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

                                   FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended June 30, 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: 000-27879


                           GATEWAY DISTRIBUTORS, LTD.
                 (Name of small business issuer in its charter)

                NEVADA                                        88-0301278
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                       Identification No.)

    3035 E. PATRICK LANE, SUITE 14,
          LAS VEGAS, NEVADA                                     89120
(Address of principal executive offices)                      (Zip Code)

                                 (702) 938-9316
                           (Issuer's telephone number)

     Check  whether  the  issuer  (1)  filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter  period  that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes  [X]  No  [_]

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of the latest practicable date:  As of August 10, 2004, the
issuer  had 2,787,126,008 shares of its common stock and 2,996,125 shares of its
preferred  stock  issued  and  outstanding.

     Transitional Small Business Disclosure Format (check one):  Yes [_]  No [X]


<PAGE>
                                TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .3
   Item 2.  Management's Discussion and Analysis or Plan of Operation . . . . 10
   Item 3.  Controls and Procedures . . . . . . . . . . . . . . . . . . . . . 11
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 12
   Item  1.  Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 12
   Item  2.  Changes in Securities. . . . . . . . . . . . . . . . . . . . . . 12
   Item  3.  Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . 12
   Item  4.  Submission of Matters to a Vote of Security Holders. . . . . . . 12
   Item  5.  Other Information. . . . . . . . . . . . . . . . . . . . . . . . 12
   Item  6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 12
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 . . . 14
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 . . . 15
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 . . . 16
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 . . ..17


                                        1
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS.

     The financial statements and related notes are included as part of this
Quarterly Report as indexed in the appendix on pages F-1 through F-12.

ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS.

FORWARD-LOOKING INFORMATION

     Much of the discussion in this Item is "forward looking" as that term is
used in Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934.  Actual operations and results may materially differ from
present plans and projections due to changes in economic conditions, new
business opportunities, changed business conditions, and other developments.
Other factors that could cause results to differ materially are described in our
filings with the Securities and Exchange Commission.

     The following are factors that could cause actual results or events to
differ materially from those anticipated, and include, but are not limited to
general economic, financial and business conditions, changes in and compliance
with governmental laws and regulations, including various state and federal
environmental regulations, our ability to obtain additional financing from
outside investors and/or bank and mezzanine lenders; and our ability to generate
sufficient revenues to cover operating losses and position us to achieve
positive cash flow.

     Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof.  We believe
the information contained in this Form 10-QSB to be accurate as of the date
hereof.  Changes may occur after that date.  We will not update that information
except as required by law in the normal course of our public disclosure
practices.

     Additionally, the following discussion regarding our financial condition
and results of operations should be read in conjunction with the financial
statements and related notes contained in Item 1 of Part I of this Form 10-QSB,
as well as the financial statements in Item 7 of Part II of our Form 10-KSB for
the fiscal year ended December 31, 2003.

MANAGEMENT'S PLAN OF OPERATION

     We were originally incorporated in the State of Nevada on May 26, 1993.
Our principal executive office is located at 3035 East Patrick Lane, Suite 14,
Las Vegas, Nevada 89120 and our telephone number is (702) 938-9316.  We are a
network marketing company that sells whole food nutrition, and health and
dietary supplements throughout North America and Japan.

     Our products are marketed through a network marketing system within the
United States and wholesale personal export sales outside the United States.
Network marketing enables our independent distributors in the United States to
earn profits by selling our products to retail consumers.  Distributors may also
develop their own distributor downline organizations by sponsoring others to do
business in any market where we operate, entitling the sponsors to receive
overrides or commissions (cash incentives, including royalties and bonuses) on
product sales within their downline organizations.  We maintain a site on the
World Wide Web at www.rightsolution.com.

     We believe that our network marketing system is ideally suited to our
products, which emphasize a healthy lifestyle, because sales of such products
are strengthened by ongoing personal contact between retail consumers and
distributors, most of whom use our products themselves.  Our network marketing
system appeals to a broad cross-section of people throughout the world,
particularly those seeking to supplement family income, start a home-based
business, or pursue employment opportunities other than conventional, full-time
employment.

     We will continue to seek increased sales opportunities through our network
marketing system by utilizing extensive training and motivational programs.  We
will also hold regional meetings throughout the United States.


                                        2
<PAGE>
We have engaged Jack Zufelt to oversee the training of our marketing and sales
personnel.  Our new starting kits have training material along with product
which will allow the new distributor to get started quicker.  In addition, Jack
Zufelt will conduct conferences, seminars, and one-on-one training.

     We have recently acquired Jeunesse by Francois which are skin care
products originally formulated 75 years ago in Romania.  In the first half of
2004, an infomercial was produced to introduce the new product.  This will allow
us to expand our customer base and increase our sales.

     We extended our agreement with PT. Mahakam Beta Farma in Indonesia.  They
are purchasing our Body Gard product and are distributing it through their
pharmacies throughout Indonesia.

     We anticipate continuing to 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, our
executives, staff, consultants, and outside parties.

SECOND QUARTER COSTS AND CHANGES IN FINANCIAL CONDITIONS

The balance of current assets at December 31, 2003 was $553,000 compared to a
balance of $2,040,000 at June 30, 2004. The balance of current liabilities was
$4,837,000 and $4,233,000, respectively, for the same period. The resulting
current ratio at December 31, 2003 was 0.11 to 1. The current ratio at June 30,
2004 was .48 to 1. The current ratio indicates that our ability to pay our
obligations has significantly improved over the course of the second quarter of
2004.

The balance of accounts receivable at June 30, 2004 was $4,077, a decrease of
$728 from the period ended December 31, 2003. The receivables for all intents
and purposes remained the same. The Company carries very little accounts
receivable as it collects payment for products upon shipment except for a few
customers in Grandma Hamman's that have a payment structure grandfathered in
from the previous operator.

RESULTS OF OPERATIONS

Sales
-----

Sales for the Six Months ended June 30, 2004, were $499,000 compared to $588,000
for the same period in 2003. The decrease in sales of approximately $89,000 is
attributable to the sales volume dropping in its subsidiary, Grandma Hamman's
and the loss of two of the top selling products of The Right Solution Gateway
(Trim Easy and Trim Easy Plus) due to changes in governmental regulations.  The
reduction in Grandma Hamman's sales came about primarily from moving its
operations from Wisconsin to Nevada and the reduction in telemarketing of its
products.  Costs of sales were $90,000 for the Six Months ended on June 30,
2004, compared to $124,000 for the comparable period in 2003.  Cost of sales
decreased by approximately $34,000 due primarily to the reduction in sales.
Sales for the Three Months ended June 30, 2004 of $233,000 are down $43,000 from
the comparable Three Months ended June 30, 2003 of $276,000.  Cost of Sales for
the Three Months ended June 30, 2004 of $45,000 are down $16,000 from the same
period 2003 of $61,000.

Gross Profit
------------

Gross profit decreased $54,000 for the six months ending June 30, 2004 compared
to the six month ending June 30, 2003. The decline in gross profits for the six
months ending June 30, 2004 and 2003 is consistent with the both three month
periods ending June 30, 2004 and 2003, with the three months ending June 30,
2003. Each of the three months ending June 30, 2004 and 2003 are down $34,000,
when taking the last three months as the average and comparing it to the
respective six months ending June 30, 2004 and 2003. Management believes this
most likely indicates the decline of sales and gross profits has leveled off and
that the Company is more likely than not to now be positioned to experience an
increase in sales and gross profits in the near future.

Selling, general and administrative expenses
--------------------------------------------

Selling, general, and administrative expenses were $6,321,000 for the Six Months
ended on June 30, 2004 and $742,000 for the comparable period in 2003, an
increase of approximately $5,579,000. The primary reasons for the increase was a
dramatic increase in services paid with stock issuances of over $4,519,000 for
product development, professional services and an increase in marketing efforts.
Expenses were $3,118,000 for the Three Months ended on June 30, 2004 and
$364,000 for the comparable period in 2003, an increase of approximately
$2,754,000, again attributable to efforts of product development, professional
services and marketing paid with Company stock.

Net loss was $6,037,000 during the Six Months ended on June 30, 2004, compared
to a net loss of $363,000 for the comparable period in 2003. The Company's
increase in the operating loss for the Six Months ended June 30, 2004 of
approximately $5,674,000 was primarily the result of the increases in services
paid with stock issuances for product development, professional services, and
marketing efforts. Net loss for the Three Months ended June 30, 2004 of
$2,993,000 has increased $2,798,000 from the comparable Three Months ended June
30, 2003 of $195,000.


While most of the increases in losses for the three and six month periods ending
June 30, 2004 come for the payment of services with Company stock, an additional
amount of about $1,000,000 comes from non stock issues, which will ultimately be
out of cash.  Out of the $1,000,000 non-stock expenditures, $321,000 was
invested in the one product line of Jeunesse by Francois.  This product as of
August 17, 2004 was recently released for marketing, the results of which are
too early to evaluate.

The remaining $679,000 non stock issued expenditures during the six months ended
June 30, 2004 are primarily for: 1) an increase in payroll preparing and
readying for the anticipated increase in sales activity and investments of the
Company, 2) efforts in product development that are viable but not to the point
where management has determined to capitalize, 3) product development that
management has worked on and reached the conclusion to set aside for now or to
abandon completely, and 4) internal and out of pocket costs associated with the
acquisition of various real estate properties.

Management is confident that these efforts, which have been expensed, are the
beginnings of an upward swing of the Company in its focus and in the direction
the Company is moving.  The Company is diversifying into other areas besides
multi-level marketing and wholesale marketing of nutritional products.  These
other areas of focus the Company is moving into management believes will not
compete with the marketing of nutritional products.  Rather, management
anticipates such efforts will lend economic stability to the Company and will
help to provide the means and time to enhance the possibilities to enjoy
financial success in the marketing of nutritional products.


LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 2004, our current liabilities exceeded current assets in the
amount of $2,192,532.  We generated a cash flow deficit from operations of
$2,856,620 for the six months ended June 30, 2004.  Cash flow deficits from
operating activities for the six months ended June 30, 2004 are primarily
attributable to the development and marketing of new products and the loss of
two of the top selling products (Trim Easy and Trim Easy Plus) due to changes in
governmental regulations.

     We used for investing activities $2,757,883 of which $2,326,988 was used
in acquiring real estate properties and $248,687 was used in "Product
Development Awaiting Production", an "Other Asset".

     Cash flow provided from financing activities was $6,084,206 for the six
months ended June 30, 2004.  This was mainly from proceeds received from
employees for stock options exercised during this period of $5,099,411 and an
increase of $984,795 in term debt, mostly for the acquisition of real estate.

     As discussed by our accountants in the audited financial statements
included in Item 7 of our Annual Report on Form 10-KSB, our revenue is currently
insufficient to cover our costs and expenses.  We anticipate raising any
necessary capital from outside investors coupled with bank or mezzanine lenders.
As of the date of this report, we have not entered into any negotiations with
any third parties to provide such capital.

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

     By adjusting our operations and development to the level of
capitalization, we believe we have sufficient capital resources to meet
projected cash flow deficits through the next 12 months.  However, if thereafter
we are not successful in generating sufficient liquidity from operations or in
raising sufficient capital resources, on terms acceptable to us, there could be
a material adverse effect on our business, results of operations, liquidity and
financial condition.

     We will continue to evaluate opportunities for corporate development.
Subject to our ability to obtain adequate financing at the applicable time, we
may enter into definitive agreements on one or more of those opportunities.


                                        3
<PAGE>
     Our independent certified public accountants have stated in their report
included in our December 31, 2003 Form 10-KSB, that we have incurred operating
losses in the last two years, and that we are dependent upon management's
ability to develop profitable operations.  These factors among others may raise
substantial doubt about our ability to continue as a going concern.

RECENT DEVELOPMENTS

     Effective June 28, 2004 we implemented a reverse split of our common stock
on the basis of one post-consolidation share for each 900 pre-consolidation
shares.  Our trading symbol was changed to "GWAD.OB."  Effective June 28, 2004
we also increased the number of our authorized shares of preferred stock from
1,000,000 to 200,000,000 shares.

     Each of these corporate actions was accomplished by filing the Articles of
Amendment to our Articles of Incorporation with the Secretary of State of
Nevada.

OFF-BALANCE SHEET ARRANGEMENTS

     We do not have any off-balance sheet arrangements.

ITEM 3.  CONTROLS AND PROCEDURES.

     Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.  Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.

     Evaluation of disclosure and controls and procedures.  As of the end of
the period covered by this Quarterly Report, we conducted an evaluation, under
the supervision and with the participation of our chief executive officer and
chief financial officer, of our disclosure controls and procedures (as defined
in Rules 13a-15(e) of the Exchange Act).  Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

     Changes in internal controls over financial reporting.  There was no
change in our internal controls, which are included within disclosure controls
and procedures, during our most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
controls.

                          PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     Reference is made to Item 1 of Part II of our Quarterly Report for the
period ended March 31, 2004, filed with the Commission on May 17, 2004.

ITEM 2.  CHANGES IN SECURITIES.

     Please see information regarding reverse split of our common stock under
"Recent Developments," above.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

     None.


                                        4
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     On June 28, 2004, at a special shareholders' meeting, our shareholders
voted in favor of a resolution to amend our articles of incorporation to:

-    Increase  the  authorized  shares  of our preferred stock from 1,000,000 to
     200,000,000  shares;  and

-    Effect  a  reverse  split  of  our  common  stock  on  the  basis  of  one
     post-consolidation  share  for up to each 1,000 pre-consolidation shares to
     occur  at  some time within 12 months of June 28, 2004, with the exact time
     of  the  reverse  split  to  be  determined  by  the  board  of  directors.

     The total number of votes cast in favor of each of the above proposals was
7,552,686,678  shares of our common stock, which number exceeded the majority of
the  issued  and  outstanding  shares  of  our  common  stock on the record date
required  to  pass  the  proposed  amendments.

ITEM 5.  OTHER INFORMATION.

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits.

<TABLE>
<CAPTION>
EXHIBIT NO.  IDENTIFICATION OF EXHIBIT
-----------  -------------------------------------------------------------------------------------------------
<C>          <S>
  3.1**      Articles of Incorporation
  3.2*       Articles of Amendment to the Articles of Incorporation.
  3.3*       Articles of Amendment to the Articles of Incorporation.
  3.2**      Bylaws
  10.1*      Consulting Agreement between the Company and Jack M. Zufelt.
  10.2*      Consulting Agreement between the Company and Tarun Mendiratta.
  10.3*      Settlement Agreement between the Company, Herbally Yours, and Blaine Wendtland.
  31.1*      Certification of Richard A. Bailey, Chief Executive Officer of Gateway Distributors, Ltd.,
             pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of 2002.
  31.2*      Certification of Richard A. Bailey, Chief Financial Officer of Gateway Distributors, Ltd.,
             pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of 2002.
  32.1*      Certification of Richard A. Bailey, Chief Executive Officer of Gateway Distributors, Ltd.,
             pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002.
  32.2*      Certification of Richard A. Bailey, Chief Financial Officer of Gateway Distributors, Ltd.,
             pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002
</TABLE>
__________
*    Filed  herewith.
**   Previously  filed.


                                        5
<PAGE>
(b)  Reports on Form 8-K.

     None.


                                   SIGNATURES

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

                                   GATEWAY DISTRIBUTORS, LTD.

Dated August 20, 2004.

                                   By  /s/  Richard A. Bailey
                                     -------------------------------------------
                                       Richard A. Bailey,
                                       President and Chief Executive Officer


                                        6
<PAGE>
                                    APPENDIX


ITEM 1.     FINANCIAL STATEMENTS

As used herein, the term "Company" refers to Gateway Distributors, Ltd., a
Nevada corporation, and its subsidiaries and predecessors unless otherwise
indicated.  Unaudited, interim, condensed, consolidated financial statements
including a balance sheet for the Company as of the period ended June 30, 2004,
and statements of operations, and statements of cash flows, for interim periods
up to the date of such balance sheet and the comparable period of the preceding
year are attached hereto as Pages F-1 through F-12 and are incorporated herein
by this reference.

BASIS  OF  PRESENTATION

The  accompanying  consolidated  unaudited financial statements are presented in
accordance with accounting principles generally accepted in the United States of
America  for  interim financial information and the instructions for Form 10-QSB
and Item 310 under subpart A of Regulation S-B. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted  in the United States of America for complete financial statements. The
accompanying statements should be read in conjunction with the audited financial
statements  for  the years ended December 31, 2003 and December 31, 2002. In the
opinion of management, all adjustments considered necessary in order to make the
financial  statements  not  misleading have been included. Operating results for
the  quarter  and  period  ended June 30, 2004 are not necessarily indicative of
results that may be expected for the year ended December 31, 2004. The financial
statements  are  presented  on  the  accrual  basis.




     [THIS  SPACE  LEFT  BLANK  INTENTIONALLY]




<PAGE>
                   GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES


                                  - CONTENTS -


                                                                PAGE NUMBER
                                                                -----------
Financial Statements:

   Balance Sheet                                                    F-1

   Statement of Operations                                          F-3

   Statement of Stockholders - Equity                               F-4

   Statement of Cash Flows                                          F-5

   Notes to Financial Statements                                    F-7


<PAGE>
<TABLE>
<CAPTION>
                  GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEET

ASSETS                                                              June 30,
                                                                     2004
<S>                                                               <C>
CURRENT ASSETS:
   Cash and cash equivalents                                      $  632,893
   Accounts Receivable                                                 4,077
   Receivable from Stock Sales                                       273,888
   Property Held for Short Term Investment                           770,715
   Inventories                                                       358,908
                                                                  -----------
                                            Total Current Assets  $2,040,481
                                                                  -----------

PROPERTY & EQUIPMENT
   Property and Equipment, at cost                                 2,468,001
   (Less) accumulated depreciation and amortization                 (122,984)
                                                                  -----------
                                      Total Property & Equipment  $2,345,017
                                                                  -----------


OTHER ASSETS
   Product Development Awaiting Production                           248,687
   Goodwill, Trademarks & Formulas                                   726,969
   Website                                                            25,000
   Stock Investment - Non-Equity                                      25,000
   Other Assets                                                      121,097
                                                                  -----------
                                              Total Other Assets  $1,146,753
                                                                  -----------

Total Assets                                                      $5,532,251
                                                                  ===========
</TABLE>

                      See Notes to the Financial Statements

                                       F-1


<PAGE>
<TABLE>
<CAPTION>
          GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
             UNAUDITED CONSOLIDATED BALANCE SHEET

            LIABILITIES                       June 30,
                                               2004
<S>                                       <C>
CURRENT LIABILITIES:
Current maturities of long-term debt        1,546,662
Accounts payable:
  Trade                                       385,001
  Commissions                                 714,971
Accrued expenses:
  Payroll and employee benefits               142,897
  Payroll taxes                               153,069
  Interest                                  1,255,641
  Other                                        34,772
                                          ------------
Total current liabilities                   4,233,013
                                          ============

LONG-TERM DEBT                              1,364,660

                                          ------------
Total Liabilities                           5,597,673
                                          ============

STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock - $.001 par value
  Authorized - 1,000,000 shares
  996,125 shares issued and outstanding           996
Common stock, - $.001 par value
  Authorized - 25,000,000,000 shares
  Issued and outstanding - 40,050,917          40,051
  Additional paid-in capital               17,409,356
  Accumulated (deficit)                   (17,515,825)

                                          ------------
Total Equity (Deficiency)                     (65,422)
                                          ------------

                                          ------------
Total Liabilities & Equity (Deficiency)     5,532,251
                                          ============
</TABLE>

                      See Notes to the Financial Statements

                                       F-2


<PAGE>
<TABLE>
<CAPTION>
                                   GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
                                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                            3 Months      3 Months      6 Months      6 Months
                                                              Ended         Ended         Ended         Ended
                                                            June 30,      June 30,      June 30,      June 30,
                                                              2004          2003          2004          2003
                                                          -------------  -----------  -------------  -----------
<S>                                                       <C>            <C>          <C>            <C>
SALES                                                     $    233,400   $  276,226   $    499,508   $  588,046

COST OF SALES                                                   45,840       61,725         90,140      124,785
                                                          -------------  -----------  -------------  -----------

GROSS PROFIT                                                   187,560      214,501        409,368      463,261
                                                          -------------  -----------  -------------  -----------

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES:
    Depreciation Expense                                        11,737            0         16,737            0
    Professional Services                                    1,169,299       93,940      1,193,948      262,139
    Development of Jeunesse by Francois Product Line            74,343            0        321,000            0
    Product Development                                        931,735                   3,299,663
    All Other Selling, General and Administrative              931,053      270,413      1,489,889      479,940
                                                          -------------  -----------  -------------  -----------

TOTAL SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES                                                     3,118,167      364,353      6,321,237      742,079

OTHER INCOME (EXPENSE):
    Loss on Sale of Assets                                      (1,774)           0         (1,774)           0
    Additional Loss Incurred on 2002 Sale of Subsidiary        (40,000)           0        (40,000)           0
    Interest Expense                                           (66,227)     (48,023)      (129,589)     (87,256)
    Other Income                                                44,635        2,203         45,524        2,203
                                                          -------------  -----------  -------------  -----------

                                                               (63,366)     (45,820)      (125,839)     (85,053)


NET INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAX                                                  (2,993,973)    (195,672)    (6,037,708)    (363,871)

PROVISION FOR INCOME TAX                                  $          0   $        0   $          0   $        0

                                                          -------------  -----------  -------------  -----------
NET INCOME (LOSS)                                          ($2,993,973)   ($195,672)   ($6,037,708)   ($363,871)
                                                          =============  ===========  =============  ===========



BASIC AND DILUTED EARNINGS (LOSS) PER
SHARE                                                           ($0.16)      ($0.13)        ($0.00)      ($0.05)
                                                          -------------  -----------  -------------  -----------

BASIC & DILUTED WEIGHTED AVERAGE SHARES
OF                                                              18,510    1,498,042     11,271,334    7,495,204
                                                          =============  ===========  =============  ===========
COMMON STOCK (000 OMITTED)
</TABLE>

                      See Notes to the Financial Statements

                                       F-3


<PAGE>
<TABLE>
<CAPTION>
                                           GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                                      FOR THE PERIODS ENDED
                                 JUNE 30, 2004 (UNAUDITED) DECEMBER 31, 2003 AND 2002 (AUDITED)
                                           Preferred Stock        Common                 Paid In       Retained      Net Equity
                                                                  Stock                  Excess
                                          Par Value $0.001        Par Value $0.001       of Par        Earnings     (Deficiency)
                                           Shares    Amount      Shares      Amount                    (Deficit)
                                          --------  ---------  -----------  ---------  ------------  -------------  ------------
<S>                                       <C>       <C>        <C>          <C>        <C>           <C>            <C>
BALANCE - December 31, 2002                    125  $       1         977   $       1  $ 4,521,591    ($9,754,654)  ($5,233,061)
                                          ========  =========  ===========  =========  ============  =============  ============

Adjustment - Rounding Prior Stock Splits                                2           0            0                            0
Stock for Services - Preferred Stock       726,000        725                               71,875                       72,600
Stock for Services - Restricted Stock                              62,222          62        5,538                        5,600
Stock for Services - Unrestricted Stock                            10,775          11      473,877                      473,888
Cash                                                              613,950         614    1,887,893                    1,888,507
Debt - Accounts Payable                                                63           0        2,022                        2,022
Debt - Note Payable - Suburban                                          6           0      273,781                      273,781
Renegotiation Acquisition Grandma
   Hammans acquired 2002                                                0           0            0                            0
Note Payable - Suburban Paid Off
   Via Stock Sold In 2002 By Suburban                                  (2)
   At a Value Greater In 2003 Than
   Was Estimated In 2002                                                0           0      500,000                      500,000

(Loss) for the period                                                                                  (1,723,463)   (1,723,463)

                                          --------  ---------  -----------  ---------  ------------  -------------  ------------
BALANCE - December 31, 2003                726,125        726     687,993         688    7,736,577    (11,478,117)   (3,740,126)

Stock for Services - Restricted Stock      270,000        270                               26,730                       27,000
Stock for Services - Restricted Stock                           3,888,889       3,889      346,111                      350,000
Stock for Services - Unrestricted Stock                         1,358,678       1,358    2,309,129                    2,310,487
Stock for Cash                                                  2,254,642       2,255    2,568,103                    2,570,358

(Loss) for the period                                                                                  (3,507,612)   (3,507,612)

                                          --------  ---------  -----------  ---------  ------------  -------------  ------------
BALANCE - March 31, 2004                   996,125        996   8,190,202       8,190   12,986,650    (14,985,729)   (1,989,893)

Assigned Value of Restricted Stock
     Preferred Stock $270, not $27,000                                                     (26,730)                     (26,730)
     Common Stock $3,500, not $350,000                                                    (346,500)                    (346,500)

Reduction of Loss for the period
     Preferred Stock for Services                                                                          26,730        26,730
     Common Stock for Services                                                                            346,500       346,500
     Capitalized as Product Development
           Awaiting Production                                                                             90,647        90,647

Adjusted (Loss) for the period                                                                         (3,043,735)

                                          --------  ---------  -----------  ---------  ------------  -------------  ------------
BALANCE - June 30, 2004                    996,125        996   8,190,202       8,190   12,613,420    (14,521,852)   (1,899,246)

Stock for Services - Preferred Stock             0          0                                                                 0
Stock for Services - Restricted Stock                          16,975,064      16,975      (12,785)                       4,190
Stock for Services - Unrestricted Stock                         7,783,210       7,784    2,197,428                    2,205,212
Stock for Cash                                                  7,102,441       7,102    2,611,293                    2,618,395

(Loss) for the period                                                                                  (2,993,973)   (2,993,973)

                                          --------  ---------  -----------  ---------  ------------  -------------  ------------
BALANCE - June 30, 2004                    996,125  $     996  40,050,917   $  40,051  $17,409,356   ($17,515,825)     ($65,422)
                                          ========  =========  ===========  =========  ============  =============  ============
</TABLE>

                      See Notes to the Financial Statements

                                       F-4


<PAGE>
<TABLE>
<CAPTION>
                         GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
                       UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            6 Months Ended    6 Months Ended
                                                               June 30,          June 30,
                                                                 2004              2003
                                                           ----------------  ----------------
<S>                                                        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)                                                      (6,037,708)         (363,871)
Adjustments to reconcile net (loss)
     to net cash from (to) operating activities:
     Stock issued for Services                                   4,523,659            23,606
     Loss on Sale of Fixed Assets                                        0            36,926
     Depreciation & Amortization Prop & Equip                       16,737            25,197

Changes in operating assets and liabilities which
  increase (decrease) cash flow:
     Accounts Receivable                                               728              (777)
     Inventory                                                    (157,683)           48,274
     Properties Held for Short Term Investment                    (770,715)
     Prepaid Expenses and Other Current Assets                           0            (1,639)
     Accounts Payable and Commissions                             (169,468)          (35,436)
     Accrued Liabilities                                          (262,170)           57,067

                                                           ----------------  ----------------
Net cash provided (used) from operating activities              (2,856,620)         (210,653)
                                                           ================  ================

CASH FLOWS FROM INVESTING ACTIVITIES:
     Product Development Awaiting Production                      (248,687)                0
     Capital (Outlays)/Disposals                                (2,326,988)          (50,435)
     Purchase of Trademarks                                        (66,873)                0
     Renegotiation of Purchase of Grandma Hammans                  (18,600)         (217,500)
     Other Assets                                                  (96,735)          (78,642)

                                                           ----------------  ----------------
Net cash provided (used) from investing activities              (2,757,883)         (346,577)
                                                           ================  ================

CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Term Debt after Principal Payments               984,795                 0
Principle Payment on Debts (over) net proceeds Term Debt                 0           155,042
Stock Sales for Cash; Net                                        5,099,411           416,301

                                                           ----------------  ----------------
Net cash provided (used) from financing activities               6,084,206           571,343
                                                           ================  ================

NET INCREASE (DECREASE) IN CASH EQUIVALENTS                        469,703            14,113

CASH AND CASH EQUIVALENTS - Beginning of Period                    163,190               215
                                                           ----------------  ----------------

                                                           ----------------  ----------------
CASH AND CASH EQUIVALENTS - End of Period                  $       632,893   $        14,328
                                                           ================  ================
</TABLE>

                                       F-5


<PAGE>
<TABLE>
<CAPTION>
                            GATEWAY DISTRIBUTORS, LTD
            UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED

                                              6 Months Ended  6 Months Ended
                                                 June 30,        June 30,
                                                   2004            2003
                                              --------------  --------------
<S>                                           <C>             <C>
SUPPLEMENTAL DISCLOSURE

CASH PAID FOR:
  Interest                                            54,628          78,466
  Taxes                                                    0               0


NON CASH INVESTING AND FINANCING ACTIVITIES

STOCK ISSUED FOR:
  Services                                         4,523,659          23,606


CONTRIBUTION TO CAPITAL WITH NO STOCK ISSUED

Note Payable - Suburban
  Paid off via stock value greater in 2003
  than estimated in 2002 - no additional
  stock issued in 2003                                     0               0
</TABLE>


                      See Notes to the Financial Statements

                                       F-6


<PAGE>
                   GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2004

NOTE 1 - BASIS OF PRESENTATION:

     The  consolidated  interim  condensed financial statements at June 30, 2004
     and  for  the  six  months  ended June 30, 2004 and 2003 are unaudited, but
     include  all  adjustments, which the Company considers necessary for a fair
     presentation.

     The accompanying unaudited financial statements are for the interim periods
     and  do  not  include all disclosures normally provided in annual financial
     statements,  and  should  be  read  in  conjunction with the Company's Form
     10-KSB  for the year ended December 31, 2003. The accompanying consolidated
     unaudited interim financial statements for the six month periods ended June
     30,  2004  and 2003 are not necessarily indicative of the results which can
     be  expected  for  the  entire  year.

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


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Principles  of  Consolidation

     The Company has the following wholly owned subsidiaries:

          The  Right  Solution  Gateway  (multilevel marketing and retail sales)

          Grandma  Hammans  Specialty  Foods  (wholesale  sales)

          Gateway  Venture  Holdings, Inc. (a Nevada Corporation organized April
          30,  2004  to  house  and  manage  the real estate and vehicles of the
          Company)

          Aspen  Cove Resorts, Inc (a Nevada Corporation organized April 30,2004
          to  operate  the  Aspen  Cove  Resort.)

     The  Company  also  owns  51%  interest  in the following company, which is
     consolidated  into  the  unaudited  financial  statements:

          Quality  Distribution  Services  of Arizona, Inc (a Nevada Corporation
          organized  June  7,  2004  as a wholesale distributor of non-alcoholic
          beverages.  As of June 30, 2004 no operating activity has occurred, so
          no minority interest has been recognized in the financial statements.)

     The  accompanying consolidated financial statements include the accounts of
     its  subsidiaries.  All  significant intercompany balances and transactions
     have  been  eliminated.


NOTE 3 - LICENSING / PURCHASE AGREEMENT WITH THE CHELSEA COLLECTION INC.:

     The  Company  entered  into  a  verbal agreement December 12, 2003 with The
     Chelsea  Collection  Inc, a Nevada corporation ("Chelsea Collection") which
     was  finalized on March 15, 2004 and later clarified on a few points May 4,
     2004.  Chelsea Collection is a corporation owned equally by two officers of
     the  Company


                                         F-7
<PAGE>
     and  Francois  Vautour,  an  unrelated  third party of the Company. Chelsea
     Collection  in  an  agreement  dated November 25, 2003 acquired among other
     things from Francois Vautour and assigns, except for Romania, all worldwide
     rights,  trademarks,  formulas  and  licenses  of  the Jeunesse by Fran ois
     Vautour  and  the  GH3  skin  care  line.

     In  the agreement the Company has with Chelsea Collection, the Company will
     have  the  opportunity  to acquire the same Francois Vautour skin care line
     from  Chelsea  Collection for virtually the same price and terms as Chelsea
     Collection  is  buying it from Francois Vautour. The terms of the agreement
     involves  a  purchase price of $4,000,000. Payment are computed based on15%
     of  the  gross sales less cost of goods sold with a minimum weekly payment.
     The  minimum  weekly  payment  presently  is $7,500 and continues at $7,500
     through  November  2004 when it increases an additional $2,500 per week, or
     $10,000  a  week.  Once the purchase price is paid, then a royalty of up to
     15%  of  the  gross  sales  less  cost  of  goods sold steps into place and
     continues  thereafter.  The cost outlays have been charged to the statement
     of operations as a selling, general and administrative expense. The January
     through  March  2004  cost of the skin care line is $156,000 and from April
     through  June  2004  is  165,000  for  a  total  of  $321,000.

     No  title or ownership passes to the Company or to Chelsea Collection until
     the  November  25,  2003  agreement between Chelsea Collection and Fran ois
     Vautour  is  paid  in  full, the payment of which is described in the prior
     paragraph.  The  Company  has  opted  not to capitalize the purchase price.

     The  Company  is  responsible  for all product research and development for
     current  and  future  marketing as well as carrying inventory. A portion of
     the  cost  outlays  through  June 30, 2004 have been charged to the balance
     sheet  as  an  asset  under  product  development  awaiting  production for
     $168,512.

NOTE 4 - REVERSE STOCK SPLIT:

     On  June  28,  2004,  the  Company did a 900 for 1 reverse stock split. The
     financial  statements have reflected this reverse stock split retroactively
     to  inception.

NOTE 5 - EMPLOYEE STOCK INCENTIVE PLAN ("ESIP"):

     Since March 31, 2004 the Company has filed with the Securities and Exchange
     Commission  ("SEC")  Forms  S-8  notifying of Employee Stock Incentive Plan
     ("ESIP")  and its increases in stock approved to issue under the 2004 plan.

     During  January  through  March  2004  the  Company  issued  the  remaining
     447,745,400  shares  authorized out of the 1 billion shares approved in the
     ESIP  Plan 2003. Also, during January through March 2004 the Company issued
     1,581,362,000  shares and during April through June 2004 the Company issued
     5,944,765,700  shares  out of the ESIP plan 2004. During April through June
     2004  the  Company approved an additional 7.3 billion shares for a total of
     10.2  billion  shares  authorized  to  be  issued  thru the ESIP plan 2004,
     including amendments, of which 7,526,127,700 shares have been issued out of
     the  ESIP  Plan  2004  as of June 30, 2004 leaving 2,673,872,300 authorized
     shares  available  to  issue.

     The  total  net  proceeds  received  from these stock issues during January
     through  March  2004  and  April  through  June  2004  are  $2,570,358  and
     $2,618,395  respectively,  for  a  total of $5,188,753 as of June 30, 2004.


NOTE 6 - RECEIVABLE ESIP STOCK PLAN:

     Stock  issues  through the Employee Stock Incentive Plan (ESIP) are treated
     as  sold  in the period issued and are reported as a receivable rather than
     negative  equity  provided  the  proceeds are received before the financial
     statements  are  released.  Funds  to  be  received from the ESIP Plan were
     reported  as  of June 30, 2004 as "Receivable ESIP Stock Plan" as a current
     asset  in  the  amount of $273,888. This amount is for stock issued by June
     30,  2004,  the  sale  proceeds of which are received by the Company during
     July  2004.


                                         F-8
<PAGE>
NOTE 7 - NON-EMPLOYEE, DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN ("RSP"):

     The  Company  has filed with the Securities and Exchange Commission ("SEC")
     since  March 31, 2004 amended Forms S-8 notifying of Non-Employee Directors
     and  Consultants  Retainer  Stock  Plan  ("RSP") and its increases in stock
     approved  to  issue  under  the  2004  plan.

     Some  services  are  provided  and  paid for by RSP stock issuances. During
     January  through  March  2004  the company issued the remaining 990,448,916
     shares  authorized  out  of  the  1 billion shares approved in the RSP Plan
     2003.  Also,  during  January  through  March  2004  the  company  issued
     232,432,214  shares  and  during April through June 2004 the Company issued
     4,684,098,916  shares  out  of the RSP plan 2004. During April through June
     2004 the company approved an additional 5 billion shares for a total of 6.5
     billion  shares  authorized to be issued thru the RSP plan 2004. As of June
     30,  2004  there  remained  a  total  of  1,583,468,870  authorized  shares
     available  to  issue.

     The  RSP  shares issued during January through March 2004 and April through
     June  2004  for  a  value  of $2,310,487 and $2,205,212 respectively, for a
     total  of  $4,515,699  as  of June 30, 2004. These values were based on the
     market  value  at  the  time  the stock is available for sale, estimated at
     approximately  15  days  after  the  date  authorized  to  issue.

NOTE 8 - RESTRICTED STOCK ISSUED TO CONSULTANTS:

     During April through June 2004, the Company issued 5,556 restricted shares,
     to  a  consultant for services rendered. Restricted stock has no measurable
     value.  However,  $3,500  was  assigned  as  a  value  for  this  stock.

NOTE 9 - RESTRICTED STOCK ISSUED TO OFFICERS (RELATED PARTY TRANSACTIONS):

     During  January through March 2004 and April through June 2004, the Company
     issued  3,888,889  and  16,975,064  shares  respectively,  for  a  total of
     20,863,953 of restricted common stock to officers. This restricted stock is
     not  marketable.  Consequently,  no  value  can  be  determined  for  this
     restricted  stock  issued.  However a nominal amount of $3,500 from January
     through  March 2004 and $690 from April through June 2004 has been assigned
     as  the  value  for  this  non-marketable  stock  issued.

     During  January  through  March  2004, the Company issued 270,000 shares of
     restricted  preferred  stock  to  officers. The Board of Directors approved
     preferred  stock rather than common stock for compensation. Preferred stock
     is  negotiable at a value of 1 share of preferred stock for 1,000 shares of
     common  stock.  This  restricted  stock is not marketable. Consequently, no
     value can be determined for this restricted stock issued. However a nominal
     amount of $270 has been assigned as the value for this non-marketable stock
     issued.

NOTE 10 - NEPOTISM DISCLOSURE (RELATED PARTY TRANSACTIONS):

     The  daughter  of  the  Chief  Executive  Officer  works  as  Marketing
     Representative  and  the son of the Chief Operations Officer serves as Vice
     President  of  Operations  with  additional responsibilities in Information
     Technology.  Other  children of the officers work part time for the Company
     in  non-managerial  positions.

NOTE 11 - RECLASSIFICATION AND RESTATEMENTS:

     Selected items in the June 30, 2003 and March 31, 2004 financial statements
     as previously reported have been reclassified and restated to be consistent
     with  the  unaudited  financial  statements  as  of  June  30,  2004.

     In the case of the March 31, 2004 unaudited financial statements management
     identified the value assigned for restricted preferred and common stock was
     computed  incorrectly.  The  restricted preferred stock should be valued at
     $270 instead of $27,000 and the restricted common stock should be valued at
     $3,500  instead  of  $350,000.  Presented  as  part  of  this  Note  is the
     correction  this computational error had on the Statement of Operations for
     the  three months ended March 31, 2004. Refer to the Consolidated Statement
     of  Stockholder's  Equity  (Deficiency)  for  the  impact  on  equity.


                                         F-9
<PAGE>
<TABLE>
<CAPTION>
                        GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
             RESTATEMENT OF THE UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                             THREE MONTHS ENDED MARCH 31, 2004

                                                            As Corrected     As Originally
                                                             with these        Reported
                                                           March 31, 2004
                                                             Financial
                                                             Statements
                                                          ----------------  ---------------
<S>                                                       <C>               <C>
SALES                                                     $       266,108   $      266,107

COST OF SALES                                                      44,300           44,300
                                                          ----------------  ---------------

GROSS PROFIT                                                      221,808          221,807
                                                          ----------------  ---------------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
    Depreciation Expense                                            5,000            5,000
    Professional Services                                          24,649        2,687,482
    Development of Jeunesse by Francois Product Line              246,657          246,657
    Product Development                                         2,367,928                0
    All Other Selling, General and Administrative                 558,836          726,919
                                                          ----------------  ---------------

TOTAL SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES                                                        3,203,070        3,666,058

OTHER INCOME (EXPENSE):
    Loss on Sale of Assets                                              0
    Additional Loss Incurred on 2002 Sale of Subsidiary                 0
    Interest Expense                                              (63,362)         (63,361)
    Other Income                                                      889
                                                          ----------------  ---------------

                                                                  (62,473)         (63,361)


NET INCOME (LOSS) BEFORE PROVISION FOR INCOME
TAX                                                            (3,043,735)      (3,507,612)

PROVISION FOR INCOME TAX                                  $             0   $            0

NET INCOME (LOSS)                                             ($3,043,735)     ($3,507,612)
                                                          ================  ===============


BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                        ($0.00)          ($0.00)
                                                          ================  ===============

BASIC & DILUTED WEIGHTED AVERAGE SHARES OF                      6,111,088        7,371,182
                                                          ================  ===============
COMMON STOCK (000 OMITTED)
</TABLE>



NOTE 12- PURCHASE OF REAL ESTATE AND TRANSPORTATION EQUIPMENT:

     As  of  June  30,  2004,  the  Company  has  purchased  various real estate
     properties.  Some  of these properties are held for investment while others
     are  held  and  used  by  the  Company  in  its  operations.

     The  Company  created Gateway Venture Holdings, Inc ("Gateway Ventures"), a
     wholly  owned subsidiary, designed to own the real estate properties of the
     Company.


                                         F-10
<PAGE>
     One of these properties is a 50% ownership in Aspen Cove Resort, located in
     a  pristine area of southwestern Utah. (The Company had previously reported
     in the SEC Form 10-QSB filing for March 31, 2004 that the ownership held by
     the  Company  was  66  2/3% rather than 50%.) The Company has created Aspen
     Cove  Resort,  Inc,  a wholly owned subsidiary, to manage the operations of
     the  Aspen Cove Resort. In agreement with the other party owning Aspen Cove
     Resort  (the  property),  the Company and the other party share equally the
     profits  and  losses  of Aspen Cove Resort, Inc. (the operations) after all
     expenses  of  operations.

     The  Company  also  purchased  a  50% ownership interest in some commercial
     properties  in  the southeastern part of Las Vegas, Nevada. The Company has
     identified  this  property  as  its future office and warehouse facilities.

     The  Company  has  also  purchased  other  real  estate properties that are
     reported  as  part of Property and Equipment, at cost, on the balance sheet
     as  of  June  30,  2004.  The Company has also purchased vehicles and other
     transportation  equipment,  some  of  which  are  in  conjunction  with the
     purchase  of  some  of  the  real  estate  purchases.

     As  of  June  30,  2004  the Company has acquired the following real estate
     properties  and  transportation  equipment,  all  in  2004  (no  additional
     acquisitions  have  occurred  since  June  30,  2004):


                                                                      Remaining
                                                        Cost          Debt Owed
                                                     ----------       ----------

     CURRENT ASSETS

       Property Held for Short Term Investment       $  770,715       $        0

     PROPERTY & EQUIPMENT

       Aspen Cove Resort (50% ownership)                723,891          493,505

       Future Offices and Warehouse of the
       Company (50% ownership)                        1,234,326          915,000

       All Other Real Estate                            103,544                0

       Vehicle & Other Transportation Equipment         241,763                0
                                                     ----------       ----------

       Total                                         $3,074,239        1,408,505
                                                     ==========       ==========


     If  the  other  party  defaulted on its share of the debt of the Aspen Cove
     Resort,  as  well  as  the Future Offices and Warehouse of the Company, the
     Company  would then take over the other 50% ownership of the assets and own
     all  such assets and all of its related debts. If this were to happen, then
     as  of  June  30,  2004 the additional cost of the properties of $1,958,217
     would be added to the value of the properties and offset with an additional
     debt  of  $1,408,505,  thus  adding approximately $550,000 net value to the
     financial  picture  of  the  Company.

     With this in mind, the Company has no off-balance sheet arrangements.


                                         F-11
<PAGE>
NOTE 13- INVESTMENT IN SHORT TERM SECURITIES:

     The  Company  purchased  stock  in  an  unrelated  company  as a short term
     investment  for  $25,000.  As  of  June  30, 2004 the market value of these
     securities  approximates  $5,000.  Gain  or loss on this investment will be
     recognized  at  the  time  of  sale or at year end, which ever comes first.

NOTE 14- INVESTMENT IN PROJECTS:

     As  of  June 30, 2004 the Company has invested in various projects. Some of
     these  projects  the  Company  has  determined  are  worth pursuing and are
     expected  to  be  profitable while others the Company has determined to set
     aside  and  to  pursue no further. Many of these projects involved finders'
     fees  and  other  consulting  fees  that were paid with free trading common
     stock  of the Company. This common stock is issued by the Company under its
     Non-Employee,  Directors  and  Consultants  Retainer  Stock  Plan ("Plan").

     As  discussed  in  a  prior  footnote,  the  stock issued under the Plan is
     unrestricted  and is issued as "S-8" stock as defined by the Securities and
     Exchange  Commission  ("SEC").  It  is management's opinion that such stock
     (S-8 stock) cannot be issued for assets. Therefore, the value of such stock
     has  been  expensed  when  perhaps  it  could have been capitalized. Should
     management  determine at a later date that costs paid towards projects that
     were  paid  with  S-8  stock should have been capitalized, then the Company
     will  take  such costs presently recognized as expenses and reclassify them
     as  assets.

     The most significant projects the Company has invested in this year through
     June  30,  2004  are:

<TABLE>
<CAPTION>
                                                       Project Development
                                          ------------------------------------------------
                                           Product Developed
                                          Awaiting Production      Expensed as Part of
                                          As An "Other Asset"    General & Administrative
                                           (All Paid In Cash)     (Paid in Cash & Stock)
                                          --------------------  --------------------------
<S>                                       <C>                   <C>

Jeunesse by Francois - initial
  development costs                                    168,512                     321,000

Finders fees for real estate
  transactions                                                                      72,600

IGIA Product                                                                       615,600

Pete Rose Product line                                  80,175                   1,465,539

Zufelt Marketing Strategies                                                         29,340

Distributor Recruitment                                                             27,000

All other projects - future or abandoned                                         1,218,524
                                          --------------------  --------------------------

        Total                                          248,687  $                3,749,603
                                          --------------------  --------------------------
</TABLE>

     When  the costs capitalized here are put into production, then they will be
     reclassified  to  inventory  and  such  costs  will  be amortized using the
     unit-of-production  of  accounting.

NOTE 15- SUBSEQUENT EVENTS:

     OTHER
     -----

     The Company has invested $250,000 in a marketing program to be developed to
     recruit  distributors.


                                         F-12
<PAGE>