UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-KSB**


(Mark
      One)





R Annual
      Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of
      1934





For the fiscal year ended **December
              31, 2006**


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


For
                  the transition period from ________ to ________
                
                COMMISSION
                  FILE NUMBER000-29803


**EYI
      INDUSTRIES, INC.**


(Name
      of
      small business issuer in its charter)





**NEVADA**
            
            **88-0407078**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)**7865
                Edmonds Street****Burnaby,
                B.C. CANADA**
            
            **V3N
                1B9**(Address
                of principal executive offices)
            
            (Zip
                Code)**(604)
                759-5031**Issuer's
                telephone number





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





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





**COMMON
      STOCK, $0.001 PAR VALUE PER SHARE.**




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. □





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**  R  No □





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





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes □   **No**  R





Revenues
      for the fiscal year ended December 31, 2006 were : **$4,131,437.**





The
      aggregate value of the voting stock held by non-affiliates of the registrant
      computed on the basis of the average of the bid and ask price of the
      registrant’s common stock on **December
      31, 2006** was **$2,924,197**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. **As
      March 30, 2007, the Issuer had 379,490,852 Shares of Common Stock
      outstanding.**





Documents
      incorporated by reference:  **NONE**





Transitional
      Small Business Disclosure Format (Check one): Yes □ ****  **No**  R









**TABLE
      OF CONTENTS**


PAGE**PART
                  I**Item
                  1.
              Description
                  of Business.
              3Item
                  2.
              Description
                  of Property.
              19Item
                  3.
              Legal
                  Proceedings.
              20Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders.
              21**PART
                  II**Item
                  5.
              Market
                  for Common Equity and Related Stockholder Matters.
              21Item
                  6.
              Management’s
                  Discussion and Analysis Or Plan of Operation.
              22Item
                  7.
              Financial
                  Statements.
              39Item
                  8..
              Changes
                  in and Disagreements with Accountants On Accounting and Financial
                  Disclosure.
              59Item
                  8A.
              Controls
                  and Procedures.
              59Item
                  8B.
              Other
                  Information.
              59**PART
                  III**Item
                  9.
              Directors,
                  Executive Officers, Promoters, Control Persons and Corporate Governance;
                  Compliance with Section 16(a) of the Exchange Act.
              59Item
                  10.
              Executive
                  Compensation.
              61Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters.
              64Item
                  12.
              Certain
                  Relationships and Related Transactions, and Director
                  Independence.
              66Item
                  13.
              Exhibits.
              67Item
                  14.
              Principal
                  Accountant Fees and Services.
              70**SIGNATURES**
              
              71
 
 2




**PART
      I**





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





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





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS.**





**OVERVIEW**




We
      are in
      the business of selling, marketing, and distributing a product line consisting
      of approximately 26 products in four categories: dietary supplements, personal
      care products, water filtration systems and a fuel additive product. Our most
      successful product is Calorad, a liquid collagen-based dietary supplement
      presently available in the market. Our products are marketed through a network
      marketing program in which independent business associates ("IBAs") purchase
      products for resale to retail customers, as well as for their own personal
      use.
      We have a list of over 385,000 IBAs, of which approximately 8,000 we consider
      "active". An "active" IBA is one who has purchased our products within the
      preceding 12 months. Approximately 1,750 of these IBAs are considered "very
      active". A "very active" IBA is one who is on our Convenience Program and is
      current with their annual administration fee. Our Convenience Program allows
      our
      IBAs to set up a reoccurring order that is automatically shipped to them each
      month.






The
      IBAs
      in our network are encouraged to recruit interested people to become new
      distributors of our products. New IBAs are placed beneath the recruiting IBA
      in
      the “network” and are referred to as being in that IBA’s “down-line”
organization. Our marketing plan is designed to provide incentives for IBAs
      to
      build, maintain and motivate an organization of recruited distributors in their
      down-line organization to maximize their earning potential. IBAs generate income
      by purchasing our products at wholesale prices and reselling them at retail
      prices. IBAs also earn commissions on product purchases generated by their
      down-line organization. Qualified IBAs may also earn additional commissions
      under the Management Matching Bonus (“MMB”) program.




On
      an
      ongoing basis, we review our product line for duplication and sales trends
      and
      make adjustments accordingly. As of December 31, 2006, our product line
      consisted of: (i) 18 dietary supplement products; (ii) 5 personal care products,
      consisting primarily of cosmetic and skin care products; (iii) 2 water
      filtration system products; (iv) 1 fuel additive product. Our products are
      primarily manufactured by Nutri-Diem, Inc., ("NDI") a related party, and sold
      by
      us under a license and distribution agreement with NDI. Certain of our own
      products are manufactured for us by third party manufacturers pursuant to
      formulations developed for us. Our products are sold to our IBAs located in
      the
      United States, Canada, the Philippines and Hong Kong.




We
      believe that our network marketing system is suited to marketing dietary
      supplements, personal care products, water filtration systems and fuel additive
      products because sales of such products are strengthened by ongoing personal
      contact between IBAs and their customers. We also believe that our network
      marketing system appeals to a broad cross-section of people, particularly those
      looking to supplement family income or who are seeking part-time work. IBAs
      are
      given the opportunity, through our sponsored events and training sessions,
      to
      network with other distributors, develop selling skills and establish personal
      goals.




3




**Recent
      Corporate Developments**




We
      experienced the following significant developments through the date of this
      filing and during fiscal 2006:




·
            On
                February 1, 2007, the Board of the Directors of the Company approved
                a
                Stock Incentive Plan for its employees, directors and consultants.
                The
                plan is for a total of 250,000,000 restricted shares of common stock
                and
                expires February 11, 2017. On February 1, 2007 the Board of Directors
                also
                approved the grants of 235,000,000 stock options to our officers,
                employees and consultants.




·
            On
                January 23, 2007, EYI entered into a web site design and development
                agreement with Colossal Head Communications ("Colossal"). Compensation
                for
                Colossal will be paid after completion of stages in the project,
                which is
                expected to be completed in sixteen weeks once work commences. The
                estimated cost is $40,000. Scheduling of phase two of this project
                is in
                progress.




·
            On
                January 5, 2007, the Company completed a share exchange with certain
                shareholders of EYI. Shareholders received 1,999,323 restricted shares
                of
                the Company in exchange for shares owned by individuals in our subsidiary,
                Essentially Yours Industries, Inc.




·
            On
                January 1, 2007, EYI entered into a Consulting Agreement with New
                U, Inc.
                ("New U") for a six month term. New U will receive $2,000 per month
                compensation for providing consulting services.





·
            On
                October 27, 2006, EYI entered into a consulting agreement with Global
                Trends, Inc. ("Global Trends") on a month to month basis. Global
                Trends
                received 317,254 shares of restricted common stock as compensation
                for
                their services.




·
            On
                October 20, 2006, EYI entered into a non-binding letter of intent
                with
                Mach 3 Technologies, LLC (“Mach 3”) for the exclusive distribution rights
                for the fuel enhancement product Ultimate ME2in
                the Philippines. On November 28, 2006, EYI entered into a definitive
                agreement with Mach 3 for the exclusive distribution rights for the
                fuel
                enhancement product Ultimate ME2in
                the Philippines for a period of three
                years.




·
            On
                October 19, 2006, EYI entered into a consulting agreement with Creative
                Life Enterprises, Inc. (“Creative Life”) on a month to month basis.
                Creative Life received 500,000 shares of restricted common stock
                as
                compensation for their services.




·
            On
                October 1, 2006, EYI entered into an agreement with Agoracom Investor
                Relations Corp. (“Agoracom”) to provide investor relations services.
                Agoracom is to receive $2,500 per month compensation along with a
                warrant
                for the purchase of up to 500,000 shares of common stock at $0.06
                for a
                period of two years. The agreement expires on October 1, 2007.




·
            On
                August 12, 2006, EYI entered into a joint venture agreement with
                Internet
                Marketing Consortium ("IMC") to provide multi media strategies,
                promotional, direct and targeted marketing services for an undetermined
                period of time. In consideration for the services provided by IMC,
                we paid
                a fee of $25,000.





·
            On
                July 27, 2006, EYI entered into an addendum (the "Addendum") to the
                China
                Agency Agreement dated September 15, 2005 between Essentially Yours
                Industries (Hong Kong) Limited ("EYI HK"), Guangzhou Zhongdian Enterprises
                (Group) Co. Ltd., China Electronics Import and Export South China
                Corporation. Pursuant to the Addendum, we agreed to extend the purchasing
                and exclusivity terms of the China Agency Agreement for an additional
                one
                year period.





·
            On
                July 19, 2006, EYI signed a letter of intent with Mach 3. Subject
                to the
                receipt of sufficient efficiency testing and Environmental Protection
                Agency ("EPA") registration, EYI may acquire the exclusive individual
                residential consumer rights for the USA, Canada and Mexico for the
                Ultimate ME2product. The Ultimate ME2 product is designed to reduce emissions
                and save
                fuel. On August 2, 2006 confirmation of EPA registration was received
                by
                Mach 3. On October 12, 2006, EYI entered into a definitive agreement
                with
                Mach 3 for the exclusive residential rights for the fuel enhancement
                product ME2 in the US, Canada and Mexico for a period of three years.
                Pursuant to the agreement, Mach 3 received 967,680 warrants at $0.06
                per
                share expiring October 12, 2008.




4




·
            On
                July 12, 2006 and July 14, 2006, EYI received letters from Metals
&
                Arsenic Removal Technology, Inc. ("MARTI") advising that the worldwide
                license for the ARTI-64 technology used for the production of the
                Code
                BlueTM product had been transferred from Hydroflo, Inc. to MARTI. MARTI
                has
                also transferred some of its inventory to Markus Group Ltd. ("Markus
                Group") and in the event MARTI is unable to meet production requirements,
                they have granted the rights to produce Code BlueTM to Markus Group. On
                July 20, 2006 Markus Group provided EYI with an Indemnity in connection
                with the letters provided by MARTI. We believe that this transfer
                will not
                interfere with the terms of our agreement with MARTI.





·
            On
                July 1, 2006, EYI entered into a consulting agreement with James
                Toll. Mr.
                Toll provided training and marketing services for a period of three
                (3)
                months. Mr. Toll received $3,750 per month as compensation for his
                services.





·
            On
                May 17, 2006, our wholly owned subsidiary EYI HK entered into a
                distribution agreement (the "Distribution Agreement") with Nozin,
                LLC. The
                Distribution Agreement is for a term of five years for the distribution
                of
                the nozin nasal sanitizer product in Hong Kong, Philippines and China.
                At
                present, the Company has not placed any purchase orders with Nozin,
                LLC.





·
            On
                May 1, 2006, we entered into a settlement agreement with Thomas K.
                Viccars, SAV Management Co. Ltd. and VFT Management Co. Ltd.
                (collectively, "Viccars group") in the amount of $60,000 pursuant
                to which
                we entered into a full and final settlement of all claims by Viccars
                Group
                against our company and subsidiaries whereby Mr. Viccars claimed
                that he
                was entitled to certain unpaid compensation and benefits from our
                company
                and subsidiaries.





·
            On
                May 1, 2006, EYI HK amended the Logistics Management Agreement originally
                dated September 1, 2005 with All In One Global Logistics Ltd. which
                provides international freight, warehousing and distribution services
                in
                Hong Kong.





·
            On
                April 24, 2006 we entered into a Securities Purchase Agreement with
                Cornell Capital Partners, LP ("Cornell") pursuant to which we entered
                into
                the following agreements: an Investor Registration Rights Agreement,
                Irrevocable Transfer Agent Instructions and a Security Agreement.
                Pursuant
                to the terms of the Securities Purchase Agreement, we may sell convertible
                debentures to Cornell in the amount of $4,500,000 plus accrued interest
                which are convertible into shares of our common stock. The convertible
                debentures accrue interest at 10% per annum, convertible at $0.06
                or 80%
                of the lowest volume weighted average price of EYI's common stock
                during
                five (5) trading days immediately preceding the date of conversion
                as
                quoted by Bloomberg. Of this amount $1,500,000 must be paid five
                days
                after April 24, 2006, $1,500,000 must be paid two (2) business days
                prior
                to the date a registration statement is filed with the SEC and $1,500,000
                shall be paid two (2) business days prior to the date that such
                registration statement is declared effective by the SEC. We received
                proceeds of $1,305,000 (net of fees associated with the issuance
                of the
                convertible debentures) on April 27, 2006 in connection with the
                issuance
                of $1,500,000 of convertible debentures in the following amounts:
                $750,000
                to Cornell, $416,667 to TAIB Bank, B.S.C., and $333,333 to Certain
                Wealth,
                Ltd. pursuant to the terms of the Securities Purchase Agreement.





·
            Pursuant
                to the terms of the Securities Purchase Agreement and the issuance
                of our
                convertible debentures, on April 24, 2006 we issued to Cornell seventeen
                warrants to purchase up to an aggregate 124,062,678 shares of our
                common
                stock at the discretion of Cornell (collectively, the “Warrants”). Cornell
                is entitled to purchase from us: (1) 10,416,650 shares of our common
                stock
                at $0.02 per share, (2) 13,888,866 shares of our common stock at
                $0.03 per
                share, (3) 10,416,650 shares of our common stock at $0.04 per share,
                (4)
                8,333,320 shares of our common stock at $0.05 per share, (5) 6,944,433
                shares of our common stock at $0.06 per share, (6) 5,952,371 shares
                of our
                common stock at $0.07 per share, (7) 11,250,000 shares of our common
                stock
                at $0.08 per share, (8) 10,000,000 shares of our common stock at
                $0.09 per
                share, (9) 19,000,000 shares of our common stock at $0.10 per share,
                (10)
                8,181,818 shares of our common stock at $0.11 per share, (11) 7,500,000
                shares of our common stock at $0.12 per share, (12) 3,333,333 shares
                of
                our common stock at $0.15 per share, (13) 2,500,000 shares of our
                common
                stock at $0.20 per share, (14) 2,000,000 shares of our common stock
                at
                $0.25 per share, (15) 1,666,666 shares of our common stock at $0.30
                per
                share, (16) 1,428,571 shares of our common stock at $0.35 per share
                and
                (17) 1,250,000 shares of our common stock at $0.40 per share upon
                surrender of the Warrants (or as subsequently adjusted pursuant to
                the
                terms of each Warrant) . Each Warrant has “piggy back” registration rights
                and expires five (5) years from the date of
                issuance.




5




·
            On
                April 6, 2006, Essentially Yours Industries (International) Limited
                ("EYIINT") signed a Letter of Intent and Good Faith Commitment with
                Raul
                Bautista and Rommel Panganiban to act as managing partners and
                distributors for the Philippines. On September 20, 2006, EYIINT entered
                into a consignment and distribution licensing agreement with Orientrends,
                Inc. The agreement is for a period of five years for the sale a portion
                of
                our products in the Philippines





·
            On
                April 3, 2006, we signed a termination agreement with Cornell terminating
                our Standby Equity Distribution Agreement, Registration Rights Agreement
                and Escrow Agreement previously entered into with Cornell on May
                13,
                2005.





·
            On
                March 14, 2006, we entered into an agreement with Porter Public Relations,
                Inc. (“Porter”) pursuant to which Porter provided us with certain public
                relations services to promote the launch of the Code Blue water filtration
                system and the Longevity Series consisting of Calorad®, Prosoteine® and
                Calorad® Cream. Pursuant to the terms of this agreement, we agreed to pay
                Porter a fee of $5,000 per month for up to 40 hours of services per
                month.
                The agreement was terminated on August 29, 2006.





·
            On
                January 27, 2006, we entered into a Consulting Agreement with Mr.
                Lou
                Prescott, for a period of six (6) months and $5,000USD per month
                to
                provide EYI with assistance in developing Mr. Prescott's business
                to
                business marketing model for EYI. Pursuant to the terms of the agreement
                we also agreed to purchase Mr. Prescott’s gold lead system, and during the
                term of the agreement, provided Mr. Prescott with 100% of the leads
                generated by the system.





·
            On
                January 19, 2006, we entered into an agreement with Global Consulting
                Group Inc. ("Global") on a month to month basis. Global provided
                investor
                relations services and created investor awareness for a fee of $15,000.00
                USD per month. This agreement was terminated on April 17,
                2006.





**CORPORATE
      ORGANIZATION**





We
      were
      incorporated under the laws of the State of Nevada on June 27, 1996, under
      the
      name of "Inter N. Corporation". From 1999 to 2002, the Company's business plan
      was to create a product line of miniaturized microchip technology for insertion
      into inanimate objects or injection under the skin of animals. The Company
      again
      changed the focus of its business to oil and gas opportunities in 2002. From
      1999 to 2003, the Company was a non-operating company with limited assets and
      was not able to raise sufficient funds to fund its business operations. On
      December 31, 2003, the Company completed a share exchange (the "Exchange")
      with
      certain of the shareholders (the "EYI Shareholders") of Essentially Yours
      Industries, Inc. a Nevada Corporation ("EYI"), under a Share Exchange Agreement,
      dated November 4, 2003, (the "Exchange Agreement").





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





**Subsidiaries
      and Affiliates**





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





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




6




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





·
            ***Essentially
                Yours Industries (International) Limited,***located
                in Hong Kong, (Wholly Owned), is a subsidiary of EYI Industries Inc.,
                incorporated on December 6, 2005 to facilitate our expansion throughout
                Southeast Asian countries.





·
            ***Essentially
                Yours Industries (Hong Kong) Limited,***located
                in Hong Kong, (Wholly Owned), is a subsidiary of EYI Industries Inc,.
                incorporated on August, 22, 2005 and markets health and wellness
                products
                as well as water filtration products for use in Hong Kong and
                China.





·
            ***Essentially
                Yours Industries (Canada), Inc***.
                (Wholly Owned*),*a
                Canadian Federally incorporated Corporation, was incorporated on
                September
                13, 2002 and is located in Burnaby, British Columbia, and assists
                us with
                Canadian sales, sales taxes and
                reporting.





·
            ***RGM
                International, Inc*****.,**a
                Nevada Corporation (Wholly Owned), RGM was incorporated on July 3,
                1997 in
                Nevada. RGM is a dormant investment company which holds 1% of
                Halo.





·
            ***Halo
                Distribution LLC***,
                a
                Kentucky Corporation, was organized on January 15, 1999. Halo was
                the
                distribution center for the Company's product, in addition to other
                products, until April 30, 2005, at which time the Company made the
                decision to discontinue its’ operations. Halo was dissolved on November 1,
                2005.





·
            ***World
                Wide Buyers Club,***a
                (51% owned) dormant Nevada Corporation was organized on May 6, 2004
                pursuant to a joint venture agreement. Management and the Board of
                Directors of the Company determined not to proceed with the joint
                venture.





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





·
            ***Nutri-Diem,
                Inc*****.
                ("NDI"),**Quebec, Canada. NDI is the manufacturing facility in Quebec that
                supplies
                approximately 85% of our products. EYI negotiated with NDI an exclusive
                Distribution and Licensing Agreement whereby EYI can sell the products
                of
                NDI, such as Calorad and Agrisept-L, in the United States and Canada,
                and
                elsewhere in the world, subject to the approval of NDI. Michel Grise,
                President of NDI is one of our shareholders and a director of one
                of our
                subsidiaries.





·
            ***Essentially
                Yours Industries Corp*****.**,
                located in Burnaby, B.C., provides services to EYI under a management
                agreement. These services consist of : computer and management information
                systems and support. Payments due under the management agreement
                are at
                cost of services plus a mark-up of approximately 5%. Essentially
                Yours
                Industries Corp. is controlled by Jay Sargeant, our President and
                Chief
                Executive Officer.





**Key
      Operating Strengths**





Our
      key
      operating strengths are primarily attributed to our IBA support programs coupled
      with our IBA compensation programs. We provide our IBAs with quality products
      and competitive commission programs, along with training and motivational events
      and services. We believe that we have established a strong operating platform
      to
      support IBAs and facilitate future growth. The key components of this platform
      include the following:





·
            quality
                dietary supplement products, water filtration systems, personal care
                products and a fuel additive product that we believe appeal to consumers
                demands for products that contribute to a healthy lifestyle and
                environment;





·
            a
                compensation program that permits IBAs to earn income from profits
                on the
                resale of products and residual income from product purchases within
                an
                IBAs’ down-line organization;





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





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




7




·
            an
                in-house marketing department; and





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





**Growth
      Strategy**




*New
      Product Introduction* .




·
            *Code
                Blue*-
                In 2005, we introduced Code BlueTM, a water filtration system product. The
                initial shipment of Code Blue Filters did not meet EYI’s product
                specifications. However, these product concerns were corrected with
                a
                later version of the Code Blue filter called the G-4, which we introduced
                and began promoting in 2006. It was our intent to create market awareness
                of this new product through a year-long promotional tour campaign
                which
                began in Spring 2006. Early results of this campaign indicated that
                product sales were not meeting sales targets and objectives. Management
                assessed these results and concluded that the problems surrounding
                the
                initial product version significantly hindered the public’s confidence in
                the Code Blue product line. Management still believes that this is
                a
                quality product with the unique performance feature of reducing arsenic
                and other contaminants from potable water through a tabletop unit.
                Management intends to continue to market this product along-side
                it’s
                other products but has scaled back the allocation of future marketing
                dollars earmarked for the tour
                campaign.




·
            *Nozin
                Nasal Sanitizer*-
                On May 17, 2006, EYI HK entered into a Distribution Agreement with
                Nozin.
                The agreement granted EYI HK distribution rights exclusive to their
                channel for Nozin Nasal Sanitizer in Hong Kong and the Philippines.
                The
                Distribution Agreement granted EYI HK non-exclusive rights for China
                and
                all its territories. Prior to issuing a purchase order for this product,
                management learned that the product falls under the drug classification
                which would require a registration process of over one year. EYI
                is not in
                a position to register products that are classified in the drug category
                and therefore will not be proceeding with the marketing of Nozin.




·
            *Ultimate
                ME2*-
                In October 2006, EYI signed a definitive agreement with Mach 3. Through
                this agreement, Mach 3 has granted EYI the right to market the fuel
                enhancement product Ultimate ME2 (“ME2”).ME2
                is a non-polluting fuel performance additive product that enhances
                and
                creates efficient combustion that cools the engine of vehicles. Test
                results indicate that automobiles using ME2 will create fewer emissions
                for the environment, their engines will run smoother and will consume
                less
                fuel. In October 2006, EYI placed its first purchase order of the
                ME2
                product and received delivery at the end of December. The initial
                three-month launch campaign concluded on January 16, 2007 in which
                an
                estimated 8,000 bottles of Ultimate ME2 was sold during this period.
                In
                connection with this launch, we also accepted over 1,000 membership
                applications from new distributors.




*International
      Expansion* *.*




*Hong
      Kong and China-* Our
      Hong
      Kong office was opened in September 2005 with the fundamental objective to
      serve
      the local Hong Kong distributors and provides a product pick-up depot for Code
      BlueTM, Calorad ***®*** ,
      Prosoteine® ***,*** Agrisept-L®,
      Definition® drops and cream, and Calorad ***®*** Cream.
      Although sales in the region have not met management’s expectations to-date, we
      intend to maintain this facility because it also serves as our resource and
      support center for other international expansion projects, including the CEIEC
      China Agency Agreement.




*Philippines* - In
      April 2006, our subsidiary, EYIINT, signed a Letter of Intent and Good Faith
      Commitment with Raul Bautista and Rommel Panganiban to act as managing partners
      and distributors for the Philippines. On September 20, 2006 we signed a
      definitive agreement with Orientrends, Inc. in connection with the Letter of
      Intent. Orientrends has since leased a new office in Makati which will be used
      for training new Filipino IBAs and will serve as a distribution center of EYI’s
      products within that region. We anticipate that initial sales will begin in
      the
      second quarter of 2007.




8




*Distributor
      Commission Pay Plan Enhancement* .





On
      July
      28, 2006 the Company launched a new component of its commission pay plan for
      its
      IBAs called the Matching Management Bonus Program (“MMB”). Management believes
      that this enhancement will give IBAs an additional incentive to sell more
      products, recruit new sales people and assist their existing and future
      customers.





In
      2007,
      we intend to launch a further enhancement to our commission pay plan called
      Environmental Hero Awards (“EHA”). This program is designed to run in
      conjunction with our existing compensation program and will allow eligible
      IBA’s
      to generate bonuses paid from a separate pool of up to 5% of our binary product
      sales. Management believes that this new commission plan addendum will encourage
      the sales of our environmentally friendly product, Ultimate ME2, as well as
      our
      other products.





**Industry
      Overview**





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





We
      believe the following factors drive growth in the nutrition
      industry:





·
            The
                general public's heightened awareness and understanding of the connection
                between diet and health;


·
            Rising
                health care costs and the worldwide trend towards preventative health
                care; and


·
            Product
                introductions in response to new scientific findings.





According
      to the World Health Organization ("WHO") arsenic in drinking water is a global
      situation and can cause severe health challenges with long term exposure. As
      reported by WHO, reliable data on exposure and health effects are rarely
      available, but it is clear that there are many countries in the world where
      arsenic in drinking water has been detected at concentration greater than
      guideline value 0.01mg/L. As a matter of prevention and control, WHO recommends
      the most important remedial action is prevention by providing
      safe-drinking-water.





According
      to the EPA, in typical urban areas cars, buses, trucks and off highway mobile
      sources such as construction vehicles and boats, produce at least half of the
      hydrocarbons and nitrogen oxides. Even though nationally these pollutants are
      created from a great varied of industrial and combustion process, the personal
      automobile is the single greatest polluter. EPA studies show that many people
      typically associate air pollution with the billowing smokestacks of large
      industries. Air pollution emissions from each individual car are generally
      small. America's population of automobiles and drivers are increasing. This
      combined with the traffic congestion of urban areas results in a very large
      amount of air pollution. The EPA believes that emissions from millions of
      vehicles on our nations roads each day contribute substantially to our air
      pollution problems. Driving a private car is probably a typical citizen's most
      "polluting" daily activity.





**Products**





Our
      product line consists of products in the categories of dietary supplement
      products, personal care products, water filtrations systems and a fuel additive
      product. We currently market approximately 26 products. For the year ended
      December 31, 2006, Calorad sales represented over  65%
      of
      our net sales and is expected to provide a large portion of our net sales in
      the
      foreseeable future. In the third quarter of 2006, we launched our newest
      product, Ultimate ME2, which generated 6% of our overall 2006 gross
      revenues.





**Dietary
      Supplements**





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




·
            ***Agrisept-L®:***Agrisept-L
                is a dietary supplement of citrus extracts used as a
                germicide.




9




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





·
            ***Definition®
                (drops):***Definition
                is a natural herbal product designed to feed and nurture the female
                breast. This product is available in both cream and drop
                formulations.





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





·
            ***Noni
                Plus®:***Noni
                is an extract of organic Noni fruit and liquid trace minerals. It has
                been used by natives and ancient healers of many
                countries.





·
            ***Oxy-Up®:***Oxy-Up
                is a liquid stabilized oxygen
                supplement.





·
            ***Prosoteine®:***Prosoteine
                is a plant based, natural, stimulant-free liquid protein
                supplement.





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





**Personal
      Care Products**





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





·
            **Calorad®*****(cream)*****:**Calorad cream is a topical serum with a base of collagen that aids
                the
                skin during the natural aging process. The exclusive mixture of
                ingredients in Calorad cream stimulate, moisturize and nourish to
                bio-illuminate skin. The active ingredients in Calorad cream are
                compatible with the biologic structure of the human skin. The formulation
                is a selection of the most recent biotechnology ingredients, working
                in
                perfect synergy, easily penetrating the cellular metabolism level
                of the
                skin.





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





**Water
      Filtration Systems**





·
            **Code
                BlueTM Water Filtration System:**Code Blue is a pour-through drinking water filtration system (containing
                a
                pitcher and filter) that reduces Arsenic, Chlorine, Nitrates, Nitrites,
                Mercury and other contaminants from potable water.





·
            **Code
                BlueTM Filter**is
                a filter that reduces Arsenic, Chlorine, Nitrates, Nitrites, Mercury
                and
                other contaminants from potable
                water.





**Fuel
      Additive Product**





·
            Ultimate
                ME2is
                a fuel performance product that reduces fuel consumption and
                emissions.





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





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





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




10




**Product
      Procurement and Distribution Insurance** .
      Approximately 85% of our product line in the dietary supplement category is
      manufactured by NDI, utilizing its and our product formulations, as well as
      product formulations it licenses to us. A majority of our product line in the
      personal care category is also manufactured by NDI.





We
      have
      contracts with NDI that grant to us the exclusive license and right to market,
      sell and distribute in Canada and the United States and a non-exclusive right
      to
      market on the Internet certain products owned by Michel Grise Consultant, Inc.,
      a Quebec corporation, which is controlled by Michel Grise, a director of our
      subsidiary, EYI. To maintain the license and distribution rights granted by
      those contracts, we were obligated to purchase from NDI during the period
      commencing on June 1, 2003, and continuing through and including May 31, 2004,
      products totaling $1,530,000. Those contracts also specify that for the period
      from June 1, 2004 to May 31, 2005, we were required to purchase from NDI
      products totaling $3,825,000. Additionally, those contracts specify that for
      each year commencing on June 1, and ending on May 31 thereafter during the
      term
      of that agreement, we are required to purchase products totaling $5,355,000.
      The
      provisions of those contracts specify that NDI will offer us the right to sell,
      market and distribute in those territories any new product developed by
      NDI




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




All
      of
      the items in our product line include a customer satisfaction guarantee. Within
      30 days of purchase, any retail customer or IBA who is not satisfied with our
      product for any reason may return it or any unused portion to the distributor
      from whom it was purchased or to us for a full refund or credit toward the
      purchase of another product. IBAs may obtain replacements from us for products
      returned to them by retail customers, provided they return such products on
      a
      timely basis. Furthermore, in most jurisdictions, we maintain a buy-back
      program. Under this program, we will repurchase products sold to a distributor
      (subject to a 10% restocking charge), provided that the distributor resigns
      as a
      distributor and returns the product in marketable condition within one year
      of
      original purchase, or longer where required by applicable state law or
      regulations. We believe this buy-back program addresses a number of the
      regulatory compliance issues pertaining to network marketing systems. We expect
      that the cost of products returned to us will be less than 2% of gross sales.
      Below is a summary of return information based on our sales transactions that
      were paid for by credit card for the year ended December 31,
      2006:





**Month**
            **Deposit**
            **Sales**
            **Returns**
            **Chargebacks**
            **Adj/
                Disc.**
            **Net
                Deposit**January-06
            $350,329
            $352,929
            $14,887
            $0
            $12,196
            $325,846February-06
            $343,419
            $345,703
            $1,983
            $756
            $10,572
            $332,393March-06
            $361,146
            $371,173
            $8,961
            $688
            $12,505
            $349,019April-06
            $313,197
            $322,800
            $9,412
            $0
            $10,991
            $302,397May-06
            $316,811
            $338,460
            $21,321
            $143
            $11,149
            $305,847June-06
            $331,526
            $334,805
            $2,944
            $143
            $10,717
            $321,001July-06
            $312,428
            $315,036
            $2,252
            $241
            $10,492
            $302,052August-06
            $279,370
            $283,649
            $4,279
            $0
            $9,967
            $269,403September-06
            $296,712
            $298,075
            $997
            $103
            $9,534
            $287,442October-06
            $304,681
            $309,896
            $4,746
            -$103
            $10,321
            $294,932November-06
            $321,345
            $325,240
            $3,534
            $0
            $10,683
            $311,023December-06
            $458,678
            $461,367
            $2,329
            $0
            $16,427
            $442,611$3,989,644
            $4,059,134
            $77,644
            $1,971
            $135,554
            $3,843,964*100.00%*
            *-1.91%*
            *-0.05%*
            *-3.34%*
            *94.70%*




11




Our
      specific refund policies are as follows:




**Refund
      to Retail Customer**




All
      EYI
      products have a thirty (30) day satisfaction guarantee from the date of purchase
      unless specifically extended in the case of special promotions. In the event
      of
      a dissatisfied customer, the IBA is responsible to return the customer’s money
      and have all remaining products returned to the IBA. The IBA then forward's
      the
      following to EYI:




1)
            Proof
                of refund;


2)
            Written
                explanation from the customer;


3)
            EYI’s
                Order number;


4)
            Proof
                of Purchase (Bill of Sale);


5)
            The
                unused portion of the product (Refunds will be void if 50% of the
                product
                is not returned).




Upon
      receipt of the above items, provided that the IBA has acted in a timely fashion,
      EYI will promptly replace any returned product to the IBA. An IBA acting in
      a
      "timely fashion" means that items one through five must be received by EYI
      within twenty (20) days of the date of refund transaction. Refunds will be
      void
      if 50% of the product is not returned.




To
      request a refund, the IBA must return the unused portion of the product within
      30 days from the date of purchase. In addition, the IBA must include the
      purchase/invoice number and cover the cost of the return. The refund offer
      is
      void if the product is more than 50% used.




**Refund
      To Independent Business Associates**




An
      IBA
      may request a return, by returning the unused portion of a product within 30
      days from the day of purchase. IBA’s must include the purchase/invoice number
      and cover the cost of the product return.




If
      an IBA
      is not satisfied with a given EYI product, EYI will replace the product with
      a
      product of same or like value, less shipping and handling charges. The IBA
      is
      responsible for the replacement shipping and handling cost.




Refunds
      will be issued upon request. Please keep in mind that EYI will not issue any
      refunds for product(s) previously certified as sold under the 70% rule. (Please
      refer to EYI's Policies and Procedures, for details). As well, refunds will
      be
      less commission paid on the returned product. Business volume issued at the
      time
      of purchase will be removed from the binary and adjusted accordingly at the
      time
      of the return. IBA’s effected by the negative adjustment will be responsible to
      reimburse EYI for all commission they may have earned at the time of the
      purchase.




Refunds
      are less original shipping and handling fee’s and are subject to a 10%
      processing fee.




The
      offer
      is void if product is more than 50% used.




The
      above
      will be offered up until one (1) year from the purchase date providing the
      product is returnable to stock and in re-sellable condition.




**DISTRIBUTION
      AND MARKETING**





Our
      product line is distributed from a third party warehouse in Bensalem, PA, our
      facility and warehouse in Burnaby, British Columbia, our 22 consignment centers
      located throughout the USA and Canada and a portion of our product line is
      distributed from our offices in the Philippines and Hong Kong.





We
      distribute our product line through our network marketing system where IBAs
      purchase product at wholesale and through person-to-person contact and re-sell
      the product at retail prices. At December 31, 2006, we had approximately 8,000
      "active" IBAs. To be considered "active" a distributor must have purchased
      our
      products within the preceding 12 months. Our IBAs are independent contractors
      who purchase products directly from us for resale to retail consumers. IBAs
      may
      elect to work on a full-time or part-time basis. We believe our network
      marketing system appeals to a broad cross-section of people, particularly those
      seeking to:




12




·
            supplement
                family income,





·
            start
                a home business, or





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





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





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





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





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





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





Growth
      of
      an IBAs' down-line organization is dependent on the recruiting and enrollment
      of
      additional IBAs by the distributor or the IBAs within such distributor's
      down-line organization. We currently do not keep records that would enable
      us to
      calculate IBA turnover frequency.





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





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





Growth
      of
      our network marketing program is in part attributable to our incentive
      structure. IBAs earn profits by purchasing from our product line at wholesale
      prices and selling our product line to their customers at retail prices.
      Additionally, we have a commission structure which provides for payment of
      commissions on product purchases made by other IBAs in a distributor's down-line
      organization. IBAs derive this commission income mainly through their "Business
      Volume", as described below.





Business
      Volume is assigned to most of our products and is used to calculate sales
      commission. The Business Volume, in most instances, is 50% of the wholesale
      cost
      of a product. Commissions are based on the total Business Volume which has
      been
      generated both personally and through the IBAs' down-line activity. Therefore,
      as a down-line grows, it is possible for greater commissions to be earned.
      None
      of our IBAs have derived $1 million per year or greater for the years ended
      2006, 2005 or 2004.





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





·
            an
                IBA needs to create a Business Center by completing an IBA Application
                and
                Agreement Form;





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




13




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





·
            an
                IBA needs to be current with their annual administration
                fee.





The
      average annual commission earned by our IBAs during the twelve month period
      starting on January 1, 2006 and ending on December 31, 2006 was approximately
      $1,450.





To
      aid
      IBAs in meeting the monthly personal product purchase requirement to qualify
      for
      commissions, we developed the "Convenience Program." Under the Convenience
      Program purchasing arrangement, each Business Center establishes a standing
      product order (20 Business Volume minimum), which is automatically charged
      to a
      credit card or deducted from a bank account each month prior to shipment of
      the
      ordered products. Additionally, the Convenience Program allows IBAs to purchase
      certain products at reduced prices. As of December 31, 2006, we had
      approximately 1,750 IBAs participating in the Convenience Program.





Under
      our
      Consignment Center Program, we designate IBAs to operate consignment centers.
      Each Consignment Center located in North America, functions as our product
      distribution center, carrying our products. As of December 31, 2006, we had
      22
      consignment centers. Consignment centers provide hubs of local product and
      business training. They sell to customers at the point of purchase, teach sales
      and marketing techniques, distribute literature about our products and business
      while lowering our shipping and data-entry costs.





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





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





We
      also
      maintain an Internet site, www.eyicom.com ,
      which
      is an integral part of our product sales, customer retention, IBA recruitment
      and IBA development efforts. Further, we provide IBAs with a free e-commerce
      Internet "home page" to aid their marketing efforts.





**Government
      Regulation**





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





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





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





·
            our
                network marketing organization.





We
      believe we are currently in compliance with all regulations. In the past, we
      have met and passed inspections by the United States Food and Drug
      Administration ("FDA"), except as described below. Our past FDA violations
      are
      as follows: on October 7, 2002, we had a Food and Drug label inspection. A
      notice to re-label on Calorad was submitted on October 9, 2002. A panel was
      added to our Calorad product to round the calories to be in compliance with
      the
      Dietary Supplement Health Education Act of 1994 ("DSHEA Act"). The "may proceed"
      release was issued on November 6, 2002. On February 2, 2004, a notice to
      redeliver from the Department of Treasury/United States Customs Service in
      Detroit, Michigan was issued requesting an inspection and import permit along
      with an original CFI certificate (Canadian Food Inspection Agency
      Certificate).On entry number #336-0214262-5. We met all requirements and the
      shipment was released on February 27, 2004. On August 16, 2005 a hold was
      designated on entry number #336-0524098-8. Samples were collected by the FDA
      and
      sent to a lab for analysis on August 18, 2005. This was a routine sampling
      that
      the FDA performs on products at any given time to ensure product contents match
      the product labels. Testing was completed and the product was released on
      September 8, 2005. On October 5, 2005 we received a hold from the FDA for two
      products, requesting label clarification on one product and clarification on
      website claims for another product. On November 21, 2005 the first product
      was
      released under direction to make a small label adjustment on the next product
      run. We have complied with this request. On November 15, 2005 the second product
      was released after review of marketing materials available on the internet.




14




**Products**





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





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





In
      January 2000, the FDA published a final rule that defines the types of
      statements that can be made concerning the effect of a dietary supplement on
      the
      structure or function of the body pursuant to the DSHEA. Under the DSHEA,
      dietary supplement labeling may bear "structure/function" claims, which are
      claims that the products affect the structure or function of the body, without
      prior FDA approval. They may not without prior FDA approval, bear a claim that
      they can prevent, treat, cure, mitigate or diagnose disease, otherwise known
      as
      a "drug claim". The final rule describes how the FDA will distinguish drug
      claims from structure/function claims. Dietary supplements, like conventional
      foods, are also permitted to make "health claims", which are claims that are
      exempt from regulation as "drug" claims pursuant to the amendments to the FDCA
      established by the NLEA in 1990. A "health claim" is a claim, ordinarily
      approved by the FDA regulation, on a food or dietary supplement product's
      labeling that "characterizes the relationship of any substance to a disease
      or
      health-related condition". To help assure that foods, dietary supplements and
      cosmetics comply with the provisions of the FDCA and FDA's regulations, the
      FDA
      has numerous enforcement tools, including the ability to issue warning letters,
      initiate product seizures and injunctions, seek restitution and consent
      agreements, issue Import Alerts and pursue criminal penalties.





The
      manufacturer of dietary supplements is subject to existing FDA current good
      manufacturing practices, or "cGMP", regulations for food. In March 2003, the
      FDA
      proposed detailed cGMP regulations specifically for dietary supplements. The
      FDA
      is expected to publish final cGMP regulations for dietary supplements in the
      near future.




15




Personal
      care products, regulated by the FDA as cosmetics are intended to be applied
      to
      the human body for cleansing, beautifying, promoting attractiveness, or altering
      the appearance. Included in this definition are products such as skin creams,
      lotions, perfumes, lipsticks, fingernail polishes, eye and facial make-up
      preparations, shampoos, permanent waves, hair colors, deodorants, and any
      material intended for use as a component of a cosmetic product-provided such
      products are not promoted with drug claims.




In
      general, our cosmetic products are not subject to pre-market approval by the
      FDA. Cosmetics are, however, subject to regulation by the FDA under the Federal
      Food, Drug, and Cosmetic Act adulteration and misbranding provisions. They
      are
      also subject to specific labeling regulations, including warning statements,
      if
      the product's safety is not adequately substantiated or if it may be hazardous,
      as well as ingredient statement and other packaging requirements under the
      Fair
      Packaging and Labeling Act. Cosmetics that meet the definition of a drug (i.e.,
      that are intended to treat or prevent disease or affect the structure or
      function of the body), such as sunscreens, are regulated as drugs. Cosmetics
      that bear label claims that expressly or impliedly suggest that the product
      serves such drug purposes will also be regulated as drugs.





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





The
      EPA
      regulations require that each manufacturer or importer of gasoline, diesel
      fuel,
      or a fuel additive have its product registered prior to its introduction into
      commerce. ME 2 's
      EPA
      registration number is #204320001.





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





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





**NAD
      Enforcement**




The
      National Advertising Division, or "NAD", of the Council of Better Business
      Bureaus oversees an industry-sponsored self-regulatory system that permits
      competitors to resolve disputes over advertising claims. The NAD may challenge
      a
      company’s advertising on its own initiative or at the request of a competitor.
      While the NAD has no ultimate enforcement authority of its own,
      it
      may refer advertising that it views as violating FTC requirements or guidelines
      to the FTC for further action.




**Bioterrorism
      Act Compliance**





In
      June of 2002 Congress passed the Public Health Security and Bioterrorism
      Preparedness and Response Act of 2002 (“Bioterrorism Act”). Several provisions
      of the Bioterrorism Act have resulted in additional regulatory compliance
      issues. Under the Bioterrorism Act, domestic and foreign facilities that
      manufacture, process, pack, or hold food for human or animal consumption in
      the
      United States must register with the FDA. In November 2004 ,
      we met
      this requirement by registering with the FDA. In addition, the Bioterrorism
      Act
      requires companies to provide FDA with prior notification of all food
      importation, including dietary supplement importation. The Bioterrorism Act
      also
      mandates recordkeeping and records maintenance requirements. We currently
      believe we are in compliance with all Bioterrorism Act requirements.





**Compliance
      Efforts**





We
      attempt to remain in full compliance with all applicable laws and regulations
      governing the manufacture, labeling, sale, distribution, and advertising of
      our
      dietary supplements, personal care, water filtration and a fuel additive
      product. We retain special legal counsel for advice on both US FDA and FTC
      legal
      issues.





**Network
      Marketing System**





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




16




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




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





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




On
      April
      5, 2006, the FTC released a proposed New Business Opportunity Rule. The proposed
      rule would require pre-sale disclosures for all business opportunities, which
      might include network marketing compensation plans. The New Business Opportunity
      Rule is currently only a proposed rule. If implemented at all, the rule
      ultimately may not be implemented in a form that applies to network marketing
      compensation plans, or may change significantly before it is implemented. If
      the
      proposed rule were adopted as currently proposed, it will require us to change
      some of our current practices regarding pre-sale disclosures.





**Competition**





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





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




17




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





Ultimate
      ME2 competes directly with the engine efficiency supplements produced by Fuel
      Freedom International, a network marketing company.





Code
      Blue
      competes directly with Brita, a water filtration line of products available
      in
      retail outlets.





Our
      network marketing competitors include small, privately held companies, as well
      as larger, publicly held companies with greater financial resources and greater
      product and market diversification and distribution. Our competitors include
      Reliv International, Mannatech Incorporated, Usana Health Services, Alticor
      Inc.
      (Amway Corp.), Avon Products Inc., Herbalife Ltd., Mary Kay Inc., Melaleuca,
      Inc., Nature's Sunshine Products Inc., Nu Skin Enterprises Inc. as well as
      mass
      retail establishments.





**Employees**





As
      at
      March 30, 2007 we had 36 employees and managers. Of this total, 3 are executive
      officers, 4 are in accounting, 1 is in investor relations, 1 is in international
      development, 12  are
      in
      operations, 3 are in sales and marketing, 2 are in sales communication, 5 are
      in
      information systems, 1 is in product development, 3 are in purchasing/warehouse
      and 1 is in administration. We consider our employee relations to be good.
      None
      of our employees or managers are members of a trade union and we have not
      experienced any business interruption as a result of any labor
      disputes.





**Research
      and Development Expenditures**





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





**Intellectual
      Property**





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





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





**Product**
            **Status**Agrisept-L®
            Registered
                TrademarkBeaugest®
            Registered
                TrademarkBellaffina®
            Registered
                TrademarkCalorad®
            Registered
                TrademarkCitrex®
            Registered
                TrademarkCitrio®
            Registered
                TrademarkDefinition®
            Registered
                TrademarkEmulgent®
            Registered
                TrademarkFem
                Fem®
            Registered
                Trademark




18




Golden
                Treat®
            Registered
                TrademarkHom Hom®
            Registered
              TrademarkInvisible®
            Registered
              TrademarkLivocare®
            Registered
              TrademarkMelan
                Plus®
            Registered
                TrademarkNeocell®
            Registered
                TrademarkNRG®
            Registered
              TrademarkParablast®
            Registered
              TrademarkProsoteine®
            Registered
                TrademarkParattack®
            Registered
              TrademarkSea
                Krit®
            Registered
                Trademark





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





**Copyright/Trademark**
            **Status
                of Application**Citri-plus®
            Registered
                TrademarkEYI
                w/design®
            Registered
                TrademarkEssential
                Marine®
            Registered
                TrademarkEssentially
                Yours®
            Registered
                TrademarkEssentially
                Yours Industries Corp. (with design) ®
            Registered
                TrademarkIso
                greens®
            Registered
                Trademark





The
      following additional products are licensed to EYI:





Just
                Go Pro! ®
            Registered
                TrademarkOxy
                UpTM
            Registered
                TrademarkThe
                Ultimate Performance Enhancer!TM
            Registered
                TrademarkCode
                Blue DRINK ONLY THE WATERTM
            Pending
                TrademarkHow
                do you take your water...with or without Arsenic?! TM
            Pending
                Trademark




**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY.**





Our
      principal office is located at 7865 Edmonds Street, Burnaby, B.C., Canada,
      V3N
      1B9. The rent from January 1, 2006 to December 31, 2006 was at a rate of
      CDN$12,500.00 plus goods and service tax ("GST") per month. The lease is for
      a
      period of seven years commencing January 1, 2005 and our monthly rent increases
      by CDN$500 per month in January of each year. The rent for the period January
      1,
      2007 to December 31, 2007 is CDN$13,000 per month plus GST.





We
      also
      have an office located at Units 1-3, 15th Floor, No. 1 Minden Avenue, Tsim
      Sha
      Tsui Kowloon. On September 28, 2005, EYI HK entered into a Lease with Dombas
      Estates Limited for the lease of the office space. The lease is for a two year
      term at a monthly rent of approximately $3,500 USD (HK$22,920).




19




**ITEM
      3.**  **LEGAL
      PROCEEDINGS.**





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





*Action
      By Suhl, Harris and Babich*





In
      2003 a
      consolidated action was brought by the plaintiffs Wolf Suhl, Christine Harris
      and Edward Babich in the Supreme Court of British Columbia pursuant to an order
      pronounced in the New Westminster Registry under Action No. S061589 on May
      7,
      2003, which allowed the plaintiffs to proceed with an action against EYI. In
      February 2006, the Supreme Court of British Columbia made an order that the
      Company and Mr. Jay Sargeant be added to the lawsuit. The Plaintiffs' total
      claim in this matter was approximately $478,000. On September 5, 2006 we paid
      $200,000 in full and final settlement and a consent dismissal order was
      pronounced on September 13, 2006 concluding the action.





*Action
      by The State of Texas, et al*





On
      August
      25, 2006 the State of Texas filed a Plaintiffs' First Amended Original Petition
      in the District Court of Travis County, Texas naming Essentially Yours
      Industries, Inc. A/K/A Essentially Yours Corp. A/K/A Burrard Capital, Inc.
      a
      foreign (NV) Corporation. The action arises from EYI's predecessor organization,
      Essentially Yours Industries, Corp., a Canadian Corporation's unpaid sales
      tax
      for the State of Texas in the amount of $179,094.84 plus interest and costs.
      A
      hearing on this matter has been set for June 11, 2007 at 9:00 am at the District
      Court of Travis County, Texas. ****





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





None.


**PART
      II**





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




**MARKET
      INFORMATION**





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





**YEAR
                2005**
            
            **High
                Bid**
            
            **Low
                Bid**Quarter
                Ended March 31, 2005
            
            $0.19
            
            $0.03Quarter
                Ended June 30, 2005
            
            $0.06
            
            $0.02Quarter
                Ended September 30, 2005
            
            $0.19
            
            $0.03Quarter
                Ended December 31, 2005
            
            $0.12
            
            $0.02**YEAR
                2006**
            
            **High
                Bid**
            
            **Low
                Bid**Quarter
                Ended March 31, 2006
            
            $0.04
            
            $0.02Quarter
                Ended June 30, 2006
            
            $0.05
            
            $0.02Quarter
                Ended September 30, 2006
            
            $0.02
            
            $0.01Quarter
                Ended December 31, 2006
            
            $0.01
            
            $0.01





The
      source of the high and low bid information is the OTCBB. The market quotations
      provided reflect inter-dealer prices, without retail mark-up, markdown or
      commission and may not represent actual transactions.




**HOLDERS
      OF COMMON STOCK**





As
      of
      March 30, 2007, we had 193 registered stockholders holding 379,490,852 shares
      of
      our common stock.




20




**DIVIDENDS**





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





**RECENT
      SALES OF UNREGISTERED SECURITIES**





On
      January 5, 2007 we completed a share exchange with certain of the shareholders
      of EYI, under a Share Exchange Agreement, dated January 5, 2007, (the "Exchange
      Agreement").





Under
      the
      terms of the Exchange Agreement, we issued 1,999,323 restricted shares of our
      common stock to the EYI shareholders in exchange for 260,485 shares of common
      stock held by them in EYI.




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





**Overview**





We
      are in
      the business of selling, marketing, and distributing a product line consisting
      of approximately 26 nutritional products in four categories: dietary
      supplements; personal care products; water filtration systems; and a fuel
      additive product. Currently, our product line consists of: (i) 18 dietary
      supplement products; (ii) 5  personal
      care products consisting primarily of cosmetic and skin care products; (iii)
      2
      water filtration system products; and (iv) 1 fuel additive product. Our products
      are primarily manufactured by and sold by us under a license and distribution
      agreement with NDI. The President of NDI, Michel Grise, is a director of our
      subsidiary EYI. Certain of our own products are manufactured for us by third
      party manufacturers pursuant to formulations developed for us. Our products
      are
      sold in the United States, Canada and Southeast Asia. Our products are marketed
      through a network marketing program in which IBAs purchase products for resale
      to retail customers as well as for their own personal use. We have a list of
      over 385,000 IBAs, of which approximately 8,000 we consider “active”. An
“active” independent business associate is one who purchased our products within
      the preceding 12 months. Approximately 1,750 of these IBAs are considered "very
      active". A "very active" IBA is one who is on our automatic Convenience Program
      which allows our IBAs to set up a reoccurring order that is automatically
      shipped to them each month.





Our
      independent auditors have added an explanatory paragraph to their audit issued
      in connection with the financial statements for the period ended December 31,
      2006, relative to our ability to continue as a going concern. We have negative
      working capital of approximately $4,025,000 and an accumulated deficit incurred
      through December 31, 2006 of $18,452,975, which raises substantial doubt about
      our ability to continue as a going concern. Our ability to obtain additional
      funding will determine our ability to continue as a going concern. Accordingly,
      there is substantial doubt about our ability to continue as a going concern.
      Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





We
      have a
      history of losses. We have incurred an operating loss since inception and had
      an
      accumulated deficit of $18,452,975  as
      of
      December 31, 2006. For the year ended December 31, 2006, we incurred a net
      loss
      of $7,105,759. For the year ended December 31, 2005, we incurred a net loss
      of
      $4,262,011. Consequently we will in all likelihood have to rely on external
      financing for all of our capital requirements. Future losses are likely to
      continue unless we successfully implement our business plan, which calls for
      us
      to increase sales revenue and lower operating expenditures.





**Critical
      Accounting Policies**





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





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




21




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





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




**Derivative
      Instruments**





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





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





**Earnings
      Per Share**





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





**Foreign
      Currency Translation And Other Comprehensive Income**





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





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





**Foreign
      Currency Valuation And Risk Exposure**





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




22




**Income
      Taxes**





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




**Long-Lived
      Assets**





In
      accordance with Statement of Financial Accounting Standards No. 144, “Accounting
      for the Impairment or Disposal of Long-Lived Assets”. This standard establishes
      a single accounting model for long-lived assets to be disposed of by sale,
      including discontinued operations, and requires that these long-lived assets
      be
      measured at the lower of carrying amount or fair value less cost to sell,
      whether reported in continuing operations or discontinued operations.
      Accordingly, the Company reviews the carrying amount of long-lived assets for
      impairment where events or changes in circumstances indicate that the carrying
      amount may not be recoverable. The determination of any impairment would include
      a comparison of estimated future cash flows anticipated to be generated during
      the remaining life of the assets to the net carrying value of the assets. For
      the year ended December 31, 2006, no impairments have been
      identified.




**Revenue
      Recognition**





The
      Company is in the business of selling nutritional products in four categories:
      dietary supplements, personal care products, water filtration systems and a
      fuel
      additive product. Sales of personal care products represent less than 5% of
      the
      overall revenue and therefore are not classified separately in the financial
      statements. The Company recognizes revenue from product sales when the products
      are shipped and title passes to customers. Administrative fees charged to the
      Independent Business Associates are included in the gross sales and totaled
      $150,554 and $128,967 for the year ended December 31, 2006 and December 31,
      2005
      respectively.





**Segment
      Information**





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





**Recent
      Accounting Pronouncements**





New
      accounting pronouncements that have a current or future potential impact on
      our
      financial statements are as follows:





In
      February, 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition or results of operation.




23




In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87,88,106, and 132(R)” (hereinafter :SFAS No. 158”). This statement requires
      an employer to recognize the overfunded or underfunded statues of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a not
      for
      profit organization. This statement also requires an employer to measure the
      funded status of a plan as of the date of its year end statement of financial
      position, with limited exceptions. The adoption of this statement had no
      immediate material effect on the Company’s financial condition or results of
      operations.





In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“SFAS No. 157”). This statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (GAAP), and
      expands disclosure about fair value measurements. This statement applies under
      other accounting pronouncements that require or permit fair value measurements.
      This statement does not require any new fair value measurements, but for some
      entities, the application of this statement may change current practice. The
      adoption of this statement had no immediate material effect on the Company’s
      financial condition or results of operations.





In
      June
      2006, the Financial Accounting Standards Board issued FASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition
      threshold and measurement attribute for the financial statement recognition
      and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. FIN 48
      is
      effective for fiscal years beginning after December 15, 2006. The Company does
      not expect the adoption of FIN 48 to have a material impact on its financial
      reporting, and the Company is currently evaluating the impact, if any the
      adoption of FIN 48 will have on its disclosure requirements.




In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 156, “Accounting for Servicing of Financial Assets-an
      amendment of FASB Statement No. 140.”  This statement requires an entity to
      recognize a servicing asset or servicing liability each time it undertakes
      an
      obligation to service a financial asset by entering into a servicing contract
      in
      any of the following situations: a transfer of the servicer’s financial assets
      that meets the requirements for sale accounting; a transfer of the servicer’s
      financial assets to a qualifying special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale securities or trading
      securities; or an acquisition or assumption of an obligation to service a
      financial asset that does not relate to financial assets of the servicer or
      its
      consolidated affiliates.  The statement also requires all separately
      recognized servicing assets and servicing liabilities to be initially measured
      at fair value, if practicable and permits an entity to choose either the
      amortization or fair value method for subsequent measurement of each class
      of
      servicing assets and liabilities.  The statement further permits, at its
      initial adoption,  a one-time reclassification of available for sale
      securities to trading securities by entities with recognized servicing rights,
      without calling into question the treatment of other available for sale
      securities under Statement 115, provided that the available for sale securities
      are identified in some manner as offsetting the entity’s exposure to changes in
      fair value of servicing assets or servicing liabilities that a servicer elects
      to subsequently measure at fair value and requires separate presentation of
      servicing assets and servicing liabilities subsequently measured at fair value
      in the statement of financial position and additional disclosures for all
      separately recognized servicing assets and servicing liabilities. This statement
      is effective for fiscal years beginning after September 15, 2006, with early
      adoption permitted as of the beginning of an entity’s fiscal year. Management
      believes the adoption of this statement will have no impact on the Company’s
      financial condition or results of operations.





In
      February 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial
      Instruments, an Amendment of FASB Standards No. 133 and 140” (hereinafter “SFAS
      No. 155”). This statement established the accounting for certain derivatives
      embedded in other instruments.  It simplifies accounting for certain hybrid
      financial instruments by permitting fair value remeasurement for any hybrid
      instrument that contains an embedded derivative that otherwise would require
      bifurcation under SFAS No. 133 as well as eliminating a restriction on the
      passive derivative instruments that a qualifying special-purpose entity (“SPE”)
      may hold under SFAS No. 140.  This statement allows a public entity to
      irrevocably elect to initially and subsequently measure a hybrid instrument
      that
      would be required to be separated into a host contract and derivative in its
      entirety at fair value (with changes in fair value recognized in earnings)
      so
      long as that instrument is not designated as a hedging instrument pursuant
      to
      the statement.  SFAS No. 140 previously prohibited
      a qualifying special-purpose entity from holding a derivative financial
      instrument that pertains to a beneficial interest other than another derivative
      financial instrument. This
      statement is effective for fiscal years beginning after September 15, 2006,
      with
      early adoption permitted as of the beginning of an entity’s fiscal year.
      Management believes the adoption of this statement will have no impact on the
      Company’s financial condition or results of operations.




24




In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 154, “Accounting Changes  and Error 
Corrections,” (hereinafter “SFAS No. 154”) which replaces Accounting 
Principles Board Opinion No. 20, “Accounting  Changes,” and SFAS No. 3,
“Reporting Accounting Changes in Interim Financial Statements - An Amendment
      of
      APB Opinion No. 28.”  SFAS No. 154 provides guidance on accounting for and
      reporting changes in accounting principle and error corrections.  SFAS No.
      154 requires that changes in accounting principle be applied retrospectively
      to
      prior period financial statements and is effective for fiscal years beginning
      after December 15, 2005.  The Company does not expect SFAS No. 154 to have
      a material impact on its consolidated financial position, results of operations,
      or cash flows.





In
      March
      2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement
      Obligations.”  FIN 47 clarifies that the term “conditional asset retirement
      obligation,” which as used in SFAS No. 143, “Accounting for Asset Retirement
      Obligations,” refers to a legal obligation to perform an asset retirement
      activity in which the timing and (or) method of settlement are conditional
      on a
      future event that may or may not be within the control of the entity.  The
      entity must record a liability for a “conditional” asset retirement obligation
      if the fair value of the obligation can be reasonably estimated.  FIN 47
      also clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation.   FIN 47 is
      effective no later than the end of fiscal years ending after December 15,
      2005.




**RESULTS
      OF OPERATIONS**





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





***Summary
                of Year End Consolidated Results*****Fiscal
              Year****31-Dec-06**
            
            **31-Dec-05**
            
            **31-Dec-04**Revenue,
                net of returns and allowances
            100%
            
            100%
            
            100%Cost
                of goods sold
            31%
            
            23%
            
            21%Gross
                profit before commission expense
            69%
            
            77%
            
            79%Commission
                expense
            37%
            
            39%
            
            41%Gross
                profit
            33%
            
            38%
            
            39%Operating
                expenses
            108%
            
            111%
            
            103%Operating
                loss
            75%
            
            74%
            
            65%





During
      the year ended December 31, 2006, we had total revenues of $4,131,437 and gross
      profits of $1,354,956 or 33%, compared to revenues of $4,980,408 and gross
      profits of $1,883,507 or 38% during the year ended December 31, 2005. We
      experienced a total decline in revenue of $848,971 or 17%.





The
      gross
      profits generated during fiscal year 2006 were unable to offset our annual
      operating expenditures, which in turn resulted in an operating loss. For the
      year ended December 31, 2006 we incurred operating expenses of $4,456,017 and
      had an operating loss of $3,101,061. For the year ended December 31, 2005,
      we
      incurred operating expenses of $5,550,077 and had an operating loss of
      $3,666,570.





25





**REVENUE
      BY SEGMENT**





The
      following table summarizes our main revenue segments and the comparative net
      change from the prior year:





***Revenue
      by Segments***




**Three
                months ended**
            
            **Year
                ended****31-Dec-06**
            
            **31-Dec-05**
            
            **Variance**
            
            **31-Dec-06**
            
            **31-Dec-05**
            
            **Variance**Administration
                fees
            
            $38,973
            
            $27,951
            
            $11,022
            39%
            
            $150,554
            
            $128,967
            
            $21,587
            17%Binary
                Sales
            
            $829,797
            
            $856,446
            
            ($26,650)
            -3%
            
            $2,977,091
            
            $3,758,260
            
            ($781,169)
            -21%Direct
                sales
            
            $114,879
            
            $164,547
            
            ($49,668)
            -30%
            
            $631,895
            
            $779,028
            
            ($147,133)
            -19%Affiliate
                sales
            
            $75,891
            
            $80,302
            
            ($4,412)
            -5%
            
            $361,278
            
            $304,568
            
            $56,710
            19%Sales
                Aids
            
            $3,733
            
            $917
            
            $2,816
            307%
            
            $10,619
            
            $9,585
            
            $1,034
            11%$1,063,271
            
            $1,130,163
            
            ($66,894)
            -6%
            
            $4,131,437
            
            $4,980,408
            
            ($848,971)
            -17%




**Revenue
      by Segment, Three Month Results**





Details
      of the most significant changes for the quarter ended December 31, 2006 to
      the
      quarter ended December 31, 2005 are detailed below:





*Administration
      fees* - These
      fees represent the annual membership fees paid by our IBAs. The fourth quarter
      results for 2006 improved 39% over the same period in 2005. We believe that
      this
      improvement in attracting a greater number of new IBAs is related to two key
      factors:





·
            the
                launch of our newest product, Ultimate ME2,
                and


·
            improvements
                made to our Compensation Plan





*Binary
      sales* - The
      binary sales segment represented 78% of our total revenue for the fourth
      quarter. During this quarter, our binary sales decreased by 3% or $26,650 over
      the same period last year. Although binary sales still resulted in a decrease
      for this quarter of 3%, this is significantly lower that the annualized rate
      of
      decline. Management feels that this is directly related to the launch of the
      newest product, Ultimate ME2 and the broadening awareness of the positive
      changes to our commission program.





*Direct
      sales* - Direct
      sales decreased 30% or $49,668 over the same period in 2005. The direct sales
      segment represented $114,879 or 11% of the total revenue earned during the
      quarter ended December 31, 2006, as compared to $164,547 or 15% of the total
      revenues earned during the year ended December 31, 2005. Management believes
      that this decline occurred because EYI’s marketing efforts has been
      predominately focused on the binary segment of the business.





**Revenue
      by Segment, 12 Month Results**





Details
      of the most significant changes from the year ended December 31, 2006 to the
      year ended December 31, 2005 are detailed below:





*Binary
      sales* - The
      binary sales segment represents $2,977,091 or 72% of the total revenue earned
      during the year ended December 31, 2006, as compared to $3,758,260 or 75% of
      the
      total revenues earned during the year period ended December 31, 2005. Management
      believes that our inability to attract and retain IBAs during the first three
      quarters of the year hindered our growth and caused the 21% decline in binary
      sales.





*Direct
      sales* - The
      direct sales segment represents $631,895 or 15% of the total revenue earned
      during the year ended December 31, 2006, as compared to $779,028 or 16% of
      the
      total revenues earned during the year ended December 31, 2005. Our direct sales
      segment declined 19% in 2006 and, as indicated above, management feels that
      the
      lack of marketing efforts on this segment directly contributed to the decline.





*Affiliate
      sales* - The
      affiliate sales segment represents $361,278 or 9% of the total revenue earned
      during the year ended December 31, 2006, as compared to $304,568 or 6% of the
      total revenues earned during the year ended December 31, 2005. We realized
      a 19%
      improvement in our affiliate sales over last year. Management believes that
      this
      growth is primarily due to EYI’s infrastructure with respect to processing
      affiliate sales transactions. In addition, commissions paid to our affiliates
      are consistently on time. Management believes that these factors enhance
      customer confidence and consequently, repeat sales.




26




**OPERATING
      EXPENSES**





The
      following table summarizes operating expenditures and the comparative net change
      for the Fourth Quarter and Twelve Month periods:





***Operating
      Expenditures***




**Three
                months ended**
            
            **Year
                ended****31-Dec-06**
            
            **31-Dec-05**
            
            **Variance**
            
            **31-Dec-06**
            
            **31-Dec-05**
            
            **Variance**Consulting
                fees
            
            $209,347
            
            $498,442
            
            ($289,095)
            -58%
            
            $953,085
            
            $1,250,278
            
            ($297,193)
            -24%Legal
                and professional fees
            
            $58,680
            
            $52,858
            
            $5,822
            11%
            
            $486,831
            
            $306,948
            
            $179,883
            59%Customer
                service
            
            $89,559
            
            $36,724
            
            $52,835
            144%
            
            $259,280
            
            $198,500
            
            $60,780
            31%Finance
                and administration
            
            $176,309
            
            $714,905
            
            ($538,596)
            -75%
            
            $819,838
            
            $1,378,118
            
            ($558,280)
            -41%Sales
                and marketing
            
            $29,701
            
            ($31,819)
            
            $61,520
            -193%
            
            $301,332
            
            $15,741
            
            $285,591
            1814%Telecommunications
            
            $41,314
            
            $585,192
            
            ($543,878)
            -93%
            
            $139,269
            
            $946,331
            
            ($807,062)
            -85%Wages
                and benefits
            
            $314,966
            
            $287,191
            
            $27,775
            10%
            
            $1,179,258
            
            $1,282,438
            
            ($103,180)
            -8%Warehouse
                expense
            
            $87,456
            
            $43,658
            
            $43,798
            100%
            
            $317,124
            
            $171,724
            
            $145,400
            85%$1,007,334
            
            $2,187,151
            
            ($1,179,817)
            -54%
            
            $4,456,017
            
            $5,550,077
            
            ($1,094,060)
            -20%




**Operating
      expenditures, Three Month Results**





We
      incurred operating expenses in the amount of $1,007,334 for the three months
      ended December 31, 2006, compared to $2,187,151 for the period ended December
      31, 2005. The overall decline was $1,179,817 or 54%. The following explains
      the
      most significant:





*Consulting
      fees* - For
      the quarter ended December 31, 2006, consulting fees totaled $209,347 and
      represented 21% of our total operating expenditures, as compared to $498,442
      or
      23% of the total operating expenditures for the quarter ended December 31,
      2005.
      The total decline of $289,095 or 58% is primarily attributed to the $274,650
      value of vested stock options as reported in December 2005.





*Finance
      and administration* - For
      the quarter ended December 31, 2006, finance and administration expenditures
      totaled $176,309 and represented 18% of our total operating expenditures, as
      compared to $714,905 or 32% of the total operating expenditures for the quarter
      ended December 31, 2005. The results for 2005 were higher as a result of
      expensing of stock options and financing costs expensed during the year ended
      December 31, 2005.





*Telecommunications* - For
      the quarter ended December 31, 2006, telecommunications totaled $41,314 and
      represented 4% of our total operating expenditures, as compared to $585,192
      or
      27% of the total operating expenditures for the quarter ended December 31,
      2005.
      The results for the prior year are significantly higher due to expenses
      associated with our agreement with Eyewonder.





*Warehouse
      expense* - For
      the quarter ended December 31, 2006, warehouse expenses totaled $87,456 and
      represented 9% of our total operating expenditures, as compared to $43,658
      or 2%
      of the total operating expenditures for the quarter ended December 31, 2005.
      The
      results reflect an increase of 100% for the quarter which relate to the
      additional rent and inventory expenditures associated with our Hong Kong
      operation.




**Operating
      expenditures, Twelve Month Results**





We
      incurred operating expenses in the amount of $4,456,017 for the year ended
      December 31, 2006, compared to $5,550,077 for the period ended December 31,
      2005. The overall decline was $1,094,060 or 20%. The following explains the
      most
      significant changes during the periods presented:





*Consulting
      fees* - For
      the year ended December 31, 2006, consulting fees declined by $297,193 or 24%
      which is primarily attributed to a lesser amount of vested stock options issued
      to consultants during 2006.




27




*Legal
      and professional fees* - For
      the year ended December 31, 2006, legal and professional fees increased by
      $179,882 or 59% over last year. We attribute the increase primarily to the
      costs
      associated with the settlement of the Suhl, Harris and Babich legal
      matter.





*Customer
      Service* - For
      the year ended December 31, 2006, customer services fees increased a total
      of
      $60,780 or 31% over last year. These fees have increased based on the increased
      service provided under our contract with EYI Corp.





*Finance
      and administration* - For
      the year ended December 31, 2006, finance and administration expenditures
      decreased $558,280 or 41% over last year. The results for 2005 were higher
      as a
      result of expensing of stock options and due to expensing $390,000 in financing
      costs during the year ended December 31, 2005.





*Sales
      and marketing* - For
      the year ended December 31, 2006, we increased our sales and marketing
      expenditures by $285,591. These additional expenses relate to the grand opening
      of our Hong Kong office and to the expenditures relating to our North American
      Tour.





*Telecommunications* - For
      the year ended December 31, 2006, telecommunication expenses decreased $807,062
      or 85%. The results for the prior year are significantly higher due to expenses
      associated with Eyewonder.





*Warehouse
      expense* - For
      the year ended December 31, 2006, warehouse expenses increased by a total of
      $145,400 or 85% over the prior year. This increase is attributed to additional
      rental fees and inventory expenditures associated with our Hong Kong
      operation.




**Other
      Income (Expense)** **:**





*Interest
      expense* - For
      the years ended December 31, 2006 and December 31, 2005, we expensed $280,313
      and $179,717 respectively. The current year's results include the interest
      charged to us pursuant to our debentures with Cornell Capital, TAIB Bank, and
      Certain Wealth.





*Financing
      fees* - For
      the year ended December 31, 2006, we incurred total financing fees of $946,564,
      which relate to expenses charged pursuant to our debentures with Cornell
      Capital, TAIB Bank, and Certain Wealth.





*Loss
      on derivatives* **** -
      For the
      year ended December 31, 2006, the Company reported a loss on derivatives in
      the
      amount of $2,928,321, which is made up of the following two
      components:




·
            At
                December 31, 2006, the Company revalued the derivative embedded in
                each of
                the three convertible debentures at $415,758 each or a total of
                $1,247,294. For the year ended December 31, 2006, the Company recognized
                a
                loss of $366,107.





·
            At
                December 31, 2006, the Company also calculated a marked-to-market
                adjustment for the warrants issued to Cornell Capital in connection
                with
                the convertible debenture. For the year ended December 31, 2006,
                the
                Company recognized a loss of $2,562,214 as a result of this
                valuation.




**FINANCIAL
      CONDITION**


**Working
                  Capital****As
                  at**
                **31-Dec-06**
              **As
                  at**
                **31-Dec-05**
              **Variance**Current
                  assets
              $1,904,110
              $382,057
              $1,522,053
              398%Current
                  Liabilities
              $5,928,737
              $2,347,087
              $3,581,650
              153%Working
                  Capital (deficit)
              ($4,024,627)
              ($1,965,030)
              ($2,059,597)
              105%


We
      had
      cash and cash equivalents in the amount of $901,764 as of December 31, 2006
      compared to cash in the amount of $25,639 as of December 31, 2005. We had a
      working capital deficit of $4,024,627 as of December 31, 2006 compared to a
      working capital deficit of $1,965,030 as of December 31, 2005.




28




*Current
      Assets* - We had
      an increase of $1,522,052 or 398% in our current assets since December 31,
      2005.
      This increase relates to cash proceeds received from Cornell Capital, additional
      product inventory, and inventory prepayments.





*Current
      Liabilities* - We had
      an increase of $3,581,650 or 153% in our current liabilities since December
      31,
      2005. This increase is primarily attributed the Cornell Capital convertible
      debt
      and its related interest and derivative.




**Liabilities****As
                  at**
                **31-Dec-06**
              **As
                  at**
                **31-Dec-05**
              **Variance**Accounts
                  payable and accrued liabilities
              $1,427,214
              $1,929,049
              ($501,835)Accounts
                  payable - related parties
              $439,256
              $328,038
              $111,218Convertible
                  debt - related party, net of discount
              $252,326
              $0
              $252,326Derivative
                  on convertible debt
              $2,456,311
              $0
              $2,456,311Interest
                  payable, convertible debt
              $1,303,630
              $0
              $1,303,630Notes
                  payable - related party
              $50,000
              $90,000
              ($40,000)$5,928,737
              $2,347,087
              $3,581,650


**Cash
      Provided By Financing Activities**





We
      have
      continued to finance our business primarily through equity financing agreements
      Cash provided by financing activities for the year ended December 31, 2006
      was
      $5,114,565, compared to $1,394,044 for the year ended December 31,
      2005.





**Financing
      Requirements**




Our
      consolidated financial statements included with this Annual Report on Form
      10-KSB have been prepared assuming that we will continue as a going concern.
      As
      shown in the accompanying financial statements, we had negative working capital
      of approximately $4,025,000 and an accumulated deficit of approximately
      $18,453,000 incurred through December 31, 2006.




Our
      current sources of working capital may not be sufficient to satisfy our
      anticipated current working capital needs. In the event we do not receive
      further financing from Cornell or other third parties to fully implement our
      business plan we may be required to seek additional financing. We may not be
      able to obtain additional working capital on acceptable terms, or at all.
      Accordingly, there is substantial doubt about our ability to continue as a
      going
      concern. We anticipate that any additional financing would be through the sales
      of our common or preferred stock or placement of convertible debt.




In
      the
      event that we are unable to raise additional financing on acceptable terms,
      then
      we may have to scale back our plan of operations and operating expenditures.
      We
      anticipate that we will continue to incur losses until such time as the revenues
      we are able to generate from sales and licensing of our products exceed our
      increased operating expenses. We base this expectation in part on the
      expectation that we will incur increased operating expenses in completing our
      stated plan of operations and there is no assurance that we will generate
      revenues that exceed these expenses.




29




**OFF-BALANCE
      SHEET ARRANGEMENTS**





We
      have
      no significant off-balance sheet arrangements that have, or are reasonably
      likely to have, a current or future effect on our financial condition, changes
      in financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources.





**RISK
      FACTORS**





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





We
      have a
      history of losses. We have incurred an operating loss since inception and had
      an
      accumulated deficit of $18,452,975 as of December 31, 2006. Consequently, we
      will in all likelihood, have to rely on external financing for all of our
      capital requirements. Future losses are likely to continue unless we
      successfully implement our business plan, which calls for us to increase
      revenues. If we continue to experience losses we may be forced to curtail or
      cease our business operations.





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





Our
      independent auditors have added an explanatory paragraph to their audit issued
      in connection with the financial statements for the period ended December 31,
      2005 and 2006, relative to our ability to continue as a going concern. We have
      negative working capital of approximately $4,025,000 and an accumulated deficit
      incurred through December 31, 2006, which raises substantial doubt about our
      ability to continue as a going concern. Our ability to obtain additional funding
      will determine our ability to continue as a going concern. Accordingly, there
      is
      substantial doubt about our ability to continue as a going concern. Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





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





We
      have
      relied on significant external financing to fund our operations. As of December
      31, 2006, we had $901,764 in cash and our total current assets were $1,904,110.
      Our current liabilities were $5,928,737 as of December 31, 2006. Our net working
      capital deficit was $4,024,627 as of December 31, 2006. We will need to raise
      additional capital to fund our anticipated operating expenses and future
      expansion. Among other things, external financing may be required to cover
      our
      operating costs. Unless we obtain profitable operations, it is unlikely that
      we
      will be able to secure financing from external sources. In the event we do
      not
      obtain the necessary financing to fund our anticipated operating expenses,
      we
      will be forced to reduce our personnel and curtail other operating expenses.





**The
      Sale Of Our Common Stock To Raise Capital May Cause Dilution To Our Existing
      Shareholders.**





Our
      inability to obtain adequate financing will result in the need to curtail
      business operations. Any of these events would be materially harmful to our
      business and may result in a lower stock price. Our inability to obtain adequate
      financing will result in the need to curtail business operations and
      shareholders may lose their entire investment.




**We
      May Not Be Able To Compete Effectively Against Our Competitors, Which Could
      Force Us To Curtail Or Cease Business Operations**





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





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





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




30




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





Many
      of
      the ingredients in our current products, and we anticipate in our future
      products, will be vitamins, minerals, herbs and other substances for which
      there
      is not a long history of human consumption. Although we believe all of our
      products to be safe when taken as directed by us, there is little experience
      with human consumption of certain of these product ingredients in concentrated
      form. In addition, we are highly dependent upon consumers’ perception of the
      safety and quality of our products, as well as similar products distributed
      by
      other companies.


Any
      reduction in purchases or consumption of our existing products could force
      us to
      curtail or cease our business operations.




**We
      Could Be Adversely Affected In The Event Any Of Our Products Or Any Similar
      Products Distributed By Other Companies Should Prove Or Be Asserted To Be
      Harmful To Consumers.**





In
      addition, because of our dependence upon consumer perceptions, adverse publicity
      associated with illness or other adverse effects resulting from consumers’
failure to consume our products as we suggest or other misuse or abuse of our
      products or any similar products distributed by other companies could have
      a
      material adverse effect on the results of our operations and financial
      condition.





**Adverse
      Publicity With Respect To Nutritional, Water Filtration or Fuel Additive
      Products May Force Us To Curtail Or Cease Our Business
      Operations**





In
      the
      future, scientific research and/or publicity may not be favorable with respect
      to the products we market and sell. Future reports of unfavorable to our
      products could force us to curtail or cease our business operations




Because
      of our dependence upon consumer perceptions, adverse publicity associated with
      illness or other adverse effects resulting from the consumption or use of our
      products or any similar products distributed by other companies could have
      a
      material adverse effect on our operations. Such adverse publicity could arise
      even if the adverse effects associated with such products resulted from
      consumers’ failure to consume or use products as directed. In addition, we may
      not be able to counter the effects of negative publicity concerning the efficacy
      of our products.





**We
      Will Have to Develop New Products In Order To Keep Pace With Changing Consumer
      Demands Or We Could Be Forced to Cease Or Curtail Our Business Operations**





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





We
      believe that any future success of our Company will depend, in part, on our
      ability to anticipate changes in consumer preferences and acquire, manage,
      develop and introduce, in a timely manner, new products that adequately address
      such changes. If we are unable to develop and introduce new products or if
      our
      new products are unable to achieve and maintain market acceptance, our sales
      may
      be adversely affected as customers seek competitive products. In the past,
      we
      have engaged in very limited research and development with respect to the
      development of new products, as indicated by our lack of research and
      development expenses. Our lack of experience in developing and introducing
      new
      products, combined with our limited financial resources, may prevent us from
      successfully developing and introducing any new products in the future. Failure
      to develop new products could force us to curtail or cease our business
      operations.




**If
      We Fail To Further Penetrate And Expand Our Business In Existing Markets, Then
      The Growth In Sales Of Our Products, Along With Our Operating Results, Could
      Be
      Negatively Impacted**





The
      success of our business is contingent on our ability to continue to grow by
      further penetrating existing markets, both domestically and internationally.
      Our
      ability to further penetrate existing markets in which we compete is subject
      to
      numerous factors, many of which are out of our control. For example, government
      regulations in both our domestic and international markets can delay or prevent
      the introduction, or require the reformulation or withdrawal, of some of our
      products, which could negatively impact our business, financial condition and
      results of operations. Also, our ability to increase market penetration in
      certain countries may be limited by the number of persons in a given country
      inclined to pursue a network marketing business opportunity. Moreover, our
      growth will depend upon improved training and other activities that enhance
      distributor retention in our markets. As we continue to focus on expanding
      our
      existing international operations may increase, which could harm our financial
      conditional and operating results.




31




**Failure
      To Expand Into, Or To Succeed In, New International Markets Will Limit Our
      Ability To Grow Sales Of Our Products**





We
      believe that our ability to achieve future growth is dependent in part on our
      ability to continue our international expansion efforts. However, there can
      be
      no assurance that we could be able to enter new international markets on a
      timely basis, or that new markets would be profitable. We must overcome
      significant regulatory and legal barriers before we can begin marketing in
      any
      foreign market. Our operations in some markets also may be adversely affected
      by
      political, economic and social instability in foreign countries.





We
      may be
      required to reformulate certain of our products before commencing sales in
      a
      given country. Once we have entered a market, we must adhere to the regulatory
      and legal requirements of that market. No assurance can be given that we would
      be able to successfully reformulate our products in any of our potential
      international markets to meet local regulatory requirements or attract local
      customers. The failure to do so could result in increased costs of producing
      products and adversely affect our financial condition. There can be no assurance
      that we would be able to obtain and retain necessary permits and approvals.





Also,
      it
      is difficult to assess the extent to which our products and sales techniques
      would be accepted or successful in any given country. In addition to significant
      regulatory barriers, we may also encounter problems conducting operations in
      new
      markets with different cultures and legal systems from those encountered
      elsewhere.





Additionally,
      in many markets, other network marking companies already have significant market
      penetration, the effect of which could be to desensitize the local distributor
      population to a new opportunity, or to make it more difficult for us to recruit
      qualified distributors. There can be no assurance that, even if we were able
      to
      commence operations in new foreign countries, there would be a sufficiently
      large population of potential distributors inclined to participate in a network
      marketing system offered by us. We believe our future success could depend
      in
      part on our ability to integrate our business methods, including our distributor
      compensation plan, across all markets in which our products are sold. If we
      are
      unable to expand our operations in new international markets, we could be forced
      to curtail our business operations.





**Our
      Marketing System Could Be Found To Not Comply With Applicable Laws and
      Regulations**





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





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





**We
      Are Dependent On Our IBAs For Our Product Marketing Efforts; The Loss of A
      Significant Number Of IBA's Or The Loss Of A Key IBA Could Adversely Affect
      our
      Sales**





Our
      success and growth depend upon our ability to attract, retain and motivate
      our
      network of IBAs who market our products. IBAs are independent contractors who
      purchase products directly from us for resale and their own use. IBAs typically
      offer and sell our products on a part-time basis and may engage in other
      business activities, possibly including the sale of products offered by our
      competitors. Typically, we have non-exclusive arrangements with our IBAs, which
      may be canceled on short notice and contain no minimum purchase requirements.
      While we encourage IBAs to focus on the purchase and sale of our products,
      they
      may give higher priority to other products, reducing their efforts devoted
      to
      marketing our products. Also, our ability to attract and retain IBAs could
      be
      negatively affected by adverse publicity relating to us, our products or our
      operations, as well as changes to our commission plan. In addition, as a result
      of our network marketing program, the down-line organizations headed by a
      relatively small number of key IBAs are responsible for a significant percentage
      of total sales. The loss of a significant number of IBAs, including any key
      IBA,
      for any reason, could adversely affect our sales and operating results, and
      could impair our ability to attract new IBAs. The loss of any IBAs could
      potentially reduce our sales and force us to curtail or cease our business
      operations. There is no assurance that our network marketing program will be
      successful or that we will be able to retain or expand our current network
      of
      IBAs.




32




**Since
      We Cannot Exert The Same Level Of Influence Or Control Over Our IBAs As We
      Could
      If They Were Our Own Employees, Our IBAs Could Fail to Comply With Our
      Distributor Policies and Procedures, Which Could Result In Claims Against Us
      That Could Harm Our Financial Condition and Operating
      Results**





Our
      IBAs
      are independent contractors and, accordingly, we are not in a position to
      directly provide the same direction, motivation and oversight as we would if
      our
      distributors were our own employees. As a result, there can be no assurance
      that
      our distributors will participate in our marketing strategies or plans, accept
      our introduction of new products, or comply with our IBA Policies and
      Procedures.





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





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





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





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





·
            the
                evolving interpretations of existing laws and regulations, and




·
            the
                enactment of new laws and regulations pertaining in general to network
                marketing organizations and product distribution.




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





**The
      Legality Of Our Network Marketing Program Is Subject To Challenge By Our
      IBAs**





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




33




·
            our
                network marketing policies were enforced and




·
            the
                network marketing program and IBAs’ compensation thereunder serve as
                safeguards to deter inventory loading and encourage retail sales
                to the
                ultimate consumers.




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





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





·
            demonstrate
                that our network marketing policies are enforced,
                and





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




**Network
      marketing is subject to intense government scrutiny and regulation, which adds
      to the expense of doing business and the possibility that changes in the law
      might adversely affect our ability to sell some of our products in certain
      markets.**




Network
      marketing companies, such as ours, are frequently subject to laws and
      regulations directed at ensuring that product sales are made to consumers of
      the
      products and that compensation, recognition, and advancement within the
      marketing organization are based on the sale of products rather than investment
      in the sponsoring company. We are subject to the risk that, in one or more
      of
      our present or future markets, our marketing system could be found not to comply
      with these laws and regulations or may be prohibited. Failure to comply with
      these laws and regulations or such a prohibition could have a material adverse
      effect on our business, financial condition, and results of operations. Further
      we may simply be prohibited from distributing products through a
      network-marketing channel in some foreign countries, or be forced to alter
      our
      compensation plan.




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





·
            the
                FTC will not question our advertising or other operations in the
                future,





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





·
            future
                FTC regulations or decisions will not restrict the permissible scope
                of
                such claims.





We
      are
      also subject to the risk that new laws or regulations might be implemented
      or
      that current laws or regulations might change, which could require us to change
      or modify the way we conduct business in certain markets. This could be
      particularly detrimental to us if we had to change or modify the way we conduct
      business in markets that represent a significant percentage of our net sales.
      The FTC released a proposed New Business Opportunity Rule on April 5,
      2006. The proposed rule would require pre-sale disclosures for all business
      opportunities, which might include network marketing compensation plans. The
      New
      Business Opportunity Rule is currently only a proposed rule. If implemented
      at all, the rule ultimately may not be implemented in a form that applies
      to network marketing compensation plans, or it may change significantly before
      it is implemented. If the proposed rule were adopted as currently proposed,
      it would require changes to practices regarding pre-sale
      disclosures.





In
      particular, in the past few years, the FTC has
      taken
      enforcement action against several dietary supplement companies and against
      manufacturers of weight loss products generally for false and misleading
      advertising of some of their products. FTC enforcement actions have resulted
      in
      consent decrees and significant monetary fines. While we have not been the
      target of FTC enforcement action against our product advertising, we cannot
      guarantee that the FTC, or comparable foreign agencies, will not challenge
      our
      advertising or other operations in the future.





34





**We
      Are Subject To The Risk Of Claims By Distributors And Their Customers Who May
      File Actions On Their Own Behalf, As A Class Or Otherwise, And May File
      Complaints With The FTC Or State Or Local Consumer Affairs
      Offices**





These
      agencies may take action on their own initiative against us for alleged
      advertising or product claim violations or on a referral from distributors,
      consumers or others. Remedies sought in such actions may include consent decrees
      and the refund of amounts paid by the complaining distributor or consumer,
      refunds to an entire class of distributors or customers, or other damages,
      as
      well as changes in our method of doing business. A complaint based on the
      practice of one distributor, whether or not we authorized the practice, could
      result in an order affecting some or all distributors in a particular state.
      Also, an order in one state could influence courts or government agencies in
      other states considering similar matters. Proceedings resulting from these
      complaints may result in significant defense costs, settlement payments or
      judgments and could have a material adverse effect on us. The FTC has increased
      its scrutiny of the use of distributor testimonials. Although it is impossible
      for us to monitor all the product claims made by our independent distributors,
      we make efforts to monitor distributor testimonials and restrict inappropriate
      distributor claims.




**We
      Face Substantial Competition In The Dietary Supplement, Personal Care Industry,
      Water Filtration Category and Fuel Additive Industry Including Products That
      Compete Directly With Calorad**




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




**Depending
      On The Product Category, Our Competition Varies**




Calorad
      competes directly with Colvera, a product with different ingredients but a
      similar concept. Additionally, Calorad competes indirectly with food plans
      such
      as Weight Watchers and meal replacement products such as Slim Fast. Our Noni
      Plus product competes with Morinda and others. Ultimate ME2 competes with Fuel
      Freedom International, a fuel performance product. Code Blue water filtration
      system competes with the Brita Products Company which also sells a water
      filtration system. Our other products have similar well-funded and sophisticated
      competitors. Increased competitive activity from such companies could make
      it
      more difficult for us to increase or keep market share, since such companies
      have greater financial and other resources available to them and possess far
      more extensive manufacturing, distribution and marketing
      capabilities.





**Government
      Regulation By The FDA And Other Federal And State Entities Of Our Products
      Can
      Impact Our Ability To Market Products**





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





On
      March
      7, 2003, the FDA proposed a new regulation to require current good manufacturing
      practices, or cGMPs, affecting the manufacturing, packing and holding of dietary
      supplements. The proposed regulation would establish standards to ensure that
      dietary supplements and dietary ingredients are not adulterated with
      contaminants or impurities and are labeled to accurately reflect the active
      ingredients and other ingredients in the products. It also includes proposed
      requirements for designing and constructing physical plants, establishing
      quality control procedures, and testing manufactured dietary ingredients and
      dietary supplements, as well as proposed requirements for maintaining records
      for handling consumer complaints related to current good manufacturing
      practices. The final rule resulting from this rulemaking process is currently
      undergoing review by the Office of Management and Budget. Publication of the
      final rule is expected in the near future. Because of the long delay in issuing
      the final rule, there is considerable uncertainty as to the provisions of the
      final rule, and as to how large an impact the rule will have on the dietary
      supplement industry.




35




We
      anticipate that the new GMPs, once finalized, will be more detailed and rigorous
      than the GMPs that currently apply to dietary supplements. In particular, they
      may require dietary supplements to be prepared, packaged, produced and held
      in
      compliance with standards similar to those required for drugs.




Our
      failure to comply with applicable FDA regulatory requirements could result
      in,
      among other things, injunctions, product withdrawals, recalls, product seizures,
      fines and criminal prosecutions. We intend to comply with any new cGMPs that
      are
      adopted. We recognize, however, that compliance with new GMPs may require us
      to
      expend additional, potentially substantial, capital and resources on
      manufacturing controls and increased testing of raw materials and finished
      products in the future in order to comply with the law and meet higher quality
      standards.




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





·
            is
                a product (other than tobacco) that is intended to supplement the
                diet
                that bears or contains one or more of the following dietary ingredients:
                a
                vitamin, a mineral, a herb or other botanical, an amino acid, a dietary
                substance for use by man to supplement the diet by increasing the
                total
                daily intake, or a concentrate, metabolite, constituent, extract,
                or
                combinations of these ingredients.




·
            is
                intended for ingestion in pill, capsule, tablet, or liquid form.




·
            is
                not represented for use as a conventional food or as the sole item
                of a
                meal or diet.




·
            is
                labeled as a “dietary supplement.”




Personal
      care products are intended to be applied to the human body for cleansing,
      beautifying, promoting attractiveness, or altering the appearance without
      affecting the body’s structure or functions. Included in this definition are
      products such as skin creams, lotions, perfumes, lipsticks, fingernail polishes,
      eye and facial make-up preparations, shampoos, permanent waves, hair colors,
      deodorants, and any material intended for use as a component of a cosmetic
      product, provided such products are not promoted with drug claims. In general,
      our cosmetic products are not subject to pre-market approval by the FDA.
      Cosmetics are, however, subject to regulation by the FDA under the Federal
      Food,
      Drug and Cosmetic Act adulteration and misbranding provisions. They are also
      subject to specific labeling regulations, including warning statements, if
      the
      product's safety is not adequately substantiated or if it may be hazardous,
      as
      well as ingredient statements and other packaging requirements under the Fair
      Packaging and Labeling Act. Cosmetics that meet the definition of a drug (i.e.
      that are intended to treat or prevent disease or affect the structure or
      function of the body), such as sunscreens, are regulated as drugs. Cosmetics
      that bear label claims that expressly or impliedly suggest that the product
      serves such drug purposes will also be regulated as drugs. As a marketer of
      products that are ingested by consumers or applied topically, we are subject
      to
      the risk that one or more of the ingredients in our products may become the
      subject of adverse regulatory action or product liability action.





Dietary
      supplements must follow labeling guidelines outlined by the FDA.


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




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




36




In
      general, no governmental agency or other third party makes a determination
      as to
      whether our products qualify as dietary supplements or personal care products
      prior to introducing such products into the marketplace. We make this
      determination based on the ingredients contained in the products and the claims
      we make for the products.





On
      December 9, 2006, President Bush signed the Dietary Supplement &
Nonprescription Drug Consumer Protection Act into law. This Act requires
      manufacturers of dietary supplement and over-the-counter products to notify
      the
      FDA when they receive reports of serious adverse events. Implementing
      regulations are due to be issued later in 2007. Expenditure of significant
      resources may be required to implement programs that comply with the
      requirements of these regulations.




**If
      The FTC Or Certain States Object To Our Product Claims And Advertising We May
      Be
      Forced To Give Refunds, Pay Damages, Provide Consumer Redress, Enter into a
      Consent Decree, Cease Marketing Certain Products Or Change Our Business Methods
      or Promotional Practices**




The
      Federal Trade Commission and certain states regulate advertising, product
      claims, and other consumer matters, including advertising of our products.
      In
      the past several years the Federal Trade Commission has instituted enforcement
      actions against many dietary supplement companies for false or deceptive
      advertising of certain products. In addition, the FTC has increased its scrutiny
      of the use of testimonials and is currently considering revision of its
      guidelines governing the use of testimonials and endorsements. We provide no
      assurance that:





·
            the
                FTC will not question our past or future advertising or other operations;
                or




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




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





·
            entries
                of consent decrees;




·
            refunds
                of amounts paid by the complaining IBA or
                consumer;




·
            refunds
                to an entire class of IBAs or
                customers;




·
            other
                damages; and




·
            changes
                in our method of doing business.




**A
      Large Portion Of Our Sales Is Attributable To Calorad**




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




**Our
      Products Are Subject To Obsolescence; Which Could Reduce Our Sales
      Significantly**




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




37




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




**We
      Have No Manufacturing Capabilities And We Are Dependent Upon NDI And Other
      Companies To Manufacture Our Products**




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





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




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




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




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




As
      a
      retailer and distributors of products, we face an inherent risk of exposure
      to
      product liability claims in the event that the use of our products results
      in
      injury. Such claims may include, among others, that our products contain
      contaminants or include inadequate instructions as to use or inadequate warnings
      concerning side effects and interactions with other substances. With respect
      to
      product liability claims, we have coverage of $2,000,000 per occurrence and
      $2,000,000 in the aggregate. Because our policies are purchased on a
      year-to-year basis, industry conditions or our own claims experience could
      make
      it difficult for us to secure the necessary insurance at a reasonable cost.
      In
      addition, we may not be able to secure insurance that will be adequate to cover
      liabilities. We generally do not obtain contractual indemnification from parties
      supplying raw materials or marketing our products. In any event, any such
      indemnification is limited by its’ terms and, as a practical matter, to the
      creditworthiness of the other party. In the event that we do not have adequate
      insurance or contractual indemnification, liabilities relating to defective
      products could require us to pay the injured parties’ damages which are
      significant compared to our net worth or revenues and we could be forced to
      curtail or cease our business operations.




**Although
      We Have Not Experience Any Successful Product Liability Claims, Such Claims
      could Result In Material Losses**




38




In
      the
      event the relationship with any of our manufacturers becomes impaired, we will
      be required to obtain alternative manufacturing sources for our products. In
      such event, there is no assurance that the manufacturing processes of our
      current manufacturers can be replicated by another manufacturer. We believe
      that
      we would be able to obtain alternative sources of our dietary supplement and
      personal care products. A significant delay or reduction in availability of
      products, however, could have a material adverse effect on our business,
      operating results and financial condition. We, as with other marketers of
      products that are intended to be ingested, face the inherent risk of exposure
      to
      product liability claims in the event that the use of our products results
      in
      injury. We maintain product liability insurance coverage with coverage limits
      of
      $2,000,000 per occurrence and $2,000,000 aggregate. Although we have not
      experienced any successful product liability claims, such claims could result
      in
      material losses.




**There
      Can Be No Assurance That Another Company Will Not Replicate One Or More Of
      Our
      Products**





We
      use
      several trademarks and trade names in connection with our products and
      operations, as further described below. We rely on common law trademark rights
      to protect our unregistered trademarks. Common law trademark rights do not
      provide with the same level of protection as afforded by a United States federal
      registration of a trademark. Also, common law trademark rights are limited
      to
      the geographic area in which the trademark is actually used. In addition, our
      product formulations are not protected by patents and are not patentable.




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




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




**We
      Often Use Our Securities As Consideration In Contracts Related To Our
      Operations; Which Will Cause Existing Shareholders To Experience
      Dilution**




We
      often
      issue our securities as consideration in contracts related to our operations.
      We
      issued our securities in these transactions primarily because historically
      we
      have had insufficient cash to fund our operations. During 2006, we issued
      817,254 restricted common shares for consulting services. As a result of such
      issuances, existing shareholders of EYI have experienced a dilutive impact
      to
      their ownership of our company. We may be forced to issue additional securities
      of EYI in future transactions in lieu for cash and shareholders would experience
      additional dilution.





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





Our
      common stock is traded on the Over-the-Counter Bulletin Board. Our common stock
      is thinly traded compared to larger, more widely known companies in the
      nutritional supplement industry. Thinly traded common stock can be more volatile
      than common stock traded in an active public market. The high and low bid price
      of our common stock for the last two years was $0.19 and $0.01, respectively.
      Our common stock has experienced, and is likely to experience in the future,
      significant price and volume fluctuations, which could adversely affect the
      market price of our common stock without regard to our operating performance.
      In
      addition, we believe that factors such as quarterly fluctuations in our
      financial results and changes in the overall economy or the condition of the
      financial markets could cause the price of our common stock to fluctuate
      substantially.





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





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





·
            With
                a price of less than $5.00 per
                share;




·
            That
                are not traded on a “recognized” national
                exchange;




39




·
            Whose
                prices are not quoted on the Nasdaq automated quotation system (Nasdaq
                listed stock must still have a price of not less than $5.00 per share);
                or




·
            In
                issuers with net tangible assets less than $2.0 million (if the issuer
                has
                been in continuous operation for at least three years) or $5.0 million
                (if
                in continuous operation for less than three years), or with average
                revenues of less than $6.0 million for the last three
                years.




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





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





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





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





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





40




**ITEM
      7.**  **FINANCIAL
      STATEMENTS.**




**Page**Report
                  of Independent Registered Public Accounting Firm
              **42**Financial
                  StatementsConsolidated
                  Balance Sheets as of December 31, 2006
              **43**Consolidated
                  Statements of Operations and Comprehensive Loss For the period
                  from
                  Inception to December 31, 2006
              **44**Consolidated
                  Statement of Cash Flows For the period from Inception to December
                  31,
                  2006
              **49**Consolidated
                  Statement of Stockholders’ Equity/Deficit For the period from Inception to
                  December 31, 2006
              **45**Notes
                  to Financial Statements
              **51**




41




Board
      of
      Directors


EYI
      Industries, Inc.


Burnaby,
      British Columbia, Canada





REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





We
      have
      audited the accompanying consolidated balance sheet of EYI Industries, Inc.
      as
      of December 31, 2006 and December 31, 2005 and the related consolidated
      statements of operations, stockholders' deficit and cash flows for the periods
      then ended. These consolidated financial statements are the responsibility
      of
      the Company's management. Our responsibility is to express an opinion on these
      consolidated financial statements based on our audit.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of EYI Industries, Inc. as
      of
      December 31, 2006 and December 31, 2005 and the results of its operations,
      stockholders' equity and its cash flows for the years then ended in conformity
      with accounting principles generally accepted in the United States of
      America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the consolidated
      financial statements, the Company has recorded significant losses from
      operations, has insufficient revenues to support operational cash flows and
      has
      a working capital deficit which together raise substantial doubt about its
      ability to continue as a going concern. These factors raise substantial doubt
      about the Company's ability to continue as a going concern. Management's plans
      in regards to these matters are described in Note 2. The financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.








/s/
      Williams & Webster


Williams
      & Webster, P.S.


Certified
      Public Accountants


Spokane,
      Washington


March
      30,
      2007





42




**EYI
                INDUSTRIES, INC.****CONSOLIDATED
                BALANCE SHEETS**December
                31, 2006
            
            December
                31, 2005**ASSETS**CURRENT
                ASSETSCash
            
            $
            901,764
            
            $
            25,639Accounts
                receivable, net of allowance
            
            
            18,425
            
            
            48,783Other
                accounts receivable
            
            
            67,582
            
            
            -Prepaid
                expenses
            
            
            181,048
            
            
            12,387Inventory
            
            
            735,291
            
            
            295,248TOTAL
                CURRENT ASSETS
            
            
            1,904,110
            
            
            382,057OTHER
                ASSETSProperty,
                plant and equipment, net
            
            
            77,452
            
            
            49,671Deposits
            
            
            46,432
            
            
            67,603TOTAL
                OTHER ASSETS
            
            
            123,884
            
            
            117,274INTANGIBLE
                ASSETS
            
            
            12,829
            
            
            15,044**TOTAL
                ASSETS**
            
            $
            2,040,823
            
            $
            514,375**LIABILITIES
                AND STOCKHOLDERS' DEFICIT**CURRENT
                LIABILITIESAccounts
                payable and accrued liabilities
            
            $
            1,427,214
            
            
            1,929,049Accounts
                payable - related parties
            
            
            439,256
            
            
            328,038Interest
                payable, convertible debt
            
            
            252,326
            
            
            -Convertible
                debt - related party, net of discount
            
            
            2,456,311
            
            
            -Derivative
                on convertible debt
            
            
            1,303,630
            
            
            -Notes
                payable - related party
            
            
            50,000
            
            
            90,000TOTAL
                CURRENT LIABILITIES
            
            
            5,928,737
            
            
            2,347,087Net
                liabilities from discontinued operations
            
            
            375,344
            
            
            375,344MINORITY
                INTEREST IN SUBSIDIARY
            
            
            120,739
            
            
            262,057STOCKHOLDERS'
                DEFICITPreferred
                stock, $0.001 par value; 10,000,000 shares authorized, no shares
                issued
                and outstanding
            
            
            -
            
            
            -Common
                stock, $0.001 par value; 3,000,000,000 shares authorized, 345,675,516
                and
                217,600,875 shares issued and outstanding, respectively
            
            
            345,675
            
            
            217,600Additional
                paid-in capital
            
            
            9,536,004
            
            
            6,155,518Stock
                options and warrants
            
            
            4,382,299
            
            
            2,698,984Subscription
                receivable
            
            
            (195,000
            )
            
            (195,000
            )Accumulated
                deficit
            
            
            (18,452,975
            )
            
            (11,347,215
            )TOTAL
                STOCKHOLDERS' DEFICIT
            
            
            (4,383,997
            )
            
            (2,470,113
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT**
            
            $
            2,040,823
            
            $
            514,375




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


43





**EYI
                INDUSTRIES, INC.****CONSOLIDATED
                STATEMENTS OF OPERATIONS**Year
                Ended
            
            Year
                EndedDecember
                31, 2006
            
            December
                31, 2005**REVENUE,
                NET OF RETURNS AND ALLOWANCES**
            
            $
            4,131,437
            
            $
            4,980,408**COST
                OF GOODS SOLD**
            
            
            1,261,702
            
            
            1,165,976**GROSS
                PROFIT BEFORE COMMISSION EXPENSE**
            
            
            2,869,735
            
            
            3,814,432**COMMISSION
                EXPENSE**
            
            
            1,514,779
            
            
            1,930,925**GROSS
                PROFIT AFTER COST OF GOODS SOLD AND COMMISSION
                EXPENSE**
            
            
            1,354,956
            
            
            1,883,507**OPERATING
                EXPENSES**Consulting
                fees
            
            
            953,085
            
            
            1,250,278Legal
                and professional fees
            
            
            486,831
            
            
            306,948Customer
                service
            
            
            259,280
            
            
            198,500Finance
                and administration
            
            
            819,838
            
            
            1,378,118Sales
                and marketing
            
            
            301,332
            
            
            15,741Telecommunications
            
            
            139,269
            
            
            946,331Wages
                and benefits
            
            
            1,179,258
            
            
            1,282,438Warehouse
                expense
            
            
            317,124
            
            
            171,724TOTAL
                OPERATING EXPENSES
            
            
            4,456,017
            
            
            5,550,077**LOSS
                FROM OPERATIONS**
            
            
            (3,101,061
            )
            
            (3,666,570
            )**OTHER
                INCOME (EXPENSES)**Interest
                and other income
            
            
            2,610
            
            
            3,978Interest
                expense
            
            
            (280,313
            )
            
            (179,717
            )Financing
                fees
            
            
            (946,564
            )
            
            -Gain/(loss)
                on derivatives
            
            
            (2,928,321
            )
            
            -Foreign
                currency gain (discount)
            
            
            6,572
            
            
            (124,096
            )TOTAL
                OTHER INCOME (EXPENSES)
            
            
            (4,146,016
            )
            
            (299,835
            )**NET
                LOSS BEFORE TAXES**
            
            
            (7,247,077
            )
            
            (3,966,405
            )**PROVISION
                FOR INCOME TAXES**
            
            
            -
            
            
            -**NET
                LOSS BEFORE ALLOCATION TO MINORITY INTEREST**
            
            
            (7,247,077
            )
            
            (3,966,405
            )**ALLOCATION
                OF LOSS TO MINORITY INTEREST**
            
            
            141,318
            
            
            84,763**LOSS
                FROM DISCONTINUED OPERATIONS**
            
            
            -
            
            
            (380,368
            )**NET
                LOSS**
            
            $
            (7,105,759
            )
            $
            (4,262,010
            )**BASIC
                AND DILUTED****NET
                LOSS PER COMMON SHARE**
            
            $
            (0.02
            )
            $
            (0.02
            )**WEIGHTED
                AVERAGE NUMBER OF****COMMON
                STOCK SHARES OUTSTANDING****FOR
                BASIC AND DILUTED CALCULATION**
            
            
            333,018,096
            
            
            200,846,048




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





44




**EYI
                  INDUSTRIES, INC.****CONSOLIDATED
                  STATEMENT OF STOCKHOLDERS' DEFICIT****Common
                  Stock**
              
              **Additional****Number
                  of**
              
              
              
              **Paid-in**
              
              **Subscription**
              
              **Option/**
              
              **Retained****Shares**
              
              **Amount**
              
              **Capital**
              
              **Receivable**
              
              **Warrants**
              
              **Earnings**
              
              **Total**Balance,
                  December 31, 2004
              
              
              162,753,292
              
              $
              162,753
              
              $
              3,048,606
              
              $
              (15,000
              )
              $
              2,563,044
              
              $
              (7,085,205
              )
              $
              (1,325,802
              )Stock
                  issued at $0.06 per share for promissory note for exercise of
                  options
              
              
              3,000,000
              
              
              3,000
              
              
              177,000
              
              
              (180,000
              )
              
              -
              
              
              -
              
              
              -Vested
                  stock options issued for consulting at an average price of $0.07
                  per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              35,250
              
              
              -
              
              
              35,250Vested
                  stock options issued for employee and management at an average
                  price of
                  $0.07 compensation at per share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              133,750
              
              
              -
              
              
              133,750Stock
                  issued to employee for financing guaranty & pledge valued at $0.05 per
                  share
              
              
              800,000
              
              
              800
              
              
              39,200
              
              
              -
              
              
              -
              
              
              -
              
              
              40,000Nazlin
                  - options exercised
              
              
              250,000
              
              
              250
              
              
              14,750
              
              
              -
              
              
              (5,000
              )
              
              -
              
              
              10,000Gladys
                  Sargeant 506 subscription agreement
              
              
              1,000,000
              
              
              1000
              
              
              4,000
              
              
              -
              
              
              15,000
              
              
              -
              
              
              20,000Vested
                  stock options issued for consulting at an average price of $0.03
                  per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              62,250
              
              
              -
              
              
              62,250Cancelled
                  stock options issued for compensation and consulting at anaverage
                  price of $0.08 per option
              
              
              -
              
              
              -
              
              
              425,300
              
              
              -
              
              
              (425,300
              )
              
              -
              
              
              -Cancelled
                  stock options issued for compensation at $0.20
              
              
              -
              
              
              -
              
              
              2,400
              
              
              -
              
              
              (2,400
              )
              
              -
              
              
              -Stock
                  issued to TAIB Bank to retire $75,000 of $300,000debenture
              
              
              2,027,027
              
              
              2,027
              
              
              72,973
              
              
              -
              
              
              -
              
              
              -
              
              
              75,000Stock
                  issued to TAIB Bank to retire $170,000 of $300,000 debenture plus
                  interest
                  $10,830
              
              
              4,487,096
              
              
              4,487
              
              
              176,343
              
              
              -
              
              
              -
              
              
              -
              
              
              180,830Stock
                  issued to TAIB Bank to retire $5,000 debenture plus interest of
                  14,245
              
              
              375,146
              
              
              375
              
              
              18,870
              
              
              -
              
              
              -
              
              
              -
              
              
              19,245
  45
  Stock
                  issued to Agora as part of contract
              
              
              250,000
              
              
              250
              
              
              12,250
              
              
              -
              
              
              -
              
              
              -
              
              
              12,500Stock
                  issued to Lakhani as part of contract
              
              
              500,000
              
              
              500
              
              
              34,500
              
              
              -
              
              
              -
              
              
              -
              
              
              35,000Stock
                  issued for exercise of options at $0.08 per share
              
              
              100,000
              
              
              100
              
              
              7,900
              
              
              -
              
              
              -
              
              
              -
              
              
              8,000Stock
                  issued to Cornell to retire promissory note
              
              
              22,789,581
              
              
              22,789
              
              
              1,008,099
              
              
              -
              
              
              -
              
              
              -
              
              
              1,030,888Vested
                  stock options issued for consulting at an average price of $0.20
                  per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              33,500
              
              
              -
              
              
              33,500Vested
                  stock options issued for employee and management at an average
                  price of
                  $0.20 compensation at per share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              27,840
              
              
              -
              
              
              27,840Stock
                  issued to Cornell in exchange for $700,000 pursuant to
                  SEDA
              
              
              19,268,733
              
              
              19,269
              
              
              680,731
              
              
              -
              
              
              -
              
              
              -
              
              
              700,000Cancelled
                  stock options issued for compensation
              
              
              -
              
              
              -
              
              
              10,500
              
              
              -
              
              
              (10,500
              )
              
              -
              
              
              -Vested
                  stock options issued for consulting at an average price of $0.20
                  per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              271,550
              
              
              -
              
              
              271,550Beneficial
                  conversion of convertible debt
              
              
              -
              
              
              -
              
              
              422,096
              
              
              -
              
              
              -
              
              
              -
              
              
              422,096Net
                  loss for year ended December 31, 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,262,010
              )
              
              (4,262,010
              )Balance,
                  December 31, 2005
              
              
              217,600,875
              
              
              217,600
              
              
              6,155,518
              
              
              (195,000
              )
              
              2,698,984
              
              
              (11,347,215
              )
              
              (2,470,113
              )Vested
                  stock options issued for consulting at an average price of $0.20
                  per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              3,750
              
              
              -
              
              
              3,750Stock
                  issued to Cornell in exchange for $1,084,565 pursuant to
                  SEDA
              
              
              42,941,686
              
              
              42,942
              
              
              1,041,623
              
              
              -
              
              
              -
              
              
              -
              
              
              1,084,565Shares
                  returned to treasury
              
              
              (268,639
              )
              
              (269
              )
              
              269
              
              
              -
              
              
              -
              
              
              -
              
              
              -Beneficial
                  conversion of convertible debt
              
              
              -
              
              
              -
              
              
              200,207
              
              
              -
              
              
              -
              
              
              -
              
              
              200,207Stock
                  issued to Cornell to retire portion of debenture
              
              
              34,095,618
              
              
              34,096
              
              
              182,140
              
              
              -
              
              
              -
              
              
              -
              
              
              216,236Stock
                  issued to Certain Wealth to retire portion of debenture
              
              
              22,430,351
              
              
              22,430
              
              
              104,195
              
              
              -
              
              
              -
              
              
              -
              
              
              126,625
  46
  Stock
                  issued to TAIB Bank to retire portion of debenture
              
              
              28,058,371
              
              
              28,058
              
              
              130,403
              
              
              -
              
              
              -
              
              
              -
              
              
              158,461Warrants
                  issued to Cornell Capital for financing services
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              3,148,413
              
              
              -
              
              
              3,148,413Vested
                  stock options issued for consulting at $0.10per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              5,000
              
              
              -
              
              
              5,000Vested
                  stock options issued to employees at $0.02per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,400
              
              
              -
              
              
              1,400Expired
                  consultant stock options
              
              
              -
              
              
              -
              
              
              961,300
              
              
              -
              
              
              (961,300
              )
              
              -
              
              
              -Expired
                  employee stock options
              
              
              -
              
              
              -
              
              
              311,717
              
              
              -
              
              
              (311,717
              )
              
              -
              
              
              -Stock
                  issued to Cornell to retire portion of debenture
              
              
              15,371,998
              
              
              15,372
              
              
              95,864
              
              
              -
              
              
              -
              
              
              -
              
              
              111,236Stock
                  issued to Certain Wealth to retire portion of debenture
              
              
              6,825,244
              
              
              6,825
              
              
              42,331
              
              
              -
              
              
              -
              
              
              -
              
              
              49,156Stock
                  issued to TAIB Bank to retire portion of debenture
              
              
              8,546,756
              
              
              8,547
              
              
              53,033
              
              
              -
              
              
              -
              
              
              -
              
              
              61,580Vested
                  stock options issued to employees at $0.06 per share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              40
              
              
              -
              
              
              40Expired
                  consultant stock options
              
              
              -
              
              
              -
              
              
              38,500
              
              
              -
              
              
              (38,500
              )
              
              -
              
              
              -Expired
                  employee stock options
              
              
              -
              
              
              -
              
              
              99,988
              
              
              -
              
              
              (99,988
              )
              
              -
              
              
              -Beneficial
                  conversion of convertible debt
              
              
              -
              
              
              -
              
              
              67,604
              
              
              -
              
              
              -
              
              
              -
              
              
              67,604Stock
                  issued to Cornell to retire portion of debenture
              
              
              17,226,614
              
              
              17,227
              
              
              62,773
              
              
              -
              
              
              -
              
              
              -
              
              
              80,000Stock
                  issued to Certain Wealth to retire portion of debenture
              
              
              14,940,436
              
              
              14,940
              
              
              51,429
              
              
              -
              
              
              -
              
              
              -
              
              
              66,369Stock
                  issued to TAIB Bank to retire portion of debenture
              
              
              18,679,280
              
              
              18,679
              
              
              64,302
              
              
              -
              
              
              -
              
              
              -
              
              
              82,981
  47
  Vested
                  stock options issued to employees at $0.06 per share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,415
              
              
              -
              
              
              1,415Warrants
                  issued to a consulting firm for services
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              862
              
              
              -
              
              
              862Warrants
                  issued to a manufacturer for services
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,440
              
              
              -
              
              
              1,440Expired
                  consultant stock options
              
              
              -
              
              
              -
              
              
              30,000
              
              
              -
              
              
              (30,000
              )
              
              -
              
              
              -Expired
                  employee stock options
              
              
              -
              
              
              -
              
              
              37,500
              
              
              -
              
              
              (37,500
              )
              
              -
              
              
              -Beneficial
                  conversion of convertible debt
              
              
              -
              
              
              -
              
              
              170,669
              
              
              -
              
              
              -
              
              
              -
              
              
              170,669Restricted
                  shares issued to a consultant at $0.006
              
              
              500,000
              
              
              500
              
              
              2,500
              
              
              -
              
              
              -
              
              
              -
              
              
              3,000Restricted
                  shares issued to a consultant at $0.0069
              
              
              317,254
              
              
              317
              
              
              1,872
              
              
              -
              
              
              -
              
              
              -
              
              
              2,189Net
                  loss for year ended December 31, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (7,105,759
              )
              
              (7,105,759
              )345,675,516
              
              $
              345,675
              
              $
              9,536,004
              
              $
              (195,000
              )
              $
              4,382,299
              
              $
              (18,452,975
              )
              $
              (4,383,997
              )




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





48




**EYI
                INDUSTRIES, INC.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS**Year
                Ended
            
            Year
                EndedDecember
                31, 2006
            
            December
                31, 2005**CASH
                FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES**Net
                loss
            
            $
            (7,105,759
            )
            $
            (4,262,010
            )Loss
                allocated to minority interest
            
            
            141,318
            
            
            84,763(7,247,077
            )
            
            (4,346,772
            )Adjustments
                  to reconcile net loss to
                  net cash used by operating activities:Depreciation
                and amortization
            
            
            22,352
            
            
            52,645Stock
                and warrants issued for employee compensation and
                consulting
            
            
            13,907
            
            
            547,800Stock
                issued for options exercised in lieu of debt
            
            
            -
            
            
            11,500Stock
                issued for options exercised in lieu of consulting and legal
                fees
            
            
            -
            
            
            57,500Stock
                issued for consulting services
            
            
            5,189
            
            
            -Stock
                issued for interest on convertible debt
            
            
            -
            
            
            44,570Loss/(gain)
                on valuation of derivative
            
            
            2,928,321
            
            
            -Stock
                issued for financing guaranty & pledge
            
            
            -
            
            
            40,000Discount
                recognized on convertible debt
            
            
            451,356
            
            
            120,276Beneficial
                conversion of convertible debt
            
            
            438,480
            
            
            422,096Liabilities
                in excess of assets on discontinued operations
            
            
            -
            
            
            (30,494
            )Decrease
                (increase) in:Related
                party receivables
            
            
            (67,582
            )
            
            -Accounts
                receivable
            
            
            30,358
            
            
            (12,722
            )Prepaid
                expenses
            
            
            (168,661
            )
            
            840,377Inventory
            
            
            (440,043
            )
            
            (55,607
            )Deposits
            
            
            21,171
            
            
            (65,367
            )Increase
                (decrease) in:Accounts
                payable and accrued liabilities
            
            
            (501,836
            )
            
            788,048Accounts
                payable - related parties
            
            
            111,218
            
            
            168,583Notes
                payable, related party
            
            
            (40,000
            )
            
            -Interest
                payable, convertible debt
            
            
            252,326
            
            
            (10,616
            )Net
                cash used by operating activities
            
            
            (4,190,521
            )
            
            (1,428,183
            )**CASH
                FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES**Decrease
                (increase) in restricted cash
            
            
            -
            
            
            100,248Decrease
                (increase) in property, plant, and equipment
            
            
            (47,919
            )
            
            (39,797
            )Purchase
                of trademarks
            
            
            -
            
            
            (673
            )Net
                cash provided by investing activities
            
            
            (47,919
            )
            
            59,778




49




**CASH
                FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES**Net
                change in bank indebtedness
            
            
            -
            
            
            (72,456
            )Issuance
                of stock, net of private placement costs & warrants
            
            
            -
            
            
            16,500Repayment
                of convertible debt
            
            
            -
            
            
            (250,000
            )Proceeds
                from Cornell SEDA
            
            
            1,084,565
            
            
            700,000Proceeds
                from Cornell promissory note
            
            
            -
            
            
            1,000,000Net
                proceeds from convertible debt
            
            
            4,030,000
            
            
            -Net
                cash provided by financing activities
            
            
            5,114,565
            
            
            1,394,044Net
                increase in cash and cash equivalents
            
            
            876,125
            
            
            25,639**CASH
                - Beginning of Year**
            
            
            25,639
            
            
            -**CASH
                - End of Period**
            
            $
            901,764
            
            $
            25,639**SUPPLEMENTAL
                CASH FLOW DISCLOSURES:**Interest
                expense paid
            
            $
            280,313
            
            $
            179,717Income
                taxes paid
            
            $
            -
            
            $
            -**NON-CASH
                INVESTING AND FINANCING TRANSACTIONS:**Stock
                options and warrants vested for consulting and
                compensation
            
            $
            13,907
            
            $
            547,800Beneficial
                conversion of convertible debt
            
            $
            438,480
            
            $
            -Loss
                on valuation of derivative
            
            $
            2,928,321
            
            $
            -Discount
                recognized on convertible debt
            
            $
            451,356
            
            $
            120,276Stock
                issued for consulting services
            
            $
            5,189
            
            $
            -Stock
                issued for options exercised in lieu of debt
            
            $
            -
            
            $
            11,500Stock
                issued for options exercised in lieu of consulting and legal
                fees
            
            $
            -
            
            $
            67,500Stock
                issued to retire part of prom note
            
            $
            -
            
            $
            175,000Stock
                issued for redemption of convertible debenture
            
            $
            -
            
            $
            250,000Stock
                issued for interest on convertible debenture
            
            $
            -
            
            $
            44,570Stock
                and warrants issued through 506 Private Placement
            
            $
            -
            
            $
            20,000Stock
                issued for financing guaranty & pledge
            
            $
            -
            
            $
            40,000




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





50





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 - DESCRIPTION OF BUSINESS**





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





The
      principal business of the Company is the marketing of health and wellness care
      products, a water filtration system, and a fuel additive product. The Company
      sells its products primarily through network marketing distributors which in
      turn sell the products to the end customers. The Company also sells product
      directly and through affiliates. The Company maintains its principal business
      office in Burnaby, British Columbia. Effective for the period ended December
      31,
      2003, the Company elected to change its year-end from June 30 to December
      31.





The
      Company has six wholly owned subsidiaries. The first subsidiary is Halo
      Distribution LLC (hereinafter “Halo”), which was organized on January 15, 1999,
      in the State of Kentucky. Halo was the distribution center for the Company’s
      product, in addition to other products, until April 30, 2005 at which time
      the
      Company made the decision to discontinue its’ operations. The second subsidiary
      is RGM International Inc., which was incorporated on July 3, 1997, in the State
      of Nevada. RGM International Inc. is a dormant investment company, which owns
      one percent of Halo. The third subsidiary is Essentially Yours Industries
      (Canada) Inc. (hereinafter “EYI Canada”), which was organized on September 13,
      2002, in the province of British Columbia, Canada. EYI Canada markets health
      and
      wellness care products for use in Canada. The fourth subsidiary is 642706 B.C.
      Ltd., doing business as EYI Management, which was organized on February 22,
      2002, in the province of British Columbia, Canada. EYI Management provides
      accounting, customer service and marketing services to the consolidated entity.
      The fifth subsidiary is Essentially Yours Industries (Hong Kong) Limited
      (hereinafter “EYI HK”). EYI HK was organized on August 23, 2005 in Hong Kong.
      EYI HK markets health and wellness care products for use in Hong Kong and China.
      The sixth subsidiary is Essentially Yours Industries (International) Limited
      (hereinafter “EYI INTL”). EYI INTL was organized on December 6, 2005 to
      facilitate the expansion throughout other Southeast Asian
      countries.




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




**N** **OTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES**





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





Accounting
      Method


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




Accounting
      Pronouncements - Recent




In
      February, 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition or results of operation.




51




In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87,88,106, and 132(R)” (hereinafter :SFAS No. 158”). This statement requires
      an employer to recognize the overfunded or underfunded statues of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a not
      for
      profit organization. This statement also requires an employer to measure the
      funded status of a plan as of the date of its year end statement of financial
      position, with limited exceptions. The adoption of this statement had no
      immediate material effect on the Company’s financial condition or results of
      operations.





In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“SFAS No. 157”). This statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (GAAP), and
      expands disclosure about fair value measurements. This statement applies under
      other accounting pronouncements that require or permit fair value measurements.
      This statement does not require any new fair value measurements, but for some
      entities, the application of this statement may change current practice. The
      adoption of this statement had no immediate material effect on the Company’s
      financial condition or results of operations.





In
      June
      2006, the Financial Accounting Standards Board issued FASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition
      threshold and measurement attribute for the financial statement recognition
      and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. FIN 48
      is
      effective for fiscal years beginning after December 15, 2006. The Company does
      not expect the adoption of FIN 48 to have a material impact on its financial
      reporting, and the Company is currently evaluating the impact, if any the
      adoption of FIN 48 will have on its disclosure requirements.




In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 156, “Accounting for Servicing of Financial Assets-an
      amendment of FASB Statement No. 140.”  This statement requires an entity to
      recognize a servicing asset or servicing liability each time it undertakes
      an
      obligation to service a financial asset by entering into a servicing contract
      in
      any of the following situations: a transfer of the servicer’s financial assets
      that meets the requirements for sale accounting; a transfer of the servicer’s
      financial assets to a qualifying special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale securities or trading
      securities; or an acquisition or assumption of an obligation to service a
      financial asset that does not relate to financial assets of the servicer or
      its
      consolidated affiliates.  The statement also requires all separately
      recognized servicing assets and servicing liabilities to be initially measured
      at fair value, if practicable and permits an entity to choose either the
      amortization or fair value method for subsequent measurement of each class
      of
      servicing assets and liabilities.  The statement further permits, at its
      initial adoption,  a one-time reclassification of available for sale
      securities to trading securities by entities with recognized servicing rights,
      without calling into question the treatment of other available for sale
      securities under Statement 115, provided that the available for sale securities
      are identified in some manner as offsetting the entity’s exposure to changes in
      fair value of servicing assets or servicing liabilities that a servicer elects
      to subsequently measure at fair value and requires separate presentation of
      servicing assets and servicing liabilities subsequently measured at fair value
      in the statement of financial position and additional disclosures for all
      separately recognized servicing assets and servicing liabilities. This statement
      is effective for fiscal years beginning after September 15, 2006, with early
      adoption permitted as of the beginning of an entity’s fiscal year. Management
      believes the adoption of this statement will have no impact on the Company’s
      financial condition or results of operations.




In
      February 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial
      Instruments, an Amendment of FASB Standards No. 133 and 140” (hereinafter “SFAS
      No. 155”). This statement established the accounting for certain derivatives
      embedded in other instruments.  It simplifies accounting for certain hybrid
      financial instruments by permitting fair value remeasurement for any hybrid
      instrument that contains an embedded derivative that otherwise would require
      bifurcation under SFAS No. 133 as well as eliminating a restriction on the
      passive derivative instruments that a qualifying special-purpose entity (“SPE”)
      may hold under SFAS No. 140.  This statement allows a public entity to
      irrevocably elect to initially and subsequently measure a hybrid instrument
      that
      would be required to be separated into a host contract and derivative in its
      entirety at fair value (with changes in fair value recognized in earnings)
      so
      long as that instrument is not designated as a hedging instrument pursuant
      to
      the statement.  SFAS No. 140 previously prohibited
      a qualifying special-purpose entity from holding a derivative financial
      instrument that pertains to a beneficial interest other than another derivative
      financial instrument. This
      statement is effective for fiscal years beginning after September 15, 2006,
      with
      early adoption permitted as of the beginning of an entity’s fiscal year.
      Management believes the adoption of this statement will have no impact on the
      Company’s financial condition or results of operations.




52





In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 154, “Accounting Changes  and Error 
Corrections,” (hereinafter “SFAS No. 154”) which replaces Accounting 
Principles Board Opinion No. 20, “Accounting  Changes,” and SFAS No. 3,
“Reporting Accounting Changes in Interim Financial Statements - An Amendment
      of
      APB Opinion No. 28.”  SFAS No. 154 provides guidance on accounting for and
      reporting changes in accounting principle and error corrections.  SFAS No.
      154 requires that changes in accounting principle be applied retrospectively
      to
      prior period financial statements and is effective for fiscal years beginning
      after December 15, 2005.  The Company does not expect SFAS No. 154 to have
      a material impact on its consolidated financial position, results of operations,
      or cash flows.




In
      March
      2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement
      Obligations.”  FIN 47 clarifies that the term “conditional asset retirement
      obligation,” which as used in SFAS No. 143, “Accounting for Asset Retirement
      Obligations,” refers to a legal obligation to perform an asset retirement
      activity in which the timing and (or) method of settlement are conditional
      on a
      future event that may or may not be within the control of the entity.  The
      entity must record a liability for a “conditional” asset retirement obligation
      if the fair value of the obligation can be reasonably estimated.  FIN 47
      also clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation.   FIN 47 is
      effective no later than the end of fiscal years ending after December 15, 2005.
       Management believes the adoption of this statement will have no impact on
      the Company’s financial condition or results of 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.




Accounts
      Receivable and Bad Debts




The
      Company records accounts receivable at net realizable value and estimates bad
      debts utilizing the allowance method, based upon past experience and current
      market conditions. The Company recorded an allowance to cover accounts
      receivable balances over 60 days of $45,570 and $26,346 for December 31, 2006
      and December 31, 2005, respectively.




Advertising
      Expenses




Advertising
      expenses consist primarily of costs incurred in the design, development, and
      printing of Company literature and marketing materials. The Company expenses
      all
      advertising expenditures as incurred. The Company's advertising expenses were
      $75,166 and $39,208 for the year ended December 31, 2006 and December 31, 2005,
      respectively.





Cash
      and
      Cash Equivalents




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





Compensated
      Absences




Employees
      of the Company are entitled to paid vacation, and sick days, depending on job
      classification, length of service, and other factors. The Company accrued
      vacation pay in the amounts of $64,789 and $61,686 at December 31, 2006 and
      December 31, 2005, respectively.





Concentration
      of Credit Risk




The
      Company maintains its cash in two commercial banks. Although the financial
      institutions are considered creditworthy, at December 31, 2006 the Company's
      cash balance exceeded Federal Deposit Insurance Corporation (FDIC) limits by
      $707,116 (see Note 14).




53




Cost
      of
      Sales




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





Derivative
      Instruments




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





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





The
      Company has determined that derivatives existed because of features of the
      convertible debt as of the balance sheet date of December 31, 2006 (See Note
      5.)




Earnings
      Per Share




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





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.




Fair
      Value of Financial Instruments




The
      Company's financial instruments as defined by Statement of Financial Accounting
      Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
      include cash, trade accounts receivable, and accounts payable and accrued
      expenses. All instruments are accounted for on a historical cost basis, which,
      due to the short maturity of these financial instruments, approximates fair
      value at December 31, 2006 and December 31, 2005.





Foreign
      Currency Translation and Other Comprehensive Income




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





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





Foreign
      Currency Valuation and Risk Exposure




While
      the
      Company’s functional currency is the U.S. dollar and the majority of its
      operations are in the United States, the Company maintains its main office
      in
      Burnaby, British Columbia. The Company also maintains an office in Kowloon,
      Hong
      Kong. The assets and liabilities relating to both the Canadian and Hong Kong
      operations are exposed to exchange rate fluctuations. Assets and liabilities
      of
      the Company’s foreign operations are translated into U.S. dollars at the
      year-end exchange rates, and revenue and expenses are translated at the average
      exchange rate during the period. Realized gains and losses from foreign currency
      transactions are reflected in the results of operations.




54




Impaired
      Asset Policy




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





The
      Company does not believe any adjustments are needed to the carrying value of
      its
      assets at December 31, 2006 or December 31, 2005.





Income
      Taxes




The
      Company accounts for income taxes under the provisions of Statement of Financial
      Accounting Standards No. 109, “Accounting for Income Taxes” (hereinafter “SFAS
      No. 109”). This statement requires the recognition of deferred tax liabilities
      and assets for the future consequences of events that have been recognized
      in
      the Company’s consolidated financial statement or tax returns. Measurement of
      the deferred items is based on enacted tax laws. In the event the future
      consequences of differences between financial reporting bases and tax bases
      of
      the Company’s assets and liabilities results in a deferred tax asset, SFAS No.
      109 requires an evaluation of the probability of being able to realize the
      future benefits indicated by such an asset. A valuation allowance related to
      a
      deferred tax asset is recorded when it is more likely than not that some portion
      or all of the deferred tax asset will not be realized. (See Note
      10.)





Inventories




The
      Company records inventories at the lower of cost or market on a first-in,
      first-out basis. The Company’s product inventory is reviewed each month and also
      when the re-order of the product is necessary. On a monthly basis, the Company’s
      inventory is reviewed based on the expiration of our existing inventory. Product
      that has a shelf-life of less than 60 days is written off or discounted. The
      Company expensed $81,913 and $7,881 for the year ended December 31, 2006 and
      December 31, 2005, respectively, for expired product inventory.




A
      re-order review consists of an evaluation of the Company’s current monthly sales
      volume of the product, cost of product, shelf-life of the product, and the
      manufacturers minimum purchase requirement, which all determine the overall
      potential profitability or loss of re-ordering. If the re-order of the product
      has an assessed loss, then the recommendation to management is to remove the
      product from the product line.




Long-lived
      Assets




In
      accordance with Statement of Financial Accounting Standards No. 144, “Accounting
      for the Impairment or Disposal of Long-Lived Assets”. This standard establishes
      a single accounting model for long-lived assets to be disposed of by sale,
      including discontinued operations, and requires that these long-lived assets
      be
      measured at the lower of carrying amount or fair value less cost to sell,
      whether reported in continuing operations or discontinued operations.
      Accordingly, the Company reviews the carrying amount of long-lived assets for
      impairment where events or changes in circumstances indicate that the carrying
      amount may not be recoverable. The determination of any impairment would include
      a comparison of estimated future cash flows anticipated to be generated during
      the remaining life of the assets to the net carrying value of the assets. For
      the years ended December 31, 2006 and, December 31, 2005, no impairments have
      been identified.




Property
      and Equipment




Property
      and equipment are stated at cost. Depreciation of property and equipment is
      calculated using the straight-line method over the estimated useful lives of
      the
      assets, which range from three to seven years. (See Note 6.)





Principles
      of Consolidation




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





Revenue
      Recognition




The
      Company is in the business of selling nutritional products in three categories:
      dietary supplements, personal care products, and water filtration systems.
      Sales
      of personal care products, water filtration systems, and fuel additives;
      individually represent less than 5% of the overall revenue and therefore are
      not
      classified separately in the financial statements. The Company recognizes
      revenue from product sales when the products are shipped and title passes to
      the
      customer Administrative fees charged to the Independent Business Associates
      are
      included in the gross sales and amounted to $150,554 and $128,967 for the years
      ended December 31, 2006 and December 31, 2005, respectively.




55




The
      Company offers a 100% refund policy to any retail customer or IBA who is not
      satisfied with their product purchase and returns it within 30 days of the
      purchase date. The Company also has a buy-back program in which any IBA can
      return resalable product for up to one year from the purchase date for a full
      refund less a 10% restocking fee. The Company expects that these refunds will
      represent less than 2% of its gross revenues.





Segment
      Information




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





*Stock
      Options and Warrants Granted to Employees and Non-Employees*




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




Going
      Concern




As
      shown
      in the accompanying financial statements, the Company had negative working
      capital of approximately $4,025,000 and an accumulated deficit incurred through
      December 31, 2006. The Company also has limited cash resources and a history
      of
      recurring losses. These factors raise substantial doubt about the Company’s
      ability to continue as a going concern. The financial statements do not include
      any adjustments relating to the recoverability and classification of recorded
      assets, or the amounts and classification of liabilities that might be necessary
      in the event the Company cannot continue in existence.





Management
      has established plans designed to increase the sales of the Company’s products
      and decrease debt. The Company plans on continuing to reduce expenses, and
      with
      small gains in any combination of network sales, direct sales, and international
      sales, believe that they will eventually be able to reverse the present deficit.





**NOTE
      3 - ACCOUNTS RECEIVABLE AND CREDIT RISK**





Accounts
      receivable at December 31, 2006 and December 31, 2005 consist primarily of
      amounts due from direct retail clients of EYI.





Other
      Receivables




The
      Company also has a balance owed from two IBAs who were advanced funds pursuant
      to the terms of a letter agreement dated September 19, 2006 and promissory
      notes. As at December 31, 2006, the balance of these receivables was
      $67,582.




**NOTE
      4 - CONVERTIBLE DEBT**





On
      April
      24, 2006 the Company entered into a securities purchase agreement with Cornell,
      TAIB Bank, and Certain Wealth (collectively the “ Buyers ”
and
      together with the Company, the “ Parties ”).
      Pursuant to the securities purchase agreement, the Company shall sell to the
      Buyers, and the Buyers shall purchase from the Company, convertible debentures
      in the aggregate principal amount of $4,500,000, plus accrued interest, which
      are convertible into shares of the Company’s common stock, at the Buyers
      discretion. Of this aggregate amount, (a) $1,500,000 was funded on April 28,
      2006, (b) $1,500,000 was funded on June 7, 2006 and (c) $1,500,000 was funded
      on
      June 20, 2006.





The
      debentures mature on April 24, 2009, accrue interest at an annual rate of ten
      percent (10%) and shall be convertible into shares of the Company’s common stock
      at the option of the holder, in whole or in part at any time and from time
      to
      time, at a conversion price equal to (a) $0.06 or (b) eighty percent (80%)
      of
      the lowest volume weighted average price of the Company’s common stock during
      the five (5) trading days immediately preceding the date of conversion as quoted
      by Bloomberg, LP. During the quarter ended December 31, 2006, the Company
      recognized embedded derivatives in the convertible debentures. (See Note
      5.)




56




The
      Company also executed an Investor Registration Rights Agreement pursuant to
      which the Company agreed to provide certain registration rights to the
      Investors. The Parties have also executed a security agreement, pursuant to
      which the Company has agreed to provide to the Buyers, a security interest
      in
      Pledged Collateral to secure the Company’s obligations under the convertible
      debentures, the securities purchase agreement, the Investor Registration Rights
      Agreement, the irrevocable transfer agent instructions, the security agreement,
      or any other obligations of the Company to the Buyer.





On
      April
      24, 2006 the Company issued to Cornell seventeen (17) warrants to purchase
      up to
      an aggregate 124,062,678 shares of the Company’s common stock at $0.02 and $0.40
      per share. Each warrant has “piggy back” registration rights and shall expire
      five (5) years from the date of issuance, on or about April 24, 2011. Following
      EITF 00-19, "Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settle in, a Company's Own Stock," and SFAS No. 133, the Company
      has
      recognized an embedded equity derivative in the warrant. For accounting and
      fair
      value purposes, the equity derivative will be accounted for as a stock option,
      following SFAS No. 123(R) for valuation purposes. (See Note 9.)





**NOTE
      5 - DERIVATIVES**





Derivatives
      have been accounted for in accordance with SFAS 133, as amended, and EITF No.
      00-19, "Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in, a Company's Own Stock." The Company has identified
      that
      the debentures described in Note 4 have embedded derivatives. These embedded
      derivatives have been bifurcated from their respective host debt contracts and
      accounted for as derivative liabilities in accordance with EITF 00-19. When
      multiple derivatives exist within the loan agreements, they have been bundled
      together as a single hybrid compound instrument in accordance with SFAS No.
      133,
      Derivatives Implementation Group Implementation Issue No. B-15, "Embedded
      Derivatives: Separate Accounting for Multiple Derivative Features Embedded
      in a
      Single Hybrid Instrument".





The
      embedded derivatives within the loan agreements have been recorded at fair
      value
      at the date of issuance and are marked-to-market each reporting period with
      changes in fair value recorded on the Company's income statement as gain (loss)
      on derivatives.





The
      fair
      value of the derivative liabilities is subject to the changes in the trading
      value of the Company's common stock, as well as other factors. As a result,
      the
      Company's financial statements may fluctuate from quarter-to-quarter based
      on
      factors such as the price of the Company's stock at the balance sheet date
      and
      the amount of shares converted by note holders. Consequently, the Company's
      financial position and results of operations may vary from quarter-to-quarter
      based on conditions other than its operating revenues and expenses.





At
      December 31, 2006, the Company revalued the derivative embedded in each of
      the
      three convertible debentures at $415,758 each or a total of $1,247,294. For
      the
      year ended December 31, 2006, the Company recognized a loss of
      $366,107.





At
      December 31, 2006, the Company also calculated a marked-to-market adjustment
      for
      the warrants issued to Cornell Capital in connection with the convertible
      debenture. For the year ended December 31, 2006, the Company recognized a loss
      of $2,562,214 as a result of this valuation.





**NOTE
      6 - PROPERTY AND EQUIPMENT**





Capital
      assets are recorded at cost. Depreciation is calculated using the straight
      line
      method over three to seven years. The following is a summary of property,
      equipment and accumulated depreciation at December 31, 2006 and December 31,
      2005.





2006
            
            2005Accumulated
            
            
            
            AccumulatedCost
            
            Depreciation
            
            Cost
            
            DepreciationWarehouse
                equipment
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Furniture
                and fixtures
            
            
            3,279
            
            
            841
            
            
            1,569
            
            
            371Computer
                Equipment & Software
            
            
            128,178
            
            
            94,074
            
            
            105,447
            
            
            83,068Office
                equipment
            
            
            33,909
            
            
            4,458
            
            
            14,859
            
            
            901Leasehold
                improvements
            
            
            17,973
            
            
            6,514
            
            
            13,544
            
            
            13,544Total
            
            
            183,339
            
            $
            105,887
            
            
            135,420
            
            $
            85,749Less:
                accumulated depreciation
            
            
            105,887
            
            
            
            
            
            85,749Total
                property, plant and equipment, net
            
            $
            77,452
            
            
            
            
            $
            49,671




Depreciation
      expense for the periods ended December 31, 2006 and December 31, 2005 was
      $22,352 and $52,645, respectively.




57




**NOTE
      7 - INTANGIBLE ASSETS**





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




Trademarks
      and Formulas


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





The
      following is a summary of the intangible assets at December 31, 2006 and
      December 31, 2005:





AccumulatedCost
            
            Amortization
            
            Net**Balance,
                December 31, 2005**
            
            $
            22,275
            
            $
            (7,233
            )
            $
            15,044Activity
                in last twelve months
            
            
            13
            
            
            (2,226
            )
            
            (2,213
            )Balance,
                December 31, 2006
            
            $
            22,288
            
            $
            (9,459
            )
            $
            12,829




**NOTE
      8 - CAPITAL STOCK**





Preferred
      Stock




The
      Company is authorized to issue 10,000,000 shares of preferred stock with a
      par
      value of $0.001. As of December 31, 2006, the Company has not issued any
      preferred stock.





Common
      Stock




The
      Company is authorized to issue 3,000,000,000 shares of common stock. All shares
      have equal voting rights, are non-assessable and have one vote per share. Voting
      rights are not cumulative and, therefore, the holders of more than 50% of the
      common stock could, if they choose to do so, elect all of the directors of
      the
      Company.





Between
      January 1, 2006 and March 31, 2006, the Company issued 42,941,686 shares to
      Cornell Capital in exchange for $1,084,565.





On
      February 6, 2006 the Jay Sargeant Trust was dissolved and the related shares
      were disbursed to the beneficiaries. In connection with this transaction,
      268,639 common shares were returned to treasury at par value.





Between
      June 27, 2006 and December 31, 2006, the Company issued 34,095,619 shares to
      Cornell Capital to retire $216,266 of the convertible debt.





Between
      June 27, 2006 and December 31, 2006, the Company issued 22,430,351 shares to
      Certain Wealth to retire $126,625 of the convertible debt.




58




Between
      June 27, 2006 and December 31, 2006, the Company issued 28,058,371 shares to
      TAIB Bank to retire $158,461 of the convertible debt.





On
      October 19, 2006 the Company issued 500,000 restricted common shares to Creative
      Life pursuant the terms of its agreement with the Company dated October 18,
      2006. The Company computed the number of shares issued in this transaction
      based
      on the fair value of services received and the market value of the Company’s
      common stock on the dates of issuance and recognized an expense of $3,000 to
      consulting fees.





On
      October 27, 2006 the Company issued 317,254 restricted common shares to Global
      Trends pursuant the terms of its agreement with the Company dated October 27,
      2006. The Company computed the number of shares issued in this transaction
      based
      on the fair value of services received and the market value of the Company’s
      common stock on the dates of issuance and recognized an expense of $2,189 to
      consulting fees.




**NOTE
      9 - COMMON STOCK OPTIONS AND WARRANTS**





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





In
      accordance with SFAS No. 123, the fair value of stock options and warrants
      granted are estimated using the Black-Scholes Option Price Calculation. The
      following assumptions were made to value the warrants for the period ended
      December 31, 2006: estimated risk-free interest rate of 5.125%; no dividends
      to
      be paid; estimated volatility of 128%, and term of two years.





Stock
      Options




During
      the year ending December 31, 2004, the Company’s Board of Directors approved the
      Stock Compensation Program to allow up to 25,000,000 shares of stock to be
      issued under the program. This plan enables the Company to grant stock options
      to directors, officers, employees and eligible consultants of the Company.
      There
      was no Company stock option plan in effect prior to 2004.





During
      the three months ended December 31, 2006, the Company recognized an expense
      to
      wages of $1,415 for all vested options.





Following
      is a summary of the status of the stock options during the years ended December
      31, 2005 and December 31, 2006:





Weighted
                AverageNumber
                of Shares
            
            Exercise
                PriceOutstanding
                at December 31, 2004
            
            
            19,747,390
            
            $
            0.14Granted
            
            
            7,390,000
            
            $
            0.13Exercised
            
            
            -3,350,000
            
            $
            0.12Forfeited
                or cancelled
            
            
            -7,535,000
            
            $
            0.08Outstanding
                at December 31, 2005
            
            
            16,252,390
            
            $
            0.14Granted
            
            
            25,000
            
            $
            0.06Exercised
            
            
            -
            
            
            -Forfeited
                or cancelled
            
            
            11,012,390
            
            $
            0.17Options
                outstanding at December 31, 2006
            
            
            5,265,000
            
            $
            0.09Weighted
                average fair value of options granted
            
            
            
            
            $
            0.06




59




Summarized
      information about stock options outstanding and exercisable at December 31,
      2006
      is as follows:


Options
                OutstandingExercise
            
            
            
            Weighted
                Ave.
            
            Weighted
                Ave.Price
            
            Number
            
            Remaining
            
            ExerciseRange
            
            of
                Shares
            
            Life
            
            Price$0.02
                - $0.22
            
            
            5,265,000
            
            
            0.66
            
            $
            0.09Options
                ExercisableExercise
            
            
            
            Weighted
              Ave.
            
            Weighted
              Ave.Price
            
            Number
            
            Remaining
            
            ExerciseRange
            
            of
              Shares
            
            Life
            
            Price$0.02
                - $0.22
            
            
            5,265,000
            
            
            0.66
            
            $
            0.09




Summarized
      information about non-vested but granted stock options outstanding at December
      31, 2006 is as follows:


Non-vested
                Granted Options OutstandingExercise
            
            
            
            Weighted
                Ave.
            
            Weighted
                Ave.Price
            
            Number
            
            Remaining
            
            ExerciseRange
            
            of
                Shares
            
            Life
            
            Price$-
            
            
            -
            
            
            -
            
            $
            -




**Warrants**





In
      consideration of the convertible debenture financing (see Note 4), the Company
      has also issued an aggregate of 124,062,678 common stock purchase warrants
      dated
      April 24, 2006 to Cornell, each exercisable for a period of five years
      commencing April 24, 2006 for the purchase of one share of common stock. The
      warrants provide that the holder cannot exercise the warrants to the extent
      such
      exercise would cause the holder and its affiliates to own more than 4.99% of
      our
      outstanding common shares. The warrants have exercise prices, subject to
      adjustment, ranging from $0.02 to $0.40 per share. Each warrant has “piggy back’
registration rights and shall expire five (5) years for the date of issuance,
      on
      or about April 24, 2011.





On
      October 1, 2006, the Company entered into an agreement with Agoracom Investor
      Relations Corp. (“Agoracom”) to provide investor relations services. Pursuant to
      the agreement, Agoracom is to receive a warrant for the purchase of up to
      500,000 shares of common stock at $0.06 for a period of two years.





On
      October 12, 2006, EYI entered into a definitive agreement with Mach 3. Pursuant
      to the agreement, Mach 3 received 967,680 warrants at $0.06 per share expiring
      October 12, 2008.




Number
                  of Warrants
              
              Weighted
                  Average Remaining Life
              
              Average
                  Exercise PriceOutstanding
                  and exercisable
              131,006,548
              
              4.31
              
              $0.09
 
 60


**NOTE
      10 - INCOME TAXES**





The
      significant components of the deferred tax assets at December 31, 2006 and
      December 31, 2005 were as follows:





December
                31,
            
            December
                31,2006
            
            2005Net
                operating loss carry forward****
            
            $
            18,820,000
            
            $
            11,628,000Deferred
                tax asset:
            
            $
            6,399,000
            
            $
            3,954,000Less
                valuation allowance for tax asset
            
            
            -6,399,000
            
            
            -3,954,000Net
                deferred tax asset
            
            $
            -
            
            $
            -




At
      December 31, 2006 and December 31, 2005, the Company has net operating loss
      carry forwards of approximately $18,820,000 and $11,628,000 respectively, which
      expire in the years 2024 through 2026. The change in the allowance account
      from
      December 31, 2005 to December 31, 2006 was $2,445,000.





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





**NOTE
      11 - COMMITMENTS AND CONTINGENCIES**





Joint
      Venture Agreement




On
      August
      12, 2006 we entered into a joint venture agreement with Internet Marketing
      Consortium to provide multi media strategies, promotional, direct and targeted
      marketing services for an undetermined period of time. In consideration for
      the
      services provided by IMC, the Company paid a fee of $25,000.





Purchase
      Agreement




On
      June
      30, 2002, EYI entered into a distribution and license agreement with a company
      in which one of EYI’s directors has an ownership interest *.* The
      agreement gives EYI the exclusive right to market, sell and distribute certain
      products for a five-year renewable term. Management estimates that 85% of EYI’s
      sales volume results from products supplied under this licensing
      agreement.





Pursuant
      to the agreement, EYI is required to purchase a minimum amount of $6,035,000
      of
      product in each of the remaining years.





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





As
      of the
      date of these financial statements, the purchase requirements have not been
      made. The period for which the licensor could request payment per the penalty
      clause has expired for the year and therefore the Company has not made any
      accrual to the financial statements. EYI continues to purchase Nutri Diem
      products on a regular basis.





Lease
      Payments




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





Year
                ended December 31,
            
            Minimum
                Amount2007
            
            $163,2852008
            
            141,8412009
            
            147,0132010
            
            152,1862011
            
            157,358





Regulatory
      Risks and Claims




The
      Company’s products are subject to regulation by a number of federal and state
      entities, as well as those of foreign countries in which the Company’s products
      are sold. These regulatory entities may prohibit or restrict the sale,
      distribution, or advertising of the Company’s products for legal, health or
      safety, related reasons. In addition to the potential risk of adverse regulatory
      actions, the Company is subject to the risk of potential product liability
      claims.




61




Standby
      Equity Distribution Agreement




On
      May
      13, 2005, the Company entered into a standby equity distribution agreement
      with
      Cornell Capital Partners, LP (“Cornell”) pursuant to which we entered into the
      following agreements: a registration rights agreement, an escrow agreement,
      and
      a placement agent agreement. Pursuant to the terms of the new standby equity
      distribution agreement, EYI may, at its discretion, periodically issue and
      sell
      shares of our common stock for a total purchase price of $10 million. If EYI
      requests advances under the standby equity distribution agreement, Cornell
      will
      purchase shares of our common stock for 98% of the lowest volume weighted
      average price on the Over-the-Counter Bulletin Board or other principal market
      on which our common stock is traded for the 5 days immediately following the
      advance notice date. Cornell will retain 5% of each advance under the new
      standby equity distribution agreement. EYI may not request advances in excess
      of
      a total of $10 million. Pursuant to the terms of our registration rights
      agreement and the standby equity agreement with Cornell, EYI agreed to register
      and qualify, among other things, the additional shares due to Cornell under
      the
      standby equity agreement under a registration statement filed with the SEC.




On
      April
      3, 2006 EYI signed a termination agreement with Cornell for the purpose of
      terminating our standby equity distribution agreement, registration rights
      agreement and escrow agreement all of
      which are dated as of May 13, 2005.





Other
      Matters




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





Action
      By Suhl, Harris and Babich




In
      2003,
      a consolidated action was brought by the plaintiffs Wolf Suhl, Christine Harris
      and Edward Babich in the Supreme Court of British Columbia pursuant to an order
      pronounced in the New Westminster Registry under Action No. S061589 on May
      7,
      2003, which allowed the plaintiffs to proceed with an action against EYIC.
      In
      February 2006, the Supreme Court of British Columbia made an order that the
      Company and Mr. Jay Sargeant be added to the lawsuit. The plaintiffs’ total
      claim was approximately $478,000. On
      April
      13, 2006, the plaintiffs amended their pleadings to assert claims against the
      Company and Jay Sargeant An order was pronounced on August 15, 2006 for the
      substitutional service of Mr. Jay Sargeant. On September 5, 2006 the Company
      paid $200,000 in full and final settlement of this matter .





Distribution
      Agreement




On
      September 20, 2006 Essentially Yours Industries (International) Limited entered
      into a consignment and distribution licensing agreement with Orientrends, Inc.
      Orientrends will act as an exclusive agent and qualified distributor to market
      EYI Products within the Philippines. The agreement is for a period of five
      years.





Action
      by The State of Texas, et al




On
      August
      25, 2006 the State of Texas filed a Plaintiffs' First Amended Original Petition
      in the District Court of Travis County, Texas naming Essentially Yours
      Industries, Inc. A/K/A Essentially Yours Corp. A/K/A Burrard Capital, Inc.
      a
      foreign (NV) Corporation. The action arises from EYI's predecessor organization,
      Essentially Yours Industries, Corp., a British Columbia Corporation's unpaid
      sales tax for the State of Texas in the amount of $179,094.84 plus interest
      and
      costs.




Investor
      Relations Agreement




On
      October 1, 2006 the Company entered into a two year agreement with Agoracom
      to
      provide investor relations services. Agoracom will receive $2,500 per month
      plus
      a warrant to purchase up to 500,000 shares of the Company’s common stock at
      $0.06 per share.





Consulting
      Agreements




On
      October 19, 2006 the Company entered into a consulting agreement with Creative
      Life Enterprises, Inc. on a month to month basis. Creative Life received 500,000
      shares of the Company’s restricted common stock as compensation for their
      services.




62




Manufacturing
      Agreement




On
      October 12, 2006 the Company entered into a definitive agreement with Mach
      3
      Technologies Group, LLC. (“Mach 3”) who will provide EYI with the exclusive
      rights to the fuel enhancement product ME2 in the US, Canada and Mexico for
      a
      period of three years. Pursuant to the agreement, the Company must purchase
      $1,000,000, $6,000,000, and $12,000,000 respectively in each of the three years.
      In addition to the unit price of the ME2 product, Mach 3 will also receive
      warrants to purchase the Company’s common stock with each product purchase
      order. The maximum number of warrants that can be issued to Mach 3 is
      15,000,000. In connection with purchase orders issued in October 2006, the
      Company issued Mach 3 a total of 967,680 warrants with an exercise price of
      $0.06.





Escrow
      Fund




On
      August
      1, 2005, pursuant to the standby equity distribution agreement ("SEDA") dated
      June 22, 2004, and the promissory note dated August 1, 2005, the Company
      allocated fifty-one million two hundred thousand (51,200,000) shares of the
      Company’s common stock into escrow. The SEDA was cancelled. The promissory note
      is not part of the SEDA.





**NOTE
      12 - DISCONTINUED OPERATIONS**





During
      the year ended December 31, 2005, the Company elected to discontinue the
      operations of Halo Distribution LLC (hereinafter “Halo”), a subsidiary of the
      Company. The Company’s balance sheet reports net liabilities from discontinued
      operations of $375,344 as at December 31, 2006 and December 31,
      2005.





In
      June
      2002, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards, No. 146, “Accounting for Costs Associated with Exit or
      Disposal Activities” (hereinafter “SFAS No. 146”). SFAS No. 146 addresses
      significant issues regarding the recognition, measurement, and reporting of
      costs associated with exit and disposal activities, including restructuring
      activities. SFAS No. 146 also addresses recognition of certain costs related
      to
      terminating a contract that is not a capital lease, costs to consolidate
      facilities or relocate employees, and termination benefits provided to employees
      that are involuntarily terminated under the terms of a one-time benefit
      arrangement that is not an ongoing benefit arrangement or an individual
      deferred-compensation contract. SFAS No. 146 was issued in June 2002, effective
      December 31, 2002. The Company’s financial position and results of operations
      have not been affected by adopting SFAS No. 146.





The
      assets and liabilities disposed of from discontinued operations at December
      31,
      2006 were as follows:


Total
                  Assets
              
              $
              -Accounts
                  payable
              
              $
              79,049Accrued
                  liabilities
              
              
              275,368Accounts
                  payable - related party
              
              
              105,000Liabilities
                  in excess of assets
              
              $
              380,368


**NOTE
      13 - RELATED PARTY NOTE PAYABLE**





The
      Company issued a promissory note for a total of $50,000 in December 2003. The
      note is unsecured, non-interest bearing and payable upon demand. This note
      has a
      remaining balance of $50,000 and $50,000 at December 31, 2006 and
      2005,respectively.




**NOTE
      14 - CONCENTRATIONS**





Bank
      Accounts




The
      Company maintains its cash accounts in two commercial banks. During the year,
      the Company may maintain balances in excess of the federally insured amounts
      in
      the accounts that are maintained in the United States. The Company also
      maintains funds in commercial banks in Vancouver, British Columbia and in Hong
      Kong, in which funds in U.S. dollars are not insured. At December 31, 2006
      and
      December 31, 2005, a total of $42,073 and $56,088, respectively, was not
      insured.





Economic
      Dependence




During
      the year, the Company purchased approximately 85% of its products for resale
      from one company, Nutri-Diem Inc., which is the sole supplier of the Company’s
      flagship product Calorad. Pursuant to a purchase agreement, the Company is
      subject to minimum purchases per annum. (See Note 11.)




63




**NOTE
      15 - RELATED PARTY TRANSACTIONS**





On
      May
      27, 2002, Mr. Jay Sargeant, a shareholder of EYI Corp. agreed to acquire all
      of
      the shares of EYI, along with the transfer agreement, license agreement, and
      agency appointment agreement, in settlement of amounts owed to him. As part
      of
      this transaction, EYI Corp. agreed to provide to EYI the services outlined
      in a
      management agreement.





The
      Company acquired, through agreements with EYI Corp, the rights, title, and
      interest in and to the contracts with the Company’s Independent Business
      Associates as well as the rights and licenses to trademarks and formula for
      the
      Company’s primary products.





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





The
      Company purchases approximately 85% of its products for resale from one company,
      Nutri-Diem Inc., which is owned in part by a director of the Company.





On
      September 19, 2006, the Company entered into a letter agreement with two
      consultants whereby the Company has agreed to compensate their sales efforts
      during the pre-launch phase of the ME2 product.





Promissory
      Notes




At
      December 31, 2006, the Company is owed $67,582 from two consultants pursuant
      to
      terms of Promissory Notes and advances made pursuant to a letter agreement
      dated
      September 19, 2006.




**NOTE
      16 - SUBSEQUENT EVENTS**





Between
      January 1, 2007 and March 20, 2007, the Company issued 15,908,008 common shares
      to Cornell Capital to retire $70,000 of convertible debt.





Between
      January 1, 2007 and March 20, 2007, the Company issued 7,063,155 common shares
      to Certain Wealth to retire $31,080 of convertible debt.





Between
      January 1, 2007 and March 20, 2007, the Company issued 26,298,852 common shares
      to TAIB Bank to retire $38,920 of convertible debt.





On
      February 1, 2007, the Board of Directors of the Company approved a Stock
      Incentive Plan for its employees, directors and consultants. The plan is for
      a
      total of 250,000,000 restricted shares of common stock and expires February
      17,
      2007. On February 1, 2007 the Board of Directors also approved the issuance
      of
      235,000,000 stock options to officers, employees and consultants.




On
      January 23, 2007, EYI entered into a web site design and development agreement
      with Colossal Head Communications ("Colossal"). Compensation for Colossal will
      paid after completion of stages in the project which is expected to be completed
      in sixteen weeks.




On
      January 5, 2007, the Company completed a share exchange with certain
      shareholders of EYI. Shareholders received 1,999,323 restricted shares of the
      Company in exchange for shares held in the private entity EYI.




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





None.





**ITEM
      8A.**   **CONTROLS AND PROCEDURES.**





**(A)
      Evaluation Of Disclosure Controls And Procedures**




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




64




**(B)
      Changes In Internal Controls Over Financial Reporting**




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





**ITEM
      8B.**   **OTHER INFORMATION.**





None.




**PART
      III**




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





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





**Name**
            **Age**
            **Position
                with the Company**
            **Date
                First Elected or Appointed**Jay
                Sargeant
            59
            President,
                Chief Executive Officer and Director
            Director,
                Chief Executive Officer and President since December 31, 2003.Dori
                O'Neill
            47
            Executive
                Vice-President, Treasurer, Chief Operations Officer, Secretary and
                Director
            Executive
                Vice-President, Treasurer, Chief Operations Officer, Secretary and
                Director since December 31, 2003.Rajesh
                Raniga
            41
            Chief
                Financial Officer
            Chief
                Financial Officer since December 31,
                2003.





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





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





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





**Family
      Relationships**




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





**TERMS
      OF OFFICE**





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




65




**COMMITTEES
      OF THE BOARD OF DIRECTORS**





**Audit
      Committee**





The
      Board
      of Directors performs the functions of an audit committee, but no written
      charter governs the actions of the Board of Directors when performing the
      functions of an audit committee. The Board of Directors approves the selection
      of our independent accountants and meets and interacts with the independent
      accountants to discuss issues related to financial reporting. In addition,
      the
      Board of Directors reviews the scope and results of the audit with the
      independent accountants, reviews with management and the independent accountants
      our annual operating results, considers the adequacy of our internal accounting
      procedures and considers other auditing and accounting matters including fees
      to
      be paid to the independent auditor and the performance of the independent
      auditor.





We
      presently do not have a compensation committee, an executive committee of our
      Board of Directors, stock plan committee or any other committees. However,
      our
      Board of Directors will consider establishing various committees during the
      current fiscal year.





**Audit
      Committee Financial Expert**





Our
      Board
      of Directors has determined that we do not presently have a director who meets
      the definition of an "audit committee financial expert". We believe that the
      cost related to appointing a financial expert to our Board of Directors at
      this
      time is prohibitive.





**Nomination
      Committee**





Our
      Board
      of Directors does not maintain a nominating committee. As a result, no written
      charter governs the director nomination process. The size of our company and
      the
      size of the Board of Directors, at this time, do not require a separate
      nominating committee. Our independent directors annually review all director
      performance over the past year and make recommendations to the Board of
      Directors for future nominations. When evaluating director nominees, our
      independent directors consider the following factors:





(i)
            The
                appropriate size of the Company’s Board of Directors;





(ii)
            The
                needs of the Company with respect to the particular talents and experience
                of its directors;





(iii)
            The
                knowledge, skills and experience of nominees, including experience
                in
                finance, administration or public service, in light of prevailing
                business
                conditions and the knowledge, skills and experience already possessed
                by
                other members of the board;





(iv)
            Experience
                with accounting rules and practices; and





(v)
            The
                desire to balance the benefit of continuity with the periodic injection
                of
                the fresh perspective provided by new board members.





Other
      than the foregoing, there are no stated minimum criteria for director nominees,
      although the Board of Directors may also consider such other factors as it
      may
      deem are in the best interests of the Company and its stockholders. In addition,
      the Board of Directors identifies nominees by first evaluating the current
      members of the board willing to continue in service. Current members of the
      board with skills and experience that are relevant to our business and who
      are
      willing to continue in service are considered for re-nomination. If any member
      of the Board of Directors does not wish to continue in service or if the board
      decides not to re-nominate a member for re-election, the Board of Directors
      then
      identifies the desired skills and experience of a new nominee in light of the
      criteria above. Current members of the Board of Directors are polled for
      suggestions as to individuals meeting the criteria described above. The board
      may also engage in research to identify qualified individuals. To date, we
      have
      not engaged third parties to identify or evaluate or assist in identifying
      potential nominees, although we reserve the right in the future to retain a
      third party search firm, if necessary. The Board of Directors does not typically
      consider stockholder nominees because it believes that its current nomination
      process is sufficient to identify directors who serve our best interests.





**CODE
      OF ETHICS**





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




66




**SECTION
      16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**





Section
      16(a) of the Exchange Act requires our executive officers and directors, and
      persons who beneficially own more than ten percent of our equity securities,
      to
      file reports of ownership and changes in ownership with the SEC. Officers,
      directors and greater than ten percent shareholders are required by SEC
      regulation to furnish us with copies of all Section 16(a) forms they file.
      Based
      on our review of the copies of such forms received by us, we believe that during
      the fiscal year ended December 31, 2006 all such filing requirements applicable
      to our officers and directors were complied with exception that reports were
      filed late by the following persons:





**Name
                and Principal Position**
            **Number
                of Late Form 4 Reports**
            **Transactions
                Not Timely Reported**
            **Known
                Failures to File a Required Form**Jay
                Sargeant,
              President,
                Chief Executive Officer, and Director
            0
            0
            -Dori
                O’Neill
              President,
                Chief Operations Officer, Secretary, Treasurer and
                Director
            0
            0
            -





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**





**Summary
      Compensation Table**





The
      following table sets forth certain summary information concerning the
      compensation paid or accrued for each of EYI’s last three completed fiscal years
      to EYI’s or its principal subsidiaries’ Chief Executive Officer and each of its
      other executive officers that received compensation in excess of $100,000 during
      such period (as determined at December 31, 2006, the end of EYI's last completed
      fiscal year) (the “Named Executive Officers”):





67





**SUMMARY
      COMPENSATION**





**Name
                and Principal Position**
            **Year**
            **Salary**
              **($)**
            **Bonus**
              **($)**
            **Stock**
              **Awards**
              **($)**
            **Option**
              **Awards**
              **($)**
            **Non-Equity**
              **Incentive
                Plan Compensation**
              **($)**
            **Change
                in**
              **Pension
                Value**
              **and
                Nonqualified Deferred Compensation Earnings**
              **($)**
            **All
                Other**
              **Compensation**
              **($)**
            **Total**
              **($)**Jay
                Sargeant
              
              President,
              Principal
                Executive Officer and
              Director
            2006
            $240,000(1)
            $5,000
            --
            --
            --
            --
            --
            $245,000(1)2005
            $240,000(1)
            --
            --
            1,500,000
            --
            --
            --
            --2004
            $240,000(1)
            --
            --
            4,200,000
            --
            --
            --
            --Dori
                O’Neill2)
              
              Chief
              Operations
              Officer,
              Secretary,
              Treasurer
              And
                Director
            2006
            $240,000(2)
            %5,000
            --
            --
            --
            --
            --
            $245,000(2)2005
            $240,000(2)
            --
            --
            1,500,000
            --
            --
            --
            --2004
            $240,000(2)
            --
            --
            7,400,000
            --
            --
            --
            --Rajesh
                Raniga
              
              Principal
              Financial
              Officer
            2006
            $24,000
            --
            --
            --
            --
            --
            --
            $24,0002005
            $24,000
            --
            --
            --
            --
            --
            --
            --2004
            $24,000
            --
            --
            450,000
            --
            --
            --
            --Donna
                Keay
              Chief
                Financial
              Officer(3)
            2006
            $110,200(4)
            $2,500(4)
            --
            --
            --
            --
            6,347(4)
            $118,751(4)2005(5)2004(5)


**Notes** :





(1)
            We
                paid management consulting fees to Flaming Gorge, Inc., a private
                company
                controlled by Mr. Sargeant, our President, CEO and director, for
                his
                management of the operation of the Company and our subsidiaries,
                reporting
                to the Board of Directors, and appointing managers to oversee certain
                departments. Mr. Sargeant was compensated at the rate of $20,000
                per
                month, on a month to month basis commencing November 5, 2002. The
                agreement was for an initial five-year term, which is automatically
                renewable upon expiration of the five-year period on a year-to-year
                basis.
                Effective January 1, 2004, we extended the consulting agreement of
                Mr.
                Sargeant for an additional five years.




68




(2)
            We
                paid management consulting fees to O’Neill Enterprises Inc., a private
                company controlled by Mr. O’Neill, our Executive Vice-President, COO,
                Secretary, Treasurer and director, for the management of day to day
                activities and operations of the Company and our subsidiaries. Mr.
                O’Neill
                was compensated at the rate of $15,000 per month, on a month to month
                basis commencing November 5, 2002. The agreement was for an initial
                five-year term, which is automatically renewable upon expiry of the
                five-year period on a year-to-year basis. Effective January 1, 2004,
                we
                increased the consulting fees payable to Mr. O’Neill to $20,000 per month,
                and extended the term by five years.





(3)
            Mrs.
                Keay is the Chief Financial Officer of
                EYI.





(4)
            Mrs.
                Keay is paid an annual salary of $125,000 CDN per year, $600 CDN
                per month
                car allowance and a bonus of $2,500 CDN. Based on the Bank of Canada
                2006
                average exchange rate of 1.1343 the total amount is equal to $118,751
                US.





(5)
            Mrs.
                Keay did not earn more than $100,000 US for the fiscal years ended
                December 31, 2005 or 2004.




**OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-END**


**Option awards**
              
              **Stock Awards****Name**
              
              **Number
                  of**
                **securities**
                **underlying**
                **unexercised**
                **options
                  (#)**
                **exercisable**
              
              **Number
                  of**
                **securities**
                **underlying**
                **unexercised**
                **options
                  (#)**
                **unexercisable**
              
              **Equity
                  incentive**
                **plan
                  awards:**
                **Number
                  of**
                **securities**
                **underlying**
                **unexercised**
                **unearned**
                **options
                  (#)**
              
              **Option**
                **exercise**
                **price
                  ($)**
              
              **Option**
                **expiration**
                **date**
              
              **Number
                  of**
                **shares
                  or**
                **units
                  of**
                **stock
                  that**
                **have
                  not**
                **vested
                  (#)**
              
              **Market**
                **value
                  of**
                **shares
                  or**
                **units
                  of**
                **stock
                  that**
                **have
                  not**
                **vested
                  ($)**
              
              **Equity
                  incentive**
                **plan
                  awards:**
                **Number
                  of**
                **unearned**
                **shares,
                  units or**
                **other
                  rights**
                **that
                  have not**
                **vested
                  (#)**
              
              **Equity
                  incentive**
                **plan
                  awards:**
                **Market
                  or payout**
                **value
                  of unearned**
                **shares,
                  units or**
                **other
                  rights that**
                **have
                  not**
                **vested
                  ($)**Jay
                  Sargeant
              
              1,500,000
              
              --
              
              --
              
              $0.06
              
              Feb-9-07
              
              **--**
              
              **--**
              
              **--**
              
              **--**Dori
                  O'Neill
              
              1,500,000
              
              --
              
              --
              
              $0.06
              
              Feb-9-07
              
              **--**
              
              **--**
              
              **--**
              
              **--**Rajesh
                  Raniga
              
              --
              
              --
              
              --
              
              --
              
              --
              
              **--**
              
              **--**
              
              **--**
              
              **--**Donna
                  Keay
              
              --
              
              --
              
              --
              
              --
              
              --
              
              **--**
              
              **--**
              
              **--**
              
              **--**





**COMPENSATION
      ARRANGEMENTS**





**Compensation
      of Directors**





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




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




69




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




**LONG-TERM
      INCENTIVE PLANS**





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




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





The
      following table sets forth information about the beneficial ownership of our
      common stock as of March 30, 2007, by (i) each person who we know is the
      beneficial owner of more than 5% of the outstanding shares of common stock
      (ii) each of our directors or those nominated to be directors, and
      executive officers, and (iii) all of our directors and executive officers as
      a
      group.





**Title
                of Class**
            **Name
                and Address**
              **of
                Beneficial Owner**
            **Amount
                and Nature**
              **of
                Beneficial Ownership**
            **Percentage**
              **of
                Common Stock****(1)****Directors
                and Executive Officers**Common
                Stock
            Jay
                Sargeant
            180,391,666
            47.53%3324
                Military Avenue
              Los
                Angeles, California
            Direct
                and Indirect(2)Common
                Stock
            Dori
                O’Neill
            90,763,361
            23.91%7865
                Edmonds Street
              Burnaby,
                British Columbia
              Canada
            Direct
                and Indirect(3)Common
                Stock
            Rajesh
                Raniga
            250,000
            *13357-56
                Avenue
              Surrey,
                British Columbia
              Canada
            Direct
                and Indirect(4)Common
                Stock
            Donna
                Keay
            6,381,572
            1.68%11483
                94th Avenue
              Delta,
                BC V4C 3R3
            Direct
                and Indirect(5)Common
                Stock
            All
                Directors and Executive Officers
            271,405,027
            71.51%as
                a Group (Four Persons)
            Direct
                and Indirect


_____________


*  Represents
      less than 1%.


(1)
            Applicable
                percentage of ownership is based on * shares of common stock outstanding
                as of March 30, 2007 together with securities exercisable or convertible
                into shares of common stock within 60 days of March 30, 2007 for
                each
                stockholder. Beneficial ownership is determined in accordance with
                the
                rules of the SEC and generally includes voting or investment power
                with
                respect to securities. Shares of common stock subject to securities
                exercisable or convertible into shares of common stock that are currently
                exercisable or exercisable within 60 days of March 30, 2007 are
                deemed to be beneficially owned by the person holding such options
                for the
                purpose of computing the percentage of ownership of such person,
                but are
                not treated as outstanding for the purpose of computing the percentage
                ownership of any other person.


(2)
            The
                shares are held as follows: (i) 146,419 shares held by Mr. Jay Sargeant
                (ii) 50,000 shares are held by Northern Colorado, Inc., a company
                controlled by Mr. Sargeant; (iii) 42,462,727 shares are held by Viper
                Network Inc., a company controlled by Mr. Sargeant; (iv) 120,000,000
                shares which may be acquired by Mr. Sargeant on exercise of incentive
                stock options within 60 days of March 30, 2007.


(3)
            The
                shares are held as follows: 3,454,500 shares of our common stock
                are held
                by Dori O’Neill directly, 7,308,861 shares are held by O'Neill Enterprises
                Inc., a company controlled by Mr. O'Neill and 80,000,000 shares may
                be
                acquired by Mr.O’Neill on exercise of incentive stock options within 60
                days of March 30, 2007.


(4)
            Consists
                of 250,000 shares held directly by Mr. Raniga.


(5)
            Consists
                of 1,381,572 shares held directly by Mrs.
                Keay.





**Security
      Ownership of Management**





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




70




**Securities
      Authorized for Issuance Under Equity Compensation Plans**





The
      following table sets forth certain information concerning all equity
      compensation plans previously approved by stockholders and all previous equity
      compensation plans not previously approved by stockholders, as of the most
      recently completed fiscal year. On February 17, 2004, our Board of Directors
      approved the Stock Compensation Program (the "Plan"). The Plan became effective
      on March 30, 2004. Under the Plan, options to purchase up to 25,000,000 shares
      of our common stock may be granted to our employees, officers, directors, and
      eligible consultants of our company. The Plan provides that the option price
      be
      the fair market value of the stock at the date of grant as determined by the
      Board of Directors. Options granted become exercisable and expire as determined
      by the Board of Directors. On February 1, 2007 the Board of Directors approved
      a
      Stock Incentive Plan for 250,000,000 shares of common stock.





**EQUITY
                COMPENSATION PLAN INFORMATION AS AT DECEMBER 31,
                2006****Plan
                Category**
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
              **(a)**
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
              **(b)**
            **Number
                of securities remaining available for issuance under equity compensation
                plans (excluding securities reflected in column (a))**
              **(c)**Equity
                Compensation Plans approved by security holders
            Nil
            N/A
            N/AEquity
                Compensation Plans not approved by security holders
            2,270,000
            $0.06
            14,430,000Total
            2,270,000
            $0.14
            14,430,000





**Stock
      Compensation Program**





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





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





The
      exact
      terms of the option granted are contained in an option agreement between us
      and
      the person to whom such option is granted. Eligible employees are not required
      to pay anything to receive options. The exercise price for incentive stock
      options must be no less than 70% of the fair market value of the common stock
      on
      the date of grant. The exercise price for nonqualified stock options is
      determined by the Administrator in its sole and complete discretion. An option
      holder may exercise options from time to time, subject to vesting. Options
      will
      vest immediately upon death or disability of a participant and upon certain
      change of control events.





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




71




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





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





On
      February 1, 2007 the Board of Directors approved a Stock Incentive Plan for
      the
      grant of up to 250,000,000 shares of common stock to the Company's employees,
      directors, and consultants. The Plan terminates on February 1, 2017 unless
      sooner terminated by action of the Board of Directors. All awards granted under
      the Stock Incentive Plan expire ten years from the date of grant, or such
      shorter period as is determined by the Board of Directors. No option is
      exercisable by any person after such expiration. If an award expires, terminates
      or is canceled, the shares of our common stock not purchased there under may
      again be available for issuance under the Stock Incentive Plan.





**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**





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





·
            Any
                of our directors or officers;


·
            Any
                person proposed as a nominee for election as a
                director;


·
            Any
                person who beneficially owns, directly or indirectly, shares carrying
                more
                than 10% of the voting rights attached to our outstanding shares
                of common
                stock;


·
            Any
                of our promoters; and


·
            Any
                relative or spouse of any of the foregoing persons who has the same
                house
                as such person.




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





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





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





On
      May
      27, 2002, pursuant to a Declaration of Trust and the revised First Amendment
      to
      Trust Agreement dated December 23, 2003, 91,874,538 shares of our common stock
      were held by Jay Sargeant as trustee on behalf of certain beneficiaries. Of
      the
      91,874,538 shares held pursuant to the trust, 26,397,436 of the shares were
      owned by Mr. Sargeant beneficially. The trust was unwound in February 2006
      and
      the shares were distributed to the beneficiaries of the trust.




72




We
      have a
      contract with NDI that grants to us the exclusive license and right to market,
      sell and distribute in Canada and the United States and a non-exclusive right
      to
      market on the Internet certain products owned by Michel Grise Consultant, Inc.,
      a Quebec corporation, which is controlled by Michel Grise. Mr. Grise is a
      director of our subsidiary EYI. To maintain the license and distribution rights
      granted by those contracts, we are obligated to purchase from NDI during that
      period commencing on June 1, 2003, and continuing through and including May
      31,
      2004, products totaling $1,530,000. Those contracts also specify that for the
      period from June 1, 2004 to May 31, 2005, we are required to purchase from
      NDI
      products totaling $3,825,000. Additionally, those contracts specify that for
      each year commencing on June 1, and ending on May 31 thereafter during the
      term
      of that agreement we are required to purchase products totaling $5,355,000.
      The
      provisions of those contracts specify that NDI will offer us the right to sell,
      market and distribute in those territories any new product developed by
      NDI





**ITEM
      13.**  **EXHIBITS.**





(a)
            **Exhibits**





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




**Exhibit
                Number**
            
            **Description
                of Exhibit**3.1
            
            Articles
                of Incorporation.(1)3.2
            
            Certificate
                of Amendment to Articles of Incorporation dated December 29,
                2003.(11)3.3
            
            Certificate
                of Amendment to Articles of Incorporation dated December 31,
                2003.(11)3.4
            
            Bylaws.(1)3.5
            
            Amended
                Bylaws.(12)3.6
            
            Certificate
                of Amendment to Articles of Incorporation dated March 30,
                200610.1
            
            Consulting
                Agreement, dated as of November 5, 2002, between Essentially Yours
                Industries, Inc., a Nevada corporation, and Flaming Gorge,
                Inc.(1)10.2
            
            Consulting
                Agreement, dated as of November 5, 2002, between Essentially Yours
                Industries, Inc., a Nevada corporation, and O’Neill Enterprises,
                Inc.(1)10.3
            
            Registration
                Rights Agreement, dated December 31, 2003, by and among Safe ID
                Corporation, A Nevada corporation, and certain shareholders of EYI
                Industries, Inc., A Nevada corporation.(5)10.4
            
            Stock
                Compensation Program(4)10.5
            
            Consulting
                Agreement dated December 27, 2003 between Rajesh Raniga Inc. and
                Safe ID
                Corporation.(6)10.6
            
            Consulting
                Agreement dated January 1, 2004 between EYI Industries, Inc. and
                O’Neill
                Enterprises Inc.(6)10.7
            
            Consulting
                Agreement dated January 1, 2004 between EYI Industries, Inc. and
                Flaming
                Gorge, Inc.(6)10.8
            
            Addendum
                to the Distribution and License Agreement between Essentially Yours
                Industries, Inc. and Nutri-Diem Inc. dated April 30, 2004.(6)10.9
            
            Letter
                Agreement dated May 4, 2004 between Eye Wonder, Inc. and EYI Industries,
                Inc.(6)10.10
            
            Standby
                Equity Distribution Agreement, dated June 22, 2004 by and between
                EYI
                Industries, Inc. and Cornell Capital Partners, LP(6)10.11
            
            Registration
                Rights Agreement, dated June 22, 2004 by and between EYI Industries,
                Inc.
                and Cornell Capital Partners, LP(6)10.12
            
            Escrow
                Agreement, dated June 22, 2004 by and between EYI Industries, Inc.
                and
                Cornell Capital Partners, LP(6)10.13
            
            Placement
                Agent Agreement, dated June 22, 2004 by and between EYI Industries,
                Inc.
                and Cornell Capital Partners, LP(6)10.14
            
            Compensation
                Debenture, dated June 22, 2004(7)10.15
            
            Securities
                Purchase Agreement, dated June 22, 2004 by and between EYI Industries,
                Inc. and Cornell Capital Partners, LP(6)10.16
            
            Investor
                Registration Rights Agreement, dated June 22, 2004 by and between
                EYI
                Industries, Inc. and Cornell Capital Partners, LP(6)10.17
            
            Security
                Agreement, dated June 22, 2004 by and between EYI Industries, Inc.
                and
                Cornell Capital Partners, LP(6)10.18
            
            Irrevocable
                Transfer Agent Instructions, dated June 22, 2004, by and among EYI
                Industries, Inc., Cornell Capital Partners, LP and Corporate Stock
                Transfer(6)10.19
            
            Escrow
                Agreement, dated June 22, 2004 by and among EYI Industries, Inc.,
                Cornell
                Capital Partners, L.P. and Butler Gonzalez, LLP(6)10.20
            
            Form
                of Secured Convertible Debenture(6)




73




10.21
            
            Form
                of Warrant(7)10.22
            
            Letter
                Agreement dated May 25, 2004 between EYI Industries, Inc. and Source
                Capital Group, Inc.(8)10.23
            
            Lease
                Agreement dated May 1, 2003 among 468058 B.C. Ltd., 642706 B.C. Ltd.,
                Essentially Yours Industries Corp., and Essentially Yours Industries,
                Inc.(8)10.24
            
            5%
                Secured Convertible Debenture dated September 24, 2004 between EYI
                Industries, Inc. and Cornell Capital Partners, LP(8)10.25
            
            5%
                Secured Convertible Debenture dated September 27, 2004 between EYI
                Industries, Inc. and Kent Chou(8)10.26
            
            5%
                Secured Convertible Debenture dated September 27, 2004 between EYI
                Industries, Inc. Taib Bank, E.C.(8)10.27
            
            Assignment
                Agreement dated September 27, 2004 between Cornell Capital Partners,
                LP
                and Taib Bank, E.C.(8)10.28
            
            Assignment
                Agreement dated September 27, 2004 between Cornell Capital Partners,
                LP
                and Kent Chou(8)10.29
            
            Joint
                Venture Agreement dated May 28, 2004 between EYI Industries, Inc.,
                World
                Wide Buyer’s Club Inc. and Supra Group, Inc.(9)10.30
            
            Indenture
                of Lease Agreement dated January 3, 2005 between Golden Plaza Company
                Ltd., 681563 B.C. Ltd., and 642706 B.C. Ltd.(10)10.31
            
            Consulting
                Services Agreement dated March 5, 2004 between EYI Industries, Inc.
                and
                EQUIS Capital Corp.(13)10.32
            
            Letter
                dated May 25, 2004 between Source Capital Group, Inc. and EYI Industries,
                Inc.(14)10.33
            
            Consulting
                Agreement dated April 1, 2004 between EYI Industries, Inc. and Daniel
                Matos(14)10.34
            
            Loan
                Agreement between Janet Carpenter and EYI Industries, Inc., dated
                February
                10, 2005(15)10.35
            
            Promissory
                Note dated February 10, 2005 between Janet Carpenter and EYI
                Industries(15)10.36
            
            Bonus
                Share Agreement between Janet Carpenter and EYI Industries, Inc.
                dated
                February 14, 2005(15)10.37
            
            Pledge
                and Escrow Agreement dated February 24, 2005 between Janet Carpenter,
                Cornell Capital Partners, LP and David Gonzalez.**(15)**10.38
            
            Guaranty
                Agreement dated February 24, 2005 between Janet Carpenter, Cornell
                Capital
                Partners, LP**(15)**10.39
            
            Secured
                Promissory Note dated February 24, 2005 between EYI Industries, Inc.
                and
                Cornell Capital Partners, LP**(15)**10.40
            
            Agreement
                dated April 22, 2005 between Essentially Yours Industries Inc. and
                Source
                1 Fulfillment(15)10.41
            
            Reseller
                Agreement dated May 11, 2005 between Essentially Yours Industries
                Inc. and
                Metals & Arsenic Removal Technology, Inc.(16)10.42
            
            Termination
                Agreement dated May 13, 2005 between EYI Industries Inc. and Cornell
                Capital Partners, LP(17)10.43
            
            Standby
                Equity Distribution Agreement dated May 13, 2005 between EYI Industries
                Inc. and Cornell Capital Partners, LP(17)10.44
            
            Registration
                Rights Agreement dated May 13, 2005 between EYI Industries Inc. and
                Cornell Capital Partners, LP(17)10.45
            
            Escrow
                Agreement dated May 13, 2005 between EYI Industries Inc. and Cornell
                Capital Partners, LP(17)10.46
            
            Placement
                Agent Agreement dated May 13, 2005 between EYI Industries Inc. and
                Cornell
                Capital Partners, LP(17)10.47
            
            Consulting
                Agreement dated June 1, 2005 between EYI Industries, Inc. and Eliza
                Fung(18)10.48
            
            Addendum
                to the Reseller Agreement dated June 1, 2005 between Essentially
                Yours
                Industries Inc. and Metals & Arsenic Removal Technology, Inc.(18)10.49
            
            Non-Circumvention
                and Non-Disclosure Agreement dated July 14, 2005 between Essentially
                Yours
                Industries Inc. and Metals & Arsenic Removal Technology,
                Inc.(18)10.50
            
            Promissory
                Note dated August 1, 2005 between EYI Industries Inc. and Cornell
                capital
                Partners, LP(18)10.51
            
            Investor
                Relations Agreement dated July 28, 2005 between EYI Industries, Inc.
                and
                Agora Investor Relations Corp.(18)10.52
            
            China
                Agency Agreement entered into with Guanghzhou Zhongdian Enterprises
                (Group) Co. Ltd. and China Electronics Import and Export South China
                Corporation. Dated September 15, 2005(19)10.53
            
            Logistics
                Management Agreement dated September 1, 2005 between Essentially
                Yours
                Industries (Hong Kong) Limited and All In One Global Logistics
                Ltd.(20)10.54
            
            Contract
                for Legal Services dated September 1, 2005 between EYI Industries
                Inc. and
                M. Ali Lakhani Law Corporation(21)10.55
            
            Amended
                Investor Relations Agreement dated October 5, 2005 between EYI Industries,
                Inc. and Agora Investor Relations Corp.(22)10.56
            
            Settlement
                Agreement dated December 21, 2005 between EYI Industries, Inc., Halo
                Distribution, LLC and Business Centers, LLC10.57
            
            Global
                Consulting Group Agreement dated January 19, 2006 entered into with
                Global
                Consulting Group Inc. and EYI Industries Inc.




74




10.58
            
            Consulting
                Agreement dated January 27, 2006 entered into with Lou Prescott and
                Essentially Yours Industries, Inc.10.59
            
            Termination
                Agreement dated April 3, 2006 between EYI Industries Inc. and Cornell
                Capital Partners, LP(25)10.60
            
            Letter
                of Intent dated April 6, 2006 between Essentially Yours Industries
                (International) Limited and Rommel Panganiban and Raul Batista(25)10.61
            
            Securities
                Purchase Agreement, dated as of April 24, 2006, by and between EYI
                Industries, Inc. and the Buyers listed therein(24)10.62
            
            Registration
                Rights Agreement, dated as of April 24, 2006, by and between EYI
                Industries, Inc. and the Buyers listed therein(24)10.63
            
            $750,000
                Secured Convertible Debenture No. CCP-1, dated as of April 24, 2006,
                issued to Cornell Capital Partners, LP(24)10.64
            
            $333,333
                Secured Convertible Debenture CW-1, dated as of April 24, 2006, issued
                to
                Cornell Capital Partners, LP(24)10.65
            
            $416,667
                Secured Convertible Debenture TAIB-1, dated as of April 24, 2006,
                issued
                to Cornell Capital Partners, LP(24)10.66
            
            Security
                Agreement, dated as of April 24, 2006, issued to Cornell Capital
                Partners,
                LP(24)10.67
            
            Warrant
                No. CCP-001, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.68
            
            Warrant
                No. CCP-002, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.69
            
            Warrant
                No. CCP-003, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.70
            
            Warrant
                No. CCP-004, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.71
            
            Warrant
                No. CCP-005, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.72
            
            Warrant
                No. CCP-006, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.73
            
            Warrant
                No. CCP-007, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.74
            
            Warrant,
                No. CCP-008, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.75
            
            Warrant
                No. CCP-009, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.76
            
            Warrant
                No. CCP-010, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.77
            
            Warrant
                No. CCP-011, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.78
            
            Warrant
                No. CCP-012, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.79
            
            Warrant
                No. CCP-013, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.80
            
            Warrant
                No. CCP-014, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.81
            
            Warrant
                No. CCP-015, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.82
            
            Warrant
                No. CCP-016, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)10.83
            
            Warrant
                No. CCP-017, dated April 24, 2006, issued by the Company to Cornell
                Capital Partners, LP(24)




75




10.84
            
            Irrevocable
                Transfer Agent Instructions, dated April 24, 2006, by and among the
                Company, the Buyers listed therein and Corporate Stock Transfer,
                Inc.(24)10.85
            
            Consulting
                Agreement dated May 1, 2006 between Essentially Yours Industries
                (Hong
                Kong) Limited and Siu Chung (Freeda) Chan(25)10.86
            
            Amended
                Logistics Management Agreement dated May 1, 2006 between Essentially
                Yours
                Industries (Hong Kong) Limited and All In One Global Logistics
                Ltd.(29)10.87
            
            Distribution
                Agreement dated May 17, 2006 between Essentially Yours Industries
                (Hong
                Kong) Limited and Nozin, LLC(27)10.88
            
            Consulting
                Agreement dated July 1, 2006 between Essentially Yours Industries,
                Inc.
                and James Toll(29)10.89
            
            Letters
                dated July 12, 2006 and July 14, 2006 from Metals & Arsenic Removal
                Technology(29)10.90
            
            Addendum
                to the China Agency Agreement dated September 15, 2005 between EYI
                HK and
                Guangzhou Zhondian Enterprises (Group) Co. Ltd. and China Electronics
                Import and Export South China Corporation(28)10.91
            
            Consignment
                and Distribution Agreement dated September 20, 2006 between Essentially
                Yours Industries (International) Limited and Orientrends, Inc.(30)10.92
            
            Investor
                Relations Agreement between EYI Industries, Inc and Agoracom Investor
                Relations Corp.10.93
            
            Settlement
                Agreement dated September 1, 2006 between Barry LaRose, Jay Sargeant
                and
                EYI Industries Inc.10.94
            
            Settlement
                Agreement and Release dated September 5, 200610.95
            
            Letter
                Agreement dated September 19, 2006 between Essentially Yours Industries,
                Inc., James Toll and Fred Erickson10.96
            
            Agreement
                between Essentially Yours Industries, Inc. and Mach 3 Technologies
                Group,
                LLC(31)10.97
            
            Agreement
                dated October 27, 2006 between Essentially Yours Industries, Inc.
                and
                Global Trends, Inc.10.98
            
            Agreement
                dated January 23, 2007 between Essentially Yours Industries, Inc.
                and
                Colossal Head Communications(34)10.99
            
            Agreement
                dated January 1, 2007 between Essentially Yours Industries, Inc.
                and New
                U, Inc.10.100
            
            Share Exchange
              Agreement dated January 5, 2007 between the company and EYI
              shareholders10.103
            
            Stock
                Incentive Plan(35)14.1
            
            Code
                of Ethics(5)21.1
            
            List
                of Subsidiaries23.1
            
            Consent
                of Williams & Webster, P.S.31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002




**Notes**





(1)
            Filed
                as an exhibit to the registration statement on Form 10-SB/A of Safe
                ID
                Corporation, filed with the SEC on September 21,
                2000.


(2)
            Filed
                as an exhibit to the registration statement on Form SB-2 of Essentially
                Yours Industries, Inc., filed with the SEC on November 12,
                2002.


(3)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                January 8, 2004.


(4)
            Filed
                as an exhibit to our Registration Statement on Form S-8, filed with
                the
                SEC on March 30, 2004.


(5)
            Filed
                as an exhibit to our annual report on Form 10-KSB for the year ended
                December 31, 2003, filed with the SEC on April 14,
                2004.


(6)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                March 31, 2004, filed with the SEC on May 24,
                2004.


(7)
            Filed
                as an exhibit to our registration statement on Form SB-2, filed with
                the
                SEC on September 17, 2004.




76




(8)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                September 30, 2004, filed with the SEC on November 22,
                2004.


(9)
            Filed
                as an exhibit to our Amendment No. 1 to our registration statement
                on Form
                SB-2 on December 23, 2004.


(10)
                Filed
                    as an exhibit to our Current Report on Form 8-K, filed with the
                    SEC on
                    January 12, 2005.


(11)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                September 30, 2004, filed with the SEC on November 22,
                2004.


(12)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                March 10, 2005.


(13)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB/A for the period
                ended March 31, 2004, filed with the SEC on December 15,
                2004.


(14)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB/A for the period
                ended June 30, 2004, filed with the SEC on December 15,
                2004.


(15)
            Filed
                as an exhibit to our annual report on Form 10-KSB for the period
                ended
                December 31, 2004, filed with the SEC on April 18,
                2005.


(16)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on May
                17, 2005.


(17)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                March 31, 2005, filed with the SEC on May 20, 2005


(18)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                June 30, 2005, filed with the SEC on August 19,
                2005


(19)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                September 27, 2005


(20)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                September 30, 2005, filed with the SEC on November 21,
                2005


(21)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                September 30, 2005, filed with the SEC on November 21,
                2005


(22)
            Filed
                as an exhibit to our quarterly report on Form 10-QSB for the period
                ended
                September 30, 2005, filed with the SEC on November 21,
                2005


(23)
            Filed
                as an exhibit to our annual report on Form 10-KSB for the period
                ended
                December 31, 2005, filed with the SEC onMarch
                31, 2006.


(24)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                April 28, 2006.


(25)
            Filed
                as an exhibit to our Quarterly Report on Form 10-QSB for the period
                ended
                March 31, 2006, filed with the SEC onMay
                16, 2006.


(26)
            Filed
                as an exhibit to our registration statement on Form SB-2/A on June
                21,
                2006.


(27)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                April 28, 2006


(28)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                August 3, 2006


(29)
            Filed
                as an exhibit to our Quarterly Report on Form 10-QSB for the period
                ended
                June 30, 2006, filed with the SEC on August 21,
                2006


(30)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                September 25, 2006


(31)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                October 16, 2006


(32)
            Filed
                as an exhibit to our Quarterly Report on Form 10-QSB for the period
                ended
                September 30, 2006, filed with the SEC on November 20, 2006(33)Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                December 19, 2006


(34)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                February 2, 2007


(35)
            Filed
                as an exhibit to our Current Report on Form 8-K, filed with the SEC
                on
                February 13, 2007





77




**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.**





**Audit
      Fees**





The
      aggregate fees billed for the two most recently completed fiscal years ended
      December 31, 2006 and 2005 for professional services rendered by the principal
      accountant for the audit of the Corporation’s annual financial statements and
      review of the financial statements included our Quarterly Reports on Form 10-QSB
      and services that are normally provided by the accountant in connection with
      statutory and regulatory filings or engagements for these fiscal periods were
      as
      follows:




**Year
                End December 31, 2006**
            **Year
                Ended December 31, 2005**Audit
                Related Fees
            $50,000
            $55,664Tax
                Fees
            $5,000
            $5,823All
                Other Fees
            $0
            $1,899Total
            $55,000
            $64,386




78





**SIGNATURES**








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








**EYI
      INDUSTRIES, INC.**




By:
            /s/
                Jay
                Sargeant
              **JAY
                  SARGEANT**
                President,
                  Chief Executive Officer
                (Principal
                  Executive Officer)
                Director
                
                Date:
                  March 30, 2007








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


By:
              /s/
                  Jay
                  Sargeant
                **JAY
                    SARGEANT**
                  President,
                    Chief Executive Officer
                  (Principal
                    Executive Officer)
                  Director
                  
                  Date:
                    March 30, 2007
 By:
                  /s/
                        Rajesh
                        Raniga
                      **RAJESH
                        RANIGA**
                      Chief
                        Financial Officer
                      (Principal
                        Accounting Officer)
                      
                      Date:
                        March 30, 2007
 By:
                      /s/
                          Dori
                          O'Neill
                        **DORI
                            O’NEILL**
                          Executive
                            Vice-President, Secretary, Treasurer,
                          Chief
                            Operations Officer
                          Director
                          
                          Date:
                            March 30, 2007