**SECURITIES
        AND EXCHANGE COMMISSION**
 WASHINGTON,
        D.C. 20549
 
 **FORM
        10-KSB/A**
 (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**
 OR
 o
        TRANSITION REPORT PURSUANT TO SECTION 13
        OR 15(d) OF THE SECURITIES
 **EXCHANGE
        ACT OF 1934**
 
 Commission
        File No. 0-25474
 
 LUNA
        TECHNOLOGIES INTERNATIONAL, INC.
 
 (Name
        of
        Small Business Issuer in its charter)
 
 Delaware
              
              91-1987288(State
                  of incorporation)
              
              (IRS
                  EmployerIdentification
                  No.)61A
                  Fawcett RoadCoquitlam,
                  British Columbia, Canada
              
              V3K
                  6V2(Address
                  of Principal Executive Office)
              
              Zip
                  Code
 
 
 Registrant's
        telephone number, including Area Code: (888) 955-8883 Securities registered
        pursuant to Section 12(b) of the Act: None
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 **Common
        Stock**
 (Title
        of
        Class)
 
 Check
        whether the Registrant (1) has filed all reports required to be filed by
        Section
        13 or 15(d) of the Securities Exchange Act of 1934 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 o
 
 Check
        if
        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 the
        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. x
 
 The
        Company's revenues for the most recent fiscal year were $657,165.
 
 The
        aggregate market value of the voting stock held by non-affiliates of the
        Company
        as of April 15, 2005 was approximately $1,392,044.
 
 As
        of
        April 15, 2005 the Company had 10,009,648 issued and outstanding shares of
        common stock.
 
 
 **EXPLANATORY
        NOTE:**  **This
        Amended Annual Report on Form 10-KSB/A is being filed for the purpose of
        amending the form on which the Company previously filed its Annual Report
        on
        Form 10-KSB/A filed by the Company on March 1, 2006. This amended Annual
        Report
        is being filed for the sole purpose of modifying Item 8A** ***Controls
        and Procedures*** **.
        In all other material respects this Amended Annual Report on Form 10-QSB
        is
        unchanged from the Annual Report on Form 10-KSB/A filed by the Company on
        March
        1, 2006.**
  
  **FORM
        10-KSB**
  **FOR
        THE FISCAL YEAR ENDED DECEMBER 31, 2004**
 
 **INDEX**
 
 **PART
        I**
 
 PageItem
                  1.
              Description
                  of Business
              1Item
                  2.
              Description
                  of Property
              3Item
                  3.
              Legal
                  Proceedings
              3Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              3**PART
                  II**Item
                  5.
              Market
                  for the Registrant's Common Equity andRelated
                  Stockholder Matters and Small Business Issuer Purchases ofEquity
                  Securities
              3Item
                  6.
              Management's
                  Discussion and Analysis or Plan of Operation
              4Item
                  7.
              Financial
                  Statements
              5Item
                  8.
              Changes
                  in and Disagreements with Accountants onAccounting
                  and Financial Disclosure
              5Item
                  8A.
              Controls
                  and Procedures
              5**PART
                  III**Item
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons; Compliancewith
                  Section 16(A) of the Exchange Act.
              5Item
                  10.
              Executive
                  Compensation
              6Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management andRelated
                  Stockholder Matters
              12Item
                  12.
              Certain
                  Relationships and Related Transactions
              13Item
                  13.
              Exhibits
              14**PART
                  IV**Item
                  14.
              Principal
                  Accountant Fees and Services
              15SIGNATURES
  
 
 **ITEM
        1. DESCRIPTION OF BUSINESS**
 
 The
        Company was incorporated on March 25, 1999 in Delaware to develop, manufacture
        and sell photoluminescent products (High Performance Photoluminescent Lighting,
        "HPPL") used for emergency lighting, signs and markings, wayfinding systems
        and
        novelty products with applications in marine, commuter, rail, subway, building
        and toy markets. The Company conducts business in Canada through its
        wholly-owned Canadian subsidiary, Luna Technologies (Canada) Ltd.
 
 The
        Company's executive offices are located at 61B Fawcett Road, Coquitlam, British
        Columbia, Canada V3K 6V2. The Company's telephone number is
 (604)
        526-5890, its facsimile number is (604) 526-8995, its email address is
        info@lunaplast.com, and its web site is www.lunaplast.com.
 
 From
        the
        date of its incorporation and through December 31, 2004 the Company had
        cumulative losses of $(2,406,065). There can be no assurance that the Company
        will ever earn any profits.
 
 Phosphorescent
        (also referred to as photoluminescent) materials emit light continuously
        when
        they are excited by ultraviolet or visible light. However, unlike fluorescent
        materials, when the excitation source is extinguished, phosphorescent materials
        continue to emit light. It is this light (called afterglow) that people refer
        to
        as "glow-in-the-dark". The afterglow decreases (or decays) over time after
        the
        excitation source has been extinguished.
 
 Although
        many people associate the word "photoluminescence" with "glow-in-the-dark"
        toys
        and novelties, in the lighting industry, photoluminescent products such as
        marker tapes and signs are commonly used to delineate emergency escape routes
        and danger areas, and to mark equipment, pipes, tools and working and accident
        prevention clothing.
 
 Photoluminescent
        signs and markers are used in a variety of situations, including office
        buildings, industrial sites, passenger ships, offshore drilling platforms,
        underground mines, and aircraft. The use of photoluminescent materials for
        life
        safety applications is recommended or mandated in numerous building codes,
        fire
        safety codes, and transportation standards.
 
 Most
        photoluminescent products are composed of inorganic pigments that can be
        incorporated into paint, plastic films, enamels, and flexible and rigid molded
        plastics. Typical products include adhesive vinyl tapes, rigid polyvinyl
        chloride (PVC) marker strips, and silk-screened plastic signage.
        Photoluminescent enamel-coated sheet metal and ceramic products are also
        available.
 
 The
        main
        pigment commonly used in photoluminescent glow-type products is a zinc sulphide
        compound emitting a yellowish-green light. This material performs well when
        subjected to high ambient lighting levels but the decay rate is rather rapid.
        The Company's current LUNAplast pigment material, Strontium Aluminate, has
        a
        performance level 20 x that of zinc-based products. In addition, the decay
        curve
        for strontium-based products is measured in hours as opposed to minutes for
        zinc-based items.
 
 Strontium
        Aluminate is more expensive than zinc sulphide and takes slightly longer
        to
        charge, but can "store" more light, making it much more suitable for use
        in
        locations where ambient light levels are low. Strontium Aluminate also offers
        much brighter and longer-lasting photoluminescence.
 
 Although
        Strontium Aluminate PL material is superior to products made with zinc sulphide,
        the process required to manufacture Strontium Aluminate PL is very complex
        and
        manufacturers were unable to cost effectively produce Strontium Aluminate
        PL
        products in commercial quantities.
 
 Between
        January 1995 and October 1999, Douglas Sinclair, presently the chief executive
        officer of the Company's Canadian subsidiary, developed the proprietary
        technology, formulas and processes needed to commercially manufacture Strontium
        Aluminate PL products on a cost-effective basis. The resulting product, referred
        to by the Company as Lunaplast, is up to 20 x times brighter than commercial
        zinc sulphide products, and is clearly visible after many hours of total
        darkness. During this same period of time, Mr. Sinclair and Kimberly Landry,
        an
        officer and director of the Company, developed an advanced Strontium Aluminate
        HPPL material which is four times brighter than the Company's Lunaplast product.
        Mr. Sinclair and Ms. Landry filed a patent application pertaining to this
        invention with the U.S. Patent and Trademark Office in November 1997. For
        a
        nominal consideration Mr. Sinclair and Ms. Landry assigned the rights in
        November 1997 to the patent application and related technology to Luna
        Technologies Inc. ("LTI"), a corporation formed by Ms. Landry in December
        1994.
 
 In
        April
        1999 the Company acquired from LTI the rights to the patent application and
        related technology assigned to LTI by Mr. Sinclair and Ms. Landry. In
        consideration for this assignment, the Company agreed to pay LTI $90,000,
        without interest, on or before June 30, 2000. Subsequent to June 30, 2000,
        the
        Company paid this debt in full. As of March 30, 2004 the patent application
        had
        been placed in abeyance.
  1
  In
        November 1999, the Company acquired from Mr. Sinclair the proprietary technology
        required to manufacture Lunaplast into PVC sheets, vinyl rolls and paints
        as
        well as the trademark rights to these products. In consideration for the
        assignment of this technology and the trademarks, the Company paid Mr. Sinclair
        $60,000.
 
 During
        2000 the Company developed the processes required to manufacturer Strontium
        Aluminate PL products using vacuum forming, extrusion, and injection molding
        techniques.
 
 Lunaplast
        is available in flexible vinyl and rigid PVC sheets. In addition, a wide
        range
        of polymer compounds for extrusions and injection molding was added during
        the
        year. The substantial increase in performance opens up a completely new range
        of
        opportunities in life safety. Direct replacement of electrical exit signs
        (Underwriters Laboratories UL 924) is expected to be a market for
        photoluminescent materials in the near future.
 
 The
        Company began producing Lunaplast on a commercial basis during fiscal 2000.
 
 During
        the year ended December 31, 2004 one customer accounted for 43% of the Company's
        gross revenues. The Company is of the opinion that the loss of this customer
        would not have a material adverse effect on the Company.
 
 **Manufacturing**
 
 Lunaplast
        is a three-part laminate, consisting of one base layer of highly reflective
        white material of PVC or vinyl, one mid-layer of photoluminescent PVC or
        vinyl
        impregnated with the Company's proprietary Strontium Aluminate polymer compound,
        and one top layer of clear PVC or vinyl with UV and fire-resistant properties.
 
 All
        aspects of the Company's manufacturing process are subcontracted to various
        third parties which formulate, mix and produce Lunaplast to the Company's
        specifications. Once the manufacturing process is complete, Lunaplast is
        sold to
        fabricators which use Lunaplast in a variety of end user products. All
        subcontractors involved in manufacturing Lunaplast have agreed to maintain
        the
        confidential nature of the Company's proprietary manufacturing technology.
 
 The
        Company does not have any long-term agreements with any of the third parties
        involved in manufacturing Lunaplast. The Company believes that alternative
        manufacturers are available which could produce Lunaplast on short notice
        and
        without disrupting product delivery schedules.
 
 **Sales
        and Marketing**
 
 World
        markets for photoluminescent lighting products are in the marine (shipping
        and
        cruise lines), transportation and commuter industry, and in the commercial,
        institutional and industrial retrofit and new building construction sector,
        in
        which the need for photoluminescent emergency lighting and wayfinding signage
        systems has risen sharply over the last two decades. A third primary marker
        is
        "glow-in-the-dark" toys and novelties.
 
 The
        Company believes that the world market for HPPL lighting is underdeveloped
        due
        largely to the low illumination delivered by zinc sulphide products. The
        Company
        plans to build interest and sales for Lunaplast products in established markets
        around the world. The Company's marketing plan includes advertising in trade
        magazines, exhibiting at industry tradeshows, direct mail campaigns, soliciting
        editorial coverage from naval architecture, building design, architecture
        and
        lighting industry publications and distributing product samples, videos and
        brochures to designers and developers. The Company's website will also be
        used
        as a means to distribute product information to interested parties quickly.
 
 The
        Company markets its products through its officers and through independent
        sales
        representatives. As of April 15, 2005 the Company had independent sales
        representatives marketing Lunaplast in North America, Latin America, Korea
        and
        Australia.
 
 **Competition**
 
 No
        single
        company dominates the world marketplace. Instead, a number of small and
        medium-sized firms are active within regional markets in Europe, the U.S.
        and
        elsewhere. Some producers include companies such as Permalight AG of Germany
        (Europe and North America), Safe T Glow (UK and U.S.), Datrex (U.S.), Jalite
        (UK), Everglow (Europe) and Existalight (Europe and U.S.). It is difficult
        to
        determine annual sales volumes and revenues for these firms, as most are
        privately held.
 
 Although
        there are several manufacturers and distributors of photoluminescent products
        the Company believes it has a significant advantage over its competitors
        as a
        result of its proprietary manufacturing processes and cost effective approach
        to
        the production of Strontium Aluminate-based HPPL materials in commercial
        quantities. The Company also plans to be competitive in the HPPL industry
        by
        developing advanced Strontium Aluminate materials, enhancing formulation
        and
        focusing on higher volumes with a resultant lower cost of production. During
        the
        twelve-month period ending December 31, 2005 the Company plans to spend
        approximately $100,000 on research relating to the development of advanced
        strontium aluminate PL materials.
  2
  **Office
        Space**
 
 The
        Company rents on a month to month basis approximately 4,800 square feet of
        executive office space at 61A and 16.B Fawcett Road, Coquitlam, British Columbia
        at a monthly rental of CDN$3,490.
 
 **Employees**
 
 As
        of
        April 15, 2005 the Company had ten full-time employees. See Item 9 of this
        report. As of April 15, 2005 the Company did not have any part time employees.
        Contingent upon the Company raising sufficient capital, the Company plans
        to
        hire additional employees as may be required by the level of the Company's
        operations.
 
 **ITEM
        2. DESCRIPTION OF PROPERTIES**
 
 See
        Item
        1 of this report.
 
 **ITEM
        3. LEGAL PROCEEDINGS.**
 
 The
        Company is not engaged in any litigation, and the officers and directors
        presently know of no threatened or pending litigation in which it is
        contemplated that the Company will be made a party.
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**
 
 Not
        Applicable
 
 **ITEM
        5. MARKET FOR COMMON EQUITY AND OTHER RELATED STOCK- HOLDER MATTERS.**
 
 The
        Company's common stock is quoted on the Over the Counter Bulletin Board under
        the symbol "LTII". The following table presents the high and low closing
        prices
        for the common stock as reported by the NASD for each quarter beginning in
        April
        2001 when the Company's stock was first quoted. The prices reflect inter-dealer
        quotations without adjustments for retail mark-up, markdown or commissions,
        and
        do not necessarily represent actual transactions.
 
 Quarter
                  Ending
              
              High
              
              Low3/31/02
              
              $
              0.71
              
              $
              0.416/30/02
              
              $
              1.10
              
              $
              0.759/30/02
              
              $
              0.87
              
              $
              0.3512/31/02
              
              $
              0.48
              
              $
              0.253/31/03
              
              $
              0.51
              
              $
              0.306/30/03
              
              $
              0.55
              
              $
              0.409/30/03
              
              $
              0.76
              
              $
              0.3512/31/03
              
              $
              0.76
              
              $
              0.553/31/04
              
              $
              1.15
              
              $
              0.436/30/04
              
              $
              1.00
              
              $
              0.259/30/04
              
              $
              0.40
              
              $
              0.1912/31/04
              
              $
              0.40
              
              $
              0.19
 
 As
        of
        April 15, 2005 there were 94 record owners of the Company's common stock.
 
 Holders
        of common stock are entitled to receive such dividends as may be declared
        by the
        Board of Directors out of funds legally available therefore and, in the event
        of
        liquidation, to share pro rata in any distribution of the Company's assets
        after
        payment of liabilities. The Board of Directors is not obligated to declare
        a
        dividend. The Company has not paid any dividends and the Company does not
        have
        any current plans to pay any dividends.
 
 The
        provisions in the Company's Articles of Incorporation relating to the Company's
        preferred stock would allow the Company's directors to issue preferred stock
        with rights to multiple votes per share and dividends rights which would
        have
        priority over any dividends paid with respect to the Company's common stock.
        The
        issuance of preferred stock with such rights may make more difficult the
        removal
        of management even if such removal would be considered beneficial to
        shareholders generally, and will have the effect of limiting shareholder
        participation in certain transactions such as mergers or tender offers if
        such
        transactions are not favored by incumbent management.
  3
  **During
        the year ended December 31, 2004 the Company:**
 
 1.
        Sold
        100,000 units to one private investor at a price of $0.65 per unit. Each
        unit
        consisted of one common share and one warrant. Each warrant entitles the
        holder
        to purchase one additional common share of the Company at a price of $1.00
        per
        share until February 26, 2006.
 
 2.
        Sold
        35,000 units to one private investor at a price of $1.00 per unit. Each unit
        consisted of one common share and one warrant. Each warrant entitles the
        holder
        to purchase one additional common share of the Company at a price of $1.00
        per
        share until March 31, 2006.
 
 3.
        Sold
        1,250,000 units to one private investor at a price of $0.20 per unit. Each
        unit
        consisted of one common share and one warrant. Each warrant entitles the
        holder
        to purchase one additional common share of the Company at a price of $0.30
        per
        share until September 3, 2006.
 
 4.
        Issued
        954,000 shares of its common stock upon the exercise of options granted in
        accordance with the Company's Non-Qualified Stock Option Plan.
 
 5.
        Issued
        597,812 shares of its common stock in accordance with the Company's Stock
        Bonus
        Plan.
 
 The
        Company relied upon the exemption provided by Section 4(2) of the Securities
        Act
        of 1933 with respect to the issuance of shares referred to in subparts 1
        through
        3.
 
 The
        shares referred to in subparts 4 and 5 were registered by means of a
        registration statement on Form S-8.
 
 **ITEM
        6. MANAGEMENT'S DISCUSSION AND ANALYSIS/ PLAN OF OPERATIONS**
 
 Sales
        during the year ended December 31, 2004 were $537,165, an increase of $155,444
        or 41% from the previous year. Gross margin increased 11% to 50% over the
        same
        period in 2003 due to the Company's improvement in productivity and cost
        controls. Two customers amounted to 84% of total sales in 2003 and 60% of
        total
        sales during 2004.
 
 During
        the year ended December 31, 2004 the Company received payments totaling $120,000
        from customers in connection with pricing agreements.
 
 General
        and administrative expenses for the year ended December 31, 2004 increased
        with
        the addition of management, staff and overhead needed to facilitate the
        Company's growth and ongoing product development. During the year ended December
        31, 2004, stock-based compensation of $154,600 was expensed as consulting
        fees
        representing the fair value of stock options granted and $124,868 was expensed
        as consulting fees representing the fair value of 597,812 common shares issued
        pursuant to the Company's stock bonus plan.
 
 During
        the year ended December 31, 2004, the Company's operations used $314,683
        in cash
        and the Company purchased $5,912 of equipment. During this period the Company
        satisfied its cash requirements through sales of common stock in private
        placements of $357,000 and advances from related parties of $49,509. The
        Company
        made $39,996 in convertible debenture repayments, $8,338 in notes payable
        repayments and decreased the bank overdraft by $11,068.
 
 Between
        December 2002 and January 2003 the Company borrowed $120,000 from a third
        party.
        Loan proceeds of $60,000 were received in December 2002 and the remaining
        $60,000 was received in January 2003. The loan is secured by all of the
        Company's assets and bears interest at a rate of 8% per year. The loan is
        to be
        repaid in 30 monthly principal payments of $3,333, commencing June 21, 2003,
        with a final principal payment of $20,010 due on December 21, 2005. Interest
        on
        the outstanding principal balance is payable monthly commencing June 21,
        2003.
        The unpaid balance of the loan and interest may be converted at any time
        into
        restricted shares of the Company's common stock at a price of $1.20 per share
        during 2005.
 
 The
        Company anticipates that its capital needs during the year ending December
        31,
        2005 will be as follows:
 
 $600,000
        for corporate expenses, $100,000 for research relating to the development
        of
        advanced strontium aluminate PL materials, $360,000 for current liabilities
        and
        $56,797 for convertible debenture payments.
 
 The
        Company does not have any available credit, bank financing or other external
        sources of liquidity. Due to the operating losses of the Company during the
        Company's initial year of operations, the Company's operations have not been
        a
        source of liquidity. At December 31, 2004 the Company had a working capital
        deficiency of approximately $254,000. The ability of the Company to continue
        as
        a going concern is dependent on the Company raising additional capital and
        on
        future profitable operations. To that end the Company is seeking financing
        to
        expand its operations and for working capital purposes. There can be no
        assurance that the Company will be successful in obtaining additional funding.
  4
  **Critical
        Accounting Policies And Estimates**
 
 Management's
        Discussion and Analysis of Financial Condition and Results of Operations
        discusses the Company's consolidated financial statements, which have been
        prepared in accordance with accounting principles generally accepted in the
        United States of America. The preparation of these financial statements 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. On an on-going
        basis, management evaluates its estimates and judgments, including those
        related
        to revenue recognition, intangible assets, financing operations, and
        contingencies and litigation. Management bases its estimates and judgments
        on
        historical experience and on various other factors that are believed to be
        reasonable under the circumstances, the results of which form the basis for
        making judgments about the carrying value of assets and liabilities that
        are not
        readily apparent from other sources. Actual results may differ from these
        estimates under different assumptions or conditions. These accounting policies
        are described in the notes to the consolidated financial statements for the
        fiscal year ended December 31, 2004 which are included as part of this report.
 
 **ITEM
        7. FINANCIAL STATEMENTS**
 
 See
        the
        financial statements attached to this report.
 
 **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS**
 
 None.
 
 **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 (a)
          Evaluation of Disclosure Controls and Procedures. As of the end of our
        fiscal year ended December 31, 2004, we conducted an evaluation, under the
        supervision and with the participation of Kimberly Landry, our chief executive
        officer and chief financial officer of our disclosure controls and procedures
        (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based
        upon this evaluation, we have concluded that our disclosure controls and
        procedures are effective to ensure
        that the information required to be disclosed by us in the reports that we
        file
        or submit under the Exchange Act is (i) recorded, processed, summarized and
        reported within the time periods specified in the Commission’s rules and forms,
        and (ii) is accumulated and communicated to our management, including our
        chief
        executive officer and chief financial officer, to allow timely decisions
        on
        required disclosure.
 
 (b)
          Changes in internal controls.   There was no change in our internal
        controls or in other factors that could affect these controls during our
        last
        fiscal quarter that has materially affected, or is reasonably likely to
        materially affect, our internal control over financial reporting.
 
 
 **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS**
 
 The
        following sets forth certain information concerning the present management
        of
        the Company:
 
 Name
              Age
              Position
                  with CompanyScott
                  Bullis
              42
              PresidentKimberly
                  Landry
              39
              Chief
                  Executive Officer, Principal FinancialOfficer,
                  Chief Accounting Officer, Secretary and
                  a DirectorRobert
                  H. Humber
              60
              Director
  Kimberly
        Landry was the Company's President between September 1, 2001 and August 31,
        2004. On August 31, 2004 Ms. Landry resigned as the Company President and
        was
        appointed the Company's Chief Executive Officer. Ms. Landry was appointed
        the
        Company's Principal Financial and Chief Accounting Officer on April 5, 2005.
        Ms.
        Landry has been the Secretary of the Company, as well as a director since
        April
        1999. Since December 1994 Ms. Landry has also been an officer and director
        of
        LTI.
 
 Scott
        Bullis has the Company Presidents since August 31, 2004. Between September
        2000
        and October 2003 Mr. Bullis was the Chief Executive Officer of One5 Corporation,
        a business which provided technology to wireless telecommunications companies.
        Between June 1999 and June 2000 Mr. Bullis was Vice President of Marketing
        for
        iEngineer.com, Inc.
  5
  Robert
        Humber was the President of the Company between September 1, 2001 and April
        1999. Mr. Humber has been a director of the Company since April 1999. Between
        July 1996 and November 1999 Mr. Humber was the president of LTI. Prior to
        July
        1996 Mr. Humber worked with Douglas Sinclair and Kimberly Landry in developing
        photoluminescent products. For the past twenty-three years Mr. Humber has
        also
        been an independent investigator and security consultant providing services
        to
        law enforcement agencies and private industry.
 
 The
        Company does not have a compensation committee. The Company's Board of Directors
        serves as the Company's Audit Committee. None of the Company's directors
        qualifies as a financial expert.
 
 The
        Company has adopted a Code of Ethics which is applicable to the Company's
        principal executive, financial, and accounting officers and persons performing
        similar functions. The Code of Ethics is available on the Company's website
        located at www.lunaplast.com.
 
 
 **Management
        Changes**  **Effective
        August 31, 2004:**
 
 ·
              Douglas
                  Sinclair resigned as an officer of the Company and as an officer
                  of the
                  Company's subsidiaries.·
              To
                  satisfy amounts owed by the Company to Mr. Sinclair for management
                  fees
                  the Company agreed to pay Mr. Sinclair CDN$187,000 in a series
                  of
                  installments with the last installment due January 15, 2007.·
              Mr.
                  Sinclair agreed to maintain the confidential nature of the Company's
                  trade
                  secrets and proprietary technology.·
              Mr.
                  Sinclair agreed that he would not compete with the Company until
                  July,
                  2006.·
              Kimberly
                  Landry was appointed the Company's Chief Executive Officer.·
              Scott
                  Bullis was appointed the Company's President.
 
 Brian
        Fiddler resigned as the Company's Principal Financial and Accounting Officer,
        and as a director of the Company on April 4, 2005. On that same date, Ms.
        Landry
        was appointed the Company's Principal Financial and Chief Accounting Officer.
  **ITEM
        10. EXECUTIVE COMPENSATION**
 
 The
        following table sets forth in summary form the compensation received by the
        Company's executive officers during the fiscal years ended December 31, 2002,
        2003, and 2004.
   Annual
                  Compensation
              
              Long
                  Term CompensationName
                    and Principal Position
              
              Fiscal
                    Year
              
              Salary
                    (1)
              
              Bonus
                    (2)
              
              Other
                    Annual Compensation (3)
              
              Restricted
                    Stock Awards (4)
              
              Options
                    Granted (5)Kimberly
                  Landry,
              
              
              2004
              
              $
              55,705
              
              
              
              
              
              
              
              $
              46,750
              
              
              500,000President
                  between September 1, 2001 and
              
              
              2003
              
              $
              45,120
              
              
              --
              
              
              --
              
              
              --
              
              
              --August
                  31, 2004, and Chief Executive Officer since August 31,
                  2004
              
              
              2002
              
              $
              20,000
              
              
              --
              
              
              --
              
              
              --
              
              
              --Scott
                Bullis,
              
              
              2004
              
              $
              22,016
              
              
              --
              
              
              --
              
              
              --
              
              
              659,200President
                since August 31, 2004
  6
  (1)
        The
        dollar value of base salary (cash and non-cash) received. (2) The dollar
        value
        of bonus (cash and non-cash) received.
 (3)
        Any
        other annual compensation not properly categorized as salary or bonus, including
        perquisites and other personal benefits, securities or property.
 (4)
        Amounts reflect the value of the shares of the Company's common stock issued
        as
        compensation for services.
 
 The
        table
        below shows the number of shares of the Company's common stock owned by the
        officers listed above, and the value of such shares as of December 31, 2004.
 
 Name
              
              Shares
              
              ValueKimberly
                  Landry
              
              
              2,025,000
              
              $
              790,000Scott
                  Bullis
              
              
              --
              
              
              --
 
 (5)
        The
        shares of common stock to be received upon the exercise of all stock options
        granted during the fiscal years shown in the table.
 
 The
        Company's Canadian subsidiary had an employment agreement with Kimberly Landry
        whereby the subsidiary has agreed to pay Ms. Landry a salary of CDN$7,500
        per
        month.
 
 Mr.
        Bullis has an Employment Agreement with the Company which provides that the
        Company will pay Mr. Bullis CDN$7,500 per month. The monthly salary payable
        to
        Mr. Bullis will be renegotiated at the request of either Mr. Bullis or the
        Company during the term of the Employment Agreement. In the event that the
        Company and Mr. Bullis cannot agree on any increase in salary, the monthly
        salary payable to Mr. Bullis will be increased on an annual basis by the
        greater
        of (i) 15% or (ii) the percentage which is the average percentage increase
        of
        all compensation paid to the Company's officers during the previous twelve
        months. The Employment Agreement with Mr. Bullis may be terminated by either
        the
        Company or Mr. Bullis on thirty days notice.
 
 In
        addition to his compensation Mr. Bullis was granted options in accordance
        with
        the following terms:
 
 Shares
                  Issuable Upon
              
              Option
                  Exercise
              
              ExpirationExercise
                  of Option
              
              Price
                  (1)
              
              Date52,800
              
              
              US
                  $0.35
              
              
              August
                  26, 20076,400
              
              
              US
                  $0.75
              
              
              August
                  26, 2007400,000
                  (1)
              
              
              US
                  $0.35
              
              
              August
                  26, 2007200,000
                  (1)
              
              
              US
                  $0.50
              
              
              August
                  26, 2007
 
 (1)
        Options will vest in equal monthly portions over a period of twenty-four
        months
        beginning on July 26, 2004.
 
 Mr.
        Bullis is also entitled to participate in any medical or other benefit plans
        that are offered to the Company's employees generally.
 
 The
        Company's Board of Directors may increase the compensation paid to the Company's
        officers depending upon the results of the Company's future operations.
 
 **Long
        Term Incentive Plans - Awards in Last Fiscal Year**
 
 None.
 
 **Employee
        Pension, Profit Sharing or Other Retirement Plans**
 
 Except
        as
        provided in the Company's employment agreements with its executive officers,
        the
        Company does not have a defined benefit, pension plan, profit sharing or
        other
        retirement plan, although the Company may adopt one or more of such plans
        in the
        future.
 
 **Compensation
        of Directors**
 
 Standard
        Arrangements. At present the Company does not pay its directors for attending
        meetings of the Board of Directors, although the Company may adopt a director
        compensation policy in the future. The Company has no standard arrangement
        pursuant to which directors of the Company are compensated for any services
        provided as a director or for committee participation or special assignments.
  7
  Other
        Arrangements. During the year ended December 31, 2004, and except as disclosed
        elsewhere in this report, no director of the Company received any form of
        compensation from the Company.
 
 **Stock
        Option and Bonus Plans**
 
 The
        Company has an Incentive Stock Option Plan, a Non-Qualified Stock Option
        Plan
        and a Stock Bonus Plan. A summary description of each Plan follows. In some
        cases these three Plans are collectively referred to as the "Plans". None
        of the
        plans have been approved by the Company's shareholders.
 
 Incentive
        Stock Option Plan. The Incentive Stock Option Plan authorizes the issuance
        of
        shares of the Company's common stock to persons that exercise options granted
        pursuant to the Plan. Only officers, directors and key employees of the Company
        may be granted options pursuant to the Incentive Stock Option Plan.
 
 In
        order
        to qualify for incentive stock option treatment under the Internal Revenue
        Code,
        the following requirements must be complied with:
 
 1.
        Options granted pursuant to the Plan must be exercised no later than:
 
 (a)
        The
        expiration of thirty (30) days after the date on which an option holder's
        employment by the Company is terminated.
 
 (b)
        The
        expiration of one year after the date on which an option holder's employment
        by
        the Company is terminated, if such termination is due to the Employee's
        disability or death.
 
 2.
        In the
        event of an option holder's death while in the employ of the Company, his
        legatees or distributees may exercise (prior to the option's expiration)
        the
        option as to any of the shares not previously exercised.
 
 3.
        The
        total fair market value of the shares of Common Stock (determined at the
        time of
        the grant of the option) for which any employee may be granted options which
        are
        first exercisable in any calendar year may not exceed $100,000.
 
 4.
        Options may not be exercised until one year following the date of grant.
        Options
        granted to an employee then owning more than 10% of the Common Stock of the
        Company may not be exercisable by its terms after five years from the date
        of
        grant.
 
 5.
        The
        purchase price per share of Common Stock purchasable under an option is
        determined by the Committee but cannot be less than the fair market value
        of the
        Common Stock on the date of the grant of the option (or 110% of the fair
        market
        value in the case of a person owning the Company's stock which represents
        more
        than 10% of the total combined voting power of all classes of stock).
 
 Non-Qualified
        Stock Option Plan. The Non-Qualified Stock Option Plan authorizes the issuance
        of shares of the Company's common stock to persons that exercise options
        granted
        pursuant to the Plan. The Company's employees, directors, officers, consultants
        and advisors are eligible to be granted options pursuant to the Plan, provided
        however that bona fide services must be rendered by such consultants or advisors
        and such services must not be in connection with the offer or sale of securities
        in a capital-raising transaction. The option exercise price is determined
        by the
        Committee but cannot be less than the par value of the Company's Common Stock
        on
        the date the option is granted.
 
 Options
        granted pursuant to the Plan not previously exercised terminate upon the
        date
        specified when the option was granted.
 
 Stock
        Bonus Plan. The Company's Stock Bonus Plan allows for the issuance of shares
        of
        common stock to the Company's employees, directors, officers, consultants
        and
        advisors; provided, however, that bona fide services must be rendered by
        consultants or advisors and such services must not be provided in connection
        with promoting the Company's common stock or a capital-raising transaction.
 
 Other
        Information Regarding the Plans. The Plans are administered by the Company's
        Board of Directors. The Board of Directors has the authority to interpret
        the
        provisions of the Plans and supervise the administration of the Plans. In
        addition, the Board of Directors is empowered to select those persons to
        whom
        shares or options are to be granted, to determine the number of shares subject
        to each grant of a stock bonus or an option and to determine when, and upon
        what
        conditions, shares or options granted under the Plans will vest or otherwise
        be
        subject to forfeiture and cancellation.
  8
  In
        the
        discretion of the Board of Directors, any option granted pursuant to the
        Plans
        may include installment exercise terms such that the option becomes fully
        exercisable in a series of cumulating portions. The Board of Directors may
        also
        accelerate the date upon which any option (or any part of any options) is
        first
        exercisable. Any shares issued pursuant to the Stock Bonus Plan and any options
        granted pursuant to the Incentive Stock Option Plan or the Non-Qualified
        Stock
        Option Plan will be forfeited if the "vesting" schedule established by the
        Board
        of Directors at the time of the grant is not met. For this purpose, vesting
        means the period during which the employee must remain an employee of the
        Company or the period of time a non-employee must provide services to the
        Company. At the time an employee ceases working for the Company (or at the
        time
        a non-employee ceases to perform services for the Company), any shares or
        options not fully vested will be forfeited and cancelled. In the discretion
        of
        the Board of Directors payment for the shares of Common Stock underlying
        options
        may be paid through the delivery of shares of the Company's Common Stock
        having
        an aggregate fair market value equal to the option price, provided such shares
        have been owned by the option holder for at least one year prior to such
        exercise. A combination of cash and shares of Common Stock may also be permitted
        at the discretion of the Board of Directors.
 
 Options
        are generally non-transferable except upon death of the option holder. Shares
        issued pursuant to the Stock Bonus Plan will generally not be transferable
        until
        the person receiving the shares satisfies the vesting requirements imposed
        by
        the Board of Directors when the shares were issued.
 
 The
        Board
        of Directors of the Company may at any time, and from time to time, amend,
        terminate, or suspend one or more of the Plans in any manner it deems
        appropriate, provided that such amendment, termination or suspension cannot
        adversely affect rights or obligations with respect to shares or options
        previously granted. The Board of Directors may not, without shareholder
        approval: make any amendment which would materially modify the eligibility
        requirements for the Plans; increase or decrease the total number of shares
        of
        Common Stock which may be issued pursuant to the Plans except in the case
        of a
        reclassification of the Company's capital stock or a consolidation or merger
        of
        the Company; reduce the minimum option price per share; extend the period
        for
        granting options; or materially increase in any other way the benefits accruing
        to employees who are eligible to participate in the Plans.
 
 The
        Plans
        are not qualified under Section 401(a) of the Internal Revenue Code, nor
        are
        they subject to any provisions of the Employee Retirement Income Security
        Act of
        1974.
 
 **Summary.**
 
 The
        following tables present certain information as of April 15, 2005 concerning
        the
        stock options and stock bonuses granted by the Company. Each option represents
        the right to purchase one share of the Company's common stock.
  Total
              
              Shares
              
              
              
              RemainingShares
              
              Reserved
                  for
              
              
              
              Shares
                  Options/Reserved
              
              Outstanding
              
              Issued
                  As
              
              SharesName
                of Plan
              
              Under
                  Plan
              
              Options
              
              Stock
                  Bonus
              
              Under
                  PlanIncentive
                  Stock Option Plan
              
              
              750,000
              
              
              --
              
              
              N/A
              
              
              445,000Non-Qualified
                  Stock Option Plan
              
              
              4,000,000
                  (1
              )
              
              770,200
              
              
              N/A
              
              
              2,193,130Stock
                  Bonus Plan
              
              
              1,250,000
                  (1
              )
              
              N/A
              
              
              777,812
              
              
              472,188
 
 
 (1)
        Reflects amendment to Plan in February 2005 which increased number of shares
        issuable upon exercise of options granted pursuant to the Plan.
 
 The
        persons listed below have received options or shares of the Company's common
        stock as a stock bonus:
 
 Incentive
        Stock Options
  9
  Option
                Holder
              
              Shares
                  Subject To Option
              
              Exercise Price
              
              Date
                  of Grant
              
              Expiration
                  Date of Option
              
              Options
                  Expired/ Exercised as of April 15, 2005Employee
              
              
              5,000
              
              $
              0.50
              
              
              03/04/03
              
              
              03/04/04
              
              
              5,000Consultant
              
              
              300,000
              
              $
              0.23
              
              
              10/7/04
              
              
              10/7/06
              
              
              300,000305,000
 
 **Non-Qualified
        Stock Options**
 
 Option
                  Holder
              
              Shares
                  Subject To Option
              
              Exercise
                  Price
              
              Date
                  of Grant
              
              Expiration
                  Date of Option
              
              Options
                  Expired/
                  Exercised
                    as of April 15, 2005Brian
                  Fiddler
              
              
              40,000
              
              $
              0.10
              
              
              08/15/03
              
              
              08/30/08
              
              
              40,000Brian
                  Fiddler
              
              
              40,000
              
              $
              0.18
              
              
              08/15/03
              
              
              08/30/08
              
              
              20,000Brian
                  Fiddler
              
              
              20,000
              
              $
              0.50
              
              
              08/15/03
              
              
              08/30/08Brian
                  Fiddler
              
              
              20,000
              
              $
              0.25
              
              
              08/15/03
              
              
              08/30/08Brian
                  Fiddler
              
              
              20,000
              
              $
              0.40
              
              
              08/15/03
              
              
              08/30/08Brian
                  Fiddler
              
              
              20,000
              
              $
              0.60
              
              
              08/15/03
              
              
              08/30/08Scott
                  Bullis
              
              
              52,800
              
              $
              0.35
              
              
              07/26/04
              
              
              08/26/07Scott
                  Bullis
              
              
              6,400
              
              $
              0.75
              
              
              07/26/04
              
              
              08/26/07Scott
                  Bullis
              
              
              400,000
              
              $
              0.35
              
              
              07/26/04
              
              
              08/26/07Scott
                  Bullis
              
              
              200,000
              
              $
              0.50
              
              
              07/26/04
              
              
              08/26/07Kimberly
                  Landry
              
              
              359,000
              
              $
              0.04
              
              
              10/06/04
              
              
              11/04/04
              
              
              359,000KimberlyLandry
              
              
              130,000
              
              $
              0.04
              
              
              10/06/04
              
              
              11/18/04
              
              
              130,000Kimberly
                  Landry
              
              
              11,000
              
              $
              0.04
              
              
              10/06/04
              
              
              10/06/14Other
                    employees and consultants
              
              
              572,670
              
              $
              0.05/$0.50
              
              
              *
              
              
              *
              
              
              572,6701,891,870
              
              
              
              
              
              
              
              
              
              
              
              1,121,670
 
 *
        Various
        dates
  Stock
                  BonusesShares
                  IssuedName
              
              as
                  Stock Bonus
              
              Date
                  IssuedBrian
                  Fiddler
              
              
              18,000
              
              
              8/15/03Kimberly
                  Landry
              
              
              205,000
              
              
              10/04/04Brian
                  Fiddler
              
              
              30,000
              
              
              10/04/04Robert
                  Humber
              
              
              100,000
              
              
              10/04/04Douglas
                  Sinclair
              
              
              175,000
              
              
              10/04/04Kimberly
                  Landry
              
              
              20,000
              
              
              12/31/04Brian
                  Fiddler
              
              
              20,000
              
              
              12/31/04Kimberly
                  Landry
              
              
              10,000
              
              
              01/25/05Brian
                  Fiddler
              
              
              10,000
              
              
              01/25/05Other
                  employees and consultants
              
              
              189,812
              
              
              Various
                  dates777,812
  10
  Options
        Granted and Exercised During Year Ended December 31, 2004 and Year-End Option
        Values
 
 The
        tables below present information concerning the options granted and exercised
        during the year ended December 31, 2004 to the persons named below and the
        fiscal year-end value of all unexercised options (regardless of when granted)
        held by these persons. The options shown below were all Non-Qualified Stock
        Options.
  %
                  of TotalOptions
              
              Granted
                  to
              
              ExerciseOptions
              
              Employees
                  in
              
              Price
                  Per
              
              ExpirationName
              
              Granted
                  (#)
              
              Fiscal
                  Year
              
              Share
              
              DateKimberly
                  Landry
              
              
              489,000
              
              
              42
              %
              $
              0.04
              
              
              11/04Kimberly
                  Landry
              
              
              11,000
              
              
              1
              %
              $
              0.04
              
              
              10/14Scott
                  Bullis
              
              
              659,000
              
              
              57
              %
              
              Various
              
              
              8/07Brian
                  Fiddler (5)
              
              
              --
              
              
              --
              
              
              --
              
              
              --Robert
                  H. Humber
              
              
              --
              
              
              --
              
              
              --
              
              
              --
  Name
              
              Shares Acquired
                  On Exercise (1)
              
              Value
                  Realized (2)
              
              Number
                  of  Unexercised Options (3)  Exercisable/
                  Unexercisable
              
              Value
                    (in $) of Unexercised In-the-Money Options at Fiscal Year-End (4)
                    Exercisable/ UnexercisableKimberly
                  Landry
              
              
              489,000
              
              $
              148,990
              
              
              11,000/--
              
              $
              4,290/--Scott
                  Bullis
              
              
              --
              
              
              --
              
              
              --
              
              
              --Brian
                  Fiddler (5)
              
              
              --
              
              
              --
              
              
              --
              
              
              --Robert
                  H. Humber
              
              
              --
              
              
              --
              
              
              --
              
              
              --
 
 (1)
        The
        number of shares received upon exercise of options during the year ended
        December 31, 2004.
 
 (2)
        With
        respect to options exercised during the Company's year ended December 31,
        2004,
        the dollar value of the difference between the option exercise price and
        the
        market value of the option shares purchased on the date of the exercise of
        the
        options.
 
 (3)
        The
        total number of unexercised options held as of December 31, 2004, separated
        between those options that were exercisable and those options that were not
        exercisable.
 
 (4)
        For
        all unexercised options held as of December 31, 2004, the market value of
        the
        stock underlying those options as of December 31, 2004.
 
 (5)
        Brian
        Fiddler resigned as an officer and director of the Company on April 4, 2005.
 
 The
        table
        below shows the weighted average exercise price of the outstanding options
        granted pursuant to the Company's Incentive and Non-Qualified Stock Option
        Plans
        as of December 31, 2004. The Company's Incentive and Non-Qualified Stock
        Option
        Plans were not approved by the Company's shareholders.
 
 
 Plan
                Category
              
              Number
                    of Securities to be Issued  Upon Exercise of
                    Outstanding Options [a]
              
              Weighted-Average
                  Exercise Price of Outstanding Options
              
              Number
                  of SecuritiesRemaining Available
                  For Future Issuance Under Equity Compensation Plans (Excluding
                  Securities Reflected in Column (a))Incentive
                  Stock
              
              
              --
              
              
              --
              
              
              445,000Option
                  PlanNon-Qualified
                  Stock
              
              
              770,200
              
              $
              0.39
              
              
              2,193,130Option
                  Plan
  11
  **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.**
 
 The
        following table sets forth the number of and percentage of outstanding shares
        of
        common stock owned by the Company's officers, directors and those shareholders
        owning more than 5% of the Company's common stock as of April 15, 2005.
 
 Name
                  and Address
              
              Shares
                  of Common Stock (1)
              
              Percent
                  of Class (1)Kimberly
                  Landry
                1653
                  Plateau Crescent
                Coquitlam,
                  British Columbia
                Canada
                  V3B 3E3
              
              
              2,025,000
                  (2
              )
              
              21
              %Scott
                  Bullis
                1204
                  - 939 Beatty St.
                Vancouver,
                  British Columbia
                Canada,
                  V6C 3Z1
              
              
              ---
              
              
              ---Robert
                  H. Humber
                13058
                  1/2 39th Ave., N.E
                Seattle,
                  WA 98125-4614
              
              
              100,000
              
              
              1
              %Douglas
                  Sinclair
                1653
                  Plateau Cresent
                Coquitlam,
                  British Columbia
                Canada
                  V3B 3E3
              
              
              1,584,000
              
              
              16
              %Robert
                  Young
                6687
                  Nelson St.
                West
                  Vancouver, British Columbia
                Canada
                  V7W 2A5
              
              
              1,250,000
              
              
              12.9
              %All
                  officers and directors as a group (3 persons)
              
              
              2,125,000
              
              
              22
              %
 
 *
        Less
        than 1%
 
 (1)
        Excludes shares issuable upon the exercise of options or warrants held by
        the
        following persons:
 
 Name
              
              Shares
                    Issuable Upon Exercise of Options
                    or Warrants ExercisableKimberly
                  Landry
              
              
              11,000Scott
                  Bullis
              
              
              659,000Robert
                  H. Humber
              
              
              --
 
 **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**
 
 In
        April
        1999 the Company issued shares of its common stock to the persons, in the
        amounts, and for the consideration set forth below:
  12
  Name
              
              
              Numberof Shares
              
              
              ConsiderationRobert
                  H. Humber
              
              
              800,000
              
              $
              800Kimberly
                  Landry
              
              
              1,580,000
              
              $
              1,580Other
                  third parties
              
              
              2,120,000
              
              $
              2,120
  In
        April
        1999 the Company acquired from LTI, a corporation formed by Kimberly Landry
        in
        December 1994, the rights to the Company's patent application and related
        technology. The patent application and related technology were assigned to
        LTI
        by Ms. Landry and Douglas Sinclair in November 1997. In consideration for
        the
        assignment of these rights, the Company paid LTI $90,000 during the year
        ended
        December 31, 2000. As of April 14, 2005 the patent application assigned to
        the
        Company was pending.
 
 Ms.
        Landry is an officer and director of the Company. Mr. Sinclair was an officer
        of
        the Company prior to August 31, 2004. See "Management Changes" in Item 9
        of this
        report for information concerning the resignation of Mr. Sinclair.
 
 In
        November 1999, the Company acquired from Mr. Sinclair the proprietary technology
        required to manufacture Lunaplast into PVC sheets, vinyl rolls and paints
        as
        well as the trademark rights to these products. In consideration for the
        assignment of this technology and the trademarks, the Company paid Mr. Sinclair
        $60,000 during the year ended December 31, 2000.
 
 During
        the year ended December 31, 2000 the Company borrowed $60,000 from Ms. Landry.
        During the year ended December 31, 2003 the Company issued 225,000 shares
        of its
        common stock to Ms. Landry in payment of this debt.
 
 In
        January 2001 the Company acquired from LTI office and production equipment,
        as
        well as the rights to certain tradenames used by the Company. In consideration
        for these assets the Company agreed to pay LTI $41,142 prior to January 1,
        2006.
 
 **ITEM
        13. EXHIBITS AND REPORTS ON FORM 8-K**
 
 ExhibitNumber
              
              Exhibit
                  Name
              
              Page
                  NumberExhibit
                  3
              
              Articles
                  of Incorporation and Bylaws
              
              *Exhibit
                  4
              
              Instruments
                  Defining the Rights of Security HoldersExhibit
                  4.1
              
              Incentive
                  Stock Option Plan
              
              **Exhibit
                  4.2
              
              Non-Qualified
                  Stock Option Plan
              
              **Exhibit
                  4.3
              
              Stock
                  Bonus Plan
              
              **Exhibit
                  10
              
              Material
                  ContractsExhibit
                  10.1
              
              Agreement
                  relating to purchase of patent rights
              
              *Exhibit
                  10.2
              
              Assignment
                  of patent rights
              
              *Exhibit
                  10.3
              
              Agreement
                  relating to purchase of proprietary technology and
                  trademarks
              
              *
  13
 
 Exhibit
                  10.4
              
              Assignment
                  of trademarks
              
              *Exhibit
                  10.5
              
              Non-Compete
                  Agreement
              
              *Exhibit
                  23
              
              Accountants'
                  ConsentExhibit
                  31.1
              
              Certificate
                  of Chief Executive Officer pursuant to Rule 13a 14(a)/Rule 15d-14(a)
                  of
                  the Securities Exchange Act of 1934, as amended.Exhibit
                  31.2
              
              Certificate
                  of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a)
                  of
                  the Securities Exchange Act of 1934, as amended.Exhibit
                  32.1
              
              Certificate
                  of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted
                  pursuant
                  to Section 906 of the Sarbanes-Oxley Act of 2002.Exhibit
                  32.2
              
              Certificate
                  of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted
                  pursuant
                  to Section 906 of the Sarbanes-Oxley Act of 2002
  *
        Incorporated by reference to the same exhibit filed as part of the Company's
        Registration Statement on Form 10-SB. ** Incorporated by reference to the
        same
        exhibit filed as part of the Company's Registration Statement on Form S-8
        (Commission File # 333-112647).
 
 **8-K
        Reports**
 
 During
        the quarter ending December 31, 2004 the Company did not file any reports
        on
        Form 8-K.
 
 **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 Labonte
        & Co. served as the Company's independent public accountants during the
        fiscal year ended December 31, 2003. Effective January 1, 2004, LaBonte &
Co. merged with Dale Matheson Carr-Hilton Chartered Accountants. Dale Matheson
        Carr-Hilton LaBonte served as the Company's independent public accountants
        during the fiscal year ended December 31, 2004.
 
 The
        following table sets forth the aggregate fees billed to the Company for the
        years ended December 31, 2003 and 2004 by LaBonte & Co. and by Dale Matheson
        Carr-Hilton LaBonte.
 
 2003
              
              2004Audit
                  Fees
              
              $
              17,600
              
              $
              18,297Audit-Related
                  Fees
              
              
              --
              
              
              --Financial
                  Information Systems
              
              
              --
              
              
              --Design
                  and Implementation Fees
              
              
              --
              
              
              --Tax
                  Fees
              
              
              --
              
              
              --All
                  Other Fees
              
              
              --
              
              
              --
 
 Audit
        fees represent amounts billed for professional services rendered for the
        audit
        of the Company's annual financial statements and the reviews of the financial
        statements included in the Company's Forms 10-Q for the fiscal year. Before
        LaBonte & Co. or Dale Matheson Carr-Hilton LaBonte was engaged by the
        Company to render audit services, the engagement was approved by the Company's
        Board of Directors.
  14
  
 *REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
                  FIRM*
 
 To
        the
        Stockholders and Board of Directors of Luna Technologies International,
        Inc.
 
 We
        have
        audited the consolidated balance sheets of Luna Technologies International,
        Inc.
        as at December 31, 2004 and 2003 and the consolidated statements of operations,
        stockholders’ equity and cash flows for the years then ended. These consolidated
        financial statements are the responsibility of the Company's management.
        Our
        responsibility is to express an opinion on these financial statements based
        on
        our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform an audit to obtain reasonable assurance whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the 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 audits provide a
        reasonable basis for our opinion.
 
 In
        our
        opinion, these consolidated financial statements present fairly, in all material
        respects, the financial positions of the Company as at December 31, 2004
        and
        2003 and the results of its operations and its cash flows and the changes
        in
        stockholders’ equity for the years then ended in accordance with generally
        accepted accounting principles in the United States.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 1 to the
        financial statements, the Company has
        a
        working capital deficiency and has incurred losses since inception raising
        substantial doubt about the Company’s ability to continue as a going concern.
        Management’s plans in regard to these matters are also described in Note 1. The
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.
 
 
 
 *“Dale
        Matheson Carr-Hilton LaBonte”*
 
 CHARTERED
        ACCOUNTANTS
 
 Vancouver,
        B.C.
 Canada
 March
        31,
        2005
 
   15
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **CONSOLIDATED
        BALANCE SHEETS**
  December
                  31,2004
              
              December
                  31, 2003**ASSETS****CURRENT
                  ASSETS**Accounts
                  receivable
              
              $
              81,357
              
              $
              49,127Prepaid
                  expenses
              
              
              6,027
              
              
              3,960Inventory
              
              
              75,437
              
              
              88,247162,821
              
              
              141,334**FURNITURE
                  AND EQUIPMENT,**net
                  of depreciation of $81,424 (2003 - $70,340)
              
              
              15,605
              
              
              20,777$
              178,426
              
              $
              162,111**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (CAPITAL DEFICIENCY)****CURRENT
                  LIABILITIES**Bank
                  overdraft
              
              $
              184
              
              $
              11,252Accounts
                  payable and accrued liabilities
              
              
              265,505
              
              
              229,738Current
                  portion of convertible debenture (Note 4)
              
              
              56,797
              
              
              39,996Due
                  to related parties (Note 3)
              
              
              16,160
              
              
              167,506Current
                  portion of notes payable (Note 3)
              
              
              78,168
              
              
              40,730416,814
              
              
              489,222**CONVERTIBLE
                  DEBENTURE**(Note
                  4)
              
              
              -
              
              
              56,885**NOTE
                  PAYABLE**(Note
                  3)
              
              
              101,497
              
              
              -518,311
              
              
              546,107**GOING
                  CONCERN CONTINGENCY**(Note 1)**STOCKHOLDERS’
                  EQUITY (CAPITAL DEFICIENCY)**Capital
                  stock (Note 5)Common
                    stock, $0.0001 par value,
                    30,000,000 shares authorized 9,664,648 (2003 - 6,727,836) shares
                    issued
                    and outstanding
              
              
              966
              
              
              673Convertible
                    preferred stock, $0.0001 par value, 5,000,000
                    shares authorizedNIL issued
                    and outstanding
              
              
              -
              
              
              -Additional
                  paid-in capital
              
              
              2,032,988
              
              
              1,342,003Warrants
              
              
              124,000
              
              
              74,000Deficit
              
              
              (2,406,065
              )
              
              (1,735,410
              )Accumulated
                  other comprehensive loss
              
              
              (91,774
              )
              
              (65,262
              )(339,885
              )
              
              (383,996
              )$
              178,426
              
              $
              162,111
  The
        accompanying notes are an integral part of these consolidated financial
        statements
  16
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 *CONSOLIDATED
        STATEMENTS OF OPERATIONS*
 
 Year
                  Ended December 31,2004
              
              2003**SALES**
              
              $
              537,165
              
              $
              381,721**COST
                  OF SALES**
              
              
              269,395
              
              
              232,759**GROSS
                  PROFIT**
              
              
              267,770
              
              
              148,962**OTHER
                  INCOME**
              
              
              120,000
              
              
              100,000387,770
              
              
              248,962**GENERAL
                  AND ADMINISTRATIVE EXPENSES**Consulting
              
              
              85,519
              
              
              86,958Consulting
                  - stock based (Note 5)
              
              
              279,468
              
              
              193,500Depreciation
              
              
              11,084
              
              
              19,686Interest
                  and bank charges
              
              
              12,745
              
              
              49,542Interest
                  on convertible debenture
              
              
              6,197
              
              
              8,990Management
                  fees
              
              
              187,174
              
              
              145,558Office
                  and general
              
              
              166,584
              
              
              127,336Professional
                  fees
              
              
              101,987
              
              
              54,718Rent
              
              
              33,716
              
              
              27,303Research
                  and development, net of recoveries
              
              
              55,097
              
              
              46,925Wages
                  and benefits
              
              
              172,219
              
              
              99,958Gain
                  on write-off of accounts payable (Note 6)
              
              
              (53,365
              )
              
              -1,058,425
              
              
              860,474**NET
                  LOSS FOR THE YEAR**
              
              $
              (670,655
              )
              $
              (611,512
              )**BASIC
                  NET LOSS PER SHARE**
              
              $
              (0.09
              )
              $
              (0.10
              )**WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING**
              
              
              7,615,138
              
              
              6,067,002
  The
        accompanying notes are an integral part of these consolidated financial
        statements
 
 17
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **CONSOLIDATED
        STATEMENT OF STOCKHOLDERS’ EQUITY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2004 AND 2003**
 
 Common
                  Stock
              
              Additional
              
              Share
              
              
              
              Accumulated
                OtherNumber
                  of shares
              
              Amount
              
              Paid
                  InCapital
              
              Purchase
                  Warrants
              
              Deficit
              
              Comprehensive
                  Income (loss)
              
              TotalBalance,
                  December 31, 2002
              
              
              5,415,166
              
              $
              542
              
              $
              605,150
              
              $
              -
              
              $
              (1,123,898
              )
              $
              (2,970
              )
              $
              (521,176
              )Issued
                  for cash at - $0.50 per share
              
              
              200,000
              
              
              20
              
              
              79,980
              
              
              20,000
              
              
              -
              
              
              
              
              
              100,000-
                  $0.60 per share
              
              
              250,000
              
              
              25
              
              
              119,975
              
              
              30,000
              
              
              -
              
              
              
              
              
              150,000-
                $0.80 per share
              
              
              150,000
              
              
              15
              
              
              95,985
              
              
              24,000
              
              
              -
              
              
              
              
              
              120,000Issued
                  for consulting services
              
              
              6,000
              
              
              1
              
              
              2,999
              
              
              -
              
              
              -
              
              
              -
              
              
              3,000Issued
                  for debt settlement
              
              
              225,000
              
              
              23
              
              
              86,877
              
              
              -
              
              
              -
              
              
              -
              
              
              86,900Issued
                  on exercise of options - $0.05 per share
              
              
              25,000
              
              
              3
              
              
              1,247
              
              
              -
              
              
              -
              
              
              -
              
              
              1,250-
                  $0.10 per share
              
              
              50,000
              
              
              5
              
              
              4,995
              
              
              -
              
              
              -
              
              
              -
              
              
              5,000-
                  $0.18 per share
              
              
              20,000
              
              
              2
              
              
              3,598
              
              
              -
              
              
              -
              
              
              -
              
              
              3,600-
                  $0.38 per share
              
              
              34,000
              
              
              3
              
              
              12,917
              
              
              -
              
              
              -
              
              
              -
              
              
              12,920-
                  $0.40 per share
              
              
              205,000
              
              
              20
              
              
              81,980
              
              
              -
              
              
              -
              
              
              -
              
              
              82,000-
                  $0.50 per share
              
              
              23,670
              
              
              2
              
              
              11,812
              
              
              -
              
              
              -
              
              
              -
              
              
              11,814Issued
                  pursuant to stock bonus plan
              
              
              124,000
              
              
              12
              
              
              62,088
              
              
              -
              
              
              -
              
              
              -
              
              
              62,100Beneficial
                  conversion feature of conversion option
              
              
              -
              
              
              -
              
              
              41,000
              
              
              -
              
              
              -
              
              
              -
              
              
              41,000Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              131,400
              
              
              -
              
              
              -
              
              
              -
              
              
              131,400Net
                  loss for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (611,512
              )
              
              
              
              
              (611,512
              )Currency
                  translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (62,292
              )
              
              (62,292
              )Balance,
                  December 31, 2003
              
              
              6,727,836
              
              $
              673
              
              $
              1,342,003
              
              $
              74,000
              
              $
              (1,735,410
              )
              $
              (65,262
              )
              $
              (383,996
              )
  The
        accompanying notes are an integral part of these consolidated financial
        statements
  18
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **CONSOLIDATED
        STATEMENT OF STOCKHOLDERS’ EQUITY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2004 AND 2003**
 
 Common
                  Stock
              
              Additional
              
              Share
              
              
              
              Accumulated
                  OtherNumber
                  of shares
              
              Amount
              
              Paid
                  In
                Capital
              
              Purchase
                  Warrants
              
              Deficit
              
              Comprehensive Income (loss)
              
              TotalBalance,
                  December 31, 2003
              
              
              6,727,836
              
              $
              673
              
              $
              1,342,003
              
              $
              74,000
              
              $
              (1,735,410
              )
              $
              (65,262
              )
              $
              (383,996
              )Issued
                  for cash at - $0.20 per share
              
              
              1,250,000
              
              
              125
              
              
              199,875
              
              
              50,000
              
              
              -
              
              
              -
              
              
              250,000-
                  $0.65 per
                  share
              
              
              100,000
              
              
              10
              
              
              51,990
              
              
              13,000
              
              
              -
              
              
              -
              
              
              65,000-
                  $1.00 per
                  share
              
              
              35,000
              
              
              4
              
              
              27,996
              
              
              7,000
              
              
              -
              
              
              -
              
              
              35,000Issued
                  on exercise of options - $0.04 per share
              
              
              489,000
              
              
              49
              
              
              19,511
              
              
              -
              
              
              -
              
              
              -
              
              
              19,560-
                  $0.10 per share
              
              
              160,000
              
              
              16
              
              
              15,984
              
              
              -
              
              
              -
              
              
              -
              
              
              16,000-
                  $0.23 per share
              
              
              300,000
              
              
              30
              
              
              68,220
              
              
              -
              
              
              -
              
              
              -
              
              
              68,250-
                  $0.40 per share
              
              
              5,000
              
              
              -
              
              
              2,000
              
              
              -
              
              
              -
              
              
              -
              
              
              2,000Issued
                  pursuant to stock bonus plan
              
              
              597,812
              
              
              59
              
              
              130,809
              
              
              -
              
              
              -
              
              
              -
              
              
              130,868Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              154,600
              
              
              -
              
              
              -
              
              
              -
              
              
              154,600Share
                  purchase warrants expired
              
              
              -
              
              
              -
              
              
              20,000
              
              
              (20,000
              )
              
              -
              
              
              -
              
              
              -Net
                  loss for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (670,655
              )
              
              
              
              
              (670,655
              )Currency
                  translation adjustment
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              -
              
              
              (26,512
              )
              
              (26,512
              )Balance,
                  December 31, 2004
              
              
              9,664,648
              
              $
              966
              
              $
              2,032,988
              
              $
              124,000
              
              $
              (2,406,065
              )
              $
              (91,774
              )
              $
              (339,885
              )
  The
        accompanying notes are an integral part of these consolidated financial
        statements
  19
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 
 Year
                  Ended December 31,2004
              
              2003**CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss for the year
              
              $
              (670,655
              )
              $
              (611,512
              )Adjustments
                  to reconcile net loss to net cash from operating
                  activities:-
                  depreciation
              
              
              11,084
              
              
              19,686-
                  stock-based compensation
              
              
              279,468
              
              
              193,500-
                  beneficial conversion feature
              
              
              -
              
              
              41,000-
                  non-cash gain on write-off of accounts payable
              
              
              (53,365
              )
              
              --
                  accrued interest expense
              
              
              (88
              )
              
              1,957-
                  accounts receivable
              
              
              (32,230
              )
              
              (6,434
              )-
                  inventory
              
              
              12,810
              
              
              (67,189
              )-
                  prepaid expenses
              
              
              (2,067
              )
              
              (1,763
              )-
                  accounts payable and accrued liabilities
              
              
              140,360
              
              
              (4,033
              )**NET
                  CASH USED IN OPERATING ACTIVITIES**
              
              
              (314,683
              )
              
              (434,788
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of fixed assets
              
              
              (5,912
              )
              
              (6,473
              )**NET
                  CASH USED IN INVESTING ACTIVITIES**
              
              
              (5,912
              )
              
              (6,473
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Bank
                  overdraft
              
              
              (11,068
              )
              
              8,913Loan
                  repayment
              
              
              -
              
              
              (4,500
              )Issuance
                  of common shares
              
              
              357,000
              
              
              486,584Convertible
                  debenture proceeds (repayments)
              
              
              (39,996
              )
              
              36,669Loan
                  from (repayments to) related parties
              
              
              49,509
              
              
              (24,113
              )Payment
                  on notes payable
              
              
              (8,338
              )
              
              -**NET
                  CASH FLOWS FROM FINANCING ACTIVITIES**
              
              
              347,107
              
              
              503,553**EFFECT
                  OF EXCHANGE RATE CHANGES**
              
              
              (26,512
              )
              
              (62,292
              )**INCREASE
                  (DECREASE) IN CASH**
              
              
              -
              
              
              -**CASH,
                  BEGINNING OF YEAR**
              
              
              -
              
              
              -**CASH,
                  END OF YEAR**
              
              $
              -
              
              $
              -
 **SUPPLEMENTAL
          CASH FLOW INFORMATION**
 ****Interest
                  paid
              
              $
              6,285
              
              $
              8,883****Taxes
                  paid
              
              $
              Nil
              
              $
              Nil
 **Non-cash
        activities:**
 
 Refer
        to
        Notes 3, 5 and 6.
 The
        accompanying notes are an integral part of these consolidated financial
        statements
  20
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
  ***NOTE
        1 - NATURE OF OPERATIONS AND BASIS OF
        PRESENTATION***
 
 The
        Company was incorporated on March 25, 1999 in the state of Delaware. The
        Company
        commenced operations April 30, 1999 and by agreement effective as of that
        date,
        acquired proprietary technology and patent rights from Luna Technology Inc.
        (“LTBC”), a private British Columbia company with certain directors and
        shareholders in common with the Company. In addition, by agreement effective
        November 15, 1999, the Company acquired proprietary technology and the trademark
        rights to “LUNA” and “LUNAPLAST” from Douglas Sinclair, an officer and employee
        of LTBC, which relate to the acquired Photoluminescent technology. This
        technology is used for the development and production of photoluminescent
        signage, wayfinding systems and other novelty products with applications
        in
        marine, commuter rail, subway, building and toy markets.
 
 The
        consolidated financial statements have been prepared on the basis of a going
        concern which contemplates the realization of assets and the satisfaction
        of
        liabilities in the normal course of business. At December 31, 2004 the Company
        has a working capital deficiency of $253,993 (2003 - $347,888) and has incurred
        losses since inception raising substantial doubt as to the Company’s ability to
        continue as a going concern. The ability of the Company and its subsidiary
        to
        continue as a going concern is dependent on raising additional capital and
        on
        generating future profitable operations. In addition, during 2004, 60% of
        the
        Company’s total sales was derived from two customers, one customer of which also
        provided financing to the Company in connection with the Convertible Debenture
        as described in Note 4 accounted for 43%.
 
 The
        Company anticipates meeting its working capital requirement for the next
        year
        through the sale of shares of common stock or through loans and advances
        from
        related parties as may be required.
  **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
  **Principles
        of Consolidation**
  The
        financial statements include the accounts of the Company and its wholly-owned
        subsidiary Luna Technologies (Canada) Ltd. (“LTC”), a company incorporated June
        9, 1999 in the province of British Columbia. LTC was incorporated to conduct
        all
        future business activities in Canada. All significant intercompany balances
        and
        transactions are eliminated on consolidation.
  **Use
        of Estimates and Assumptions**
  Preparation
        of the Company’s financial statements in conformity with United States generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect certain reported amounts and disclosures. Accordingly,
        actual results could differ from those estimates. The areas requiring
        significant estimates and assumptions are determining the useful lives of
        furniture and equipment and the fair value of stock-based
        compensation.
  **Inventory**
  Inventory
        is carried at the lower of cost and net realizable value.
  **Furniture
        and Equipment**
  Furniture
        and equipment are recorded at cost. Depreciation is computed by the
        straight-line method on estimated useful lives of two to five
        years.
  **Revenue
        Recognition**
  The
        Company recognizes revenue when products have been shipped and collection
        is
        reasonably assured. The Company also generates other income from one-time
        fees
        charged in connection with territorial Supply Agreements. As the Company
        has no
        future obligations in connection with these agreements, these fees are
        recognized as other income upon execution of the agreements and when collection
        is reasonably assured.
  **Research
        and Development Costs**
  Ongoing
        new product and technology research and development costs are expensed as
        incurred net of contributions made by third parties toward research
        projects.
  21
  
 **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (cont’d)**
  **Foreign
        Currency Translation**
  The
        financial statements are presented in United States dollars. In accordance
        with
        Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency
        Translation”, foreign denominated monetary assets and liabilities are translated
        to their United States dollar equivalents using foreign exchange rates which
        prevailed at the balance sheet date. Revenue and expenses are translated
        at
        average rates of exchange during the year. Related translation adjustments
        are
        reported as a separate component of stockholders’ equity, whereas gains or
        losses resulting from foreign currency transactions are included in results
        of
        operations.
  **Fair
        Value of Financial Instruments**
  In
        accordance with the requirements of SFAS No. 107, management has determined
        the
        estimated fair value of financial instruments using available market information
        and appropriate valuation methodologies. The fair value of financial instruments
        classified as current assets or liabilities including bank overdraft and
        notes
        and accounts payable approximate carrying value due to the short-term maturity
        of the instruments. Management has also determined that the fair value of
        the
        convertible debenture approximates its carrying value as at December 31,
        2004
        and 2003.
  **Risk
        Management**
  Currency
        risk. The majority of the Company’s sales and cost of sales are made in U.S.
        currency while a significant amount of its general and administrative expenses
        are made in Canadian currency. The Company does not currently hedge its foreign
        currency exposure and accordingly is at risk for foreign currency exchange
        fluctuations.
 
 Credit
        risk. Management does not believe the Company is exposed to significant credit
        risk and accordingly does not manage credit risk directly.
  **Net
        Loss per Common Share**
  Basic
        loss per share includes no dilution and is computed by dividing income available
        to common stockholders by the weighted average number of common shares
        outstanding for the period. Dilutive earnings per share reflects the potential
        dilution of securities that could share in the earnings of the Company. Share
        purchase warrants and stock options were not included in the calculation
        of
        weighted average number of shares outstanding because the effect would be
        anti-dilutive.
 
 **Stock-Based
        Compensation**
  In
        December 2002, the Financial Accounting Standards Board (“FASB”) issued
        Financial Accounting Standard No. 148, “Accounting for Stock-Based
        Compensation - Transition and Disclosure” (“SFAS No. 148”), an amendment of
        Financial Accounting Standard No. 123 “Accounting for Stock-Based
        Compensation” (“SFAS No. 123”). The purpose of SFAS No. 148 is to: (1) provide
        alternative methods of transition for an entity that voluntarily changes
        to the
        fair value based method of accounting for stock-based employee compensation,
        (2)
        amend the disclosure provisions to require prominent disclosure about the
        effects on reported net income of an entity’s accounting policy decisions with
        respect to stock-based employee compensation, and (3) to require disclosure
        of
        those effects in interim financial information. The disclosure provisions
        of
        SFAS No. 148 were effective for the Company commencing for the year ended
        December 31, 2002 and the required disclosures have been made
        below.
 
 The
        Company has elected to continue to account for stock-based employee compensation
        arrangements in accordance with the provisions of Accounting Principles Board
        Opinion No. 25, “Accounting for Stock Issued to Employees”, (“APB No. 25”) and
        comply with the disclosure provisions of SFAS No. 123 as amended by SFAS
        No. 148
        as described above. In addition, in accordance with SFAS No. 123 the Company
        applies the fair value method using the Black-Scholes option-pricing model
        in
        accounting for options granted to consultants. Under APB No. 25, compensation
        expense is recognized based on the difference, if any, on the date of grant
        between the estimated fair value of the Company’s stock and the amount an
        employee must pay to acquire the stock. Compensation expense is recognized
        immediately for past services and pro-rata for future services over the
        option-vesting period.
  22
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (cont’d)**
 
 **Stock-Based
        Compensation (cont’d)**
 The
        following table illustrates the pro forma effect on net income (loss) and
        net
        income (loss) per share as if the Company had accounted for its stock-based
        employee compensation using the fair value provisions of SFAS No. 123 using
        the
        assumptions as described in Note 5:
 For
                  the year ended December 31,2004
              
              2003Net
                  loss for the year
              
              
              As
                  reported
              
              $
              (670,655
              )
              $
              (611,512
              )SFAS
                  123 compensation expense
              
              
              Pro-forma
              
              
              (63,050
              )
              
              (18,700
              )Net
                  loss for the year
              
              
              Pro-forma
              
              $
              (733,705
              )
              $
              (630,212
              )Pro-forma
                  basic net loss per share
              
              
              Pro-forma
              
              $
              (0.10
              )
              $
              (0.10
              )
 
 The
        Company accounts for equity instruments issued in exchange for the receipt
        of
        goods or services from other than employees in accordance with SFAS No. 123
        and
        the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No.
        96-18, “Accounting for Equity Instruments That Are Issued to Other Than
        Employees for Acquiring or in Conjunction with Selling Goods or Services” (“EITF
        96-18”). Costs are measured at the estimated fair market value of the
        consideration received or the estimated fair value of the equity instruments
        issued, whichever is more reliably measurable. The value of equity instruments
        issued for consideration other than employee services is determined on the
        earlier of a performance commitment or completion of performance by the provider
        of goods or services as defined by EITF 96-18.
 
 The
        Company has also adopted the provisions of the Financial Accounting Standards
        Board Interpretation No.44, “Accounting for Certain Transactions Involving Stock
        Compensation - An Interpretation of APB Opinion No. 25” (“FIN 44”), which
        provides guidance as to certain applications of APB No. 25.
  **Income
        Taxes**
  The
        Company follows the liability method of accounting for income taxes. Under
        this
        method, deferred tax assets and liabilities are recognized for the future
        tax
        consequences attributable to differences between the financial statement
        carrying amounts of existing assets and liabilities and their respective
        tax
        balances. Deferred tax assets and liabilities are measured using enacted
        or
        substantially enacted tax rates expected to apply to the taxable income in
        the
        years in which those differences are expected to be recovered or settled.
        The
        effect on deferred tax assets and liabilities of a change in tax rates is
        recognized in income in the period that includes the date of enactment or
        substantive enactment.
 
 **Recent
        Accounting Pronouncements**
 
 In
        December 2004, the FASB issued SFAS No. 153, *Exchanges
        of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for
        Non-monetary Transactions* (“SFAS
        153”) SFAS 153 requires that exchanges of non-monetary assets are to be measured
        based on fair value and eliminates the exception for exchanges of non-monetary,
        similar productive assets, and adds an exemption for non-monetary exchanges
        that
        do not have commercial substance. SFAS 153 will be effective for fiscal periods
        beginning after June 15, 2005. Management does not believe that the adoption
        of
        this standard will have a material impact on the Company’s financial position or
        results of operations.
 
 In
        December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which
        establishes standards for the accounting for transactions in which an entity
        exchanges its equity instruments for goods or services. A key provision of
        this
        statement is the requirement of a public entity to measure the cost of employee
        services received in exchange for an award of equity instruments (including
        stock options) based on the grant date fair value of the award. That cost
        will
        be recognized over the period during which an employee is required to provide
        service in exchange for the award (i.e., the requisite service period or
        vesting
        period). This standard becomes effective for the Company for its first annual
        or
        interim period ended on or after December 15, 2005. The Company will adopt
        SFAS
        123R no later than the beginning of the Company's fourth quarter ending December
        31, 2005. Management is currently evaluating the potential impact that the
        adoption of SFAS 123R will have on the Company's financial position and results
        of operations.
  23
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
 
 **NOTE
        3 - RELATED PARTY TRANSACTIONS**
 
 The
        Company pays the CEO, President, and Chief Financial Officer, CDN$7,500,
        CDN$5,000 and CDN$4,000 per month respectively. These obligations are on
        a month
        by month basis.
 
 During
        2003 LTC and the Company executed a guarantee of certain unpaid management
        fees
        owing to the CEO of LTC (Doug Sinclair) totalling $123,750 (CAN$165,000).
        In
        connection with this guarantee, the CEO was granted the right to convert
        any or
        all of the unpaid amount into restricted shares of the Company’s common stock at
        a price of $0.30 per share. During 2003 the Company recorded a $41,000 non-cash
        interest expense representing the beneficial conversion feature embedded
        in this
        conversion option. This beneficial conversion feature was valued using the
        intrinsic value method. Effective August 31, 2004, the CEO of LTC resigned
        and
        entered into an agreement with the Company for the payment of these guaranteed
        amounts an additional fees owing. Effective August 3, 2004, the Company has
        guaranteed, by a non-interest bearing promissory note, outstanding management
        fees due to the former CEO of LTC totalling CAN$187,000 payable as follows:
        CDN$20,000 upon acceptance, CDN$ 20,000 on January 15, 2005, CDN$25,000 on
        June
        15, 2005, CDN$30,000 on January 15, 2006, CDN$40,000 on June 15, 2006 and
        CDN$52,000 on January 15, 2007. In addition, the Company has agreed to a
        severance payment of CDN$43,200 to be paid in twelve equal monthly installments
        of CDN$3,600. To December 31, 2004 CDN$41,600 has been paid in connection
        with
        the above agreements leaving CDN$188,600 (US$156,905) owing of which $138,935
        has been reclassified to notes payable and $17,970 has been reclassified
        to
        accounts payable The Company did not pay the CDN $20,000 installment due
        January
        15, 2005.
 
 During
        2004 the Company had transactions with directors, officers, a relative of
        a
        director, and LTBC as follows: expenses paid on behalf of and advances made
        to
        the Company - $96,655 (2003 - $44,332); management fees incurred by the Company
        - $187,174 (2003 - $145,558); and payments and reimbursements made by the
        Company - $234,320 (2003 - $180,959). Also during 2004 $19,560 owing to a
        director of the Company was assigned to the Company as consideration for
        the
        issuance of 489,000 shares of the Company’s common stock on the exercise of
        stock options at a price of $0.04 per share. In addition, amounts owing to
        the
        former CEO of LTC totalling $181,295 were reclassified during the year to
        Notes
        payable leaving $16,160 owing as at December 31, 2004 (2003 - $167,506).
 
 During
        2003 related party debts totalling $86,900 were settled by way of offset
        against
        the proceeds receivable on the exercise of options by assignment of these
        debts
        to an unrelated third party.
 
 The
        Company and LTC have non-interest-bearing promissory notes totalling $40,730
        to
        LTBC originally due on or before June 30, 2001. The due dates on these notes
        have been extended to January 1, 2006.
 
 Unless
        otherwise noted, all amounts due to related parties are unsecured, non-interest
        bearing and with no specific terms of repayment.
 
 Effective
        June 26, 2003 the Company entered into two agreements to acquire certain
        proprietary technology and patent application rights from Inject A Light
        Corporation Inc. (“Inject A Light”), a private Delaware corporation controlled
        by a director and officer of the Company and the former CEO of LTC. This
        proprietary technology and these patent application rights were originally
        acquired by Inject A Light from these two individuals. Under the terms of
        the
        agreements, the Company was required to pay consideration of a total of
        1,250,000 restricted shares of the Company’s common stock. Prior to the closing
        of the agreement the parties re-evaluated the terms and ultimate completion
        of
        this potential acquisition. Effective December 29, 2004, as a result of
        re-evaluating this acquisition, the parties entered into an Amending Agreement
        and Release whereby these parties agreed to transfer the Inject A Light
        proprietary technology at no cost to the Company. The parties determined
        that
        further significant development costs must be incurred to this technology
        and
        accordingly the parties were not able to determine an appropriate fair
        value.
  24
  
 **LUNA
        TECHNOLOGIES INTERNATIONAL, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
  ***NOTE
        4 - CONVERTIBLE DEBENTURE***
 
 Effective
        December 21, 2002 the Company issued a $120,000 Secured Convertible Debenture
        (the “Debenture”). The Debenture is secured by a first floating charge on all of
        the property, assets and undertakings of the Company and bears interest at
        a
        rate of 8% per annum. The Company is required to make fixed monthly principal
        payments of $3,333 for a period of 30 months commencing June 21, 2003 and
        a
        final principal payment of $20,010 due December 21, 2005. Interest is calculated
        on the outstanding principal balance and is payable monthly commencing June
        21,
        2003. During 2004 the Company made principal and interest payments totalling
        $46,281 and as at December 31, 2004 a further $124 of interest has been accrued.
        This Debenture was issued to the Company’s major customer as described in Note
        1.
 
 The
        total
        unpaid balance of principal and interest may be converted at any time into
        restricted shares of the Company’s common stock at a price of $0.90 per share
        during 2004 and $1.20 per share during 2005.
  ***NOTE
        5 - CAPITAL STOCK***
 
 During
        2003 the Company issued 200,000 units at a price of $0.50 per unit for proceeds
        of $100,000. Each unit consists of one common share and one share purchase
        warrant entitling the holder to purchase one additional common share of the
        Company at a price of $0.75 per share until December 15, 2004. The estimated
        fair value of the warrants of $20,000 has been recorded as a separate component
        of stockholders’ equity.
 
 During
        2003 the Company issued 250,000 units at a price of $0.60 per unit for proceeds
        of $150,000. Each unit consists of one common share and one share purchase
        warrant entitling the holder to purchase one additional common share of the
        Company at a price of $0.75 per share until August 15, 2005. The estimated
        fair
        value of the warrants of $30,000 has been recorded as a separate component
        of
        stockholders’ equity.
 
 During
        2003 the Company issued 150,000 units at a price of $0.80 per unit for proceeds
        of $120,000. Each unit consists of one common share and one share purchase
        warrant entitling the holder to purchase one additional common share of the
        Company at a price of $1.00 per share until June 30, 2006. The estimated
        fair
        value of the warrants of $24,000 has been recorded as a separate component
        of
        stockholders’ equity.
 
 During
        2003 the Company issued 6,000 shares of common stock at $0.50 per share in
        settlement of $3,000 of accounts payable and 225,000 shares of common stock
        in
        settlement of a total of $86,900 of loans payable and other amounts previously
        owing to related parties which were assigned to a third party during
        2003.
 
 During
        2003 the Company issued 357,670 shares of common stock on exercise of stock
        options for total consideration of $116,584.
 
 During
        2004 the Company issued 100,000 units at a price of $0.65 per unit for proceeds
        of $65,000. Each unit consists of one common share and one share purchase
        warrant entitling the holder to purchase one additional common share of the
        Company at a price of $1.00 per share until February 28, 2006. The estimated
        fair value of the warrants of $13,000 has been recorded as a separate component
        of stockholders’ equity.
 
 During
        2004 the Company issued 35,000 units at a price of $1.00 per unit for proceeds
        of $35,000. Each unit consists of one common share and one share purchase
        warrant entitling the holder to purchase one additional common share of the
        Company at a price of $1.00 per share until March 31, 2006. The estimated
        fair
        value of the warrants of $7,000 has been recorded as a separate component
        of
        stockholders’ equity.
 
 During
        2004 the Company issued 1,250,000 units at a price of $0.20 per unit for
        proceeds of $250,000. Each unit consists of one common share and one share
        purchase warrant entitling the holder to purchase one additional common share
        of
        the Company at a price of $0.30 per share until September 3, 2005. The estimated
        fair value of the warrants of $50,000 has been recorded as a separate component
        of stockholders’ equity.
 
 During
        2004 the Company issued 954,000 shares of common stock on exercise of various
        stock options for total consideration of $105,810 of which $7,000 was received
        in cash, $79,250 by offset of accounts payable and $19,560 by offset of amounts
        due to a director of the Company.
  25
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC** .
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
  ***NOTE
        5 - CAPITAL STOCK (cont’d)***
  **Stock
        option plans**
  As
        approved by the directors effective January 26, 2004, the Company has adopted
        plans allowing for the granting of stock options and awarding of shares of
        common stock as follows:
  *Incentive
        Stock Option Plan*
  The
        Company adopted an Incentive Stock Option Plan authorizing the issuance of
        options to purchase up to 750,000 shares of common stock of the Company.
        Options
        granted under this plan will have a price and term to be determined at the
        time
        of grant, but shall not be granted at less than the then fair market value
        of
        the Company’s common stock and can not be exercised until one year following the
        date of grant. This plan is available to officers, directors and key employees
        of the Company.
  *Non-Qualified
        Stock Option Plan*
  The
        Company adopted a Non-Qualified Stock Option Plan authorizing the issuance
        of
        options to purchase up to 1,350,000 shares of common of the Company. Options
        granted under this plan will have a price and term to be determined at the
        time
        of grant, but shall not be granted at less than the then par value of the
        Company’s common stock and can be exercised at any time following the date of
        grant. This plan is available to officers, directors, employees, consultants
        and
        advisors of the Company.
  *Stock
        Bonus Plan*
  The
        Company adopted a Stock Bonus Plan authorizing the awarding of up to 1,000,000
        shares of common stock of the Company solely at the discretion of the board
        of
        directors. This plan is available to officers, directors, employees, consultants
        and advisors of the Company.
 
 Effective
        February 10, 2004 the Company filed a Form S-8 Registration Statement for
        3,000,000 shares authorized under the Incentive Stock Option Plan, the
        Non-Qualified Stock Option Plan and the Stock Bonus Plan.
 
 During
        2003 the Company awarded 124,000 shares of common stock under the Stock Bonus
        Plan with a fair value of **$** 62,100.
 
 During
        2004 the Company issued 12,000 shares of common stock under the Company’s Stock
        Bonus Plan at $0.50 per share in settlement of $6,000 of accounts payable
        and
        awarded a further 585,812 shares under the Stock Bonus Plan with a fair value
        of **$** 124,868.
        As at December 31, 2004 202,188 shares remain available for awards under
        the
        Stock Bonus Plan.
 
 During
        2003 the Company granted 382,670 stock options to consultants at prices ranging
        from $0.05 per share to $0.50 per share. The fair value of these options
        was
        recorded as consulting fees of $84,400. The fair value of these options was
        estimated using the Black-Scholes option pricing model assuming expected
        lives
        ranging from 0.7 years to 1.6 years, a risk-free interest rate of 3% and
        expected volatilities ranging from 67% to 82%.
 
 During
        2003 the Company granted 160,000 stock options to a director at prices ranging
        from $0.10 per share to $0.60 per share. Of these options, 120,000 vested
        in
        2003 and the remaining 40,000 options vested between March 1, 2004 and June
        1,
        2004. During 2003 the Company recorded a consulting expense of $47,000
        representing the intrinsic value of the vested options. Also in connection
        with
        the vested options, pro-forma disclosures were provided in Note 2 to reflect
        the
        fair value of these options of $18,700 as calculated using the Black-Scholes
        option pricing model assuming expected lives of 5 years, a risk-free interest
        rate of 3% and an expected volatility of 112%. During 2004, upon vesting
        of the
        remaining options, the Company recorded an additional consulting expense
        of
        $4,400 representing the intrinsic value of the options and disclosed additional
        pro-forma fair value of the options totalling $15,700 as calculated using
        the
        Black-Scholes option pricing model assuming expected lives of 5 years, a
        risk-free interest rate of 3% and an expected volatility of 112%.
 
 During
        2004 the Company granted 460,000 stock options to consultants at prices ranging
        from $0.10 per share to $0.23 per share. The fair value of these options
        was
        recorded as consulting fees of $71,600. The fair value of these stock options
        was estimated using the Black-Scholes option pricing model assuming expected
        lives ranging from one year to five years, risk-free interest rates ranging
        from
        2% to 3% and expected volatilities ranging from 77% to 103%.
  26
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC** .
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
  ***NOTE
        5 - CAPITAL STOCK (cont’d)***
 
 During
        2004 the Company granted a total of 659,200 stock options to the Company’s new
        president at exercise prices ranging from $0.35 per share to $0.75 per share,
        exercisable for a term of three years. The fair value of these stock options
        was
        estimated using the Black-Scholes option pricing model assuming an expected
        life
        of three years, a risk-free interest rate of 3% and an expected volatility
        of
        102% resulting in a pro forma expense of $142,200 to be disclosed in Note
        2 upon
        vesting of the options. Of these options, 59,200 vested immediately and the
        remaining 600,000 vest at a rate of 16,667 per month for a period of three
        years. During year ended December 31, 2004 $30,850 of the pro forma expense
        has
        been disclosed and the remaining $111,350 will be disclosed upon vesting
        of the
        options.
 
 During
        2004 the Company granted a total of 505,000 stock options to an employee
        and a
        director of the Company at exercise prices ranging from $0.04 per share to
        $0.30
        per share, exercisable for terms ranging from one year to ten years. As the
        exercise price of certain of these options was less than the market price
        of the
        Company’s common stock as at the date of grant, the Company has recorded an
        intrinsic value stock based compensation expense of $78,600. In addition
        the
        Company has disclosed a pro-forma expense of $16,500 relating to the additional
        fair value of these options as estimated using the Black-Scholes option pricing
        model assuming an expected life of ten years, a risk-free interest rate of
        3%
        and an expected volatility of 103%.
 
 As
        at
        December 31, 2004, 305,000 shares have been granted and no stock options
        were
        outstanding under the Incentive Stock Option Plan and 770,200 stock options
        were
        outstanding under the Non-Qualified Stock Option Plan.
 
 The
        Company’s stock option activity is as follows:
  Number
                  of options
              
              Weighted
                  Average Exercise Price
              
              Weighted
                  Average Remaining LifeBalance,
                  December 31, 2002
              
              
              -
              
              $
              -
              
              
              -Granted
                  during the year
              
              
              542,670
              
              
              0.33Expired
                  during the year
              
              
              -
              
              
              -Exercised
                  during the year
              
              
              (357,670
              )
              
              0.33Balance,
                  December 31, 2003
              
              
              185,000
              
              
              0.32
              
              
              2.98
                  yearsGranted
                  during the year
              
              
              1,624,200
              
              
              0.23Expired
                  during the year
              
              
              (85,000
              )
              
              0.25Exercised
                  during the year
              
              
              (954,000
              )
              
              0.11Balance,
                  December 31, 2004
              
              
              770,200
              
              $
              0.39
              
              
              2.81
                  years
  **Share
        Purchase Warrants**
  The
        Company’s share purchase warrant activity is as follows:
 Number
                  of warrants
              
              Weighted
                  Average Exercise Price
              
              Weighted
                  Average Remaining LifeBalance,
                  December 31, 2002
              
              
              -
              
              $
              -
              
              
              -Issued
                  during the year
              
              
              914,255
              
              
              0.97Expired
                  during the year
              
              
              (75,000
              )
              
              1.25Exercised
                  during the year
              
              
              -
              
              
              -Balance,
                  December 31, 2003
              
              
              839,255
              
              
              0.94
              
              
              1.21
                  yearsIssued
                  during the year
              
              
              1,385,000
              
              
              0.37Expired
                  during the year
              
              
              (439,255
              )
              
              0.89Exercised
                  during the year
              
              
              -
              
              
              -Balance,
                  December 31, 2004
              
              
              1,785,000
              
              $
              0.51
              
              
              0.77
                  years
  27
  **LUNA
        TECHNOLOGIES INTERNATIONAL, INC** .
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 DECEMBER
                  31, 2004
  ***NOTE
        6 - OTHER GAIN***
 
 During
        2002 a creditor of the Company seized inventory from the Company in an attempt
        to secure payment of certain amounts owing by the Company in excess of the
        carrying value of the inventory. As at December 31, 2003 the creditor was
        still
        in possession of the inventory and had not initiated any action in an attempt
        to
        receive payment. During 2004 management determined that any obligation relating
        to this dispute was unlikely and accordingly wrote-off previously accrued
        amounts resulting in a gain of $53,365.
  ***NOTE
        7 - INCOME TAXES***
 
 There
        were no significant temporary differences between the Company’s tax and
        financial bases, except for the Company’s net operating loss carryforwards
        amounting to approximately $1,790,000 at December 31, 2004 (2003 - $1,400,000).
        These carryforwards will expire, if not utilized, beginning in 2006. The
        realization of the benefits from these deferred tax assets appears uncertain
        due
        to the Company’s limited operating history. Accordingly, a valuation allowance
        has been recorded which offsets the deferred tax assets at the end of the
        year.
  ***NOTE
        8 - SUBSEQUENT EVENTS***
 
 Subsequent
        to December 31, 2004, the Company issued 20,000 common shares under the Stock
        Bonus Plan and completed a private placement of 325,000 units at a price
        of
        $0.20 per unit for proceeds of $65,000. Each unit consist of one common share
        and one share purchase warrant entitling the holder to purchase one additional
        common share of the Company at prices ranging from $0.35 - $0.55 per share
        until
        March 11, 2007.
  28
  **SIGNATURES**
 
 In
        accordance with Section 13 or 15(a) of the Exchange Act, the Registrant has
        caused this Report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized on the 25th day of April 2006.
  **LUNA
                  TECHNOLOGIES INTERNATIONAL INC.**By:
              */s/
                  Kimberly
                  Landry**Kimberly
                  Landry, President, Principal**Financial
                Officer and Principal Accounting *Officer**
  In
        accordance with the Exchange Act, this Report has been signed by the following
        persons on behalf of the Registrant in the capacities and on the dates
        indicated.
 *Signature*
              *Title*
              *Date**/s/
                  Kimberly Landry*
              *Director*
              *April
                  25, 2006**Kimberly
                  Landry**/s/
                  Robert H. Humber*
              *Director*
              *April
                  25, 2006**Robert
                  H. Humber*
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