreciation expenditures associated with the discontinuation of operations of Halo Distributions LLC.

Wages and benefits - For the three months ended June 30, 2005, wages and benefits totaled $371,526 and represented 35% of our total operating expenditures, as compared to $270,599 or 23% of the total operating expenditures for the three months ended June 30, 2004. This increase is primarily a combination of the April 2004 staff expansion and the accrual of a severance package for a terminated employee.


FINANCIAL CONDITION

Cash and Working Capital

                                      ---------------------------------------------------------------------
                                                                                          Percentage
                                                                                          Increase /
                                        At June 30, 2005      At December 31, 2004        (Decrease)
Current Assets                              $905,116               $1,228,714                (26%)
Current Liabilities                        $2,961,114              $1,853,252                 60%
Working Capital (Deficit)                 ($2,055,998)             ($624,538)               (229%)




We had cash of $0 as at June 30, 2005, compared with cash of $0 as at December 31, 2004. We had a working capital deficit at June 30, 2005 and December 31, 2004 of $2,055,998 and $624,538 respectively. The increase to our working capital deficit was primarily attributed to the increases in our trade payables, related party payables and amounts due on the Cornell Convertible Debenture. The increase in convertible debt relates to the accrued interest on the debt.


Liabilities

                                      ---------------------------------------------------------------------
                                                                                          Percentage
                                                                 At December 31,          Increase /
                                        At June 30, 2005              2004                (Decrease)
Accounts Payable and  Accrued
Liabilities                                 $1,467,479             $1,141,001                 29%
Accounts Payable-Related Parties              $765,241               $159,455                380%
Convertible Debt-Related Party, Net
Of  Discount                                  $432,918               $379,724                 14%
Loan Payable, Cornell                         $200,000                  $0                   100%




We had an increase of 29% in Accounts Payable and Accrued Liabilities during the three months which represents the increase in unpaid trade payables. We also experienced a 380% increase in Accounts Payable-Related Parties which is due to the increase in unpaid wages of two of our officers and an increase in the amount owed to EYI Corp. The increase in convertible debt relates to the accrued interest on the debt.

Cash Used in Operating Activities

Cash used in operating activities for the six months ended June 30, 2005 was $280,696 compared to $533,869 for the comparative period in 2004, representing a decrease of $253,173 or 47%.

Cash Provided by Financing Activities

We have continued to finance our business primarily through private placement sales of our common stock, exercises of stock options, short term loans, conversion of accrued liabilities into stock and through increases in our accrued liabilities and accounts payable. Cash provided by financing activities for the six months ended June 30, 2005 was $160,156, compared to $470,387 for the six months ended June 30, 2004.

Financing Requirements

Our consolidated interim financial statements included with this Quarterly Report on Form 10-QSB have been prepared assuming that we will continue as a going concern. As shown in the accompanying financial statements, we had negative working capital of approximately $2,056,000 and an accumulated deficit of approximately $8,732,000 incurred through June 30, 2005.

Our current sources of working capital are sufficient to satisfy our anticipated current working capital needs. In the event we do not receive further financing from our arrangements with Cornell, we will be required to seek additional financing to fully implement our business plan. We may not be able to obtain additional working capital on acceptable terms, or at all. Accordingly, there is substantial doubt about our ability to continue as a going concern. We anticipate that any additional financing would be through the sales of our common or preferred stock or placement of convertible debt.

We presently do not have any arrangements in place for the sale of any of our securities and there is no assurance that we will be able to raise any additional capital that we require to continue operations. In the event that we are unable to raise additional financing on acceptable terms, then we may have to scale back our plan of operations and operating expenditures. We anticipate that we will continue to incur losses until such time as the revenues we are able to generate from sales and licensing of our products exceed our increased operating expenses. We base this expectation in part on the expectation that we will incur increased operating expenses in completing our stated plan of operations and there is no assurance that we will generate revenues that exceed these expenses.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements, which are included in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004.

Recent Accounting Pronouncements

New accounting pronouncements that have a current or future potential impact on our financial statements are as follows:

In December 2004, the Financial Accounting Standards Board issued a revision to Statement of Financial Accounting Standards No. 123R, "Accounting for Stock Based Compensation." This statement supercedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in Statement of Financial Accounting Standards No.
123. This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans." The Company has previously adopted SFAS 123 and the fair value of accounting for stock options and other equity instruments. The Company has determined that there was no impact to its financial statements from the adoption of this new statement.

RISKS AND UNCERTAINTIES

We have a limited operating history, an accumulated deficit and may have continued losses for the foreseeable future with no assurance of profitability.

As of June 30, 2005, we had an accumulated deficit of $8,731,925. We will need to generate significant revenues to achieve profitability, which may not occur. We expect operating expenses to increase as a result of the further implementation of our business plan. Even if we achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis in . . .