Edgar Filing: EYI INDUSTRIES INC

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB
(Mark One)
[ X ] Annual Report Pursuant To Section 13 Or 15(d) Of The Securities
Exchange Act Of 1934

For the fiscal year ended December 31, 2004

[ ] Transition Report Under Section 13 Or 15(d) Of The Securities
Exchange Act Of 1934

For the transition period from _____ to _____

COMMISSION FILE NUMBER 000-29803

EYI INDUSTRIES, INC.
(Name of small business issuer in its charter)

NEVADA88-0407078
(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3960 Howard Hughes Parkway, Suite 500 Las Vegas, Nevada

(Address of principal executive offices)
89109
(
Zip Code)

604-759-5031

Issuer's telephone number

Securities registered under Section 12(b) of the Exchange Act: NONE.

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, $0.001 PAR VALUE PER SHARE.

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 [ ]

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [ ]

Revenues for the fiscal year ended December 31, 2004 were: $6,229,029.

The aggregate value of the voting stock held by non-affiliates of
the registrant, computed on the basis of the average of the bid and
ask price of the registrant's common stock on April 8, 2005 was
$3,140, 174.

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date. As
of April 8, 2005, the Issuer had 165,520,535 Shares of Common
Stock outstanding.

Transitional Small Business Disclosure Format (Check one):
Yes ___ No X_

TABLE OF CONTENTS

PART I PAGE

Item 1. Description of Business. 3
Item 2. Description of Property. 21
Item 3. Legal Proceedings. 22
Item 4. Submission of Matters to a Vote of Security Holders.23

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.24
Item 6. Management's Discussion and Analysis Or Plan of Operation.25
Item 7. Financial Statements.
Item 8. Changes in and Disagreements with Accountants On Accounting 44
and Financial Disclosure.
Item 8A. Controls and Procedures.
Item 8B. Other Information.

PART III

Item 9. Directors, Executive Officers, Promoters And Control Persons;45
Compliance with Section 16(a) of the Exchange Act.
Item 10. Executive Compensation. 45
Item 11. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.50
Item 12. Certain Relationships and Related Transactions. 53
Item 13. Exhibits. 55
Item 14. Principal Accountant Fees and Services. 57

SIGNATURES 58

PART I

Certain statements contained in this Annual Report on Form 10-KSB constitute
"forward-looking statements". These statements, identified by words such
as "plan", "anticipate", "believe", "estimate", "should," "expect" and
similar expressions, include our expectations and objectives regarding our
future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future
events and are subject to risks, uncertainties and other factors that may
cause our actual results, performance or achievements, or industry results,
to be materially different from those described in the forward-looking
statements. Such risks and uncertainties include those set forth under
the caption "Management's Discussion and Analysis or Plan of Operation"
and elsewhere in this Form 10-KSB. We advise you to carefully review the
reports and documents we file from time to time with the Securities and
Exchange Commission ("SEC"), particularly our quarterly reports on Form
10-QSB and our current reports on Form 8-K.

As used in this Annual Report, the terms "we", "us", "our", "EYI" and
"our company" mean EYI Industries, Inc., and its subsidiaries, unless
otherwise indicated. All dollar amounts in this Annual Report are
expressed in U.S. dollars unless otherwise indicated.

ITEM 1. DESCRIPTION OF BUSINESS.

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 400,000 IBAs, of which approximately 14,000 we
consider "active". An "active" IBA is one who purchased our products
within the preceding 12 months. Over 1,500 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.
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 December 31, 2004, 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 Inc. 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.
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 through the date
of this filing and during fiscal 2004:

*In April 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 Capital Partners, L.P.
("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.

* On February 24, 2005 we received a loan of $200,000 from Cornell secured
by a secured promissory note (the "Secured Note"). Under the terms of the
Secured Note, the loan is payable by April 24, 2005 and accrues interest at
a rate of 12% per annum. In connection with the issuance of the Secured Note,
we agreed to (i) pay Cornell a fee of $20,000; and (ii) pay Yorkville Advisors
Management LLC a structuring fee in the amount of $2,500. As a condition to
Cornell's entry into the Secured Note on February 24, 2005, an employee of EYI,
Janet Carpenter, entered into a guaranty agreement with Cornell and a pledge
and escrow agreement with Cornell and David Gonzalez. Pursuant to the terms
of the guaranty agreement and the pledge and escrow agreement, Ms. Carpenter
agreed to: (i) personally guarantee the payment and performance obligations
of EYI under the Secured Note; and (ii) pledge to Cornell 3,000,000 shares of
EYI held by her to secure the obligations of EYI under the Secured Note. In
consideration of Ms. Carpenter providing the guarantee and pledge, EYI entered
into a bonus shares agreement dated February 14, 2005 with Ms. Carpenter,
pursuant to which we agreed to issue to Ms. Carpenter 800,000 shares of our
common stock at a deemed price of $0.05 per share. The shares are to be issued
to Ms. Carpenter pursuant to Regulation S of the Securities Act.

* On February 10, 2005, we entered into a loan agreement with Janet Carpenter,
pursuant to which we loaned Ms. Carpenter $180,000 for the purpose of exercising
3,000,000 incentive stock options issued to Ms. Carpenter under our stock
compensation program. The loan is payable on demand and accrues interest at a
rate of 4% per annum. The loan was secured by a promissory note dated
effective February 10, 2005.

* In January, 2005, our wholly owned subsidiary 642706 B.C. Ltd. ("EYI Sub"),
doing business as EYI Management, entered into a lease agreement with Golden
Plaza Company Ltd. and 681563 (the "Landlords"), for the purpose of leasing a
12,200 square foot building located in Burnaby, British Columbia, Canada. The
lease is for a term of seven years ending December 31, 2011 and renewable for
an additional period of five years.

* In November, 2004 we completed the development of a trade-marked and
patent-pending product called Prosoteine. Prosoteine is a proprietary
plant-based amino-acid supplement. The new patent-pending formula is
designed specifically to address longevity issues and energy issues.
We commenced sales of Prosoteine in November, 2004 under license from
Nutri-Diem.

* During the quarter ended September 30, 2004 we created a new department
called Sales Communication. This department is responsible for contacting
our inactive IBA data base and encouraging them to purchase our products.

* On November 12, 2004, we entered into a non-binding letter with Romford
Investments, PLC ("Romford") which was subject to the consummation of a
formal agreement in December 2004, and the completion of our due diligence
review of the investment terms. Romford proposed to commit to purchase a
convertible debenture of EYI with a principal amount of $10,000,000 in
exchange for shares of Romford. Romford proposed to enter into similar
transactions with approximately 20-25 small capitalization issuers whose
stock is traded on the over-the-counter bulletin board or Nasdaq Smallcap
markets. At present we have not formalized any agreements with Romford.
The transaction has been delayed due to regulatory concerns regarding
Romford's proposed investment. We continue to have an interest in this
project and have maintained contact with Romford.

* On September 24, 2004, we issued a secured convertible debenture to
Cornell in the principal amount of $250,000. The secured convertible
debenture is convertible at the Cornell's option any time up to maturity
at a conversion price equal to the lower of: (i) 120% of the closing bid
price of the common stock as of the date of issuance, or (ii) 80% of the
average of the lowest daily volume weighted average price of our common
stock for the 5 trading days immediately preceding the conversion date.
At maturity, the remaining unpaid principal and accrued interest under
the debentures must be, at our option, either paid or converted into
shares of common stock at a conversion price equal to the lower of (i)
120% of the closing bid price of the common stock as of the date of
issuance, or (ii) 80% of the lowest closing bid price of the common
stock for the lowest trading days of the 5 trading days immediately
preceding the conversion date. The secured convertible debenture is
secured by all of our assets. The secured convertible debenture accrues
interest at a rate of 5% per year and has a term of 2 years. In the
event the secured convertible debentures are redeemed, then we will
issue to Cornell a warrant to purchase 50,000 shares for every $100,000
redeemed at an exercise price of 120% of the closing bid price as of
September 24, 2004. Cornell purchased the secured convertible debentures
from us in a private placement on September 24, 2004. Cornell assigned
its interest in the secured convertible debenture in September, 2004
to Taib Bank, E.C. and Kent Chou.

* On September 17, 2004, we filed a registration statement on Form
SB-2 registering an offering of 83,646,847 shares of the common stock
held by certain of our stockholders, including Cornell which intends
to sell up to an aggregate amount of 80,918,173 shares of common stock,
which includes 71,382,289 pursuant to a Standby Equity Distribution
Agreement, described below, 8,269,295 shares of common stock underlying
convertible debentures, and 1,266,589 shares of common stock issued as a
commitment fee pursuant to the Standby Equity Distribution Agreement.
Other selling stockholders include Newbridge Securities Corporation,
an unaffiliated registered broker-dealer retained by us in connection
with the Standby Equity Distribution Agreement, which intends to sell
under the registration statement 33,411 shares of common stock issued
as a placement agent fee. We are not selling any shares of common stock
in the offering and therefore will not receive any proceeds from the
offering. We will, however, receive proceeds from the sale of common
stock to Cornell under the Standby Equity Distribution Agreement. All costs
associated with the registration of the offering will be borne by us.

* On August 9, 2004, we entered into a non-binding letter of intent
with Venevision Continental LLC, a distribution, production and
entertainment company that is part of the Cisneros Group of Companies,
for the purpose of creating an extensive media campaign throughout
the Latin America market to promote and sell EYI's flagship product,
Calorad. It is intended that the campaign would run on the Venevision
Continental media network that serves Latin America from Mexico to
Argentina. Our letter of intent with Venevision has expired. We have
requested that Venevision sign an extension to the letter of intent,
and continue to maintain contact with Venevision and their agents.

* In July, 2004 we entered into a letter of intent with a private
Canadian company for the purpose of acquiring all of its assets
including a worldwide marketing and distribution license of certain
products manufactured by Kawahara Co. Ltd. Of Japan. The letter of
intent was subject to the consummation of a definitive agreement between
the parties by November 1, 2004, and the completion of our due diligence
review of the company's Assets. The parties to the letter of intent
extended the date of consummation of a definitive agreement to January 5,
2005. At present, the letter of intent has expired and we have determined
not proceed with this transaction.

* In July, 2004 we entered into subsidy agreements with Stancorp, Winslow
Drive Corp., and Premier Wellness Products (each a "Participant"), each of
which is controlled by a relative of Mr. Jay Sargeant, our President. Pursuant
to the terms of the subsidy agreements, we agreed to pay each Participant a
subsidy of $2,500 per week in consideration of sales and marketing services
provided by the Participants to us. The agreements are intended to provide a
fixed commission to the Participants during the transitional period between
pay plans. The subsidy agreements expired on October 15, 2004 and have been
renewed every 12 weeks since their expiry.

* On June 22, 2004, we entered into a Standby Equity Distribution Agreement
(the "Standby Equity Agreement") with Cornell, pursuant to which we entered
into, among other things, the following agreements with Cornell: Registration
Rights Agreement, Securities Purchase Agreement, Escrow Agreement, Placement
Agent Agreement and Investor Registration Rights Agreement. Pursuant to the
terms of the Standby Equity 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 Standby Equity 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 Standby Equity Agreement. We may not request advances in excess
of a total of $10 million. The maximum of each advance is equal to $250,000.
Upon execution of the Standby Equity Agreement, we agreed to pay a fee
consisting of 1,266,589 shares of our common stock (the "Cornell Fee Shares")
to Cornell, and a fee of 33,411 shares (the "Newbridge Fee Shares") to
Newbridge Securities Corporation ("Newbridge") pursuant to a Placement
Agent Agreement we entered into in connection with the Standby Equity
Agreement. Pursuant to the terms of our Registration Rights Agreement
and the Standby Equity Agreement with Cornell, we agreed to register
and qualify the Fee Shares, the Newbridge Fee Shares and additional
shares due to Cornell under the Standby Equity Agreement under a registration
statement filed with the SEC.

* Also on June 22, 2004, we issued a 5% Secured Convertible Debenture
(the "Secured Debenture") to Cornell in the principal amount of $250,000.
The Secured Debenture is convertible at Cornell's option any time up to
maturity at a conversion price equal to the lower of (i) 120% of the closing
bid price of the common stock as of the date of issuance, or (ii) 80% of the
average of the lowest daily volume weighted average price of our common stock
for the 5 trading days immediately preceding the conversion date. At maturity,
the remaining unpaid principal and accrued interest under the debenture shall
be, at our option, either paid or converted into shares of common stock at
the conversion price set out in the agreement. The Secured Debenture is
secured by all of our assets. In the event the Secured Debenture is redeemed,
then we will issue to Cornell a warrant to purchase 50,000 shares for every
$100,000 redeemed at an exercise price of 120% of the closing bid price as
of June 22, 2004. We agreed to register the resale of the amount of any
principal owed which has been converted under the Secured Debenture pursuant
to the terms of our Investor Registration Rights Agreement and Securities
Purchase Agreement with Cornell.

* On May 28, 2004, we entered into a joint venture agreement with World Wide
Buyers' Club Inc. ("WWBC") and Supra Group, Inc. ("SG"). Pursuant to the
terms of the joint venture agreement, EYI and SG agreed to form WWBC, a
Nevada corporation, owned 51% by EYI and 49% by SG. The purpose of the
agreement is for the joint marketing and distribution of products of SG
using our existing distribution system in the United States. The term of
the agreement is 10 years commencing May 6, 2004. As of December 31, 2004,
there has been no economic activity between EYI, SG, or WWBC.

* On May 4, 2004 we entered into a letter agreement with Eyewonder, Inc.,
pursuant to which Eyewonder agreed to manage an advertising and lead
generation campaign to promote and sell our products utilizing Eyewonder's
proprietary audio-video streaming technology. In consideration of the
services provided by Eyewonder under the agreement, we agreed to pay the
following fees: a fee of $100,000 for product promotions, a fee of $770,000
for the implementation of a communications component for the campaign, and
a fee of $140,000 for each consumer application. Under the terms of the
agreement we have the option to pay fees to Eyewonder through the issuance
to Eyewonder of units of our stock, each consisting one share at a price
of $0.21 per share and one share purchase warrant exercisable at a price
of $0.30 per share for a period of five years from the date of issuance.
Eyewonder is also entitled to a fee of 8% of the gross revenue generated
through all sales of products that result from responses to advertising
by Eyewonder. In addition, on execution of the agreement, we agreed to
issue options to purchase 1,100,000 shares of our common stock at a price
of $0.22 per share to certain individuals designated by Eyewonder. During
the quarter ended June 30, 2004, we constructed and completed our first
video-streaming ads and developed a Calorad customer training series of
video-streams. We intend to share this video-streaming training model
with our core Network channel. Additionally, both EyeWonder, Inc. and
our internet web-marketing division have begun to test the ads in real
time. In the next phase we intend to commence a sales initiative to
capture sales, create brand awareness and support sales campaigns. At
present we are awaiting completion of the infrastructure for the ads
by Eyewonder for us to proceed with our sales initiative.

* On April 30, 2004 we entered into an amendment to our License and
Distribution Agreement with Nutri-Diem, lowering the amount of
expenditures we are required to make under the agreement. Pursuant
to the term of the original License and Distribution Agreement,
we were required to expend the following amounts on purchasing the
products of Nutri-Diem over the term of the Agreement: (i) from June
1, 2003 to May 31, 2004, the minimum amount of CDN$7,000,000, (ii)
from June 1, 2004 to May 31, 2005 the minimum amount of CDN$20,000,000
and (iii) for each year thereafter, CDN$50,000,000. Pursuant to the terms
of the amendment to the License and Distribution Agreement we are
presently required to expend the following amounts on purchasing the
products of Nutri-Diem over the term of the License and Distribution
Agreement: (i) from June 1, 2003 to May 31, 2004, $1,530,000, from
June 1, 2004 to May 31, 2005, $3,825,000, and (iii) for each year
thereafter, $5,355,000. We reduced the minimum purchase amounts as
management did not believe that those amounts were achievable in the
respective time period.

* In April, 2004 we entered into a two year consulting agreement with
Daniel Matos, pursuant to which Mr. Matos agreed to provide certain
consulting services to us, including developing business contacts for
EYI in Latin America and marketing and promoting EYI products in Latin
America, in consideration of which we granted Mr. Matos 2,000,000
incentive stock options at a deemed price of $0.20 per share and paid
Mr. Matos a consulting fee of $16,667 per month to be used to acquire
shares of EYI on the exercise of options granted to Mr. Matos.

* On January 9, 2004 our subsidiary Halo Distribution LLC extended
its lease for our warehouse and distribution center in Louisville
Kentucky for an additional three years commencing May 1, 2004 to
April 30, 2007. See "Item 2. Description of Property".

* Effective January 1, 2004, we: (i) increased the consulting fees
payable to O'Neill Enterprises Inc., a private company controlled
by Mr. O'Neill, our Executive Vice-President, COO, Secretary,
Treasurer and director to $20,000 per month, and extended the
term by five years; (ii) extended the consulting agreement with
Flaming Gorge, Inc., a private company controlled by Mr. Sargeant,
our President, Chief Executive Officer and a member of our Board
of Directors for an additional term of five years; and (iii)
entered into a consulting agreement with Rajesh Raniga to act
as our Chief Financial Officer on a month to month basis for
consideration of CDN$150 per hour with a minimum charge of
CDN$2,000 per month and 250,000 shares of our common stock to
be issued pursuant to Regulation S of the Securities Act.

* On January 9, 2004 our subsidiary Halo Distribution LLC
extended its lease for our warehouse and distribution center
in Louisville Kentucky for an additional three years
commencing May 1, 2004 to April 30, 2007.

* Effective January 1, 2004, we: (i) increased the consulting
fees payable to O'Neill Enterprises Inc., a private company
controlled by Mr. O'Neill, our Executive Vice-President, COO,
Secretary, Treasurer and director to $20,000 per month, and
extended the term by five years; (ii) extended the consulting
agreement with Flaming Gorge, Inc., a private company controlled
by Mr. O'Neill, our President, Chief Executive Officer and a
member of our Board of Directors for an additional term of
five years; and (iii) entered into a consulting agreement
with Rajesh Raniga to act as our Chief Financial Officer on
a month to month basis for consideration of CDN$150 per hour
with a minimum charge of CDN$2,000 per month and 250,000
shares of our common stock.

To further facilitate growth
and benefit from certain competitive advantages conferred by
the new commission plan, we have upgraded our Internet support
sites, created a trainer field certification program, developed
a regional training program and increased our face to face
training capability. These support tools are intended to ensure
compliance, mature team and territory development and assist
sales growth.

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 with
World Wide Buyers' Club Inc. and Supra Group, Inc., 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 Joint Venture 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.

Our plan of operations over the next twelve months is 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 a
dditional staff.

During the fourth quarter of 2004, we launched
our new product, Prosoteine. Over the next twelve months,
we intend to launch the second phase of this campaign which
includes an in-house-developed 6-week training program called
"15/5" which is designed to teach our IBAs and their guests
about Prosoteine in a telephone conference forum. Additionally,
we intend to distribute support materials.

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.

CORPORATE ORGANIZATION

We were incorporated under the laws of the State of Nevada on
June 27, 1996, under the name of "Inter N. Corporation". From
1999 to 2002, our business plan was to create a product line of
miniaturized microchip technology for insertion into inanimate
objects or injection under the skin of animals. The microchips
were also intended to provide positive identification of personal
possessions such as cameras, bicycles, boats, cars, skis,
paintings and clothes using unique codes with many available
combinations. From 1999 to 2002, we were not able to raise the
funds required for the micro-chip manufacturing and sales. As
a result, we again changed the focus of our business, to oil
and gas opportunities in 2002. From 1999 to 2003 we were a
non-operating company with limited assets and were not able
to raise sufficient funds to fund our business operations.
On December 31, 2003, we completed a share exchange
(the "Exchange") with certain of the shareholders
(the "EYI Shareholders") of Essentially Yours Industries,
Inc. a Nevada Corporation ("EYI Nevada"), under a Share
Exchange Agreement, dated November 4, 2003,
(the "Exchange Agreement").

Under the terms of the Exchange Agreement, we issued
117,991,875 shares of our common stock, representing
approximately 79.9% of our then-outstanding common stock,
to the EYI shareholders in exchange for 15,372,733 shares
of EYI Nevada common stock held by them. As a result,
we underwent a change of control. Following completion
of the Exchange the EYI shareholders controlled approximately
79.9% of our outstanding common stock, and we owned approximately
97.9% of EYI Nevada's issued and outstanding capital stock. As a
result of the transaction we acquired the business of EYI
Nevada and EYI Nevada became our majority-owned subsidiary.
Concurrent with the acquisition, we changed our name to "EYI
Industries, Inc." and our officers and directors resigned, and
nominees of the EYI Shareholders were elected as successors.

Our present business operations are conducted through our
majority owned subsidiary EYI Nevada.

Subsidiaries and Affiliates

We presently have six subsidiaries through which we conduct
our operations, described as follows:

* Essentially Yours Industries, Inc., a Nevada Corporation
(Majority Owned). EYI Nevada was organized on June 20, 2002
upon the completion of a merger between Burrard Capital Corp.,
a Nevada Corporation, and Essentially Yours Industries, Inc.,
a Nevada Corporation. The resulting merged entity continued
under the name Essentially Yours Industries, Inc. EYI Nevada
is our majority owned subsidiary which presently conducts
our US business operations.

* 642706 B.C. Ltd., dba EYI Management, located in Surrey,
British Columbia (Wholly Owned), provides accounting, customer,
service, marketing and financial advisory services to us.
642706 B.C. Ltd. is our wholly owned subsidiary and has
experience in marketing health and wellness products and
experience in financial reporting for the United States
and Canada.

* Halo Distribution LLC, Halo Distribution LLC, 7109 Global
Drive, Louisville, Kentucky (Wholly Owned). Halo was
organized on January 15, 1999 in the state of Kentucky.
Halo is owned 99% by Essentially Yours Industries, Inc.
and 1% by RGM International, Inc. Halo Distribution LLC
is our wholly-owned subsidiary and is located in
Louisville, Kentucky. Halo Distribution LLC has 33,750
square feet of warehouse, and includes a computerized
pick and pack carousel system. Halo Distribution LLC
serves as a fulfillment center for orders of our products,
which provides us with full and complete control of this
crucial part of the business of marketing, selling, and
distributing those products to the IBAs and customers
within the United States. In February 1999, Halo
entered into a lease with Business Centers LLC
with respect to the premises located at 7109 Global
Drive, Louisville, Kentucky. The premises consist of
approximately 33,750 square feet of office and
warehouse space. The lease was renewed on January 15,
2004 and extended the term of the lease until April
30, 2007. See "Item 2. Description of Property".

* Essentially Yours Industries (Canada), Inc.
(Wholly Owned), a Canadian Federal Corporation, was
incorporated in September 2002 and is located in Surrey,
British Columbia, and handles Canadian sales, Canadian
sales tax and Canadian reporting.

* RGM International, Inc., a Kentucky Corporation (Wholly Owned).
RGM was incorporated in July 1997. RGM is a dormant investment
company which holds 1% of Halo.

* World Wide Buyers' Club Inc., a Nevada Corporation (51% Owned).
World Wide Buyers' Club Inc. was organized by a joint venture
agreement effective May 6, 2004.

The following are our affiliates who are controlled by certain of
our directors and majority shareholders, as described below:

* Nutri-Diem, Inc., 470, Boul. Sir Wilfrid-Laurier bureau 103
Mont-St-Hilaire, Quebec, Canada. Nutri-Diem, Inc. is the
manufacturing facility in Quebec that supplies 80% of our
products. EYI Nevada negotiated with Nutri-Diem Inc. an
exclusive Distribution and Licensing Agreement where by EYI
Nevada will sell the products of Nutri-Diem Inc., such as
Calorad and Agrisept-L, in the United States and Canada, and
elsewhere in the world, subject to suitable arrangements. Michel
Grise, former President of Nutri-Diem , Inc. is one of our
shareholders and a director of one of our subsidiaries. Mr.
Patrick Grise is the current President of Nutri-Diem, Inc. and
is a current shareholder of EYI.

* Essentially Yours Industries Corp., located at #201 8322
130th Street, Surrey, British Columbia V3W 8J9, provides
services to EYI Nevada under a management agreement. These
services consist of the following: computer and management
information systems and support. Payments due under the
management agreement are at cost of services plus a mark-up
of approximately 5%. Essentially Yours Industries Corp. is
controlled by certain of our shareholders including Jay
Sargeant, our President and Chief Executive Officer.

Key Operating Strengths

We believe the source of our success is our support of and
compensation program for our IBAs. We provide our IBAs with
quality products and a competitive commission program, along
with training and motivational events and services. We believe
that we have established a strong operating platform to support
IBAs and facilitate future growth. The key components of this
platform include the following:

* quality dietary supplement and personal care products
that appeal to consumer demand for products that
contribute to a healthy lifestyle;

* a compensation program that permits IBAs to earn income
from profits on the resale of products and residual income
from product purchases within a IBAs' down-line organization,
as well as to participate in various non- cash awards, such
as promotional programs for computers and other electronic
equipment;

* a communications program that seeks to effectively and
efficiently communicate with IBAs by utilizing new technologies
and marketing techniques, as well as motivational events and
training seminars;

* a continual expansion and improvement of our product line
and marketing plan;

* an in-house marketing department; and

* employment of computer technology to provide timely and
accurate product order processing, weekly commission payment
processing and detailed IBA earnings statements.

Growth Strategy
Our growth strategy is expansion of our product line and network
of IBAs to increase sales. An increase in the number of
distributors generally results in increased sales volume, and new
products create enthusiasm among distributors, serve as a promotional
tool in selling other products, and attracting new distributors.
We will also seek to increase sales through initiatives designed to
enhance sales in our existing markets. Such initiatives will include
increasing the number of our training and motivational events and
teleconferences, hiring additional IBA support personnel and
establishing more convenient consignment centers in targeted
geographic markets. Our growth strategy will require expanded IBA
services and support, increased personnel, expanded operational and
financial systems, the implementation of additional control
procedures an expanded in-house marketing department and marketing
program as well as an increased presence on the Internet. There is
no assurance that we will be able to manage expanded operations
effectively. Furthermore, failure to implement financial, information
management, and other systems and to add control procedures could
have a material adverse effect on our results of operations and financial
condition.

Industry Overview

Over the past several years, widely publicized reports and medical research
findings have suggested a correlation between the consumption of dietary
supplements and the reduced incidence of certain diseases. Thousands of
such reports and research findings can be found on the International
Bibliographic Information on Dietary Supplements (IBIDS) database
produced by the Office of Dietary Supplements. In 1995, US Congress
established the Office of Dietary Supplements, a division of the National
Institutes of Health, to conduct and coordinate research into the role of
dietary supplements in maintaining health and preventing disease. In addition,
Congress has established the Office of Alternative Medicine within the
National Institutes of Health to foster research into alternative medical
treatments, which may include natural remedies.

Products

Our product line consists of products in the categories of dietary
supplements and personal care. We currently market approximately 30
products, exclusive of variations in product size, colors or similar
variations of our basic product line. For the year ended December 31,
2004, Calorad, sales represented over 65% of our net sales and is
expected to provide a large portion of our net sales in the
foreseeable future.

Dietary Supplements

We offer 22 products in the dietary supplement category which contain
herbs, vitamins, minerals and other natural ingredients. As stated
above, the dietary supplement product Calorad is expected to provide
a large portion of our net sales in the foreseeable future. The following
products represent the majority of our product sales in the dietary
supplement category:

* Calorad(r): Calorad is a liquid collagen-based dietary supplement.
Calorad is available in three formulas: beef, fish, and AM.

* Agrisept-L(r): Agrisept-L is a dietary supplement of citrus extracts
used as a germicide.

* Oxy-Up(r): Oxy-Up is a liquid stabilized oxygen supplement.

* Triomin: Triomin is a liquid trace mineral dietary supplement.

* Noni Plus(r): Noni fruit has been around for centuries, used by
natives and ancient healers of many countries during the last several
thousand years to treat many ailments. We have combined this fruit
with our own Dead Sea ionic minerals.

* Iso-Greens(r): Iso-Greens is a nutrient-rich green food supplement.
The vegetables in Iso-Greens combine to supply 39 of the vitamins,
minerals and amino acids found in food, including Vitamin B-12.

* Definition(r) (drops): Definition is an all-natural herbal product
designed to feed and nurture the female breast. This product is
available in both cream and drop formulations.

* Essential Omega: Essential Omega is a dietary supplement that
provides essential fatty acids, including CLA and GLA. This product
may also be a support for weight loss and exercise programs.

* Prosoteine(r): Prosoteine is a plant based, natural,
stimulant-free liquid protein supplement.

Personal Care Products

We offer 8 personal care products. The following product represents
the majority of our product sales in the personal care category:

* Definition (r)(cream): Definition is a safe, non-invasive,
all-natural herbal product designed to feed and nurture the female
breast. The perfectly selected ingredients work in harmony, helping
the body to maintain the nutritional needs of the mammary glands. It
works with the body's natural capabilities to maintain the shape and
tone of youth in the female breast.

Promotional Materials. We will also derive revenues from the sale of
various educational and promotional materials designed to aid our
distributors in maintaining and building their businesses. Such
materials include various sales aids, informational videotapes
and cassette recordings, and product and marketing brochures. We
produce many of our promotional material in-house and have the
capability to create just-in-time marketing pieces as needed and
constantly update our marketing material.

New Product Identification. We expand our product line through
the development of new products. New product ideas are derived
from a number of sources, including trade publications, scientific
and health journals, consultants, distributors and other third
parties. Prior to introducing new products, we investigate
product formulation as it relates to regulatory compliance
and other issues.

We rely upon Nutri-Diem, Inc. and other manufacturers,
independent researchers, vendor research departments for
product development services. When a new product concept
is identified or when an existing product must be
reformulated, the new product concept or reformulation
project is generally submitted to Nutri-Diem, Inc. or
other manufacturers for technical development and
implementation. Nutri-Diem owns all of the rights
to the products that they produce. We do not incur any
expense for the development of any products by Nutri-Diem.
We continually review our existing products for potential
enhancements to improve their effectiveness and marketability.
While we consider our product formulations to be proprietary
trade secrets, such formulations are not patented. Accordingly,
there is no assurance that another company will not replicate
one or more of our products.

Product Procurement and Distribution; Insurance. More than
80% of our product line in the dietary supplement category is
manufactured by Nutri-Diem, Inc., a related party, utilizing
theirs and our product formulations, as well as product
formulations it licenses to us. A majority of our product
line in the personal care category is also manufactured by
Nutri-Diem, Inc. We have contracts with Nutri-Diem, Inc. that
grant to us the exclusive license and right to market, sale
and distribute in Canada and the United States and a non-exclusive
right to market on the Internet certain products owned by Michel
Grise Consultant, Inc., a Quebec corporation, which is controlled
by Michel Grise. To maintain the license and distribution rights
granted by those contracts, we are obligated to purchase from
Nutri-Diem, Inc. during that period commencing on June 1, 2003,
and continuing through and including May 31, 2004, products
totaling $1,530,000. Those contracts also specify that for the
period from June 1, 2004 to May 31, 2005, we are required to
purchase from Nutri-Diem, Inc. products totaling $3,825,000.
Additionally, those contracts specify that for each year
commencing on June 1, and ending on May 31 thereafter during the
term of that agreement we are required to purchase products totaling
$5,355,000 The provisions of those contracts specify that Nutri-Diem,
Inc. will offer us the right to sell, market and distribute in
those territories any new product developed by Nutri-Diem, Inc.

If we are not in default at the expiration of the initial five
year period, those contracts will be automatically renewed for
another five year period. In the event we fail to make the
minimum purchase during any year, Nutri-Diem, Inc. has the
option, to require us to pay Nutri-Diem, Inc. an amount equal
to 15% of the difference between the minimum amount for the
respective year and the amount of actual purchases during that
year. Additionally, in the event that we do not purchase the
minimum amount during any particular year and do not pay Nutri-Diem,
Inc. that 15%, Nutri-Diem, Inc. in its sole discretion, may
terminate the respective contract or cause the license granted in
the contract to be non-exclusive.

In the event the relationship with any of our manufacturers
becomes impaired, we will be required to obtain alternative
manufacturing sources for our products. In such event, there
is no assurance that the manufacturing processes of our
current manufacturers can be replicated by another manufacturer.
We believe that we would be able to obtain alternative sources
of our dietary supplement and personal care products. A significant
delay or reduction in availability of products, however, could
have a material adverse effect on our business, operating results
and financial condition. We, as with other marketers of products that are
intended to be ingested, face the inherent risk of exposure
to product liability claims in the event that the use of our
products results in injury. We maintain product liability
insurance coverage with coverage limits of $5,000,000 per
occurrence and $5,000,000 aggregate. We have agreed to
maintain, at our sole cost and expense, standard Product
Liability Advertiser Liability Insurance naming Nutri-Diem,
Inc. and its officers, directors, agents and employees, as
additional insured parties in the amount of $1,000,000.
We generally do not obtain contractual indemnification
from other parties manufacturing our products. Although
we have not experienced any successful product liability
claims, such claims could result in material losses.

All of the items in our product line include a customer
satisfaction guarantee. Within 30 days of purchase, any
retail customer or IBA who is not satisfied with our
product for any reason may return it or any unused portion
to the distributor from whom it was purchased or to us for
a full refund or credit toward the purchase of another product.
IBAs may obtain replacements from us for products returned to
them by retail customers, if they return such products on a
timely basis. Furthermore, in most jurisdictions, we maintain
a buy-back program. Under this program, we will repurchase
products sold to a distributor (subject to a 10% restocking
charge), provided that the distributor resigns as a distributor
and returns the product in marketable condition within one
year of original purchase, or longer where required by
applicable state law or regulations. We believe this buy-back
program addresses a number of the regulatory compliance issues
pertaining to network marketing systems. We expect that the cost
of products returned to us will be less than 2% of gross sales.
Below is a summary of return information for the year ended
December 31, 2004:

Month DepositSalesReturnsChargebacksAdj./Disc.Net Deposit
January-04 $550,388 $559,960 $3,828 $1,316 $16,739 $538,077
February-04 $521,588 $534,060 $1,702 $145 $17,084 $515,129
March-04 $641,032 $662,110 $4,100 $664 $19,470 $637,876
April-04 $580,831 $601,847 $2,807 $292 $18,699 $580,049
May-04 $539,220 $559,528 $2,820 $523 $17,950 $538,235
June-04 $499,944 $520,412 $3,991 $1,081 $16,113 $499,227
July-04 $447,353 $451,937 $4,263 $221 $14,423 $433,029
August-04 $462,986 $474,415 $10,923 $359 $15,231 $447,902
September-04 $412,139 $429,322 $17,740 $159 $13,158 $398,265
October -04 $401,894 $410,321 $8,372 $238 $13,403 $388,308
November-04 $512,243 $519,102 $3,665 $284 $15,624 $499,529
December -04 $417,331 $438,882 $17,184 $459 $13,833 $407,406
Total $6,070,502$6,161,898 $81,396 $5,741 $191,728 $5,883,032
Total % 100.00% 100.00% 1.32% 0.09% 3.11% 95.71%

Our specific refund policies are as follows:

Retail Customer Guarantee

* A retail customer may return defective, unused product
(at least 50%) to his/her IBA within thirty (30) days of purchase
for exchange or full refund.

* A written statement must be obtained from the customer stating
the reason for dissatisfaction.

* The original retail receipt showing the date of purchase
must accompany a written request for a return.

* A copy of the Customer Refund Form must be completed in
full and returned to EYI with the aforementioned
documentation and product (when product is requested).

* Upon receipt of the statement, retail receipt and the
returned product, EYI will promptly replace any returned
product to the IBA.

* IBAs failure to comply with this guarantee policy may
be reason for termination.

* On product purchases of more than a one (1) month supply,
the thirty (30) day rule applies to the purchase (unless
otherwise promised by IBA to his/her retail customer. In
this instance, the IBA is responsible to uphold his/her
retail guarantee to the customer not EYI).

Refund To Independent Business Associates

If an IBA is not satisfied with a given EYI product, EYI
will replace the product with a product of same or like
value, less shipping and handling charges. If requested
EYI will issue a credit for the purchase less shipping
and handling. This credit must be used within thirty
(30) days of being issued. The request for a replacement
must occur within thirty (30) days of receipt of the
product by the IBA and the product must be in re-sale
condition upon return. IBAs must provide proof of
purchase and cover the cost of the product return.

Note the following condition for refunds:

* EYi does not issue any refunds for product(s)
previously certified as sold under the 70% rule.
(Please refer to point ten (10) in Independent
Business Association Regulations in Policies &
Procedures for details). As well, the refund
will be less commission paid on the returned
product.

DISTRIBUTION AND MARKETING

Our product line is distributed principally from
our facilities in Louisville, Kentucky and Surrey,
British Columbia or from our consignment centers.
Products are warehoused in Louisville and Surrey
and at selected consignment centers.

We distribute our product line through our network
marketing system where Independent Business
Associates ("IBAs") purchase product at wholesale
and through person-to-person contact, re-sell
the product at retail prices. At December 31,
2004, we had approximately 14,000 "active" IBAs.
To be considered "active" a distributor must have
purchased our products within the preceding 12
months. Our IBAs are independent contractors who
purchase products directly from us for resale to
retail consumers. IBAs may elect to work on a
full-time or part-time basis. We believe our
network marketing system appeals to a broad
cross-section of people, particularly those
seeking to:

* supplement family income,

* start a home business, or

* pursue employment opportunities other than
conventional, full-time employment.

A majority of our IBAs sell our products on a
part-time basis.

We believe that our network marketing system is
ideally suited to marketing our product line,
because sales of our products are strengthened by
ongoing personal contact between retail consumers
and IBAs, many of whom use our products themselves.
Sales are made through direct personal sales
presentations, as well as presentations made to
groups. These sales methods are designed to
encourage individuals to purchase our products by
informing potential customers and IBAs of our
product line and results of personal use, and
the potential financial benefits of becoming a
distributor. Our marketing efforts are typically
focused on middle-income families and individuals.

Our network marketing program encourages individuals
to develop their own down-line network marketing
organizations. Each new IBA is either linked to:

* the existing distributor that personally enrolled
the new distributor into our network marketing program,
or

* the existing distributor in the enrolling distributor's
down-line as specified by the enrolling distributor at
the time of enrollment.

Growth of an IBAs' down-line organization is dependent
on the recruiting and enrollment of additional IBAs by
the distributor or the IBAs within such distributor's
down-line organization.

IBAs are encouraged to assume responsibility for
training and motivation of other IBAs within their
down-line organization and to conduct opportunity
meetings as soon as they are appropriately trained. We
strive to maintain a high level of motivation, morale,
enthusiasm and integrity among the members of our
network marketing organization. We believe this
result is achieved through a combination of products,
sales incentives, personal recognition of outstanding
achievement, and quality promotional materials. Under
our network marketing program, IBAs purchase sales aids
from us and assume the costs of advertising and marketing
our product line to their customers,as well as the direct
cost of recruiting new IBAs. We believe that this form of
sales organization is cost efficient, because our direct
sales expenses are primarily limited to the payment of
commissions, which are only incurred when products are
sold.

We continually strive to improve our marketing strategies,
including the compensation structure within our network
marketing program and the variety and mix of products in
our line, to attract and motivate IBAs. These efforts are
designed to increase IBAs' monthly product sales and the
recruiting of new IBAs.

Growth of our network marketing program is in part attributable
to our incentive structure. IBAs earn profits by purchasing
from our product line at wholesale prices and selling our
product line to their customers at retail.

Additionally, we have a commission structure which provides
for payment of commissions on product purchases made by other
IBAs in a distributor's down-line organization. IBAs derive
this commission income mainly through their Business Volume,
as described below.

Business Volume is assigned to most of our products and is
used to calculate sales commission. The Business Volume, in
most instances, is 50% of the wholesale cost of a product.
Commissions are based on the total Business Volume which has
been generated both personally and through the IBAs'
down-line activity. Therefore, as a down-line grows, it is
possible for greater commissions to be earned. None of our
IBAs have derived $1 million per year or greater for the
years ended 2004, 2003 or 2002.

In order for an IBA to earn commissions, there are four
requirements:

* an IBA needs to create a Business Center by filling out
our IBA Application and Agreement Form;

* an IBA needs to qualify his Business Center with a 100
Business Volume order of our products;

* an IBA needs to activate his Business Center by making
two personal sales to two people who become qualified
IBAs within one year of entry into the business; and

* to be eligible for commission, an IBA needs to pay
a yearly administration fee of $40.

The average commission earned by our IBAs during the
twelve month period starting on January 1, 2004 and
ending on December 31, 2004 was $1,168.

To aid IBAs in easily meeting the monthly personal
product purchase requirement to qualify for
commission, we developed the "Auto-ship Program."
Under the Auto-ship Program purchasing arrangement,
each Business Center establishes a standing product order
(20 Business Volume minimum) which is automatically charged
to a credit card or deducted from a bank account each month
prior to shipment of the ordered products. Additionally,
Auto-ship allows IBAs to purchase certain products at reduced
prices. As of December 31, 2004, we had over 1,500 IBAs
participating in the Auto-ship Program.

Under our Consignment Center Program, we designate IBAs
to operate consignment centers. Each Consignment Center
functions as our product distribution center, carrying our
products. As of December 31, 2004, we had 20 consignment
centers. Consignment centers provide hubs of local product
and business training. They sell to customers at the point
of purchase, teach sales and marketing techniques, distribute
literature about our products and business while lowering
our shipping and data-entry costs.

We maintain a computerized system for processing distributor
orders and calculating commission payments, which enables
us to remit such payments promptly to IBAs. We believe that
prompt and accurate remittance of commissions is vital to
recruiting and maintaining IBAs, as well as increasing
their motivation and loyalty to us. We calculate the
commissions weekly and pay commissions biweekly.

We are committed to providing the best possible support
to our IBAs. IBAs in our network marketing program are
provided training guides and are given the opportunity
to participate in our training programs. We sponsor
weekly conference calls for our IBAs, which include
testimonials from successful IBAs and satisfied
customers, as well as current product and promotional
information. We produce weekly newsletters, which
provide information on us, our products and network
marketing system. The newsletter is designed to help
recruit new IBAs, by answering commonly asked questions
and includes product information and business building
information. The newsletter also provides a forum for
us to give additional recognition to our IBAs for
outstanding performance. In addition, we regularly
sponsor training sessions for our IBAs across the
United States and Canada. At these training sessions
IBAs are provided the opportunity to learn more about
our product line and selling techniques, so that they
can build their businesses more rapidly.

We also maintain an Internet site, www.eyicom.com,
which is an integral part of our product sales, customer
retention, IBA recruitment and IBA development efforts.
Approximately 8,800 of our IBAs are networked electronically,
allowing them access to marketing information and sales leads.
Further, we provide IBAs with a free, e-commerce Internet
"home page" to aid their marketing efforts.

Government Regulation

In the United States (as well as in any foreign markets
in which we may sell our products), we are subject to laws,
regulations, administrative determinations, court decisions
and similar constraints (as applicable, at the federal,
state and local levels) (hereinafter "regulations"). These
regulations include and pertain to, among others:

* the formulation, manufacture, packaging, labeling,
distribution, importation, sale and storage of our
products,

* our product claims and advertising (including direct
claims and advertising as well as claims and advertising
by distributors, for which we may be held responsible), and

* our network marketing organization.

Products

The formulation, manufacture, packaging, storing, labeling,
advertising, distribution and sale of our products are subject
to regulation by federal agencies, including the Food and Drug
Administration, the Federal Trade Commission, the Consumer
Product Safety Commission, the United States Department of
Agriculture, the Environmental Protection Agency, and the United
States Postal Service. Our activities are also regulated by
various agencies of the states, localities and foreign countries
in which our products are or may be manufactured, distributed
and sold. The Food and Drug Administration, in particular,
regulates the formulation, manufacture and labeling of dietary
supplements, cosmetics and skin care products, including some
of our products. Food and Drug Administration regulations
require us and our suppliers to meet relevant regulatory good
manufacturing practices for the preparation, packaging and
storage of these products. Good manufacturing practices for
dietary supplements have yet to be promulgated, but are
expected to be proposed. The Dietary Supplement Health and
Education Act of 1994 revised the provisions of the Federal
Food, Drug and Cosmetic Act concerning the composition and
labeling of dietary supplements, which we believe is generally
favorable to the dietary supplement industry. The Dietary
Supplement Health and Education Act created a new statutory
class of "dietary supplements." This new class includes vitamins,
minerals, herbs, amino acids and other dietary substances for
human use to supplement the diet. In general, a dietary
supplement is a product (other than tobacco) that is intended
to supplement the diet that bears or contains one or more of
the following dietary ingredients: a vitamin, a mineral, a
herb or other botanical, an amino acid, a dietary substance
for use by man to supplement the diet by increasing the total
daily intake, or a concentrate, metabolite, constituent,
extract, or combinations of these ingredients; is intended
for ingestion in pill, capsule, tablet, or liquid form; is
not represented for use as a conventional food or as the
sole item of a meal or diet; and is labeled as a "dietary
supplement." However, the Dietary Supplement Health and
Education Act grand fathered, with certain limitations,
dietary ingredients that were on the market before October
15, 1994. A dietary supplement containing a new dietary
ingredient and placed on the market on or after October
15, 1994 must have a history of use or other evidence
establishing a basis for expected safety. Manufacturers
of dietary supplements having a "structure-function"
statement must have substantiation that the statement
is truthful and not misleading.

The majority of our sales come from products that are
classified as dietary supplements under the Federal Food,
Drug and Cosmetic Act. The labeling requirements for
dietary supplements have been set forth in final
regulations with respect to labels affixed to
containers beginning after March 23, 1999. These
regulations include how to declare nutrient content
information, and the proper detail and format required
for the "supplemental facts" box. We revise our
product labels in compliance with these regulations.
The costs of product re-labeling were immaterial. Many
states have also recently become active in the regulation
of dietary supplement products. These states may require
modification of labeling or formulation of certain of
our products sold in these states.

In addition, on April 29, 1998, the US Food and Drug
Administration published a proposed regulation offering
guidance and providing limitations on permissible
structure/function statements to be placed on labels
and in brochures. Structure/function statements are
claims of the benefit or effect of a product or an
ingredient on the body's structure or function. The
proposed regulation has not been finalized. We
anticipate that some of the regulation as proposed
will become final, but this new regulation will not
significantly change the way that the Food and Drug
Administration currently interprets structure/function
statements. Thus, we do not expect to make any
substantial label revisions based on this proposed
regulation regarding any of our structure/function
product statements.

Personal care products are intended to be applied to
the human body for cleansing, beautifying, promoting
attractiveness, or altering the appearance without
affecting the body's structure or functions. Included
in this definition are products such as skin creams,
lotions, perfumes, lipsticks, fingernail polishes, eye
and facial make-up preparations, shampoos, permanent
waves, hair colors, toothpastes, deodorants, and any
material intended for use as a component of a cosmetic
product. The Food & Drug Administration has a limited
ability to regulate personal care products. The Food &
Drug Administration can regulate personal care products
after they are introduced into the market and can review
personal care products and their ingredients after they
are sold to the public.

As a marketer of products that are ingested by consumers,
we are subject to the risk that one or more of the
ingredients in our products may become the subject
of adverse regulatory action.

A portion of our products sold in Canada have separate
labels or combination labels to satisfy Canadian
compliance organizations, such as the Food Inspection
Agency and Health Canada. Health Canada is moving
towards stricter compliance guidelines for dietary
supplement products through its recently created
Office of Natural Health Products. New compliance
guidelines through the Office of Natural Health
Products may affect the formulation, manufacture,
packaging, storing, labeling, advertising, distribution
and sale of our products in Canada. We plan to comply
with all regulations promulgated by Office of Natural
Health Products. Quebec has different label requirements
than the rest of Canada, however, a portion of our
Canadian labels or combination labels are compliant
and sufficient for the sale in Quebec. Due to the
small percentage of sales in Canada, we do not hold
separate Canadian labels for our complete product line.

In foreign markets, prior to commencing operations and
prior to making or permitting sales of our products,
we may be required to obtain an approval, license or
certification from the country's ministry of health or
comparable agency. Prior to entering a new market in
which a formal approval, license or certificate is
required, we will be required to work extensively
with local authorities to obtain the requisite
approvals. The approval process generally will
require us to present each product and product
ingredient to appropriate regulators and, in some
instances, arrange for testing of products by
local technicians for ingredient analysis. Such
approvals may be conditioned on reformulation of
our products or may be unavailable with respect
to certain products or ingredients.

Product Claims and Advertising

The Federal Trade Commission and certain states
regulate advertising, product claims, and other
consumer matters, including advertising of our
products. All advertising, promotional and
solicitation materials used by distributors
require our approval prior to use. The Federal
Trade Commission has in the past several years
instituted enforcement actions against several
dietary supplement companies for false and
misleading advertising of certain products.
In addition, the Federal Trade Commission has
increased its scrutiny of the use of testimonials.
We have not been the target of Federal Trade
Commission enforcement action. There is no
assurance that:

* the Federal Trade Commission will not
question our advertising or other operations
in the future,

* a state will not interpret product claims
presumptively valid under federal law as
illegal under that state's regulations, or

* future Federal Trade Commission
regulations or decisions will not
restrict the permissible scope of such
claims.

We are also subject to the risk of claims
by distributors and their customers who
may file actions on their own behalf,
as a class or otherwise, and may file
complaints with the Federal Trade Commission
or state or local consumer affairs offices.
These agencies may take action on their own
initiative against us for alleged advertising
or product claim violations or on a referral
from distributors, consumers or others. Remedies
sought in such actions may include consent
decrees and the refund of amounts paid by
the complaining distributor or consumer,
refunds to an entire class of distributors
or customers, or other damages, as well as
changes in our method of doing business. A
complaint based on the practice of one
distributor, whether or not we authorized
the practice, could result in an order
affecting some or all distributors in a
particular state. Also, an order in one
state could influence courts or government
agencies in other states considering similar
matters. Proceedings resulting from these
complaints may result in significant defense
costs, settlement payments or judgments and
could have a material adverse effect on us.

Compliance Efforts

We attempt to remain in full compliance with all
applicable laws and regulations governing the
manufacture, labeling, sale, distribution, and
advertising of our dietary supplements. We retain
special legal counsel for advice on both US Food
and Drug Administration and US Federal Trade
Commission legal issues.

Network Marketing System

Our network marketing system is subject to a
number of federal and state regulations
administered by the Federal Trade Commission
and various state agencies. These regulations
are generally directed at ensuring that product
sales are ultimately made to consumers (as
opposed to other distributors) and that
advancement within an organization be based on
sales of the organization's products, rather than
investment in the organization or other non-retail
sales related criteria. For instance, in certain
markets there are limits on the extent to which
distributors may earn royalties on sales generated
by distributors that were not directly sponsored
by the distributor.

Our network marketing program and activities are
subject to scrutiny by various state and federal
governmental regulatory agencies, to ensure
compliance with various types of laws and
regulations. These laws and regulations include
securities, franchise investment, business
opportunity and criminal laws prohibiting the
use of "pyramid" or "endless chain" types of
selling organizations. The compensation structure
of such selling organizations is very complex,
and compliance with all of the applicable laws
is uncertain in light of evolving interpretation
of existing laws and the enactment of new laws
and regulations pertaining to this type of
product distribution. We have an ongoing
compliance program with assistance from legal
counsel experienced in the laws and regulations
pertaining to network sales organizations. We are
not aware of any legal actions pending or threatened
by any governmental authority against us regarding
the legality of our network marketing operations.

We currently have IBAs in the United States and
Canada. We review the requirements of various states,
as well as seek legal advice regarding the structure
and operation of our selling organization to ensure
that it complies with all of the applicable laws
and regulations pertaining to network sales
organizations. On the basis of these efforts and
the experience of our management, we believe that
we are in compliance with all applicable federal and
state regulatory requirements. We have not obtained
any no-action letters or advance rulings from any
federal or state security regulator or other
governmental agency concerning the legality of
our operations, nor are we relying on a formal
opinion of counsel to such effect. We, accordingly,
are subject to the risk that, in one or more of our
markets, our marketing system could be found to not
comply with applicable laws and regulations. Our
failure to comply with these regulations could have
a material adverse effect on us in a particular
market or in general.

We are subject to the risk of challenges to the
legality of our network marketing organization,
including claims by our distributors, both
individually and as a class. Most likely these
claims would be based on our network marketing
program allegedly being operated as an illegal
"pyramid scheme" in violation of federal securities
laws, state unfair practice and fraud laws and the
Racketeer Influenced and Corrupt Organizations Act.

We believe that our network marketing system is not
classified as a pyramid scheme under the standards
set forth in applicable law. In particular, in most
jurisdictions, we maintain an inventory buy-back
program to address the problem of "inventory loading."
Pursuant to this program, we repurchase products sold
to a distributor (subject to a 10% restocking charge)
provided that the distributor returns the product in
marketable condition within one year of original
purchase, or longer where required by applicable
state law or regulations.

Our literature provided to distributors describes our
buy-back program. However, as is the case with other
network marketing companies, the commissions paid by
us to our distributors are based on product purchases,
including purchases of products that are personally
consumed by the down-line distributors. Basing commissions
on sales of personally consumed products may be
considered an inventory loading purchase. Furthermore,
distributors' commissions are based on the wholesale
prices received by us on product purchases or, in some
cases, based upon the particular product purchased, on
prices less than the wholesale prices.

To further address the problem of "inventory loading,"
our IBAs must sell at least 70% of their inventory
before they can reorder.

In the event of challenges to the legality of our
network marketing organization by distributors, we
would be required to:

* demonstrate that our network marketing policies
are enforced, and

* demonstrate that the network marketing program
and distributors' compensation thereunder serve as
safeguards to deter inventory loading and encourage
retail sales to the ultimate consumers.

Nutrition for Life International, Inc., one of our
competitors and a multi-level seller of personal
care and nutritional supplements, announced in 1999
that it had settled class action litigation brought
by distributors alleging fraud in connection with
the operation of a pyramid scheme. Nutrition for
Life agreed to pay in excess of $3 million to settle
claims brought on behalf of its distributors, and
related securities fraud claims brought on behalf
of certain purchasers of its stock. We believe that
our marketing program is significantly different
from the program allegedly promoted by Nutrition
for Life and that our marketing program is not in
violation of anti-pyramid laws or regulations. Two
issues in the Nutrition for Life matter were a
$1,000 buy-in urged on new recruits, and the paying
of commissions on product vouchers prior to the
actual delivery of product. By design, our marketing
program offers no incentive to anyone to make a large
personal purchase nor do we use product vouchers.
However, there is no assurance that claims similar
to the claims brought against Nutrition for Life and
other multi-level marketing organizations will not be
brought against us, or that we will prevail in the
event any such claims were made. Furthermore, even
if we were successful in defending against any such
claims, the costs of conducting such a defense, both
in dollars spent and in management time, could be
material and adversely affect our operating results
and financial condition. In addition, the negative
publicity of such a suit could adversely affect our
sales and ability to attract and retain distributors.

Competition

We are subject to significant competition in recruiting
IBAs from other network marketing organizations,
including those that market products in the dietary
supplement and personal care categories, as well as
other types of products. There are more than 300
companies worldwide that utilize network marketing
techniques, many of which are substantially larger,
offer a greater variety of products, and have
available considerably greater financial resources
than us. Our ability to remain competitive depends,
in significant part, on our success in recruiting
and retaining IBAs through an attractive commission
plan and other incentives. We believe that our
commission plan and incentive programs provide our
IBAs with significant income potential. However,
there can be no assurance that our programs for
recruitment and retention of IBAs will continue
to be successful.

In addition, the business of marketing products in
the dietary supplement and personal care categories
is highly competitive. This market segment includes
numerous manufacturers, other network marketing
companies, catalog companies, distributors, marketers,
retailers and physicians that actively compete in the
sale of such products. We also compete with other
providers of such products, especially retail
outlets, based upon convenience of purchase and
immediate availability of the purchased product.
The market is highly sensitive to the introduction
of new products or weight management plans
(including various prescription drugs) that may
rapidly capture a significant share of the market.
As a result, our ability to remain competitive depends,
in part, upon the successful introduction and addition
of new products to our line.

Depending on the product category, our competition
varies. Calorad competes directly with Colvera, a
product with different ingredients but a similar
concept. Additionally, Calorad competes indirectly
with food plans such as Weight Watchers and meal
replacement products such as Slim Fast. Our Noni
Plus product competes with Morinda and others. Our
other products have similar well funded and
sophisticated competitors. Increased competitive
activity from such companies could make it more
difficult for us to increase or keep market share,
since such companies have greater financial and other
resources available to them and possess far more
extensive manufacturing, distribution and marketing
capabilities.

Our network marketing competitors include small,
privately held companies, as well as larger, publicly
held companies with greater financial resources and
greater product and market diversification and
distribution. Our competitors include Reliv
Inernational, Mannatech Incorporated and Usana
Health Services.

Employees

As at December 31, 2004 we had 42 employees. Of
these employees, 3 are executive officers, 4 are
accounting, 1 is in investor relations, 16 are
in operations, 8 are in sales and marketing, 4
are in information systems, 1 is in product
development, 6 are in our warehouse and 1 is in
administration. We consider our employee
relations to be good. None of our employees is
a member of a trade union and we have not
experienced any business interruption as a
result of any labor disputes.

Research and Development Expenditures

We have not incurred any research or
development expenditures during our
last two fiscal years.

Intellectual Property

We use several trademarks and trade names in
connection with our products and operations, as
further described below. We rely on common law
trademark rights to protect our unregistered
trademarks. Common law trademark rights do not
provide with the same level of protection as
afforded by a United States federal registration
of a trademark. Also, common law trademark rights
are limited to the geographic area in which the
trademark is actually used. In addition, our product
formulations are not protected by patents and are
not patentable. Therefore, there can be no assurance
that another company will not replicate one or more
of our products.

We have a License Agreement with Nutri-Diem that
gives EYI the exclusive right to use the trademarks
solely in connection with the sale, marketing and
distribution of the products. Our agreement states
that we have non-exclusive rights to use the
trademarks on the Internet. The Agreement is
based on a five year term, with automatic renewal
for another five year period. We also have license
agreement with EYI Corp which gives EYI the
exclusive right to the trademarks for the purpose
of sales and marketing activities. The Agreement
is based on a 50 year term with a yearly renewal
each year thereafter.

On June 30, 2002, the following Nutri-Diem trademarks
were licensed to EYI Nevada pursuant to the Marketing
and Distribution Agreement in place between Nutri-Diem
and EYI Nevada. The owner of the trademarks set out in
the table below is Michel Grise Consultants Inc., an
associated company of Nutri-Diem and is controlled by
Michel Grise, one of the directors of EYI Nevada:

Product Status

Agrisept-L(R) Registered Trademark
Beaugest(R) Registered Trademark
Bellaffina(R) Registered Trademark
Calorad(R) Registered Trademark

Citrex(R) Registered Trademark
Citrio(R) Registered Trademark

Definition(R) Registered Trademark
Emulgent(R) Registered Trademark
Fem Fem(R) Registered Trademark
Golden Treat(R)Registered Trademark
Hom Hom(R) Registered Trademark
Invisible(R) Registered Trademark
Livocare(R) Registered Trademark
Melan Plus(R) Registered Trademark
Neocell(R) Registered Trademark
NRG(R) Registered Trademark
Parablast(R) Registered Trademark
Parattack(R) Registered Trademark
Prosoteine(R) Registered Trademark
Sea Krit(R) Registered Trademark

On June 30, 2002, EYI Nevada acquired a license from
Essentially Yours Industries Corp., an affiliated
company, to use the below trademarks and formulas
for a term of 50 years, renewable at the option of
EYI Nevada on a yearly basis thereafter at the
same yearly rate of $1.00 per year, from year
to year:

Citri-plus(R) Registered Trademark
EYI w/design(R) Registered Trademark
Essential Marine(R) Registered Trademark
Essentially Yours(R) Registered Trademark
Essentially Yours
Industries Corp.
(with design)(R) Registered Trademark
Iso greens(R) Registered Trademark

Just Go Pro!(TM) Registered Trademark
Oxy Up(TM) Registered Trademark
Prosoteine(r) Registered Trademark
The Ultimate
Performance
Enhancer!(TM) Registered Trademark

ITEM 2. DESCRIPTION OF PROPERTY.

Our principal offices are located at 3960 Howard
Hughes Parkway, Suite 500, Las Vegas, Nevada 89109.
We rent these premises at a rate of $400 per month.
The office rental is on a month to month basis without
a formal contract.

Other property lease commitments include our warehouse
and distribution centers in Louisville, Kentucky and
Surrey, British Columbia, as described in the table below.

Location Term of Lease Square Feet Monthly Lease Commitment
Louisville,
Kentucky Three years, commencing
April 30, 2007 33,750 $10,419 per month from May 1, 2004
to April 30, 2005; $11,719 per month
from May 1, 2005 to April 30, 2005;
and $13,019 per month from May 1,
2006 to April 30, 2007 .<
Surrey, B.C. Two years, commencing May 1,
2003 21,730 $156,000 per year
Burnaby,B.C. Seven years, commencing
January 1, 2005 12,200 CDN$12,000 per month from January 1,
2005 to December 1, 2005 (January 1,
2005-April 30, 2005 is a rent free
period).

ITEM 3. LEGAL PROCEEDINGS.

Other than as described below, we are not a party to
any material legal proceedings and to our knowledge,
no such proceedings are threatened or contemplated.

1. Oppression Action by Lavorato/Heyman

In 2002, an oppression action was commenced in the
Supreme Court of British Columbia by the plaintiffs
Brian Lavorato, Geraldine Heyman and their respective
holding companies, alleging that Essentially Yours
Industries Corp., our affiliate, had improperly
vended assets into Essentially Yours Industries,
Inc., our wholly owned subsidiary, as part of a
corporate restructuring alleged to be oppressive
to the plaintiffs. As of April 4, 2003, the lawsuit
has been settled and was subsequently dismissed by
the plaintiffs by consent, with the exception of
claims asserted by the plaintiffs against Thomas
K. Viccars, a former in-house counsel of Essentially
Yours Industries, Corp., who may potentially assert
a third party claim against Essentially Yours
Industries, Inc. The Settlement of the Oppression
Action was consented to by the Plaintiffs pursuant
to a written agreement between the Plaintiffs and,
inter alia, EYI Inc., dated as of April 4th, 2003,
under which EYI Inc. agreed as follows, inter alia:

* In consideration of 468058 B.C. Ltd. leasing to
642706 B.C. Ltd. (a company related to EYI Inc.)
EYI's business premises at 8310 and 8322, 130th
Street, Surrey, B.C., EYI Inc. and Essentially
Yours Industries Corp. jointly and severally
agreed to indemnify the landlord in respect of
the tenant's lease obligations till May 2005.

* EYI Inc. agreed to enter into a mutual release
of all claims with all parties (except Thomas
Viccars). The mutual release was executed by all
parties (except Thomas Viccars) as of April 4th,
2003.

As part of the original action we claimed against
Callum MacLeod, a co-defendant, for breach of
his employment agreement and Mr. MacLeod filed
a counterclaim against us for wrongful dismissal.
We have filed a consolidated statement of defense
to the counterclaim, and interrogatories have
been responded to. Management believes this
counterclaim to be without merit and intends to
vigorously defend against this claim.

2. Action By Suhl, Harris and Babich

In 2003 a consolidated action was brought by the
plaintiffs Wolf Suhl, Christine Harris and Edward
Babich in the Supreme Court of British Columbia
pursuant to an order pronounced in the New
Westminster Registry under Action No. S061589
on May 7, 2003, which allowed the plaintiffs to
proceed with an action against Essentially Yours
Industries, Inc. The plaintiffs allege that
Essentially Yours Industries, Inc. holds certain
of its products or revenues derived therefrom as
trust property for the benefit of the plaintiffs.

The claim is for a total of $220,000 and an
aggregate 4.9% of the wholesale volume of sales
generated by Essentially Yours Industries, Inc.
from the alleged trust property, and for damages
and costs. A consolidated statement of defence has
been filed by Essentially Yours Industries, Inc.,
and interrogatories have been responded to. A three
day summary trial was set for early April, 2005 for
this matter, but has been adjourned to September
pending the outcome of further discoveries.
Management believes this claim to be without merit
and intends to vigorously defend against this claim.

To the best of our knowledge, we are not subject to
any other active or pending legal proceedings or
claims against us or our subsidiaries or any of our
properties that will have a material effect on our
business or results of operations. However, from
time to time, we may become subject to claims and
litigation generally associated with any business
venture.

3. Agreement with Source, Inc.

In February, 2004 we entered into a letter of commitment
with Source, Inc. ("Source") for the purpose of further
developing our corporate marketing position with Source
and for assistance in raising equity capital. Pursuant
to the terms the letter agreement, we agreed to: (i)
pay Source 20% of the gross revenues generated by Source
under a Corporate Marketing Organization Agreement
("CMO Agreement") previously entered into with Premier
Lifestyles International Corporation, a company related
to Source; (ii) to offer up to $4,000,000 of EYI restricted
stock over a 90 day period at $0.21 per share and warrants
exercisable at a price of $0.30 per share for investors
referred to EYI by Source in connection with any equity
offerings by EYI; (iii) at the end of the 12 months
period following execution of the agreement, and if
Source had referred enough investors to raise a minimum
of $500,000, to issue to Source $1,800,000 in common
stock of EYI or pay the balance in cash; and (iv) on
a monthly basis, during the 12 month period, pay 50% of
all monies collected by EYI from Source referred investors,
to be paid to Source towards the $1,800,000 to pay for
the CMO Agreement and $300,000 towards a proposed web
portal. Subsequently, we terminated the CMO Agreement
in accordance with its terms in July, 2004, and notified
Source that they failed to raise the minimum funding of
$500,000 in connection with EYI's equity offering
closing in June, 2004. Source has notified EYI that they
dispute the fact that they did not raise the minimum
financing amount. Management believes that if Source were
to advance any such claims against EYI its chance of
success would be remote and we intend to vigorously
defend against any potential legal claims respecting
this matter.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

Our shares are currently trading on the Over-The-Counter Bulletin
Board (the "OTCBB") under the symbol EYII on January 30, 2004
following completion of the Exchange Agreement among our company,
certain of our shareholders and Safe ID Corporation, see
"Item 1. Description of Business" above. The shares of Safe ID
Corporation traded on the OTC BB under the symbol "MYID" from
January 17, 2001 to January 30, 2004. The following table
contains the reported high and low bid prices for the common
stock as reported on the OTC BB for the periods indicated:

YEAR 2001 High Bid Low Bid
Quarter Ended March 31, 2001 $0.875 $0.150
Quarter Ended June 30, 2001 $0.875 $0.125
Quarter Ended September 30, 2001 $0.550 $0.150
Quarter Ended December 31, 2001 $0.500 $0.250

YEAR 2002 High Bid Low Bid
Quarter Ended March 31, 2002 $0.510 $0.250
Quarter Ended June 30, 2002 $0.760 $0.200
Quarter Ended September 30, 2002 $0.450 $0.160
Quarter Ended December 31, 2002 $0.430 $0.160

YEAR 2003 High Bid Low Bid
Quarter Ended March 31, 2003 $0.265 $0.051
Quarter Ended June 30, 2003 $0.110 $0.032
Quarter Ended September 30, 2003 $0.340 $0.050
Quarter Ended December 31, 2003 $0.335 $0.190

YEAR 2004 High Bid Low Bid
Quarter Ended March 31, 2004 $0.300 $0.190
Quarter Ended June 30, 2004 $0.320 $0.180
Quarter Ended September 30, 2004 $0.300 $0.110
Quarter Ended December 31, 2004 $0.140 $0.050

HOLDERS OF COMMON STOCK

As of April 8, 2005, we had 112 registered stockholders holding
165,520,535 shares of our common stock.

DIVIDENDS

Since our inception, we have not declared nor paid any cash
dividends on our capital stock and we do not anticipate
paying any cash dividends in the foreseeable future. Our
current policy is to retain any earnings in order to finance
the expansion of our operations. Our Board of Directors will
determine future declaration and payment of dividends, if any,
in light of the then-current conditions they deem relevant and
in accordance with applicable corporate law.

RECENT SALES OF UNREGISTERED SECURITIES

We have not completed any sales of securities without
registration pursuant to the Securities Act of 1933 during
the fiscal year ended December 31, 2004 that have not been
reported on our Quarterly Reports on Form 10-QSB during the
year.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

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.
Currently, our product line consists 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, Inc.
Certain of our own products are manufactured for us by third party
manufacturers pursuant to formulations developed for us. Our
products are sold in the United States and Canada. Our products
are marketed through a network marketing program in which independent
business associates purchase products for resale to retail customers
as well as for their own personal use. We have a list of over 400,000
independent business associates, of which approximately 14,000
we consider "active". An "active" independent business associate is
one who purchased our products within the preceding 12 months.
Our independent auditors have added an explanatory paragraph to
their audit issued in connection with the financial statements for
the period ended December 31, 2004, relative to our ability to
continue as a going concern. We have negative working capital of
approximately $1,080,000 and an accumulated deficit incurred through
December 31, 2004, which raises substantial doubt about our ability
to continue as a going concern. Our ability to obtain additional
funding will determine our ability to continue as a going concern.
Accordingly, there is substantial doubt about our ability to continue
as a going concern. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
We have a history of losses. We have incurred an operating loss
since inception and had an accumulated deficit of $7,085,205 as
of December 31, 2004. For the year ended December 31, 2004 we
incurred a net loss of $4,462,795. For the short period ended
December 31, 2003 and for the year ended June 30, 2003, we
incurred a net loss of $969,987 and $1,644,456, respectively.
Consequently, we will in all likelihood, have to rely on external
financing for all of our capital requirements. Future losses are
likely to continue unless we successfully implement our business
plan, which calls for us to secure both debt and equity financing
while pursuing acquisitions and/or joint ventures with companies
in the nutritional supplement industry.

Our core business is in network marketing development and sales.
In 2004 we implemented some critical changes to our network marketing
development and sales strategy. We analyzed our compensation structure
and realized that although the plan paid the sales force more than
industry standard, it was still not encouraging sales, growth,
duplication or retention. After months of study, outside consulting,
field leader's focus groups and senior management discussion, we made
key adjustments during our first fiscal quarter in 2004 that are
intended to cap the sales commission expense while at the same time
promote increased network sales. Our experience to date is that the
changes to our commission plan have improved our gross profit margin,
however, they have also resulted in an unexpected reduction in IBA
retention which has adversely affected our gross revenues. We
believe the results to date are sufficiently encouraging to warrant
continued implementation of the changes to the commission plan.
To further facilitate growth and benefit from certain competitive
advantages conferred by the new commission plan, we have upgraded
our Internet support sites, created a trainer field certification
program, developed a regional training program and increased our
face to face training capability. These support tools are intended
to ensure compliance, mature team and territory development and
assist sales growth.

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 with World Wide Buyers' Club Inc. and
Supra Group, Inc., 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 Joint Venture 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.

Our plan of operations over the next twelve months is 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.

During the fourth quarter of 2004, we launched our new product,
Prosoteine. Over the next twelve months, we intend to distribute the
second phase of this campaign which includes an in-house-developed
6-week training program called "15/5" which is designed to teach
our IBAs and their guests about Prosoteine in a telephone
conference forum. Additionally, we intend to launch support
materials. 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.

Critical Accounting Policies

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

Our management routinely makes judgments and estimates about the
effects of matters that are inherently uncertain. As the number of
variables and assumptions affecting the probable future resolution
of the uncertainties increase, these judgments become even more
subjective and complex. We have identified certain accounting
policies, described below, that are the most important to the
portrayal of our current financial condition and results of
operations.

Accounting for Stock Options and Warrants Granted to Employees
and Non-Employees

Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS No. 123"), defines a fair
value-based method of accounting for stock options and other equity
instruments. We have adopted this method, which measures compensation
costs based on the estimated fair value of the award and recognizes
that cost over the service period.

Accounts Receivable and Bad Debts

We estimate bad debts utilizing the allowance method, based upon
past experience and current market conditions. At December 31, 2004,
we determined that an allowance was necessary to cover accounts
receivable balances aged over 60 days and therefore established an
allowance in the amount of $16,321. At December 31, 2003 and June
30, 2003, we determined that no allowance was required and elected
to use the direct write-off method and the amounts of $26,408 and $0
respectively were charged to bad debt expense.

Cash and Cash Equivalents

For purposes of the statement of cash flows, EYI considers all highly
liquid investments and short-term debt instruments with original
maturities of three months or less to be cash equivalents.

Compensated Absences

Employees of EYI are entitled to paid vacation, and sick days,
depending on job classification, length of service, and other
factors. We accrued vacation pay in the amounts of $60,186 at
December 31, 2004.

Cost of Sales

Cost of sales consists of the purchase price of products sold,
inbound and outbound shipping charges, packaging supplies and costs
associated with service revenues and marketplace business.

Derivative Instruments

The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (hereinafter "SFAS No. 133"), as
amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB No. 133",
and SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", and SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities". These statements
establish accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
and for hedging activities. They require that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and
measure those instruments at fair value.

At December 31, 2004, EYI has not engaged in any transactions that
would be considered derivative instruments or hedging activities.

Earnings Per Share

EYI has adopted Statement of Financial Accounting Standards No. 128,
which provides for calculation of "basic" and "diluted" earnings per
share. Basic earnings per share includes no dilution and is computed
by dividing net income (loss) available to common shareholders by the
weighted average common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution of securities that
could share in the earnings of an entity similar to fully diluted
earnings per share. Basic and diluted loss per share were the same,
at the reporting dates, as inclustion of the common stock equivalents
would be anti-dilutive.

Fair Value Of Financial Instruments

EYI's financial instruments as defined by Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments," include cash, trade accounts receivable,
and accounts payable and accrued expenses. All instruments are
accounted for on a historical cost basis, which, due to the short
maturity of these financial instruments, approximates fair value
at December 31, 2004.

Foreign Currency Translation And Other Comprehensive Income

EYI has adopted Financial Accounting Standard No. 52. Monetary
assets and liabilities denominated in foreign currencies are
translated into United States dollars at rates of exchange in
effect at the balance sheet date. Gains or losses are included
in income for the year. Non-monetary assets, liabilities and
items recorded in income arising from transactions denominated
in foreign currencies are translated at rates of exchange in
effect at the date of the transaction.

As EYI's functional currency is the U.S. dollar, and all
translation gains and losses are transactional, EYI has no
assets with value recorded in Canadian dollar and there is
no recognition of other comprehensive income in the financial
statements.

Foreign Currency Valuation And Risk Exposure

While EYI's functional currency is the U.S. dollar and the
majority of its operations are in the United States, EYI
maintains its main operations office in Surrey, British
Columbia. The assets and liabilities relating to the Canadian
operations are exposed to exchange rate fluctuations. Assets
and liabilities of EYI's foreign operations are translated
into U.S. dollars at the year-end exchange rates, and revenue
and expenses are translated at the average exchange rate
during the period. The net effect of exchange difference
arising from currency translation is disclosed as a separate
component of stockholders' equity. Realized gains and
losses from foreign currency transactions are reflected
in the results of operations.

Income Taxes

EYI accounts for income taxes under the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes". This statement requires the recognition of
deferred tax liabilities and assets for the future consequences
of events that have been recognized in EYI consolidated financial
statement or tax returns. Measurement of the deferred items is
based on enacted tax laws. In the event the future consequences
of differences between financial reporting bases and tax bases
of EYI assets and liabilities results in a deferred tax asset,
SFAS No. 109 requires an evaluation of the probability of being
able to realize the future benefits indicated by such an asset.
A valuation allowance related to a deferred tax asset is recorded
when it is more likely than not that some portion or all of the
deferred tax asset will not be realized.

Inventories

EYI records inventories at the lower of cost or market on a
first-in, first-out basis.

Long-Lived Assets

In accordance with Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". This standard establishes a single
accounting model for long-lived assets to be disposed of
by sale, including discontinued operations, and requires
that these long-lived assets be measured at the lower of
carrying amount or fair value less cost to sell, whether
reported in continuing operations or discontinued operations.
Accordingly, EYI reviews the carrying amount of long-lived
assets for impairment where events or changes in circumstances
indicate that the carrying amount may not be recoverable. The
determination of any impairment would include a comparison of
estimated future cash flows anticipated to be generated during
the remaining life of the assets to the net carrying value of
the assets. For the year ended December 31, 2004, no
impairments have been identified.

Property And Equipment

Property and equipment are stated at cost. Depreciation of
property and equipment is calculated using the straight-line
method over the estimated useful lives of the assets, which
range from three to seven years.

Revenue Recognition

We are in the business of selling nutritional products in two
categories; dietary supplements and personal care products.
Sales of personal care products represent less than 5% of the
overall revenue and therefore is not classified separately in
the financial statements accompanying this annual report. We
recognize revenue for product sales when the products are
shipped and title passes to customer. Administrative fees
charged to the Independent Business Associates are included
in the gross sales and amounted to $190,340, $161,040 and
$314,971 for the year ended December 31, 2004, the short
period ended December 31, 2003 and year ended June 30,
2003, respectively.

Segment Information

EYI adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related
Information," (hereafter "SFAS No. 131") which supersedes SFAS
No. 14, "Financial Reporting for Segments of a Business
Enterprise," replacing the "industry segment" approach with
the "management" approach. The management approach designates
the internal organization that is used by management for making
operating decisions and assessing performance as the source of
EYI reportable segments. SFAS No. 131 also requires disclosures
about products and services, geographic areas and major customers.
The adoption of SFAS No. 131 did not affect EYI results of
operations or financial position.

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.

RESULTS OF OPERATIONS

The following table summarizes operating results as a
percentage of revenue, respectively, for the periods
indicated:

Summary of Year End Results

Twelve Months ended
December 31, 2004 Short Period endedTwelve Months ended
December 31, 2003 June 30, 2003

Revenue 100% 100% 100%
Cost of goods sold 21% 17% 8%
Gross profit before
commission expense 79% 83% 92%
Commission expense 40% 49% 65%
Gross profit after
ost of goods sold
and commission expense 40% 34% 27%
Operating expenses 108% 57% 38%
Operating loss -69% -23% -11%

Revenues

During the year ended December 31, 2004 we had total revenues of
$6,229,029 and gross profits of $2,464,818 or 40% compared to
revenues of $4,313,579 and gross profits of $1,467,779 or 34%
during the short period ended December 31, 2003. The decrease
in our revenues can be primarily attributed to the following
factors:

* the changes made to our commission plan in January 2004 in
which our overall commission payout to our IBAs was reduced
and therefore hindering our ability to retain existing IBAs
and attract new ones.

* our inability to fund marketing initiatives and programs
that may promote growth within new markets and existing ones.

* Lack of IBA participation in our autoship program.

Revenue by Segments

The following table summarizes our four revenue segments as a
percentage of total revenue, respectively, for the periods
indicated:

Year ended Short period ended Year ended
12/31/04 12/31/03 6/30/03
Administration
fees 3% 4% 2%
Binary sales 76% 86% 96%
Direct sales 18% 8% 2%
Shipping 2% 2% 1%
Total revenue 100% 100% 100%

Details of the most significant changes from the short year ended
December 31, 2003 to the year ended December 31, 2004 are detailed
below:
Binary sales The binary sales segment represents $4,744,742 or
76% of the total revenue earned during the year ended December 31,
2004, as compared to $3,727,692 or 86% of the total revenues earned
during the short period ended December 31, 2003. Management believes
that our inability to properly fund our marketing initiatives hindered
growth and retention in this segment.

Direct sales - The direct sales segment represents $1,150,759 or 18%
of the total revenue earned during the year ended December 31, 2004,
as compared to $330,229 or 8% of the total revenues earned during
segment in May 2003, EYI has acquired new direct sales contracts which
has supported the growth in direct sales.

Gross profit

Our consolidated gross profit increased to 40% for the year ended
December 31, 2004 from 34% for the short period ended December 31,
2003. This increase is attributed to the changes made to our commission
plan in January 2004. By reducing the commissions paid on binary sales,
we experienced an increase in our gross profit.

Year ended
12/31/04 Short period ended Year ended
12/31/03 6/30/03

Binary sales$4,744,742 $3,727,692 $13,770,558
Commission -
Binary $2,321,555 $2,034,737 $9,325,775
Gross profit on
binary sales before cost
of product $2,423,187 $1,692,955 $4,444,783
% of Total
Revenue 51% 45% 32%

Expenses

Operating expenses:

The following table summarizes operating expenditures as a percentage
of total operating expenses, respectively, for the periods indicated:

Twelve Months Short Period Ended Twelve Months
Ended December 31, 2004 December 31, 2003 Ended June 30, 2003

OPERATING EXPENSES
Consulting fees 21% 16% 14%
Legal and
professional fees 5% 6% 6%
Customer service 6% 20% 23%
Finance and
administration 31% 13% 15%
Sales and marketing 2% 4% 9%
Telecommunications 7% 9% 10%
Wages and benefits 19% 22% 17%
Warehouse expense 8% 9% 5%
Total Operating
Expenses 100% 100% 100%

We incurred operating expenses in the amount of $6,745,022 for the year
ended December 31, 2004, compared to $2,446,108 for the short period
ended December 31, 2003. The following explains the most significant
changes during the periods presented:

Consulting fees - For the year ended December 31, 2004, consulting fees
totaled $1,438,362 and represented 21% of our total operating
expenditures, as compared to $394,200 or 16% of the total operating
expenditures for the short period ended December 31, 2003. This
increase relates primarily to the cost associated with stock granted
to consultants during the year.

Customer Service - For the year ended December 31, 2004, customer
services fees totaled $393,244 and represented 6% of our total
operating expenditures, as compared to $488,944 or 20% of the total
operating expenditures for the short period ended December 31, 2003.
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.

Finance and administrations - For the year ended December 31, 2004,
finance and administration expenditures totaled $2,101,842 and
represented 31% of our total operating expenditures, as compared
to $324,853 or 13% of the total operating expenditures for the
short period ended December 31, 2003. This increase relates
primarily to the cost associated with stock granted to employees
during the year ended December 31, 2004. In addition, we expensed
$390,000 in financing costs during the year ended December 31, 2004.

Wages and benefits - For the year ended December 31, 2004, wages
and benefits totaled $1,296,801 and represented 19% of our total
operating expenditures, as compared to $547,076 or 22% of the
total operating expenditures for the short period ended December
31, 2003. Although we expanded our payroll in April 2004 as
indicated above, we reduced the overall wages and benefits
during the year by reducing staff in various departments.

Other Income (Expense)
During the year ended December 31, 2004 we had total other
income (expense) of ($271,346) compared to ($7,928) for the
short period ended December 31, 2003. The increased expense
relates to $250,000 in interest expense accrued on the
beneficial conversion of the June 2004 and September 2004
disbursements from Cornell.

LIQUIDITY AND FINANCIAL CONDITION

Cash Flows Year Ended Short Period
12/31/2004 12/31/2003

Net Cash from (used in)
Operating Activities ($826,300) ($490,611)
Net Cash from (used in)
Investing Activities $122,723 ($9,177)
Net Cash from (used in)
Financing Activities $684,520 $535,679
Net Increase (decrease) in
Cash During Period ($19,057) $35,891

Working Capital At Dec. 31, 2004 At Dec. 31, 2003 Percentage
Increase/(Decrease)
Current Assets $1,280,879 $616,512 107.8%
Current Liabilities ($2,361,120) ($1,882,345) 25.4%
Working Capital
Surplus (Deficit) ($1,080,241) ($1,265,833) (14.7)%

We had cash and cash equivalents in the amount of $33,018 as
of December 31, 2004 compared to cash in the amount of $52,075
as of December 31, 2003. We had a working capital deficit of
$1,080,241 as of December 31, 2004 compared to a working capital
deficit of $1,265,833 as of December 31, 2003.

Current Assets - We had an increase of $664,367 or 107.8%
in our current assets since December 31, 2003. This increase
relates to our agreement with Eyewonder, pursuant to which we
prepaid the communications component.

Current Liabilities - We had an increase of $478,775 or 25% in
our current liabilities since December 31, 2003. This
increase is primarily attributed to the following: (i) increase
in unpaid trade payables; and (ii) the convertible debt per
our loan agreement with Cornell entered into on June 2, 2004,
pursuant to which we received a net of $379,724 in exchange
for convertible securities.

The financial statements accompanying this Annual Report
contemplate our continuation as a going concern. However,
we have sustained substantial losses, have a limited
operating history and are still in the development stage
of our business. Additional funding will be necessary
to continue development and marketing of our products. We
intend to arrange for the sale of additional shares of our
common stock to obtain additional operating capital for at
least the next twelve months, however there is no assurance
that we will be able to raise the necessary capital to
continue our operations.

Cash Provided By Financing Activities

We have continued to finance our business primarily
through private placement sales of our common stock,
short term loans,
conversion of accrued liabilities into stock and
through increases in our accrued liabilities and
accounts payable. We have also received funding
as a result of the exercise of stock options.
Cash provided by financing activities for the year
ended December 31, 2004 was $684,520, compared to
$535,679 for the year ended December 31, 2003.

Financing activities included the issuance of
common stock for aggregate proceeds of $492,316
during the year ended December 31, 2004 in private
placement and other financing transactions. During
the year ended December 31, 2004 we issued 24,934,000
stock options under our Stock Compensation Program
at an average weighted price of $0.14 per share. All
shares issued pursuant to stock option exercises
during the year ended December 31, 2004 were
registered on Form S-8 registration statements that
we filed with the SEC.

On June 22, 2004, we issued a secured convertible
debenture to Cornell in the principal amount of
$250,000. The secured convertible debentures are
convertible at the holder's option any time up to
maturity at a conversion price equal to the lower
of (i) 120% of the closing bid price of the common
stock as of the date of issuance, or (ii) 80% of
the average of the lowest daily volume weighted
average price of our common stock for the 5 trading
days immediately preceding the conversion date.
At maturity, the remaining unpaid principal and
accrued interest under the debentures shall be,
at our option, either paid or converted into
shares of common stock at a conversion price equal
to the lower of (i) 120% of the closing bid price
of the common stock as of the date of issuance or
(ii) 80% of the lowest closing bid price of the
common stock for the lowest trading days of the 5
trading days immediately preceding the conversion date.
The secured convertible debenture is secured by all of
EYI's assets. The secured convertible debentures accrue
interest at a rate of 5% per year and has a term of 2 years.
In the event the secured convertible debentures are redeemed,
then EYI will issue to Cornell a warrant to purchase 50,000
shares for every $100,000 redeemed at an exercise price of
120% of the closing bid price as of June 22, 2004. Cornell
purchased the secured convertible debentures from EYI in
a private placement on June 22, 2004.

On September 24, 2004, we issued a secured convertible
debenture to Cornell in the principal amount of
$250,000. The secured convertible debentures are
convertible at the holder's option any time up to
maturity at a conversion price equal to the lower
of: (i) 120% of the closing bid price of the
common stock as of the date of issuance, or
(ii) 80% of the average of the lowest daily
volume weighted average price of our common stock
for the 5 trading days immediately preceding the
conversion date. At maturity, the remaining unpaid
principal and accrued interest under the debentures
must be, at our option, either paid or converted
into shares of common stock at a conversion price
equal to the lower of (i) 120% of the closing bid
price of the common stock as of the date of issuance,
or (ii) 80% of the lowest closing bid price of the
common stock for the lowest trading days of the 5
trading days immediately preceding the conversion date.
The secured convertible debenture is secured by all of our
assets. The secured convertible debenture accrues interest
at a rate of 5% per year and has a term of 2 years. In the event
the secured convertible debentures are redeemed, then we will
issue to Cornell a warrant to purchase 50,000 shares for every
$100,000 redeemed at an exercise price of 120% of the closing bid
price as of September 24, 2004.

Financing Requirements

We currently have minimal cash and working capital resources.
We do not have adequate financial resources in order to enable
us to continue our business operations without additional financing.
In the event that we do not obtain the necessary financing to fund
our anticipated operating expenses, we will be forced to reduce our
personnel and curtail our telecommunications and mailout expenses.
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 will require additional financing if we are to continue as a going
concern and to finance our business operations. We anticipate that any
additional financing would be through the sales of our common or
preferred stock or placement of convertible debt. 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.

On June 22, 2004, we entered into a Standby Equity Distribution Agreement
with Cornell. Pursuant to 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
Standby
Equity Distribution Agreement, Cornell will purchase shares of common stock of
EYI 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 Standby Equity Distribution Agreement. We may not
request advances in excess of a total of $10 million. The maximum of each
advance is equal to $250,000.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant 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.

RISK FACTORS
We Have Historically Lost Money And Losses May Continue In The Future

We have a history of losses. We have incurred an operating loss since
inception and had an accumulated deficit of $7,085,205 as of December
31, 2004. Consequently,
we will in all likelihood, have to rely on external financing for all of our
capital
requirements. Future losses are likely to continue unless we successfully
implement our business plan, which calls for us to secure both debt and equity
financing while
pursuing acquisitions and/or joint ventures with companies in the nutritional
supplement industry. Our ability to continue as a going concern will be
dependent
upon our ability to draw down on our Standby Equity Distribution Agreement
that we
have established with Cornell. If we incur any problems in drawing down our
Standby
Equity Distribution Agreement, we may experience significant liquidity and cash
flow problems. If we are not successful in reaching and maintaining
profitable operations, we may not be able to attract sufficient capital to
continue our operations. Our inability to obtain adequate financing will
result in the need to curtail business operations and will likely result
in a lower stock price.

We Have Been Subject To A Going Concern Opinion From Our Independent Auditors

Our independent auditors have added an explanatory paragraph to their
audit issued in connection with the financial statements for the period
ended December 31, 2004, relative to our ability to continue as a going
concern. We have negative working capital of approximately $1,080,000
and an accumulated deficit incurred through December 31, 2004, which
raises substantial doubt about our ability to continue
as a going concern. Our ability to obtain additional funding will
determine our ability to continue as a going concern. Accordingly, there
is substantial doubt about our ability to continue as a going concern.
Our financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

If We Are Unable To Raise Additional Capital To Finance Operations, We Will
Need To Curtail Or Cease Our Business Operations

We have relied on significant external financing to fund our operations.
As of December 31, 2004, we had $33,018 in cash and our total current
assets were $1,280,879. Our current liabilities were $2,361,120 as of
December 31, 2004. We will need to raise additional capital to fund
our anticipated operating expenses and future expansion.
Among other things, external financing may be required to cover our
operating costs. Unless we obtain profitable operations, it is unlikely
that we will be able to secure financing from external sources other
than our Standby Equity Distribution Agreement
with Cornell. In the event we do not obtain the necessary financing to
fund our anticipated operating expenses, we will be forced to reduce our
personnel and curtail other operating expenses. The sale of our common
stock to raise capital may cause
dilution to our existing shareholders. Our inability to obtain adequate
financing will result in the need to curtail business operations.
Any of these events would be materially harmful to our business and
may result in a lower stock price. Our
inability to obtain adequate financing will result in the need to
curtail business
operations and you could lose your entire investment.

Our Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
Significantly

Our common stock is traded on the Over-the-Counter Bulletin Board. Our common
stock is thinly traded compared to larger, more widely known companies in
the nutritional supplement industry.
Thinly traded common stock can be more volatile than common stock traded
in an active public market. The lower our stock price, the more shares we
will have to issue in connection with advances we may request under our
Standby Equity Distribution Agreement.

The high and low bid price of our common stock for the last two years has $0.45
and $0.05,respectively. Our common stock has experienced, and is likely
to experience in the future, significant price and volume fluctuations, which
could adversely affect the market price of our common stock without
regard to our operating performance. In addition, we believe
that factors such as quarterly fluctuations in our financial results
and changes in the overall economy or the condition of the financial
markets could cause the price of our
common stock to fluctuate substantially.

We Are Currently Dependent On Our Standby Equity Distribution Agreement
With CornellCapital Partners; We May Not Be Able To Access
Sufficient Funds When Needed; The Price
Of Our Common Stock Will Affect Our Ability To Draw Down
On The Standby Equity
DistributionAgreement

Currently, we are dependent upon external financing to fund our
operations. Our financing needs are expected to be provided, in
large part, by our Standby Equity Distribution Agreement.
Therefore, we are dependent on our Standby Equity Distribution
Agreement with Cornell to fund our operations. We will receive
no funding under the Standby Equity Distribution Agreement until
such time as a registrion statement on Form SB-2 filed by us with
the SEC to register the resale of shares acquired by
Cornell under the agreement has become effective. there is no
assurance that the
registration statement will become effective in the near
future or ever. Our
ability to access other financing is limited by
the terms of the Standby Equity Distribution Agreement.

The amount of each advance under the Standby
Equity Distribution Agreement is subject to a maximum
amount equal to $250,000.
We may not request an advance under the Standby Equity Distribution
Agreement less than six trading days after a prior advance request.
Because of this maximum advance restriction, we may not be able
to access sufficient funds when needed. In addition, pursuant to the
Standby Equity Distribution Agreement, once the registration statement is
effective, in order to receive advances we must have filed with the
Securities and Exchange Commission in a timely manner, all reports, notices
and other documents required of a "reporting company" under the Exchange Act.

In addition, as we draw down on our Standby Equity Distribution Agreement
and more shares of our common stock are sold, our stock price
could decrease significantly and make
further advances impractical or impossible during time periods
in which we may need
financing. Unless we obtain profitable operations, it is unlikely
that we will be
able to secure additional financing from external sources other
than our Standby
Equity Distribution Agreement. Therefore, if we are unable to
draw down on our Standby
Equity Distribution Agreement, we may be forced to curtail or
cease our business
operations.

Our Common Stock Is Deemed To Be "Penny Stock," Which May Make It
More Difficult For
Investors To Sell Their Shares Due To Suitability Requirements

Our common stock is deemed to be "penny stock" as that term is
defined in Rule 3a51-1
promulgated under the Securities Exchange Act of 1934. Penny stocks are stock:

* With a price of less than $5.00 per share;
* That are not traded on a "recognized" national exchange;
* Whose prices are not quoted on the Nasdaq automated quotation system (Nasdaq
listed stock must still have a price of not less than $5.00 per share); or
* In issuers with net tangible assets less than $2.0 million
(if the issuer has been
in continuous operation for at least three years) or $5.0 million
(if in continuous
operation for less than three years), or with average revenues of
less than $6.0
million for the last three years.

Broker/dealers dealing in penny stocks are required to
provide potential investors
with a document disclosing the risks of penny stocks.
Moreover, broker/dealers
are required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor. These requirements may reduce the
potential market for our common stock by reducing the number of potential
investors. This may make it more difficult for investors in our common
stock to sell shares to third parties or to otherwise dispose of them.
This could cause our stock price to decline.

The Issuance Of Preferred Stock May Entrench Management Or
Discourage A Change Of Control

Our Articles of Incorporation authorize the issuance of up to 10,000,000
shares of preferred stock that would have designations rights, and
preferences determined from time to time by our Board of Directors.
Accordingly, our Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividends, liquidation,
conversion, voting, or other rights that could adversely affect the
voting power or other rights of the holders of our common stock.
In the event of issuance, the preferred stock could be used, under
certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the company or, alternatively,
granting the holders of preferred stock such rights as to
entrench management. Current members of our management that are
large stockholders may have peculiar interests that are different
form other stockholders. Therefore, conflicting interests of certain
members of management and our stockholders may lead to stockholders
desiring to replace these individuals. In the event this occurs
and the holders of our common stock desired to remove current
management, it is possible that our Board of Directors could issue
preferred stock and grant the holders thereof such rights and
preferences so as to discourage or frustrate attempts by the
common stockholders to remove current management. In doing so,
management would be able to severely limit the rights of common
stockholders to elect the Board of Directors. In addition, by
issuing preferred stock, management could prevent other shareholders
from receiving a premium price for their shares as part of a tender offer.

Mr. Jay Sargeant, our President and Chief Executive Officer Controls
Approximately 57% Of Our Common Stock On A Fully Diluted Basis And
Such Concentration Of Ownership May Have The Effect Of Delaying Or
Preventing A Change Of Control Of Our Company

Mr. Jay Sargeant, our President, Chief Executive Officer and a
Director, beneficially owns approximately 57% of EYI's currently
issued and outstanding common stock. As a result, Mr. Sargeant
will have significant influence in matters requiring stockholder
approval, including the election and removal of directors, the
approval of significant corporate transactions, such as any
merger, consolidation or sale of all or substantially all of
EYI's assets, and the control of the board of directors and
affairs of EYI. Accordingly, such concentration of ownership
may have the effect of delaying, deferring or preventing a
change in control of EYI, impeding a merger, consolidation,
takeover or other business combination involving EYI or
discouraging a potential acquirer from attempting to obtain
control of EYI.

We May Not Be Able To Compete Effectively Against Our Competitors

Many of our competitors have significantly greater name recognition,
financial resources and larger distribution channels. In addition,
our industry is characterized by low barriers to entity, which means
we may face more competitors in the future. If we are not able to
compete effectively against our competitors, we will be forced to
curtail or cease our business operations. Our main competitors are
Usana Health Sciences, Reliv International and Mannatech Incorporated
based on product offerings and sales pay structure. Our market share
in the nutrition supplement industry is very small at this time.

We May Not Be Able To Identify And Successfully Consummate Any Future
Acquisitions;Future Acquisitions May Disrupt Our Business And Deplete
Our Financial Resources

We lack significant experience in identifying acquisition candidates in our
industry and may not be able to identify future acquisition candidates.
Further, even if we are able to identify potential acquisition candidates,
we may have difficulty convincing such candidates to sell their businesses
to us and consummating such acquisition transactions given our financial
condition and operating history. Our failure to successfully consummate
any acquisitions in the future may hinder our ability to grow our business,
which could force us to curtail or cease our business operations.

Future Acquisitions May Disrupt Our Business And Deplete Our Financial Resources

Any future acquisitions we make could disrupt our business and seriously harm
our financial condition. We intend to consider investments in complementary
companies, products and technologies. We believe that any future success of
our company will depend, in part, on our ability to anticipate changes in
consumer preferences and either acquire or develop new products that
adequately address such changes. Therefore, we may need to consider
acquisitions of businesses,
products and/or technologies even though we lack experience in identifying and
consummating acquisitions and face business disruption with such acquisitions.
While we have no current agreements to do so, we anticipate buying businesses,
products and/or technologies in the future in order to fully implement our
business strategy. In the event of any future acquisitions, we may:

* issue stock that would dilute our current stockholders' percentage ownership;
* incur debt;
* assume liabilities;
* incur amortization expenses related to goodwill and other intangible
assets; or
* incur large and immediate write-offs.

The use of debt or leverage to finance our future acquisitions should allow us
to make acquisitions with an amount of cash in excess of what may be currently
available to us. If we use debt to leverage up our assets, we may not be able
to meet our debt obligations if our internal projections are incorrect or if
there is a market downturn. This may result in a default and the loss in
foreclosure proceedings of the acquired business or the possible bankruptcy
of our business.

Our operation of any acquired business will also involve numerous risks,
including:

* integration of the operations of the acquired business and its
technologies or products;
* unanticipated costs;
* diversion of management's attention from our core business;
* adverse effects on existing business relationships with
suppliers and customers;
* risks associated with entering markets in which we have
limited prior experience;
and
* potential loss of key employees, particularly those of the
purchased organizations.

Investors Should Not Rely On An Investment In Our Stock For The
Payment Of Cash Dividends

We have not paid any cash dividends on our capital stock and we do not
anticipate paying cash dividends in the future. Investors should not make
an investment in our common stock if they require dividend income. Any
return on an investment in our common stock will be as a result of any
appreciation, if any, in our stock price.

There Are No Conclusive Studies Regarding The Medical Benefits Of
Nutritional Products

Many of the ingredients in our current products, and we anticipate in our
future products, will be vitamins, minerals, herbs and other substances
for which there is not a long history of human consumption. Although we
believe all of our products to be safe when taken as directed by us,
there is little experience with human consumption of certain of these
product ingredients in concentrated form. In addition, we are highly
dependent upon consumers' perception of the safety and quality of our
products as well as similar products distributed by other companies,
we could be adversely affected in the event any of our products or
any similar products distributed by other companies should prove
or be asserted to be harmful to consumers. In addition, because
of our dependence upon consumer perceptions, adverse publicity
associated with illness or other adverse effects resulting from
consumers' failure to consume our products as we suggest or other
misuse or abuse of our products or any similar products distributed
by other companies could have a material adverse effect on the
results of our operations and financial condition.

Potential Effect Of Adverse Publicity

In the future, scientific research and/or publicity may not be
favorable to the nutritional product market or any particular
product, or may be inconsistent with any earlier favorable
research or publicity. Future reports of research that are
unfavorable to nutritional products could force us to curtail
or cease our business operations. Because of our dependence
upon consumer perceptions, adverse publicity associated with
illness or other adverse effects resulting from the consumption
of our products or any similar products distributed by other
companies could have a material adverse effect on our operations.
Such adverse publicity could arise even if the adverse effects
associated with such products resulted from consumers' failure
to consume such products as directed. In addition, we may not
be able to counter the effects of negative publicity concerning
the efficacy of our products. Any such occurrence could have
a negative effect on our operations and force us to curtail or
cease our business operations.

Any Future Acquisitions Will Have To Develop New Products
In Order To Keep Pace With Changing Consumer Demands

The dietary supplement industry is highly competitive and
characterized by changing consumer preferences and continuous
introduction of new products. Our goal is to expand our portfolio
of dietary supplement products through acquisition of existing
companies and/or products serving niche segments of the industry.
New products must be introduced in a timely and regular basis to
maintain distributor and consumer interest and appeal to varying
consumer preferences.

We believe that any future success of our company will depend,
in part, on our ability to anticipate changes in consumer
preferences and acquire, manage, develop and introduce, in a
timely manner, new products that adequately address such changes.
If we are unable to develop and introduce new products or if our
new products are not successful, our sales may be adversely
affected as customers seek competitive products. In the past,
we have engaged in very limited research and development with
respect to the development of new products, as indicated by
our lack of research and development expenses. Our lack of
experience in developing and introducing new products combined
with our limited financial resources may prevent us from
successfully developing and introducing any new products
in the future. Any reduction in purchases or consumption
of our existing products could force us to curtail or cease
our business operations.

We Are Dependent On Our IBAs For Our Product Marketing Efforts

Our success and growth depend upon our ability to attract,
retain and motivate our network of IBAs who market our
products. IBAs are independent contractors who purchase
products directly from us for resale and their own use.
IBAs typically offer and sell our products on a part-time
basis and may engage in other business activities, possibly
including the sale of products offered by our competitors.
Typically, we have non-exclusive arrangements with our IBAs
which may be canceled on short notice and contain no minimum
purchase requirements. While we encourage IBAs to focus on the
purchase and sale of our products, they may give higher priority
to other products, reducing their efforts devoted to marketing our
products. Also, our ability to attract and retain IBAs could be
negatively affected by adverse publicity relating to us, our
products or our operations. In addition, as a result of our
network marketing program, the down-line organizations headed
by a relatively small number of key IBAs are responsible for
significant percentage of total sales. The loss of a significant
number of IBAs, including any key IBA, for any reason, could
adversely affect our sales and operating results, and could
impair our ability to attract new IBAs. The loss of any IBAs
could potentially reduce our sales and force us to curtail or
cease our business operations. There is no assurance that our
network marketing program will continue to be successful or
that we will be able to retain or expand our current network
of IBAs. Also, if our IBAs do not accept recent changes to our
commission plan, our business may be adversely affected.

Government Regulation By The Food And Drug Administration And
Other Federal And State Entities Of Our Products Can Impact Our
Ability To Market Products

The manufacturing, processing, formulation, packaging, labeling
and advertising of nutritional products are subject to regulation
by one or more federal agencies, including the Food and Drug
Administration, the Federal Trade Commission, the Consumer Product
Safety Commission, the United States Department of Agriculture,
the United States Postal Service, the United States Environmental
Protection Agency and the Occupational Safety and Health Administration.
These activities are also regulated by various agencies of the states
and localities, as well as of foreign countries, in which our products
may be sold. We may incur significant costs in complying with these
regulations. In the event we cannot comply with government regulations
affecting our business and products, we may be forced to curtail or
cease our business operations.

We market products that fall under two types of Food and Drug
Administration regulations: dietary supplements and personal care
products. In general, a dietary supplement:

* is a product (other than tobacco) that is intended to supplement the
diet that bears or contains one or more of the following dietary ingredients:
a vitamin, a mineral, a herb or other botanical, an amino acid, a dietary
substance for use by man to supplement the diet by increasing the total daily
intake, or a concentrate, metabolite, constituent, extract, or combinations
of these ingredients.
* is intended for ingestion in pill, capsule, tablet, or liquid form.
* is not represented for use as a conventional food or as the sole item
of a meal or diet.
* is labeled as a "dietary supplement."

Personal care products are intended to be applied to the human body for
cleansing,beautifying, promoting attractiveness, or altering the
appearance without affecting the body's structure or functions.
Included in this definition are products such as skin creams,
lotions, perfumes, lipsticks, fingernail polishes,
eye and facial make-up preparations, shampoos, permanent waves,
hair colors, toothpastes, deodorants, and any material intended for
use as a component of a cosmetic product. The Food & Drug
Administration has a limited ability to regulate
personal care products.

Dietary supplements must follow labeling guidelines outlined
by the FDA. Neither dietary supplements nor personal care
products require FDA or other government
approval or notification to market in the United States.

Under the Dietary Supplement Health and Education Act of 1994,
companies that manufacture and distribute dietary supplements
are limited in the statements
that they are permitted to make about nutritional support on the product
label without FDA approval. In addition, a manufacturer of a dietary
supplement must have substantiation for any such statement made and must
not claim to diagnose, mitigate, treat, cure or prevent a specific disease
or class of disease. The product label must also contain a prominent
disclaimer. These restrictions may restrict our flexibility in marketing
our product.

We believe that all of our existing and proposed products are dietary
supplements or personal care products that do not require governmental
approvals to market in the United States. Our key products are classified
as follows:

Dietary Supplements
* Calorad(r)
* Agrisept-L(r)
* Oxy-Up(r)
* Triomin
* Noni Plus(r)
* Iso-Greens(r)
* Definition(r) (drops)
* Essential Omega
* Prosoteine(r)

Personal Care Products
* Definition (r)(cream)

The processing, formulation, packaging, labeling and advertising of
such products, however, are subject to regulation by one or more
federal agencies, including the FDA, the Federal Trade Commission,
the Consumer Products Safety Commission, the
Department of Agriculture and the Environmental Protection Agency.
Our activities are also subject to regulation by various
agencies of the states and localities in which our products are sold.
Among other things, such regulation puts a burden
on our ability to bring products to market. Any changes in
the current regulatory environment could impose requirements
that would make bringing new products to
market more expensive or restrict the ways we can
market our products.

No governmental agency or other third party makes a
determination as to whether our products qualify as
dietary supplements, personal care products or neither.
We make this determination based on the ingredients
contained in the products
and the claims we make for the products.

If The Federal Trade Commission Or Certain States Object To Our Product Claims
And Advertising We May Be Forced To Give Refunds, Pay Damages, Stop Marketing
Certain Products Or Change Our Business Methods

The Federal Trade Commission and certain states regulate advertising, product
claims, and other consumer matters, including advertising of our products. In
the past several years the Federal Trade Commission has instituted enforcement
actions against several dietary supplement companies for false or deceptive
advertising of certain products. We provide no assurance that:

* the Federal Trade Commission will not question our past or future advertising
or other operations; or

* a state will not interpret product claims presumptively valid under federal
law as illegal under that state's regulations.

Also, our IBAs and their customers may file actions on their
own behalf, as a class or otherwise, and may file complaints
with the Federal Trade Commission or
state or local consumer affairs offices. These agencies may
take action on their own initiative or on a referral from IBAs,
consumers or others. If taken, such actions may result in:

* entries of consent decrees;
* refunds of amounts paid by the complaining IBA or consumer;
* refunds to an entire class of IBAs or customers;
* other damages; and
* changes in our method of doing business.

A Complaint Based On The Activities Of One IBA, Whether Or Not Such Activities
Were Authorized By Us, Could Result In An Order Affecting Some Or All IBAs In
A Particular State, And An Order In One State Could Influence Courts Or
Government Agencies In Other States

Our IBAs act as independent sales people and are not closely supervised by
EYI or supervised by us at all. We have little or no control or knowledge of
our IBAs' actual sales activities and therefore, we have little or no ability
to ensure that our IBAs comply with regulations and rules regarding how they
market and sell our products. It is possible that we may be held liable for
the actions of our IBAs. Proceedings resulting from any complaints
in connection with our IBAs' marketing and sales activities may
result in significant defense
costs, settlement payments or judgments and could force
to curtail or cease our business operations.

If our network marketing program is shown to violate federal or
state regulations, we may be unable to market our products. Our
network marketing program is subject to a number of federal
and state laws and regulations administered by the Federal
Trade Commission and various state agencies. These laws and
regulations include securities, franchise investment, business
opportunity and criminal laws prohibiting the use of "pyramid"
or "endless chain" types of selling
organizations. These regulations are generally directed at
ensuring that product sales are ultimately made to consumers
(as opposed to other IBAs) and that
advancement within the network marketing program is based
on sales of products, rather than investment in the
company or other non-retail sales related criteria.

The compensation structure of a network marketing
organization is very complex.
Compliance with all of the applicable regulations
and laws is uncertain because of:

* the evolving interpretations of existing laws
and regulations, and
* the enactment of new laws and regulations pertaining
in general to network marketing organizations and product distribution.

We have not obtained any no-action letters or advance
rulings from any federal or state securities regulator
or other governmental agency concerning the legality
of our operations. Also, we are not relying on a formal
opinion of counsel to such effect. Accordingly there is
the risk that our network marketing system could be
found to be in noncompliance with applicable laws and
regulations, which could have a material adverse effect on us.
Such a decision could require modification of our
network marketing program, result in negative publicity, or
have a negative effect on IBA morale and loyalty.
In addition, our network marketing system will be subject
to regulations in foreign markets administered by foreign
agencies should we expand
our network marketing organization into such markets.

The Legality Of Our Network Marketing Program Is Subject
To Challenge By Our IBAsWe are subject to the risk of
challenges to the legality of our network marketing
organization by our IBAs, both individually and as a
class. Generally, such challenges would be based on
claims that our network marketing program was operated
as an illegal "pyramid scheme" in violation of federal
securities laws, state unfair practice and
fraud laws and the Racketeer Influenced and Corrupt
Organizations Act. An illegal
pyramid scheme is generally a marketing scheme that
promotes "inventory loading" and
does not encourage retail sales of the products and
services to ultimate consumers.
Inventory loading occurs when distributors purchase
large quantities of non-returnable
inventory to obtain the full amount of compensation
available under the network
marketing program. In the event of challenges to the
legality of our network
marketing organization by our IBAs, there is no assurance
that we will be able
to demonstrate that:

* our network marketing policies were enforced and
* the network marketing program and IBAs' compensation
thereunder serve as
safeguards to deter inventory loading and encourage retail
sales to the ultimate
consumers.

Proceedings Resulting From Claims Could Result In Significant
Defense Costs, Settlement
Payments Or Judgments, And Could Have A Material Adverse Effect On Us

One of our competitors, Nutrition for Life International,
Inc., a multi-level seller of personal care and nutritional
supplements, announced in 1999 that it
had settled class action litigation brought by distributors
alleging fraud in connection with the operation of a
pyramid scheme. Nutrition for Life International
agreed to pay in excess of $3 million to settle claims
brought on behalf of its distributors and certain
purchasers of its stock.

We believe that our marketing program is significantly
different from the program allegedly promoted by Nutrition
for Life International and that our marketing program
is not in violation of anti-pyramid laws or regulations.
However, there can be no assurance that claims similar
to the claims brought against Nutrition for Life
International and other multi-level marketing organizations
will not be made against us, or that we would prevail
in the event any such claims were made. Furthermore,
even if we were successful in defending against any such claims,
the costs of conducting such a defense, both in dollars
spent and in management time, could be material and adversely
affect our operating results and financial
condition. In addition, the negative publicity of such a
suit could adversely affect our sales and ability to
attract and retain IBAs.

A Large Portion Of Our Sales Is Attributable To Calorad

A significant portion of our net sales is expected
to be dependent upon our Calorad product. Calorad has
traditionally represented more than 65% of our
net sales and, although we hope to expand and
diversify our product offerings,
Calorad is expected to provide a large portion
of our net sales in the foreseeable
future. If Calorad loses market share or loses
favor in the marketplace, our
financial results will suffer.

Our Products Are Subject To Obsolescence

The introduction by us or our competitors of new dietary
supplement or personal care products offering
increased functionality or enhanced results may render
our existing products obsolete and unmarketable. Therefore, our ability to
successfully introduce new products into the market on a timely basis and
achieve acceptable levels of sales has and will continue to be a significant
factor in our ability to grow and remain competitive and profitable. In
addition, the nature and mix of our products are important factors in
attracting and maintaining our network of IBAs, which consequently affects
demand for our products. Although we seek to introduce additional products,
the success of new products is subject to a number of conditions, including
customer acceptance. There can be no assurance that our efforts to develop
innovative new products will be successful or that customers will accept
new products.

In addition, no assurance can be given that new products currently experiencing
strong popularity will maintain their sales over time. In the event we are
unable to successfully increase the product mix and maintain competitive
product replacements or enhancements in a timely manner in response to the
introduction of new products, competitive or otherwise, our sales and earnings
will be materially and adversely affected.

We Have No Manufacturing Capabilities And We Are Dependent
Upon Nutri-Diem, Inc.
And Other Companies To Manufacture Our Products

We have no manufacturing facilities and have no present
intention to manufacture any of our dietary supplement
and personal care products. We are dependent upon
relationships with independent manufacturers to fulfill our product needs.
Nutri-Diem, Inc., a related party, manufactures and supplies more than 80% of
our products. We have contracts with Nutri-Diem that require us to purchase set
amounts of its manufactured products for at least the next five years and
possibly the next ten years. It is possible that these contracts with
Nutri-Diem, Inc. could become unfavorable, and we may not be able to use
other manufacturers to provide us with these services if our terms with
Nutri-Diem, Inc. become unfavorable. In addition, we must be able to
obtain our dietary supplement and personal care products at a cost that
permits us to charge a price acceptable to the customer, while also
accommodating distribution costs and third party sales compensation.
Competitors who do own their own manufacturing may have an advantage over
us with respect to pricing, availability of product and in other areas
through their control of the manufacturing process. In addition, because
our agreement with Nutri-Diem, Inc. requires us to mandatory purchase minimums,
we face that risk that we may receive purchase orders for sufficient amounts of
product that will enable us to sell the quantities that we are required to
purchase. In the event that this occurs, we will be forced to hold larger
quantities of inventory, which could adversely affect our cash flow and our
ability to pay our operating expenses. In addition, if we are forced to hold
longer quantities of inventory, we face the risk that our inventory becomes
obsolete with the passage of large amounts of time.

We may not be able to deliver various products to our customers if third
party providers fail to provide necessary ingredients to us. We are dependent
on various third parties for various ingredients for our products. Some of the
third parties that provide ingredients to us have a limited operating history
and are themselves dependent on reliable delivery of products from others. As
a result, our ability to deliver various products to our users may be adversely
affected by the failure of these third parties to provide reliable various
ingredients for our products.

We Are Materially Dependent Upon Our Key Personnel And The Loss Of Such
Key Personnel Could Result In Delays In The Implementation Of Our Business
Plan Or Business Failure

We depend upon the continued involvement of Jay Sargeant, our President,
Chief Executive Officer and Director, and Dori O'Neill, our Executive Vice
President, Chief Operations Officer, Secretary, Treasurer and Director. As we
are a developing company, the further implementation of our business plan is
dependent on the entrepreneurial skills and direction of management. Mr.
Sargeant and Mr. O'Neill guide and direct our activity and vision. This
direction requires an awareness of the market, the competition, current and
future markets and technologies that would allow us to continue our
operations. The loss or lack of availability of these individuals could
materially adversely affect our business and operations. We do not carry
"key person" life insurance for these officers and directors, and we would
be adversely affected by the loss of these two key consultants.

We Face Substantial Competition In The Dietary Supplement And Personal Care
Industry, Including Products That Compete Directly With Calorad

The dietary supplement and personal care industry is highly competitive.
It is relatively easy for new companies to enter the industry due to the
availability of numerous contract manufacturers, a ready availability of
natural ingredients and a relatively relaxed regulatory environment.
Numerous companies compete with us in the development, manufacture and
marketing of supplements as their sole or principal business. Generally,
these companies are well funded and sophisticated in their marketing
approaches.

Depending On The Product Category, Our Competition Varies

Calorad competes directly with Colvera, a product with different ingredients
but a similar concept. Additionally, Calorad competes indirectly with food
plans such as Weight Watchers and meal replacement products such as Slim Fast.
Our Noni Plus product competes with Morinda and others. Our other products
have similar well-funded and sophisticated competitors. Increased competitive
activity from such companies could make it more difficult for us to increase
or keep market share, since such companies have greater financial and other
resources available to them and possess far more extensive manufacturing,
distribution and marketing capabilities.

We May Be Subject To Products Liability Claims And May Not Have Adequate
Insurance To Cover Such Claims. As With Other Retailers, Distributors And
Manufacturers Of Products That Are Designed To Be Ingested, We Face An
Inherent Risk Of Exposure To Product Liability Claims In The Event That
The Use Of Our Products Results In Injury

We, like any other retailers and distributors of products that are designed
to be ingested, face an inherent risk of exposure to product liability
claims in the event that the use of our products results in injury. Such
claims may include, among others, that our products contain contaminants or
include inadequate instructions as to use or inadequate warnings concerning
side effects and interactions with other substances. With respect to product
liability claims, we have coverage of $5,000,000 per occurrence and $5,000,000
in the aggregate. Because our policies are purchased on a year-to-year basis,
industry conditions or our own claims experience could make it difficult for
us to secure the necessary insurance at a reasonable cost. In addition, we
may not be able to secure insurance that will be adequate to cover liabilities.
We generally do not obtain contractual indemnification from parties supplying
raw materials or marketing our products. In any event, any such indemnification
is limited by its terms and, as a practical matter, to the creditworthiness of
the other party. In the event that we do not have adequate insurance or
contractual indemnification, liabilities relating to defective products could
require us to pay the injured parties' damages which are significant compared
to our net worth or revenues.

We May Be Adversely Affected By Unfavorable Publicity Relating To Our Product
Or Similar Products Manufactured By Our Competitors

We believe that the dietary supplement products market is affected by national
media attention regarding the consumption of these products. Future scientific
research or publicity may be unfavorable to the dietary supplement products
market generally or to any particular product and may be inconsistent with
earlier favorable research or publicity. Adverse publicity associated with
illness or other adverse effects resulting from the consumption of products
distributed by other companies, which are similar to our products, could
reduce consumer demand for our products and consequently our revenues. This
may occur even if the publicity did not relate to our products. Adverse
publicity directly concerning our products could be expected to have an
immediate negative effect on the market for that product.

Because We Have Few Proprietary Rights, Others Can Provide Products And
Services Substantially Equivalent To Ours

We hold no patents. We believe that most of the technology used by us in
the design and implementation of our products may be known and available
to others. Consequently, others may be able to formulate products
equivalent to ours. We rely on confidentiality agreements and trade s
ecret laws to protect our confidential information. In addition, we
restrict access to confidential information on a "need to know" basis.
However, there can be no assurance that we will be able to maintain the
confidentiality of our proprietary information. If our pending trademark
or other proprietary rights are violated, or if a third party claims that
we violate its trademark or other proprietary rights, we may be required
to engage in litigation. Proprietary rights litigation tends to be costly
and time consuming. Bringing or defending claims related to our
proprietary rights may require us to redirect our human and monetary
resources to address those claims.

We Often Use Our Securities As Consideration In Contracts Related To Our
Operations

We often issue our securities as consideration in contracts related to
our operations. We issued our securities in these transactions primarily
because historically we have had insufficient cash to fund our operations.
Over the past two years, we have issued 5,876,190 shares of our common
stock and 2,700,000 stock options for consideration other than cash. As
a result of such issuances, existing shareholders of EYI have experienced
a dilutive impact o their ownership of our company.

We may be forced to issue additional securities of EYI in the future
transactions in lieu for cash and shareholders would experience
additional dilution.

ITEM 7. FINANCIAL STATEMENTS.

Report of Independent Registered Public
Accounting Firm

Financial Statements

Consolidated Balance Sheets as of December 31, 2004

Consolidated Statements of Operations and Comprehensive Loss
For the period from Inception to December 31, 2004

Consolidated Statement of Cash Flows
For the period from Inception to December 31, 2004

Statement of Stockholders' Deficiency
For the period from Inception to December 31, 2004

Notes to Financial Statements

Board of Directors
EYI Industries, Inc.
Surrey, British Columbia, Canada

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheet of EYI Industries,
Inc. as of December 31, 2004, December 31, 2003 and June 30, 2003
and the related consolidated statements of operations, stockholders'
deficit and cash flows for the periods then ended. These consolidated
financial statements are the responsibility of the Company's management.
Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of EYI Industries, Inc.
as of December 31, 2004, December 31, 2003 and June 30, 2003 and the results
of its operations, stockholders' equity and its cash flows for the periods
then ended in conformity with accounting principles generally accepted in
the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has an accumulated deficit, and a negative
working capital position. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans regarding those matters
are described in Note 2. The consolidated financial statements
do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Williams & Webster
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
April 15, 2005

EYI INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS

ASSETS

<->December 31, 2004 December 31, 2003 June 30, 2003
(Restated)
CURRENT ASSETS

Cash $ 33,018 $ 52,075 $ 16,184

Restricted cash 100,248 223,682 223,682

Accounts receivable, net of allowance 45,806 52,323 26,596

Related party receivables 4,996 5,465 6,162

Prepaid expenses 857,170 28,600 36,484

Inventory <->239,641 254,367 302,605

TOTAL CURRENT ASSETS <->1,280,879 616,512 611,713<->

OTHER ASSETS

Property, plant and equipment, net 60,336 143,439 160,611

Deposits <->24,361 - 10,406

TOTAL OTHER ASSETS <->84,697 143,439 171,017

INTANGIBLE ASSETS <->16,561 19,801 19,801

TOTAL ASSETS $ <=>1,382,137 $ 779,752 $ 802,531

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Bank indebtedness $ 72,456 $ 259,977 $ 274,880

Accounts payable and accrued
liabilities 1,218,146 836,751 554,830

Accounts payable - related parties 590,146 689,367 545,075

Interest payable, convertible debt 10,616 - -
Convertible debt- related party,
net of discount 379,724 - -

Customer deposits - 6,250 46,292
Notes payable - related party <-> 90,000 90,000 -
TOTAL CURRENT LIABILITIES <->2,361,120 1,882,345 1,421,077

Page 1

MINORITY INTEREST IN SUBSIDIARY<->$346,819 $468,877 $485,148

STOCKHOLDERS' EQUITY DEFICIT
Preferred stock, $0.001 par value; 10,000,000 shares
authorized, no shares issued and
outstanding - - -

Common stock, $0.001 par value; 300,000,000 shares
authorized, 162,753,292 148,180,670 and 118,045,603
shares issued and outstanding, respectively
162,753 148,181 118,046

Discount on common stock - (53,598) (53,598)
c>Additional paid - in capital 3,048,606 827,972 484,281

Stock options and warrants 2,563,044 128,385 -

Subscription receivable (15,000) - -

Accumulated deficit <->(7,085,205) (2,622,410) (1,652,423)

TOTAL STOCKHOLDERS' DEFICIT <->(1,325,802) (1,571,470) (1,103,694)

TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT <->$ 1,382,137 $779,752 $802,531

The accompanying notes are an integral part of these financial statements.

Page 2

EYI INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended Short Period Ended Year Ended
<->December 31, 2004 December 31, 2003 June 30, 2003

REVENUE $ 6,229,029 $4,313,579 $14,390,049

COST OF GOODS SOLD <-> 1,277,241 734,421 1,150,786

GROSS PROFIT BEFORE
COMMISSION EXPENSE 4,951,788 3,579,158 13,239,263

COMMISSION EXPENSE <-> 2,486,970 2,111,379 9,360,920

GROSS PROFIT AFTER COST OF GOODS
SOLD AND COMMISSION EXPENSE<-> 2,464,818 1,467,779 3,878,343

OPERATING EXPENSES
Consulting fees 1,438,362 394,200 765,580
Legal and professional fees 333,549 145,001 354,356
Customer service 393,244 488,944 1,270,297
Finance and administration 2,101,842 324,853 835,008
Sales and marketing 154,638 92,834 506,276
Telecommunications 501,599 231,318 550,480
Wages and benefits 1,296,801 547,076 959,526
Warehouse expense <-> 524,987 221,882 282,252
TOTAL OPERATING EXPENSES <->6,745,022 2,446,108 5,523,775

LOSS FROM OPERATIONS <->(4,280,204) (978,329) (1,645,432)

OTHER INCOME (EXPENSES)
Interest and other income 16,847 4,746 1,713
Interest expense (308,572) (21,879) (12,792)
Foreign currency gain
/(discount) <->20,379 9,205 (16,697)
TOTAL OTHER INCOME (EXPENSES)<->(271,346) (7,928) (27,776)

NET LOSS BEFORE TAXES (4,551,550) (986,257) (1,673,208)

PROVISION FOR INCOME TAXES <-> - - -

NET LOSS BEFORE ALLOCATION
TO MINORITY INTEREST (4,551,550) (986,257) (1,673,208)

ALLOCATION OF LOSS
TO MINORITY INTEREST <->88,755 16,270 28,752

NET LOSS <=>$(4,462,795) $(969,987) $(1,644,456)

BASIC AND DILUTED
NET LOSS PER COMMON SHARE<=>$(0.03) $ (0.01) (0.01)

WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING FOR BASIC AND
DILUTED CALCULATION <=>157,060,345 128,090,625 118,045,603

The accompanying notes are an integral part of these financial statmements.
Page 3

EYI INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)

<->Common Stock Additional
Number of Paid-in Discount on Subscription Option/ Retained
<->Shares Amount Capital Common Stock Receivable Warrants Earnings Total

Stock issued for
cash on June 21, 2002 23,026,200 $23,026 $6,974 $ - $ - $ - $ - $30,000

Contribution of assets,
liabilities and subsidiaries
acquired at June 30,2002 92,104,800 92,105 - (53,598) - - - 38,507

Net loss for period ended
June 30, 2002 <-> - - - - - - (7,967) (7,967)

Balance, June 30, 2002 115,131,000 115,131 6,974 (53,598) - - (7,967) 60,540

Shares issued for cash in private
placement for $1.50 per share,
net of prorata share of private placement
fees of $61,206 2,914,603 2,915 477,307 - - - - 480,222

Net loss for fiscal year ended
June 30, 2003 <-> - - - - - - (1,644,456)(1,644,456)

Balance, June 30, 2003 118,045,603 118,046 484,281 (53,598) - - (1,652,423)(1,103,694)

Recapitalization and
share exchange (restated) 30,135,067 30,135 343,691 - - 128,385 - 502,211

Net loss for fiscal year ended
December 31, 2003 <-> - - - - - - (969,987)

Balance, December 31, 2003
(restated) 148,180,670 148,181 827,972 (53,598) - 128,385(2,622,410)(1,571,470)

Common stock issued at $0.20 including
warrants less expenses
of $28,715 1,466,455 1,466 146,930 - - 70,844 - 219,240

Stock issued at $0.165 per share
for cashless exercise of options in
form of foregone debt 3,200,000 3,200 524,800 - - - - 528,000

Stock issued for exercise of options
at $0.20 per share in lieu of payment
of legal fees 300,000 300 59,700 - - - - 60,000

Stock issued at $0.165 per share
for cash and promissory note for
exercise of options
1,000,000 1,000 164,000 - (15,000) - - 150,000

Common stock issued at $0.21 including
warrants 5,476,190 5,476 487,381 - - 657,143 - 1,150,000

Common stock issued at $0.21 including
warrants less expenses of$3,231 566,833 567 36,369 - - 78,869 - 115,805

Stock issued for exercise of options at $0.22 per share
in lieu of consulting fees 50,000 50 10,950 - - - - 11,000

Stock issued for deferred
financing costs 1,300,000 1,300 388,700 - - - - 390,000

Adjustment to subsidiaries stock held by minority
interest 176,534 177 33,126 - - - - 33,303

Stock issued at $0.28 per
share for consulting agreement 350,000 350 97,650 - - - - 98,000

Vested stock options issued for consulting at an
average price of $0.18 per share - - - - - 128,250 - 128,250

Vested stock options issued for consulting at an
average price of $0.18 per share - - - - - 1,078,277 - 1,078,277

Stock issued at $0.165 per
share for cash and promissory note for
exercise of options 36,360 36 7,236 - - - - 7,272

Stock issued for exercise of options at $0.08 per share
in lieu of consulting fees 200,000 200 15,800 - - - - 16,000

Stock issued for exercise of options at $0.08 per share
in lieu of consulting fees 250,000 250 19,750 - - - - 20,000

Stock issued for exercise of options at $0.11 per share
by the CEO 200,250 200 31,841 - - (10,013) - 22,028

Cancellation of discount
on common stock - - (53,598) 53,598 - - - -

Beneficial conversion of
convertible debt - - 250,000 - - - - 250,000

Vested stock options issued
for compensation and consulting at an average
price of $0.12 per option - - - - - 1,087,900 - 1,087,900

Cancelled stock options issued for
compensation and consulting at an average price
of $0.19 per option - - - - - (656,612) - (656,612)

Net loss for period ended
December 31, 2004 <-> - - - - - - (4,462,795) (4,462,795)

Balance,
December 31, 2004 <=> 162,753,292 $162,753 $3,048,606 $- $(15,000) $2,563,043$(7,085,205)$(1,325,802)

The accompanying notes are an integral part of these financial statements.

Page 4

EYI INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Twelve Months Ended Short Period Ended
<->December 31, 2004 December 31, 2003
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
Net loss $(4,462,795) $ (969,987)
Loss allocated to minority interest <-> 88,755 (16,270)
<-> (4,551,550) (986,257)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 87,054 36,756
Stock and warrants issued for employee compensation
and consulting 1,735,814 -
Stock issued for deferred financing costs 390,000 -
Stock issued for options exercised in lieu
of consulting and legal fees 207,000 -
Beneficial conversion of convertible debt
of convertible debt 250,000 -
Decrease (increase) in:
Related party receivables 469 697
Accounts receivable 6,517 (25,727)
Prepaid expenses 221,430 7,884
Inventory 14,726 48,237
Deposits (24,361) -
Increase (decrease) in:
Accounts payable and accrued liabilities 392,043 273,549
Accounts payable - related parties 450,808 194,292
Customer deposits <->(6,250) (40,042)
Net cash used by operating activities <->(826,300) (490,611)

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
Decrease/(increase) in restricted cash 123,434 -
Decrease (increase) in property, plant, and equipment ( 711) (19,584)
Increase in security deposit <-> - 10,407
Net cash provided by investing activities <->122,723 (9,177)

CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
Net change in bank indebtedness (187,521) (14,904)
Cash received through recapitalization - 550,583
Issuance of stock, net of private placement costs & warrants 492,316 -
Net proceeds from convertible debt <->379,725 -
Net cash provided by financing activities <->684,520 535,679

Net increase in cash and cash equivalents (19,057) 35,891

CASH - Beginning of Year <->52,075 16,184

CASH - End of Period <=>$ 33,018 $ 52,075

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest expense paid $ 47,956 $ -
Income taxes paid $ - $ -

NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Stock and warrants issued for employee compensation
and consulting $1,735,814 $ -
Stock issued for options exercised in lieu of debt $ 646,028 $ -
Stock issued for options exercised in lieu of consulting
and legal fees $ 207,000 $ -
Stock and warrants issued for prepaid expenses $1,150,000 $ -
Stock issued for financing fees $ 390,000 $ -
Beneficial conversion of convertible debt $ 250,000 $ -

The accompanying notes are an integral part of these financial statements.

Page 5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS

Essentially Yours Industries, Inc. (hereinafter "EYI"),
was incorporated on June 21,
2002 in the State of Nevada. The main business activities of
Essentially Yours Industries, Inc. were acquired through a merger
with the former entity, Burrard Capital, Inc., and other entities
described in Note 4 concerning EYI's reorganization . On
December 31, 2003, EYI entered into a share exchange agreement of its
stock with Safe ID Corporation ("Safe ID"). This transaction was
accounted for as a share exchange and recapitalization.
(See Note 3). As a result of this transaction, Safe ID has
changed its name to EYI Industries, Inc. ("the Company") and is
acting as the parent holding company for the operating subsidiaries.

The principal business of the Company is the marketing of health
and wellness care products. The Company sells its products through
network marketing distributors, which in turn, sell the products to
the end customers. The Company maintains its principal business
office in Surrey, British Columbia. Effective for the period ended
December 31, 2003, the Company elected to change its year-end from
June 30 to December 31.

The Company has four wholly owned subsidiaries. The first subsidiary
is Halo Distribution LLC (hereinafter "Halo"), which was organized on
January 15, 1999, in the State of Kentucky. Halo is the distribution
center for the Company's product in addition to other products. The
second subsidiary is RGM International Inc., which was incorporated on
July 3, 1997, in the State of Nevada. RGM International Inc. is a
dormant investment company, which owns one percent of Halo. The third
subsidiary is Essentially Yours Industries (Canada)Inc. (hereinafter
"EYI Canada"), which was organized on September 13, 2002, in the
province of British Columbia, Canada. EYI Canada markets health and
wellness care products for use in Canada. The fourth subsidiary is
642706 B.C. Ltd., doing business as EYI Management, which was
organized on February 22, 2002, in the province of British
Columbia, Canada. EYI Management provides accounting and marketing
services to the
consolidated entity.

In addition, the Company owns approximately 98% of Essentially
Yours Industries, Inc. ("EYII"), incorporated on June 21, 2002
in the State of Nevada. EYII markets health and wellness care
products for use in USA. The Company also owns 51% of World
Wide Buyers' Club Inc., a Nevada corporation, which was
organized by a joint venture agreement effective May 6, 2004.
(See Note 6.)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

This summary of significant accounting policies of EYI Industries,
Inc., is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, which is
responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally
accepted in the United States of America, and have been
consistently applied in the preparation of the financial
statements.

Accounting Method
The Company's financial statements are prepared using the
accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America.

Accounting Pronouncements-Recent

In December 2004, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 153.
This statement addresses the measurement of exchanges of
nonmonetary assets. The guidance in APB Opinion No. 29,
"Accounting for Nonmonetary Transactions," is based on the
principle that exchanges of nonmonetary assets should be
measured based on the fair value of the assets exchanged.
The guidance in that opinion, however, included certain
exceptions to that principle. This statement amends
Opinion 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. A nonmonetary
exchange has commercial substance if the future cash flows
of the entity are expected to change significantly as a
result of the exchange. This statement is effective for
financial statements for fiscal years beginning after
June 15, 2005. Management believes the adoption of this
statement will have no impact on the financial statements
of the Company.

In December 2004, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 152,
which amends FASB statement No. 66, "Accounting for Sales
of Real Estate," to reference the financial accounting and
reporting guidance for real estate time-sharing transactions
that is provided in AICPA Statement of Position (SOP) 04-2,
"Accounting for Real Estate Time-Sharing Transactions."
This statement also amends FASB Statement No. 67,
"Accounting for Costs and Initial Rental Operations of
Real Estate Projects," to state that the guidance for (a)
incidental operations and (b) costs incurred to sell
real estate projects does not apply to real estate
time-sharing transactions. The accounting for those
operations and costs is subject to the guidance in SOP 04-2.
This statement is effective for financial statements
for fiscal years beginning after June 15, 2005. Management
believes the adoption of this statement will have no
impact on the financial statements of the Company.

In December 2004, the Financial Accounting Standards
Board issued a revision to Statement of Financial
Accounting Standards No. 123R, "Accounting for Stock
Based Compensation." (hereinafter "SFAS NO. 123R").
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.
The Company has previously adopted SFAS No. 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
statement.

In May 2003, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards
No. 150, "Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity"
(hereinafter "SFAS No. 150"). SFAS No. 150 establishes
standards for classifying and measuring certain financial
instruments with characteristics of both liabilities
and equity and
requires that those instruments be classified as
liabilities in statements of financial position.
Previously, many of those instruments were classified
as equity. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and
otherwise is effective at the beginning of the first
interim period
beginning after June 15, 2003. The Company has determined
that there was no impact from the adoption of this statement.

Accounts Receivable and Bad Debts
The Company estimates bad debts utilizing the allowance
method, based upon past experience and current market
conditions. At December 31, 2004, the Company
recorded an allowance of $16,321 to cover
balances over 60 days. At December 31,
2003 and June 30, 2003, the Company determined that no
allowance was required although writeoffs in the amounts
of $26,408 and $0 respectively were charged to bad debt
expense in these two periods then ended.

Advertising Expenses
Advertising expenses consist primarily of costs incurred
in the design, development, and printing of Company
literature and marketing materials. The Company
expenses all advertising expenditures as incurred.
The Company's advertising expenses were $18,937,
$75,135 and $29,072, for the year ended
December 31, 2004, short period ended December 31, 2003
and year ended June 30, 2003, respectively.

Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company
considers all highly liquid investments and short-term debt
instruments with original
maturities of three months or less to be cash equivalents.

Restricted Cash
Restricted cash includes deposits held in a reserve account
in the amount
of $100,248, $223,682, and $223,682 at December 31, 2004, December 31,
2003, and June 30, 2003 respectively. Such deposits are
required by the bank as protection against unfunded charge backs
and returns of credit card transactions.

Compensated Absences
Employees of the Company are entitled to paid vacation, and sick days,
depending on job classification, length of service, and other factors.
The Company accrued vacation pay in the amounts of $60,186, $38,882,
and $38,976 at December 31, 2004, December 31, 2003, and June 30, 2003
respectively.

Concentration of Credit Risk
The Company maintains its cash in one commercial account at a major
financial institution. Although the financial institution is
considered creditworthy and has not experienced any losses on its
deposits, at December 31, 2004, the Company's cash balance exceeded
Federal Deposit Insurance Corporation (FDIC) limits by $248.

Cost of Sales
Cost of sales consists of the purchase price of products sold,
inbound and outbound shipping charges, packaging supplies and
costs associated with service revenues and marketplace business.

Derivative Instruments
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (hereinafter "SFAS No. 133"), as
amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB No. 133",
and SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", and SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging
Activities". These statements
establish accounting and reporting standards for
derivative instruments,
including certain derivative instruments embedded
in other contracts,
and for hedging activities. They require that an
entity recognize
all derivatives as either assets or liabilities
in the balance sheet
and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the
timing of gain or loss recognition on the hedging derivative with
the recognition of (i) the changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss
is recognized in income in the period of change.

At December 31, 2004, December 31, 2003, and June 30, 2003, the
Company has not engaged in any transactions that would be considered
derivative instruments or hedging activities.

Earnings Per Share
The Company has adopted Statement of Financial Accounting Standards
No. 128, which provides for calculation of "basic" and "diluted"
earnings per share. Basic earnings per share includes no dilution
and is computed by dividing net income (loss) available to common
shareholders by the weighted average common shares outstanding for
the period. Diluted earnings per share reflect the potential dilution
of securities that could share in the earnings of an entity similar
to fully diluted earnings per share. Basic and diluted loss per
share were the same, at the reporting dates, as inclusion of the
common stock equivalents would be dilutive.

Estimates
The proces of preparing financial statements in conformity with
accounting principles generally accepted in the United States
of America requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses.
Such estimates primarily relate to unsettles transactions and
events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.

Fair Value of Financial Instruments
The Company's financial instruments as defined by Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," include cash, trade accounts
receivable, and accounts payable and accrued expenses. All
instruments are accounted for on a historical cost basis,
which, due to the short maturity of these financial instruments,
approximates fair value at December 31, 2004, December 31, 2003,
and June 30, 2003.

Foreign Currency Translation and Other Comprehensive Income
The Company has adopted Financial Accounting Standard No. 52.
Monetary assets and liabilities denominated in foreign currencies
are translated into United States dollars at rates of exchange in
effect at the balance sheet date. Gains or losses are included in
income for the year. Non-monetary assets, liabilities and items
recorded in income arising from transactions denominated in
foreign currencies are translated at rates of exchange in effect
at the date of the transaction.

As the Company's functional currency is the U.S. dollar, and
all translation gains and losses are transactional, the Company
has no assets with value recorded in Canadian dollar and there
is no recognition of other comprehensive income in the financial
statements.

Foreign Currency Valuation and Risk Exposure
While the Company's functional currency is the U.S. dollar and
the majority of its operations are in the United States, the
Company maintains its main office in Surrey, British Columbia.
The assets and liabilities relating to the Canadian operations
are exposed to exchange rate fluctuations. Assets and liabilities
of the Company's foreign operations are translated into U.S.
dollars at the year-end exchange rates, and revenue and expenses
are translated at the average exchange rate during the period.
The net effect of exchange difference arising from currency
translation is disclosed as a separate component of stockholders'
equity. Realized gains and losses from foreign currency transactions
are reflected in the results of operations.

Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued
statement of Financial Accounting Standard No. 121, "Accounting
for Impairment of Long-lived
Assets." In complying with this standard, the Company reviews its
long-lived assets quarterly to determine if any events or changes
in circumstances have transpired which indicate that the carrying
value of its assets may not be recoverable. The Company determines
impairment by comparing the undiscounted future cash flows
estimated to be generated by its assets to their respective
carrying amounts.

The Company does not believe any adjustments are needed to the
carrying value of its assets at December 31, 2004.

Income Taxes
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (hereinafter "SFAS No. 109". This statement
requires the recognition of
deferred tax liabilities and assets for the future consequences
of events that have been recognized in the Company's consolidated
financial statement or tax returns. Measurement of the deferred
items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases
and tax bases of the Company's assets and liabilities results
in a deferred tax asset, SFAS No. 109 requires an evaluation
of the probability of being able to realize the future benefits
indicated by such an asset. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not
that some portion or all of the deferred tax asset will not be
realized. (See Note 14).

Inventories
The Company records inventories at the lower of cost or market
on a first-in, first-out basis.

Long-lived Assets
In accordance with Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets". This standard establishes a single accounting model
for long-lived assets to be disposed of by sale, including
discontinued operations, and requires that these long-lived
assets be measured at the lower of carrying amount or fair value
less cost to sell, whether reported in continuing operations or
discontinued operations. Accordingly, the Company reviews the
carrying amount of long-lived assets for impairment where events
or changes in circumstances indicate that the carrying amount
may not be recoverable. The determination of any impairment
would include a comparison of estimated future cash flows
anticipated to be generated during the remaining life of the
assets to the net carrying value of the assets. For the year
ended December 31, 2004, short period ended December 31, 2003,
and year ended June 30, 2003 no impairments have been identified.

Property and Equipment
Property and equipment are stated at cost. Depreciation of
property and equipment is calculated using the straight-line
method over the estimated useful lives of the assets, which
range from three to seven years. (See Note 7)

Principles of Consolidation
The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All
significant transactions and balances among the companies
included in the consolidated financial statements have been
eliminated.

Revenue Recognition
The Company is in the business of selling nutritional products
in two categories; dietary supplements and personal care products.
Sales of personal care products represent less than 5% of the
overall revenue and therefore is not classified separately in
the financial statements. The Company recognized revenue for
product sales when the products are shipped and title passes
to customer. Administrative fees charged to the Independent
Business Associates are included in the gross sales and
amounted $190,340, $161,040 and $314,971 for the year ended
December 31, 2004, the short period ended December 31, 2003
and year ended June 30, 2003 respectively.

Segment Information
The Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information," (hereafter "SFAS No. 131")
which supersedes SFAS No. 14, "Financial Reporting for Segments
of a Business Enterprise," replacing the "industry segment"
approach with the "management" approach. The management
approach designates the internal organization that is used
by management for making operating decisions and assessing
performance as the source of the Company's reportable
segments. SFAS No. 131 also requires disclosures about
products and services, geographic areas and major customers.
The adoption of SFAS No. 131 did not affect the Company's
results of operations or financial position. (See Note 17.)

Stock Options and Warrants Granted to Employees and Non-Employees
Statement of Financial Accounting Standards No. 123 "Accounting
for Stock-Based Statement of Financial Accounting Standards No.
123"), defines a fair value-based method of accounging for stock
options and other equity instruments. The Company has adopted
this method, which measures compensation costs based on the
estimated fair value of the award and recognizes that cost over
the service period.

Going Concern
As shown in the accompanying financial statements, the Company
had negative working capital of approximately $1,080,242 and
an accumulated deficit incurred through December 31, 2004.
The Company also limited cash resources and a history of
recurring losses.
These factors raise substantial doubt about the Company's
ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or
the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in
existence.

Management has established plans designed to increase the
sales of the Company's products, and decrease debt. The
Company plans on continuing to reduce expenses, and with
small gains in any combination of network sales, direct sales,
international sales, and warehouse sales, believe that they
will eventually be able to reverse the present deficit.
Management intends to seek additional capital from new
equity securities offerings that will provide funds needed
to increase liquidity, fund internal growth and fully
implement its business plan. Management plans include
negotiations to convert significant portions of existing
debt into equity.

The timing and amount of capital requirements will depend
on a number of factors, including demand for products and
services and the availability of opportunities for
international expansion through affiliations and other
business relationships.

NOTE 3 - SHARE EXCHANGE AGREEMENT

On December 31, 2003, Essentially Yours Industries, Inc.
completed a share exchange agreement with Safe ID
Corporation ("Safe ID) and changed its name to EYI
Industries, Inc. Under the terms of the agreement, the
Company issued 30,153,067 shares of its common stock to
the shareholders of Safe ID. In relation to this agreement
and plan of recapitalization, the Company authorized a 1 for
7.6754 exchange rate of the originally issued and outstanding
Essentially Yours Industries, Inc. shares. All references
in the accompanying financial statements and notes to the
common shares and per share amounts have been restated to
reflect the reverse stock split. The Company also approved
an increase in the number of its authorized common stock shares
to 300,000,000 when in the months prior to the finalization of
this agreement, the registrant prior to the recapitalization sold
approximately $550,000 of common stock and warrants as part of
private placement. These stock sales were in anticipation of
this agreement and recapitalization, and as such, are reflected
as financing cash flows.

As Safe ID was a non-operating public company with limited assets,
the substance of the transaction with Safe ID is a capital
transaction, rather than a business combination. The transaction
is equivalent to the issuance of stock by the Company for the net
assets of Safe ID, accompanied by a recapitalization. The
accounting is identical to that resulting from a reverse
acquisition, except that no goodwill or other intangibles are
recorded. The substantial asset of Safe ID that was acquired
was approximately $32,500 in cash. The liabilities acquired by
the Company under this agreement totaled approximately $11,800.

NOTE 4 - REORGANIZATION

On May 27, 2002, Mr. Jay Sargeant, a shareholder of Essentially
Yours Industries, Corp. ("EYI Corp.") agreed to acquire all of
the shares of the Essentially Yours Industries, Inc. ("EYII"),
along with the transfer agreement, license agreement, and
agency appointment agreement as described below, in settlement
of amounts owed to him. As part of this transaction, EYI Corp.
agreed to provide to EYII the services outlined in a management
agreement. These agreements became effective on June 30, 2002.
EYII owns ninety-nine percent of Halo Distributions LLC ("HALO").
The other one percent of HALO is owned by RGM International, Inc.
("RGM"), a former subsidiary of EYI Corp., which was transferred
to Mr. Sargeant as additional consideration.

On June 30, 2002, the shareholder of EYII exchanged all of the
outstanding shares of EYII for 12,000,000 common shares of
Burrard Capital Inc ("Burrard"). Concurrent with this
transaction, EYII was merged into Burrard with Burrard
emerging as the surviving entity. The combined entity was
renamed Essentially Yours Industries, Inc. For accounting
purposes, the acquisition has been treated as a recapitalization
of EYII with EYII as the acquirer. Prior to this merger, EYII
and RGM were considered to be dormant companies, with the
activities of HALO being consolidated directly with EYII Corp.
although the legal ownership was vested in EYII and RGM.
Therefore, the losses from HALO operations and the other
economic impacts prior to June 30, 2002 are considered to
be the separate activity of EYI Corp.

On June 30, 2002, EYII took over the sales and marketing
activities of its former holding company and entered into
various agreements with that Company as follows:

Transfer Agreement
As part of the aforementioned transaction and for
consideration of $1, EYI Corp. transferred and assigned to
EYII all of its rights, title and interest in and to the
contracts with its independent business associates and any
other contracts that may be identified by the parties as
being inherent or necessary to the sales and marketing
activities to EYII.

License Agreement
EYI Corp. licensed to EYII all of the rights, title, and
interest that it may have in various intellectual
properties for $1 per year for a term of 50 years.
The Company has the option at any time to require EYI
Corp. to transfer all of its rights, title, interest
in and to the intellectual properties to the Company
at the sum of $1 or such greater sum as may be determined
to be the fair market value of such intellectual property
as determined by agreement between the parties, by
arbitration or by the appropriate taxation authorities
after all assessments and appeals have been concluded.

Agency Appointment Agreement
EYI Corp. appointed EYII as the sole and exclusive agent
to sell its remaining inventory on hand as of June 30,
2002 at the prices previously established, and to
continue to sell at such price unless and until any
change is agreed upon with EYI Corp. In consideration
for its efforts, the Company is entitled to a sales
commission of fifteen percent on all sales of such
inventory.

Management Agreement
EYI Corp. agreed to perform various services such as
administration, computer support, and sales and customer
support, on behalf of EYII for a term of one year commencing
June 30, 2002. The services and duties to be provided and
performed by EYI Corp. for EYII shall be determined and
agreed upon by the parties, from time to time, as required,
provided however, it is understood and agreed that such
services will primarily consist of assisting EYII in the
sales and marketing business. At the date of these
financial statements, the agreement had expired, and EYII
was operating on a month-to-month basis for management
services with EYI Corp.

The remuneration to be paid by EYII to EYI Corp. for
the aforementioned services is to be negotiated by the
parties from time to time, provided however, the parties
agree that the remuneration to be paid shall be consistent
with industry standards for the type and nature of the
services or duties being provided. At the present time,
EYII has agreed to pay EYI Corp. actual expenses plus a
fee of 5% on these expenses.

NOTE 5 - ACCOUNTS RECEIVABLE AND CREDIT RISK

Accounts receivable at December 31, 2004, December 31,
2003 and June 30, 2003 consist primarily of amounts due
from third parties for distribution services provided
by Halo and direct retail clients of EYII.

NOTE 6 - JOINT VENTURE AGREEMENT

On May 28, 2004, the Company entered into a joint venture
agreement with World Wide Buyers' Club Inc. ("WWBC") and
Supra Group, Inc. ("SG") Pursuant to the terms of the
joint venture agreement, the Company and SG agree to
form WWBC, a Nevada corporation, owned 51% by the Company
and 49% by SG. The purpose of the agreement is
jointly market and distribute products of SG using
the Company's existing distribution system in the United
States. The term of the agreement is 10 years commencing
May 6, 2004. As of December 31, 2004, there has been no
economic activity between the Company, SG, or WWBC.

NOTE 7 - PROPERTY AND EQUIPMENT

Capital assets are recorded at cost. Depreciation is
calculated using the straight-line method over three to
seven years. The following is a summary of property,
equipment and accumulated depreciation at December 31,
2004, December 31, 2003 and June 30, 2003:

<->December 31, 2004 December 31, 2003 June 30, 2003
<->Cost Accumulated Depreciation Cost Accumulated Depreciation Cost Accumulated Depreciation
Warehouse
equipment $223,927 $207,525 $223,927 $175,353 $223,927 $159,359

Furniture
and fixtures 18,698 18,083 18,698 15,453 18,527 414,074
Computer Equipment
& Software 115,392 83,995 115,392 40,265 95,527 422,756
Office
equipment 3,510 3,410 3,510 2,909 3,510 2,616
Leasehold
improvements<->32,523 20,696 32,523 16,631 32,523 14,598
Total 394,050<=>$333,714 394,050 <=>$250,610 <=>$374,014<=>$213,403
Less:
accumulated
depreciation<->333,544 250,611 213,403
Total property,
plant and
equipment net<=> $60,336 $143,439 160,611

Depreciation expense for the periods ended December 31,
2004, December 31, 2003, and June 30, 2003, was $56,154,
$36,756 and $50,888 respectively.

NOTE 8 - CONVERTIBLE LOANS PAYABLE

On June 2, 2004, the Company issued to Cornell Capital
Partners, LP a 5% secured convertible
debenture in the principal amount of $250,000 with a
term of two years and accrued interest at 5%. The
debenture is convertible into our
common stock at a price per share equal to the lessor
of (a) 120% of the closing bid price by the second
anniversary date of issuance or (b) 100% of the
lowest daily volume weighted average price for the
30 days immediately prior to conversion.

One June 24, 2004, the Company received the 250,000
loan less related expenses of approximately $65,000
which has been allocated as discount on debt and
will be amortized over a two year period. The
convertible securities are guaranteed by the assets
of the Company. Under the agreement, the Company
is required to keep available common stock duly
authorized for issuance in satisfaction of the
convertible. The conversion amount will be the
face amount of the convertible plus interest at
the rate of 5% per annum from the closing date
of June, 2004 to the conversion date, which is
the date on which the Company receives a notice
of conversion from the investor exercising the
right to convert the convertible into common
shares of the Company. The convertible will
automatically convert into common stock on the
second anniversary date of issuance. The terms
of the debt does not require regular monthly
payments.

On September 24, 2004, the Company issued to
Cornell Capital Partners, LP ("Cornell") a
5% secured convertible debenture in the principal
amount of $250,000 with a term of two years and
interest at 5%. The debenture is convertible into
our common
stock at a price per share equal to the lessor of
(a) 120% of the closing bid price by the second
anniversary date of issuance or (b) 100% of the
lowest daily volume weighted average price for
the 30 days immediately prior to conversion. On
September 27, 2004, the Company re-assigned
$245,000 of this debenture to Taib Bank, E.C.
and reassigned $5,000 of debenture B to an
individual. Under the debenture agreement,
the Company's failure to issue
unrestricted, freely tradable common stock
to Cornell or Taib Bank or the Individual
upon conversion after the registration statement filed
pursuant to this transaction has been
declared effective would be considered
an event of default, thereby entitling Cornell
to accelerate full repayment of the
convertible securities then outstanding.
Under the agreement, the Company is required
to maintain available common stock duly authorized
for issuance in satisfaction of the convertible.
(See Note 11)

One September 24, 2004 the Company received the
250,000 loan less related expenses of
approximately $55,000 which has been allocated
as discount on debt and will be amortized over
a two year period. The convertible securities
are guaranteed by the assets of the Company.
Under the agreement, the Company is required
to keep available common stock duly authorized
for issuance in satisfaction of the convertible.
The conversion amount will be the face amount
of the convertible plus interest at the rate of
5% per annum from the closing date of September,
2004 to the conversion date, which is the date
on which the Company receives a notice of
conversion from the investor exercising the
right to convert the convertible into common
shares of the Company. The convertible will
automatically convert into common stock on the
second anniversary date of issuance. The terms
of the debt do not require regular monthly payments.

The convertible debentures contained a beneficial
conversion feature computed at its intrinsic value
that was the difference between the conversion price
and the fair value on the debenture issuance date of
the common stock into which the debt was convertible,
multiplied by the number of shares into which the debt
was convertible at the commitment date. Since the
beneficial conversion feature was to be settled
by issuing equity, the amount attributed to the
beneficial conversion feature, or $250,000, was
recorded as an interest expense and a component
of stockholders' equity on the balance sheet date.

Standby Equity Distribution Agreement
In June, 2004, the Company entered into a standby
equity distribution agreement with Cornell Capital
Partners, LP ("Cornell"). Pursuant to this
agreement, Cornell will purchase up to $10,000,000
of the Company's common stock through a placement
agent over a two-year period after the effective
registration of the shares. In addition, the
Company issued 1,300,000 shares of its common
stock to Cornell and the placement agent upon
the inception of the standby equity distribution
agreement. The $390,000 value of these shares was
recognized as a period expense due to the fact that
the 1,300,000 shares have been deemed to be fully
earned as of the date of the agreement.

NOTE 9 - INTANGIBLE ASSETS

Intangible assets consist of rights, title, and
interest in and to the contracts with the Company's
independent business associates as well as the rights
and licenses to trademarks and formula for the
Company's primary products. These rights and licenses
were obtained from the Company's former parent Company pursuant
to a transfer agreement, as well as from the Company's
primary shareholder. (See Notes 4 and 9).

Trademarks and Formulas
Costs relating to the purchase of trademarks and
formulas were capitalized and amortized using the
straight-line method over ten years, representing the
estimated life of the assets.

The following is a summary of the intangible assets at
December 31, 2004 and December 31, 2003:

<->Cost Accumulated Net
Balance, December Amortization $19,801
31, 2003 $21,601 (1,800)
Activity in last
twelve months (3,240)
Balance, December <->
31, 2004 <=> $21,601 (5,040) $16,561

NOTE 10 - BANK INDEBTEDNESS

Bank indebtedness consists of checks written in excess
of funds on deposit. The underlying bank is used as
an impress account with automatic transfers from the
Company's general account as checks are presented.

NOTE 11 - CAPITAL STOCK

Preferred Stock
The Company is authorized to issue 10,000,000 shares
of preferred stock with a par value of $0.001. As of
December 31, 2004, December 31, 2003, and June 30,
2003, the Company has not issued any preferred stock.

Common Stock
The Company is authorized to issue 300,000,000 shares
of common stock. All shares have equal voting rights,
are non-assessable and have one vote per share. Voting
rights are not cumulative and, therefore, the holders
of more than 50% of the common stock could, if they
choose to do so, elect all of the directors of the
Company.

In its initial capitalization in June 2002, the Company
issued 23,026,200 shares of common stock for a total of
$30,000 cash.

Pursuant to the merger agreement as discussed in Note 4,
an additional 92,104,800 shares of common stock were
issued to the shareholder of Essentially Yours Industries,
Inc. The transaction was valued at $38,507, representing
the basis of Essentially Yours Industries, Inc. in the
assets, liabilities and subsidiaries that it contributed
to Burrard Capital, Inc. At the completion of the merger,
the Company changed its name from Burrard Capital, Inc.
to Essentially Yours Industries, Inc.

In August, 2002, the Company sold, under a private
placement offering, 5,400,043 shares of common stock
at approximately $0.18 per share for a total of $994,122
in cash, net of private placement costs of $61,206. Of
these 5,400,043 shares, 2,485,440 were purchased for
$513,900, and were determined to be shares related to a
minority interest, and were subsequently reclassified
on the balance sheet as minority interest in subsidiary.
Minority shareholders hold approximately a 1.64% interest
in the Company at December 31, 2003.

On December 31, 2003, the Company completed an
acquisition agreement with Safe ID, and at the
completion of the merger, the Company changed its
name from Essentially Yours Industries,
Inc. to EYI Industries, Inc. In connection with
this reverse merger, the Company issued 30,153,067
shares of its common stock and warrants to the
shareholders of Safe ID. This acquisition was
valued at $502,211. See Note 3 and 13. This
transaction resulted in a discount on common
stock of $53,398.
See Note 12.

On January 1, 2004, the Company entered into a agreement
with an independent contractor to provide services in
exchange for 250,000 common shares. The Company computed
the number of shares issued in this transaction based on
the estimated fair market value of the Company's common
stock on the dates of issuance and recognized an expense
of $70,000 for consulting fees.

On March 5, 2004, the Company entered into a agreement
with an independent contractor to provide services in
exchange for 100,000 common shares. The Company computed
the number of shares issued in this transaction based
on the estimated fair market value of the Company's
common stock on the dates of issuance and recognized
an expense of $28,000 for consulting fees.

On April 1, 2004, the Company entered into a consulting
agreement that granted the consultant, Daniel Matoes,
2,000,000 stock options and requires the payment of a
consulting fee of $16,667 each month. The consultant
will use the monthly sum to acquire shares of the
Company by exercising the options once they vested
on October 1, 2004. As at December 31, 2004, the
consultant has not exercised these options.

On April 6, 2004, an employee of the Company exercised
1,000,000 options at $0.165 per share at the aggregate
exercise price of $165,000. The options were paid by a
combination of cash and a promissory note issued by the
employee to the Company in the amount of $15,000. The
note has been determined to be a stock subscription and
has been properly allocated on the financial statements
as a subscription receivable.

On April 20, 2004, an officer of the Company exercised
3,200,000 options at $0.165 per share at the aggregate
exercise price of $528,000. The options were paid in
the form of foregone debt owed to the officer by the
Company. (See Note 13)

On May 4, 2004 the Company issued 5,476,190 common
shares to Eyewonder, Inc. ("Eyewonder") at a price
of $0.21 per share, pursuant to the terms of the
Letter Agreement dated May 4, 2004. The issuance
of the 5,476,190 of common shares has been determined
to be a prepaid expense due to the conditions of the
agreement stating that the shares are fully paid in
exchange for Eyewonder's role and work in creating
and managing an advertising and promotional on-line
campaign for the Company. Eyewonder Inc. also
received 5,476,190 warrants exercisable at a price
of $0.30 per share for a period of five years from
the date of issuance. In addition, on execution
of the agreement, the Company agreed to issue
options to purchase 1,100,000 shares of the
Company's common stock at a price of $0.22
per share to certain individuals designated
by Eyewonder. The total amount of prepaid
expense in the amount of $1,050,000 is being
expensed over three years, the life of the
contract. In the period ending September 30, 2004,
the Company has expensed $145,834 on this contract.

On June 3, 2004, 300,000 options were exercised at
$0.20 per share at the aggregate exercise price of
$60,000. The options were paid in the form of
forgone debt owed to the legal firm by the Company.
The Company computed the number of options issued
in this transaction based on the estimated fair
market value of the Company's common stock on
the dates of issuance.

During the quarter ended June 30, 2004, the
Company issued 50,000 restricted shares at $0.22
per share in payment of consulting fees. The
Company computed the number of shares issued
in this transaction based on the fair value
of services received and the market value of
the Company's common stock on the dates of
issuance and recognized an expense of $11,000
to consulting fees.

During the quarter ended June 30, 2004, the
Company received $115,805 from the private
placement sale of 566,833 shares of common
stock at $0.21 per share. In addition,
the purchasers of the shares received
warrants to purchase one additional share
of common stock for each share purchased,
exercisable at $0.30 per share for a period
of two years. (See Note 13)

During the period ended June 30, 2004, the
Company issued 1,300,000 shares of its
common stock as an incentive.

During the quarter ended June 30, 2004,
management determined that 176,534 shares
were no longer allocated to shares held by
the minority interest of Essentially Yours
Industries, Inc. The Company determined
that the number of shares incorrectly held
by the minority interest had the effect of
understating the number of common shares
outstanding and corrected the error by properly
allocating the 176,534 shares to common shares
outstanding. The shares were determined to
have the value of approximately $0.19 per
share for a total increase in stockholders
equity in the amount of $33,303.

During the quarter ended June 30, 2004,
the Company began expensing stock options
granted to various employees and consultants
in accordance with SFAS 123 recognition and
measurement provisions as amended by SFAS 148.
The Company recognized a period expense of
$1,202,452 for all vested stock options as
of 12/31/04.

On June 24, 2004 and September 24, 2004,
the Company obtained two disbursements
related to convertible debt financing with
Cornell Capital (the "investor"), and this
transaction created a beneficial conversion
feature for the investor. The Company expensed
$250,000 in anticipation of the conversion of
debt to common shares. (See Note 8)

On July 1, 2004, the Company issued 100,000
stock options at $0.26 per share to consultants
in exchange for services. The options will vest
at 50% on October 1, 2004 and 50% on October 1, 2005.

On July 6, 2004, an employee of the Company
exercised 36,360 options at $0.20 per share.
The options were paid by cash in the amount of
$7,272.

On September 30, 2004, the Company issued 2,650,000
stock options at $0.11 per share to various
consultants and an employee. These options vested
immediately upon issuance. (See Note 13)

On October 13, 2004, 250,000 options were exercised
at $0.08 per share for an exercise price of $20,000.
The options were paid in the form of lieu of legal
fees owed to a legal firm by the Company. The Company
computed the number of options issued in this transaction
based on the estimate fair market value of the Company's
common stock on the dates of issuance.

On November 1, 2004, the Company issued 250,000 stock
options at $0.20 per share to a consultant. These
options vest 50% on February 1, 2005 and 50% on
February 1, 2006.

On December 27, 2004, the Company issued 1,050,000
stock options at $0.08 per share to various consultants
and employees. These options vested immediately
upon issuance.

On December 27, 2004, two officers agreed to terminate
3,200,000 stock options each that were previously
granted to them in April 2004.

On December 27, 2004, an employee agreed to terminate
100,000 stock options that were previously granted to
her in April 2004.

During the quarter ended December 31, 2004, 200,000
options were exercised at $0.08 per share for an
exercise price of $16,000. The options were paid in
the form of lieu of legal fees owed to a legal firm
by the Company. The Company computed the number of
options issued in this transaction based on the
estimate fair market value of the Company's common
stock on the dates of issuance.

On December 31, 2004, 200,250 options were exercised
at $0.11 per share for an exercise price of $22,028.
The options were paid in the form of lieu of debt
owed to the CEO of the Company by the Company. The
Company computed the number of options issued in this
transaction based on the estimate fair market value
of the Company's common stock on the dates of issuance.

On December 31, 2004, the Company elected to close
the discount on common stock account in the amount
of $53,598 to additional paid in capital account.
(See Note 12.)

NOTE 12 - DISCOUNT ON COMMON STOCK

As a result of the share
exchange agreement between Safe ID and Essentially
Yours Industries, Inc., a discount on common stock
was recorded in the amount of $53,598 to reflect the
partial deficit in the par value of the stock received
in the share exchange. This is the result of the
recorded par value of the stock exceeding the original
value of the assets exchanged. On December 28,
2004, the Company closed the discount on common
stock account to the additional paid-in capital
account.

NOTE 13 - COMMON STOCK OPTIONS AND WARRANTS

Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (hereinafter "SFAS No.
123"), defines a fair value-based method of accounting
for stock options and other equity instruments. The
Company has adopted this method, which measures
compensation costs based on the estimated fair value
of the award and recognizes that cost over the service
period.

In accordance with SFAS No. 123, the fair value of stock
options and warrants granted are estimated using the
Black-Scholes Option Price Calculation. The following
assumptions were made to value the stock options and
warrants for the period ended December 31, 2004;
estimated risk-free interest rate of 4%, estimated
volatility of between 144% and term of two years.

Warrants

Warrants and Prior Year Adjustment
During the period ended June 30, 2004, the Company
determined that an additional 916,667 warrants from
the reverse acquisition and share exchange with
Safe ID Corporation had not been properly determined
and valued at the date of the change of control nor
at December 31, 2003. A correction of an error was
made and is reflected in the financial statements.
The warrants were valued at $45,833. The additional
paid-in-capital was reduced by $45,833 and warrants
accounted for in the equity section was increased
by the same. There was no effect on total
stockholders' equity or reported losses or deficits.

During the period ended December 31, 2004, the
Company received $115,805 from the private
placement sale of 566,833 shares of common stock.
In addition, the purchasers of the shares received
warrants to purchase one additional share of
common stock for each share purchased, exercisable
at $0.30 per share for a period of two years.
The fair value of the warrants issued as part of
the private placement was determined to be $78,869.

During the period ended march 31, 2004, the Company
received $219,240 less expenses, from the private
placement sale of 1,466,455 shares of common stock.
In addition, the purchasers of the shares received
warrants to purchase one additional share of common
stock for each share purchased. Of these warrants
857,143 are exercisable at $0.30 per share for a
period of two years. The fair value of the
warrants issued as part of the private placement was
determined to be $78,869.

On May 4, 2004, the Company issued 5,476,190 common
shares to Eyewonder, Inc. ("Eyewonder") at a price
of $0.21 per share, pursuant to the terms of a
letter agreement dated May 4, 2004. Eyewonder Inc.
also received 5,476,190 warrants exercisable at a
price of $0.30 per share for a period of five years
from the date of issuance. (See Note 11).

Stock Options
During the period ending December 31, 2004, the
Company's board of directors approved the Stock
Compensation Program to allow up to 25,000,000
shares of stock to be issued under the program.
Subsequent to the board of directors approval,
this plan was approved by the shareholders. This
plan enables the Company to grant stock options
to directors, officers, employees and eligible
consultants of the Company. There was no
Company stock option plan in effect prior to
2004.

During the period ended December 31, 2004,
the Company granted stock options to purchase
a total of 24,934,000 shares of common stock
to its employees, directors, and consultants.
The options were granted from $0.08 to $0.26
per share. The Company recognized an expense
to services and consulting of $1,202,452 during
the period ending December 31, 2004 for all
vested options.

Following is a summary of the status of the
stock options during the year ended December
31, 2004:

Number of Shares Weighted Average
Exercise Price
Outstanding at - -
December 31, 2003
Granted 24,934,000 $ 0.15
Exercised (5,186,610) $ 0.16
Forfeited - $ -
Options outstanding
at December 31, 2004 19,747,390 $ 0.14
Options exercisable
at December 31, 2004 16,950,390 $ 0.13
Weighted average fair
value of options granted
in 2004 $ 0.13

Summarized information about stock options outstanding and exercisable at
December 31, 2004 is as follows:

<->Options Outstanding
Exercise Weighted Average Weighted Average
<->Price Range Number of Shares Remaining Life Exercise Price
$0.08-$0.26 19,747,390 2.00 $0.14

Options Exercisable Weighted Average Weighted Average
Exercise Number of Shares Remaining Life Exercise Price
<->Price Range 16,950,390 2.00 $0.13
$0.11-$0.22

<->Number of Warrants Weighted Average Average Exercise
Outstanding Remaining Life Price
and exercisable 2,751,746 2 $0.11

NOTE 14 - INCOME TAXES

The significant components of the deferred
tax asset at December 31, 2004,
December 31, 2003 and June 30, were as follows:

<->December 31, 2004 December 31, 2003 June 30, 2003
Net operating loss
carryforward $7,082,270 2,563,500 1,564,279
Deferred tax asset: $2,407,972 871,590 531,855
Less valuation allowance
for tax asset <->(2,407,972) (871,590) (531,855)
Net deferred tax asset <=>$ - $ - $ -

At December 31, 2004, December 31, 2003, and
June 30, 2003, the Company has net operating
loss carryforwards of approximately $7,082,270,
$2,563,500, and $1,564,279 respectively, which
expire in the years 2022 through 2024. The
change in the allowance account from December
31, 2003 to December 31, 2004 was $1,536,382.

The Company's subsidiaries in Canada are
required to file income tax returns in
British Columbia, Canada. The losses from
operations are allocated to both United
States and Canadian operations.

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Purchase Agreement
On June 30, 2002, the Company entered into
a distribution and license agreement with
a company in which one of the Company's
directors has an ownership interest.
The agreement gives the Company the
exclusive right to market, sell and
distribute certain products for a
five-year renewable term. Management
estimates that 90% of the Company's sales
volume results from products supplied
under this licensing agreement.

During the quarter ended March 31, 2004,
the Company negotiated the lowering of
the purchasing threshold, and pursuant to
the agreement, the Company is required to
purchase the following amounts of product
during the term of the agreement:

From June 1, 2004 to May 31, 2005 $3,964,000

For each year thereafter, during the term
of this agreement, the Company is obligated
to purchase a minimum amount of $5,549,000
of product.

In the event that the Company is unable to
meet the minimum purchase requirements of
the licensing agreement or the terms
requiring it to pay 15% of the difference
between the minimum purchase amount referred
to above and actual purchases for that year
in which there is a shortfall, then the
licensor has various remedies available
to it including, renegotiating the agreement,
removing exclusivity rights, or terminating
the agreement.

As of the date of these financial statements,
the purchase requirements have not been made
and it has been determined by the Company
to be a remote possibility that the licensor
will enforce the minimum purchase requirements,
therefore, there has not been an accrual made
to the financial statements to reflect any
estimated liability pertaining to this agreement
due to the fact that the maximum time period to
make a claim expired prior to the issuance of
the financial statements.

Lease Payments
The Company has operating lease commitments
for its premises, office equipment and an
automobile. The minimum annual lease
commitments are as follows:

Year ended December 31, Minimum Amount

2005 262,805
2006 276,739
2007 182,432
2008 135,000
2009 140,000
2010 145,000
2011 150,000

Management Agreement
EYI Corp. has agreed to perform various
services and administrative assistance to
the Company on a month to month basis commencing
April 1, 2004. The services and duties to be
provided and performed by EYI Corp. for EYII
shall be determined and agreed upon by the
parties, from time to time, as required,
provided however, it is understood and agreed
that such services will primarily consist of
assisting EYII in the sales and marketing business.

The remuneration to be paid by EYII to EYI Corp.
for the aforementioned services shall be the
cost of actual expenses plus a fee of five (5%)
percent for services provided.

Subsidy Agreements

During the year months ended December 31, 2004,
the Company entered into subsidy agreements
with three related parties in which the Company
agreed to pay a guaranteed amount of $2,500
per week to each party for sales and marketing
services. This subsidy is in lieu of all
commissions earned by each of these three
individuals.

Standby Equity Distribution Agreement

On June 22, 2004, the Company entered into
a two-year standby equity distribution agreement
with Cornell Capital Partners LP ("Cornell").
Pursuant to this agreement, Cornell will purchase
up to 10,000,000 shares of the Company's common
stock through a placement agent. The Company
issued 1,300,000 shares of its common stock
to Cornell and the placement agent upon the
inception of this agreement. The $390,000
value of these shares was based on the fair
market value of the shares on the date of the
contract and is recognized as a period expense
due to the fact that the 1,300,000 shares have
been deemed to be fully earned as of the date
of the agreement. (See Note 5).

Other Matters
The Company's predecessor organization,
Essentially Yours Industries Corp. ("EYIC"),
a British Columbia corporation, has outstanding
claims from the Internal Revenue Service for
penalties and interest of approximately
$2,000,000. Furthermore, one or more states
may have claims against EYIC for unpaid state
income taxes. Management believes that these
claims are limited solely to EYIC and that
any prospective unpaid tax claims against the
Company are remote and unable to be estimated.

NOTE 16 - RELATED PARTY NOTE PAYABLE

The Company issued two promissory notes, for
a total of $90,000 in December 2003. The
notes are unsecured, non-interest bearing
and are payable upon demand.

NOTE 17 - CONCENTRATIONS

Bank Accounts
The Company maintains its cash accounts in
a two commercial bank. During the year,
the Company may maintain balances in excess
of the federally insured amounts in the
accounts that are maintained in the United
States. The Company also maintains funds
in commercial banks in Vancouver, British
Columbia, in which funds in U.S. dollars
are not insured. At December 31, 2004,
December 31, 2003, and June 30, 2003, a
total of $248, $140, and $1,675,
respectively, was not insured.

Economic Dependence
During the year, the Company purchased
approximately 90% of its products for resale
from one company, Nutri-Diem Inc., which is
the sole supplier of the Company's flagship
product Calorad. Pursuant to a purchase
agreement, the Company is subject to minimum
purchases per annum. See Note 13.

NOTE 18 - SEGMENT REPORTING

The Company is organized into two reportable
segments - EYI Industries, Inc. and Halo.
The two segments have different strategic
goals and are managed separately. EYI
Industries, Inc., the first reportable
segment, is a selling and marketing company.
The second reportable segment, Halo,
operating as a distribution center, derives
approximately 90% of its activities from
distributing products for the Company and
its subsidiaries.

The following tables present information
about the two segments for December 31,
2004, December 31, 2003 and June 30, 2003:

<->Year ended December 31, 2004
<->EYI Industries Inc.<->Halo<->Eliminations<->Consolidated
External Revenue <=>$6,085,731 <=> $143,298 <=>- <=>$6,229,029
Operating Loss <=>$(4,078,763) <=> $(201,441) <=>- <=>$(4,280,204)
Loss Before Income
Taxes <=> $(4,462,795)<=> $(201,441) <=>- <=>$(4,035,922)
Depreciation <=> $12,749 <=> $43,405 <=>- <=>$56,155
Interest Expense <=> $308,572 <=> $- <=>- <=>$308,572
Identifiable Assets<=> $1,304,818 <=> $60,758 <=>- <=>$1,365,576
Intangible Assets <=> $16,561 <=>$16,561
Total Assets <=>$802,531

<->Six months ended December 31, 2003
<->EYI Industries Inc.<->Halo<->Eliminations<->Consolidated
External Revenue <=>$4,218,961 <=> $94,618 <=>- <=>$4,313,579
Operating Loss <=>$(892,673) <=> ($85,656) <=>- <=>$(978,329)
Loss Before Income
Taxes <=> $(900,601)<=> $(85,656) <=>- <=>$(986,257)
Depreciation <=> $13,792 => $22,964 <=>- <=>$-
Interest Expense <=> $21,879 <=> $- <=>- <=>$-
Identifiable Assets<=> $547,334 <=> $160,542<=>- <=>$707,876
General Corporate Assets <=>$19,801
Total Assets <=>$727,677

<->Year ended June 30, 2003
<->EYI Industries Inc.<->Halo<->Eliminations<->Consolidated
External Revenue <=>$14,306,684 <=> $83,365 <=>- <=>$14,390,049
Operating Loss <=>$(1,526,387) <=> $(119,045) <=>- <=>$(1,645,432)
Loss Before Income
Taxes <=> $(1,554,163)<=> $(119,045) <=>- <=>$(1,673,208)
Depreciation <=> $9,093 <=> $41,795 <=>- <=>$50,888
Interest Expense <=> $11,272 <=> $1,520 <=>- <=>$12,792
Identifiable Assets<=> $584,655 <=> $160,542 <=>- <=>$782,730
General Corporate Assets <=>$19,801
Total Assets <=>$802,531

The accounting policies for the two reportable segments
are the same as those described in the summary of
significant accounting policies. The Company allocates
resources to and evaluates performance of its operating
segments based on operating income.

NOTE 19 - RELATED PARTY TRANSACTIONS

The Company acquired, through agreements with Essentially
Yours Industries, Corp. ("EYI Corp"), the rights, title,
and interest in and to the contracts with the Company's
Independent Business Associates as well as the rights and
licenses to trademarks and formula for the Company's
primary products. Expanded details are explained
in Note 9.

Accounts payable to related parties represents amounts
due to the president and chief executive officer for
services preformed during the last year as well as to
other related parties and the company with which they
have a signed management agreement. These payables are
non-interest bearing and non-collateralized. See Note 16.

See note 15 regarding subsidy agreements with related parties.

During the year, the Company purchased approximately
90% of its products for resale from one company,
Nutri-Diem Inc., which is owned in part by a
director of the Company. See Note 15.

NOTE 19 - SUBSEQUENT EVENTS

On January 3, 2005, 642706 B.C. Ltd dba EYI Management
signed a seven year lease with Golden Plaza Company
to lease the premises at 7865 Edmonds St., Burnaby,
B.C. The premise has a rentable area of 12,200 sq
feet.

On February 9, 2005, two officers agreed to terminate
3,200,000 stock options each that were previously
granted to them on December 27, 2004.

On February 9, 2005, the Company issued 6,000,000
stock options at a price of $0.06 per share to an
employee and two consultants. These stock options
vest immediately.

On February 10, 2005, the Company loaned an employee
$180,000 in order for her to exercise 3,000,000 stock
options. This loan is secured by a Promissory Note
and a Loan Agreement.

On February 14, 2005, the Company agreed through a
Bonus Share Agreement, to compensate Janet Carpenter
with 800,000 shares of common stock at a deemed price
of $0.05 as consideration for her pledge of shares to
secure the Secured Promissory Note with Cornell Capital.

On February 24, 2005, the Company entered into a Secured
Promissory Note with Cornell Capital in which the Company
received $200,000 less expenses. The Promissory Note has
interest of 12% and is due 60 days after the date of
the note.

On February 24, 2005, a Pledge and Escrow Agreement
was signed between Janet Carpenter, Cornell Capital
and David Gonzalez whereas Janet Carpenter has pledged
her 3,000,000 shares to guarantee the Secured Promissory
Note between EYI and Cornell Capital.

On February 24, 2005, a Guaranty Agreement was signed
between Janet Carpenter and Cornell Capital in which
Janet Carpenter has agreed to guarantee the conditions
of the Secured Promissory Note.

On March 3, 2005, a consultant agreed to terminate
250,000 stock options granted to him on October 13, 2004.

On April 4, 2005, Cornell Capital Partners, LP entered
into an Assignment Agreement in which the Debenture dated
June 22, 2004 in the principal amount of $250,000 given
by the Company to Cornell Capital Partners, LP was
reassigned to TAIB Bank, E.C.

On April 4, 2005, Cornell Capital Partners, LP entered
into an Assignment Agreement in which the Debenture
dated June 22, 2004 in the principal amount of $50,000
given by the Company to Kent Chou was reassigned to
TAIB Bank, E.C.

On April 4, 2005, the Company entered into a
Redemption Agreement with TAIB Bank, E.C. to
confirm that the Company would not seek to
modify, alter, renegotiate or otherwise
cause any such action that
would cause the termination of the Standby Equity
Agreement ("SEDA") dated June 22, 2004 with Cornell
Capital Partners, LP. The Company agreed that the
first use of proceeds obtained from the use of the
SEDA will immediately redeem the Debenture with
TAIB Bank.

NOTE 20 RESTATEMENT

During the quarter ended June 30, 2004, management determined
that 176,534 shares were no longer allocated to shares held by
the minority interest of Essentially Yours Industries, Inc. The
Company determined that the number of shares incorrectly held by
the minority interest had the effect of understating the number
of common shares outstanding and corrected the error by properly
allocating the 176,534 shares to common shares outstanding. The
shares were determined to have the value of approximately $0.19 per
share for a total increase in stockholders equity in the amount
of $33,303. The financial statements have been restated to
reflect the appropriate minority interest.

NOTE 21 - SUBSEQUENT EVENTS

On January 3, 2005, 642706 B.C. Ltd dba EYI Management
signed a seven year lease with Golden Plaza Company to lease the
premises at 7865 Edmonds St., Burnaby, B.C. The premise has a
rentable area of 12,200 sq feet.

On February 9, 2005, two officers agreed to terminate 6,400,000
stock options originally granted at $0.08 per share on December 27, 2004.

On February 9, 2005, the Company issued 6,000,000 stock options at a
price of $0.06 per share to an employee and two officers. These stock
options vest immediately.

On February 10, 2005, the Company loaned an employee $180,000 in order
for her to exercise 3,000,000 stock options. This loan is secured
by a Promissory Note and a Loan Agreement.

On February 14, 2005, the Company agreed through a Bonus Share Agreement,
to compensate Janet Carpenter with 800,000 shares of common stock at a
deemed price of $0.05 as consideration for her pledge of shares to secure
the Secured Promissory Note with Cornell Capital.

On February 24, 2005, the Company entered into a Secured Promissory Note
with Cornell Capital in which the Company received $200,000 less expenses.
The Promissory Note has interest of 12% and is due 60 days after the date
of the note.

On February 24, 2005, a Pledge and Escrow Agreement was signed between
Janet Carpenter, Cornell Capital and David Gonzalez whereas Janet Carpenter
has pledged her 3,000,000 shares to guarantee the Secured Promissory Note
between EYI and Cornell Capital.

On February 24, 2005, a Guaranty Agreement was signed between Janet Carpenter
and Cornell Capital in which Janet Carpenter has agreed to guarantee the
conditions of the Secured Promissory Note.

On March 3, 2005, a consultant agreed to terminate 250,000 stock options
granted to him on October 13, 2004.

On April 4, 2005, Cornell Capital Partners, LP entered into an Assignment
Agreement in which the Debenture dated June 22, 2004 in the principal amount
of $250,000 given by the Company to Cornell Capital Partners, LP was reassigned
to TAIB Bank, E.C.

On April 4, 2005, Cornell Capital Partners, LP entered into an Assignment
Agreement in which the Debenture dated June 22, 2004 in the principal
amount of $5,000 given by the Company to Kent Chou was reassigned to TAIB
Bank, E.C.

On April 4 2005 the Company entered into a Redemption Agreement
with TAIB Bank E.C. to confirm that the Company would not seek
to modify, alter, renegotiate or otherwise cause any such action
that would cause the termination of the Standby Equity Agreement
("SEDA") dated June 22, 2004 with Cornell Capital Partners, LP.
The Company agreed that the first use of proceeds obtained from
the use of the SEDA will immediately redeem the Debenture with
TAIB Bank.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

None.

ITEM 8A. CONTROLS AND PROCEDURES.

(A) Evaluation Of Disclosure Controls And Procedures
As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the participation
of our principal executive officerand principal financial officer,
of the effectiveness of the design and operation
of our disclosure controls and procedures. Our disclosure controls
and procedures are designed to provide a reasonable level of
assurance that our disclosure control objectives are achieved.
Our principal executive officer and principal financial
officer has concluded that our disclosure controls and
procedures are, in fact, effective at providing this
reasonable level of assurance as of the period covered.

(B) Changes In Internal Controls Over Financial Reporting

In connection with the evaluation of our internal controls
during our last fiscalquarter, our principal executive
officer and principal financial officer has determined
that there are no changes to our internal controls over
financial reporting that has materially affected, or is
reasonably likely to materially
effect, our internal controls over financial reporting.

ITEM 8B. OTHER INFORMATION.

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The following information sets forth the names of our officers and directors,
their present positions with our company, and their biographical information.

Name Age Position with the Company Date First Elected or Appointed
Jay Sargeant 57 President, Chief Executive Director, Chief Executive Officer
Officer and Director and President since December 31,2003

Dori O'Neill 45 Executive Vice-President, Treasurer Executive Vice-President, Treasurer,
Chief Operations Officer, Secretary Chief Operations Officer, Secretary
and Director and Director since December 31, 2003
Rajesh Raniga 39 Chief Financial Officer Chief Financial Officer since
December 31, 2003
Bruce Nants 54 Director Director since March 1, 2004

Jay Sargeant. Mr. Sargeant has been our President, Chief Executive Officer
and a member of our Board of Directors since December 31, 2003. Mr. Sargeant
graduated from Boston State College in 1979 with a Bachelors Degree in English
Literature and Psychology. From 1995 until June 30, 2002, the date of our
merger with Essentially Yours Industries, Inc., Mr. Sargeant was a director
of Essentially Yours Industries, Corp. a Canadian Federal corporation and
our Affiliate. Mr. Sargeant has resigned as a member of the Board of
Directors of Essentially Yours Industries, Corp. to concentrate on our
sales and marketing efforts. Mr. Sargeant was a founder of Essentially
Yours Industries, Corp.

Dori O'Neill. Mr. O'Neill has been our Executive Vice President,
Chief Operations Officer and a member of our Board of Directors since
December 31, 2003. From 1997 to June 2002, Mr. O'Neill served as a
Vice President and a member of the Board of Directors of Essentially
Yours Industries Corp., a Canadian Federal corporation and our Affiliate,
from December 2001 to June 2002. From 1994 through 1998 Mr. O'Neill was
a self-employed consultant.

Bruce Nants. Mr. Nants has been a member of our Board of Directors
since March 1, 2004. Mr. Nants is an attorney and has practiced
since 1978 as a sole practitioner.

Rajesh Raniga. Mr. Raniga has been our Chief Financial Officer since
December 31, 2003. Mr. Raniga is a Certified General Accountant. From
1989 to present Mr. Raniga has practiced with Delves Freer Anderson
Raniga Caine as a general partner. In his private practice, prior to
joining us, he specialized in auditing publicly-listed companies as
well as acquisitions and mergers. He has also sat on the Board of
Directors and served as the Chief Financial Officer of Uniserve
Communications Services Inc., an internet service provider l
isted on the TSX Venture Exchange in Canada.

Family Relationships
There is no family relationship between any of our officers or
directors.

TERMS OF OFFICE

Our directors are appointed for one-year terms to hold office until
the next annual general meeting of the holders of our common stock
or until removed from office in accordance with our by-laws. Our
officers are appointed by our Board of Directors and hold office
until removed by our Board of Directors.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors does not maintain a separately-designated
standing audit committee. As a result, our entire Board of
Directors acts as our audit committee. Our Board of Directors has
determined that we do not presently have a director who meets the
definition of an "audit committee financial expert." We believe that
the cost related to appointing a financial expert to our Board of
Directors at this time is prohibitive.

Our Board of Directors presently do not have a compensation
committee, nominating committee, an executive committee of our
board of directors, stock plan committee or any other committees.

Audit Committee Financial Expert

We have no financial expert. We believe the cost related to
retaining a financial expert at this time is prohibitive.

CODE OF ETHICS

We adopted a Code of Ethics applicable to our Chief Executive
Officer, Chief Financial Officer, Corporate Controller and certain
other finance executives, which is a "code of ethics" as defined by
applicable rules of the SEC. Our Code of Ethics is attached to our
Annual Report on Form 10-KSB filed with the SEC on April 14, 2004.
If we make any amendments to our Code of Ethics other than technical,
administrative, or other non-substantive amendments, or grant any
waivers, including implicit waivers, from a provision of our Code
of Ethics to our chief executive officer, chief financial officer,
or certain other finance executives, we will disclose the nature
of the amendment or waiver, its effective date and to whom it
applies in a Current Report on Form 8-K filed with the SEC.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers
and directors, and persons who beneficially own more than ten
percent of our equity securities, to file reports of ownership
and changes in ownership with the SEC. Officers, directors and
greater than ten percent shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a)
forms they file. Based on our review of the copies of such
forms received by us, we believe that during the fiscal year
ended December 31, 2004 all such filing requirements applicable
to our officers and directors were complied with exception
that reports were filed late by the following persons:

Name and Number Transactions Not Known Failures
Principal Position of Late Reports Timely Reported to File a Required Form

Jay Sargeant
President, Chief Executive 3 3 -
Officer, and Director

Dori O'Neill
President, Chief
Operations Officer, 5 5 -
Secretary, Treasurer
and Director

Michel Grise 1 1 -
10% shareholder

ITEM 10. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth certain summary information concerning
the compensation paid or accrued for each of EYI's last three completed
fiscal years to EYI's or its principal subsidiaries' Chief Executive
Officer and each of its other executive officers that received compensation
in excess of $100,000 during such period (as determined at December 31,
2004, the end of EYI's last completed fiscal year) (the "Named Executive
Officers"):

SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Compensation All
Name/TitleYearSalaryBonusOther Annual Compensation Restricted Options/LTIP payouts Other
Stock Awarded SARs ($) Compensation
Jay Sargeant(1)
President,
CEO and
Director
2004 -- -- $240,000 (2) -- -- -- 4,200,000 -- --
2003 -- -- $240,000 (2) -- -- -- -- -- --
2002 -- -- $20,000 (2) -- -- -- -- -- --

Dori O'Neill(3) Chief
Operations
Officer,
Secretary,
Treasurer
And Director2004 -- -- $240,000 (4) -- -- -- 7,400,000 --
2003 -- -- $180,000 (4) -- -- -- -- --
2002 -- -- $30,000 (4) -- -- -- -- --

Notes:
(1)Mr. Sargeant was appointed as our President and Chief Executive
Officer on December 31, 2003.
(2)We paid management consulting fees to Flaming Gorge, Inc., a
private company controlled by Mr. Sargeant, our President, CEO and
director, for his management of the operation of the company and our
subsidiaries, reporting to the Board of Directors, and appointing
managers to oversee certain departments. Mr. Sargeant was compensated
at the rate of $20,000 per month, on a month to month basis commencing
November 5, 2002. The agreement was for an initial five-year term,
which is automatically renewable upon expiry of the
five-year period on a year-to-year basis. Effective January 1, 2004,
we extended the consulting agreement of Mr. Sargeant for an additional
five years.
(3)Mr. O'Neill was appointed as our Executive Vice-President, Chief
Operations Officer,Secretary, Treasurer on December 31, 2003.
(4)We paid management consulting fees to O'Neill Enterprises Inc.,
a private company controlled by Mr. O'Neill, our Executive
Vice-President, COO, Secretary, Treasurer
and director, for the management of day to day activities and
operations of the company and our subsidiaries. Mr. O'Neill was
compensated at the rate of $15,000 per month,
on a month to month basis commencing November 5, 2002. The
agreement was for an initial five-year term, which is
automatically renewable upon expiry of the five-year
period on a year-to-year basis. Effective January 1, 2004,
we increased the consulting
fees payable to Mr. O'Neill to $20,000 per month,
and extended the term by five years.

STOCK OPTION GRANTS IN THE LAST FISCAL YEAR

The following table contains information regarding options
granted during the yearended December 31, 2004 to EYI's
Named Executive Officers.

OPTION/SAR GRANTS TABLE

Name No. Of Securities Underlying% Total Options/SARs Exercise or Base Expiration
Options/SARS Granted (#) Granted to Employees Price Date
in year ended December ($ perShare)
31 2004%

Jay Sargeant 3,200,000(1) 3.1% 0.19 04/30/06
President, Chief 1,000,000 0.11 09/30/06
Executive Officer 3,200,000(1) 0.08 12/27/06
and Director

Dori O'Neill 3,200,000(2) 17.95% 0.165 04/04/06
Chief Operations 3,200,000(1) 0.19 04/30/06
Officer, 1,000,000 0.11 09/30/06
Secretary, 3,200,000(1) 0.08 12/27/06
Treasurer
and Director

(1) On December 27, 2004, our board of directors approved the re-pricing of 3,200,000 options
issued to Mr. O'Neill and 3,200,000 options issued to Mr. Sargeant. The 6,400,000 options were
cancelled on December 27, 2004 and 3,200,000 options were issued on December 27, 2004 to each of
Mr. O'Neill and Mr. Sargeant to replace their cancelled options. The new options have a $0.08
exercise price and expire December 27, 2006.
(2) The 3,200,000 options were exercised on April 21, 2004

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES

The following table contains information regarding options exercised in the year ended December
31, 2004, and the number of shares of common stock underlying options held as of December 31,
2004, by EYI's Named Executive Officers.

AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTIONS/SAR VALUES

Number of Securities Underlying Value of Unexercised
Shares Unexercised Options/SARs In-the-Money Options/SARs
Acquired on Value at FY-End at FY-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable Unexcersiable Exercisable Unexercsiable

Jay Sargeant
President,
Chief Executive
Officer and
Director 200,250 $22,027 3,999,750 -- -- --

Dori O'Neill
Chief Operations Officer, Secretary,
Treasurer and Director
3,200,000 $528,000 4,200,000 -- -- --

REPRICING OF OPTIONS

During the year ended December 31, 2004, our board of directors
approved the re-pricing of: (i) options to purchase 3,200,000
shares of our common stock granted in favor of Mr.
Sargeant, our president and chief executive officer on April 30,
2004 at a price of $0.19; and (ii) options to purchase
3,200,000 shares of our common stock granted in
favor of Mr. O'Neill, our president and chief executive
officer on April 30, 2004 ata price of $0.19. The option price
was reduced to $0.08 per share in order that the exercise price
was more reflective of the then current trading price of our common
stock and in order to provide a continuing performance incentive.
The 6,400,000 options were cancelled on December 27, 2004
and 3,200,000 options were issued on December 27, 2004 to each
of Mr. O'Neill and Mr. Sargeant to replace their cancelled
options. The new options have a $0.08 exercise price and expire
December 27, 2006.

COMPENSATION ARRANGEMENTS

Compensation of Directors

All of our directors receive reimbursement for out-of-pocket
expenses for attending Board of Directors meetings. From time
to time we may engage certain membersof the Board of Directors
to perform services on behalf of the Company and may compensate
such persons for the performance of those services.

In November 2002, we entered into a consulting agreement
with Flaming Gorge, Inc., a company controlled by Jay Sargeant,
our President, Chief Executive Officer and a member of our
Board of Directors. Pursuant to this agreement, we agreed to
pay Flaming Gorge, Inc. $20,000 per month in consideration of
management consulting services provided by Mr. Sargeant to us.
The agreement automatically renews on a year-to-year basis
at the end of the initial five (5) year term.

In November 2002, we entered into a consulting agreement with O'Neill
Enterprises, Inc., a company controlled by Dori O'Neill, our Executive
Vice President, Chief Operations Officer, Secretary, Treasurer and a
member of our Board of Directors. Pursuant to the agreement, we agreed to
pay $15,000 per month in consideration of management consulting services
provided by Mr. O'Neill to us. This agreement automatically renews on a
year-to-year basis at the end of the initial five (5) year term. Effective
January 1, 2004, we increased the consulting fees payable to O'Neill
Enterprises, Inc., to $20,000 per month for management consulting services
provided by Mr. O'Neill to us.

LONG-TERM INCENTIVE PLANS

We do not have any long-term incentive plans, pension plans, or similar
compensatory plans for our directors or executive officers.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information about the beneficial ownership
of our common stock as of April 8, 2005, by (i) each person who we know
is the beneficial owner of more than 5% of the outstanding shares of
common stock (ii) each of our directors or those nominated to be directors,
and executive officers, and (iii) all of our directors and executive
officers as a group.

Title of Class Name and Address Amount and Nature Percentage
of Beneficial Owner of Beneficial Ownership of Common Stock(1)

Directors and Executive Officers

Common Stock Jay Sargeant 93,472,157 55.5%
3324 Military Avenue Direct
Los Angeles,California and Indirect(2)

Common Stock Dori O'Neill 12,934,884 6.3%
6520 Walker Avenue Direct
Burnaby,British Columbia and Indirect (3)
Canada

Common Stock Bruce Nants 560,000 shares *
1999 West Colonial Dr. Direct
Suite 211 and Indirect(6)
Orlando, Florida

Common Stock Rajesh Raniga 700,000 shares *
13357-56 Avenue Direct
Surrey, British Columbia and Indirect(7)
Canada

Common Stock All Directors and Executive
Officers 102,717,041 62.1%
as a Group (Four Persons)Direct and Indirect

Holders of More than 5% of Our Common Stock

Common Stock Barry Larose 23,643,302 shares(4) 14.2%
20080 84th Avenue Direct and Indirect
Langley, British Columbia
Canada Indirect

Common Stock Michel Grise 17,971,748 shares(5) 10.8%
489 Rue Du Massif Direct and Indirect
Mont St-Hilaire QC

Common Stock Jay Sargeant 91,972,157 55.5%
3324 Military Avenue Direct and Indirect(2)
Los Angeles, California

Common Stock Dori O'Neill 10,434,884 6.3%
6520 Walker Avenue Direct and Indirect (3)
Burnaby, British Columbia
Canada

* Represents less than 1%.
(1) Applicable percentage of ownership is based on 165,520,535 shares
of common stock outstanding as of April 8, 2005 together with securities
exercisable or convertible into shares of common stock within 60 days of
December 14, 2004 for each stockholder. Beneficial ownership is determined
in accordance with the rules of the SEC and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to securities exercisable or convertible into shares of common stock that
are currently exercisable or exercisable within 60 days of April 8, 2005 are
deemed to be beneficially owned by the person holding such options for
the purpose of computing the percentage of ownership of such person, but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.
(2) The shares are held as follows: (i) 50,000 shares are held by
Northern Colorado, Inc., a company controlled by Mr. Sargeant; (ii)
65,477,302 shares are held in the Jay Sargeant Trust, of which Mr.
Sargeant is the Trustee. Mr. Sargeant has granted to the beneficiaries
named in the trust the right to receive any cash distributions on the
shares and has agreed to add to the trust corpus any stock dividends or
shares granted in respect of, or in exchange for, the shares currently
held in the trust. Mr. Sargeant retains the right to vote and dispose
of the shares or amend the trust at any time; (iii) 26,397,236 shares
are held by Mr. Sargeant beneficially as a named beneficiary under the
trust; and (iv) 1,500,000 shares which may be acquired by Mr. Sargeant
on exercise of incentive stock options within 60 days of April 8, 2005.
Mr. Sargeant acquired 47,619 shares as an investor in the Rule 506
Private Placement. Mr. Sargeant purchased each share at a price of
$0.21 with a warrant at $0.30.
(3) Consists of 3,066,500 shares of our common stock held by Dori
O'Neill directly, 7,368,384 shares held by Mr. O'Neill indirectly under
the Jay Sargeant Trust, and 2,500,000 shares which may be acquired by
Mr.O'Neill on exercise of incentive stock options within 60 days of April
8, 2005. Mr. O'Neill is a named beneficiary of the Jay Sargeant Trust,
and is therefore an indirect beneficial owner, with respect to 7,368,384
shares. Under the trust, Mr. O'Neill has the right to receive any cash
distributions on the shares, but Jay Sargeant, as the settlor of the Trust,
has retained the right to vote and dispose of the shares, and to revoke or
amend the trust at any time.
(4) Barry LaRose is a named beneficiary of the Jay Sargeant Trust, and
is therefore an indirect beneficial owner, with respect to 23,643,302
shares. Under the Trust, Mr. LaRose has the right to receive any cash
distributions on the shares, but Jay Sargeant, as the settlor of the Trust,
has retained the right to vote and dispose of the shares and to revoke or
amend the trust at any time.
(5) Michel Grise is a named beneficiary of the Jay Sargeant Trust, and
is therefore an indirect owner, with respect to 17,195,966 shares. Under
the trust, Mr. Grise has the right to receive any cash distributions on
the shares, but Jay Sargeant, as the settlor of the Trust, has retained
the right to vote and dispose of the shares and to revoke or amend the
trust at any time.
(6) Consists of 60,000 shares held directly by Mr. Nants and 500,000
shares which may be acquired by Mr. Nants on exercise of incentive stock
options within 60 days of April 8, 2005.
(7) Consists of 250,000 shares held directly by Mr. Raniga and 450,000
shares which may be acquired by Mr. Raniga on exercise of incentive stock
options within 60 days of April 8, 2005.

Security Ownership of Management

We are not aware of any arrangement that might result in a change in control in the future.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information concerning all equity
compensation plans previously approved by stockholders and all previous equity
compensation plans not previously approved by stockholders, as of the most recently
completed fiscal year. On February 17, 2004, our board of directors approved the Stock
Compensation Program (the "Plan"). The Plan became effective on March 30, 2004. Under
the Plan, options to purchase up to 25,000,000 shares of our common stock may be granted
to our employees, officers, directors, and eligible consultants of our company. The Plan
provides that the option price be the fair market value of the stock at the date of grant
as determined by the Board of Directors. Options granted become exercisable and expire as
determined by the Board of Directors.

EQUITY COMPENSATION PLAN INFORMATION AS AT DECEMBER 31, 2004

Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of outstanding remaining available for
exercise of outstanding options, warrants and rights issuance under equity
options, warrants and (b) compensation plans
rights (a) (excluding securities
reflected in column (a)
(c)
Equity Compensation Nil N/A N/A
Plans approved by
security holders

Equity Compensation 19,747,390 $0.14 per share 5,252,610
Plans not approved
by security holders

Total 19,747,390 $0.14 per share 5,252,610

Stock Compensation Program

On February 17, 2004, we established our Stock Compensation Program.
The purpose of the Plan is to advance the interests of our company
and our stockholders by strengthening our ability to obtain and retain
the services of the types of employees, consultants, officers and
directors who will contribute to our long term success and to provide
incentives which are linked directly to increases in stock value which
will inure to the benefit of all our stockholders. The Plan is
administered by our Board of Directors or by a committee of two or
more non-employee directors appointed by the Board of Directors
(the "Administrator"). Subject to the provisions of the Plan,
the Administrator has full and final authority to grant the awards of
stock options and to determine the terms and conditions of the awards
and the number of shares to be issued pursuant thereto. Options
granted under the Plan may be either "incentive stock options,"
which qualify for special tax treatment under the Internal Revenue
Code of 1986, as amended, (the "Code"), nonqualified stock options
or restricted shares.

All of our employees and members of our Board of Directors are
eligible to be granted options. Individuals who have rendered or
are expected to render advisory or consulting services to us are
also eligible to receive options. The maximum number of shares of
our common stock with respect to which options or rights may be
granted under the Plan to any participant is 25,000,000 shares,
subject to certain adjustments to prevent dilution.

The exact terms of the option granted are contained in an option
agreement between us and the person to whom such option is granted.
Eligible employees are not required to pay anything to receive
options. The exercise price for incentive stock options must be
no less than 85% of the fair market value of the common
stock on the date of grant. The exercise price for nonqualified
stock options is determined by the Administrator in its sole and
complete discretion. An option holder may exercise options from
time to time, subject to vesting. Options will vest immediately
upon death or disability of a participant and upon certain
change of control events.

The Administrator may amend the Plan at any time and in any manner,
subject to the following: (1) no recipient of any award may, without
his or her consent, be deprived thereof or of any of his or her
rights thereunder or with respect thereto as a result of such
amendment or termination; and (2) any outstanding incentive
stock option that is modified, extended, renewed, or otherwise
altered must be treated in accordance with Section 424(h) of the Code.

The Plan terminates on March 30, 2014 unless sooner terminated
by action of the Board of Directors. All awards granted under
the Plan expire ten years from the date of grant, or such shorter
period as is determined by the Administrator. No option is
exercisable by any person after such expiration. If an award expires,
terminates or is canceled, the shares of our common stock not
purchased thereunder may again be available for issuance under the Plan.

We filed a registration statement under the Securities Act of 1933,
as amended, to register the 25,000,000 shares of our common stock
reserved for issuance under
the Plan on March 30, 2004.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Except as described below, none of the following parties has, since
our date of incorporation, had any material interest, direct or
indirect, in any transaction with us or in any presently proposed
transaction that has or will materially
affect us, other than noted in this section:

* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting rights attached to our outstanding shares of
common stock;
* Any of our promoters; and
* Any relative or spouse of any of the foregoing persons who has the same
house as such person.
In November 2002, we entered into a consulting agreement with O'Neill
Enterprises, Inc., a company controlled by Dori O'Neill, our Executive Vice
President, Chief Operations Officer, Secretary, Treasurer and a member of our
Board of Directors. Pursuant to the agreement, we agreed to pay $15,000 per
month in consideration of management consulting services provided by Mr.
O'Neill to us. This agreement automatically renewed on a year-to-year
basis at the end of the initial five (5) year term. Effective January 1,
2004, we increased the consulting fee payable to Mr. O'Neill to $20,000
per month with a five year extension.

In November 2002, we entered into a consulting agreement with Flaming
Gorge, Inc., a company controlled by Jay Sargeant, our President, Chief
Executive Officer and a member of our Board of Directors. Pursuant to
the agreement, we agreed to pay $20,000 per month in consideration of
management consulting services provided by Mr. Sargeant to us. This
agreement automatically renewed on a year-to-year basis at the end of
the initial five (5) year term. Effective January 1, 2004, we extended
the consulting agreement of Mr. Sargeant for an additional five year extension.

On May 27, 2002, pursuant to a Declaration of Trust and the revised First
Amendment to Trust Agreement dated December 23, 2003, Jay Sargeant, agreed
that in the event he becomes the owner of stock in EYI Nevada, and/or RGM
International, Inc., a Nevada corporation, he will hold stock in trust
for the below listed persons. As at December 31, 2004 Mr. Sargeant held
11,970,000 shares of common stock of EYI Nevada, allocated as follows:

NAME NUMBER OF SHARES NUMBER OF SHARES AFTER EXCHANGE
Jay Sargeant 3,439,200 26,397,236
Barry LaRose 3,080,400 23,643,302
Michel Grise 2,240,400 17,195,966
Dori O'Neill 960,000 7,368,384
Thomas Viccars 960,000 7,368,384
Kristan Sargeant480,000 3,684,192
Rena Davis 240,000 1,842,096
Donna Keay 180,000 1,381,572
Janet Carpenter 180,000 1,381,572
Shauna Browne 120,000 921,048
Harnek Chandi 90,000 690,786

During the year ended December 31, 2004, we purchased approximately 90% of
our products for resale from Nutri-Diem Inc., a company owned in part
by a director of our company.

In January 2004, entered into a consulting agreement with Rajesh
Raniga to act as our Chief Financial Officer on a month to month
basis for consideration of $150 per hour with a minimum charge of
$2,000 per month and 250,000 shares of our common stock. In
January, 2004, we issued 250,000 shares of restricted common stock
to Rajesh Raniga Inc. for prior consulting services provided to EYI.
Mr. Raniga became our chief financial officer on January 1, 2004.

ITEM 13. EXHIBITS.

(a) Exhibits

The following exhibits are either provided with this Annual Report
or are incorporated herein by reference:

3.1 Articles of Incorporation.(1)
3.2 Certificate of Amendment to Articles of Incorporation
dated December 29, 2003.(11)
3.3 Certificate of Amendment to Articles of Incorporation
dated December 31, 2003.(11)
3.4 Bylaws.(1)
3.5 Amended Bylaws. (12)
10.1 Consulting Agreement, dated as of November 5, 2002, between
Essentially Yours Industries, Inc., a Nevada corporation, and
Flaming Gorge, Inc.(1)
10.2 Consulting Agreement, dated as of November 5, 2002, between
Essentially Yours Industries, Inc., a Nevada corporation, and O'Neill
Enterprises, Inc.(1)
10.3 First Amendment to Trust Agreement dated December 23, 2003,
between Jay Sargeant and twelve named trust beneficiaries, revising
the terms of the Declaration of Trust dated as of May 27, 2002, between
Jay Sargeant and twelve named trust beneficiaries.(5)
10.4 Registration Rights Agreement, dated December 31, 2003, by and
among Safe ID Corporation, A Nevada corporation, and certain
shareholders of EYI Industries, Inc., A Nevada corporation.(5)
10.5 Stock Compensation Program(4)
10.6 Consulting Agreement dated December 27, 2003 between
Rajesh Raniga Inc. and Safe ID Corporation.(6)
10.7 Consulting Agreement dated January 1, 2004 between EYI
Industries, Inc. and O'Neill Enterprises Inc.(6)
10.8 Consulting Agreement dated January 1, 2004 between EYI
Industries, Inc. and Flaming Gorge, Inc. (6)
10.9 Addendum to the Distribution and License Agreement
between Essentially Yours Industries, Inc. and Nutri-Diem Inc.
dated April 30, 2004.(6)
10.10 Letter Agreement dated May 4, 2004 between Eye Wonder, Inc.
and EYI Industries, Inc.(6)
10.11 Letter Agreement dated May 4, 2004 between Eye Wonder, Inc.
and EYI Industries, Inc.(6)
10.12 Standby Equity Distribution Agreement, dated June 22, 2004
by and between EYI Industries, Inc. and Cornell Capital Partners, LP(6)
10.13 Registration Rights Agreement, dated June 22, 2004 by and
between EYI Industries, Inc. and Cornell Capital Partners, LP(6)
10.14 Escrow Agreement, dated June 22, 2004 by and between EYI
Industries, Inc. and Cornell Capital Partners, LP(6)
10.15 Placement Agent Agreement, dated June 22, 2004 by and
between EYI Industries, Inc. and Cornell Capital Partners, LP(6)
10.16 Compensation Debenture, dated June 22, 2004(7)
10.17 Securities Purchase Agreement, dated June 22, 2004 by and
between EYI Industries, Inc. and Cornell Capital Partners, LP(6)
10.18 Investor Registration Rights Agreement, dated June 22, 2004
by and between EYI Industries, Inc. and Cornell Capital Partners, LP(6)
10.19 Security Agreement, dated June 22, 2004 by and between EYI
Industries, Inc. and Cornell Capital Partners, LP(6)
10.20 Irrevocable Transfer Agent Instructions, dated June 22, 2004,
by and among EYI Industries, Inc., Cornell Capital Partners, LP and
Corporate Stock Transfer(6)
10.21 Escrow Agreement, dated June 22, 2004 by and among EYI
Industries, Inc., Cornell Capital Partners, L.P. and Butler Gonzalez, LLP(6)
10.22 Form of Secured Convertible Debenture(6)
10.23 Form of Warrant(7)
10.24 Letter Agreement dated May 25, 2004 between EYI Industries, Inc.
and Source Capital Group, Inc.(8)
10.25 Lease Agreement dated May 1, 2003 among 468058 B.C. Ltd.,
642706 B.C. Ltd., Essentially Yours Industries Corp., and Essentially
Yours Industries, Inc. (8)
10.26 Amendment to Lease Agreement dated January 9, 2004 between
Business Centers, LLC and Halo Distribution, LLC. (8)
10.27 Subsidy Agreement dated July 23, 2004 between Essentially
Yours Industries, Inc. and Winslow Drive Corp. (8)
10.28 Subsidy Agreement dated July 23, 2004 between Essentially
Yours Industries, Inc. and Premier Wellness Products. (8)
10.29 Subsidy Agreement dated July 23, 2004 between Essentially
Yours Industries, Inc. and Stancorp. (8)
10.30 5% Secured Convertible Debenture dated September 24, 2004
between EYI Industries, Inc. and Cornell Capital Partners, LP(8)
10.31 5% Secured Convertible Debenture dated September 27, 2004
between EYI Industries, Inc. and Kent Chou(8)
10.32 5% Secured Convertible Debenture dated September 27, 2004
between EYI Industries, Inc. Taib Bank, E.C.(8)
10.33 Assignment Agreement dated September 27, 2004 between
Cornell Capital Partners, LP and Taib Bank, E.C. (8)
10.34 Assignment Agreement dated September 27, 2004 between
Cornell Capital Partners, LP and Kent Chou(8)
10.35 Joint Venture Agreement dated May 28, 2004 between EYI
Industries, Inc., World Wide Buyer's Club Inc. and Supra Group, Inc.(9)
10.36 Indenture of Lease Agreement dated January 3, 2005
between Golden Plaza Company Ltd., 681563 B.C. Ltd., and 642706
B.C. Ltd.(10)
10.37 Consulting Services Agreement dated March 5, 2004 between
EYI Industries, Inc. and EQUIS Capital Corp.(13)
10.38 Letter dated May 25, 2004 between Source Capital Group,
Inc. and EYI Industries, Inc.(14)
10.39 Consulting Agreement dated April 1, 2004 between EYI
Industries, Inc. and Daniel Matos(14)
10.40 Loan Agreement between Janet Carpenter and EYI Industries,
Inc., dated February 10, 2005
10.41 Promissory Note dated February 10, 2005 between Janet
Carpenter and EYI Industries
10.42 Bonus Share Agreement between Janet Carpenter and EYI
Industries, Inc. dated February 14, 2005
10.43 Pledge and Escrow Agreement dated February 24, 2005
between Janet Carpenter, Cornell Capital Partners, LP and
David Gonzalez.
10.44 Guaranty Agreement dated February 24, 2005 between
Janet Carpenter, Cornell Capital Partners, LP
10.45 Secured Promissory Note dated February 24, 2005 between
EYI Industries, Inc. and Cornell Capital Partners, LP

Exhibit Number

Notes
(1) Filed as an exhibit to the registration statement on Form 10-SB/A
of Safe ID Corporation, filed with the SEC on September 21, 2000.
(2) Filed as an exhibit to the registration statement on Form SB-2
of Essentially Yours Industries, Inc., filed with the SEC on November 12, 2002.
(3) Filed as an exhibit to our Current Report on Form 8-K, filed
with the SEC on January 8, 2004.
(4) Filed as an exhibit to our Registration Statement on Form S-8,
filed with the SEC on March 30, 2004.
(5) Filed as an exhibit to our annual report on Form 10-KSB for
the year ended December 31, 2003, filed with the SEC on April 14, 2004.
(6) Filed as an exhibit to our quarterly report on Form 10-QSB for
the period ended March 31, 2004, filed with the SEC on May 24, 2004.
(7) Filed as an exhibit to our registration statement on Form SB-2,
filed with the SEC on September 17, 2004.
(8) Filed as an exhibit to our quarterly report on Form 10-QSB for
the period ended September 30, 2004, filed with the SEC
on November 22, 2004.
(9) Filed as an exhibit to our Amendment No. 1 to our registration
statement on Form SB-2 on December 23, 2004.
(10) Filed as an exhibit to our Current Report on Form 8-K, filed
with the SEC on January 12, 2005.
(11) Filed as an exhibit to our quarterly report on Form 10-QSB
for the period ended September 30, 2004, filed with the SEC
on November 22, 2004.
(12) Filed as an exhibit to our Current Report on Form 8-K,
filed with the SEC on March 10, 2005.
(13) Filed as an exhibit to our quarterly report on Form
10-QSB/A for the period ended March 31, 2004, filed with the SEC
on December 15, 2004.
(14) Filed as an exhibit to our quarterly report on Form
10-QSB/A for the period ended June 30, 2004, filed with the SEC
on December 15, 2004.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed for the two most recently completed
fiscal years ended December 31, 2004 and 2003 for professional
services rendered by the principal accountant for the audit of
the Corporation's annual financial statements and review of the
financial statements included our Quarterly Reports on Form 10-QSB
and services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements
for these fiscal periods were as follows:

Year Ended December 31, 2004 Year Ended December 31, 2003

Audit Related Fees $106,500 $56,710
Tax Fees $0 $2,150
All Other Fees $0 $1,000
Total $106,500 $59,860

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

EYI INDUSTRIES, INC.

By:
/s/ Jay Sargeant
JAY SARGEANT
President, Chief Executive Officer
(Principal Executive Officer)
Director

Date: April 15, 2005

In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

By:
/s/ Jay Sargeant
JAY SARGEANT
President, Chief Executive Officer
(Principal Executive Officer)
Director

Date: April 15, 2005

By:
/s/ Rajest Raniga
RAJESH RANIGA
Chief Financial Officer
(Principal Accounting Officer)

Date: April 15, 2005

By:
/s/ Dori O'Neill
DORI O'NEILL
Executive Vice-President, Secretary, Treasurer,
Chief Operations Officer
Director

Date: April 15, 2005

By:
/s/ Bruce Nants
BRUCE NANTS
Director

Date: April 15, 2005