**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
D.C. 20549**
  
 **FORM
10-KSB**
   x
    **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE**
      **SECURITIES
      EXCHANGE ACT OF 1934****For
      the fiscal year ended December 31, 2004, or**o
    **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE**
      **SECURITIES
      EXCHANGE ACT OF 1934****For
      the transition period from ____________****to
      ____________**
  **Commission
File No. 0-32327**
 
 
  **EPOD
INTERNATIONAL INC.**
 (formerly
known as Cyokonos Corporation)
  (Name of
Small Business Issuer in its charter)
  **Nevada**
    
    **91-1953719**(State
      of Incorporation)
    
    (IRS
      Employer ID. No.)
 
 **2223
Hayman Road, Kelowna, British Columbia, Canada V1Z 1Z6**
 (Address
of Principal Executive Offices) (Zip Code)
  **(250)
769-0130**
 Issuer's
telephone number, including area code
 
 Securities
registered under Section 12(b) of the Exchange Act:
 none
 
 Securities
registered under Section 12(g) of the Exchange Act:
 **Common
Stock, par value $0.001 per share**
 (Title of
Class)
 
 
  
 
 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 xNo o
  Check if
there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. x
  The
issuer's revenues for its most recent fiscal year were $0.
  The
aggregate market value of the common equity held by non-affiliates (for the
purposes of this calculation only, directors, executive officers and principle
controlling shareholders of the registrant are deemed to be affiliates of the
registrant) computed by reference to the price at which the issuer's common
stock was sold, based on the average of bid and asked prices on March 28, 2005,
was $21,635,550.
  As of
March 28, 2005 there were 48,691,000 shares of common stock outstanding and no
other outstanding classes of a common equity security
  Transitional
Small Business Disclosure Format (check one): Yes o   No x
   2
  **TABLE
OF CONTENTS**
 
 **PART
      I**
    
    PageITEM
      1.
    Description
      of Business
    4ITEM
      2.
    Description
      of Properties
    7ITEM
      3.
    Legal
      Proceedings
    7ITEM
      4.
    Submission
      of Matters to a Vote of Security Holders
    8**PART
      II**ITEM
      5.
    Market
      for Common Equity and Related Stockholder Matters
    8ITEM
      6.
    Management’s
      Discussion and Analysis or Plan of Operation
    10ITEM
      7.
    Financial
      Statements
    15ITEM
      8.
    Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure
    16ITEM
      8A.
    Controls
      and Procedures
    16**PART
      III**ITEM
      9.
    Directors
      and Executive Officers
    16ITEM
      10.
    Executive
      Compensation
    18ITEM
      11.
    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
    18ITEM
      12.
    Certain
      Relationships and Related Transactions
    19ITEM
      13.
    Exhibits
    20ITEM
      14.
    Principal
      Accountant Fees and Services
    20
  **FORWARD-LOOKING
STATEMENTS**
  This
Report contains certain forward looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995) and information relating
to Cyokonos Corporatipon that is based on the beliefs of our management, as well
as assumptions made by and information currently available to our management.
When used in this Report, the words "estimate," "project," "believe,"
"anticipate," "hope," "intend," "expect," and similar expressions are intended
to identify forward looking statements, although not all forward looking
statements contain these identifying words. Such statements reflect our current
views with respect to future events and are subject to unknown risks,
uncertainties, and other factors that may cause actual results to differ
materially from those contemplated in such forward looking statements. Such
factors include the risks described in Item 1. Description of Business; Risk
Factors and elsewhere in this Report and, among others, the following: general
economic and business conditions, both nationally, internationally, and in the
regions in which we operate; catastrophic events, including acts of terrorism;
the success of our technology; relationships with and events affecting third
parties; demographic changes; existing government regulations, and changes in,
or the failure to comply with, government regulations; competition; changes in
business strategy or development plans; the cost of pursuing new business
initiatives; technological developments and difficulties; the availability and
terms of capital to fund the expansion of our businesses; and other factors
referenced in this Report. Readers are cautioned not to place undue reliance on
these forward looking statements, which speak only as of the date hereof. We do
not undertake any obligation to publicly release any revisions to these forward
looking statements to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events.
  3
  **PART
I**
  **ITEM
1. DESCRIPTION OF BUSINESS**
   **GENERAL**
  The
Company was incorporated on July 11, 2003 in the Commonwealth of the Bahamas and
is in the development stage. The Company was organized to develop, produce,
license and sell innovative energy management and electronic technology. It
currently owns the worldwide rights to certain patent-pending technology that
improves the efficiency of electrical power usage. In November 2003, the Board
of Directors of the Company approved the acquisition through reverse merger of
Cyokonos Corporation, a public entity organized under the laws of the state of
Nevada on February 16, 1999. This reverse merger (“Merger”) was executed on
January 13, 2004 pursuant to an Exchange Agreement with the issuance of
9,230,000 shares of common stock, at par value of $.001 per share, to the
shareholders of Cyokonos. From its inception until January 13, 2004, Cyokonos
was headed up by its sole officer and director, Mr. Ronald McIntire, and had not
commenced any commercial operations or material operating activities. On January
15, 2004, the Company retained Mr. L. Mark Roseborough as President of the
Company and entered into a contractual relationship with him on July 1, 2004.
 
 A Special
Shareholder’s Meeting, for Cyokonos, was called on January 21, 2004, at which
time Mr. Ronald McIntire, of Cyokonos Corporation, voluntarily resigned from the
Board of Directors and Mr. Michael Matvieshen, Mr. L. Mark Roseborough, Mr.
Peter Hipp, Mr. Hans Schroth and Mr. Peter Lacey were elected to the Board of
Directors. The Shareholders also voted to change the name of Cyokonos
Corporation to EPOD International Inc. at the soonest practicable date. The name
change became effective on or about July 9, 2004, at which time the trading
symbol on the OTC Bulletin Board changed from CYOK to EPOI.
 
 The
Company’s principal place of business is currently located at 2223 Hayman Road,
Kelowna, British Columbia, Canada V1Z 1Z6.
  **BUSINESS
OF THE COMPANY**
  EPOD
International Inc. is an integrated Energy Services company aspiring to be a
leader in electrical power storage systems for the distributed generation,
co-generation, wind and solar power markets through the production, licensing
and sales of innovative, energy management and electronic technology. The
Company is in development of certain patent-pending electrical technology that
it is calling the “Energy Pod,” or “EPOD,” which may exist in one form as an
integrated circuit chip transportable across many different markets and
applications. The Energy Pod reportedly manages and manipulates electrical
energy. EPOD provides demand and supply-side management solutions through a
comprehensive suite of patent-pending storage, conversion and energy management
products allowing users to significantly increase power sales revenue, reduce
their power costs and increase their power quality. The net result is that
utilization of DC electrical power becomes significantly more efficient. The
Company is also developing other innovative products with synergetic
technologies.
 
 The
Company, over the next year, anticipates that it will accomplish an equity
financing. The emphasis will be on focused research and development and
marketing to produce Energy Pod storage and management products with the
potential to maximize revenue and time to market. Manufacturing of the final
product can be done in house, contracted out or the technology licensed.
Infrastructure will be kept to a minimum with focused budgets.
 
 **MARKET**
 
 The two
main EPOD markets are for power storage and power conversion/management.
Products that are being introduced to these market segments are set forth
below.
 
 4
 ******
 ***Power
Storage***
 
 EPOD
provides commercial and industrial power users with power storage systems. EPOD
can assist with increased power quality and reliability, reduced power costs and
new power sales revenue. For grid-power users, EPOD’s EMT (“Energy Management
Technology”) power storage system allows a company to buy and store inexpensive,
off-peak power for next-day peak-power demand or back-up power requirements. The
EMT’s peak-shaving and virtual load-shifting benefits dramatically reduce or
eliminate demand and standby charges while increasing power quality and
reliability. For partial onsite power users, the EMT power storage system allows
a company to further reduce grid-based power costs by increasing the output of
the on-site power generation assets. The installation of an EMT storage unit
allows a company to operate DG or CoGen hardware during off-peak hours, storing
this power for next-day use and increasing the useful output of your capital
assets.
 
 ***Power
Management and Conversion***
 
 EPOD
offers three management and conversion products:
 
 ·
    The
      EPOD rectifier is an AC-continuous waveform current converted to DC-power
      with less than 4% power loss. Traditional rectifiers average 70-71%
      efficiency, whereas the EPOD rectifier is 96% efficient. EPOD's advanced
      rectifier design represents a new benchmark for rectifier
      efficiency.
 ·
    The
      EPOD inverter has been designed to allow for DC power to be converted to
      AC power on the order of 95% efficiency.
 ·
    The
      EPOD power controller significantly increases a battery's useful output.
      When a DC-power supply is used in a circuit utilizing the patent-pending
      EPOD power controller, the controller will manage and maintain the voltage
      at a higher potential by creating an energy reservoir from the energy that
      is normally consumed by the circuit whenever the circuit is turned on.
      This reservoir of energy holds the circuit voltage higher than if a
      battery, for example, was used without the EPOD power controller in the
      circuit. The ability of the power controller to maintain higher circuit
      voltage throughout the battery discharge curve equals more power available
      to do more work. In independent engineering tests, the batteries using the
      EPOD power controller increased the overall useful work completed by the
      battery by up to 30%.
 
 Although
these segments of the market are new and EPOD products are still in the
development stage, preliminary market studies have shown a significant need and
market for these products. The Company plans to take significant advantage of
the “Green” movement to increase energy efficiency. Time to market is based on
the duration of independent testing and tool up to production. The Company is
still doing research and development on these products and is concentrating on
costing and independent engineering verification.
 
 **EMPLOYEES**
 
 The
Company had no full-time employees as of December 31, 2004.
 
 **RISK
FACTORS**
 
 The
Company faces a number of risks and uncertainties that could cause actual
results or events to differ materially from those contained in any
forward-looking statement. Additional risks and uncertainties not presently
known to the Company or that are currently deemed to be immaterial may also
impair the Company's business operations. Factors that could cause or contribute
to such differences include, but are not limited to, the following:
 
 ***We
May Be Unable To Meet Our Future Capital Requirements.***
 
 We may
require additional capital to finance expansion or growth at levels greater than
our current business plan. Because of the uncertainties in raising additional
capital, there can be no assurance that we will be able to obtain the necessary
capital to finance our growth initiatives. Insufficient capital will require us
to delay or scale back our proposed development activities.
 
 5
 ******
 ***We
Have A Limited Operating History.***
 
 We
commenced operations in November 1999 and adopted our current business plan in
January 2004. Accordingly, we have a limited operating history and our business
strategy may not be successful. Our failure to implement our business strategy
or an unsuccessful business strategy could materially adversely affect our
business, financial condition and operating losses.
 
 ***We
Depend On Key Personnel To Maintain Our Success.***
 
 Our
success depends substantially on the continued services of our directors,
executive officers and key employees, in particular Michael Matvieshen, L. Mark
Roseborough and certain other executive officers. The loss of the services of
any of our key executive officers or key employees could harm our business. None
of our key executive officers or key employees currently has a contract that
guarantees their continued employment by us. There can be no assurance that any
of these persons will remain employed by us or that these persons will not
participate in businesses that compete with us in the future.
 
 ***Corporate
Governance-Related Issues.***
 
 At
present, the Company’s President and Chief Executive Officer, L. Mark
Roseborough, is also acting as the Company’s Chief Financial Officer.
Accordingly, Mr. Roseborough is required to devote attention to both positions,
thereby diverting attention from his position as CEO. Further, because both the
CEO and CFO positions are currently held by a single person, outside of the
Board of Directors and the audit committee, no independent oversight of the CEO
or the CFO function currently exist within the Company’s management structure.
In addition, although the Company is in the process of developing and
implementing policies and practices relating to corporate governance, including
reviewing and monitoring the implementation of the corporate governance
guidelines, to date the Company does not yet have a functioning Corporate
Governance Committee, Compensation Committee or an Audit Committee Expert. The
Company does intend to be Sarbanes-Oxley compliant by the end of fiscal
2006.
 
 ***Our
Products May Not Have Marketable Value.***
 
 We do not
currently have a marketable product and the new and advanced products that we
are developing are not fully tested and therefore, there is no guarantee of a
marketable product.
 
 ***The
Price Of The Company’s Securities May Be Volatile And Subject To Wide
Fluctuations.***
 
 The
market price of the Company’s securities may be volatile and subject to wide
fluctuations. If the Company’s revenues do not grow or grow more slowly than it
anticipates, or, if operating or capital expenditures exceed its expectations
and cannot be adjusted accordingly, or if some other event adversely affects the
Company, the market price of the Company’s securities could decline. If
securities analysts alter their financial estimates of the Company’s financial
condition it could affect the price of the Company’s securities. Some other
factors that could affect the market price of the Company’s securities include
announcements of new product or service offerings, technological innovations and
competitive developments. In addition, if the market for stocks in the Company’s
industry or the stock market in general experiences a loss in investor
confidence or otherwise fails, the market price of the Company’s securities
could fall for reasons unrelated to its business, results of operations and
financial condition. The market price of the Company’s stock also might decline
in reaction to conditions, trends or events that affect other companies in the
market for electronic generation and storage products and services even if these
conditions, trends or events do not directly affect the Company. In the past,
companies that have experienced volatility in the market price of their stock
have been the subject of securities class action litigation. If the Company were
to become the subject of securities class action litigation, it could result in
substantial costs and a diversion of management’s attention and
resources.
 
 6
 ******
 ***The
Public Trading Market For The Company’s Common Stock Is Limited And May Not Be
Developed Or Sustained.***
 
 There is
a limited trading market for the Company’s Common Stock. The Common Stock has
been traded under the symbol “EPOI” on the Over The Counter Bulletin Board, a
NASDAQ-sponsored and operated inter-dealer automated quotation system for equity
securities. There can be no assurance that an active and liquid trading market
will develop or, if developed that it will be sustained.
 
 ***Proprietary
Technology.***
 
 Our
business plan is based on proprietary and patent-pending technology. There is no
guarantee that patents will be granted and we face risk of claims that we have
infringed third parties intellectual property rights. These may result in costly
litigation or the invalidation of property rights on which we
depend.
 
 ***Technological
Change.***
 
 The
market for products and services in the electrical technology industry is
characterized by rapid change, evolving industry standards and frequent
introductions of new technological developments. These new standards and
developments could make our existing or future products or services obsolete.
Our keeping pace with the introduction of new standards and technological
developments could result in additional costs or prove difficult or impossible.
The failure to keep pace with these changes and to continue to enhance and
improve the responsiveness, functionality and features of our services could
harm our ability to attract and retain customers and markets.
 
 ***United
States Participation in a War or Military or Other Actions; Terrorism.***
 
 Involvement
in a war or other military action or acts of terrorism may cause significant
disruption to commerce throughout the world. To the extent that such disruptions
result in 1) delays or cancellations of customer orders, 2) a general decrease
in consumer spending on certain technology, 3) our inability to effectively
market and distribute our products, or 4) our inability to access capital
markets, our business and results of operations could be materially and
adversely affected. We are unable to predict whether the involvement in a war or
other military action will result in any long term commercial disruptions or if
such involvement or responses will have any long term material adverse effect on
our business, results of operations, or financial condition.
 
 ***We
May Issue Shares Of Common Stock In The Future.***
 
 Our
certificate of incorporation authorizes the issuance of 75,000,000 shares of
common stock. The future issuance of all or part of the remaining authorized
common stock may result in substantial dilution in the percentage of our common
stock held by our existing stockholders. Also, any stock we sell in the future
may be valued on an arbitrary basis by us and the issuance of shares of common
stock for future services, acquisitions or other corporate actions may have the
effect of diluting the value of the shares held by existing shareholders.
 
 **ITEM
2. DESCRIPTION OF PROPERTY**
 
 The
Company currently owns no property. Its office space is provided at no charge by
the President of the Company, Mr. L. Mark Roseborough. This office arrangement
is considered adequate for current operations of the Company. The Company,
however, has acquired “to-be-built” office space in Kelowna, British Columbia to
house its corporate headquarters and for laboratory research and development.
The dedicated executive office and laboratory space will allow the Company
to consolidate its product development and administrative efforts under one roof
while providing much needed space for additional staff and future growth.
Additionally, the new facility will increase research and development
security, laboratory efficiency, and, in the short term, reduce administrative
overheads. The purchase price of the approximately 2,500 square foot office
facility was CDN$292,820 and is currently under construction with occupancy
scheduled for late May 2005.
 
 **ITEM
3. LEGAL PROCEEDINGS**
 
 The
Company is not a party to any pending legal proceedings, and no such proceedings
are known to be contemplated.
 
 7
 ****
 **ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 On July
1, 2004 the Board of Directors voted unanimously to proceed with a two for one
(2:1) stock split of its common stock. On July 5, 2004, there were 23,280,000
shares outstanding. The proposal was approved by a majority of outstanding
shares, 18,000,000, by written consent of the majority shareholders on July 5,
2004. The amendment to the Company’s Articles of Incorporation to effectuate the
stock split was filed with the State of Nevada and effective September 1, 2004.
The stock split entitled each stockholder of record at the close of business on
September 20, 2004 (record date) to receive one additional share for every share
of common stock held on that date. At the date of the stock split, 23,334,000
shares were outstanding at a par value of $0.001. Shares resulting from the
split were distributed by the Company's transfer agent on or about September 21,
2004. Immediately after the stock split, the Company had 46,668,000 shares of
common stock outstanding with a par value of $0.0005.
 
 **PART
II**
 
 **ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**
 
 **A.**  **Market
for Common Stock**
 
 The
Company's common stock is not traded on a national securities exchange or the
NASDAQ Stock Market. The common stock has been quoted on the OTC Bulletin Board
under the symbol "CYOK" from November 2001 through July 2004 and then under the
symbol “EPOI” thereafter. The range of high and low bid prices on the OTC
Bulletin Board during each fiscal quarter, as reported by Bloomberg L.P., is as
follows:
  **Quarter
      Ended**
    
    
    **High**
    
    
    **Low**December
      31, 2001
    
    $
    0.50
    
    $
    0.01March
      31, 2002
    
    $
    0.85
    
    $
    0.50June
      30, 2002
    
    $
    1.25
    
    $
    0.65September
      30, 2002
    
    $
    1.20
    
    $
    0.55December
      31, 2002
    
    $
    1.05
    
    $
    0.55March
      31, 2003
    
    $
    0.55
    
    $
    0.35June
      30, 2003
    
    $
    1.05
    
    $
    0.35September
      30, 2003
    
    $
    1.01
    
    $
    0.40December
      31, 2003
    
    $
    0.99
    
    $
    0.31March
      31, 2004
    
    $
    1.00
    
    $
    0.42June
      30, 2004
    
    $
    1.25
    
    $
    0.60September
      30, 2004 (2:1 stock split 9/22/04)
    
    $
    2.50
    
    $
    0.60December
      31, 2004
    
    $
    2.00
    
    $
    0.90
 
 **"Penny
Stock" Rules**
 
 The
Company's common stock is a "penny stock" which is subject to Rule 15g-9
under the Securities Exchange Act of 1934. It is considered penny stock because
it is not listed on a national exchange or NASDAQ, its bid price is below $5.00
per share, has net tangible assets of less than $5,000,000, and average annual
revenue has not exceeded $6,000,000 in the past three years.
 
 As a
result, broker-dealers must comply with additional sales practices requirements.
Broker-dealers must determine that the investment is suitable for the buyer and
receive the buyer's written agreement to the transaction before they can sell
the Company's common stock to buyers who are not the broker-dealer's established
customers or institutional accredited investors. In addition, broker-dealers
must deliver to the buyer before the transaction a disclosure schedule which
explains the penny stock market and its risks, discloses the commissions to be
paid to the broker-dealer, discloses the stock's bid and offer quotations, and
discloses if the broker-dealer is the sole market maker in the stock.
 
 8
 ****
 **B.**  **Holders
of Record**
 
 As of
March 28, 2005, the Company had 86 holders of record of its shares of common
stock, excluding shares held by broker-dealers, with an approximate total of 100
shareholders.
 
 **C.**  **Dividends**
 
 The
Company has not paid any cash dividends and does not anticipate that it will pay
cash dividends on in the foreseeable future. Payment of cash dividends is within
the discretion of the Board of Directors and will depend, among other factors,
upon earnings, financial condition and capital requirements. There are no
restrictions on the payment of dividends.
 
 **D.**  **Securities
Authorized for Issuance under Equity Compensation Plans**
  **EQUITY
COMPENSATION PLAN INFORMATION**
 **(December
31, 2004)**
 
 **Plan
      category**
    
    **Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights**
    
    **Weighted-average
      exercise price of outstanding options, warrants and
      rights**
    
    **Number
      of securities remaining available for future issuance under equity
      compensation plans**Equity
      compensation plans approved by security holders
    
    
    ---
      (1
    )
    $
    0.00
    
    
    ---Equity
      compensation plans not approved by security holders
    
    
    200,000
      (2
    )
    $
    0.75
    
    
    200,000
 
 (1)
    The
      Company does not currently have any approved equity compensation
      plans.
 (2)
    The
      Company has set aside 200,000 shares of common stock to be used for
      non-executive employee options with vesting and distribution to be
      determined by the Board of Directors.No
      options have yet been granted.
 
 **E.**  **Unregistered
Securities Sales (Not Previously Disclosed)**
 
 **Common
Stock**
 
 On August
10, 2004, the Company issued 57,000 shares of restricted common stock for
consulting services. This issuance was made without registration under Section
4(2) of the 1933 Act.
 
 On
September 20, 2004, the Company issued a two-for-one stock
split entitling each stockholder of record at the close of business on September
20, 2004 (record date) to receive one additional share for every share of common
stock held on that date. Because of the stock split, the Company issued
23,334,000 shares of restricted common stock to current
stockholders.
 
 **Warrants**
 
 There
were no sales or issuances of these warrants during the fiscal year ended
December 31, 2004.
 
 9
 ****
 **Options**
 
 On
January 21, 2004 the Board of Directors approved the granting to each director
(Michael Matvieshen, L. Mark Roseborough, Peter Hipp, Hans Schroth and Peter
Lacey) **** 100,000
three-year options to purchase restricted shares of common stock at an exercise
price of $0.75 per share. The stock options vest at 25,000 shares at the end of
each quarter. None of these stock options have been exercised as of the year
ended December 31, 2004.
 
 On March
15, 2004, the Company,
for services being rendered, granted 100,000 options to purchase shares of
restricted common stock. The stock options vest at 8,333 per month beginning on
March 15, 2004. None of
these stock options have been exercised as of the year ended December 31, 2004.
 
 On July
1, 2004, the Company,
for services being rendered, granted 150,000 options to purchase shares of
restricted common stock. The stock options vest at 37,500 per quarter beginning
on August 15, 2004. None of
these stock options have been exercised as of the year ended December 31, 2004.
 
 On July
31, 2004, the Company
granted 232,800 options to purchase shares of restricted common stock to
President L. Mark Roseborough pursuant to an option agreement that is part of
his compensation agreement . The
options vested immediately. None of these stock options have been exercised as
of the year ended December 31, 2004.
 
 **F.
Purchase of Equity Securities**
 
 None.
 
 **ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**
 
 The
following discussion of the financial condition and results of operations of the
Company should be read in conjunction with the consolidated financial statements
and related notes, which are included herein. This report contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those indicated in the
forward-looking statements.
 
 **OVERVIEW**
 
 The
Company was incorporated on July 11, 2003 in the Commonwealth of the Bahamas and
is in the development stage. The Company is in the process of developing and
producing innovative energy management and electronic technology with the intent
to license and sell such products and technology. It currently owns the
worldwide rights to certain patent-pending technology that improves the
efficiency of electrical power usage. In November 2003, the Board of Directors
of the Company approved the acquisition through reverse merger of Cyokonos
Corporation, a public entity organized under the laws of the state of Nevada on
February 16, 1999. This reverse merger (“Merger”) was executed on January 13,
2004 pursuant to an Exchange Agreement with the issuance of 9,230,000 shares of
common stock, at par value of $.001 per share, to the shareholders of Cyokonos.
From its inception until January 13, 2004, Cyokonos was headed up by its sole
officer and director, Mr. Ronald McIntire and had not commenced any commercial
operations or material operating activities. On January 15, 2004, the Company
retained Mr. L. Mark Roseborough as President of the Company and entered into
contractual relationship for his services on July 1, 2004.
 
 A Special
Shareholder’s Meeting, for Cyokonos, was called on January 21, 2004, at which
time Mr. Ronald McIntire, of Cyokonos Corporation, voluntarily resigned from the
Board of Directors and Mr. Michael Matvieshen, Mr. L. Mark Roseborough, Mr.
Peter Hipp, Mr. Hans Schroth and Mr. Peter Lacey were elected to the Board of
Directors. The Shareholders also voted to change the name of Cyokonos
Corporation to EPOD International Inc. at the soonest practicable date. The name
change became effective on or about July 9, 2004, at which time the trading
symbol on the OTC Bulletin Board changed from CYOK to EPOI.
 
 The
Company is an integrated Energy Services company aspiring to be a leader in
electrical power storage systems for the distributed generation, co-generation,
wind and solar power markets through the production, licensing and sales of
innovative, energy management and electronic technology. The Company is in
development of certain patent-pending electrical technology that it is calling
the “Energy Pod,” or “EPOD,” which may exist in one form as an integrated
circuit chip transportable across many different markets and applications. The
Energy Pod products manage and manipulate electrical energy. EPOD provides
demand and supply-side management solutions through a comprehensive suite of
patent-pending storage, conversion and energy management products allowing users
to significantly increase power sales revenue, reduce their power costs and
increase their power quality.
 
 10
 
 EPOD
provides commercial and industrial power users with power storage systems. EPOD
can assist with increased power quality and reliability, reduced power costs and
new power sales revenue. For grid-power users, EPOD’s EMT (“Energy Management
Technology”) power storage system allows a company to buy and store inexpensive,
off-peak power for next-day peak-power demand or back-up power requirements. The
EMT’s peak-shaving and virtual load-shifting benefits dramatically reduce or
eliminate demand and standby charges while increasing power quality and
reliability. For partial onsite power users, the EMT power storage system allows
a company to further reduce grid-based power costs by increasing the output of
the on-site power generation assets. The installation of an EMT storage unit
allows a company to operate DG or CoGen hardware during off-peak hours, storing
this power for next-day use and increasing the useful output of your capital
assets.
 
 EPOD
offers three management and conversion products. First, the EPOD rectifier
is an AC-continuous waveform current converted to DC-power with less than 4%
power loss. Traditional rectifiers average 70-71% efficiency, whereas the EPOD
rectifier is 96% efficient. EPOD's advanced rectifier design represents a new
benchmark for rectifier efficiency. Second the EPOD inverter has been designed
to allow for DC power to be converted to AC power on the order of 95%
efficiency. Third, the EPOD power controller significantly increases a battery's
useful output. When a DC-power supply is used in a circuit utilizing the
patent-pending EPOD power controller, the controller will manage and maintain
the voltage at a higher potential by creating an energy reservoir from the
energy that is normally consumed by the circuit whenever the circuit is turned
on. This reservoir of energy holds the circuit voltage higher than if a battery,
for example, was used without the EPOD power controller in the circuit. The
ability of the power controller to maintain higher circuit voltage throughout
the battery discharge curve equals more power available to do more work. In
independent engineering tests, the batteries using the EPOD power controller
increased the overall useful work completed by the battery by up to 30%. The
Company is also developing other innovative products with synergetic
technologies.
 
 One
important milestone for the Company in the fourth fiscal quarter was the
recently signed agreement with Simmax Energy (CA), LLC to install EPOD's
electric power storage system, the EPOD EMT. Simmax Energy, a distributed power
generation vendor providing onsite electric power and heating to industrial and
commercial customers, has agreed to install EPOD's proprietary EMT energy
storage system at a client site. The installation of the EMT will result in a
reduction of the client's electric power costs. The lower power costs will come
through a combination of 'peak shaving', a process whereby electric power is
purchased and stored during less-expensive, off-peak periods for subsequent use
during peak business hours, and the reduction of standby and demand charges. The
EPOD EMT, the Company's core product offering, is an energy storage and
peak-shaving system that allows commercial and industrial power users to reduce
their electric power expenses. This occurs by giving users first ever access to
less-expensive off-peak power pricing from their local utility during peak
periods. The EPOD EMT is also ideally suited to the onsite or distributed
generation markets, allowing users to sell surplus electricity to their local
utility. This is the initial installation of the EPOD EMT and is to be operated
and maintained by EPOD for a period of five years, during which approximately
50% of energy savings will be paid to EPOD. The installation is awaiting Simmax
Board approval.
 
 During
the year, EPOD has researched, developed and successfully produced a low power,
single cell, vanadium redox battery. Additionally, in a joint research and
technology development effort between EPOD and Barrett Engineering Inc. of San
Diego, California, EPOD completed the successful conversion and testing of a
hydrogen-fueled motor, successfully converted a Honda GX160 gasoline-fueled
motor to operate using hydrogen.
 
 The
Company's current principal place of business is located at 2223 Hayman Road,
Kelowna, British Columbia, Canada V1Z 1Z6. However, it has acquired
“to-be-built” office space in Kelowna, British Columbia to house its corporate
headquarters and for laboratory research and development. The dedicated
executive office and laboratory space will allow the Company to consolidate
its product development and administrative efforts under one roof while
providing much needed space for additional staff and future growth.
Additionally, the new facility will increase research and development
security, laboratory efficiency, and, in the short term, reduce administrative
overheads. The purchase price of the approximately 2,500 square foot office
facility was CDN$292,820 and is currently under construction with occupancy
scheduled for May 2005.
 
 11
 
 With
regard to financings, the Company has been in negotiations over the past few
months with a group for an equity placement funding that, if consummated, should
fund the Company’s business plan for approximately the next full year. The
Company makes no representations regarding the success of these negotiations or
any ultimate transaction.
 
 **Critical
Accounting Policies and Estimates**
 
 Our
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an ongoing basis, we
evaluate our estimates. We base our estimates on historical experience and on
other assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results could differ from these estimates under different
assumptions or conditions. During the year ended December 31, 2004, there were
no material changes to accounting estimates or judgments.
 
 Use of
Estimates
 The
process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.
 
 Translation
of Financial Statements
 The U.S.
dollar is the functional currency of the Company. A Canadian bank account is
maintained and is translated using the exchange rate in effect at the balance
sheet date. Monetary assets and liabilities denominated in foreign currencies
are translated to United States dollars at the exchange rate in effect on the
balance sheet date. Non-monetary assets and liabilities are translated at their
historical rate. Revenues and expenses are translated at the average rates of
exchange prevailing during the year. Gains and losses on foreign currency
transactions are included in the consolidated statement of
operations.
 
 Fair
Value of Equity Instruments
 The
Company’s accounting is in accordance with Financial Accounting Standards Board
No. 123 and ETIF 96-18A in recording warrants and stock options. The Company
uses fair value base method of accounting for employee stock options or similar
instruments. Under the fair value based method, compensation cost is measured at
the grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period. The Company utilizes the
Black-Scholes valuation model to calculate the fair value of options issued for
payment of services. The parameters used in such valuations include a risk free
rate of 4.0%, the assumption that no dividends are paid, exercise periods of two
to five years, and a volatility factor of 127%, in accordance with SFAS
No. 123.
 
 Revenue
Recognition
 Although
the Company currently has no operating revenues, it will recognize revenue for
products and other services to customers in the period the related services are
provided or when the products are shipped, when the amount of revenue is
determinable and collection is reasonably assured.
 
 **RESULTS
OF OPERATIONS**
 
 **FOR
THE YEARS ENDED DECEMBER 31, 2004 AND INCEPTION (JULY 11, 2003) TO DECEMBER 31,
2004**
 
 **Revenue.** The
Company had non-operating revenues totaling $400 for the year ended December 31,
2004, as well as from inception to December 31, 2004. The Company expects to
experience operating revenues for fiscal year 2005 with the potential
implementation of the Simmax installation.
 
 12
 ****
 **General
and Administrative Expenses; Legal Expenses; Research and Development.** The
Company incurred general and administrative costs and legal fees during the year
ended December 31, 2004 of $676,021 and $210,101 respectively, compared to
$763,671 and $215,099 respectively from inception to December 31, 2004.
Additionally, the Company incurred research and development costs of $117,990
during the year ended December 31, 2004 and has cumulatively incurred research
and development expenses of $212,802 from inception to December 31, 2004. The
Company expects general and administrative expenses to increase substantially
during fiscal year 2005 as the Company ramps of its sales and increases its
employee base.
 
 **Net
Loss.** Mainly
as a result of the above, the Company sustained a loss from operations of
$1,039,745 for the year ended December 31, 2004, and a cumulative net loss of
$1,227,205 from inception to December 31, 2004.
 
 **LIQUIDITY
AND CAPITAL RESOURCES**
 
 **FOR
THE YEAR ENDED DECEMBER 31, 2004**
 
 Our
financial statements have been prepared on the going concern basis of
accounting, which contemplates realization of assets and liquidation of
liabilities in the ordinary course of business. The Company has experienced a
loss from operations during its development stage as a result of its investment
necessary to achieve its operating plan, which is long-range in nature.
 
 **Cash
Position.** As of
December 31, 2004, the Company had cash and cash equivalents of $222 and current
liabilities of $703,533.
 
 **Operating
Activities.** During
the year ended December 31, 2004, the Company had negative cash flows from
operating activities of $276,115 and recorded an operating loss of $1,039,734.
At December 31, 2004, the Company had an accumulated operating deficit of
$1,192,006.
 
 **Financing
Activities.** Since
its inception, the Company has received advances from shareholders totaling
$459,054. These advances are due upon demand. In addition, during the period
from inception to December 31, 2004, the Company entered into a promissory note
and loan agreement for $95,000. The loan agreement is non-interest bearing and
has no stated maturity date.
 
 **Future
Capital requirements.** The
Company has no positive working capital, no revenue generating operations and
little non-operating revenues. The Company's ability to continue as a going
concern is contingent upon its ability to attain profitable operations by
securing financing and implementing its business plan. The Company's ability to
continue as a going concern must be considered in light of the problems,
expenses and complications frequently encountered by entrance into established
markets and the competitive environment in which the Company operates.
 
 **OUTLOOK**
 
 The
Company has experienced a loss from operations during its development stage as a
result of its investment necessary to achieve its operating plan, which is
long-range in nature. For the period from inception to December 31, 2004, the
Company has incurred a net loss of $1,227,205. In addition, the Company has no
significant physical assets, no working capital, no revenue generating
operations and stockholders deficit. The Company’s ability to continue as a
going concern is contingent upon its ability to attain profitable operations by
securing financing and implementing its business plan. In addition, the
Company’s ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.
 
 13
 
 The
Company's current cash balance as of December 31, 2004 was $222. In order to
advance its business plan to the next phase, the Company will need to raise
additional capital. For the twelve-month period subsequent to December 31, 2004,
the Company anticipates that its minimum cash requirements to continue as a
going concern will be approximately $145,000 per month. The anticipated source
of these funds will be from a private placement of its equity securities. The
Company continues to pursue financing through several different sources and is
currently negotiating a private equity placement of its securities with one
certain group. These financing efforts should allow the Company to pursue its
business and marketing plan more aggressively, however, the Company makes no
representations regarding the success of these negotiations.
 
 If no
funding is received, the Company will be forced to rely on funds loaned by the
officers and directors. The officers and directors have no formal commitments or
arrangements to advance or loan funds to the Company. In such a restricted cash
flow scenario, the Company would be primarily unable to move its business plan
forward, and would, instead, delay all cash intensive activities. Should the
Company be unable to raise additional financing, it cannot assure that it would
be able to maintain operations.
 
 14
  **ITEM
7. FINANCIAL STATEMENTS**
 
 The
audited financial statements of the Company and related notes that have been
included in this 10-KSB have been audited by Williams & Webster, P.S. They
have been so included in reliance upon the opinion of such accountants given
upon their authority as experts in auditing and accounting.
       
 15
  **REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  Audit
Committee and Shareholders
 EPOD
International, Inc.
 Kelowna,
British Columbia
  We have
audited the accompanying consolidated balance sheets of EPOD International Inc.
(a Nevada corporation and development stage enterprise) as of December 31, 2004,
and the related consolidated statements of operations and comprehensive loss,
stockholders’ deficit and cash flows for the year then ended and for the period
from July 11, 2003 (inception) through December 31, 2004. These consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The financial statements of the predecessor
company as of December 31, 2003, were audited by other auditors whose report
dated March 25, 2004, expressed an unqualified opinion on those
statements.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of EPOD International Inc. as
of December 31, 2004 and the results of its operations, stockholders’ deficit
and cash flows for the year then ended and for the period from July 11, 2003
(inception) through December 31, 2004, in conformity with accounting principles
generally accepted in the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has generated no revenue. This
condition raises substantial doubt about the Company’s ability to continue as a
going concern. Management’s plans regarding this issue are also discussed in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
 
 
 Williams
& Webster, P.S.
 *Certified
Public Accountants*
 Spokane,
Washington
 March 25,
2005
 16
  **EPOD
      INTERNATIONAL INC.****(A
      Development Stage Company)****CONSOLIDATED
      BALANCE SHEETS**
  December
      31,
    
    December
      31,2004
    
    2003**ASSETS**CURRENT
      ASSETSCash
    
    $
    222
    
    $
    549Prepaid
      expenses
    
    
    2,692
    
    
    --Total
      Current Assets
    
    
    2,915
    
    
    549PROPERTY
      AND EQUIPMENT, net
    
    
    2,058
    
    
    --OTHER
      ASSETSDeposits
    
    
    78,964
    
    
    --**TOTAL
      ASSETS**
    
    $
    83,936
    
    $
    549**LIABILITIES
      AND STOCKHOLDERS' DEFICIT****LIABILITIES**CURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
    
    $
    99,630
    
    $
    --Payable
      to related party
    
    
    49,848
    
    
    --Shareholder
      advances
    
    
    459,054
    
    
    100,255Notes
      payable - shareholder
    
    
    95,000
    
    
    95,000Total
      Current Liabilities
    
    
    703,533
    
    
    195,255COMMITMENTS
      AND CONTINGENCIES
    
    
    --
    
    
    --**STOCKHOLDERS'
      DEFICIT**Common
      stock, $0.0005 par value; 75,000,000 shares authorized,46,740,630
      and 36,000,000 issued and outstanding, respectively
    
    
    23,370
    
    
    18,000Stock
      options
    
    
    497,839
    
    
    -Additional
      paid-in capital
    
    
    119,915
    
    
    -Discount
      on common stock
    
    
    (21,270
    )
    
    (13,000
    )Accumulated
      deficit during development stage
    
    
    (1,227,205
    )
    
    (187,460
    )Accumulated
      other comprehensive loss
    
    
    (12,246
    )
    
    (12,246
    )Total
      Stockholders' Deficit
    
    
    (619,597
    )
    
    (194,706
    )**TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT**
    
    $
    83,936
    
    $
    549
 The
accompanying notes are an integral part of these consolidated financial
statements
 
  17
 **EPOD
      INTERNATIONAL INC.****(A
      Development Stage Company)****CONSOLIDATED
      STATEMENTS OF OPERATIONSAND COMPREHENSIVE
  LOSS**
  FromYear
      Ended
    
    Year
      Ended
    
    July
      11, 2003December
      31,
    
    December
      31,
    
    (Inception)
      to2004
    
    2003
    
    Dec.
      31, 2004REVENUE
    
    $
    --
    
    $
    --
    
    $
    --OPERATING
      EXPENSESGeneral
      and administrative
    
    
    676,021
    
    
    87,650
    
    
    763,671Legal
      and professional
    
    
    210,101
    
    
    4,998
    
    
    215,099Research
      and development
    
    
    117,990
    
    
    94,812
    
    
    212,802Amortization
      expense
    
    
    434
    
    
    --
    
    
    434Total
      Operating Expenses
    
    
    1,004,546
    
    
    187,460
    
    
    1,192,006LOSS
      FROM OPERATIONS
    
    
    (1,004,546
    )
    
    (187,460
    )
    
    (1,192,006
    )OTHER
      INCOME (EXPENSE)Other
      income
    
    
    400
    
    
    --
    
    
    400Foreign
      currency transaction loss
    
    
    (35,599
    )
    
    --
    
    
    (35,599
    )Total
      Other Income (Expense)
    
    
    (35,199
    )
    
    --
    
    
    (35,199
    )NET
      LOSS BEFORE TAXES
    
    
    (1,039,745
    )
    
    (187,460
    )
    
    (1,227,205
    )PROVISION
      FOR INCOME TAXES
    
    
    --
    
    
    --
    
    
    --NET
      LOSS
    
    
    (1,039,745
    )
    
    (187,460
    )
    
    (1,227,205
    )OTHER
      COMPREHENSIVE INCOME (LOSS)Foreign
      currency translation gain (loss)
    
    
    --
    
    
    (12,246
    )
    
    (12,246
    )NET
      COMPREHENSIVE LOSS
    
    $
    (1,039,745
    )
    $
    (199,706
    )
    $
    (1,239,451
    )BASIC
      AND DILUTED NET LOSS PER COMMON SHARE
    
    $
    (0.02
    )
    $
    (0.01
    )WEIGHTED
      AVERAGE NUMBER OF COMMONSHARES
      OUTSTANDING BASIC AND DILUTED
    
    
    46,657,808
    
    
    36,000,000
 The
accompanying notes are an integral part of these consolidated financial
statements
 18
 **EPOD
      INTERNATIONAL INC.****(A
      Development Stage Company)****CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' DEFICIT**

DeficitAccumulatedCommon
      Stock
    
    Additional
    
    
    
    Discount
    
    During
    
    Other
    
    TotalNumber
    
    
    
    Paid-in
    
    Stock
    
    on
      Common
    
    Development
    
    Comprehensive
    
    Stockholders'of
      Shares
    
    Amount
    
    Capital
    
    Options
    
    Stock
    
    Stage
    
    Income
      (Loss)
    
    Equity
      (Deficit)Common
      stock issued for cash on July 11, 2003
    
    
    14,400
    
    $
    7
    
    $
    --
    
    $
    --
    
    $
    (5
    )
    $
    --
    
    $
    --
    
    $
    2Common
      stock issued for services
    
    
    35,985,600
    
    
    17,993
    
    
    --
    
    
    --
    
    
    (12,995
    )
    
    -
    
    
    --
    
    
    4,998Foreign
      currency translation gain (loss)
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    (12,246
    )
    
    (12,246
    )Net
      loss for period ended December 31, 2003
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    (187,460
    )
    
    --
    
    
    (187,460
    )Balance,
      December 31, 2003
    
    
    36,000,000
    
    $
    18,000
    
    $
    --
    
    $
    --
    
    $
    (13,000
    )
    $
    (187,460
    )
    $
    (12,246
    )
    $
    (194,706
    )Reverse
      acquisition and recapitalization
    
    
    10,560,000
    
    
    5,280
    
    
    --
    
    
    --
    
    
    (8,270
    )
    
    --
    
    
    --
    
    
    (2,990
    )Common
      stock issued for services at $0.37 per share
    
    
    108,000
    
    
    54
    
    
    39,636
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    39,690Options
      issued for services
    
    
    --
    
    
    --
    
    
    --
    
    
    30,195
    
    
    --
    
    
    --
    
    
    --
    
    
    30,195Common
      stock issued for services at $0.58
    
    
    18,630
    
    
    9
    
    
    10,844
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    10,853Common
      stock issued for services at $1.29 per share
    
    
    54,000
    
    
    27
    
    
    69,435
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    69,462Options
      issued for services
    
    
    --
    
    
    --
    
    
    --
    
    
    68,653
    
    
    --
    
    
    --
    
    
    --
    
    
    68,653Options
      issued for services
    
    
    --
    
    
    --
    
    
    --
    
    
    259,852
    
    
    --
    
    
    --
    
    
    --
    
    
    259,852Options
      issued to directors for services
    
    
    --
    
    
    --
    
    
    --
    
    
    139,139
    
    
    --
    
    
    --
    
    
    --
    
    
    139,139Net
      loss for year ended December 31, 2004
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    (1,039,745
    )
    
    --
    
    
    (1,039,745
    )Balance,
      December 31, 2004
    
    
    46,740,630
    
    $
    23,370
    
    $
    119,915
    
    $
    497,839
    
    $
    (21,270
    )
    $
    (1,227,205
    )
    $
    (12,246
    )
    $
    (619,597
    )
 The accompanying notes are an integral part of these
consolidated financial statements
 
 19
 **EPOD
      INTERNATIONAL INC.****(A
      Development Stage Company)****CONSOLIDATED
      STATEMENTS OF CASH FLOWS**

FromYear
      Ended
    
    
    Year
      Ended
    
    
    July
      11, 2003December
      31,
    
    
    December
      31,
    
    
    (Inception)
      to2004
    
    
    2003
    
    
    Dec.
      31, 2004

CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
    
    $
    (1,039,745
    )
    $
    (187,460
    )
    $
    (1,227,205
    )Adjustments
      to reconcile net loss to net cash used by operating
      activities:Common
      stock issued for servicesand expenses
    
    
    120,005
    
    
    4,998
    
    
    125,003Options
      issued for expenses
    
    
    497,839
    
    
    --
    
    
    497,839Changes
      in assets and liabilities:Prepaid
      expenses
    
    
    (2,692
    )
    
    --
    
    
    (2,692
    )Accounts
      payable
    
    
    148,478
    
    
    --
    
    
    148,478Net
      cash used by operating activities
    
    
    (276,115
    )
    
    (182,462
    )
    
    (458,577
    )CASH
      FLOWS FROM INVESTING ACTIVITIES:Proceeds
      from purchase of subsidiary
    
    
    85
    
    
    --
    
    
    85Changes
      in capital assets
    
    
    (2,058
    )
    
    --
    
    
    (2,058
    )Changes
      in long term assets
    
    
    (78,964
    )
    
    --
    
    
    (78,964
    )Net
      cash provided (used) by investing activities
    
    
    (80,937
    )
    
    --
    
    
    (80,937
    )CASH
      FLOWS FROM FINANCING ACTIVITIES:Common
      stock issued for cash
    
    
    --
    
    
    2
    
    
    2Proceeds
      from short-term borrowings - related parties
    
    
    356,724
    
    
    195,255
    
    
    551,979Net
      cash provided by financing activities
    
    
    356,724
    
    
    195,257
    
    
    551,981NET
      INCREASE (DECREASE) IN CASH
    
    
    (327
    )
    
    12,795
    
    
    12,468Other
      comprehensive gain (loss) - foreign currency translation
    
    
    --
    
    
    (12,246
    )
    
    (12,246
    )CASH,
      BEGINNING OF PERIOD
    
    
    549
    
    
    --
    
    
    --CASH,
      END OF PERIOD
    
    $
    222
    
    $
    549
    
    $
    222SUPPLEMENTAL
      CASH FLOW INFORMATION:Interest
      paid
    
    $
    --
    
    $
    --
    
    $
    --Income
      taxes paid
    
    $
    
    
    $
    --
    
    $
    --NON-CASH
      FINANCING AND INVESTING ACTIVITIES:Common
      stock issued for services and expenses
    
    $
    120,005
    
    $
    4,998
    
    $
    125,003Options
      issued for expenses
    
    $
    497,839
    
    $
    --
    
    $
    497,839
 The accompanying notes are an integral part of these
consolidated financial statements
 20
 **EPOD
INTERNATIONAL INC.**
 **(A
Development Stage Company)**
 **Notes
to Consolidated Financial Statements**
 **December
31, 2004**
 
 **NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS**
 
 The
Company was incorporated on July 11, 2003 in the Commonwealth of the Bahamas and
is in the development stage  The
Company was organized to develop, produce, license and sell innovative energy
management and electronic technology. It currently owns the worldwide rights to
certain patent-pending technology that improves the efficiency of electrical
power usage . The
Company has chosen December 31 as its year-end and has had no significant
operating activity from inception to December 31, 2004.
 
 During
January 2004, EPOD International Inc. (the “Company”) completed a reorganization
with Cyokonos Corporation (“Cyokonos”) a Nevada corporation, whose net
liabilities consisted of cash of $85 and accounts payable and due to affiliate
of $3,075. In conjunction therewith, the Company issued 18,000,000 shares of its
restricted common stock for all of the issued and outstanding common shares of
Cyokonos. This reorganization was accounted for as
though it were a recapitalization of the Company and sale by the Company of
9,230,000 shares of common stock at par value of $0.001 per share,
in exchange
for the net liabilities of Cyokonos. See Note 4 .
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence. See Note 2.
 
 In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, considered necessary for a fair presentation have been included.
 
 Infrastructure
is still being kept to a minimum, pending the construction of corporate offices.
Management and consultants are working from home offices.
 
 **NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 This
summary of significant accounting policies is presented to assist in
understanding the Company’s financial statements. The financial statements and
notes are representations of the Company’s management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and have been
consistently applied in the preparation of the financial
statements.
 
 Accounting
Method
 
 The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
 
 Cash
and Cash Equivalents
 
 The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
 
 Concentration
of Risk
 
 The
Company maintains its cash in two business checking accounts in a Canadian bank,
one in Canadian currency and one in U.S. currency. The Canadian funds are
insured by the Canada Deposit Insurance Corporation (CDIC).
 
 Compensated
Absences
 
 Currently,
the Company has no paid employees; therefore, no liability has been recorded in
the accompanying financial statements. The Company’s policy will be to recognize
the costs of compensated absences when there are employees who earn such
benefits.
 
 21
 
 Derivative
Instruments
 
 The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended by SFAS No. 137, “Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB No. 133”, SFAS
No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging
Activities”, and SFAS No. 149, “Amendment of Statement 133 on Derivative
Instruments and Hedging Activities”, which is effective for the Company as of
January 1, 2001. These statements establish accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. They require that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value.
 
 If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change. The Company has not entered into
derivatives contracts to hedge existing risks or for speculative
purposes.
 
 For the
period from July 11, 2003 (inception) to December 31, 2004, the Company has not
engaged in any transactions that would be considered derivative instruments or
hedging activities.
 
 Development
Stage Activities
 
 The
Company has been in the development stage since its formation, July 11, 2003,
and has realized little revenue. It will be primarily engaged in developing,
producing, licensing and selling innovative energy management and electronic
technology.
 
 Recent
Accounting Pronouncements
 
 In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 153, “Exchange of Nonmonetary Assets, an
amendment of ARB Opinion No. 29.” This statement addresses the measurement of
exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, “Accounting
for Nonmonetary Transactions,” is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged. The guidance in that opinion, however, included certain exceptions to
that principle. This statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This statement is effective for financial statements for fiscal
years beginning after June 15, 2005. Management believes the adoption of this
statement will have no impact on the financial statements of the
Company
 
 In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 152, “Accounting for Real Estate Time-Shares
Transactions,” an amendment of Statement of Financial Accounting Standards Board
No. 66, “Accounting for Sales of Real Estate,” to reference the financial
accounting and reporting guidance for real estate time-sharing transactions that
is provided in AICPA Statement of Position (SOP) 04-2, “Accounting for Real
Estate Time-Sharing Transactions.” This statement also amends Financial
Accounting Standards Board Statement No. 67, “Accounting for Costs and Initial
Rental Operations of Real Estate Projects,” to state that the guidance for (a)
incidental operations and (b) costs incurred to sell real estate projects does
not apply to real estate time-sharing transactions. The accounting for those
operations and costs is subject to the guidance in SOP 04-2. This statement is
effective for financial statements for fiscal years beginning after June 15,
2005. Management believes the adoption of this statement will have no impact on
the financial statements of the Company.
 
 22
 
 In
December 2004, the Financial Accounting Standards Board issued a revision to
Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based
Compensation” (hereinafter “SFAS No. 123”). This statement supercedes APB
Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related
implementation guidance. This statement establishes standards for the accounting
for transactions in which an entity exchanges its equity instruments for goods
or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity’s equity instruments or that may be settled by the issuance of
those equity instruments. This statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. This statement does not change the accounting guidance for share
based payment transactions with parties other than employees provided in SFAS
No. 123. The Company has determined that there was no impact to its financial
statements from the adoption of this statement.
 
 In
November 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 151, “Inventory Costs— an
amendment of ARB No. 43, Chapter 4.” This statement amends the
guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Paragraph 5 of ARB 43,
Chapter 4, previously stated that “. . . under some circumstances, items
such as idle facility expense, excessive spoilage, double freight, and
re-handling costs may be so abnormal as to require treatment as current period
charges. . . .” This statement requires that those items be recognized as
current-period charges regardless of whether they meet the criterion of “so
abnormal.” In addition, this statement requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. This statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005. Management does
not believe the adoption of this statement will have any immediate material
impact on the Company’s financial statements as the Company maintains no
inventory.
 
 In May
2003, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 150, “Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity” (“SFAS No. 150”). SFAS No. 150
establishes standards for classifying and measuring certain financial
instruments with characteristics of both liabilities and equity and requires
that those instruments be classified as liabilities in statements of financial
position. Previously, many of those instruments were classified as equity. SFAS
No. 150 is effective for financial instruments entered into or modified after
May 31, 2003 and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. The Company has determined that there was
no impact to its financial statements from the adoption of this
statement.
  23
  Fair
Value of Financial Instruments
 
 The
Company's financial instruments as defined by Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments," may
include cash, receivables, advances, accounts payable and accrued expenses. All
such instruments are accounted for on a historical cost basis, which, due to the
short maturity of these financial instruments, approximates fair value at
December 31, 2004.
 
 Going
Concern
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.
 
 From July
11, 2003 (inception) to December 31, 2004, the Company has incurred losses aggregating
$1,227,205 . At
December 31, 2004, the Company has limited cash resources, a working capital
deficiency, and an accumulated deficit. These factors, among others, raise
substantial doubt about the Company’s ability to continue as a going concern for
a reasonable period of time. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that may be necessary
should the Company be unable to continue as a going concern. The Company’s
continuation as a going concern is contingent upon its ability to obtain
additional financing, and to generate revenue and cash flow to meet its
obligations on a timely basis. The Company’s ability to meet its obligations as
they come due is primarily dependent upon securing additional
financing.
 
 For the
twelve-month period subsequent to December 31, 2004, the Company anticipates
that its minimum cash requirements to continue as a going concern will climb to
$145,000 per month. The anticipated source of these funds is a private placement
of its equity securities. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence. Management has
established plans to seek new capital from new equity securities issuances in
order to provide funds needed to increase liquidity, fund internal growth and
fully implement its business plan.
 
 Basic
and Diluted Net Loss Per Share
 
 Net loss
per share was computed by dividing the net loss by the weighted average number
of shares outstanding during the period. The weighted average number of shares
was calculated by taking the number of shares outstanding and weighting them by
the amount of time that they were outstanding. At December 31, 2004, basic and
diluted net loss per share are the same.
 
 Provision
for Taxes
 
 Income
taxes are provided based upon the liability method of accounting pursuant to
Statement of Financial Accounting Standards No. 109 “Accounting for Income
Taxes,” (hereinafter “SFAS 109”). Under this approach, deferred income taxes are
recorded to reflect the tax consequences in futures years of differences between
the tax basis of assets and liabilities and their financial reporting amounts at
each year-end. A valuation allowance is recorded against the deferred tax asset
if management does not believe the Company has met the “more likely than not”
standard imposed by SFAS No. 109 to allow recognition of such an
asset.
 
 24
 
 Reclassification
 
 Certain
amounts from prior periods have been reclassified to conform to the current
period presentation. These reclassifications have not resulted in any changes to
the Company’s accumulated deficit or net losses presented.
 
 Translation
of Financial Statements
 
 The U.S.
dollar is the functional currency of the Company. A Canadian bank account is
maintained and is translated using the exchange rate in effect at the balance
sheet date. Monetary assets and liabilities denominated in foreign currencies
are translated to United States dollars at the exchange rate in effect on the
balance sheet date. Non-monetary assets and liabilities are translated at their
historical rate. Revenues and expenses are translated at the average rates of
exchange prevailing during the year. Gains and losses on foreign currency
transactions are included in the consolidated statement of
operations.
 
 Comprehensive
Income (Loss)
 
 The
Company has adopted SFAS 130, “Reporting Comprehensive Income” (hereinafter
“SFAS No. 130”), which was issued in June 1997. SFAS No. 130 establishes rules
for the reporting and display of comprehensive income and its components, but
had no effect on the Company’s net income (loss) or total stockholders’ equity.
SFAS No. 130 requires unrealized gains and losses on the Company’s foreign
currency translation to be included in comprehensive income.
 
 Principles
of Consolidation
 
 The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, EPOD Corporation, a Bahamian corporation. All
significant transactions and balances among the companies included in the
consolidated financial statements have been eliminated.
 
 Stock
Options and Warrants
 
 The
Company’s accounting is in accordance with Financial Accounting Standards Board
No. 123 and ETIF 96-18A in recording warrants and stock options. The Company
uses fair value base method of accounting for employee stock options or similar
instruments. Under the fair value based method, compensation cost is measured at the grant
date based on the value of the award and is recognized over the service period,
which is usually the vesting period.
 
 **NOTE
3 - PROPERTY AND EQUIPMENT**
 
 Equipment
is stated at cost. Depreciation is provided using the straight-line method over
the estimated useful life of the asset. For purposes of computing depreciation,
the useful life of office equipment is deemed to be three years. The following
is a summary of equipment, and accumulated depreciation:
  25
   **December
      31,**
      **2004**
    
    **December
      31, 2003**Office
      Equipment
    
    $
    2,492
    
    $
    --Less
      accumulated depreciation
    
    
    (434
    )
    
    --Total
      Net Equipment
    
    $
    2,058
    
    $
    --
 
 Depreciation
expense for the year ended December 31, 2004 and for the period from July 11,
2003 (inception) to December 31, 2004 was $434. The Company evaluates the
recoverability of equipment when events and circumstances indicate that such
assets might be impaired. Maintenance and repairs are expensed as incurred.
Replacements and betterments are capitalized. The cost and related reserves of
assets sold or retired are removed from the accounts, and any resulting gain or
loss is reflected in results of operations.
 
 **NOTE
4 - COMMON STOCK TRANSACTIONS**
 
 The
Company is authorized to issue 75,000,000 shares of $0.0005 par value common
stock. Each share of stock is entitled to one vote at the annual shareholders’
meeting. On September 20, 2004, the Company completed a two-for-one stock split
of its common stock. Prior to the date of the stock split, 23,334,000 shares
were outstanding at a par value of $0.001. Subsequent to the stock split,
46,668,000 shares of common stock were outstanding. All references to common
stock shares in these financial statements and notes have been restated to
reflect this stock split.
 
 On
January 13, 2004, the Company issued 18,460,000 shares of common stock in
exchange for all the issued and outstanding common stock of Cyokonos
Corporation. Also, as part of this exchange transaction, the Company received
from an officer of the Company 3,950,000 shares of issued and outstanding common
stock. These shares were to be cancelled on April 7, 2004, however 1,1960,000
are still being held in a holding account as of the statement date. For the
purposes of the equity section of the financial statements these shares are
considered to be cancelled.
 
 During
the year ended December 31, 2004, an unaffiliated individual provided services
to the Company in exchange for 162,000 shares of the Company’s common stock. As
of December 31, 2004, 48,000 shares had not yet been administratively
issued.
 
 On July
1, 2004, the Company entered into 12-month contracting agreement with an
unaffiliated consultant. Under the terms of the agreement, the Company pays
monthly fees of $5,000 in cash with half in common stock of the Company for May
through July 2004. For the month of August 2004, the Company pays half the
monthly fees in cash and deferred half in the above valuation, at the
contractor’s election. $10,853 has been accrued for 18,630 shares of common
stock for the period of May through August. These shares are authorized and
considered issuable at December 31, 2004.
 
 In the
year ended December 31, 2004, the Company authorized a total of 180,630 shares
of common stock for $120,005 in services. Shares earned but not issued prior to
the stock split were considered to have participated in the stock
split.
 
 **NOTE
5 - COMMON STOCK OPTIONS**
 
 The
Company utilizes the Black-Scholes valuation model to calculate the fair value
of options issued for payment of services. The parameters used in such
valuations include a risk free rate of 4.0%, the assumption that no dividends
are paid, exercise periods of two to five years, and a volatility factor of
127%, in accordance with SFAS No. 123.
 
 26
 
 Director
Related Compensation
 
 On
January 21, 2004, the Company’s board of directors approved the granting to each
of the five directors a three-year option to purchase 100,000 shares of common
stock at an exercise price of $0.75 per share. The stock options vest quarterly
over the course of one year. The total fair value of the options issued to
directors, estimated on the grant date using the Black-Scholes Option Price
Calculation was $139,000, recorded for the twelve months ending December 31,
2004, of which $34,776 is an expense for the final quarter.
 
 Executive
Compensation
 
 On July
1, 2004, the Company’s board of directors granted to one of its officers the
option to purchase 1% of all issued and outstanding common stock as of July 31,
2004, July 31, 2005 and July 31, 2006. As of July 31, 2004, one percent (1%) of
the outstanding number of shares of common stock equaled 232,800 shares. The
exercise price at the date initial date was $0.75 per share and the stock
options vested immediately upon grant. The total fair value of the options
issued the Company’s officer, estimated on the grant date using the
Black-Scholes Option Price Calculation was $259,852, which is included in
expense for the twelve months ending December 31, 2004.
 
 Non-Executive
Compensation
 
 On
January 21, 2004 the Company’s board of directors approved the reservation of
200,000 shares of common stock for non-executive employee options at a set price
of $0.75 per share. The vesting and distribution of such options will be
determined by the board. No non-executive options were granted during the year
ended December 31, 2004.
 
 Consultant
Compensation
 
 On March
15, 2004, the Company entered into a two year contracting agreement with a law
corporation for business services and advice. For each year of the two year
contract, there is an option to purchase 100,000 shares of common stock at an
exercise price of $0.75 per share for the first year and the lowest price at
which the Company grants any options to any person from and after March15, 2005
for the second year. The stock options vest monthly over the course of each
year. The total fair value of the 100,000 options granted as of March 15th 2004
using the Black-Scholes option price calculation was $36,234, of which $30,195
has been recorded in the year ended December 31, 2004.
 
 On July
1, 2004, the Company granted to a consultant, for services provided, a two-year
option to purchase 150,000 shares of common stock at an exercise price of $0.75
per share. The stock options vest quarterly over the course of one year. The
total fair value of the options, estimated on the grant date using the
Black-Scholes Option Price Calculation was $137,000, of which $68,654 was
included in expense for the year ended December 31, 2004.
 
 Following
is a summary of the status of the options during the years ended December 31,
2004 and 2003:
 
 **Number
      of Shares**
    
    **Weighted
      Average Exercise Price**Outstanding
      at January 1, 2003
    
    
    --
    
    $
    --Granted
    
    
    --
    
    
    --Exercised
    
    
    --
    
    
    --Forfeited
    
    
    --
    
    
    --Outstanding
      at December 31, 2003
    
    
    --
    
    
    --Granted
    
    
    982,800
    
    
    0.75Exercised
    
    
    --
    
    
    --Forfeited
    
    
    --
    
    
    --Options
      outstanding at December 31, 2004
    
    
    982,800
    
    $
    0.75Options
      exercisable at December 31, 2004
    
    
    891,133
    
    $
    0.75Weighted
      average fair value of options granted in 2004
    
    
    
    
    $
    0.58
 
 27
 
 Summarized
information about stock options outstanding and exercisable at December 31, 2004
is as follows:
 
 **Outstanding
      Options****Exercise
      Price Range**
    
    
    **Number
      of Shares**
    
    
    **Weighted
      Average Remaining Life**
    
    
    **Weighted
      Average Exercise Price**$
      0.75
    
    
    982,800
    
    
    3.22
    
    $
    0.75
 
 **Exercisable
      Options****Exercise
      Price Range**
    
    **Number
      of Shares**
    
    **Weighted
      Average Remaining Life**
    
    **Weighted
      Average Exercise Price**$
      0.75
    
    
    891,133
    
    
    3.34
    
    $
    0.75
 
 The
Company does not currently have any equity compensation plans approved by
shareholders.
 
 **NOTE
6 - INCOME TAXES**
 
 At
December 31, 2004, the Company has federal net operating loss carry forwards of
approximately $1,039,000, which expire in the years 2019 through 2024. As
management of the Company cannot determine that it is more likely than not that
the Company will realize the benefit of the net deferred tax asset, a valuation
allowance equal to the net deferred tax asset has been recorded. The change in
the allowance account from December 31, 2003 and December 31, 2004 was $353,000,
which is principally due to the Company’s net operating loss carry forward.
 
 Approximately
$187,000 of the Company’s losses accumulated during its development stage may
not be available for U.S. income tax purposes, as these losses originated
outside of the U.S.
 
 **NOTE
7 - RELATED PARTY TRANSACTIONS**
 
 From
January 13, 2004 to December 31, 2004, the Company received advances from
shareholders totaling $459,054. These advances are unsecured, non-interest
bearing and have no stated maturity.
 
 In 2003,
the Company entered into a promissory note and loan agreement with a shareholder
for $95,000. This note is unsecured, non-interest bearing and has no stated
maturity. As of December 31, 2004, the entire balance of principal was still
outstanding.
 
 On July
1, 2004, the Company entered into an agreement with a related entity,
Roseborough Holdings, Inc. for management services. Under the terms of this
annual agreement, the Company is charged $120,000 CDN ($99,696 U.S.D.) per
annum. Approximately $49,800 (USD) has been accrued under this agreement as of
December 31, 2004.
 
 On
December 3, 2004 the Company entered into an agreement with Parmount Holdings,
Ltd, a related entity. Under the terms of the agreement, a deposit in the amount
of $95,000 CDN ($78,964 U.S.D.) was paid on a property currently under
construction. The purchase price, as per the purchase contract, is $292,820 CDN
excluding GST , with
occupancy scheduled for May 2005.
 
 **NOTE
8 - COMMITMENTS AND CONTINGENCIES**
 
 On March
15, 2004, the Company entered into a two-year contracting agreement with a law
corporation for business services and advice. Under the terms of the agreement,
the Company pays an annual fee of $75,000 CDN, due in monthly installments of
$6,250. In the event the Company exceeds the yearly maximum of 412.5 hours, the
Company will pay an additional hourly fee of $180 CDN per hour.
 
 28
 
 On July
1, 2004, the Company entered into twelve-month consulting agreement whereby the
Company pays monthly fees of $5,000 CDN. At the consultant’s election, a portion
of the fees may be paid in common stock.
 
 On
December 3, 2004, the Company entered into an agreement with Parmount Holdings,
Ltd. See Note 7.
 
 **NOTE
9 - SUBSEQUENT EVENTS**
 
 On
February 12, 2005, the Company entered into an agreement with Simmax Energy
(CA), LLC, to install EPOD's electric power storage system, the EPOD EMT. The
EMT is the Company's core product offering, which is an energy storage and
peak-shaving system that allows commercial and industrial power users to
dramatically reduce their electric power expenses. Simmax Energy is a
distributed power generation vendor providing onsite electric power and heating
to industrial and commercial customers. This is the first installation of the
EPOD EMT by the Company. The transaction is awaiting approval from the Simmax
Board of Directors.
 
 
 29
  **ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE**
 
 None.
 
 **ITEM
8A.  CONTROLS AND PROCEDURES**
 
 **(a)
Evaluation of Disclosure Controls and Procedures**
 
 The
Company, under the supervision and with the participation of its management,
including the Chief Executive Officer, who is also the Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Company’s
“disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934 (the Exchange Act) as of the end of
the period covered by this report.  Based on that evaluation, the Chief
Executive Officer, who is also the Chief Financial Officer, concluded that the
Company’s disclosure controls and procedures, as of the end of such period, are
effective in timely making known to them information relating to the Company and
the Company’s consolidated subsidiaries required to be disclosed in the
Company’s reports filed or submitted under the Exchange Act.
 
 Since we
are not an accelerated filer, we are not currently required to comply with
Section 404 ( *Management
Assessment of Internal Controls* ) of the
Sarbanes-Oxley Act of 2002. We are in the process of implementing what we
believe will be sufficient internal control structures and procedures for our
financial reporting such that our management can provide the required
certifications as to these structures and procedures in our Annual Report on
Form 10-KSB for our fiscal year ending December 31, 2006.
 
 **(b)
Changes in Internal Controls**
 
 There has
been no change in the Company’s internal control over financial reporting or in
other factors during the year or quarter ended December 31, 2004 that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting subsequent to the date of the
evaluation referred to above.
 
 **PART
III**
 
 **ITEM
9. DIRECTORS AND EXECUTIVE OFFICERS**
 
 The
following are the directors and executive officers of the Company:
 
 **Michael
Matvieshen** , 43,
Chairman of the Board. Mr. Matvieshen became a director of the Company on
January 13, 2004 upon the Company’s acquisition of EPOD International Inc. and
then Chairman of the Board on January 21, 2004. Mr. Matvieshen is the founder of
EPOD and was its President since inception. Prior to founding EPOD, he was
President of Wolverine Resources Inc., a large oil upgrading refinery owned by a
large venture capital firm. Mr. Matvieshen has also served as Vice President of
Gen5 Tech Corporation, which managed the construction, capital budgeting and
startup of an oil upgrading plant in Alberta. Mr. Matvieshen has extensive
experience in the industrial wastewater and industrial waste-oil treatment
industries and has been in the technology business for the past fifteen years
primarily as an entrepreneur and inventor.
 
 **L.
Mark Roseborough,** 52,
Director. Mr. Roseborough became a Director of the Company on January 21, 2004
and also serves in the capacity of President. From 1992 to 2003, Mr. Roseborough
worked at Belkorp Industries Inc. where he was most recently Vice President of
Manufacturing having direct responsibility for the operations of three pulp and
paper mills and one small oil refinery. These operations had approximately 350
employees and $300 million in revenues. From November 1999 to 2003, he also held
the position as President and Chief Executive Officer of Bluewater Fiber in Port
Huron, Michigan (on behalf of owner Merrill Lynch) which was a large recycle
pulp mill with revenues at full production of $35 million. In 1997, Mr.
Roseborough also started, and co-owned, Belkin Paper Stock, a successful paper
trading business. Prior to his work at Belkorp, he served from 1989-1992 as
General Manager of Slave Lake Pulp overseeing the design, construction, hiring
and training of employees for a $175 million state-of-the-art mechanical pulp
mill owned by Alberta Energy Company. Mr. Roseborough is also a commercial pilot
with a multiengine instrument rating.
 
 30
 ****
 **Peter
Lacey** , 47,
Director. Mr. Lacey became a Director of the Company on January 21, 2004. He is
currently President and Chief Executive Officer of Cervus Corporation, a
publicly traded company on the TSX Venture Exchange. Cervus Corp. consists of
nine John Deere agricultural dealerships across Western Canada with annual sales
in excess of $100 million. Mr. Lacey also serves as Board Chair of Red Deer
College, served on the College’s Foundation Board for three years prior to his
Board of Governors appointment, and also served on the recent capital campaign
committee, which raised $7.2 million for the RDC Library Information Common. Mr.
Lacey also serves as a director of three other publicly traded companies, VHQ
Entertainment (TSX), River Valley Energy Services (TSX Venture), and Longbow
Energy Corporation (TSX Venture).
 
 **Peter
Hipp,** 68,
Director. Mr. Hipp became a Director of the Company on January 21, 2004. He is
currently President of Hipp Engineering Ltd., which is a multi-discipline
engineering company started in 1973. Since then it has carried out the
engineering services for projects in which the aggregate, original capital value
exceeds $2.0 billion (cdn). Hipp Engineering maintains a constant staff of key
process and technical engineering resources in all major disciplines that are
experienced in a wide range of industries. Hipp Engineering provides such
services as rationalization, feasibility and development strategy studies,
conceptual design, project definition, detailed engineering, project and
construction management and plant startup. ****
 
 **Hans
Schroth,** 46,
Director. Mr. Schroth became a Director of the Company on January 21, 2004. Mr.
Schroth comes to Cyokonos with an extensive business and management background
in the food/beverage and franchise industry. Mr. Schroth has worked for start up
organizations in the farming and import and export business. He currently serves
on the Board of Directors of Globus Corporation and part owner of Celltech
Labs.
 
 **SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**
 
 Section 16(a)
of the Securities Exchange Act of 1934 requires the Company’s directors,
executive officers and persons who own beneficially more than 10% of the
Company’s common stock to file with the Securities and Exchange Commission
(“SEC”) initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. Officers, directors and
greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file. To the
Company’s knowledge, based solely on review of the copies of such reports
furnished to the Company or advice that no filings were required, during fiscal
year 2004 all officers, directors and greater than 10% beneficial owners
complied with the Section 16(a) filing requirements.
 
 **Audit
Committee**
 
 The
Company’s Board of Directors has established a separately designated, standing
Audit Committee (as defined in and established in accordance with Section
3(a)(58)(A) of the Exchange Act) to oversee the accounting and financial
reporting processes of the Company and the audits of our financial
statements.  The members of the Audit Committee are Peter Lacey (Chair),
Peter Hipp and Hans Schroth.
 
 Under the
new rules of the SEC brought about by the Sarbanes-Oxley Act, companies are
required to disclose whether their Audit Committees have an "audit committee
financial expert" as defined in Item 401(h) of Regulation S-B under the Exchange
Act and whether that expert is "independent" as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act. The Board of Directors has
determined that although the three members of the current audit committee are
"independent" and have ability to understand financial reporting, they do not
fully meet the description of "financial experts" as defined in the Regulation.
The Board of Directors is evaluating qualified candidates to expand the Board at
this time.
 
 The
Company’s Board of Directors has not yet adopted a Code of Ethics, but
anticipates having one adopted this fiscal year.
  31
   **ITEM
10.  EXECUTIVE COMPENSATION**
 
 **COMPENSATION
OF EXECUTIVE OFFICERS**
 
 The
following table sets forth certain information regarding compensation paid
during each of the Company’s last three fiscal years to its chief executive
officer and other executive officers whose total annual salary and bonuses
exceeded $100,000 (the “named executive officers”).
 
 **SUMMARY
COMPENSATION TABLE**
 
 **Long
      Term**
      **Compensation**
      **Awards****Name
      and Principal Position**
    
    **Fiscal
      Year**
    ****
    **Annual**
      **Compensation**
    ****
    **Securities**
      **Underlying**
      **Options**
      **(in
      shares,**
      **cumulative)**
    ****
    **Bonus
      ($****)**
    ****
    **All
      Other**
      **Compensation******
    ******Salary
      ($)******
    
    ****
    
    ****
    
    ****L.
      Mark Roseborough(1)
    
    2004
    
    $
    49,848(2)
    
    332,800(3)
    
    
    0
    
    
    0Ronald
      McIntire(4)
    
    2004
    
    $
    0
    
    0
    
    $
    0
    
    $
    -0-President
      and CEO
    
    2003
    
    $
    0
    
    0
    
    $
    0
    
    $
    -0-2002
    
    $
    0
    
    0
    
    $
    0
    
    $
    -0-
 
 
 (1)
    Mr.
      L. Mark Roseborough became President on January 15, 2004, and entered into
      a contractual relationship for such position on July 1, 2004.
 (2)
    Mr.
      Roseborough has not yet been paid this amount, as it is being set up as a
      Company accrual until sufficient funds can be
obtained.
 (3)
    On
      July 31, 2004, as part of his compensation package, Mr. Roseborough
      received 232,800 options to purchase restricted shares of common stock,
      which represented one (1%) of the outstanding common shares of the Company
      on that date, and 100,000 options to purchase restricted shares as
      compensation for being a Director
 (4)
    Mr. McIntire
      became the President and Chief Executive Officer of the Company in
      November 1999 and resigned on January 21, 2004.
 
 
 **COMPENSATION
OF DIRECTORS FOR FISCAL 2004**
 
 None of
the five directors receives any cash compensation.
 
 **DIRECTOR
AND EXECUTIVE OPTIONS GRANTED IN FISCAL 2004**
 
 On
January 21, 2004 the Board of Directors approved the granting to each director
(Michael Matvieshen, L. Mark Roseborough, Peter Hipp, Hans Schroth and Peter
Lacey) **** 100,000
three-year options to purchase restricted shares of common stock at an exercise
price of $0.75 per share. The stock options vest at 25,000 shares at the end of
each quarter.
 
 On July
31, 2004, the Company
granted 232,800 options to purchase shares of restricted common stock to
President L. Mark Roseborough pursuant to an option agreement that is part of
his compensation agreement .
 
 **ITEM
11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**
 
 The
following table sets forth information with respect to beneficial ownership of
our outstanding stock as of December 31, 2004 by (i) each person known to
the Company to be the beneficial owner of more than 5% of the Company’s common
stock; (ii) each of the Company’s directors; (iii) each executive
officer named in the Summary Compensation Table; and (iv) all of the
Company’s executive officers and directors as a group.
 
 32
 **Shares
      Beneficially**
      **Owned****Name
      of Beneficial Owner**
    
    **Number**
    
    **Percent
      ***Michael
      Matvieshen, Chairman
    
    
    13,256,826(1
    )
    
    28
    %L.
      Mark Roseborough, President
    
    
    333,800(2
    )
    
    **
    %Peter
      Hipp
    
    
    180,000(3
    )
    
    **
    %Hans
      Schroth
    
    
    376,500(4
    )
    
    **
    %Peter
      Lacey
    
    
    18,264,000(5
    )
    
    38
    %All
      executive officers and directors as a group (5 persons)
    
    
    32,664,666
    
    
    68
    %
 
 
 * Based
on 48,691,000 shares outstanding as of March 28, 2005
 ** Less
than one percent
 
 (1)
    Includes
      13,006,001 shares of common stock owned directly, 150,825 shares of common
      stock owned indirectly through a family trust and 100,000 options subject
      to exercise within the next 60 days.
 (2)
    Includes
      1,000 shares of common stock owned directly and 332,800 options subject to
      exercise within the next 60 days..
 (3)
    Includes
      80,000 shares of common stock owned directly and 100,000 options subject
      to exercise within the next 60 days.
 (4)
    Includes
      276,500 shares of common stock owned directly and 100,000 options subject
      to exercise within the next 60 days.
 (5)
    Includes
      18,164,000 shares of common stock owned directly and 100,000 options
      subject to exercise within the next 60
days.
 
 **ITEM
12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 As
permitted by Nevada law, the Company's Articles of Incorporation provide that
the Company will indemnify its directors and officers against expenses and
liabilities they incur to defend, settle, or satisfy any civil or criminal
action brought against them on account of their being or having been Company
directors or officers unless, in any such action, they are adjudged to have
acted with gross negligence or willful misconduct. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
 
 From
January 13, 2004 to December 31, 2004, the Company received advances from
shareholders totaling $459,054. These advances are unsecured, non-interest
bearing and have no stated maturity.
 
 In 2003,
the Company entered into a promissory note and loan agreement with a shareholder
for $95,000. This note is unsecured, non-interest bearing and has no stated
maturity. As of December 31, 2004, the entire balance of principal still
outstanding.
 
 On July
1, 2004, the Company entered into an agreement with Roseborough Holdings, Inc.
Under the terms of the agreement, the Company pays a monthly amount, which is
fixed from time to time by the board of directors, of $120,000 (Cdn.) per annum.
Approximately $49,800 (USD) has been accrued under this agreement as of December
31, 2004.
 
 On
December 3, 2004, the Company entered into an agreement with Parmount Holdings,
Ltd for the purchase and construction of its corporate headquarters. Under the
terms of the agreement, a deposit in the amount of $95,000 (Cdn.) was paid on
the property. The purchase price, as per the purchase contract, is $292,820
excluding GST, Paramount Holdings is an entity partially owned by one of the
directors.
 
 33
 ****
 **ITEM
13.  EXHIBITS**
 
 Exhibits
 
 Exhibit
31 - Certification by CEO pursuant to Section 302 of the Sarbanes Oxley Act
of 2002, filed herewith.
 
 Exhibit
32 - Certification pursuant to Section 906 of the Sarbanes Oxley Act of
2002, filed herewith.
 
 **ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 Williams
& Webster P.S.has served as the Company’s Principal Accountant since July
13, 2004. Their fees billed to the Company for the past two fiscal year are set
forth below:
 
 **Fiscal
      year ending**
      **December 31,
      2004**
    
    **Fiscal
      year ending**
      **December
      31, 2003**Audit
      Fees
    
    $
    9,000
    +
    $
    0Audit
      Related Fees (Review)
    
    $
    8,915
    
    $
    0Tax
      Fees
    
    $
    0
    
    $
    0All
      Other Fees
    
    $
    0
    
    $
    0
 
 Stark
Winter Schenkein, LLP served as the Company’s Principal Accountant from April 4,
2003 until July 12, 2004. Their fees billed to the Company for the past two
fiscal years are set forth below:
 
 **Fiscal
      year ending**
      **December 31,
      2003**
    
    **Fiscal
      year ending**
      **December
      31, 2002**Audit
      Fees
    
    $
    4,000
    
    $
    2,500Audit
      Related Fees (Review)
    
    $
    8,800
    
    $
    1,500Tax
      Fees
    
    $
    0
    
    $
    0All
      Other Fees
    
    $
    0
    
    $
    0
 
 As of
December 31, 2004, the Company’s Board of Directors did not have a pre-approval
policy for the fees of the principal accountant.  It is in the process of
adopting such a policy.
 
  34
  **SIGNATURES**
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
 
 EPOD
      INTERNATIONAL INC.By:
    
    /s/  L.
      Mark Roseborough
      L.
      Mark Roseborough
      *Chief
      Financial Officer*
      March
      31, 2005
 
 Pursuant
to the requirement of the Securities Exchange Act of 1934, 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/  L.
      MARK ROSEBOROUGH
    
    Principal
      Executive Officer and Director
    
    March
      31, 2005L.
      Mark Roseborough/s/  MICHAEL
      MATVIESEN
    
    Director
    
    March
      31, 2005Michael
      Matviesen/s/  PETER
      HIPP
    
    Director
    
    March
      31, 2005Peter
      Hipp/s/
      PETER LACEY
    
    Director
    
    March
      31, 2005Peter
      Lacey/s/
      HANS SCHROTH
    
    Director
    
    March
      31, 2005Hans
      Schroth




35