**UNITED
      STATES**


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-QSB**







[X]
      Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
      1934 for the quarterly period ended June 30, 2005





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


(No
      fee
      required) for the transition period
      from____________to________________


Commission
      file number: **0-27919**




**XRAYMEDIA
      Inc.**


fka
      XRAYMEDIA.COM Inc.


(Name
      of
      Small Business Issuer in Its Charter)











**Minnesota**  **410951123**


(State
      or
      Other Jurisdiction
      of                                                 
      (  I.R.S. Employer


Incorporation
      or
      Organization)                                              
      Identification No.)





**555
      Hastings Street, Ste.# 1560, Vancouver, B.C., Canada V6B 4N6**


(Address
      of Principal Executive Offices) (Zip Code)





**(888)
      777-0658**


(Issuer's
      Telephone Number, Including Area Code)





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





Title
      of Each ClassName
      of each Exchange on Which Registered





Common
      Stock ($0.001 Par Value)          
       
                    
      None





Preferred
      Stock ($0.001 Par Value) None





***Page
          - 1***











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





Yes
      [X]     No [  ]





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





The
      issuer's total revenues for the two quarters ended June 30, 2005, were $68,500.





On
      June
      30, 2005 and August 9, 2005 the number of shares outstanding of the registrant's
      Common Stock, $0.001 par value (the only class of voting stock), was 247,457,250
      and 310,457,250. On June 30, 2005 and August 9, 2005, the number of shares
      outstanding of the registrants Preferred Stock, $0.001 par value was 1,000,000.







***Page
          - 2***














**PART
      I**





FORWARD-LOOKING
      STATEMENTS. THIS REGISTRATION STATEMENT INCLUDES "FORWARD-LOOKING STATEMENTS."
      FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REGISTRATION STATEMENT ARE BASED
      ON
      MANAGEMENT'S BELIEFS AND ASSUMPTIONS AND ON INFORMATION CURRENTLY AVAILABLE
      TO
      MANAGEMENT. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS IN WHICH WORDS SUCH
      AS
      "EXPECT, " "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "ESTIMATE," "CONSIDER,"
      OR
      SIMILAR EXPRESSIONS ARE USED.





YOU
      SHOULD NOT CONSTRUE ANY FORWARD-LOOKING STATEMENT AS A GUARANTEE OF FUTURE
      PERFORMANCE. THESE STATEMENTS INHERENTLY INVOLVE RISKS, UNCERTAINTIES AND
      ASSUMPTIONS. THE FUTURE RESULTS AND STOCKHOLDER VALUES MAY DIFFER FROM THOSE
      EXPRESSED IN THESE FORWARD-LOOKING STATEMENTS, AND THOSE VARIATIONS MAY BE
      MATERIAL AND ADVERSE. MANY FACTORS THAT WILL AFFECT THESE RESULTS AND VALUES
      ARE
      BEYOND OUR ABILITY TO CONTROL OR PREDICT.








**ITEM
      1.  FINANCIAL STATEMENTS**








**As
      used herein, the term “Company” refers to XRAYMEDIA, INC., a Minnesota
      Corporation, and its subsidiaries and predecessors unless otherwise indicated.
      Consolidated, unaudited, condensed interim financial statements including a
      balance sheet for the Company as of the quarter ended JUNE 30, 2005 and
      statements of operations, and statements of cash flows for the interim period
      up
      to the date of such balance sheet and the comparable period of the preceding
      year are attached hereto as Pages F - 1 through F - 9 and are incorporated
      herein by this reference.**








**(THIS
      SPACE LEFT BLANK INTENTIONALLY)**










***Page
          - 3***





**XRAYMEDIA,
      INC.**


(FORMERLY
      XRAYMEDIA.COM, INC.)


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**BALANCE
      SHEET (UNAUDITED)**


JUNE
      30,
      2005








JUNE
                30**ASSETS**
            **2005**CURRENT
                ASSETSCash
                and cash equivalents
            $
            220Accounts
              receivable (Note A)
            
            29,100Prepaid
              expenses (Note B)
            
            34,083TOTAL
                CURRENT ASSETS
            
            63,403FIXED
                ASSETSFurniture
                and equipmentCost.
            
            334,705Accumulated
                amortization.
            
            (301,139
            )Net
            
            33,566Software
                LicenseCost.
            
            25,000Accumulated
                amortization
            
            (25,000
            )Net
            
            0TOTAL
                FIXED ASSETS
            
            33,566TOTAL
                ASSETS
            $
            96,969CURRENT
                LIABILITIESAccounts
                payable and Accrued expenses(Note D)
            $
            1,328,201Advances
                from Company Officer (Note F)
            
            144,419Advance
                from related party (Note F)
            
            646,782Advances
                - Other (Note D)
              
              TOTAL
                CURRENT LIABILITIES
            
            237,052
              
              2,356,454TOTAL
                LIABILITIES
            
            2,356,454STOCKHOLDERS'
                EQUITY (Note H)Convertible
                Preferred Stock, par value $.001; 11,000,000shares
                authorized; 1,000,000 issued and outstanding at June 30, 2005
            
            1,000Additional
                paid in capital
            
            -Common
                Stock, par value $.001; 750,000,000 shares authorized; issued and
                outstanding 247,457,250
              June
                30, 2005
            
            247,457Additional
                paid in capital
            
            23,384,109Common
                shares subscribed
            
            11,000Deficit
                at inception date
            
            (746,875
            )Accumulated
                deficit during the development stage
            
            (25,156,176
            )Common
                stock note receivable
            
            (0
            )TOTAL
                STOCKHOLDERS' EQUITY<DEFICIT>
            
            (2,259,485TOTAL
                LIABILITIES ANDSTOCKHOLDERS'
                EQUITY
            $
            96,969










***Page
          - 4***








**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**STATEMENTS
      OF OPERATIONS AND ACCUMULATED DEFICIT (UNAUDITED)**


FOR
      THE
      THREE AND SIX MONTHS ENDED JUNE 30, 2005, 2004, AND


THE
      PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE) TO JUNE 30, 2005














Three
                Months Ended
              June
                30,
            
            
            
            Six
                Months Ended
              June
                30,
            
            March
                1, 1994
              (inception
                of development stage)
              to
                June 30, 20052005
            
            
            
            2004
            
            
            
            2005
            
            
            
            2004REVENUE
            
            
            
            $30,750
            
            
            
            $22,500
            
            
            
            $68,500
            
            
            
            $24,088
            
            $184,657___________
            
            
            
            
            
            
            
            
            
            
            
            ___________
            
            
            
            
            
            ________
            
            
            
            
            
            __________
            
            
            _____________COSTS
                AND EXPENSESPersonnel
                Costs
            
            
            
            
            
            15,000
            
            
            
            
            
            21,000
            
            
            
            
            
            30,000
            
            
            
            
            
            42,000
            
            
            778,871Compensation
                expense
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            9,432,425
            
            
            12,121,750Occupancy
                costs
            
            
            
            
            
            21,315
            
            
            
            
            
            20,998
            
            
            
            
            
            43,523
            
            
            
            
            
            43,378
            
            
            501,257Professional
                fees
            
            
            
            
            
            45,575
            
            
            
            
            
            91,760
            
            
            
            
            
            211,939
            
            
            
            
            
            156,717
            
            
            1,745,164Computer
                Costs
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            94,840Media
                advertising
            
            
            
            
            
            78,594
            
            
            
            
            
            (11,245
            )
            
            
            
            
            195,170
            
            
            
            
            
            65,514
            
            
            568,634Marketing
            
            
            
            
            
            19,377
            
            
            
            
            
            25,632
            
            
            
            
            
            41,149
            
            
            
            
            
            49,629
            
            
            374,942Travel
                & Promotion
            
            
            
            
            
            7,358
            
            
            
            
            
            20,868
            
            
            
            
            
            20,637
            
            
            
            
            
            60,307
            
            
            474,943Consulting
            
            
            
            
            
            23,461
            
            
            
            
            
            137,222
            
            
            
            
            
            47,812
            
            
            
            
            
            159,949
            
            
            571,545Bank
                charges
            
            
            
            
            
            456
            
            
            
            
            
            874
            
            
            
            
            
            1,634
            
            
            
            
            
            2,145
            
            
            20,045Office
                supplies
            
            
            
            
            
            11,857
            
            
            
            
            
            17,574
            
            
            
            
            
            38,475
            
            
            
            
            
            43,017
            
            
            422,090Communication.
            
            
            
            
            
            6,114
            
            
            
            
            
            6,039
            
            
            
            
            
            12,376
            
            
            
            
            
            11,212
            
            
            185,667Insurance
            
            
            
            
            
            260
            
            
            
            
            
            99
            
            
            
            
            
            452
            
            
            
            
            
            99
            
            
            78,330Miscellaneous
            
            
            
            
            
            -
            
            
            
            
            
            173
            
            
            
            
            
            670
            
            
            
            
            
            1,470
            
            
            27,288Transfer
                fees
            
            
            
            
            
            1,570
            
            
            
            
            
            1,000
            
            
            
            
            
            3,528
            
            
            
            
            
            3,308
            
            
            28,987Depreciation
                and amortization.
            
            
            
            
            
            16,635
            
            
            
            
            
            18,260
            
            
            
            
            
            33,370
            
            
            
            
            
            36,520
            
            
            345,350Bad
                debt expense.
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            188,375Research
                and Development.
            
            
            
            
            
            52,065
            
            
            
            
            
            76,433
            
            
            
            
            
            152,032
            
            
            
            
            
            196,406
            
            
            1,157,789Media
                and project development
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            2,135,850Patent,
                copyright expense
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            924,000Investor
                relations
            
            
            
            
            
            2,131
            
            
            
            
            
            169,342
            
            
            
            
            
            69,316
            
            
            
            
            
            373,849
            
            
            1,984,717TOTAL
                OPERATING EXPENSES
            
            301,768
            
            
            
            
            
            596,029
            
            
            
            
            
            902,083
            
            
            
            
            
            10,677,945
            
            
            24,640,434OTHER
                INCOMEDissolution
                of Corp Reports
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            (503,507
            )Other
                (Note H)
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            (138,774
            )-
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (642,281
            )OTHER
                EXPENSESInterest
                and penalties
            
            
            
            
            
            3,000
            
            
            
            
            
            475
            
            
            
            
            
            3,000
            
            
            
            
            
            1,950
            
            
            16,694Other
                interest
            
            
            
            
            
            1,981
            
            
            
            
            
            857
            
            
            
            
            
            3,598
            
            
            
            
            
            4,230
            
            
            41,424____________
            
            
            
            
            
            
            
            
            
            
            
            ____________
            
            
            
            
            
            _________
            
            
            
            
            
            ___________
            
            
            ____________$
            4,981
            
            
            
            
            $
            1,332
            
            
            
            
            $
            6,598
            
            
            
            
            $
            6,180
            
            $
            58,118____________
            
            
            
            
            
            
            
            
            
            
            
            ____________
            
            
            
            
            
            __________
            
            
            
            
            
            ___________
            
            
            ____________NET
                (LOSS)
            
            
            
            
            
            (275,999
            )
            
            
            
            
            (574,861
            )
            
            
            
            
            (840,181
            )
            
            
            
            
            (10,660,037
            )
            
            (25,156,176
            )Accumulated
                deficit, beginning
            
            
            
            
            
            (24,880,177
            )
            
            
            
            
            (18,767,252
            )
            
            
            
            
            (24,315,995
            )
            
            
            
            
            (8,682,076
            )Accumulated
                deficit, Ending
            
            
            
            
            $
            (25,156,176
            )
            
            
            
            $
            (19,342,113
            )
            
            
            
            $
            (25,156,176
            )
            
            
            
            $
            (19,342,113
            )
            $
            $
                (25,156,176
            )BASICLOSS
                PER SHARE (NOTE A).
            
            
            
            
            $
            (0.002
            )
            
            
            
            $
            (0.004
            )
            
            
            
            $
            (0.003
            )
            
            
            
            $
            (0.093
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING.258,790,583
            
            
            
            
            
            140,932,167
            
            
            
            
            
            240,707,250
            
            
            
            
            
            114,189,333













***Page
          - 5***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**STATEMENTS
      OF CASH FLOWS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005, 2004, AND


THE
      PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE) TO JUNE 30, 2005





Six
                  Months Ended June 30,
              
              March
                  1, 1994
                (inception
                  of development stage)2005
              
              2004
              to June 30, 2005CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              $
              (840,181)
              
              $
              (10,660,037)
              
              (25,156,176
              )Adjustments
                  to reconcile net lossto
                  net cash used by operating activities:Depreciation
              
              33,470
              
              
              36,520
              
              320,350Amortization
              
              -
              
              
              -
              
              25,000Shares
                  issued in exchange for servicescharged
                  to Professional fees
              
              170,000
              
              
              232,825
              
              494,500Shares
                  issued for stock performance plan
              
              -
              
              
              332,425
              
              1,996,000Shares
                  issued under section 144-control position
              
              -
              
              
              9,100,000
              
              10,150,000Shares
                  issued for services
              
              244,000
              
              
              1,642,500
              
              4,547,850Abandonment
                  of furniture & equipment
              
              -
              
              
              -
              
              30,809Bad
                  debt expense
              
              -
              
              
              -
              
              36,343Write-off
                  of goodwill
                Write-off
                  of patent, copyright
              
              -
              
              
              -
              
              464,831
                924,000CHANGES
                  IN CURRENT ASSETSAND
                  CURRENT LIABILITIES:<Increase>decrease
                  in current assets:Prepaid
                  expenses
              
              (33,956)
              
              
              (185,644)
              
              (34,083)Accounts
                  receivable
              
              2
              
              
              (19,000)
              
              (35,443)Security
                  deposit
              
              158
              
              
              1,069
              
              1Increase
                  in current liabilities:Accrued
                  expenses
              
              263,710
              
              
              (189,597)
              
              1,160,428Advances
                  from Company Officers and related parties
              
              25,410
              
              
              -
              
              1,014,043Advances
                  from Others
              
              150,699
              
              
              (47,881)
              
              210,487NET
                  CASH USED FOR OPERATING ACTIVITIES
              
              13,312
              
              
              243,180
              
              3,851,060









***Page
          - 6***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**STATEMENTS
      OF CASH FLOWS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005, 2004, AND


THE
      PERIOD MARCH 1, 1994 (INCEPTION OF THE DEVELOPMENT STAGE) TO JUNE 30, 2005
      (CONT)














Six
                Months Ended June 30,
            
            March
                1, 1994
              (inception
                of development stage)2005
            
            2004
            
            to
                June 30,2005CASH
                FLOWS FROM INVESTING ACTIVITIES:Acquisition
                of furniture and equipment
            $
            (6,679)
            
            (19,996)
            
            (384,725)Acquisition
                of software
            
            -
            
            -
            
            (25,000)of
                goodwill
            
            -
            
            -
            
            (464,831)Acquisition
                of patent, copyright and domain protection
            
            
            
            (924,000)NET
                CASH <USED>FOR INVESTING ACTIVITIES
            
            $(6,679)
            
            (943,996)
            
            (874,556)CASH
                FLOWS FROM FINANCING ACTIVITIES:Issuance
                of notes payable
            
            -
            
            -
            
            1,704,807Shares
                issued for note
            
            -
            
            -Shares
                subscribed
            
            -
            
            (342,300)
            
            11,000Sale
                of common stock
            
            
            -
            
            
            1,030,100
            
            
            3,010,029NET
                CASH PROVIDED BY FINANCINGACTIVITIES
            
            
            -
            
            
            688,800
            
            
            4,725,836NET
                INCREASE<DECREASE> IN CASH
            
            
            6,633
            
            
            (12,016
            )
            
            220CASH,
                beginning of period
            
            
            (6,413
            )
            
            19,652CASH,
                end of period
            
            $
            220
            
            $
            7,636
            
            $
            220SUPPLEMENTAL
                DISCLOSURE:Penalties
                and interest
            
            $
            3,000
            
            $
            1,950
            
            
            25,809Other
                Interest expense
            
            $
            3,598
            
            $
            4,230
            
            
            41,424Non-cash
                investing and financing activitiesShares
                issued for services & charged to professional fees
            
            $
            170,000
            
            $
            232,825Shares
                issued for stock performance plan
            
            
            -
            
            
            332,425Shares
                issued under section 144 - control position
            
            
            -
            
            
            9,100,000Shares
                issued in exchange for services
            
            
            244,000
            
            
            1,642,500Share
                issued for intangible assets
            
            
            -
            
            
            924,000$
            414,000
            
            $
            12,231,750No
                significant amounts of taxes were paid during the periods shown above.








***Page
          - 7***








**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





NOTE
      A -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Organization




In
      November 2003, the Company changed its name to XRAYMEDIA, INC. (XRYM) from
      XRAYMEDIA.COM.




The
      Company is incorporated in the United States in the state of Minnesota and
      operates in Vancouver, British Columbia and New York. The Company’s principal
      business is a general media Internet supersite portal currently under
      development. The website XRAYMEDIA.com, when completed, will be comprised of
      a
      main general media supersite portal that will branch out into three media
      specific business portals: Buy & Sell Services; Public Relations Services;
      and Advertising Agency Services (Live Media Marketplace).  The Company
      intends to sell conventional media advertising space, online advertising, and
      advertising and public relations services via its internet site. Because the
      Company is in the development stage, the accompanying financial statements
      should not be regarded as typical for normal operating periods.


Basis
      of Presentation


The
      unaudited balance sheet of Xraymedia, Inc. (the “Company”) as of JUNE 30, 2005
      and the unaudited statements of operations and accumulated deficit for the
      THREE
      MONTHS and SIX MONTHS ended JUNE 30, 2005 and 2004 and the statements of cash
      flow for the SIX MONTHS ended JUNE 30, 2005 and 2004. These have been prepared
      in accordance with accounting principles generally accepted in the United States
      for interim financial reporting. Accordingly, they do not include all of the
      disclosures required by accounting principles generally accepted in the United
      States for complete financial statements and should be read in conjunction
      with
      the audited consolidated financial statements and notes thereto included in
      the
      Company’s Form 10-KSB for the year ended December 31, 2004. In the opinion of
      management, all adjustments (consisting only of normal recurring adjustments)
      considered necessary for a fair presentation of the interim financial
      information have been included. The results of operations for any interim period
      are not necessarily indicative of the results of operations for the entire
      year.










***Page
          - 8***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





Summary
      of Significant Accounting Principles





a.
      Accounting estimates





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




b.
      Basic earnings per share




Basic
      earnings per share have been calculated in conformity with Financial Accounting
      Standards Board Statement No. 128 “ *Earnings
      per Share* ”.
      The
      Company has a capital structure that has significant potential common shares.
      Basic earnings per share is calculated weighted on the average number of common
      shares outstanding each year. Diluted earnings per share are calculated as
      if
      the convertible preferred shares and warrants have been converted and/or
      exercised at date of issuance.




c.(1)
      Office furniture and equipment




Office
      furniture and equipment purchases are capitalized and the cost depreciated
      over
      the estimated useful lives of the related assets, generally five to seven years
      under the straight-line method. Office furniture and equipment abandoned is
      written off at the time of the abandonment.





c.(2)
      Software license





Software
      license purchases are capitalized and the cost amortized over the estimated
      useful lives of the related assets, generally three to five years under the
      straight-line method.




c.(3)
      Patent, copyright and domain protection




Costs
      incurred in attempting to obtain protection for that portion of our technology
      developments, copyrighting special features and securing our Internet domain
      were to be capitalized and amortized over the estimated useful life of the
      related assets. This was not feasible and the entire amount was written off
      in
      2004.





d.
      Issuance of preferred and common stock




The
      issuance of common stock for other than cash is recorded by the Company at
      management estimate of the fair value of the assets acquired or services
      rendered. The value is discounted for restricted stock for the time that
      restrictions are placed on the stock.







***Page
          - 9***








**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





e.
      Income taxes





No
      income
      taxes are payable for the SIX MONTHS ended June 30, 2005 and 2004. The Company
      has net operating losses of approximately $25,000,000, which will expire in
      the
      20 th year
      from
      the date the losses were incurred, i.e. from 2015 to 2025.





f.
      Functional currency




The
      financial statements are stated in U.S. dollars, which is the functional
      currency of the Company.




g.
      Research and development




All
      research and development expenses are expensed as incurred. Costs incurred
      to
      establish the technological feasibility of the web site is expensed as incurred
      and included in Research and Development expenses. There are no production
      costs
      to capitalize as defined in Statement on Financial Accounting Standards NO.86.











***Page
          - 10***




**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005




NOTE
      A
      - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Summary
      of Significant Accounting Principles (Continued)




Impact
      of accounting standards




In
      November 2004, the FASB issued SFAS 151, Inventory Costs—an amendment of ARB No.
      43, Chapter 4. The Statement amends the guidance of ARB No. 43, Chapter 4,
      Inventory Pricing, by clarifying that abnormal amounts of idle facility expense,
      freight, handling costs, and wasted materials (spoilage) should be recognized
      as
      current-period charges and by requiring the allocation of fixed production
      overheads to inventory based on the normal capacity of the production
      facilities. The adoption of SFAS 151 did not have any impact on the Company’s
      financial condition or results of operations.





In
      December 2004, the FASB issued a revision to SFAS 123 (revised 2004),
      Share-Based Payment. The revision requires all entities to recognize
      compensation expense in an amount equal to the fair value of share-based
      payments granted to employees. The statement eliminates the alternative method
      of accounting for employee share- based payments previously available under
      APB
      25. The provisions of SFAS 123R are effective as of the first interim period
      that begins after June 15, 2005. The adoption of SFAS 123R did not have any
      impact on the Company’s financial condition or results of operations.




In
      December 2004, the FASB issued SFAS No. 153 "Exchanges of Non-monetary
      Assets-amendment of APB Opinion No. 29". Statement 153 eliminates the exception
      to fair value for exchanges of similar productive assets and replaces it with
      a
      general exception for exchange transaction that do not have commercial
      substance, defined as transaction that are not expected to result in significant
      changes in the cash flows of the reporting entity. This statement is effective
      for exchanges of non-monetary assets occurring after June 15, 2005. The Company
      does not believe that this recent accounting pronouncement will have a material
      impact on their financial position or results of operations.




***Page
          - 11***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005




i.
      Deferred tax assets




Differences
      between accounting rules and tax laws cause differences between the bases of
      certain assets and liabilities for financial reporting purposes and tax
      purposes. The tax effects of these differences, to the extent they are
      temporary, are recorded as deferred tax assets and liabilities under SFAS 109
      and consist primarily of net operating loss carry forward amounting to
      approximately $25,000,000. Because of the uncertainty of utilizing the net
      operating loss carry forward, the Company has provided a full valuation
      allowance against the deferred tax asset (See Note
      G).


j.
      Reclassification




Certain
      2004 amounts have been reclassified to conform to 2005 classifications.




k.
      Advertising




The
      Company expenses all advertising as incurred. For the six month period ended
      June 30, 2005 and 2004, the Company charged to operations $195,170 and $65,514
      respectively. The advertising was used in the joint ventures as described
      further in Note K but included Company information in the advertisement.




l.
      Accounts Receivable




Accounts
      receivable are reported at the customers' outstanding balances less any
      allowance for doubtful accounts. Interest is not accrued on overdue accounts
      receivable.




m.
      Allowance for Doubtful Accounts





The
      allowance for doubtful accounts on accounts receivable is charged to income
      in
      amounts sufficient to maintain the allowance for uncollectible accounts at
      a
      level management believes is adequate to cover any probable losses. Accounts
      receivable are charged off against the allowance when collection is determined
      to be permanently impaired (bankruptcy, lack of contact, account balance over
      one year old, etc.).




n.
      Fair Value of Financial Instruments




The
      Company estimates that the fair value of all financial instruments at June
      30,
      2005, as defined in FASB 107, does not differ materially from the aggregate
      carrying values of its financial instruments recorded in the accompanying
      balance sheet. The estimated fair value amounts have been determined by the
      Company using available market information and appropriate valuation
      methodologies. Considerable judgment is required in interpreting market data
      to
      develop the estimates of fair value, and accordingly, the estimates are not
      necessarily indicative of the amounts that the Company could realize in a
      current market exchange.




o.
      Revenue Recognition Policy





Revenue
      is recognized when the earning process is complete and the risk and rewards
      of
      ownership have transferred to the customer, which is generally considered to
      have occurred upon the delivery of the media and services to our customer.
      The
      Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
      101.




Transactions
      that involve the exchange of goods or services for other goods or services
      are
      accounted for in accordance with APB 29 and the interpretations contained in
      EITF 93-11 and EITF 99-17. Accordingly, the Company generally records exchanges
      at the carrying value of the goods or services exchanged, which is typically
      zero, as the fair values of the goods or services exchanged lack readily
      determinable fair values within reasonable limits as the Company has no history
      of receiving cash in similar transactions, and therefore the earnings process
      has not been completed.


***Page
          - 12***




**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


JUNE
      30,
      2005 AND 2004





NOTE
      B -
      PREPAID EXPENSES


Prepaid
      expenses at June 30, 2005 consist of:





2005(a)
                Legal expenses
              
              (b)
                Other prepaid expenses
            $  
                25,0009,083$
                34,083The
                renumeration in both (a) and (b)was in the form of Section 144 Restricted
                Stock.





NOTE
      C -
      FURNITURE AND EQUIPMENT





Property
      and equipment at June 30, 2005 consist of:





2005Furniture
                and equipment
            $
                334,705Software
                License
            
            25,000Less:
                Accumulated depreciation
              and
                amortization
            
            (326,139)Furniture
                and equipment, net
            $
            33,566








Depreciation
      expense for the six months ended June 30, 2005 and 2004 was $33,370 and $36,250
      respectively. Amortization expense on the software license was $2,082 for the
      two quarters ended June 30, 2004, as the software license was fully amortized
      at
      December 31, 2004.




NOTE
      D -
      ACCOUNTS PAYABLE, ACCRUED EXPENSES AND ADVANCES


Accounts
      payable and accrued expenses at June 30, 2005 were comprised of the following:








2005Accrued
                Consulting expense
            $
            239,076Accrued
                Office expense
            
            212,512Accrued
                Professional fees expense
            
            278,922Accrued
                Website/Internet expense
            
            358,614Accrued
                Other expenses
            
            6,833Accrued
                Wages payable
            
            140,789Accrued
                Media advertising
            
            91,39Total
                Accrued Expenses
            $
            1,328,201





Advances
      were made by another company for rental expenses incurred during the three
      months ended December 31, 2002 in the amount of $26,565. The advances were
      extended on open terms and remain outstanding on June 30, 2005.




Other
      advances amounting to $210,487 from a related party was used for daily
      operations of the Company. Interest for the said advances was waived. The
      interest if imputed would be immaterial to these financial statements. These
      advances where extended on open terms and remain outstanding on June 30, 2005.







***Page
          - 13***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005








NOTE
      F -
      RELATED PARTY TRANSACTIONS





A
      shareholder and spouse of the Company President advanced money on a partially
      revolving basis without interest to the Company since 2001, to be used in daily
      operations. If the interest expense was imputed it would be immaterial to the
      financial statements taken as a whole and thus is not included. Balances of
      June
      30, 2005 show additional investment of $34,836 during this half year.




The
      President charges the Company for his management fees in lieu of an employee
      salary. Management fees for the two quarters ended June 30, 2005 and 2004 were
      $23,461 and $24,351 respectively and are included in consulting in the Statement
      of Operations and Accumulated Deficit. The Company owed the President $144,419
      as of June 30, 2005 for these services which are included in advances on the
      Balance Sheet.




NOTE
      G -
      STOCK PERFORMANCE PLAN





The
      Board
      of Directors offers common stock, on a discretionary basis, to certain
      individuals who have been instrumental in the Company’s continuance, for the two
      quarters ended June 30, 2005, no shares were issued under this plan. However
      during the years ended December 31, 2004 and 2003, 7,830,487 and 1,000,000
      shares were issued of common stock under the stock performance plan,
      respectively. The shares issued were valued at fair market value at the date
      of
      issuance, ranging from $0.03 to $0.40 per share, and were recognized in
      compensation expense in the Statements of Operations and Accumulated Deficit.







***Page
          - 14***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





NOTE
      H -
      EQUITY TRANSACTIONS




On
      June
      24, 2005 a special general meeting was held and the shareholders of the
      Corporation voted and subsequently received regulatory approvals, to amend
      the
      authorized capital:




COMMON
      SHARES (voting) : 750,000,000 shares par value $0.001 per share




CONVERTIBLE
      PREFERRED SHARES: 11,000,000 shares par value $0.001 per share consisting of
      three (3) separate classes:





a.
            5,000,000
                shares of Preferred Stock Series A, par value $.001, convertible
                at a
                conversion rate of 1 share of Preferred


Stock
      Series A for 100 shares of Common Stock, with all voting rights converted at
      the
      same rate. The 1,000,000 issued


And
      outstanding preferred shares will be designated as Preferred Stock Series
      A





b.
            1,000,000
                shares of Preferred Stock Series B, par value $.001, convertible
                at a
                conversion rate of 1 share of
                Preferred


Stock
      Series B for 1 share of Common Stock, with all voting rights converted at the
      same rate.





c.
            5,000,000
                shares of Preferred Stock Series C, par value $.001, convertible
                at a
                conversion rate of 1 share of Preferred Stock Series C for 1 share
                of
                Common Stock, with all voting rights converted at the same rate.





The
      Corporation changed its name by dropping the .com. This change necessitated
      new
      stock certificates being issued to existing shareholders and the stock to trade
      under it’s new name and ticker symbol “XRYM”. When the switchover was completed
      the existing stock ceased to trade, i.e.; the old shares had to be exchanged
      for
      new certificates through the transfer agent.




The
      Preferred shares are not being called for trading, but as they are convertible
      to a specific number of Common shares, the value of the Preferred will easily
      be
      calculated as a multiplier of the Common.




Stock
      Transaction -
      in the
      second quarter to the date of this report, August 9, 2005, are as follows:





#
                of Shares
            Pricea.
                Cash transactions
            N/Cb.
                Non-cash transactionsIssued
                for services past and future
            22,500,000
            $ 0.013-$0.034Total
                common shares issued
            22,500,000Common
                shares issued toDecember
                31, 2004
            224,957,250Total
                common shares issued toJune
                30, 2005
            247,457,250Common
                Shares Issued from July 1, 2005 - August 9, 2005
              For
                services past and future
              
              
              Total
                Common shares issued to August 9, 2005
              
              c.
                Future shares issuance is restricted by
            63,000,000
              
              
              310,457,250
            $
                0.01Unexpired
                warrants as of June 30, 2005
            120,000Cashless
                warrants exercised in 2004 still to be issued in 2005
            101,538Unconverted
                preferred shares
            100,000,000Remaining
                cash subscriptions from December 31, 2004
            333,333Total
                share issuance restriction
            100,554,871Total
                shares issued as of August 9, 2005
            310,457,250Total
                possible shares
            411,012,121The
                Company issued warrants during the course of private placement offerings.
                The warrants could be converted into shares of stock in lieu of payment
                through a formula, which divides the value of the warrants at the
                time the
                conversion right is exercised by the market value. Earnings per share
                is
                not adjusted to include the weighted average outstanding warrants
                as to do
                so would be antidilutive.As
                of June 30, 2005 and the date of this report the unexpired cashless
                warrants were calculated to be approximately 120,000. Significant
                amounts
                of warrants were unexercised and expired during the two quarters
                of 2005.







***Page
          - 15***




**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





NOTE
      I -
      NET OPERATING LOSS CARRY FORWARD





The
      net
      operating loss carry forward since inception is as follows:








Year
            
            Net
                Operating Loss
            
            Valuation
              Allowance
            
            Year
                of
              Expiration2005
                - Two Quarters
            
            $
                840,181
            
            $
                336,072
            
            20252004
            
            15,633,919
            
            6,253,567
            
            20242003
            
            
            2,012,733
            
            
            805,093
            
            
            20232002
            
            
            1,679,917
            
            
            671,967
            
            
            20222001
            
            
            1,571,200
            
            
            628,480
            
            
            20212000
            
            
            1,671,139
            
            
            668,456
            
            
            20201999
            
            
            205,851
            
            
            82,340
            
            
            20191994-1998
            
            
            1,541,236
            
            
            616,494
            
            
            2014-2018$
            25,156,176
            
            $
            10,062,469











SFAS
      No.
      109 requires a valuation allowance to be recorded when it is more likely than
      not that some or all of the deferred tax assets will not be realized. A
      valuation allowance for the full amount of the net deferred tax asset, using
      an
      anticipated income tax rate of 40%, was recorded each year because of
      uncertainties as to the amount of taxable income that would be generated in
      future years.




***Page
          - 16***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGE)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005








NOTE
      J -
      GOING CONCERN




The
      Company has had minor sales and suffered recurring losses from operations that
      raise substantial doubt about its ability to continue as a going concern.
      However, the financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




The
      Company has been in the development stage since March 1, 1994. It is the
      Company’s intention to grow through generating sales. However, in order to
      support existing operations, the Company plans to seek additional financing,
      form strategic partnerships to generate revenue, and acquire additional
      shareholder capital. The ability to achieve these objectives raises substantial
      doubt about the company’s ability to continue as a going concern.




NOTE
      K -
      JOINT VENTURES




In
      2003,
      the Company signed five Joint Venture agreements to generate advertising
      revenue. Two were through the sale of advertising and related media services
      through the Live Media Marketplace, which is further described in Note A. The
      other three are based on the Company purchasing advertising for their respective
      products. Each of the agreements provides for a sharing of the net revenue
      generated as a result of the media advertising between the joint venture
      partners, as described in the table below. The Company does not have equity
      interest or management rights in any of the joint ventures. Their investment
      in
      all of the joint ventures is $0. Joint venture A and B have Company share
      issuance clauses for reaching certain levels of sales beyond the net revenue
      sharing agreement. One additional joint venture agreement was signed in 2004.
      None have been entered into in the two quarters of 2005.











Joint
                Venture
            Company
                Investment in Joint Venture
            Profit
                Sharing Percentage
            Joint
                Venture revenue for Two Quarters of 2005A
            $0
            50%
            $0B
            $0
            50%
            $0C
            $0
            20%
            $0D*
            $0
            40%-50%
            $0E*
              F
            $0
              $0
            15%-20%
              7.5%-50%
            $0
              $0





During
      the quarter ended March 31, 2004, $1,588 in revenues had been generated under
      the above agreements and incurred $76,759 in media advertising expenses
      associated with the joint ventures. The Company under the terms of the
      agreements will not be reimbursed. In the two quarters ended June 30, 2005,
      $0
      in revenues was generated and incurred $195,170 in media advertising expenses.





Two
      of
      the joint ventures (marked with an *) were discontinued by mutual consent in
      2004.







***Page
          - 17***





**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGES)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





NOTE
      L -
      COMMITTMENTS




During
      February 2003 the Company signed a three-year lease agreement for office space
      in Vancouver, B.C. The term of the lease extended from May 2003 through April
      2006. The minimum monthly rent payments are $6,830. Future minimum lease
      payments are as follows:





2005
            61,470


2006  27,320


Total $88,790




Rental
      and other occupancy expenses for the two quarters ended June 30, 2005 amounted
      to $43,523.




NOTE
      M -
      STATUTORY VIOLATION




During
      the year ended December 31, 2002 the Company did not remit required payroll
      taxes for employee withholdings and Company related payroll tax expenses. These
      withholdings and expenses were accrued as an accounts payable at December 31,
      2002 in the amount of $47,540, including violation penalties and interest in
      the
      amount of $22,809. Subsequently, in 2003, the Canadian Revenue Agency (CRA)
      assessed a tax lien against the Company for these unpaid payroll taxes. The
      Company made the final payment during the quarter ended September 30, 2004.
      The
      total amount owed CRA at September 30, 2004, in this regard was $0. During
      the
      third quarter of 2004 the CRA conducted a further audit and assessed an
      additional $30 for the year 2003, but advised that some portion of earlier
      penalties/interest would be reversed. CRA does not make a practice of cash
      refunds in these matters. The amounts involved are not deemed sufficient to
      require a restatement of prior financials, but have created a reverse balance
      in
      interest/penalty expenses for the year ended December 31, 2004. The Company
      again fell into arrears in remitting payroll taxes in late 2004, a problem
      which
      has continued into 2005. The Company has included in its accrued expenses
      approximately $40,942 for these unpaid payroll taxes including the Company’s
      estimate of any penalties, which may be $3,000 this year based on recent
      discussion with the Regulatory Board.





***Page
          - 18***




**XRAYMEDIA,
      INC.**


(A
      COMPANY IN THE DEVELOPMENT STAGES)


**NOTES
      TO THE FINANCIAL STATEMENTS (UNAUDITED)**


FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2005





NOTE
      N -
      THREATENED LITIGATION




Due
      to
      the on-going negative cash flow the Company has been unable to pay certain
      vendors for services. Certain items have been forwarded to collection agencies
      and legal action has been threatened. No additional liability has been accrued
      beyond the original amount payable.


NOTE
      O
      - CONTINGENCIES





In
      October 2004, an action was filed against the Company for alleged breach of
      contract. The Plantiffs seek in excess of $20 Million in damages and issuance
      of
      125 Million shares of the Company’s Common Stock. The Company has filed an
      answer and is vigorously defending the action, denying any and all liability,
      and has filed a separate action against the principals of the Plantiff LLC’s
      seeking damages. The action is in the preliminary stages and no discovery has
      been commenced.





Legal
      experts hired by the Company cannot predict whether the likelihood of an
      unfavorable outcome is probable or remote. Therefore, no liability has been
      recognized by the Company as of the date of this report. While the outcome
      of
      this claim cannot be predicted with certainty, management does not believe
      that
      the outcome of any pending legal matters will have a material adverse effect
      on
      the financial position, although results of operations or cash flows could
      be
      affected in a particular period.




NOTE
      P -
      SUBSEQUENT EVENTS




The
      Company set up a European LOM operations with three managers joining the Company
      to structure a new European division.




This
      event had no effect on the financial statements for the six months ended June
      30, 2005.







***Page
          - 19***





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








The
      following information should be read in conjunction with the unaudited condensed
      consolidated financial information and the notes thereto included in this
      Quarterly Report on Form 10-Q.




In
      addition to the other information in this report, the following Management's
      Discussion and Analysis should be considered carefully in evaluating Xraymedia,
      Inc. and our business. This Quarterly Report on Form 10-Q contains
      forward-looking statements. These statements relate to future events or our
      future financial performance and are identified by terminology such as "may,"
      "will," "could," "should," "expects," "plans," "intends," "seeks,"
      "anticipates," "believes," "estimates," "potential" or "continue," or the
      negative of such terms or other comparable terminology. These statements are
      only predictions. You should not place undue reliance on these forward-looking
      statements. Actual events or results may differ materially. In evaluating these
      statements, you should specifically consider various important factors,
      including the risks outlined under "Certain Factors Which May Impact Future
      Results" in this section of this report and our other filings with the
      Securities and Exchange Commission. These factors may cause our actual results
      to differ materially from any forward-looking statement.





Management
      Statement:





Commencing
      in the later part of 2004, XRAYMEDIA has positioned to become an industry
      leader, by providing cutting edge live negotiating technology to multiple
      industries through its premiere business-to-business web site.




Central
      to XRAYMEDIA is its unique live negotiating technology; under years of
      development this technology has been solely deployed in media industry.
      Available to the global community, 24 hours a day, 7 days a week, XRAYMEDIA
      now
      releases this proprietary technology to virtually every industry worldwide,
      with
      video and image components allowing users to thoroughly evaluate merchandise,
      and other such offerings, before initiating live negotiations. XRAYMEDIA proudly
      releases one of the most powerful technologies in live Internet negotiating
      for
      online marketplaces today.





XRAYMEDIA
      has received and considered several joint venture opportunities, specifically
      during the second quarter, covered in this report, XRAYMEDIA has sold its first
      non-exclusive Master License Agreement for its new open industry live
      negotiating technology, with a private successful Internet entrepreneur. The
      master licensee has begun implementing their aggressive first-to-market
      marketing plan to acquire sub-licensees for their non-exclusive marketing
      territory. Under the terms of this agreement the master license holder is
      committed to promoting and marketing the live negotiating system, in various
      industries, to the general business community, and the public at large over
      the
      next 36 months. During this quarter the company has successfully launched the
      first website sub-licensed with the recently launched Live Open Marketplace
      system (LOM). The initial LOM sub-license holder is a private Ohio business
      owner that is looking forward to the prospect of immediately expanding his
      client base. His website www.bavarianpastryshop.com is now released, complete
      with customized graphics, and presentation featuring the many benefits of the
      live negotiating technology in the LOM system.





The
      Screenwriter Dig (TSD), born out of XRAYMEDIA’s established partnership with
      Hollywood entertainment conglomerate, Relativity Management, has an impending
      announcement of National Sponsorship packages to create a media buzz around
      XRAYMEDIA's Entertainment division. The Company expects to publicize its
      official national and regional sponsorship packages upon legal approvals. The
      sponsorship packages will be structured in tiers allowing businesses and
      organizations to commit different levels of contests support and media exposure.
      XRAYMEDIA sponsors this contest quest to find quality scripts and pitches for
      potential further development by famous producer, and contest host, Mark Canton.
      Over the course of this competition, launched April 12, 2005, at www.thescreenwriterdig.com XRAYMEDIA will provide the online expertise and infrastructure for The
      Screenwriter Dig, while Mark Canton brings creative expertise as well as access
      to the major motion picture studios and television networks. Through The
      Screenwriter Dig, writers from all over the country and world are given the
      chance to have their screenplays, teleplays and television and film pitches
      read
      by Mark Canton and his creative staff. At the end of the year one of each type
      of project (i.e., film script, TV pitch, etc.) will be chosen for further
      development and submission to a studio for production
      consideration.





PLAN
      OF
      OPERATIONS;





XRAYMEDIA's
      plan of operations for the remainder of the year 2005 will consist of continuing
      to build on its revenue stream through increased transactions in the Live Media
      Marketplace (LMM) and the Live Open Marketplace (LOM) through the new release
      and marketing programs announced for the live negotiating technology. XRAYMEDIA
      European operations shows great promise as it’s representatives have garnered
      great interest and have already established two license holders for the
      technology and the company has begun preparing to build the subsequent websites
      utilizing its LOM technology.





The
      company’s partnership with Relativity Management is beginning to blossom as the
      first payment of $50,000 is expected shortly with many more to follow as the
      Beverly Hills film fund begins production on its first financed motion picture.





As
      well
      as liquidating the trade inventory obtained by the company through corporate
      trade transactions for additional revenue and assets on the balance sheet or
      can
      also be converted to cash or used for acquiring additional media inventory
      for
      its clients. During the remainder of this fiscal year, we intend to show how
      this plan will translate into strong cash flow for the Company. Going forward
      we
      will continue to focus on the three areas that we feel will add significantly
      to
      shareholder value: transactional business flow, cash flow, and liquid asset
      accumulation.





***Page
          - 20***








A.
      Results of Operations





The
      numbers used in this analysis are those contained in the comparative financial
      statements that follow. These reflect the changes of previous periods to reflect
      the current method of presentation.





*Sales*


Revenues
      for the first quarter of 2005 were $37,750 and $1,588 for the same quarter
      in
      2004.


Revenues
      for the second quarter of 2005 were $30,750, for a six month total of
      $68,500.


Revenues
      for the second quarter of 2004 were $22,500, for a six month total of $24,088.




*Losses*




Net
      losses for the two quarters ended June 30, 2005, decreased to $840,181 over
      the
      same period in 2004 of $10,660,037, a decrease of ($9,819,856).




The
      decrease in losses was attributable to decrease in compensation expense and
      investor relations expense, offset by increases in professional fees and media
      advertising.




XRAYMEDIA
      expects to continue to incur losses at least through fiscal year 2005 and there
      can be no assurance that XRAYMEDIA will achieve or maintain profitability from
      revenues that may be generated or that growth can be sustained in the future.







***Page
          - 21***





*Expenses*





Selling,
      general and administrative expenses for the six months ended June 30, 2005,
      decreased to $716,581 from $10,445,019 for the quarter ended June 30, 2004.
      The
      disproportionate decrease was primarily the inclusion, in 2004, of $9,100,000
      in
      Section 144 control position expenses, along with $332,425 in stock performance
      plan, both amounts charged to compensation expense. Without the inclusion of
      these two non-cash items, the 2004 category would be reduced to $530,518, making
      the two quarters fairly comparable. Depreciation and amortization expenses
      for
      the three and six months ended June 30, 2005 and June 30, 2004 were $16,635,
      $33,370, $18,260 and $36,520 respectively.





Research
      and Development expenses for the six months ended June 30, 2005 and 2004 were
      $152,032, $196,406, respectively. The company spent slightly more heavily in
      2004 to expedite the development and spring launch of its Media Service Portal
      of the Live Media Marketplace.





*B.
      Liquidity and Capital Resources*





For
      the
      six months of 2005, the issuance of 22,500,000 non-cash-shares and the increase
      in borrowings, barely offset the loss for the six months





Cash
      flows generated by operations were $13,312 for the six months ended June 30,
      2005, as versus $243,180 for the six months ended June 30, 2004, a decrease
      of
      $229,868. The heavy issuance of non-cash-shares in 2004 was reduced in
      2005.




Cash
      used
      by investing activities was $6,679 for the six months ended June 30, 2005 and
      $943,996 for the six months ended June 30, 2004. The substantial decrease is
      attributable to the payment, in 2004, in restricted shares, for protection
      of
      patents, copyrights and domain, which was written off in the fourth quarter
      of
      2004 as it was determined to be unsuccessful.




Cash
      flows generated from financing activities were nil for the six months ended
      June
      30, 2005 and $688,800 for the quarter ended June 30, 2004. XRAYMEDIA's financing
      activities, in the 2004 period, primarily consisted of the sale of XRAYMEDIA's
      common stock pursuant to private placements.




XRAYMEDIA
      has funded its cash needs over the period covered by this Form 10-QSB through
      increasing debt and the issuance of its common stock for services. XRAYMEDIA
      intends to cover its cash needs over the next twelve months in part through
      the
      sale of additional shares of its common stock pursuant to a registration
      statement or an appropriate exemption from registration. However, there is
      no
      guarantee that XRAYMEDIA will continue to be able to raise additional funds
      from
      the sale of its securities.




*C.
      Capital Expenditures*




XRAYMEDIA
      made no significant net capital expenditures on property or
      equipment during the two quarters ended June 30, 2005 and 2004. The
      major
      planned capital expenditure is further website development. XRAYMEDIA has
      budgeted $100,000 to purchase the additional equipment or programs needed for
      this development and XRAYMEDIA intends to contract sometime in the near future
      to complete this work. XRAYMEDIA also plans to raise operating funds by a
      mixture of debt and stock to provide monies needed for their new projects.




Several
      years ago, XRAYMEDIA's website had passed its initial test stage on its way
      to
      becoming operational to handle the 'real-time' interactive business, a goal
      which was reached in 2004. The newest developments have resulted in numerous
      new
      modifications.




XRAYMEDIA's
      estimated cash requirements are approximately $1,500,000 annually. The majority
      of our cash requirements will be used for personnel costs, professional fees,
      advertising, and further website development. These should be offset to some
      extent from revenue cash flow. The company will continue its earlier practice
      of
      settling some debt for shares.








***Page
          - 22***





*D.
      Income Tax Expense (Benefit)*





XRAYMEDIA
      has net operating loss carry forwards of approximately $25,000,000. which will
      expire from 2014 to 2025. All available losses may not be utilized unless
      matching profits are earned.




*E.
      Impact of Inflation*





XRAYMEDIA
      believes that inflation has had a negligible effect on operations over the
      past
      four years. XRAYMEDIA believes that it can offset inflationary increases in
      the
      cost of materials and labor by increasing sales and improving operating
      efficiencies.





*F.
      Critical accounting policies*





Estimates





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our financial statements, which have been prepared in accordance
      with
      accounting principles generally accepted in the United States. The preparation
      of these financial statements requires us to make estimates and judgments that
      affect the reported amounts of assets, liabilities, revenues and expenses.
      In
      consultation with our Board of Directors, we have identified accounting policies
      that we believe are key to an understanding of our financial statements. These
      are important accounting policies that require management’s most difficult,
      subjective judgments.





Revenue
      Recognition


Revenue
      is recognized when the earning process is complete and the risk and rewards
      of
      ownership have transferred to the customer, which is generally considered to
      have occurred upon the delivery of the media to our customer. The Company
      recognizes revenue in accordance with SEC Staff Accounting Bulletin
      101.


Transactions
      that involve the exchange of goods or services for other goods or services
      are
      accounted for in accordance with APB 29 and the interpretations contained in
      EITF 93-11 and EITF 99-17. Accordingly, the Company generally records exchanges
      at the carrying value of the goods or services exchanged, which is typically
      zero, as the fair values of the goods or services exchanged lack readily
      determinable fair values within reasonable limits as the Company has no history
      of receiving cash in similar transactions, and therefore the earnings process
      has not been completed.





Research
      and Development




We
      expense all research and development expenses as incurred. Costs incurred to
      establish the technological feasibility of our web site and technology are
      expensed as incurred and included in Research and Development expenses. There
      are no production costs to capitalize as defined in Statement on Financial
      Accounting Standards No. 86.





*G..
      Going Concern*





XRAYMEDIA
      has suffered recurring losses from operations that raises substantial doubt
      about its ability to continue as a going concern. Management plans in regards
      to
      theses matters is to grow through business combinations rather then to seek
      immediate, short-term earnings. However, in order to support existing operations
      and to fund proposed acquisitions, additional bank, private and/or equity
      financing must be obtained. Additionally, XRAYMEDIA plans to increase its sales
      through its website, www.xraymedia.com.





Additionally,
      due to the website launch delays and unexpected expenditures on internal
      development of replacement auction software it was necessary for management
      to
      arrange advances to XRAYMEDIA.








***Page
          - 23***





**ITEM
      13.     EXHIBITS AND REPORTS ON FORM 8-K**











(A)
      EXHIBITS: EXHIBITS REQUIRED TO BE ATTACHED BY ITEM 601 OF REGULATION S-B ARE
      LISTED IN THE INDEX TO EXHIBITS BEGINNING ON PAGE 23 OF THIS FORM 10-QSB, WHICH
      IS INCORPORATED HEREIN BY REFERENCE.


(B)
      REPORTS ON FORM 8-K: NOVEMBER 30, 2000, THE COMPANY FILED A FORM 8-K IN RESPECT
      TO THE RESIGNATION OF ONE OF OUR DIRECTORS, BRIAN WALKER. MR. WALKER HAD
      SUBMITTED A WRITTEN RESIGNATION TO US ON NOVEMBER 1, 2000.





[THIS
      SPACE LEFT BLANK INTENTIONALLY]










***Page
          - 24***








**SIGNATURES**








IN
      ACCORDANCE WITH SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, THE
      REGISTRANT CAUSED THIS FORM 10-QSB TO BE SIGNED ON ITS BEHALF BY THE
      UNDERSIGNED, THEREUNTO DULY AUTHORIZED, THIS 19TH DAY OF AUGUST, 2005.







**XRAYMEDIA
      INC.**





/S/
      RAYMOND DABNEY


NAME:
      RAYMOND DABNEY


TITLE:
      PRESIDENT, CEO AND DIRECTOR











IN
      ACCORDANCE WITH THE EXCHANGE ACT, THIS REPORT HAS BEEN SIGNED BELOW BY THE
      FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON
      THE
      DATES INDICATED.











SIGNATURE   TITLE  DATE











/S/
      RAYMOND DABNEY PRESIDENT AND DIRECTOR  AUGUST
      9, 2005.








RAYMOND DABNEY










***Page
          - 25***











**EXHIBIT
      31**











***Page
          - 26***





**CERTIFICATIONS
      PURSUANT TO**








**SECTION
      302 OF THE SARBANES-OXLEY ACT OF 2002**














I,
      Raymond Dabney, Chief Executive Officer of XRAYMEDIA, Inc. certify
      that:




1.
      I have
      reviewed this quarterly report on Form 10-QSB of XRAYMEDIA, Inc;





2.
      Based
      on my knowledge, this quarterly report does not contain any untrue statement
      of
      a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were
      made, not misleading with respect to the period covered by this quarterly
      report;








3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this quarterly report, fairly present in all material respects
      the
      financial condition, results of operations and cash flows of the registrants
      of,
      and for, the periods presented in this quarterly report;








4.
      The
      registrant’s other certifying officers and I are responsible for establishing
      and maintaining disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-14 and 15d-14) for the registrant and have;








a)
       
      designed such disclosure controls and procedures to ensure that material
      information relating to the registrant, including its consolidated subsidiaries,
      is made known to us by others within those entities, particularly during the
      period in which this quarterly report is being prepared;








b)
       
      evaluated the effectiveness of the registrant’s disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the “Evaluation Date”); and








c)
       
      presented in this quarterly report our conclusions about the effectives of
      the
      disclosure controls and procedures based on our evaluation as of the Evaluation
      Date;








5.The
      registrant’s other certifying officers and I have disclosed, based on our most
      recent evaluation, to the registrant’s auditors and the audit committee of
      registrant’s board of directors (or persons performing the equivalent
      functions):








a)
       
      all significant deficiencies in the design or operation in internal controls
      which could adversely affect the registrant’s ability to record, process,
      summarize and report financial data and have identified for the registrant’s
      auditors any material weaknesses in internal controls; and








b)
       
      any fraud, whether or not material, that involves management or other employees
      who have a significant role in the registrant’s internal controls; and








6)
      The
      registrant’s other certifying officers and I have indicated in this quarterly
      report whether there were significant changes in internal controls or in other
      factors that could significantly affect internal controls subsequent to the
      date
      of our most recent evaluation, including any corrective actions with regard
      to
      significant deficiencies and material weaknesses.














Date:
      August 9, 2005         Signature: /s/Raymond
      C. Dabney


Raymond
      C.
      Dabney





Chief
      Executive Officer











***Page
          - 27***








**CERTIFICATIONS
      PURSUANT TO**








**SECTION
      302 OF THE SARBANES-OXLEY ACT OF 2002**














I,
      Raymond Dabney,  Chief Financial Officer  of
      XRAYMEDIA,
      Inc. certify that:








1.
      I have
      reviewed this quarterly report on Form 10-QSB of  XRAYMEDIA, Inc;








2.
      Based
      on my knowledge, this quarterly report does not contain any untrue statement
      of
      a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were
      made, not misleading with respect to the period covered by this quarterly
      report;








3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this quarterly report, fairly present in all material respects
      the
      financial condition, results of operations and cash flows of the registrants
      of,
      and for, the periods presented in this quarterly report;








4.
      The
      registrant’s other certifying officers and I are responsible for establishing
      and maintaining disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-14 and 15d-14) for the registrant and have;








a)
       
      designed such disclosure controls and procedures to ensure that material
      information relating to the registrant, including its consolidated subsidiaries,
      is made known to us by others within those entities, particularly during the
      period in which this quarterly report is being prepared;








b)
       
      evaluated the effectiveness of the registrant’s disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the “Evaluation Date”); and








c)
       
      presented in this quarterly report our conclusions about the effectives of
      the
      disclosure controls and procedures based on our evaluation as of the Evaluation
      Date;








5.The
      registrant’s other certifying officers and I have disclosed, based on our most
      recent evaluation, to the registrant’s auditors and the audit committee of
      registrant’s board of directors (or persons performing the equivalent
      functions):








a)
       
      all significant deficiencies in the design or operation in internal controls
      which could adversely affect the registrant’s ability to record, process,
      summarize and report financial data and have identified for the registrant’s
      auditors any material weaknesses in internal controls; and








b)
       
      any fraud, whether or not material, that involves management or other employees
      who have a significant role in the registrant’s internal controls; and








6.The
      registrant’s other certifying officers and I have indicated in this quarterly
      report whether there were significant changes in internal controls or in other
      factors that could significantly affect internal controls subsequent to the
      date
      of our most recent evaluation, including any corrective actions with regard
      to
      significant deficiencies and material weaknesses.














Date:
      August 9, 2005         Signature: /s/Raymond
      C. Dabney


Raymond
      C.
      Dabney





Chief Financial Officer







***Page
          - 28***








**EXHIBIT
      32**














***Page
          - 29***










**CERTIFICATION
      PURSUANT TO 18 U.S.C.**


**SECTION
      1350, AS ADOPTED PURSUANT TO**


**SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002**











In
      connection with the Quarterly Report of XrayMedia, Inc. on Form
      10-QSB
      for the period ending June 30, 2005 as filed with the Securities and Exchange
      Commission on the date hereof (the “Report”), I, Raymond Dabney, President and
      Chief Executive Officer of XrayMedia, Inc and a member of the Board of
      Directors, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:





(1)
      The
      Report fully complies with the requirements of section 13(a) or 15(d) of the
      Securities Exchange Act of 1934; and





(2)
      The
      information contained in the Report fairly represents, the financial condition
      and result of operations of the Company.











Date:
      August 9, 2005         Signature: /s/Raymond
      C. Dabney


Raymond
      C.
      Dabney





Chief Executive Officer











***Page
          - 30***





**CERTIFICATION
      PURSUANT TO 18 U.S.C.**





**SECTION
      1350, AS ADOPTED PURSUANT TO**





**SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002**











In
      connection with the Quarterly Report of XrayMedia, Inc. on Form
      10-QSB
      for the period ending June 30, 2005 as filed with the Securities and Exchange
      Commission on the date hereof (the “Report”), I, Raymond Dabney, President and
      Chief Financial Officer of XrayMedia, Inc and a member of the Board
      of
      Directors, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:











(1)
      The
      Report fully complies with the requirements of section 13(a) or 15(d) of the
      Securities Exchange Act of 1934; and











(2)
      The
      information contained in the Report fairly represents, the financial condition
      and result of operations of the Company.























Date:
      August 9, 2005         Signature: /s/Raymond
      C. Dabney


Raymond
      C.
      Dabney


Chief Executive Officer











***Page
          - 31***








**ITEM
      2.     DESCRIPTION OF EXHIBITS.**











INDEX
      TO
      EXHIBITS





EXHIBIT





NO. 
              PAGE NO.    
          
      DESCRIPTION








2(A) 
              *       
       
         ARTICLES OF MERGER AND PLAN AND OF MERGER, PORT INDUSTRIES,


INC. MARCH 1, 1994. (INCORPORATED BY REFERENCE FILED WITH


THE COMPANY'S FORM 10-SB/A-2 ON MARCH 29, 2000).








2(B) 
              *       
       
         STOCK PURCHASE AGREEMENT DATED SEPTEMBER 20, 1996. (DIGITAL


REPORTING, INC. ACQUIRES ALL OF THE ISSUED AND OUTSTANDING


SHARES OF R&D INDUSTRIES, INC.). (INCORPORATED BY REFERENCE


FILED WITH THE COMPANY'S FORM 10-SB/A-2ON MARCH 29, 2000).








2(C) 
              *       
       
         DIGITAL REPORTING, INC. BOARD RESOLUTION DATED SEPTEMBER 3,


1997, AUTHORIZING THE ACQUISITION OF ALL THE OUTSTANDING


STOCK OF CYBERGUIDES, INC. (INCORPORATED BY REFERENCE FILED


WITH THE COMPANY'S FORM 10-SB/A-2 ON MARCH 29, 2000).








3(I)(A)
             *       
          
      ARTICLES OF INCORPORATION OF PORT INDUSTRIES, INC.


(INCORPORATED BY REFERENCEFILED WITH THE COMPANY'S FORM


10-SB/A-2 ON MARCH 29, 2000).








3(I)(B) 
             *       
          
      ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF PORT


INDUSTRIES, INC. DATED OCTOBER 28, 1969 AUTHORIZING TOTAL


NUMBER OF SHARES TO BE 30,000 AT $10.00 EACH. (INCORPORATED


BY REFERENCE FILED WITH THE COMPANY'S FORM 10-SB/A-2 ON


MARCH 29, 2000).








***Page
          - 32***





3(I)(C) 
             *         
       
      ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF PORT


INDUSTRIES, INC. DATED MARCH 6, 1972 AUTHORIZING THE NUMBER


OF SHARES TO BE 1,000,000 AT $.10 EACH. (INCORPORATED BY


REFERENCE FILED WITH THE COMPANY'S FORM 10-SB/A-2 ON MARCH


29, 2000).














3(I)(D)
             *       
          
      MINNESOTA SECRETARY OF STATE AMENDMENT OF ARTICLES OF


INCORPORATION (DIGITAL REPORTING INC. CHANGES ITS NAME TO


CYBERGUIDES INTERNATIONAL, INC., SEPTEMBER 30, 1997).


(INCORPORATED BY REFERENCE FILED WITH THE COMPANY'S FORM


10-SB/A-2 ON MARCH 29, 2000).














3(I)(E) 
             *       
          
      MINNESOTA SECRETARY OF STATE AMENDMENT OF ARTICLES OF


INCORPORATION (CYBERGUIDES INTERNATIONAL, INC., CHANGES ITS


NAME TO AJA MERCHANT BANKING CORPORATION FEBRUARY 10, 1998)


(INCORPORATED BY REFERENCE FILED WITH THE COMPANY'S FORM


10-SB/A-2 ON MARCH 29, 2000).




















3(I)(F) 
                 *    
       
           MINNESOTA SECRETARY OF STATE AMENDMENT OF ARTICLES
      OF


INCORPORATION (AJA MERCHANT BANKING CORPORATION CHANGES ITS


NAME TO IMAGE PHOTO SYSTEMS, INC. DECEMBER 3, 1998).


(INCORPORATED BY REFERENCE FILED WITH THE COMPANY'S FORM


10-SB/A-2 ON MARCH 29, 2000).
















***Page
          - 33***








3(I)(G)
                 *    
       
           MINNESOTA SECRETARY OF STATE AMENDMENT OF ARTICLES
      OF


INCORPORATION (IMAGE PHOTO SYSTEMS, INC. CHANGES ITS NAME


TO XRAYMEDIA.COM, INC., SEPTEMBER 16, 1999). (INCORPORATED


BY REFERENCE FILED WITH THE COMPANY'S FORM 10-SB/A-2 ON


MARCH 29, 2000).














3(I)(H) 
                 *    
       
            ARTICLES OF INCORPORATION OF IMAGE PHOTO
      SYSTEMS, INC.


(INCORPORATED BY REFERENCE FILED WITH THE COMPANY'S FORM


10-SB/A-2 ON MARCH 29, 2000).














3(II)(A)
                 *    
       
            BY-LAWS OF PORT INDUSTRIES, INC. (INCORPORATED
      BY
      REFERENCE


FILED WITH THE COMPANY'S FORM 10-SB/A-2 ON MARCH 29, 2000).














3(II)(B) 
                 *    
       
            BY-LAWS OF IMAGE PHOTO SYSTEMS, INC. (INCORPORATED
      BY


REFERENCE FILED WITH THE COMPANY'S FORM 10-SB/A-2 ON MARCH


29, 2000).














23
      22             
          
            CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT,
      DATED MARCH
      15,


2000.










***Page
          - 34***





MATERIAL
      CONTRACTS








EXHIBIT








NO. 
                 PAGE NO. 
          
         DESCRIPTION














6(A) 
                 *    
       
            AGREEMENT, DATED JULY 29, 1999, BETWEEN XRAYMEDIA.COM,


INC. AND LAURIER LIMITED. (INCORPORATED BY REFERENCE FILED
      WITH THE


COMPANY'S FORM 10- SB/A-2 ON MARCH 29, 2000).














10(I) 
                 *    
       
            BENEFIT PLAN DATED OCTOBER 15, 1999. (INCORPORATED
      BY


REFERENCE FILED WITH THE COMPANY'S FORM 10-SB/A-2 ON MARCH


29, 2000).














10(II) 
                 *    
       
            MANAGEMENT AGREEMENT BETWEEN MEIR KAHTAN
      AND


XRAYMEDIA.COM, INC. DATED MARCH 15, 2000. (FILED WITH AMENDMENT
      NO.
      1 TO


10-KSB ON MAY 8, 2000).







***Page
          - 35***