Whole Living Adds Four New Products, Expands Core Product Line
Wednesday March 10, 9:15 am ET

PROVO, Utah--(BUSINESS WIRE)--March 10, 2004--Whole Living Inc. (OTCBB:WLIV - News) announced today the addition of two new flavors of Pulse, the company's core product line, and two new varieties of Finally Fruit, a parch-dried fruit product.
Cherry and Apple Pulse are each made with 24 all natural whole food ingredients, including fruits, nuts, grains, and seeds. Cherries are known to have antioxidants, which inhibit the cycling of free radicals, and compounds that may factor in causing certain cancer. Apples contain phytonutrients which inhibit the growth of colon cancer and liver cancer cells. One hundred grams of apple provide the antioxidant activity of 1,500 grams of Vitamin C. Pulse product line is designed for consumers who want well balanced, convenient, and healthy food options.

Carnival and Sunrise are the new Finally Fruit flavors. Carnival is made with blueberries, peaches, kiwis, whole strawberries, cherries, apples, raspberries, and blackberries. Sunrise features the lighter, brighter fruits--apricots, kiwis, apples, bananas, peaches, oranges, mangos, and pineapples. In the parch-drying process, all the moisture is removed from the fruit, preserving nutrients, enzymes, and the natural fruit flavor.

"We've been introducing new products every month since October, and the response from the field has been tremendous," stated President Doug Burdick. "Our retention rate is significantly improving as we increase our all natural offerings and appeal to more and more customers. We intend to unveil 3-5 new products every month, expanding variety and options while giving customers something new to look forward to each month."

Whole Living Inc. develops, manufactures, and distributes all natural products to five countries and all fifty states. Pulse, their core product line, is a blend of all natural ingredients that fight health problems and diseases associated with poor diets. www.thebraingarden.com

Forward-Looking Statements

This press release contains certain forward-looking statements. Investors are cautioned that certain statements in this release are "forward-looking statements" and involve both known and unknown risks, uncertainties and other factors. Such uncertainties include, among others, certain risks associated with the operation of the company described above. The Company's actual results could differ materially from expected results.

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Contact:
Whole Living Inc.
Sharm Smith, 801-655-1000
or
Brokers/Analysts:
Summit Resource Group
Shawn Miller, 800-400-1290
Form 10QSB for WHOLE LIVING INC

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14-Nov-2003

Quarterly Report

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
Whole Living operates through its wholly-owned subsidiary Brain Garden, Inc. We develop, manufacture, distribute all natural products to five countries and all fifty states. We have recorded operating income for the second and third quarters for 2003; however, we have recorded losses for the nine month period ended September 30, 2003, and since inception. Our plan is to focus our marketing efforts on the Food First Program and expand this program into the international market. During the first quarter of 2003 we experienced non-recurring expenses related to the launch of this program and now expect to move forward with increased sales. We launched the Food First Program in the United Kingdom in June 2003 and anticipate further growth in the international market.

Results of Operations

The following discussions should be read in conjunction with the financial statements included with this report and comparisons are presented for the three and nine month periods ended September 30, 2003 and 2002.

We recognize revenue upon the receipt of the sales order, which is simultaneous with the payment and delivery of our goods. Revenue is net of returns, which has historically been between 2% and 3%. For the nine month period ended September 30, 2003, we recorded sales of $9,784,431 compared to sales of $6,474,118 for the comparable 2002 nine month period. Sales for the three month period ended September 30, 2003 ("2003 third quarter"), were $3,460,888 compared to $3,281,216 in sales for the 2002 third quarter. The increase in sales is primarily due to the Food First Program which has resulted in growth in new customers.

Cost of goods sold consists primarily of the cost of procuring and packaging products, sales commissions paid to our independent distributors, the cost of shipping product to distributors, plus credit card sales processing fees. Distributor commissions are paid to several levels of distributors on each product sold. The amount and recipient of the commission varies depending on the purchaser's position within the Unigen Plan. Distributor commissions are paid to distributors on a monthly basis based upon their personal and group sales volume. Additional bonuses are paid weekly to distributors. The overall payout average for sales commissions has historically been approximately 36% to 38% of product sales.

Cost of goods sold increased $3,050,528 for the 2003 nine month period compared to the 2002 nine month period. Cost of goods sold increased $509,099 for the 2003 third quarter compared to the 2002 third quarter. Cost of goods sold were 74.0% of sales for the 2003 nine month period compared to 64.7% of sales for the 2002 nine month period. Cost of goods sold were 73.6% of sales for the 2003 third quarter compared to 62.1% of sales for the 2002 third quarter.

Our gross profit increased $259,785, or 10.2%, for the 2003 nine month period compared to the 2002 nine month period, and gross profit decreased $329,427, or 26.5%, for the 2003 third quarter compared to the 2002 third quarter.

Total operating expenses decreased $135,973, or 4.1%, for the 2003 nine month period compared to the 2002 nine month period. Total operating expenses decreased $574,953, or 39.9%, for the 2003 third quarter compared to the 2002 third quarter. These changes are discussed in more detail below in relation to general and administrative expenses and selling expenses. Our total operating expenses were 32.4% of sales for the 2003 nine month period compared to 51.0% of sales for the 2002 nine month period. Total operating expenses were 25.0% of sales for the 2003 third quarter compared to 43.9% of sales for the 2002 third quarter.

General and administrative expenses, which include general office expense, management and employees' salaries, and the support systems for the distributor network, decreased $511,294, or 17.1%, for the 2003 nine month period and decreased $743,627, or 54.3%, for the 2003 third quarter compared to the 2002 third quarter. These expenses decreased in the 2003 periods primarily due to an accounting reclassification of expense categories.

Selling expenses, which include marketing expenses, the support of sales meetings and events, and certain customer service expenses, increased $375,321, or 122.6%, for the 2003 nine month period compared to the 2002 comparable period. Selling expenses increased $168,674, or 231.3%, for the 2003 third quarter compared to the 2002 third quarter. These expenses increased in the 2003 periods primarily due to an accounting reclassification of expense categories.

Based on the above, we recorded operating income of $45,128 for the 2003 third quarter compared to an operating loss of $200,398 for the 2002 comparable quarter. For the 2003 nine month period we recorded an operating loss of $625,598 compared to an operating loss of $1,021,356 for the 2002 nine month period.

We recorded total other expense, primarily related to interest expense, of $78,791 for the 2003 nine month period and $118,490 for the 2002 nine month period. For the 2003 third quarter we recorded total other expense of $35,637 compared to total other expense of $64,227 for the 2002 third quarter.

We recorded a net loss of $704,389 for the 2003 nine month period compared to a net loss of $1,139,846 for the 2002 nine month period. However, we recorded net income of $9,491 for the 2003 third quarter compared to a net loss of $264,625 for the 2002 third quarter. Our net loss per share was $0.02 for the 2003 nine month period compared to a net loss per share of $0.04 for the 2002 nine month period. No net income or loss per share was recorded for the 2003 third quarter compared to a net loss per share of $0.01 for the 2002 third quarter.

Factors Affecting Future Performance

Until the 2003 second quarter, internal cash flows alone have not been sufficient to maintain our operations. We may be unable to maintain this profitability. Actual costs and revenues could vary from the amounts we expect or budget, possibly materially, and those variations are likely to affect how much additional financing we will need for our operations. Our future internal cash flows will be dependent on a number of factors, including:

. Our ability to encourage our distributors to sponsor new
distributors and increase their own personal sales;
. Our ability to promote our product lines with our distributors;
. Our ability to develop successful new product lines;
. Effects of future regulatory changes in the area of direct
marketing, if any;
. Our ability to remain competitive in our markets; and
. Our ability to meet the demand of our new Food First Program.

In addition, we have entered into agreements with independent distributors and suppliers located in

Australia, Canada, New Zealand, Japan and the United Kingdom. We may establish similar arrangements in other countries in the future. As a result, our future revenues may be affected by the economies of these countries. Our international operations are subject to a number of risks, such as, longer payment cycles, unexpected changes in regulatory environments, import and export restrictions and tariffs, difficulties in staffing and managing international operations, greater difficulty or delay in accounts receivable collection, potentially adverse recessionary environments and economies outside the United States, and possible political and economic instability.

Seasonal Aspects

In the direct selling industry, the summer months of June, July and August, and the holiday months of November and December are relatively soft. However, in our short operating history we have experienced an increase in sales during the summer months and are unsure how the industry-wide fluctuations will affect our business in the future.

Liquidity And Capital Resources

We have funded our cash requirements primarily through sales, loans and private placements of our common stock. We expect that we will continue to fund operations in the short-term from these sources. At the nine month period ended September 30, 2003, we had no cash on hand and total current assets of $1,439,259 compared to no cash on hand and total current assets of $724,125 at the year ended December 31, 2002. Our total current liabilities were $2,031,705 at the end of the 2003 nine month period compared to $1,776,015 at December 31, 2002. Accounts payable represented 28.3% of total current liabilities and the current portion of long-term liabilities represented 33.0% of total current liabilities at the end of the 2003 nine month period. Our accumulated deficit was $10,705,758 at September 30, 2003.

Net cash used by operating activities was $1,044,242 for the 2003 nine month period compared to $1,336,875 for the 2002 third quarter. Net cash used by investing activities was $125,758 for the 2003 nine month period compared to $1,345,791 for the 2002 third quarter. The investing activities for the 2003 nine month period were primarily related to purchases of property and equipment and the 2002 nine month period were related to payments from notes receivable. Net cash provided by financing activities was $1,170,000 for the 2003 nine month period compared to $2,661,315 for the 2002 nine month period. Financing activities were primarily proceeds from debt financing in those periods.

Prior to the third quarter, management was considering building manufacturing facilities in several countries to facilitate the delivery of fresh quality product to consumers around the world. On July 17, 2003, we reached agreements with shipping corporations that would provide for shipment of our product at reduced costs. The reduction in expenses temporarily delayed the decision to build new manufacturing facilities. Management will revisit the need for additional manufacturing plants when demand rises above domestic capacity.

Commitments and Contingent Liabilities

At the nine month period ended September 30, 2003, our long term liabilities consisted of $670,000 notes payable to related parties compared to $420,000 at December 31, 2002. We also have an operating lease for our office and manufacturing facility at $17,400 per month. Future minimum payments on operating leases for office space and warehouse space were $626,400 through 2005 at December 31, 2002. We also have contingent liabilities of $243,879 for the 2003 third quarter primarily related to litigation (See, Part II, Item 1, below, for further details).

Financing

While we have generated net income for the 2003 second and third quarter; historically, we have relied on loans from shareholders and management to fund cash flow shortfalls. We have typically converted the loans into

common stock and have relied on equity transactions to pay for services provided to us. Management anticipates that additional capital for cash shortfalls will be provided by future loans or private placements of our common stock. We expect to issue private placements of stock pursuant to exemptions provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.

If we fail to raise the necessary funds through private placements, we anticipate we will require debt financing from related or third parties. We have not investigated the availability, source and terms for external financing at this time and we can not assure that funds will be available from any source, or, if available, that we will be able to obtain the funds on terms agreeable to us. Also, the acquisition of funding through the issuance of debt could result in a substantial portion of our cash flows from operations being dedicated to the payment of principal and interest on the indebtedness, and could render us more vulnerable to competitive and economic downturns.