UNITED ~~STATES~~ ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~ STATES

~~FORM 10-Q~~SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~December 31, ~~2005~~2008

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission File Number: 0-16196

ENERLUME ENERGY MANAGEMENT CORP.

~~HOST AMERICA CORPORATION~~ (Exact name of registrant as specified in its charter)

Colorado		06-1168423
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

2 Broadway Hamden, Connecticut		06518-2697
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (203) 248-4100

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer ~~(as~~or ~~defined~~a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the ~~Securities~~ Exchange Act ~~of 1934)~~. ~~Yes ¨ No x~~

OnLarge accelerated ~~May~~filer ~~17,~~¨ Accelerated filer ~~2005,~~¨ Non-accelerated filer ~~there~~¨ ~~were~~Smaller reporting ~~4,893,630~~company ~~shares of the registrant’s common stock, $.001 par value, outstanding.~~x

~~HOST~~Indicate by ~~AMERICA~~check ~~CORPORATION~~mark ~~AND~~whether ~~SUBSIDIARIES~~the ~~MARCH~~registrant ~~31,~~is ~~2005~~a ~~FORM~~shell 10company (as defined in Rule 12b-Q2 ~~INDEX~~of the Securities Exchange Act of 1934). Yes ¨ No x

Part I – Financial Information			Page
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets – March 31, 2005 (Unaudited) and June 30, 2004 (Audited)		3
	Condensed Consolidated Statements of Operations – for the three months ended March 31, 2005 and 2004 (Unaudited)		4
	Condensed Consolidated Statements of Operations – for the nine months ended March 31, 2005 and 2004 (Unaudited)		5
	Condensed Consolidated Statements of Cash Flows – for the nine months ended March 31, 2005 and 2004 (Unaudited)		6-7
	Notes to Condensed Consolidated Financial Statements (Unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37
Item 4.	Controls and Procedures		38
Part II – Other Information
Item 1.		Legal Proceedings	39
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.		Defaults Upon Senior Securities	40
Item 4.		Submission of Matters to a Vote of Security Holders	40
Item 5.		Other Information	41
Item 6.		Exhibits	41
		Signatures	42

On March 20, 2009, there were 14,071,728 shares of the registrant’s common stock, $.001 par value, outstanding.

ENERLUME ENERGY MANAGEMENT CORP. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

Part I – Financial Information			Page

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets – December 31, 2008 (Unaudited) and June 30, 2008 (Audited)		3

	Condensed Consolidated Statements of Operations – for the three months ended December 31, 2008 and 2007 (Unaudited)		4

	Condensed Consolidated Statements of Operations – for the six months ended December 31, 2008 and 2007 (Unaudited)		5

	Condensed Consolidated Statements of Cash Flows – for the six months ended December 31, 2008 and 2007 (Unaudited)		6

	Notes to Condensed Consolidated Financial Statements (Unaudited)		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		41

Item 4(T).	Controls and Procedures		41


Part II – Other Information

Item 1.		Legal Proceedings	43

Item 1A.		Risk Factors	44

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.		Defaults Upon Senior Securities	46

Item 4.		Submission of Matters to a Vote of Security Holders	46

Item 5.		Other Information	46

Item 6.		Exhibits	46

		Signatures	47

~~HOST~~ENERLUME ~~AMERICA~~ENERGY ~~CORPORATION~~MANAGEMENT CORP. AND SUBSIDIARIES ~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

ASSETS
	March 31, 2005 (Unaudited)			June 30, 2004 (Audited)
CURRENT ASSETS
Cash	$	1,330,956		$	3,767,058
Accounts receivable, net		4,840,423			2,659,787
Inventories		1,429,672			1,055,865
Notes receivable – related party		165,000			125,000
Prepaid expenses and other current assets		527,454			177,597
Assets of discontinued segment		-			1,814,355
Total current assets		8,293,505			9,599,662
EQUIPMENT AND IMPROVEMENTS, net		1,693,376			1,096,271
OTHER ASSETS
Other		419,891			176,953
Cash – restricted		2,732,000			4,000,000
Deferred financing costs, net		1,453,167			1,895,110
Intangible assets, net		1,870,966			907,323
Goodwill, net		6,515,160			3,978,838
		12,991,184			10,958,224
TOTALS	$	22,978,065		$	21,654,157
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long-term debt	$	1,582,023		$	1,136,849
Accounts payable		3,749,508			2,341,618
Accrued expenses		1,391,851			665,130
Liabilities of discontinued segment		-			111,491
Total current liabilities		6,723,382			4,255,088
LONG-TERM LIABILITIES
Long-term debt, less current portion		5,869,898			5,523,836
Subordinated debt		2,932,513			2,928,390
		8,802,411			8,452,226
Total liabilities		15,525,793			12,707,314
CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $.001 par value, 2,000,000 shares authorized		-			-
Preferred stock, Series B, $.001 par value, 266,667 shares designated and outstanding		267			267
Common stock, $.001 par value, 80,000,000 shares authorized; 4,811,573 and 4,117,491 outstanding at March 31, 2005 and June 30, 2004, respectively		4,812			4,118
Additional paid-in capital		23,037,732			20,149,518
Accumulated deficit		(15,590,539	)		(11,207,060	)
Total stockholders’ equity		7,452,272			8,946,843
TOTALS	$	22,978,065		$	21,654,157

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to the condensed consolidated financial statements. 3

ASSETS
	December 31, 2008 (Unaudited)			June 30, 2008 (Audited)
CURRENT ASSETS
Cash and cash equivalents	$	26,367		$	409,672
Accounts receivable, net of allowance for doubtful accounts of $61,000, at December 31 and June 30, 2008		705,309			547,848
Inventories		256,460			259,145
Prepaid expenses and other current assets		329,850			357,622
Total current assets		1,317,986			1,574,287

EQUIPMENT AND IMPROVEMENTS, net		195,501			291,990

OTHER ASSETS
Other		19,360			19,360
Deferred financing costs, net		20,185			30,229
Intangible assets, net		67,500			97,500
		107,045			147,089
Total Assets	$	1,620,532		$	2,013,366

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Demand note payable	$	286,971		$	293,223
Current portion of secured debt		147,168			172,264
Current portion of unsecured debt		1,333,581			536,038
Accounts payable		3,039,928			2,102,874
Accrued expenses		2,067,996			1,680,883
Total current liabilities		6,875,644			4,785,282

LONG-TERM LIABILITIES
Secured debt, less current portion		548,832			799,209
Unsecured debt, less current portion		1,982,073			1,855,055
Other long term liability		10,561			-
		2,541,466			2,654,264
Total liabilities		9,417,110			7,439,546

COMMITMENTS & CONTINGENCIES

STOCKHOLDERS’ EQUITY (DEFICIENCY)
Preferred stock, $.001 par value, 2,000,000 shares authorized		-			-
Common stock, $.001 par value, 80,000,000 shares authorized; 13,994,142 and 13,492,138, issued and outstanding at December 31 and June 30, 2008		13,994			13,492
Additional paid-in capital		51,445,033			49,775,345
Accumulated deficit		(59,255,605	)		(55,215,017	)
Total stockholders’ deficiency		(7,796,578	)		(5,426,180	)
Total Liabilities and Stockholders’ Equity (Deficiency)	$	1,620,532		$	2,013,366

~~HOST~~See accompanying ~~AMERICA~~notes ~~CORPORATION~~to ~~AND~~the ~~SUBSIDIARIES~~condensed ~~CONDENSED~~consolidated ~~CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)~~financial statements.

	2005			2004
NET REVENUES	$	8,163,964		$	6,153,567
OPERATING COSTS AND EXPENSES
Cost of revenues		6,959,240			5,192,069
Selling, general and administrative expenses (including non-cash charges of $305,100 in 2005)		1,836,600			1,298,948
Acquired in process research and development costs		-			70,814
Depreciation and amortization		185,329			94,000
Research and development costs		104			-
		8,981,273			6,655,831
Operating loss – continuing operations		(817,309	)		(502,264	)
OTHER INCOME (EXPENSE)
Other income (expense)		4,723			(4,635	)
Amortization of deferred financing costs		(151,967	)		(9,610	)
Amortization of debt discount		(206,185	)		(29,967	)
Interest expense		(355,484	)		(105,728	)
		(708,913	)		(149,940	)
Loss from continuing operations before income taxes		(1,526,222	)		(652,204	)
PROVISION FOR INCOME TAXES		10,000			5,000
Loss from continuing operations		(1,536,222	)		(657,204	)
Income from operations of discontinued segment		81,627			45,612
Loss on sale of discontinued segment		(663,618	)		-
Income (loss) from discontinued segment		(581,991	)		45,612
Net loss		(2,118,213	)		(611,592	)
Preferred stock dividends		(8,000	)		-
Loss applicable to common stockholders	$	(2,126,213	)	$	(611,592	)
Loss per share – basic and diluted:
Loss from continuing operations	$	(0.34	)	$	(0.16	)
Income (loss) from discontinued segment		(0.13	)		.01
Total	$	(0.47	)	$	(0.15	)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		4,517,832			4,018,766

~~See~~ENERLUME ~~accompanying~~ENERGY ~~notes~~MANAGEMENT toCORP. ~~the~~AND ~~condensed consolidated financial statements. 4~~SUBSIDIARIES

~~HOST AMERICA CORPORATION AND SUBSIDIARIES~~ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~FOR THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)~~

	2005			2004
NET REVENUES	$	21,569,580		$	18,572,877
OPERATING COSTS AND EXPENSES
Cost of revenues		18,455,919			15,716,241
Selling, general and administrative expenses (including non-cash charges of $305,100 and $11,397)		4,695,624			2,933,275
Acquired in process research and development costs		-			3,431,381
Depreciation and amortization		448,585			241,118
Research and development costs		43,087			-
		23,643,215			22,322,015
Operating loss – continuing operations		(2,073,635	)		(3,749,138	)
OTHER INCOME (EXPENSE)
Other income (expense)		(3,277	)		1,475
Amortization of deferred financing costs		(455,902	)		(22,297	)
Amortization of debt discount		(607,934	)		(73,367	)
Interest expense		(699,180	)		(263,190	)
		(1,766,293	)		(357,379	)
Loss from continuing operations before income taxes		(3,839,928	)		(4,106,517	)
PROVISION FOR INCOME TAXES		28,000			12,000
Loss from continuing operations		(3,867,928	)		(4,118,517	)
Income from operations of discontinued segment		172,063			99,137
Loss on sale of discontinued segment		(663,618	)		-
Income (loss) from discontinued segment		(491,555	)		99,137
Net loss		(4,359,483	)		(4,019,380	)
Preferred stock dividends, including charges for beneficial conversion in 2004		(24,000	)		(533,334	)
Loss applicable to common stockholders	$	(4,383,483	)	$	(4,552,714	)
Loss per share – basic and diluted:
Loss from continuing operations		(0.92	)		(1.43	)
Income (loss) from discontinued segment		(0.11	)		0.03
Basic and diluted loss per common share	$	(1.03	)	$	(1.40	)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		4,256,993			3,258,801

FOR THE THREE MONTHS ENDED DECEMBER 31, 2008 AND 2007

~~See accompanying notes to the condensed consolidated financial statements 5~~(UNAUDITED)

HOST AMERICA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)

		2008			2007

NET REVENUES	$	1,136,558		$	2,222,727

OPERATING COSTS AND EXPENSES
Cost of revenues		981,477			1,209,722
Selling, general and administrative expenses		1,196,164			2,368,260
Depreciation and amortization		44,649			46,789
Research and development costs		35,038			6,946
		2,257,328			3,631,717

Loss from operations		(1,120,770	)		(1,408,990	)

OTHER INCOME (EXPENSE)
Other income		679			23,692
Amortization of deferred financing costs		(13,594	)		(78,207	)
Amortization and write off of debt discount		(222,681	)		(209,557	)
Interest expense		(340,357	)		(1,085,896	)
		(575,953	)		(1,349,968	)
Loss from continuing operations		(1,696,723	)		(2,758,958	)

Income from discontinued operations		-			96,190
Gain on sale of discontinued operations		-			716,339
Income from operations classified as discontinued		-			812,529
Net loss		(1,696,723	)		(1,946,429	)

Preferred stock dividends		-			(2,667	)

Net loss applicable to common stockholders	$	(1,696,723	)		(1,949,096	)

Net earnings (loss) per share – basic and diluted:
Loss per share from continuing operations	$	(0.12	)	$	(0.24	)
Earnings per share from discontinued operations		-			0.07

Net loss per share	$	(0.12	)	$	(0.17	)

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		13,993,599			11,795,101

	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,359,483	)	$	(4,019,380	)
Income from operations of discontinued segment		(172,063	)		(99,137	)
Loss on sale of discontinued segment		663,618			-
Loss from continuing operations		(3,867,928	)		(4,118,517	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		478,206			241,118
Write-off of acquired in process research and development costs		-			3,431,381
Amortization of deferred financing costs		455,902			22,297
Amortization of debt discount		607,934			73,367
Beneficial conversion charge to interest expense		161,393			-
Loss on disposal of equipment		20,688			3,940
Non-cash compensation		305,100			11,397
Changes in operating assets and liabilities		(1,633,823	)		(1,874,277	)
Net cash used in operating activities of continuing operations		(3,472,528	)		(2,209,294	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment		-			8,475
Proceeds from sale of discontinued segment, net		878,522			-
Purchases of equipment		(135,834	)		(139,849	)
Issuance of notes receivable – related parties		(220,280	)		-
Repayment of notes receivable – related parties		180,280			-
Proceeds from loan held in restricted cash account		1,268,000				-
Purchase of patents		-			(64,298	)
Cash paid for businesses acquired, net of cash received of $49,663		(405,709	)		(176,438	)
Net cash provided by (used in) investing activities of continuing operations		1,564,979			(372,110	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock, net		-			386,940
Proceeds from issuance of common stock, net		459,251			2,562,403
Proceeds from subordinated debt		100,000			1,875,000
Payments for deferred financing costs		(13,960	)		(195,965	)
Payments on demand notes payable		-			(424,889	)
Principal payments on long-term debt		(1,207,114	)		(1,336,554	)
Net cash (used in) provided by financing activities of continuing operations		(661,823	)		2,866,935
Net cash (used in) provided by continuing operations		(2,569,372	)		285,531
Net cash provided by discontinued segment		133,270			123,836
NET (DECREASE) INCREASE IN CASH		(2,436,102	)		409,367
CASH, beginning of period		3,767,058			574,528
CASH, end of period	$	1,330,956		$	983,895

See accompanying notes to the condensed consolidated financial statements.

ENERLUME ENERGY MANAGEMENT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2008 AND 2007

(UNAUDITED)

		2008			2007

NET REVENUES	$	2,440,628		$	4,399,788

OPERATING COSTS AND EXPENSES
Cost of revenues		2,142,877			2,695,677
Selling, general and administrative expenses		2,734,834			3,820,411
Depreciation and amortization		89,947			89,823
Research and development costs		71,243			9,310
		5,038,901			6,615,221

Loss from operations		(2,598,273	)		(2,215,433	)

OTHER INCOME (EXPENSE)
Other income		916			24,653
Amortization of deferred financing costs		(30,229	)		(163,763	)
Amortization and write off of debt discount		(440,678	)		(438,905	)
Interest expense		(972,324	)		(1,324,819	)
		(1,442,315	)		(1,902,834	)
Loss from continuing operations		(4,040,588	)		(4,118,267	)

Income from discontinued operations		-			315,423
Gain on sale of discontinued operations		-			716,339
Income from operations classified as discontinued		-			1,031,762

Net loss		(4,040,588	)		(3,086,505	)

Preferred stock dividends		-			(10,667	)

Net loss applicable to common stockholders	$	(4,040,588	)		(3,097,172	)

Net earnings (loss) per share – basic and diluted:
Loss per share from continuing operations	$	(0.29	)	$	(0.36	)
Earnings per share from discontinued operations		-			0.09

Net loss per share	$	(0.29	)	$	(0.27	)

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		13,827,914			11,337,758

See accompanying notes to the condensed consolidated financial statements.

ENERLUME ENERGY MANAGEMENT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2008 AND 2007

(UNAUDITED)

		2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,040,588	)	$	(3,086,505	)
Income from discontinued operations		-			315,423
Gain on sale of discontinued operations		-			716,339
Loss from continuing operations		(4,040,588	)		(4,118,267	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		162,253			185,852
Bad debt expense		3,069			(913)
Deferred rent		10,561			-
Non cash interest expense		736,689			1,079,656
Warrant reprice charge		135,841			-
Amortization and write off of debt discount		440,678			438,905
Non-cash compensation		130,134			1,187,146
Amortization of deferred financing costs		30,229			163,763
Loss on disposal of property and equipment		-			597
Changes in operating assets and liabilities		1,235,004			(658,243)
Net cash used in operating activities of continuing operations		(1,156,130	)		(1,721,504	)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment		-			300
Purchases of equipment and improvements		(35,764	)		(53,092	)
Increase in restricted cash		-			(178,770)
Cash received from sale of food services		-			3,012,747
Net cash (used in) provided by investing activities of continuing operations		(35,764	)		2,781,185

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on demand note		(6,252	)		(100,000)
Proceeds from issuance of common stock, net		-			978,100
Proceeds from unsecured debt		945,000			-
Proceeds from long-term debt		-			175,000
Payments for deferred financing costs		(20,185	)		-
Principal payments on long-term debt		(109,974	)		(1,320,782	)
Net cash provided by (used in) financing activities of continuing operations		808,589			(267,682)

Net cash used in continuing operations		(383,305	)		791,999

Net cast provided by discontinued operations:
Net cash provided by operating activities		-			664,231
Net cash used in investing activities		-			(32,153	)
Net cash used in financing activities		-			(166,361	)
Total net cash provided by discontinued operations		-			465,717

NET INCREASE (DECREASE) IN CASH		(383,305)			1,257,716

Cash, beginning of period		409,672			458,705

Cash, end of period	$	26,367		$	1,716,421

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) FOR THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)~~

~~SUPPLEMENTAL~~CONDENSED CONSOLIDATED ~~SCHEDULE~~STATEMENTS OF ~~NON-~~CASH ~~INVESTING AND FINANCING ACTIVITIES AND OTHER INFORMATION:~~FLOWS

~~The~~FOR THE ~~Company~~SIX ~~purchased~~MONTHS ~~all~~ENDED ~~of the outstanding stock of R.S. Services and certain assets of Food Brokers for $3~~DECEMBER 31,~~227,032~~ in2008 ~~2005~~AND ~~and GlobalNet for $2,201,331 in 2004, respectively. In conjunction with the acquisitions, liabilities were assumed as follows:~~2007

Fair value of assets acquired	$	5,129,452	$	4,351,181
Less, fair value of common stock issued and cash paid and liabilities incurred for acquisition costs		3,227,032		2,201,331
Liabilities assumed	$	1,902,420	$	2,149,850

(UNAUDITED) (Continued)

Non-cash investing and financing activities:

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	2008		2007

Cash paid during the six months ended December 31 for:
Interest – continuing operations	$	94,993	$	232,858
Interest – discontinued operations		-		13,083
Income taxes– continuing operations		-		-
Income taxes– discontinued operations		-		36,400

Equipment acquired through assumption of notes payable and capital leases	$	338,390		$	50,405
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock in payment of long-term debt and accrued interest		219,505			-
		2008			2007
Dividends on preferred stock, including beneficial conversion charge		24,000			533,334
Secured debt converted into common stock and warrants		$	150,000		$	300,000
Unsecured debt converted into common stock and warrants			-			1,112,500
Accrued dividends converted into note payable			-			135,471
Receivable recorded pertaining to issuance of common shares			-			71,000
Interest accrual converted into common stock			20,950			17,917
Dividends on preferred stock			-			10,667
Beneficial conversion charge on convertible debt			737,040			232,037
Warrants issued to extend term of unsecured debt			613,941			-
Warrants issued with debt issuance			224,908			-

See accompanying notes to the condensed consolidated financial statements. 7

~~HOST AMERICA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~7

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
		NATURE OF OPERATIONS
		Host America Corporation (“Host”) was incorporated in Delaware on February 6, 1986 with the name University Dining Services, Inc. On March 9, 1998, Host filed a certificate of amendment changing its name to Host America Corporation, and during fiscal 1999 changed its state of incorporation from Delaware to Colorado. Host is a contract food management organization, which specializes in providing management of corporate dining rooms and cafeterias and such ancillary services as special event catering and office coffee service to business and industry accounts located in the Northeast area of the United States. In July 2000, Host purchased all of the issued and outstanding shares of Lindley Food Service Corporation (“Lindley”). Lindley provides unitized meals primarily under fixed-price contracts for governmental programs in Connecticut, Florida, Indiana, Massachusetts and Rhode Island. On December 23, 2003, Host purchased all of the issued and outstanding shares of GlobalNet Energy Investors, Inc. (“GlobalNet”). GlobalNet, which is located in Carrollton, Texas, markets, sells, installs and manages energy saving products and technology. On October 29, 2004, Host purchased the operating assets of Food Brokers, Inc. (“Food Brokers”), a food service company located in Bridgeport, Connecticut. On February 16, 2005, GlobalNet Acquisition Corp. (“Global”), a wholly-owned subsidiary of Host, acquired and merged with R.S., an Oklahoma corporation, pursuant to the terms and conditions of the Agreement of Merger and Plan of Reorganization dated September 29, 2004. As a result, Global, as the surviving corporation, changed its name to R.S. Services, Inc. (“R.S. Services”), a Connecticut corporation, and will conduct the electrical installation and energy management business formerly conducted by R.S. Services, Inc. As used herein, “R.S. Services” or “R.S.” refers to R.S. Services, Inc. before the Merger and R.S. Services, Inc. together with Global after the Merger. On March 31, 2005, Host sold SelectForce, which had constituted its employment screening segment (see Note 3 herein).
		BASIS OF PRESENTATION
		The accompanying unaudited condensed consolidated financial statements of Host America Corporation and subsidiaries (the “Company”) for the three and nine months ended March 31, 2005 and 2004 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) and disclosures necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements, and accompanying notes, included in the Company’s Annual Report on Form 10-KSB for the year ended June 30, 2004 (“the 10-KSB”).

ENERLUME ENERGY MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		NATURE OF OPERATIONS

		EnerLume Energy Management Corp., formerly Host America Corporation, (“EnerLume”, “Host”, or the “Company”) was originally incorporated in Delaware on February 6, 1986 and reincorporated in Colorado in 1999. The Company is an electrical energy management organization, which specializes in providing electrical energy conservation products and services. The Company also provides electrical installations and service operations through its wholly owned subsidiary, RS Services, Inc. (“RS Services”).

		GOING CONCERN

		The Company incurred net losses of $4,040,588 and $3,086,505 for the six months ended December 31, 2008 and 2007, respectively. The Company had $1,156,130 and $1,721,504 of cash that was used in operating activities in continuing operations for the six months ended December 31, 2008 and 2007, respectively. At December 31, 2008 the Company had a working capital deficiency and a stockholders’ deficiency of $5,557,658 and $7,796,578 respectively.

		The Company’s overall short term going concern outlook is directly dependent on the success of immediate fundraising efforts, which are imperative for the Company to continue as a going concern. The Company does not have sufficient cash at December 31, 2008 to support its current obligations. As discussed above, the Company has suffered recurring losses from continuing operations, has negative cash flows from operations, has a working capital and stockholders’ deficiency at December 31, 2008 and is currently involved in litigation that can have an adverse effect on the Company’s operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

		In addition, as described in Note 7, the Company is currently involved in litigation that can have an adverse effect on the Company’s operations. If an adverse ruling with any or all of these legal matters occurs, the Company may be forced to make material payments, restructure operations, sell off a significant portion of its assets or take other necessary and appropriate matters to ensure its ability to continue operations.

		The Company plans to improve cash flow from operations through continued focus, deployment and promotion of its energy efficiency segment and the underlying technology associated with its newly designed light controller. The Company also plans to continue its efforts to identify ways of reducing operating costs and to increase liquidity through additional equity and debt financings and has a standing agreement with an institutional investment firm that could provide additional equity and debt financings. The completion of these financings and the operational initiatives are expected to improve the Company’s cash flow and to help foster the implementation of the Company’s current initiatives and business plan.

~~HOST~~NERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 1 -			BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
		PRINCIPLES OF CONSOLIDATION
		The condensed consolidated financial statements presented include the accounts of Host and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.
		USE OF ESTIMATES
		The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates.
		REVENUE RECOGNITION
		As explained above and in Note 2, the Company acquired the energy management business of R.S. Services on February 16, 2005 and, as a result, it recognizes revenue on its short-term installations, such as switch gear projects, when the job is completed. On its long-term projects, which may last several months, R.S. Services recognizes revenue based on the percentage of completion method. Progress on the percentage of completion is measured by the costs incurred to date compared to total estimated costs to complete the job. Provision is made for anticipated losses, if any, on uncompleted contracts.
	INVENTORIES
	Inventories consist primarily of food, paper products and electrical components and are stated at the lower of cost or market, with cost determined on a first-in, first-out basis.
	Inventories consist of the following as of March 31 and June 30, 2004:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	March 31, 2005		June 30, 2004
Raw materials	$	575,730	$	758,704
Work in process		207,399		184,635
Finished goods		646,543		112,526
Totals	$	1,429,672	$	1,055,865

(UNAUDITED) (Continued)

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

		BASIS OF PRESENTATION

		The condensed consolidated financial statements of EnerLume Energy Management Corp. and subsidiaries for the three and six months ended December 31, 2008 and 2007 have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) and disclosures necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements, and accompanying notes, included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2008.

		PRINCIPLES OF CONSOLIDATION

		The consolidated financial statements include the accounts of EnerLume and its wholly-owned subsidiaries since the date of acquisition. The consolidated financial statements reflect the accounts and results of corporate dining and unitized meals as discontinued operations for the six months ended December 31, 2007 within the accompanying financial statements, as those assets have been sold on October 26 and October 31, 2007, respectively.

		USE OF ESTIMATES

		The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates.

		INVENTORIES

		Inventories consist of finished goods, primarily of electrical components and are stated at the lower of cost or market, with cost determined on a first-in, first-out basis.

		REVENUE RECOGNITION

		The Company derives its revenues from continuing operations from electrical customer contracts for service work performed and from the delivery to the distributor of energy efficiency products. The Company recognizes revenue when persuasive evidence of an arrangement exists, the Company has delivered the product or performed the service, the fee is fixed or determinable and collectability is reasonably assured.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
		INCOME TAXES
		The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the temporary differences between the consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the estimated amount realizable. The income tax provision or credit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets or liabilities.
		NET EARNINGS (LOSS) LOSS PER COMMON SHARE
		The Company presents “basic” earnings (loss) per share and, if applicable, “diluted” earnings (loss) per share pursuant to the provisions of SFAS 128, “Earnings per Share.” Basic earnings (loss) per share is calculated by dividing net income or loss (including dividend requirements on the Company’s outstanding preferred stock) by the weighted average number of common shares outstanding during each period.
		The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants and the conversion of convertible securities, were issued during the period and appropriate adjustments were made for the application of the treasury stock method and the elimination of interest and other charges related to convertible securities. Diluted earnings (loss) per common share are not presented as the potentially dilutive convertible preferred stock, stock options and stock warrants are anti-dilutive.
		Convertible preferred shares subject to potential dilution totaled 266,667, shares under stock purchase options totaled 1,143,078 and 1,030,650, and shares under warrants totaled 2,770,598 and 2,116,672 at March 31, 2005 and 2004, respectively.
		Loss per share from continuing operations and net loss per share are based on the losses applicable to common stockholders and, accordingly, reflect the adjustment of loss from continuing operations and net loss for all preferred stock dividends and charges for beneficial conversion rights.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

		REVENUE RECOGNITION (Continued)

		Energy Services. Our energy services segment recognizes revenues from contract installations on a percentage of completion basis and the installation of computerized products when the products are delivered and the installation is complete. Contract installations with the RS Services, Inc. subsidiary also can include contracts that extended beyond the fiscal reporting periods. EnerLume accounted for these projects on a percentage of completion basis, which is governed by SOP 81-1, Accounting for Performance of Construction Type and Certain Production Type Contracts. As work in progress continues, the contracts specify for progress payments and the acceptance of the work from the buyer as delivered. The measurement of performance during the recognition process is calculated by the contract value of the total work to date. The contract billings require a set invoicing schedule either on a monthly and/or quarterly basis. Revenue is recognized based on the performance rendered at the measurement date. The company has incurred costs and estimated earnings in excess of billing of $144,041 and $254,344 at December 31, 2008 and 2007, respectively, which are included in accounts receivable.

		Energy Efficiency Products. EnerLume recognizes product revenue at the time of delivery with the channel partner which EnerLume has a direct contractual agreement. Title to the products delivered are transferred with a fixed fee upon fully accomplishing the terms of the agreement, and collectability is reasonably assured, as governed by SEC Staff Accounting Bulletin #104 (SAB 104). Under SAB 104, revenue is realized and earned when all of the following are met: i) persuasive evidence of an arraignment is met, ii) delivery has occurred or services rendered, iii) sellers price to buyer is fixed or determinable, and iv) collectability is reasonably assured.

		RESEARCH AND DEVELOPMENT

		Research and development costs related to our energy management division are charged to expense when incurred. The amount charged to expense for the six months ended December 31, 2008 and 2007 was $71,243 and $9,310 respectively.

		INCOME TAXES

		The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the temporary differences between the consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the estimated amount realizable. The income tax provision or credit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets or liabilities.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
		SEGMENT INFORMATION
		The Company’s primary operating segments are the management of corporate dining (Host), the preparation of unitized meals (Lindley), and energy management (R.S and GlobalNet).
		STOCK COMPENSATION PLANS
		The Company accounts for stock option awards granted to officers, directors and employees (collectively “employees”) under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Under APB 25, no stock-based employee compensation cost is reflected in net income or loss, as all options granted to employees under these plans have been granted at no less than fair market value on the date of grant. However, as a result of amendments to SFAS 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), the Company will be required to expense the fair value of employee stock options beginning with its fiscal quarter ending September 30, 2006. In accordance with the provisions of SFAS 123 and related interpretations of the Emerging Issues Task Force (the “EITF”) of the Financial Accounting Standards Board (the “FASB”), all other issuances of common stock, stock options or other equity instruments to employees and non employees as the consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued (unless the fair value of the consideration received can be more reliably measured). Generally, the fair value of any options, warrants or similar equity instruments issued will be estimated based on the Black-Scholes option-pricing model. Such fair value is measured as of an appropriate date pursuant to the guidance in the consensus for EITF Issue No. 96-18 (generally, the earlier of the date the other party becomes committed to provide goods or services or the date performances by the other party is complete) and capitalized or expensed as if the Company had paid cash for the goods or services.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

		NET EARNINGS (LOSS) PER COMMON SHARE

		The Company presents “basic” earnings (loss) per share and, if applicable, “diluted” earnings (loss) per share pursuant to the provisions of SFAS 128, Earnings per Share. Basic earnings (loss) per share is calculated by dividing net income or loss (including dividend requirements on the Company’s outstanding preferred stock) by the weighted average number of common shares outstanding during each period.

		Net loss per common share was computed based upon 13,827,914 and 11,337,758 weighted average number of common shares outstanding during the six months ended December 31, 2008 and 2007, respectively. Net loss per common share was computed based upon 13,993,599 and 11,795,101 weighted average number of common shares outstanding during the three months ended December 31, 2008 and 2007, respectively.

		The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants and the conversion of convertible securities, were issued during the period and appropriate adjustments were made for the application of the treasury stock method and the elimination of interest and other charges related to convertible securities. Diluted earnings (loss) per common share are not presented as the potentially dilutive convertible preferred stock, stock options and stock warrants are anti-dilutive.

		The December 31, 2007 preferred stock dividend declared of $10,667 has been added to the net loss of $3,086,505 for the six months ended December 31, 2007 to calculate the net loss applicable to common stockholders of $3,097,172 and the corresponding net loss per common share of $0.27. There was no preferred stock dividends for the six months ended December 31, 2008.

		Shares under stock purchase options totaled 1,512,000 and 1,492,000 for the six months ended December 31, 2008 and 2007, respectively. Shares under warrants totaled 5,748,215 and 2,744,770 for the six months ended December 31, 2008 and 2007, respectively. Convertible notes subject to potential dilution totaled 4,936,170 and 400,943 shares for the six months ended December 31, 2008 and 2007 respectively.

		SEGMENT INFORMATION

		The Company’s primary operating segments are the energy services segments of RS Services and energy efficiency product segment consisting of EnerLume Corp.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
		STOCK COMPENSATION PLANS (Continued)
		Had compensation cost for the Company’s stock option plans been determined in accordance with the fair value-based method prescribed under SFAS 123 and amortized over the vesting period, the Company’s net loss and net loss per share for the three and nine months ended March 31, 2005 and 2004 would have approximated the pro forma amounts indicated below:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31,						Nine Months Ended March 31,
	2005			2004			2005			2004
Net loss – as reported	$	(2,118,213	)	$	(611,592	)	$	(4,359,483	)	$	(4,019,380	)
Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of related tax effects		61,000			1,014,000			75,000			1,025,000
Pro forma net loss		(2,179,213	)		(1,625,592	)		(4,434,483	)		(5,044,380	)
Preferred stock dividends, including charges for beneficial conversion		(8,000	)		-			(24,000	)		(533,334	)
Pro forma net loss applicable to common stockholders	$	(2,187,213	)	$	(1,625,592	)	$	(4,458,483	)	$	(5,577,714	)
Net loss per common share, as reported	$	(0.47	)	$	(0.15	)	$	(1.03	)	$	(1.40	)
Pro forma net loss per common share applicable to common stockholders	$	(0.48	)	$	(0.40	)	$	(1.05	)	$	(1.71	)

(UNAUDITED) (Continued)

The fair value of stock options used to compute pro forma net loss and net loss per share disclosures was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0% for 2005 and 2004; expected volatility of 73% for 2005 and 77% for 2004; average risk-free interest rate of 4.5% for 2005 and 4.1% for 2004; and an expected option holding period of 10 years for 2005 and 2004. RECLASSIFICATIONS Certain reclassifications have been made to the 2004 amounts to conform to the 2005 presentations. These reclassifications did not change the previously reported net loss or the total assets of the Company.

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

		STOCK COMPENSATION PLANS

		The Company records compensation expense associated with stock options in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment”, as interpreted by SEC Staff Accounting Bulletin No. 107. During the three and six months ended December 31, 2008, the Company recognized $28,548 each, in stock based compensation expense and for the three and six months ended December 31, 2007, the Company recognized $765,354 and $771,495, respectively. The grant date fair value is calculated using the Black-Scholes option valuation model. There were 40,000 options granted during the three and six months ended December 31, 2008 and 447,000 options granted during the three and six months ended December 31, 2007.

		The weighted-average fair value of options granted during the six months ended December 31, 2008 was $0.47. The following assumptions were used during fiscal 2009:

Expected dividend rate	0.00
Expected volatility	81.61%
Risk free interest rate	3.99%
Expected option holding period (years)	10

		RECENTLY ISSUED ACCOUNTING STANDARDS

		During September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 for financial assets and liabilities, as well as any other assets and liabilities that are carried at fair value on a recurring basis in financial statements, are effective for financial statements issued for fiscal years beginning after November 15, 2007 (fiscal year 2009 for the Company). In February 2008, the FASB issued FASB Staff Positions (‘‘FSP’’) 157-1, which amended SFAS 157 to remove leasing transactions accounted for under SFAS 13, ‘‘Accounting for Leases’’ and FSP 157-2, which deferred the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis to fiscal years beginning after November 15, 2008 (fiscal year 2010 for the Company). The Company is currently evaluating the impact of SFAS No. 157 for nonfinancial assets and liabilities on its consolidated financial statements.

		In December 2007, the FASB issued SFAS 160 “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51” (SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company does not have noncontrolling interests in subsidiaries and believes that SFAS 160 will not have a material impact on its financial statements.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 2 -		ACQUISITIONS
		GlobalNet
		On December 23, 2003, the Company issued 550,000 shares of Host’s common stock valued at $1,958,000 in exchange for all of the outstanding shares of GlobalNet plus net liabilities assumed of $2,149,850. In addition, the Company incurred acquisition expenses of $243,331, for a total purchase price of $4,351,181. The acquisition was accounted for using the purchase method of accounting and, accordingly, the purchase price has been allocated to the assets purchased and the liabilities assumed based upon their fair values at the date of acquisition. The value of the 550,000 shares was determined as of December 2, 2003, the date the merger agreement was executed.
		GlobalNet markets, sells, installs and manages energy saving products and technology. In addition, GlobalNet is a registered “aggregator” with the Public Utility Commission of Texas. As a registered aggregator, GlobalNet is authorized to act as an electricity buyer’s agent and can join two or more customers into a single purchasing unit to negotiate the purchase of electricity on behalf of a customer group. GlobalNet’s principal product consists of a computerized controller capable of reducing energy consumption and demand fluctuations of electrical inductive loads on motors and certain lighting systems.
		As a result of the acquisition of GlobalNet on December 23, 2003, Host is related to certain entities through common ownership. Specifically, former GlobalNet shareholders who are now shareholders in Host are principals in EnergyNSync, principally an inactive company, and R.S. Services.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

		RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)

		In December 2007, the FASB issued SFAS 141 (Revised 2007) “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in financial statements of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141R also establishes disclosure requirements to enable users of financial statements to evaluate the nature and financial effects of the business combination. SFAS141R applies prospectively to business combinations which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and interim periods within those fiscal years. The Company has not yet determined the impact, if any, that the implementation of SFAS No.141R will have on results of operations of financial condition as a result of any acquisitions the Company may consummate.

		In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company is currently evaluating the effect, if any, of SFAS 161 on its financial statements.

		In May 2008, the FASB issued SFAS 162, “the Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of the financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 will become effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The Company’s adoption of SFAS 162 will not have a material impact on its financial Statements.

		No other new accounting pronouncement issued or effective during this interim period has had or is expected to have a material impact on the consolidated financial statements.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

~~NOTE~~NOTES TO 2CONDENSED -CONSOLIDATED ~~ACQUISITIONS~~FINANCIAL ~~(Continued) The purchase price of GlobalNet was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as follows:~~STATEMENTS

Cash	$	66,893
Accounts receivable		645,183
Other assets		11,718
Equipment		196,006
Intangible assets		3,431,381
Total assets purchased		4,351,181
Less, liabilities assumed:
Current liabilities		1,850,987
Long-term debt		298,863
Total liabilities		2,149,850
Net assets acquired	$	2,201,331

(UNAUDITED) (Continued)

The intangible assets of $3,431,381 were assigned to research and development assets that were written off at the date of acquisition in accordance with FASB Interpretation No. 4, “Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method.” Food Brokers On October 29, 2004, Host closed on its Asset Purchase Agreement with Food Brokers. Pursuant to the agreement, which was accounted for as a purchase, Host acquired certain assets constituting Food Brokers’ food service business, including machinery, equipment, customer contracts and customer lists in consideration for (i) a cash payment of $295,000, (ii) the issuance of a $655,000 promissory note bearing interest at 7.5% per year and maturing on December 1, 2008, and (iii) the issuance of $250,000 in shares of Host common stock. In addition, Host incurred acquisition expenses of $32,056 for a total purchase price of $1,232,056. At closing, Food Brokers and its principals executed a six-year non-competition agreement pursuant to which each agreed not to compete, directly or indirectly, with Host in the food service business within the United States. The results of operations of Food Brokers have been included in the condensed consolidated financial statements since the date of acquisition.

NOTE 1 -		BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

		FAIR VALUE MEASUREMENTS

		In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157), which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement. SFAS No. 157 is effective for the Company’s fiscal year beginning July 1, 2008 and for interim periods within that year. The implementation of SFAS No. 157 for financial assets and financial liabilities, effective July 1, 2008, did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 2 -		DISCONTINUED OPERATIONS OF FOOD SERVICE DIVISION

		The fiscal 2007 period reflects the food service division classified as assets held for sale and reported as discontinued operations. The food service division was sold in October 2007 which resulted in a gain on the sale in the aggregate of $716,339 during the six months ended December 31, 2007.

		SALE OF CORPORATE DINING

		On October 19, 2007, the holders of a majority of shares of the Company’s outstanding common stock approved the sale of substantially all of the assets comprising our contract food management division pursuant to the Asset Purchase Agreement dated April 17, 2007 and amended on August 31, 2007 by and between the Company, Timothy Hayes and an entity formed by Mr. Hayes to facilitate the transaction. The transaction closed on October 26, 2007 and the principal assets of this division sold in the transaction consisted of the corporate name, customer accounts, inventory, equipment, intellectual property and promotional and marketing materials.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 2 -	ACQUISITIONS (Continued)
		Food Brokers (Continued)
		Accordingly, the purchase price was initially allocated to assets acquired and liabilities assumed at their fair values including identifiable intangible assets comprised of a customer list and covenants not to compete.
		The acquisition price, including $32,056 of acquisition costs, was initially allocated as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Equipment	$	130,000
Other intangible assets		1,102,056
Total assets purchased		1,232,056
Less liabilities incurred:
Common stock obligation		250,000
Promissory note		655,000
Total liabilities		905,000
Net cash paid for assets acquired	$	327,056

(UNAUDITED) (Continued)

The common stock obligation is payable through the issuance of 62,500 shares during the three months ending June 30, 2005. R.S. Services On February 16, 2005, Host acquired R.S. Services, Inc. pursuant to the terms and conditions of the Agreement of Merger and Plan of Reorganization dated September 29, 2004. R.S. Services is both an energy management and electrical contracting firm, which also assembles the Company’s energy saving products in Duncan, Oklahoma. R.S. Services also sells and installs the energy products. The products consist of a digital microprocessor, capable of reducing energy consumption and demand functions of electrical inductive loads on motors and lighting systems. Some of the factors Host considered in determining its decision to acquire R.S. Services were: R.S. had an established business in the electrical and energy management field with experience in the installation and servicing of energy savings products; R.S. had a UL approved panel shop for the assembly of our products; and R.S. had a history of installations for national accounts. R.S. Services will continue to conduct its electrical installation and energy management business as a wholly-owned subsidiary of Host. The results of operations of R.S. Services have been included in the condensed consolidated financial statements since the date of acquisition. The aggregate purchase price of $1,994,976 consisted of $200,000 in cash, 431,777 shares of common stock valued at $1,666,659 and closing costs of $128,317. The value of the 431,777 shares of restricted common stock was determined based on the closing market price of the Company’s common shares on January 31, 2005, the date of shareholder approval for the acquisition. In addition to the aforementioned Host common stock and cash consideration, Ronald Sparks, the former sole shareholder of R.S. Services, is eligible to earn additional cash and Host common stock based on the performance of Host’s energy management division.

NOTE 2 -		DISCONTINUED OPERATIONS OF FOOD SERVICE DIVISION (Continued)

		SALE OF CORPORATE DINING (Continued)

		The Asset Purchase Agreement provided for a cash purchase price of $1.2 million dollars subject to certain adjustments prior to closing. Based upon the adjustments made at closing, the final cash purchase price paid to the Company was $1,137,077.

		Mr. Hayes formerly served as the director of operations for the corporate dining division and resigned from the Company effective at the closing date. The Company believes the sale was fair to the Company and its shareholders based upon a fairness opinion provided by an independent valuation firm. In addition, the Company’s audit committee reviewed the transaction and the Company’s board of directors approved the transaction based upon the conclusion the terms were no less favorable than generally available to an independent third party. David Murphy, the Company’s chief executive officer and a director, entered into a non-compete agreement with the purchaser for a period of five years and was paid $34,218 over a five year period as consideration for entering into a non-compete agreement.

		The Corporate Dining accounts are classified as discontinued operations in the consolidated financial statements for the three and six months ended December 31, 2007.

		Summarized operating data for the discontinued operations of Corporate Dining are as follows:

	Three Months Ended Dec 31, 2007		Six Months Ended Dec 31, 2007
Net revenue	$	859,690		3,797,072
Income before taxes		14,072		154,710
Income taxes		1,000		4,000
Income from discontinued operations	$	13,072		150,710

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 2 -	ACQUISITIONS (Continued)
		R. S. Services (Continued)
		Mr. Sparks will receive an additional $200,000 in cash and $872,500 worth of Host’s restricted common stock if the energy management division generates a total of $20 million in sales for the 24-month period after the closing date of the merger. If $30 million in divisional sales are reached for the 30-month period after the closing date of the merger, another $200,000 in cash and $336,250 worth of Host’s restricted common stock will be issued to Mr. Sparks. If $40 million in divisional sales are reached in the 36-month period after the closing date of the merger, $536,250 worth of Host common stock will be issued to Mr. Sparks. If the $40 million division sales goal is not reached for the 36-month period after the closing date of the merger, but division sales exceed $30 million, Host will issue to Mr. Sparks additional common stock based on a ratio of sales achieved, as described in the merger agreement. These “earn-out” periods expire three years from the closing date of the merger. Any such amounts earned will result in an increase in goodwill.
		Concurrent with the closing of the merger, Host entered into an employment agreement with Mr. Sparks providing that Mr. Sparks will serve as the President of R.S. Services and receive an initial salary of $125,000, incentive stock options to purchase 18,000 shares of Host’s common stock and such other executive benefits as are afforded to similar officers of Host and its subsidiaries. The employment agreement is for a period of three years, contains a three year non-competition provision and provides Mr. Sparks with certain severance benefits in the event of his termination.
		The purchase price of R.S. Services was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash	$	49,663
Accounts receivable		734,438
Other assets		223,612
Equipment		353,362
Intangible assets		2,536,321
Total assets purchased		3,897,396
Less, liabilities assumed:
Current liabilities		751,059
Long-term debt		1,151,361
Total liabilities		1,902,420
Net assets acquired	$	1,994,976

(UNAUDITED) (Continued)

The allocation of the purchase price was based upon preliminary data and could change when the final valuation of certain intangible assets is obtained. The $2,536,321 of goodwill was assigned to the energy management segment.

NOTE 2 -		DISCONTINUED OPERATIONS OF FOOD SERVICE DIVISION (Continued)

		SALE OF UNITIZED MEALS

		On October 19, 2007, the holders of a majority of shares of the Company’s outstanding common stock approved the sale of substantially all the assets of Lindley Food Services Corporation, our supplier of fresh unitized meals to schools and senior feeding programs. Pursuant to the Asset Purchase Agreement dated April 17, 2007, the Company sold to Lindley Acquisition Corporation substantially all the assets and liabilities of this division which consisted of equipment, inventory, accounts receivable, intellectual property, contracts and agreements, cash and real estate and capital services leases. The transaction closed on October 31, 2007.

		The Asset Purchase Agreement provided for an initial cash purchase price of $2,500,000 subject to adjustments based on the net asset value of the division two days prior to closing. As a result of the aforementioned adjustments, the Company received final net proceeds after post closing adjustments of $1,875,670 from the sale of this division.

		Prior to the transaction, Gilbert Rossomando was the president of this division and Mark Cerreta was the executive vice president of this division. Messrs. Rossomando and Cerreta are the sole shareholders of Lindley Acquisition Corporation. Messrs. Rossomando and Cerreta resigned as officers of the Company effective at the closing date, and Mr. Rossomando resigned as a member of the board of Directors as of September 28, 2008. The Company believes the sale was fair to the Company and its shareholders based upon a fairness opinion provided by an independent valuation firm. In addition, the Company’s audit committee reviewed the transaction and the Company’s board of directors approved the transaction based upon the conclusion the terms were no less favorable than generally available to an independent third party.

		The unitized meals accounts are classified as discontinued operations in the consolidated financial statements for the three and six months ended December 31, 2007.

		Summarized operating data for the discontinued operations of unitized meals are as follows:

	Three Months Ended Dec 31, 2007		Six Months Ended Dec 31, 2007
Net revenue	$	1,559,717		5,353,684
Income before taxes		87,118		180,713
Income taxes		4,000		16,000
Income from discontinued operations	$	83,118		164,713

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 2 -	ACQUISITIONS (Continued)
		R. S. Services (Continued)
		The following information reflects the (unaudited) pro forma results of operations of the Company for the three and nine months ended March 31, 2005 and 2004 assuming that the aforementioned acquisitions had occurred as of July 1, 2003:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31,						Nine Months Ended March 31,
	2005 (Pro Forma)			2004 (Pro Forma)			2005 (Pro Forma)			2004 (Pro Forma)
Net revenue	$	8,503,154		$	7,498,266		$	24,547,056		$	22,565,922
Net loss from continuing operations		(1,636,801	)		(498,846	)		(4,461,395	)		(4,530,465	)
Net loss		(2,218,792	)		(453,234	)		(4,952,950	)		(4,431,328	)
Loss applicable to common stockholders*		(2,226,792	)		(453,234	)		(4,976,950	)		(4,964,662	)
Loss per common share – basic and diluted	$	(0.47	)	$	(0.10	)	$	(1.06	)	$	(1.21	)

(UNAUDITED) (Continued)

		* Includes $24,000 and $533,334 of preferred stock dividends and beneficial conversion charge for the nine months ended March 31, 2005 and 2004, respectively. Includes $8,000 of preferred stock dividends for the three months ended March 31, 2005.
NOTE 3 -	DEMAND NOTE PAYABLE
			The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of July 1, 2003.
	RS Services has an open credit obligation with a bank with interest calculated based on a variable rate index equal to the Wall Street Journal prime rate daily plus 1% per annum (4.25% at December 31, 2008). The note is collateralized by certain assets of RS Services and has an outstanding balance of $286,971 and $293,223 at December 31, 2008 and June 30, 2008 respectively.
NOTE 3 -			DISCONTINUED OPERATIONS OF SELECTFORCE SEGMENT
NOTE 4 -	DEBT
			On March 31, 2005, Host and T.E.D. Corporation (“Purchaser”) entered into a Share Purchase Agreement (“Agreement”) whereby Host sold to the Purchaser all of its shares in SelectForce, a wholly owned subsidiary of Host, which was its employment screening segment. Host decided to sell SelectForce in order to concentrate its resources on its food and energy management operations, to streamline its overall operation and to raise capital. The President of the Purchaser is a former director of Host and an officer of SelectForce.
	SECURED DEBT
			Pursuant to the Agreement, the sales price of $2,070,000 was payable as follows: (i) $896,482 in cash at the closing; (ii) cancellation of $973,518 of obligations owed by Host to SelectForce; and (iii) the assumption of two of Host’s subordinated debt promissory notes in the principal amount of $200,000. The assets sold consisted primarily of cash, accounts receivable, property and equipment, goodwill and other assets and the other liabilities assumed consisted of certain accounts payable and accrued liabilities. As a result of this transaction, Host incurred a loss on the sale of discontinued operations of $663,618, including transaction costs of $17,960.
	On July 23, 2007, the Company closed the sale of $850,000 of subordinated secured convertible promissory notes (“Notes”) in a private placement to a limited number of accredited investors. The Notes bear interest at the rate of 12.00% per annum, payable semi-annually on December 31 and June 30. The Notes had an initial maturity date of June 30, 2008, and the unpaid principal balance due and interest accruing on the Notes is convertible at the option of the holder into the Company’s common stock at $2.12 per share. The offer and sale of the Notes was conducted by the officers and directors of the Company who did not receive a commission or other remuneration. As security for the payment of the Notes and the performance by the Company of its obligations, the Company assigned to the Noteholders a security interest in all of its right, title and interest in the patent pending and brand name rights relating to the Company’s EnerLume \| EM® energy saving-device.
	Between June 2008 and September 2008 the Company entered into a promissory note extension agreement with the holders of the Notes to amend the maturity date of the Notes pursuant to a promissory note extension agreement, in which the maturity date for the Notes was extended to June 30, 2010. In July 2008 the Company paid $50,000 as principal to one investor and extended the maturity of the balance of the Notes. The Notes shall continue to accrue interest at the rate of 12% per annum in accordance with the original terms of the Note. As an inducement to extend maturity holders received warrants to purchase an aggregate 433,850 shares of the Company’s common stock exercisable until June 30, 2013 at $0.75 per share. The Company recorded an unamortized debt discount associated with the fair value of warrants issued under the Black Scholes method of $226,779.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 3 -		DISCONTINUED OPERATIONS OF SELECTFORCE SEGEMENT (Continued)
		The Agreement contains numerous representations, warranties and covenants by Host and the Purchaser, including a two-year covenant not to compete by Host and its officers and directors in the ownership, management, operation or control of an employment screening business.
		Summarized financial data for the discontinued operations of SelectForce are outlined below:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31,				Nine Months Ended March 31,
	2005		2004		2005		2004
Net revenue	$	549,599	$	491,740	$	1,590,149	$	1,382,471
Income before taxes		83,627		48,612		183,063		106,137
Income taxes		2,000		3,000		11,000		7,000
Income from discontinued operations		81,627		45,612		172,063		99,137

(UNAUDITED) (Continued)

	March 31, 2005*		June 30, 2004
NOTE 4 -		DEBT (Continued)
Cash	$	186,351	$	124,142
		SECURED DEBT (Continued)
Accounts receivable		256,142		243,048
		Pursuant to EITF No. 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, an embedded beneficial conversion feature has been recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in-capital. That amount is calculated at the commitment date of July 23, 2007 as the difference between the conversion price and the fair value of the common stock. The recorded discount resulting from allocation of proceeds to the beneficial conversion feature is amortized and recognized as interest expense over the minimum period from the date of issuance to the date at which the debt holder can realize that return using the effective yield method. The market price of the Company’s shares when the Company committed to the July 23, 2007 private placement was $2.70 per share and the exercise price of the Note was set at $2.12 per share. A beneficial conversion feature was also recorded during the repricing of the convertible feature of the Notes on August 4, 2008 (see Note 5). For the six months ended December 31, 2008 and 2007 the beneficial conversion feature recorded as interest expense was $264,859 and $102,508 respectively. For the three months ended December 31, 2007, the beneficial conversion feature recorded as interest expense was $58,008.
Other assets		978,733		3,655
		UNSECURED DEBT
Equipment		7,062		10,592
		On April 18, 2008 the Company completed the sale of 20 units consisting of 9% convertible unsecured promissory notes and common stock purchase warrants to 5 investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total proceeds to the Company were $1,000,000. Each unit was sold for $50,000 per unit and also entitled the unit holder to 15,000 common stock purchase warrants which are exercisable for five years at $1.80 per warrant. The notes bear interest at a rate of 9% per year, payable semiannually in arrears in cash. The notes will mature on April 18, 2010. Holders may convert their notes and any accrued interest 6 months after the date of purchase into shares of common stock at a conversion rate of $1.50 per share. One investor has requested his conversion right not to be effective until 12 months from the date of purchase to facilitate his investment objectives. The Company did not pay a sales commission or other remuneration in connection with the sale of the notes. The fair value of the warrants of $234,240 under the Black Scholes method has been recorded as debt discount, resulting in a reduction in the carrying value of the related debt. On August 4, 2008, the convertible feature on this note has been repriced to $0.47 per share. (see Note 5)
Intangible assets		1,412,235		1,432,918
Total assets		2,840,523		1,814,355
Accounts payable		97,733		95,251
Accrued expenses		27,132		16,240
Total liabilities		124,865		111,491
Net assets of discontinued operations	$	2,715,658	$	1,702,864

* Represents assets and liabilities prior to sale.

NOTE 4 - AMENDMENT TO LAURUS DEBT AGREEMENT On February 15, 2005, Host entered into Amendment No. 1 and Consent (the “Amendment Agreement”) with Laurus Master Funds, Ltd. amending certain terms of a Secured Convertible Term Note A and a Secured Convertible Term Note B previously issued by Host to Laurus pursuant to a Securities Purchase Agreement dated June 23, 2004 and certain related loan documents. Pursuant to the Amendment Agreement, Term Note A is amended to provide that the initial fixed conversion price remains at $5.03 per share, provided, however, that the first $1,000,000 aggregate principal amount of Term Note A and/or Term Note B, collectively, converted into shares of common stock on or after February 15, 2005 shall be converted at a fixed conversion price of $3.50 per share (“reduced conversion price”).

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 4 -		AMENDMENT TO LAURUS DEBT AGREEMENT (Continued)
		As a result of the reduced conversion price, Host recorded a charge to interest expense of $142,857 for the intrinsic value of this beneficial conversion price of $3.50 per share as of February 15, 2005. In addition, scheduled principal payments under Term Note A were deferred until after May 1, 2005. The Amendment Agreement also amended applicable provisions of certain related loan documents to be consistent with the modification to the fixed conversion price described above.
		In addition, pursuant to the Amendment Agreement, Host issued to Laurus a common stock purchase warrant for 25,000 shares of its common stock exercisable through June 23, 2014 at $5.98 per share. The warrant is subject to certain adjustment provisions in the event Host shall (a) effect a corporate reorganization or merger; or (b) consolidate or merge into any other entity or transfer all or substantially all of its assets or properties under a plan contemplating its dissolution. Accordingly, Host recorded the fair value of the warrant of $77,000, determined by using the Black-Scholes pricing model, as debt discount, resulting in a reduction in the carrying value of the debt. The debt discount will be amortized to interest expense over the remaining term of the related debt.
		Host entered into the Amendment Agreement in order to obtain Laurus’ consent to Host’s merger with R.S. Services. Laurus’ consent was a condition to the closing of the merger. In connection with the Amendment Agreement and Host’s merger with R.S. Services, Laurus released $750,000 from restriction on Term Note B to Host. Host used approximately $588,000 of these proceeds to repay outstanding debt obligations of R.S. Services and will use the remainder for working capital. Laurus has also released an additional $518,000 on Term Note B from restriction to bring the total funds released on this note to $1,268,000 as of March 31, 2005.
NOTE 5 -		STOCKHOLDERS’ EQUITY
		STOCK OPTIONS
		The Company granted 128,678 stock options, with exercise prices ranging from $3.48 to $4.04 per share, during the three months ended March 31, 2005. No other options were granted during the nine months ended March 31, 2005. Included in the total stock options granted during the period, were 100,000 options issued to Host’s investor relations firm as additional compensation for its services. Accordingly, Host recorded a charge of $305,100 in selling, general and administrative expenses for the fair value of these options. Host utilized a Black-Scholes analysis to calculate the fair value of these options. The Company issued 16,250 shares of common stock for options exercised during the three and nine months ended March 31, 2005 (see Note 11 in the 10-KSB). The Company received $34,906 in gross proceeds from these options, which were exercised at $2.00 and $2.69 per share.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 4 -		DEBT (Continued)

		UNSECURED DEBT (Continued)

		On January 8, 2004, the Company commenced a private placement offering of $2,000,000 or eighty units at $25,000 per unit. Each unit consisted of one 7.5% unsecured promissory note in the amount of $25,000 due January 31, 2009 and warrants to purchase 7,500 shares of common stock at an exercise price of $10.00 per share, exercisable from December 31, 2004 until January 31, 2009. Interest began to accrue from the date of issuance, payable semi-annually on June 30 and December 31. Unsecured notes payable to directors and other affiliated persons totaled $150,000 each at September 30 and June 30, 2008. The Company sold a total of 80 units and received gross proceeds of $2,000,000 from the offering and issued warrants to purchase 600,000 shares. The fair value of the warrants of $803,467 has been recorded as debt discount, resulting in a reduction in the carrying value of the related debt. The debt discount is being amortized on a straight-line basis over the period of the related debt at an annual amount of $161,289.

		Between June 2008 and September 2008 the Company entered into a promissory note extension agreement with the holders of the notes with a face value of $1,437,500 to amend the terms of the 7.5% unsecured promissory notes. Pursuant to the promissory note extension agreements, the maturity date for the Unsecured Notes were extended to January 31, 2010, interest shall continue to accrue on the Unsecured Notes and the Company shall continue to pay interest payments under the terms of the Unsecured Notes until the amended maturity date. As an inducement to the note holders to extend the maturity date, the Company issued aggregate warrants to purchase 731,250 shares of the Company’s common stock exercisable until June 30, 2014 at $0.75 per share. Such warrants were valued at $399,110 under the Black Scholes method. This debt discount will be amortized over the remaining term of the Notes.

		On July 30, 2008, the Company completed the sale of one unit consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to one investor that met the definition of an “accredited investor” pursuant to Regulation B of the Securites Act of 1933. The total net proceeds to the Company were $500,000. The unit was sold for $500,000 and entitled the unit holder to 250,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The unit will mature and be payable in full on January 30, 2009. The Holder may convert the unit and any accrued interest thereon, on January 30, 2009 into shares of common stock at a conversion rate of $0.47 per share. The Company did not pay a sales commission or other remuneration in connection with the sale of the unit. The unit was purchased by the brother of Nicholas Troiano, a current director.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 5 -		STOCKHOLDERS’ EQUITY (Continued)
		PREFERRED STOCK
		The Company had issued 700,000 shares of series A preferred stock to certain officers and directors of the Company. Each share of series A preferred stock was automatically convertible, at no additional cost to the holder into one share of common stock in July 2003. On July 21, 2003, the Company converted 700,000 shares of series A preferred stock into 700,000 shares of its common stock.
		On August 5, 2003, the Board of Directors of Host authorized and approved the designation, issuance and sale of 266,667 shares of series B convertible preferred stock (the “series B stock”). On August 11, 2003, Host privately offered and sold 266,667 shares of the series B stock to an individual investor for an aggregate purchase price of $400,000, or $1.50 per share.
		The series B stock has various preferences and conversion rights, including the right to receive a cumulative distribution at the rate of 8% per share per annum, payable semi-annually on or before the last day of Host’s fiscal quarters ending December 31 and June 30. Accordingly, the Company recorded $8,000 and $24,000 dividend liabilities in accrued expenses and other which has been reflected as an increase to the accumulated deficit during the three and nine months ended March 31, 2005. Furthermore, the series B stock is convertible for a period of five years from the issue date into shares of Host’s common stock according to the conversion ratio set forth in the Articles of Amendment to the Articles of Incorporation of Host, which were filed with the Colorado Secretary of State on August 11, 2003. The conversion price will initially be equal to the purchase price as defined, subject to anti-dilution provisions. Except as required by law, the series B stock will vote together with the common stock. Each series B share shall have a right to that number of votes equal to the number of shares of common stock issuable, upon conversion of such stock.
		The difference between the purchase price and the fair value of the common stock into which the series B stock is convertible of $533,334 as of August 11, 2003 was a beneficial conversion feature that is analogous to a dividend on the series B stock and therefore has been reflected as an increase to the accumulated deficit and additional paid-in capital and an increase in the net loss applicable to common stock during the nine months ended March 31, 2004.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 4 -		DEBT (Continued)

		UNSECURED DEBT (Continued)

		On September 30, 2008, the Company completed the sale of 2.5 units consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to five investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $125,000. The units were sold for $50,000 and entitled the unit holder to 25,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full six months from the date of issuance. The Holders may convert the note and any accrued interest thereon after six months from the date of issuance into shares of common stock at a conversion rate of $0.47 per share. The Company did not pay a sales commission or other remuneration in connection with the sale of the note. The warrants issued from the 18% convertible unsecured promissory note were aggregated and valued at $111,921 under the Black Scholes method and will be amortized over the remaining term of the units. The Company also recorded a beneficial conversion feature of $151,814 as a discount and being amortized over six months to interest expense.

		On December 2, 2008, the Company completed the sale of 3.9 units consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to four investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $195,000. Each unit was sold for $50,000 and entitled the unit holder to 25,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full six months from the date of issuance. The Holders may convert the note and any accrued interest thereon after six months from the date of issuance into shares of common stock at a conversion rate of $0.47 per share. The Company did not pay a sales commission or other remuneration in connection with the sale of the note. The warrants issued from the 18% convertible unsecured promissory note were aggregated and valued at $26,541 under the Black Scholes method and will be amortized over the remaining term of the units. The Company also recorded a beneficial conversion feature of $21,196 as a discount and being amortized over six months to interest expense.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 5 -		STOCKHOLDERS’ EQUITY (Continued)
		COMMON STOCK
		On September 17, 2004, in accordance with the terms of its Securities Purchase Agreement, Laurus Master Fund, Ltd., exercised its right to convert both principal and interest payable by the Company into shares of Host’s common stock. Accordingly, in September 2004, Host issued 10,000 shares of its common stock at the initial “Fixed Conversion Price” of $5.03 per share in payment of $30,000 of principal and $20,300 of interest on the Laurus Note A (see Note 8 in the 10-KSB). On January 18, 2005, Host issued 34,325 shares of its common stock at a mutually agreed upon one-time conversion price of $3.40 per share in payment of $99,032 of principal and $17,675 of interest on the Laurus Note A. Accordingly, Host recorded a charge to interest expense of $18,536 for the intrinsic value of this beneficial conversion price of $3.40 per share. On March 16, 2005, in accordance with the terms of Amendment No. 1 and Consent to its Securities Purchase Agreement, Host issued 15,000 shares of its common stock at $3.50 per share in payment of $52,500 of principal (see Note 4 herein).
		On January 15, 2005, Host received $100,000 in proceeds for 24,390 shares of its common stock issued in a private placement to one investor (see Note 7 herein).
		WARRANTS
		On February 15, 2005, in accordance with the terms of Amendment No. 1 and Consent to its Securities Purchase Agreement with Laurus Master Fund, Ltd., Host issued Laurus warrants to purchase 25,000 shares of its common stock exercisable through June 23, 2014 at $5.98 per share (see Note 4 herein). The Company issued 162,340 shares of common stock for warrants exercised during the nine months ended March 31, 2005. The Company received $324,680 in gross proceeds from the exercise of these warrants, which were exercised at $2.00 per share. During the three and nine months ended March 31, 2005, no warrants were cancelled or expired.
NOTE 6 -		CONTINGENCIES
		LEGAL MATTERS
		On August 25, 2004, a claim was filed for the alleged breach of employment agreements with two former Host employees when Host terminated such agreements; that Host allegedly breached a written contract to purchase from the claimants the exclusive right to distribute and sell a product known as the “Fan Saver” in exchange for Host common stock and the three-year employment agreements; and that Host and GlobalNet allegedly engaged in securities fraud, fraud and deceit, and interference with prospective economic advantage.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 4 -		DEBT (Continued)

		UNSECURED DEBT (Continued)

		On December 31, 2008, the Company completed the sale of $125,000 12% two month unsecured promissory note and common stock purchase warrants to two investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. Each note entitled the holder to an aggregate 200% common stock purchase warrants which are exercisable for a five year period at $0.26 per warrant. The note bears interest at a rate of 12% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full two months from the date of issuance. The Company paid a 10% sales commission in connection with the sale of the note. The warrants issued from the 18% convertible unsecured promissory note were aggregated and valued at $46,553 under the Black Scholes method and will be amortized over the remaining term of the units.

NOTE 5 -		STOCKHOLDERS’ EQUITY

		The Company granted 40,000 stock options during the three and six months ended December 31, 2008 and recorded no forfeitures as actual terminations according to the plan policy.

		COMMON STOCK AND WARRANTS

		On July 1, 2008, The Company issued 68,750 shares to the members of the Board pursuant to the scheduled quarterly and annual compensation plan in the fourth quarter of fiscal 2008. The value of the shares granted totaled $55,000 and were accrued as of June 30, 2008. On October 1, 2008, The Company issued 44,530 shares to the members of the Board pursuant to the scheduled quarterly compensation plan in the first quarter of fiscal 2009. The value of the shares granted totaled $29,836.

		On October 3, 2008, The Company issued 25,000 shares as compensation to an employee. The value of the shares granted totaled $16,750.

		In September 2008, EnerLume granted 363,723 shares of common stock upon conversion of $150,000 plus interest of $20,950 of the $850,000 of subordinated secured convertible promissory notes. The securities were issued at a conversion price of $0.47.

		REPRICE AGREEMENTS

		The Company recorded an aggregate charge to earnings of $135,841 from the following warrant reprice agreements:

		On August 4, 2008 the Company offered to investors of the holders of its 12% secured promissory notes dated July 23, 2007 the option to change the convertible feature of the note from $2.12 per share to $0.47 per share and to reprice the holders warrants from an exercise price of $0.75 per share to $0.54 per share.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 6 -		CONTINGENCIES (Continued)
		LEGAL MATTERS (Continued)
		The claimants are seeking damages of at least $250,000 each. They claim in their complaint that Host owes the financial equivalent of 292,000 shares of its common stock, salary for the remaining two and one-half years on each of the two employment contracts, and punitive damages. The range of potential loss, therefore, is from approximately $350,000 to $1.5 million at current prices for Host stock, excluding the claim for punitive damages. However, Host believes it is too early to provide an evaluation of the likelihood of an unfavorable outcome and does not believe any reserves are currently necessary.
		Host intends to vigorously defend this action. Host has answered the complaint and also asserted a cross-complaint, which alleges that the two former employees breached the employment contract by their poor sales performance, and that they engaged in fraud and deceit by making misrepresentations about the extent of their distribution channels and probable sales of the Fan Saver. The lawsuit is currently in the discovery phase, and the parties are taking depositions of key witnesses in May 2005. No trial has been scheduled.
		The Company is also a party to various other claims and matters of litigation incidental to the normal course of its business. Management believes that the final resolution of these matters will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
NOTE 7 -		RELATED PARTY TRANSACTIONS
		At March 31, 2005, the Company is obligated to certain officers, directors, and affiliated persons in the amount of $750,000 in connection with the private placements of subordinated debt (see Note 10 of Form 10-KSB).
		In accordance with the terms of the Lindley acquisition, Host is obligated to pay the Sellers of Lindley, the President and Executive Vice President of Lindley, an “Earnout EBITA” (see Note 13 of Form 10-KSB). Earnout EBITA totaling $372,600 earned through June 30, 2003 was considered to be additional purchase price and therefore, recorded as goodwill. This obligation was paid in full in April 2005.
		A major shareholder of Host, who was also a principal shareholder of GlobalNet, provided GlobalNet with debt financing, which was assumed by Host as a result of the acquisition (see Note 2 herein). As of March 31, 2005, there are two outstanding promissory notes with a total balance due of $81,464. These notes, which bear interest at 15%, mature in June and August 2006. On July 7, 2004, Host repaid a third note having a balance of $280,640.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 5 -		STOCKHOLDERS’ EQUITY (Continued)

		REPRICE AGREEMENTS (Continued)

		On August 4, 2008 the Company offered to investors of the holders of its 9% unsecured promissory notes dated April 18, 2008 the option to change the convertible feature of the note from $1.50 per share to $0.47 per share and to reprice the holders’ warrants from an exercise price of $1.80 per share to $0.54 per share.

		On August 11, 2008, the Company offered to the holders of its 7.5% unsecured promissory notes dated January 8, 2004 a repricing agreement to reprice the warrants to the holders of the notes from $0.75 per share to $0.54 per share.

		On August 11, 2008 the Company offered to holders of previously issued warrants with an exercise price of $2.25 issued between November 2007 through January 2008 the option to change the exercise price from $2.25 per share to $0.54 per share.

NOTE 6 -		INCOME TAXES

		The provision for income taxes for discontinued operations consists of current state income taxes of $20,000 for the six months ended December 31, 2007.

		As of December 31, 2008, the Company has federal net operating loss carryforwards of approximately $30,717,000 expiring through fiscal 2028.

		The Company establishes a valuation allowance in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. The Company continually reviews the adequacy of the valuation allowance and recognizes a benefit from income taxes only when reassessment indicates that it is more likely than not that the benefits will be realized. At December 31, 2008, the Company has recorded a valuation allowance for all of its net deferred tax assets and for the six months ended December 31, 2008 the Company increased the valuation allowance by approximately $1,093,000.

		The Company adopted the provisions of FIN 48 “Accounting for Uncertainty in Income Taxes – An Interpretation of SFAS No. 109” (“FIN 48”) on July 1, 2007, and the adoption did not have an impact on the consolidated financial statements. The Company classifies any interest and penalty payments or accruals within operating expenses on the financial statements. There were no accruals on interest or penalties nor were there unrecognized tax benefits at the date of adoption of FIN 48.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 7 -		RELATED PARTY TRANSACTIONS (Continued)
		On February 11, 2004, KWM Electronics (“KWM”) borrowed $125,000 from GlobalNet. Accordingly, KWM issued a promissory note to GlobalNet in the amount of $125,000, which bears interest at 7.5% and had a maturity date of August 11, 2004. On August 10, 2004, the Board of Directors for Host America Corporation authorized the extension of the KWM note until the date that Host and KWM sign an asset purchase agreement or June 30, 2005, whichever is sooner. On July 8, 2004, KWM borrowed an additional $40,000 from GlobalNet. Accordingly, KWM issued an additional promissory note to GlobalNet in the amount of $40,000 under similar terms. For the three and nine months ended March 31, 2005, interest income on these notes was not material. The president of KWM is not a stockholder of Host, but is the chief operating officer of GlobalNet.
		On December 16, 2004, R.S. Services issued a promissory note to Host in the amount of $307,000 which had a stated interest rate of 7.5% and a maturity date of December 31, 2007. In December 2004, Host offset $180,280 of this promissory note for RS products and services purchased by Host’s GlobalNet subsidiary. On February 10, 2005, R.S. Services issued a second promissory note in the amount of $289,000 under the same terms as the first note and, on the date of acquisition, owed Host a balance of $365,634. Accordingly, the $365,634 is included in Host’s and R.S. Services’ intercompany accounts and has been eliminated in the consolidated financial statements as of March 31, 2005.
		On January 15, 2005, Host issued and sold one unit at $200,000 in a private placement to a current member of its board of directors. The unit consists of 24,390 shares of its common stock at $4.10 per share, the approximate fair value, or $100,000 and one 7.5% unsecured convertible promissory note in the face amount of $100,000. The outstanding principal balance due on the promissory note is convertible at the election of the holder into shares of Host’s common stock at anytime after January 19, 2006 at $4.10 per share. The promissory note is due and payable on January 19, 2007. The offer and sale was made by Host’s officers and directors and no commission or other remuneration was paid in connection with the private placement. The gross proceeds from the offering were $200,000.
		R.S. Services leases its facility from an employee/shareholder under a lease agreement with an initial five-year term at $60,000 per year, with three subsequent renewal options for two years each. The Company believes this lease is on terms competitive with other similar facilities in the area.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 7 -		CONTINGENCIES

		LEGAL MATTERS

		The Company has established an accrual for all maximum estimated potential losses that it expects to incur from the below actions pursuant to SFAS 5, “Accounting for Contingencies”.

		State Court Derivative Action

		On September 28, 2005, the Company was named as a nominal defendant in a derivative action filed in the Connecticut Superior Court in Bart Hester v. Geoffrey W. Ramsey, et al., Docket No. UWY-CV-05-5001448-S (“Hester” action). The action named as defendants the Company’s then existing board, Geoffrey Ramsey and Roger Lockhart. The Hester complaint asserted claims based on a press release issued by the Company in July 2005 regarding its commercial relationship with a major retail chain. The Hester action essentially duplicated an earlier-filed derivative action in federal court. Following the settlement of the federal action, all parties in Hester filed a joint motion to dismiss the suit with prejudice, which the court granted on September 2, 2008.

		State and Federal Court Individual Suits

		On May 2, 2006, 47 plaintiffs who alleged that they had purchased the Company’s securities at artificially inflated prices in reliance on the July 2005 press release sued the Company in the Connecticut Superior Court in Enrique Jose Contreras, et al., v. Host America Corp., Docket No. No. UWY-CV-06-4013754-S (“Contreras” action). The Contreras amended complaint asserts claims under state law, including fraud and negligent misrepresentation. On June 25, 2007, the same plaintiffs’ group filed a separate complaint under the federal securities laws in the federal district court in Connecticut against David J. Murphy, Geoffrey Ramsey, Peter Sarmanian, and Roger D. Lockhart, in the matter Anil Sawant, et al. v. Geoffrey W. Ramsey, et. al., Civil Action No. 07-cv-980 (VLB). Plaintiffs in the two cases claim aggregate damages of approximately $2.93 million. The Company and its past and present officer and director defendants have tentatively agreed in principal with the plaintiffs to settle both actions. The tentative agreement is subject to various contingencies and will not become binding until the parties have executed a written settlement stipulation. There is no assurance that a settlement will be finalized. In the event a settlement is not concluded, the Company believes that it has substantial and meritorious defenses to the action.

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 8 -		INDUSTRY SEGMENT INFORMATION
		The Company has three reportable segments: the business dining segment which is operated by Host, and the unitized meals and energy management segments which are operated by Host’s two wholly-owned subsidiaries Lindley and R.S. Services, respectively. On March 31, 2005, Host sold its SelectForce subsidiary (see Note 3 herein). The segments were determined based on the components of the Company’s business that are evaluated separately by management. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
		Business segment financial information for the three months ended March 31, 2005 is as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Business Dining		Unitized Meals		Energy Management		Corporate		Continuing Operations Total		Discontinued Operations		Consolidated
Sales to external customers	$	3,368,819	$	3,689,957	$	1,105,188	$	-	$	8,163,964	$	-	$	8,163,964
Segment loss		(107,451)		(114,258)		(309,491)		(1,005,022)		(1,536,222)		(581,991)		(2,118,213)
Depreciation and amortization		12,359		133,167		39,803		-		185,329		-		185,329
Provision for income taxes		1,000		9,000		-		-		10,000		-		10,000

(UNAUDITED) (Continued)

Business segment financial information for the three months ended March 31, 2004 is as follows:

NOTE 7 -		CONTINGENCIES (Continued)

		LEGAL MATTERS (Continued)

		Anne and Debra Ramsey Arbitration

		On December 2, 2005, a Demand for Arbitration was filed by Anne Ramsey and Debra Ramsey alleging that their employment was terminated in breach of employment agreements that they purportedly entered into with the Company. Anne Ramsey, the sister of Geoffrey Ramsey, was the Company’s former Human Resource Director and had served on the Board of Directors until June 18, 2007. Debra Ramsey is the wife of Geoffrey Ramsey and was a former administrative assistant for the Company. The Company terminated both individuals on November 23, 2005. On or about March 20, 2006, the Company instituted an injunction proceeding in the New Haven Superior Court to permanently enjoin this arbitration on the basis that the Company never authorized the employment agreements relied upon by Anne and Debra and therefore such contracts were void. The matter was tried in November, 2006 and the Court rendered a decision on January 8, 2007 denying a permanent injunction. On January 26, 2007 the Company filed an appeal of the Superior Court decision in the Connecticut Appellate Court and thereafter filed a Motion for Stay with the Superior Court which was granted. On July 5, 2007 the Company filed its brief with the Appellate Court and oral argument occurred on March 10, 2008. On May 20, 2008, the Connecticut Appellate affirmed the Superior Court’s decision. Thereafter the Company filed a petition for certification on June 27, 2008 with the Supreme Court in the State of Connecticut which the Supreme Court denied. An arbitration hearing occurred on March 3rd and 5th 2009, and briefs from both parties were filed on March 24, 2009. The Company intends to continue to vigorously defend itself against the claims of Anne and Debra Ramsey.

		Wal-Mart Stores, Inc. v. Eaton Corp. & RS Services

		On July 9, 2008, RS Services, Inc. was named as a co-defendant with Eaton in a lawsuit initiated by Wal-Mart arising from an industrial accident in July 2006. The case is docket number 08CV1141and was filed in Adams County District Court in the State of Colorado. Wal-Mart claims breach of contract and negligence against the defendants. It seeks damages for worker’s compensation benefits paid to its employees, property damage, lost profits, and other items. In accordance with the liability insurance policy, RS Services, Inc. has submitted the defense of this case to its liability carrier. Management believes that the liability carrier for RS Services, Inc. will cover all expenses, including damages, relating to this suit as part of the liability policy and without additional expense by RS Services, Inc.

		Other

		In addition, there exists routine litigation incidental to the Company’s business, none of which is anticipated to have a material adverse impact on our financial position, results of operations, liquidity or cash flows.

		Business Dining		Unitized Meals		Energy Management		Corporate		Continuing Operations Total		Discontinued Operations		Consolidated
Sales to external customers	$	3,197,691	$	2,910,245	$	45,631	$	-	$	6,153,567	$	-	$	6,153,567
Segment (loss) profit		(70,799)		63,821		(529,477)		(120,749)		(657,204)		45,612		(611,592)
Depreciation and amortization		19,020		53,045		21,935		-		94,000		-		94,000
Provision for income taxes		1,000		4,000		-		-		5,000		-		5,000

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

~~NOTE~~NOTES TO 8CONDENSED -CONSOLIDATED ~~INDUSTRY~~FINANCIAL ~~SEGMENT INFORMATION (Continued) Business segment financial information as of and for the nine months ended March 31, 2005 is as follows:~~STATEMENTS

		Business Dining		Unitized Meals		Energy Management		Corporate		Continuing Operations Total		Discontinued Operations		Consolidated
Sales to external customers	$	9,860,104	$	10,603,438	$	1,106,038	$	-	$	21,569,580	$	-	$	21,569,580
Segment loss		(389,767)		(133,525)		(1,302,570)		(2,042,066)		(3,867,928)		(491,555)		(4,359,483)
Depreciation and amortization		42,135		295,400		111,050		-		448,585		-		448,585
Provision for income taxes		7,000		21,000		-		-		28,000		-		28,000
Segment assets		6,835,422		10,132,624		6,010,019		-		22,978,065		-		22,978,065

(UNAUDITED) (Continued)

Business segment financial information as of and for the nine months ended March 31, 2004 is as follows:

NOTE 8 -		INDUSTRY SEGMENT INFORMATION

		The Company has two major reportable segments: energy services and energy efficiency products. RS Services is the energy services segment and EnerLume Corp. is the energy efficiency products segment. The segments were determined based on the components of the Company’s business that are evaluated separately by management.

		Business segment financial information as of and for the three months ended December 31, 2008 is as follows:

		Business Dining		Unitized Meals		Energy Management		Corporate		Continuing Operations Total		Discontinued Operations		Consolidated
		Energy Services				Energy Products				Corporate				Total
Sales to external customers	$	9,450,401	$	9,076,845	$	45,631	$	-	$	18,572,877	$	-	$	18,572,877
Sales to unaffiliated customers		$	1,093,150			$	43,408			$	-			$	1,136,558
Segment (loss) profit		(39,207)		124,030		(3,904,504)		(298,836)		(4,118,517)		99,137		(4,019,380)
Segment loss			(356,566	)			(201,492	)			(1,138,665	)			(1,696,723	)
Depreciation and amortization		~~66,432~~	68,511	~~152,751~~		~~21,935~~	3,284	-		~~241,118~~	7,291	-		~~241,118~~	79,086
Provision for income taxes		~~3,000~~	-	~~9,000~~		-	-	-		~~12,000~~	-	-		~~12,000~~	-
Segment assets		2,038,666		8,111,162		1,978,689		-		12,128,517		1,832,704		13,961,221

NOTE 9 -		SUBSEQUENT EVENTS
		WARRANTS EXTENSION
		On April 1, 2005, Host’s Board of Directors approved the extension of the expiration dates of 1,150,000 warrants to purchase common stock issued on July 21, 1998 and 32,692 warrants to purchase common stock issued on June 21, 2001 (the “Warrants”). The Board extended both sets of Warrants until July 21, 2007, subject to further extension. The Warrant exercise prices of $5.50 and the other terms of the respective Warrants remain unchanged.

Business segment financial information for the three months ended December 31, 2007 is as follows:

	Energy Services		Energy Products			Corporate			Total
Sales to unaffiliated customers	$	2,103,010	$	119,717		$	-		$	2,222,727
Segment profit (loss)		418,839		(141,563	)		(3,036,234	)		(2,758,958	)
Depreciation and amortization		79,214		3,241			10,556			93,011
Provision for income taxes		-		-			-			-

~~HOST~~ENERLUME ENERGY ~~AMERICA~~MANAGEMENT ~~CORPORATION~~CORP. AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED)~~

NOTE 9 -		SUBSEQUENT EVENTS (Continued)
		COMMON STOCK ISSUANCE
		The Company issued 82,057 shares of its common stock from April 1, 2005 to May 17, 2005. It issued 74,977 shares to the Laurus Master Fund, Ltd. at $3.50 per share (see Note 4 herein) in payment of $200,433 in principal and $61,987 in interest. In addition, the Company issued 7,080 shares of its common stock for warrants exercised at $2.00 per share. The Company received $14,160 in gross proceeds from the exercise of these warrants.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (Continued)

NOTE 8 -		INDUSTRY SEGMENT INFORMATION (Continued)

		Business segment financial information as of and for the six months ended December 31, 2008 is as follows:

	Energy Services			Energy Products			Corporate			Total
Sales to unaffiliated customers	$	2,369,014		$	71,614		$	-		$	2,440,628
Segment loss		(746,754	)		(463,679	)		(2,830,155	)		(4,040,588	)
Depreciation and amortization		139,244			7,696			15,313			162,253
Provision for income taxes		-			-			-			-
Segment assets		900,136			606,645			113,751			1,620,532

Business segment financial information for the six months ended December 31, 2007 is as follows:

	Energy Services		Energy Products			Corporate			Total
Sales to unaffiliated customers	$	4,264,929	$	134,859		$	-		$	4,399,788
Segment profit (loss)		596,022		(348,568	)		(4,365,721	)		(4,118,267	)
Depreciation and amortization		161,833		5,960			18,059			185,852
Provision for income taxes		-		-			-			-
Segment assets		2,114,286		306,934			2,029,590			4,450,810

NOTE 9 -		SUBSEQUENT EVENTS

		PRIVATE PLACEMENTS

		On January 5, 2009, the Company completed the sale of a 12% unsecured promissory note and common stock purchase warrants to one investor that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $25,000. The note entitled the unit holder to 50,000 common stock purchase warrants which are exercisable for a five year period at $0.27 per warrant. The note bears interest at a rate of 12% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full two months from the date of issuance. The Company did not pay a sales commission or other remuneration in connection with the sale of the note.

~~ITEM~~ENERLUME ENERGY 2MANAGEMENT CORP. ~~Management’s~~AND ~~Discussion and Analysis of Financial Condition and Results of Operations~~SUBSIDIARIES

~~The~~NOTES TO ~~following~~CONDENSED ~~review~~CONSOLIDATED ~~should~~FINANCIAL ~~be read in conjunction with the consolidated financial statements and notes thereto.~~STATEMENTS

~~Cautionary Statement Regarding Forward Looking Information~~(UNAUDITED) (Continued)

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding, among other items, our growth strategies, anticipated trends in our businesses and our future results of operations, market conditions in our industry segments, our ability to make and integrate acquisitions and the impact of government regulation. These forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties, many of which are beyond our control. Actual results could differ materially from these forward-looking statements as a result of, among other things: our ability to retain and renew customer contracts; our need to finance clients’ equipment and initial start-up costs; our dependence on building owners’ ability to retain clients; fluctuations in food costs; uncertainties in the competitive bidding process; our dependence on key personnel; and intense competition in the industry segments in which we operate on a local and national level.

NOTE 9 -		SUBSEQUENT EVENTS (Continued)

		PRIVATE PLACEMENTS (Continued)

		On February 12, 2009, the Company entered into a promissory note extension agreement with the holder of the 18% convertible unsecured promissory note to amend the terms of the note issued to him on July 30, 2008. The unsecured note was originally issued for the principal amount of $500,000, convertible into common stock at $0.47 per share, accrued interest at the rate of 18% per annum, and was originally due on January 30, 2009. Pursuant to the promissory note extension agreement, the principle on the note has been increased to $545,000 which includes the prior accrued interest. The conversion feature on the note was adjusted to $0.37 per share and the maturity date for the unsecured note was extended to July 30, 2009 and shall continue to accrue interest at the rate of 18% per annum in accordance with the original terms of the unsecured note. In addition, the holder will receive an additional warrant to purchase 310,000 shares of the Company’s common stock exercisable until January 31, 2014 at $0.54 per share. The holder of the note is a brother to a member of the Company’s Board of Directors and such brother did not participate in the Board’s decision to extend the notes or the revised terms thereof.

		On February 26, 2009, the Company entered into a promissory note extension agreement with the holder of the 12% unsecured promissory note due February 19, 2009 to amend the terms of the note issued to him on December 19, 2008. The unsecured note was originally issued for the principal amount of $100,000, accrued interest at the rate of 12% per annum. Pursuant to the promissory note extension agreement, the principle on the note has been increased to $102,000 which includes the prior accrued interest. The maturity date for the unsecured note was extended to June 19, 2009 and shall continue to accrue interest at the rate of 12% per annum in accordance with the original terms of the unsecured note. In addition, the holder will receive an additional warrant to purchase 200,000 shares of the Company’s common stock exercisable until January 31, 2014 at $0.26 per share.

In addition, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions, as they relate to Host, our business or our management, are intended to identify forward-looking statements.27

WeITEM ~~undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report~~2. In Management’s ~~light~~Discussion ~~of these risks~~ and ~~uncertainties,~~Analysis ~~the~~of ~~forward-looking~~Financial ~~events~~Condition and ~~circumstances~~Results ~~discussed~~of ~~in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.~~Operations

~~Overview~~Forward-Looking Statements

~~Host~~This Quarterly ~~America~~Report ~~Corporation~~on ~~(referred~~Form to10-Q incontains ~~this report as~~ “~~Host,”~~forward-looking ~~the “Company,~~statements” ~~“we,”~~within ~~“us”~~the meaning ~~and “our”) consists~~ of ~~four~~the ~~principal~~Private ~~operating~~Securities ~~divisions~~Litigation ~~and~~Reform ~~three operating~~Act segments: Host Business Dining, Lindley Food Service, GlobalNet and R.S. Services. Lindley Food Service, GlobalNet and R.S. Services conduct their operations through entities which are wholly-owned subsidiaries of ~~Host. Our~~ ~~GlobalNet and R~~1995.S. “Forward-looking ~~Services~~statements” ~~subsidiaries~~are ~~provide~~those ~~customized~~statements ~~energy management and conservation solutions for commercial, industrial and real estate customers through the installation of products~~ that ~~possess the capacity to reduce the energy consumption on inductive~~describe ~~loads for electrical equipment, motors and the majority of existing lighting systems. Our energy~~ management’s ~~division~~beliefs ~~currently has customers located in Florida, Oklahoma~~ and ~~Texas;~~expectations ~~however,~~about ~~it intends to solicit business throughout~~ the ~~United States~~future. ~~Host~~ Although we ~~Business~~believe ~~Dining~~these isexpectations aare ~~contract food management organization that specializes in providing full service corporate dining~~reasonable, ~~and~~our ~~such~~operations ~~ancillary~~involve ~~services~~a asnumber ~~special~~of risks ~~event catering~~ and ~~office~~uncertainties, ~~coffee~~including ~~products~~those todescribed ~~business~~in ~~and~~the ~~industry~~“Risk ~~accounts~~Factors” ~~located in Connecticut,~~section ~~Massachusetts,~~of ~~New~~our ~~Hampshire,~~Annual ~~New~~Report ~~York, New Jersey, Rhode Island and Texas. Our Lindley Food Service subsidiary provides fresh, unitized meals~~ for ~~governmental~~the ~~programs,~~fiscal ~~such~~year asended ~~senior nutrition programs~~June 30, ~~Head~~2008 ~~Start~~on ~~programs, school breakfast and summer school~~Form ~~programs, primarily under fixed~~10-~~price contracts in Connecticut, Indiana, Massachusetts and Rhode Island~~K.

27The Company’s actual results could differ materially from those discussed in any forward-looking statements included in this Quarterly Report.

~~Recent~~We have ~~Developments~~used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “predict,” “project” and similar terms and phrases, including references to assumptions, in this Quarterly Report on Form 10-Q to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

~~Amendment~~· ~~Agreement~~our ability to develop, retain and renew Master Channel Partner and service related contracts;

On· ~~February 15,~~uncertainties ~~2005,~~in ~~Host entered into Amendment No. 1 and Consent (~~the ~~“Amendment~~competitive ~~Agreement”)~~bidding with Laurus Master Funds, Ltd. amending certain terms of a Secured Convertible Term Note A and a Secured Convertible Term Note B previously issued by Host to Laurus pursuant to a Securities Purchase Agreement dated June 23, 2004 and certain related loan documents. Pursuant to the Amendment Agreement, Term Note A is amended to provide that the initial fixed conversion price remains at $5.03 per share, provided, however, that the first $1,000,000 aggregate principal amount of Term Note A and/or Term Note B, collectively, converted into shares of common stock on or after February 15, 2005 shall be converted at a fixed conversion price of $3.50 per share (“reduced conversion price”). As a result of the reduced conversion price, Host recorded a charge to interest expense of $142,857 for the intrinsic value of this beneficial conversion price of $3.50 per share as of February 15, 2005. In addition, scheduled principal payments under Term Note A were deferred until after May 1, 2005. The Amendment Agreement also amended applicable provisions of certain related loan documents to be consistent with the modification to the fixed conversion price described above.process;

In· ~~addition,~~our ~~pursuant~~dependence toon ~~the~~key Amendment Agreement, Host issued to Laurus a common stock purchase warrant for 25,000 shares of its common stock exercisable through June 23, 2014 at $5.98 per share. The warrant is subject to certain adjustment provisions in the event Host shall (a) effect a corporate reorganization or mergerpersonnel; or (b) consolidate or merge into any other entity or transfer all or substantially all of its assets or properties under a plan contemplating its dissolution. Accordingly, Host recorded the fair value of $77,000, determined by using the Black-Scholes pricing model, as debt discount, resulting in a reduction in the carrying value of the debt. The debt discount will be amortized to interest expense over the remaining term of the related debt.

~~Host~~· ~~entered into~~ the ~~Amendment~~outcome ~~Agreement in order to obtain Laurus’ consent to Host’s merger with R.S. Services. Laurus’ consent was a condition to the closing~~ of ~~the~~existing ~~merger. In~~litigation ~~connection with the Amendment Agreement~~ and Host’s merger with R.S. Services, Laurus released $750,000 from restriction on Term Note B to Host. Host used approximately $588,000 of these proceeds to repay outstanding debt obligations of R.S. Services and will use the ~~remainder~~ potential for ~~working~~new ~~capital. Laurus has also released an additional $518,000 on Term Note B from restriction to bring the total funds released on this note to $1,268,000 as of March 31, 2005.~~litigation;

~~R.S.~~· ~~Services~~intense ~~Merger~~competition in the industry segments in which we operate on a local and national level;

On· ~~February 16, 2005, Host acquired R.S. Services pursuant to~~ the ~~terms~~integration and ~~conditions~~success of the ~~Agreement~~early ofstage ~~Merger~~energy ~~and~~management ~~Plan~~division ofand ~~Reorganization~~its ~~dated~~ability ~~September 29, 2004. R.S. Services will continue~~ to ~~conduct~~produce ~~its electrical~~favorable ~~installation~~revenue and ~~energy~~profitability; management business as a wholly-owned subsidiary of Host. The results of operations of R.S. Services have been included in the condensed consolidated financial statements since the date of acquisition.and

~~The~~· ~~aggregate~~other ~~purchase~~factors ~~price~~including ofthose ~~$1,994,976~~discussed ~~consisted~~under of“Risk ~~$200,000~~Factors” in ~~cash,~~Item ~~431,777~~1A ~~shares~~ of ~~common~~our ~~stock~~Annual ~~valued~~Report at $1,666,659 and closing costs of $128,317. The value of the 431,777 shares of restricted common stock was determined based on the closing market price of the Company’s common shares on January 31, 2005, the date of shareholder approval for the ~~acquisition. In~~fiscal ~~addition~~year toended ~~the~~June ~~aforementioned Host common stock and cash consideration~~30, ~~Ronald~~2008 ~~Sparks, the former sole shareholder of R.S. Services, is eligible to earn additional cash and Host common stock based~~ on ~~the~~Form ~~performance of Host’s energy management division~~10-K.

28You should keep in mind that any forward-looking statement made by us in this Quarterly Report on Form 10-Q or elsewhere speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this Quarterly Report on Form 10-Q after the date of this filing, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this Quarterly Report on Form 10-Q or elsewhere might not occur.

Mr. Sparks will receive an additional $200,000 in cash and $872,500 worth of Host’s restricted common stock if the energy management division generates a total of $20 million in sales for the 24-month period after the closing date of the merger. If $30 million in divisional sales are reached for the 30-month period after the closing date of the merger, another $200,000 in cash and $336,250 worth of Host’s restricted common stock will be issued to Mr. Sparks. If $40 million in divisional sales are reached in the 36-month period after the closing date of the merger, $536,250 worth of Host common stock will be issued to Mr. Sparks. If the $40 million division sales goal is not reached for the 36-month period after the closing date of the merger, but division sales exceed $30 million, Host will issue to Mr. Sparks additional common stock based on a ratio of sales achieved, as described in the merger agreement. These “earn-out” periods expire three years from the closing date of the merger. Any such amounts earned will result in an increase in goodwill.Overview

~~Concurrent~~We are ~~with~~an ~~the~~outsource ~~closing~~provider of ~~the~~an ~~merger,~~electrical ~~Host~~energy ~~entered~~efficiency ~~into~~product anand electrical ~~employment~~energy ~~agreement~~management ~~with~~services ~~Mr. Sparks providing~~ that ~~Mr.~~enable ~~Sparks~~customers ~~will~~to ~~serve~~manage astheir lighting ~~the~~infrastructure ~~President~~more ofeffectively ~~R.S. Services~~ and ~~receive~~reduce anenergy ~~initial salary of $125,000, incentive~~costs. We ~~stock~~believe ~~options~~as tothe ~~purchase~~economic ~~18,000~~cost ~~shares~~ of ~~Host’s~~energy ~~common~~rises ~~stock~~ and ~~such~~the ~~other~~demand ~~executive~~for ~~benefits~~energy conservation ascontinues ~~are afforded~~ to ~~similar~~increase, ~~officers~~our ofmission ~~Host and its subsidiaries. The employment agreement~~ is ~~for~~to aprovide ~~period~~products ~~of three years, contains a three-year~~and ~~non-competition~~design ~~provision~~systems ~~and~~that ~~provides~~provide ~~Mr.~~new ~~Sparks~~levels ~~with~~of ~~certain~~efficient ~~severance~~utilization ~~benefits in the event~~ of ~~his~~energy ~~termination~~and utilities.

~~Oklahoma Gas and Electric Research Report~~28

InOur principal ~~a March 15~~product, ~~2005~~EnerLume ~~press~~| ~~release~~EM®, ~~Oklahoma~~is ~~Gas~~a computerized ~~and~~energy ~~Electric~~savings ~~Services,~~device awhich ~~subsidiary~~improves ofthe ~~OGE~~efficiency ~~Energy~~of ~~Corp~~fluorescent lighting systems. EnerLume ~~(“OG&E”),~~| ~~announced~~EM® accomplishes ~~initial~~this ~~results~~by reducing the amount of ~~20%~~electricity ~~energy~~needed ~~savings~~to ~~during~~operate fluorescent anlighting ~~on-going~~with ~~research~~limited ~~project~~light itloss. EnerLume | EM® is most ~~conducted~~adaptable to large retail and manufacturing facilities that are heavily dependent on fluorescent lighting. With third party independent testing and proven field results demonstrating energy savings of up to 15%, EnerLume | EM® improves the efficiency of a lighting system ~~developed~~ by ~~R.S.~~reducing ~~Services~~the electrical energy consumed while maintaining energy loads to keep peak demands within user-defined limits. ~~Testing~~ Once ofinstalled ~~the~~and ~~ENS~~connected ~~LightMasterPlus~~to a facility’s utility meters, EnerLume ~~which~~| ~~adjusts~~EM® ~~fluorescent~~allows the ~~lighting~~user ~~systems~~to ~~designed~~set ~~for~~and ~~retail~~adjust ~~businesses~~electrical inlighting ~~order~~demand set points to reduce energy ~~electricity~~consumption and load limits during peak or off peak usage, hours. With ~~began~~the inlighting ~~November~~system’s ~~2004~~ballasts operating at the ~~OG&E~~use prescribed ~~Foodservice~~levels, peak voltage for maximum light output can be regulated, ~~Technology~~reducing ~~Center~~energy consumption and resulting in ~~Oklahoma~~energy ~~City~~savings. Through a self-contained energy management system, OKEnerLume | EM® can also be programmed to automatically turn off or curtail the amount of fluorescent fixtures when not required, which can also provide additional energy savings.

AWe also ~~commercial~~provide ~~account~~full ~~manager~~service atelectrical ~~OG&E~~contracting ~~monitored the test~~ and ~~measured~~installation ~~the~~of ~~overall~~ electrical energy ~~savings~~management ~~for~~services, ~~T-8~~through ~~and~~our ~~T-12~~RS ~~fluorescent~~Services ~~lights~~segment located in ~~the~~Duncan, Oklahoma, ~~center. The~~to ~~T-8~~clients ~~and~~consisting ~~T-12~~of ~~are~~large ~~standardized~~retail ~~fluorescent~~chains ~~lights~~primarily ~~and~~in the ~~tests~~ ~~were~~southeastern ~~measured~~part ~~under~~of ~~normal~~the ~~operating~~United ~~conditions~~States. We ~~both~~specialize ~~with~~in the installation and ~~without~~design ~~the~~of ~~LightMasterPlus~~electrical systems, energy~~-saving~~ ~~product. As~~management asystems, telecommunications ~~result~~networks and retrofitting of ~~these~~existing ~~tests,~~electrical ~~OG&E~~control panels. Our ~~concluded~~service ~~that~~electricians and technicians provide the necessary ~~product~~evaluation ~~met~~and ~~requirements~~installation service for ~~energy-saving~~our ~~devices,~~products ~~while~~and services. We ~~reducing~~also ~~the~~have ~~amount~~a ofcertified ~~kilowatts~~design engineer and certified ~~used. OG&E~~alarm ~~determined~~personnel ~~that~~on ~~the~~staff ~~percentage~~to ofassist ~~electricity~~with ~~usage~~network ~~saved~~cabling ~~was~~and ~~significant~~compliance ~~according~~with local tolaws ~~utility~~and ~~industry~~regulations ~~standards~~for high voltage electrical systems.

~~Sale~~Our principal ofexecutive ~~SelectForce~~offices are located at Two Broadway, Hamden, Connecticut 06518 and our telephone number is (203) 248-4100. Our web site is www.enerlume.com. Any reference contained in this report to our web site, or to any other web site, shall not be deemed to incorporate information from those sites into this report.

~~On March 31, 2005, Host and T.E.D. Corporation (“Purchaser”) entered into a Share Purchase Agreement (“Agreement”) whereby Host sold to the Purchaser all of its shares in SelectForce, Inc.~~Recent ~~(“SelectForce”), a wholly owned subsidiary of Host. The President of the Purchaser is Tammi Didlot, a former director of Host and an officer of SelectForce.~~Developments

~~Pursuant~~This section tocovers ~~the~~developments ~~Agreement,~~beginning ~~the sales price of $2,070,000 was payable as follows: (i) $896,482~~ in ~~cash at~~ the ~~closing;~~second ~~(ii)~~quarter ~~cancellation~~ of ~~$973,518~~fiscal ~~of obligations owed by Host to SelectForce; and~~ 2009 (~~iii)~~beginning ~~the~~October ~~assumption of two of Host’s subordinated debt promissory notes in the principal amount of $200~~1,~~000. The~~ ~~assets sold consisted primarily of cash~~2008), ~~accounts~~the ~~receivable,~~last ~~property~~period ~~and~~for ~~equipment,~~which ~~goodwill~~reports ~~and~~were ~~other~~provided ~~assets and the assumption of certain accounts payable and~~to ~~accrued liabilities~~shareholders. ~~As a result of this transaction, Host incurred a loss on the sale of discontinued operations of $663,618, including transaction costs of $17,960.~~

29Private Brand Label Agreement

~~The~~We announced ~~Agreement~~on ~~contains~~December ~~numerous representations~~10, ~~warranties~~2008 ~~and~~that ~~covenants~~a byglobal ~~Host~~leader ~~and~~in ~~the~~power ~~Purchaser,~~technology ~~including~~has entered into a ~~two-year~~private ~~covenant~~brand ~~not~~label agreement to ~~compete~~distribute byour ~~Host~~proprietary EnerLume ~~and~~| ~~its~~EM® ~~officers~~energy ~~and~~efficiency ~~directors~~product. This inagreement ~~the~~provides ~~ownership,~~for ~~management,~~a ~~operation~~two oryear ~~control~~private ofbrand label agreement with an ~~employment~~open ~~screening~~quantity ~~business~~purchase with no minimum purchase requirement with set pricing for the duration of the term.

~~Extension of Warrants Expiration Dates~~ 29

On April 1, 2005, Host’s Board of Directors approved the extension of the expiration dates of 1,150,000 warrants to purchase common stock issued on July 21, 1998 and 32,692 warrants to purchase common stockPrivate issued on June 21, 2001 (the “Warrants”). The Board extended both sets of Warrants until July 21, 2007, subject to further extension. The Warrant exercise prices of $5.50 and the other terms of the respective Warrants remain unchanged.Placements

~~Lindley~~On December 2, ~~Food~~2008, ~~Service~~we completed the sale of 3.9 units consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to four investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $195,000. Each unit was sold for $50,000 and entitled the unit holder to 25,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full six months from the date of issuance. The Holders may convert the note and any accrued interest thereon after six months from the date of issuance into shares of common stock at a conversion rate of $0.47 per share. We did not pay a sales commission or other remuneration in connection with the sale of the note.

~~Effective April~~On December 131, ~~2005~~2008, ~~Lindley~~we ~~Food~~completed ~~Service~~the ~~will~~sale noof ~~longer~~$125,000 be12% ~~providing~~two ~~meals~~month unsecured ~~out~~promissory ofnote ~~its~~and ~~Florida~~common ~~location. Lindley~~stock ~~was~~purchase ~~unsuccessful~~warrants into ~~its~~two ~~attempts~~investors that met the definition of an “accredited investor” pursuant to ~~restructure~~Regulation D of the ~~terms~~Securities Act of ~~its~~1933. Each ~~agreement~~note ~~with~~entitled the ~~Florida~~holder ~~meals~~to an onaggregate ~~wheels~~200% ~~agency~~common stock purchase warrants which ~~would~~are beexercisable ~~mutually~~for ~~beneficial~~a tofive year ~~both~~period ~~parties~~at $0. ~~Therefore,~~26 ~~Lindley~~per ~~determined~~warrant. The itnote ~~would~~bears beinterest inat ~~its~~a ~~best~~rate of ~~interest~~12% toper ~~terminate~~annum, ~~its~~payable ~~Florida~~at ~~operation~~maturity in arrears in cash. The ~~termination~~note will ofmature ~~this~~and ~~operation~~be ~~will~~payable ~~reduce~~in ~~Lindley’s~~full ~~future~~two ~~revenues~~months byfrom the date of ~~approximately~~issuance. We ~~$650,000~~paid ~~per~~a ~~year~~10% sales commission in connection with the sale of the note.

~~Department~~On January 5, 2009, we completed the sale of ~~Energy’s~~a ~~Test~~12% ~~Results~~unsecured promissory note and common stock purchase warrants to one investor that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $25,000. The note entitles the unit holder to 50,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 12% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full two months from the date of issuance. We did not pay a sales commission or other remuneration in connection with the sale of the note.

InOn February 12, an2009, ~~April~~we entered into a promissory note extension agreement with the holder of the 18% convertible unsecured promissory note to amend the terms of the note issued on July 30, 2008. The unsecured note was originally issued for the principal amount of $500,000, convertible into common stock at $0.47 per share, accrued interest at the rate of 18% per annum, and was originally due on January 730, ~~2005~~2009. Pursuant ~~press~~to ~~release~~the promissory note extension agreement, Rthe principle on the note has been increased to $545,000 which includes the prior accrued interest.S The conversion feature on the note was adjusted to $0.37 ~~Services~~per ~~announced~~share and the ~~results~~maturity ofdate anfor the ~~extensive~~unsecured note was extended to July 30, ~~month~~2009 ~~long~~and ~~test~~shall continue to accrue interest at the rate of 18% per annum in accordance with the ~~LightMasterPlus~~original terms ~~conducted~~of atthe unsecured note. In addition, the ~~Department~~holder will receive an additional warrant to purchase 310,000 shares of ~~Energy~~the Company’s ~~testing~~common ~~facility~~stock exercisable until January 31, ~~Oak~~2014 ~~Ridge~~at ~~Laboratory,~~$0.54 inper ~~Oak~~share. The ~~Ridge~~holder of the note is a brother of Nicholas Troiano, ~~Tennessee~~a current member of the Board of Directors. ~~Highlights~~ Nicholas ~~from~~Troiano did not participate in the Board’s ~~report~~decision ~~are~~to asextend ~~follows:~~the notes or the revised terms thereof.

	•	The LightMasterPlus reduces the temperature of ballasts; therefore, does not degredate the specified life expectancy of the ballast; generates a 15% to 30% energy savings; and,
	•	LightMasterPlus represents a cost-effective option for new and existing fluorescent-lighting systems.

~~Eaton~~On February 26, ~~Cutler-Hammer~~2009, ~~Contract~~we entered into a promissory note extension agreement with the holder of the 12% unsecured promissory note due February 19, 2009 to amend the terms of the note issued to him on December 19, 2008. The unsecured note was originally issued for the principal amount of $100,000, accrued interest at the rate of 12% per annum. Pursuant to the promissory note extension agreement, the principle on the note has been increased to $102,000 which includes the prior accrued interest. The maturity date for the unsecured note was extended to June 19, 2009 and shall continue to accrue interest at the rate of 12% per annum in accordance with the original terms of the unsecured note. In addition, the holder will receive an additional warrant to purchase 200,000 shares of the Company’s common stock exercisable until January 31, 2014 at $0.26 per share.

On May 2, 2005, R.S. announced that it had entered into an agreement with Eaton Cutler-Hammer to handle a large-scale switch-gear roll-out for approximately 400 retail stores in the south and western regions of the UnitedAppointment ~~States. A switch gear roll-out is a highly specialized electrical installation project. Eaton Corporation is a global leader~~ of ~~electrical~~New systems and components and will provide the controls for the 400 stores and R.S. will handle the installation. The program has already started but is expected to ramp up considerably during June of 2005 through October 2005. Based upon past experience and recent installations, the Company expects to generate revenues of approximately $13,000 per installation.Director

~~Common~~On January ~~Stock~~8, ~~Issuance~~2009, the Board of Directors elected Paul M. Belliveau to serve as a Class III member of the Board of Directors. Mr. Belliveau qualifies as an independent director within the meaning of NASDAQ Rule 4200 and has no material relationship or reportable transactions with us under Item 404(a) of Regulation S-K. Mr. Belliveau has not been appointed to any committees of the Board of Directors.

~~The~~Mr. Belliveau ~~Company~~is ~~issued~~President 82of Cardo Americas,~~057~~ ~~shares~~a subsidiary of ~~its~~Cardo ~~common~~AB, ~~stock~~a ~~from~~provider of ~~April 1,~~industrial ~~2005~~doors toand ~~May 17~~logistics systems, ~~2005. It~~systems ~~issued~~for 74water treatment,~~977~~ ~~shares~~process equipment tofor the ~~Laurus~~pulp ~~Master~~and ~~Fund~~paper industry and garage doors, which is based in ~~Ltd~~Malmo, Sweden. Mr. atBelliveau ~~$3.50~~is ~~per~~also ~~share~~the ~~(see~~Vice ~~Note~~President 4of ~~herein)in~~ABS ~~payment~~Group and President of ~~$200~~ABS America,~~433~~ inboth ~~principal~~Cardo AB subsidiaries. Previously, Mr. Belliveau was the President and ~~$61~~CEO of Besam Entrance Solutions,~~987~~ inthe ~~interest~~North American subsidiary of the world’s largest automatic door company, ASSA ABLOY. In addition, ~~the~~Mr. ~~Company~~Belliveau ~~issued~~has ~~7,080~~held ~~shares~~several ofleading ~~its~~positions within ~~common~~ThyssenKrupp ~~stock~~Elevator, ~~for~~completing ~~warrants~~his ~~exercised~~career at ~~$2.00~~the ~~per~~company as ~~share. The~~President ~~Company~~of ~~received~~the ~~$14,160~~Northeast Region in ~~gross~~the ~~proceeds~~USA. Mr. Belliveau graduated from the ~~exercise~~University of ~~these~~Connecticut ~~warrants~~and holds a Bachelor degree in economics.

30In connection with the election of Mr. Belliveau to the Board of Directors, Mr. Belliveau will participate in the Company’s standard compensatory arrangements for its non-employee directors, including quarterly director fees of $3,000 and quarterly restricted stock grants of the Company’s common stock valued at $7,500.

Outlook

WeOur overall ~~believe~~short interm ~~our~~outlook ~~plan~~is todirectly ~~grow~~dependent ~~our~~on ~~business~~the ~~and~~success ~~increase~~of ~~profitability~~immediate fundraising ~~through future strategic acquisitions~~efforts, ~~sales~~which ~~growth~~are ~~and~~imperative ~~cost~~for ~~reductions by consolidating~~ the ~~buying~~Company ~~power~~to ofcontinue ~~all~~as ofa ~~our entities. The recent~~going ~~acquisition of R~~concern.S. There ~~Services~~is ~~has~~inadequate ~~strengthened~~cash ~~Host’s~~on ~~energy management business. We are now capable of providing~~ the ~~installation~~balance ofsheet ~~our~~to ~~energy~~support ~~saving products which recently received third party attestation of their energy saving ability from both Oklahoma Gas and Electric and~~ the ~~Department of Energy~~ Company’s ~~Oak~~present ~~Ridge Laboratory~~obligations. ~~Our~~ We ~~management~~have issuffered ~~pleased~~recurring ~~with~~losses ~~the~~from continuing ~~results~~operations, ofhave ~~these~~had ~~independent~~negative ~~tests~~cash ~~which~~flows ~~provide~~from ~~credibility~~operations, tohave ~~our~~had ~~energy saving products as~~ a working ~~viable~~capital ~~means~~and ofstockholders’ ~~reducing~~deficiency ~~energy~~at ~~consumption and~~December ~~reducing~~31, ~~electricity~~2008 ~~costs. Host~~ and ~~Lindley~~ are currently ~~continually~~ involved in ~~the~~litigation ~~bidding~~that ~~process~~could ~~for~~have ~~potential~~an ~~new~~adverse ~~business~~effect ~~and~~on ~~currently~~our operations. ~~are~~These ~~working~~conditions onraise ~~proposals~~substantial todoubt ~~secure~~about ~~additional~~our ~~corporate~~ability ~~dining,~~to continue ~~senior~~as ~~feeding~~a ~~and~~going ~~headstart accounts~~concern.

~~Recent~~We are ~~Accounting~~currently ~~Pronouncements~~having difficulty meeting unpaid vendors and other support obligations. In the event that we are unable to extend or refinance our debt or obtain additional capital on a timely basis and on acceptable terms, we will be required to take further steps to attempt to acquire the funds necessary to satisfy our short-term cash needs or may be forced to restructure operations. Our inability to address our debt maturities in a satisfactory fashion also raises substantial doubts as to our ability to continue as a going concern.

In December 2004, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 123(R) (revised 2004), “Share-Based Payment”, which amends FASB Statement No. 123 and will be effective for public companies for annual periods beginning after December 15, 2005. The new standard will require us to expense employee stock options and other share-based payments over the service periods. The FASB believes the use of a binomial lattice model for option valuation is capable of more fully reflecting certain characteristics of employee share options compared to the Black-Scholes options pricing model. The new standard may be adopted in one of three ways - the modified prospective transition method, a variation of the modified prospective transition method or the modified retrospective transition method. We are currently evaluating how we will adopt the standard as required on July 1, 2006 and evaluating the effect that the adoption of SFAS 123(R) will have on our financial position and results of operations.31

~~Critical~~We will ~~Accounting~~continue ~~Policies~~to search for new and innovative ideas to develop products that will provide electrical energy efficiency. Continuing development of new products such as daylight harvesting, electric heating, demand response, lighting ballast and lamps as well as energy efficiency for HID lighting will compliment our existing EnerLume│EM® product and help expand into a larger market presence. We aspire to develop a complete lighting system, including ballast, lamps and light fixture together with EnerLume│EM® which, when used together, will provide maximum energy savings. As new ideas emerge from new and existing technology for energy efficiency, we will research the feasibility of developing such technology to help reduce electrical demand to satisfy the global need for energy conservation.

~~There~~ We have ~~been~~accomplished, nothrough ~~major~~independent ~~changes~~channel topartner ~~the~~deployment ~~critical~~and ~~accounting~~through our ~~policies~~marketing asefforts, ~~outlined~~increased inmarket ~~the~~awareness ~~Company’s~~of ~~June 30,~~our ~~2004~~EnerLume ~~Form~~| ~~10-KSB~~EM® product. Potential installations include apartment communities, warehouse ~~except~~distribution ~~for~~centers, ~~our~~military ~~revenue~~installations ~~recognition~~and ~~policy~~other ~~which~~commercial ~~now~~and industrial ~~reflects~~applications. The ~~the~~product ~~effects~~has ofevolved ~~our~~from ~~R.S.~~installation of ~~Services~~the ~~acquisition. R.S.~~product ~~Services~~for ~~recognizes~~demonstration ~~revenue~~and onverification ~~its~~purposes ~~short-term~~to more order-based installations,. Independent ~~such~~tests asof ~~switch~~the ~~gear~~product ~~projects,~~have ~~when~~verified ~~the~~an electrical ~~job~~energy isconsumption ~~completed. On~~savings ~~its~~of ~~long-term~~up ~~projects~~to 15%, ~~which~~and, ~~may~~as ~~last~~a ~~several~~result ~~months,~~we ~~R.S.~~have instituted ~~recognizes~~a ~~revenue~~money ~~based~~back onguarantee to the ~~percentage~~end ~~of completion method~~user. ~~Progress~~ onWe ~~the~~plan ~~percentage~~to ofgrow ~~completion~~our isbusiness and ~~measured~~obtain byeventual ~~the~~profitability ~~costs~~mainly ~~incurred~~through tosales derived ~~date~~from ~~compared~~strategic toalliances ~~total~~with ~~estimated~~our ~~costs~~channel topartner ~~complete~~distributorships, including the ~~job~~channel partner network under the currently contracted independent master channel partner. ~~Provision~~ Additionally, iswe ~~made~~believe in our plans for ~~anticipated~~new product ~~losses,~~development ifto ~~any,~~complement onour ~~uncompleted~~existing ~~contracts~~technology and introduce new energy savings and efficiency products to the market.

~~Results~~In the annual report filed on Form 10-K for the fiscal year of ~~Operations~~2008 we disclosed that we had experienced longer sales cycles with our product than initially anticipated and also disclosed that we experienced a more cautious approach from public ~~continuing~~acceptance ~~operations~~to the new technology which was unforeseen in our prior ~~Three~~forecasts ~~months~~and ~~ended~~guidance. We ~~March 31~~do not anticipate this trend to continue into the fiscal year of 2009, ~~2005~~as ~~(“2005~~we ~~period”)~~have vsadopted marketing outreach programs through channel partner relationships and potential third party distribution channels to both market and cross-market energy efficiency products. We ~~three~~believe ~~months~~that ~~ended~~our ~~March 31,~~solution ~~2004~~to ~~(“2004~~energy ~~period”)~~efficiency will be part of an end-user overall energy reduction plan as we can provide needed cost savings that energy conscious retail and warehouse chains demand.

~~Net~~Our short-term ~~revenues~~cash ~~for~~requirements ~~the~~have ~~three~~steadily ~~months~~declined ~~ended~~as ~~March 31,~~we ~~2005~~focus ~~were~~on ~~$8,163,964~~cost ascutting initiatives ~~compared to $6,153,567~~ for ~~the~~future ~~three months ended March 31, 2004~~costs. ~~Accordingly,~~ Our ~~revenues~~longer ~~increased~~term ~~$2,010,397~~plan oris ~~approximately~~to ~~33%.~~improve ~~Host~~our ~~business~~cash ~~dining~~flow ~~revenue~~through ~~increased~~continued ~~by $171~~focus,~~128~~ indeployment ~~the~~and ~~three~~promotion ~~months~~of ~~ended~~our ~~March 31~~energy efficiency product, ~~2005~~EnerLume ~~when~~| ~~compared to the 2004 period~~EM®. ~~The~~ ~~business~~We ~~dining~~also plan ~~revenue~~to ~~increase~~continue isour ~~primarily~~efforts ~~attributable~~ to anidentify ~~improvement~~ways ~~in corporate catering and the addition~~ of ~~two cafeteria~~reducing ~~units~~operating ~~during~~costs ~~the~~and ~~previous quarter. Host cannot predict if the improvement in corporate catering revenue will continue; however, it does expect revenues~~ to increase ~~due~~liquidity tothrough ~~the~~additional ~~addition~~equity ofand ~~the~~debt ~~two~~financings ~~new~~and ~~cafeteria units it opened on December 20,~~have ~~2004. Lindley~~entered ~~had~~into aan ~~revenue~~agreement ~~increase~~with ofan ~~$779,712,~~institutional ~~which~~investment ~~was~~firm ~~partly~~that ~~attributable~~could provide toadditional ~~its~~equity ~~Florida, Indiana~~ and ~~Massachusetts~~debt ~~locations~~financings. The ~~which~~completion ~~had a combined revenue increase~~ of these ~~$278,609~~financings ~~over~~and the ~~comparable~~operational ~~2004~~initiatives ~~period. The~~are ~~increase~~imperative into ~~Lindley~~improving ~~revenue~~our ~~generated~~cash byflow ~~these~~and ~~locations includes $203,881 for Massachusetts which was attributable~~ to ~~its~~help ~~contract~~foster ~~with~~ the ~~Northeast~~implementation ~~Massachusetts~~of ~~Consortium~~our ofcurrent ~~Elder~~initiatives ~~Nutrition~~and business plan.

31We are also currently involved in litigation that could have an adverse effect on our operations. If an unfavorable ruling with any or all of these legal matters occurs, we may be forced to either restructure operations, or take other necessary and appropriate matters that could potentially limit our ability to continue operations.

Programs which began on October 1, 2004. However, the trend of increasing revenues for these three locations will be impacted in future quarters due to Lindley’s termination of its Florida operation on April 1, 2005 as discussed in “Recent Developments.” Lindley’s Connecticut operation generated a $501,103 revenue increase which was primarily attributable to the Food Brokers asset purchase. The majority of Lindley’s work is done on a contract basis with terms ranging from one to five years—the summer food programs are as short as eight weeks. Most contracts are secured through a competitive bidding process. Price alone is not the only determining factor for the awarding of these contracts—food quality, service and other factors may also enter into the decision making process. Due to the fact that most of Lindley’s business is awarded as a result of this competitive bidding process, Lindley cannot predict if it will be successful in securing new contracts or renewing existing ones; however, based on these recent awards, we feel in the near term, the prospect of increasing revenue for Lindley appears probable. The energy management division, which is comprised of GlobalNet and R.S. Services, generated $1,105,188 in revenues during the 2005 period an increase of $1,059,557 over the 2004 period. The majority of this revenue increase was attributable to the R.S. Services operation which was acquired during the current quarter. The Company expects the energy management division to continue to increase its revenues during future periods due to the recent signing of the Eaton Cutler-Hammer contract for a switch gear roll-out in approximately 400 retail stores. This program is expected to increase dramatically from June through October 2005. Based upon past experience and recent installations, the Company expects to generate revenues of approximately $13,000 per installation. The Company expects to increase its revenues for the balance of fiscal 2005 and beyond through the addition of more corporate dining accounts, the continued promotion of its elderly feeding, head start, shelf stable meal programs and the anticipated growth of its energy management division. The Food Brokers asset purchase, which was consummated on October 29, 2004, is expected to improve Lindley’s profitability for the balance of fiscal 2005 and beyond and the R.S. Services’ acquisition is already having a positive impact on the energy management division’s bottom line.32

Total operating costs and expenses were $8,981,273 for the 2005 period as compared to $6,655,831 for the 2004 period, an increase of $2,325,442 or approximately 35%. The Company’s cost of revenues represent theResults ~~cost~~ of food and paper products, related labor costs and benefits, various business dining unit related costs, energy management operating expenses and the cost of shipping our products to our customers. Cost of revenues for the three months ended March 31, 2005 and 2004 approximated 85% and 84% of revenues, respectively. This increase is primarily attributable to increased labor costs during the 2005 period.Operations

Selling, general and administrative expenses consist primarily of management and clerical salaries, legal, accounting and other professional fees, liability insurance, facility rentals, repairs, maintenance, utilities,Three ~~commissions,~~months ~~travel~~ended ~~and various other costs. Selling~~December 31, ~~general~~2008 ~~and administrative expenses were $1,836,600 in~~ (the ~~2005~~“2008 ~~period~~Period”) ~~as compared to $1,298,948 during 2004, an increase of $537,652 or approximately 41%~~vs. ~~The~~ ~~large~~three ~~increase~~months ~~over the 2004 period is~~ended partly attributable to R.S. Services which had selling, general and administrative expenses of $166,710 that were mostly offset by a $126,005 decrease in GlobalNet’s selling, general and administrative expenses. Excluding R.S. and GlobalNet, selling, general and administrative expenses increased $496,947 for the 2005 period. The increase in selling, general and administrative expenses is primarily attributable to a charge of $305,100 in the 2005 period for the fair value of 100,000 options issued to its investor relations firm as additional compensation for its services. Depreciation and amortization increased by $91,329 in the 2005 period. The increase in depreciation and amortization expense is primarily attributable to the Lindley operation.December ~~Lindley has made significant equipment purchases due to its revenue growth. Lindley also incurred amortization charges on the Food Brokers’ customer list of $45~~31,~~919~~ ~~during~~2007 (the ~~period. The~~“2007 increase in the 2005 operating costs and expenses was partly offset by the charge of $70,814 for acquired in process research and development costs incurred by GlobalNet during the 2004 period as compared to no cost in the 2005 period. We are anticipating that our selling, general and administrative expenses will increase over the balance of fiscal 2005 and into fiscal 2006 due to thePeriod”)

32The following are our net revenues from continuing operations for:

accounting and other costs associated with the undertaking of our Sarbanes-Oxley Act Section 404 compliance requirements and the anticipated growth of our energy management division.

	2008 Period		2007 Period		Variance			% Variance

Energy Services	$	1,093,150	$	2,103,010	$	(1,009,860	)		-48.0	%
Energy Products		43,408		119,717		(76,309	)		-63.7	%

Total Revenues	$	1,136,558	$	2,222,727	$	(1,086,169	)		-48.9	%

~~Amortization~~We have ofexperienced ~~deferred~~an ~~financing~~aggregate ~~costs~~revenue ~~increased~~decrease byfrom ~~$142,357~~continuing ~~for~~operations ~~the~~of 48.9% ~~three~~as ~~months~~compared ~~ended~~to ~~March 31,~~the ~~2005~~2007 ~~when~~Period. ~~compared~~The todecrease ~~the~~in ~~2004~~energy ~~period. This~~services ~~increase~~revenue is a ~~mostly~~direct ~~attributable~~reflection toof the ~~amortization~~absence of ~~the~~revenue ~~costs incurred~~ in the ~~Laurus~~2008 ~~Fund~~Period ~~financing~~associated ~~transaction. These~~with switchgear ~~costs,~~and ~~which~~retrofit ~~will~~services befrom ~~amortized~~both ~~over the three~~multi-~~year~~location ~~life~~contractor ofand subcontractor ~~the~~contract ~~loans, amounted to $133,985 for the three months ended March 31, 2005~~revenues. ~~Amortization~~ This ofshortfall ~~deferred~~resulted ~~financing~~in ~~costs~~a ~~on the~~revenue ~~second~~decrease ~~private placement~~ of ~~subordinated~~approximately ~~debt was~~ $17797,~~982~~000. ~~for the three months ended March 31~~Additionally, ~~2005. These~~installation ~~costs~~and ~~will~~product servicing beservices ~~amortized~~revenue ~~over~~decreased ~~the~~by ~~five-year life of the related subordinated debt. Amortization of debt discount was $206,185 in 2005 as~~approximately ~~compared with~~ $29212,~~967 for the 2004 period~~000. ~~The~~ We ~~large~~believe ~~increase~~that ~~is a result of~~ the ~~issuance~~lapse of ~~the~~switchgear ~~subordinated debt~~ and ~~the~~retrofit services, ~~Laurus~~which ~~Fund~~include ~~notes~~replacing ~~during~~older, ~~the~~less ~~year~~efficient ~~ended~~equipment ~~June 30,~~and ~~2004,~~similar electrical ~~which~~devices ~~incurred~~and ~~debt~~replacing ~~discounts~~them ofwith ~~$13~~new,~~008~~ and ~~$171,477,~~more ~~respectively,~~updated ~~during~~energy ~~the~~efficient ~~three~~devices ~~months~~such ~~ended~~as ~~March 31,~~circuit ~~2005. Interestexpense~~breakers ~~increased~~and byflorescent ~~$249,756~~lighting ~~for~~tubes ~~the three months ended March 31~~and ballasts, ~~2005 when compared to the 2004 period. This increase~~ is ~~primarily~~a ~~attributable~~direct toreflection ~~interest expense charges~~ of ~~$142,857 and $18,536 for~~ the ~~intrinsic~~overall ~~value~~downturn ofin the ~~beneficial~~macro-economic environment ~~conversion~~which ~~prices~~commenced ofin ~~$3.50~~the ~~and~~2008 $3Period.40 To ~~per~~this ~~share~~end, ~~respectively,~~a onmajor customer ~~the~~has ~~Laurus~~decreased ~~Fund~~its ~~financing~~overall ~~(see~~capital ~~Notes~~spending 4 and ~~5 herein). In addition~~, ~~Host~~as ~~recorded~~a ~~other interest charges of $80~~result,~~482~~ onhas halted its ~~outstanding~~switchgear ~~debt obligation with Laurus during the period~~installations. ~~These~~ We ~~interest~~anticipate ~~charges~~this ~~were~~revenue ~~partially~~decrease from ~~offset by~~ the ~~pay~~2007 ~~off~~Period ofto ~~the~~continue ~~bank~~until ~~term~~improvements ~~and~~in ~~demand~~the ~~notes~~macro-economic environment ontake ~~February 13, 2004~~hold.

~~Host~~Our principal ~~incurred~~energy aefficiency ~~net~~product, ~~loss~~EnerLume ~~from~~| ~~continuing~~EM®, ~~operations~~has experienced ofa ~~$1,536,222~~longer ~~after~~sales ~~provision~~cycle ~~for~~than ~~state~~initially ~~income~~anticipated. We ~~taxes~~have also ofexperienced ~~$10,000~~a ~~for~~more ~~the~~cautious ~~three~~approach ~~months~~from ~~ended~~public ~~March 31,~~acceptance ~~2005,~~and ashad ~~compared~~ to overcome a ~~net~~proof ~~loss~~of ~~from~~concept ~~continuing~~stage ~~operations~~with ~~of $657,204~~new ~~for~~energy ~~the~~efficiency ~~three~~technology ~~months~~from channel ~~ended~~partner ~~March 31,~~clients ~~2004. There~~and prospects which was aheretofore $5difficult to forecast. Additionally,~~000~~ ~~provision~~current ~~for~~economic ~~state~~conditions ~~income~~that ~~taxes~~have negatively inaffected ~~the~~retail ~~2004~~and ~~period. Host~~other ~~incurred~~overall consumer confidence measurements have created a ~~net~~challenge ~~loss~~to the timely execution of ~~$2,118,213~~our ~~for~~business plan. We ~~the~~do ~~2005~~not ~~period~~anticipate ~~which~~this ~~included~~trend ato ~~loss~~continue onin the ~~sale~~second half of ~~SelectForce~~fiscal year of ~~$663~~2009,~~618~~ ~~and~~as we have recently contracted with a retail chain to ~~net~~install ~~income~~our ~~from~~EnerLume ~~discontinued~~| ~~SelectForce~~EM® ~~operations~~product in 96 of ~~$81,627~~the retail chain’s stores. ~~Host~~ Such ~~incurred~~installation awill ~~net~~commence in ~~loss~~the fourth quarter of ~~$611,592~~the ~~after~~fiscal ~~net~~year ~~income~~of 2009. Revenues from technical ~~SelectForce~~service ~~operations~~support of $4543,~~612~~408 ~~during~~in the ~~2004~~2008 ~~period.~~Period ~~The~~include ~~large~~the ~~net~~services, ~~loss~~as well ~~for~~as ~~the~~consulting ~~2005~~and ~~period~~training ~~was~~of ~~mostly~~support ~~attributable~~for toour ~~the~~channel ~~loss~~partner onnetwork. ~~the~~Technical ~~sale~~service ofsupport ~~SelectForce,~~sales ~~the~~recorded ~~energy~~in ~~management~~the ~~division’s~~2007 ~~operating~~Period ~~loss~~were of approximately $~~309~~119,~~491,~~717. We ~~which~~also ~~was~~anticipate ~~net~~technical ofservice ~~R.S.~~support ~~Services~~sales ~~net~~to increase ~~income~~with ~~of $17,463,~~ the ~~$305,100~~anticipated ~~compensation~~increase ~~charge~~in ~~for~~product ~~the~~sales. We ~~fair~~continue to ~~value~~research ofnew ~~the~~product ~~options~~line ~~issued~~opportunities to ~~Host’s~~support ~~investor~~our ~~relations~~energy ~~firm~~products segment. Our ~~and~~EnerLume | EM® is a ~~$713,636~~lighting inenergy ~~charges~~efficiency ~~for~~device ~~interest~~that ~~and~~is ~~amortization~~designed ofto ~~deferred~~reduce ~~financing~~excess ~~costs~~kilowatts ordinarily ~~and~~required ~~debt~~for ~~discount. The~~operating ~~large~~magnetic ~~net~~or ~~loss~~electronic ballasts used in fluorescent ~~the~~lighting ~~2004~~systems, ~~period~~and ~~was~~manages ~~primarily~~the aincoming ~~result~~power ofso the ~~GlobalNet~~ballasts draw ~~operation~~energy ~~which~~when ~~incurred~~the apower ~~loss~~transmission ofis ~~$529,477~~most efficient. ~~During~~ This reduces ~~the~~energy ~~previous~~costs ~~quarter, GlobalNet~~while ~~began~~reducing tolight ~~trim~~level ~~its~~by ~~overhead~~amounts ~~through~~virtually undetectable by the ~~elimination~~human ofeye. We ~~several~~intend ~~administrative~~to ~~positions. The~~continue ~~R.S.~~to ~~Services~~market EnerLume ~~operation~~| ~~generated~~EM® avia channel ~~small~~partners ~~profit~~to market leaders in ~~the~~industry ~~quarter~~segments (retail, commercial, industrial, and ~~the~~institutional), ~~Company~~which ~~expects~~we itbelieve towill ~~continue~~lend credibility and name brand recognition to ~~have~~our aproduct. Since ~~positive~~our ~~impact~~fiscal onyear ~~future~~end June 30, ~~profitability.~~2008, we have signed agreements with

~~Results of Operations from continuing operations Nine months ended March 31, 2005 (“2005 period”) vs. nine months ended March 31, 2004 (“2004 period”)~~33

Net revenues for the nine months ended March 31, 2005 were $21,569,580 as compared to $18,572,877 for the nine months ended March 31, 2004. Accordingly, revenues increased $2,996,703 or approximately 16%. Hostthree ~~business~~direct ~~dining~~channel ~~revenue~~partners ~~increased by $409,703 in the nine months ended March 31, 2005 when compared~~ to ~~the~~market ~~2004~~EnerLume ~~period. The~~| ~~business dining improvement was mostly attributable to the opening of several business dining units during the previous year~~ EM® and ~~the~~ ~~two~~we ~~units~~have ~~that~~recently ~~were~~signed ~~opened during the previous quarter. Host cannot predict if it will be able to continue to add new cafeteria locations in the future to generate further revenue growth. Lindley had~~ a ~~revenue~~2 ~~increase~~year ofprivate ~~$1,526,593,~~brand ~~which~~label ~~was~~agreement ~~partly attributable~~with ~~to the Florida, Indiana and Massachusetts locations which had~~ a ~~combined revenue increase of $725,009 over the comparable 2004 period. The increase in Lindley revenue generated by these locations includes $576,267 for Massachusetts which was mostly~~global ~~attributable~~technology toleader its contract with the Northeast Massachusetts Consortium of Elder Nutrition Programs which began on October 1, 2004. However, the trend of increasing revenues for these three locations will be impacted in ~~future~~electrical ~~quarters due to Lindley’s termination of its Florida operation on April 1, 2005 as discussed in “Recent Developments~~systems.~~” Lindley’s Connecticut operation generated an~~

33The following are our direct costs and margins from continuing operations for:

$801,584 revenue increase which was primarily attributable to the accounts in the Food Brokers asset purchase. The majority of Lindley’s work is done on a contract basis with terms ranging from one to five years—the summer food programs are as short as eight weeks. Most contracts are secured through a competitive bidding process. Price alone is not the only determining factor for the awarding of these contracts—food quality, service and other factors may also enter into the decision making process. Due to the fact that most of Lindley’s business is awarded as a result of this competitive bidding process, Lindley cannot predict if it will be successful in securing new contracts or renewing existing ones; however, based on these recent awards, we feel in the near term, the prospect of increasing revenue for Lindley appears probable. The energy management division, which is comprised of GlobalNet and R.S. Services, generated $1,106,038 in revenues during the 2005 period, an increase of $1,060,407 over the 2004 period. This revenue increase was attributable to the acquisition of R.S. Services, which generated $1,083,015 of the energy management division’s sales in the 2005 period. The Company expects to increase its revenues for the balance of fiscal 2005 and beyond through the addition of more corporate dining accounts, the continued promotion of its elderly feeding, head start, shelf stable meal programs and the anticipated growth of its energy management division. The Food Brokers asset purchase, which was consummated on October 29, 2004, is expected to improve Lindley’s profitability for the balance of fiscal 2005 and beyond and the R.S. Services acquisition is already having a positive impact on the energy management division’s bottom line.

	2008 Period		2007 Period		Variance			% Variance
Cost of revenues from:
Energy Services	$	953,482	$	1,108,758	$	(155,276	)		-14.0	%
Energy Products		27,995		100,964		(72,969	)		-72.3	%

Total costs of revenues	$	981,477	$	1,209,722	$	(228,245	)		-18.9	%

Total operating costs and expenses were $23,643,215 for the 2005 period as compared to $22,322,015 for the 2004 period, an increase of $1,321,200 or approximately 6%. The 2004 period included a charge of $3,431,381 for acquired in process research and development costs in connection with the GlobalNet acquisition. Excluding this charge, other operating expenses increased by $4,752,581 over the 2004 period. The Company’s cost of revenues represent the cost of food and paper products, related labor costs and benefits, various business dining unit related costs, energy management operating expenses and the cost of shipping our products to our customers. Cost of revenues for the nine months ended March 31, 2005 and 2004 approximated 86% and 85% of revenues, respectively. Cost of revenues increased by $2,739,678 primarily as a result of the R.S. Services acquisition, which accounted for $894,917 of this increase and Host and Lindley’s higher revenues in 2005.

	2008 Period			2007 Period			Variance
Direct cost margins from:
Energy Services		12.8	%		47.3	%		-34.5	%
Energy Products		35.5	%		15.7	%		19.8	%

Total direct cost margin		13.6	%		45.6	%		-32.0	%

~~Selling,~~The Company’s ~~general~~cost ~~and administrative expenses consist primarily~~ of ~~management~~revenues ~~and~~from ~~clerical~~continuing ~~salaries,~~operations ~~legal,~~represent ~~accounting~~the ~~and~~direct ~~other~~cost of ~~professional~~job ~~fees~~materials, ~~liability~~direct ~~insurance,~~wages ~~facility~~for ~~rentals,~~electrical ~~repairs,~~installations ~~maintenance,~~relating ~~utilities,~~to energy ~~commissions~~services, ~~travel~~direct ~~and~~product ~~various other~~ costs~~. Selling,~~ ~~general~~ and ~~administrative~~labor ~~expenses~~associated ~~were~~with ~~$4,695,624~~technical intraining ~~the~~and servicing ~~2005~~our ~~period~~channel aspartners ~~compared~~for toour ~~$2,933,275~~energy ~~during 2004, an increase of $1,762,349 or approximately 60%~~products segment. ~~The~~ Energy ~~large~~services ~~increase~~costs ~~over~~throughout the ~~2004~~2008 ~~period~~Period iswere ~~mostly~~reduced ~~attributable~~by toapproximately ~~the energy management division, which accounted for~~ $~~881~~250,~~185~~200 ofdirectly ~~the~~related ~~increase. Excluding~~to ~~energy~~subcontractor ~~management, selling, general~~ and ~~administrative~~other related ~~expenses~~cost ~~increased by $881,164 for the 2005 period~~reductions. A This ~~portion~~savings ofreduction ~~this~~was ~~increase~~partially inoffset ~~selling,~~by ~~general~~increased ~~and~~direct ~~administrative~~wage ~~expenses~~costs isof ~~attributable~~approximately to$77,300. Material costs ~~legal~~also ~~and~~increased ~~accounting fees incurred~~ by ~~the~~approximately ~~Company for the 2005 period~~$29,600. ~~Legal~~ Depreciation ~~and~~directly related ~~accounting~~to ~~fees~~cost ~~for~~of ~~Host~~goods ~~and~~sold ~~the~~decreased ~~energy management division increased~~ by $~~155~~12,~~979~~000 ~~and~~from ~~$112,721, respectively, over~~ the ~~2004~~2007 ~~period~~Period. ~~The~~ ~~Company~~Our energy ~~incurred~~products ~~increased~~segment ~~legal~~direct ~~and~~costs ~~accounting~~experienced ~~fees during 2005 as~~ a ~~result~~favorable ofvariance ~~filing~~from ~~a number of Registration Statements. The Company also incurred legal fees attributable to~~ the ~~lawsuit described in Note 6 as well as an increase in~~ ~~contract~~2007 ~~work. In~~period ~~addition, Host recorded a charge~~ of $~~305~~72,~~100 in the 2005 period for the fair value of 100~~969,~~000~~ ~~options issued to its investor relations firm~~ as ~~additional~~we ~~compensation~~recorded ~~for~~cost ~~its~~savings ~~services. Depreciation and amortization increased by $207,467~~ in ~~the~~technical ~~2005~~service ~~period~~support sales. The ~~increase~~2008 ~~in depreciation~~ and ~~amortization~~2007 ~~expense~~Period isdirect ~~primarily~~cost ~~attributable~~margins toreflect the ~~Lindley and GlobalNet operations. Lindley has made significant equipment purchases due to its revenue growth. Lindley also incurred~~out ~~amortization charges on the Food Brokers’ customer list~~ of ~~$76,532~~pocket ~~during~~labor ~~the 2005 period. As a result of its December 23, 2003 acquisition date, GlobalNet incurred depreciation~~ and ~~amortization~~technical ~~charges~~training oftools ~~$21,912~~associated inwith the ~~2004~~ramp ~~period~~up ~~as compared to~~of ~~$107,598~~technical inservice ~~2005. The~~support ~~balance~~sales ofto support the ~~increase~~growth in ~~operating costs and expenses is~~ the ~~research and development costs of $43,087 relating to~~ energy ~~management~~products segment. We ~~are~~anticipate ~~anticipating~~a ~~that~~higher ~~our~~margin ~~selling,~~trend ~~general~~from ~~and~~energy ~~administrative~~products ~~expenses~~to ~~will~~continue ~~increase over the~~in ~~balance of fiscal 2005 and into fiscal 2006 due to~~ the ~~accounting~~future ~~and~~as ~~other~~product ~~costs~~sales ~~associated with the undertaking of our Sarbanes-Oxley Act Section 404 compliance requirements and the anticipated growth of our energy management division~~increase.

34The following is our other operating costs from continuing operations for:

Amortization of deferred financing costs increased by $433,605 for the nine months ended March 31, 2005 when compared to the 2004 period. This increase is mostly attributable to the amortization of the other costs incurred in the Laurus Fund financing transaction. These costs, which will be amortized over the three-year life of the loans, amounted to $401,295 for the nine months ended March 31, 2005. Amortization of deferred financing costs on the second private placement of subordinated debt was $34,434 for the nine months ended March 31, 2005. These costs will be amortized over the five-year life of the related subordinated debt. Amortization of debt discount was $607,934 in 2005 as compared with $73,367 for the 2004 period. The large increase is a result of the issuance of the subordinated debt and the Laurus Fund notes during the year ended June 30, 2004, which incurred debt discounts of $39,023 and $501,156, respectively, during the nine months ended March 31, 2005. Interest expense increased by $435,990 for the nine months ended March 31, 2005 when compared to the 2004 period. This increase is primarily attributable to interest expense charges of $142,857 and $18,536 for the intrinsic value of the beneficial conversion prices of $3.50 and $3.40 per share, respectively, on the Laurus Fund financing (see Notes 4 and 5 herein). In addition, Host recorded interest charges of $112,500 and $217,150 on the second private placement of subordinated debt and the Laurus Fund financing, respectively. These interest charges were partially offset by the pay off of the bank term and demand notes on February 13, 2004.

	2008 Period		2007 Period		Variance

SG&A	$	1,196,164	$	2,368,260	$	(1,172,096	)
Depreciation and amortization		44,649		46,789		(2,140	)
Research and development		35,038		6,946		28,092

Total other operating costs	$	1,275,851	$	2,421,995	$	(1,146,144	)

~~Host incurred a net loss from continuing operations of $3~~Selling,~~867,928 after provision for state income taxes of $28,000 for the nine months ended March 31, 2005, as compared to a net loss from continuing operations of~~ ~~$4,118,517~~general for the nine months ended March 31, 2004. There was a $12,000 provision for state income taxes in the 2004 period. Host incurred a net loss of $4,359,483 for the 2005 period which included a loss on the sale of SelectForce of $663,618 and ~~net~~ ~~income~~administrative ~~from~~expenses ~~discontinued SelectForce operations of $172,063. Host incurred a net loss of $4,019,380 after net income~~ from ~~SelectForce~~continuing operations ofconsist ~~$99,137 during the 2004 period. The large net loss for the 2005 period was mostly attributable to loss on the~~primarily ~~sale~~ of ~~SelectForce, the energy~~ management ~~division’s~~and ~~operating~~clerical ~~loss of $1~~salaries,~~302,570,~~ ~~which was net of R.S. Services net income of $17~~legal,~~463,~~ ~~the~~accounting ~~$305,100~~and ~~compensation~~other ~~charge for the fair value of the options issued to Host’s investor relations firm and~~professional $1fees,~~763,016~~ inliability ~~charges~~insurance, ~~for~~facility ~~interest and amortization of deferred financing costs and debt discount. The large net loss in the 2004 period was primarily a result of the GlobalNet operation which incurred a charge of $3~~rentals,~~431,381~~ ~~for acquired in process research and development costs and a total segment loss of $473~~repairs,~~123.~~

~~Liquidity and Capital Resources~~34

Tomaintenance, utilities, ~~date~~commissions, ~~the~~travel ~~Company~~and ~~has~~various ~~been~~other ~~dependent~~costs. The substantial onSG&A ~~equity~~decrease ~~and~~over ~~debt~~the ~~financing~~2007 toPeriod ~~fund~~is ~~its~~primarily ~~operations,~~attributable ~~product~~to a ~~development,~~2007 ~~working~~Period ~~capital~~one ~~and~~time ~~acquisition~~charge ~~strategy. The~~relating to ~~Company~~employee ~~anticipates~~compensation ~~this~~of ~~trend~~approximately to$933,000 ~~continue~~and compensation in professional ~~the~~fees ~~upcoming fiscal~~of ~~year. Host’s~~approximately ~~liquidity~~$109,000 asrelated ~~evidenced~~to bythe ~~its~~issuance ~~current~~of ~~ratio~~stock ~~has~~and option ~~decreased~~compensation. ~~The~~ Additionally, ~~current~~reductions ~~ratio~~in atoverall ~~March 31,~~general ~~2005~~ and administrative ~~June 30,~~costs ~~2004~~and ~~was~~legal ~~1.23:1~~ and ~~2.26:1,~~other ~~respectively. This~~services ~~decrease~~netted isadditional ~~primarily~~cost ~~attributable~~savings of toapproximately ~~the~~$130,000. ~~net~~Depreciation ~~operating~~and amortization increased ~~loss~~nominally ofby $42,~~359,483~~140 ~~for~~in the ~~nine~~2008 ~~months~~Period. ~~ended~~The ~~March 31,~~balance ~~2005~~of operating costs and expenses ~~the~~is ~~inclusion~~related into ~~current~~the ~~assets~~research and ~~liabilities~~development costs of the ~~discontinued~~EnerLume | ~~SelectForce~~EM® product. ~~assets~~We ~~and~~recognized ~~liabilities. If~~an ~~the~~increase ~~discontinued~~in ~~SelectForce~~research ~~assets~~ and ~~liabilities~~development ~~held~~costs ~~for~~by ~~disposition had been excluded~~$28,092 associated ~~the~~with ~~current~~our ~~ratio~~energy atmanagement ~~June 30, 2004 would have been 1~~product.~~88:1.~~

Net cash flows for the nine-month period ended March 31, 2005 resulted in a decrease in cash of $2,436,102 that was comprised of a decrease in cash from continuing operations of $2,569,372 which was partly offset by cashOther provided by the discontinued SelectForce operation of $133,270. The decrease in cash was primarily attributable to the net loss of $4,359,483 which was comprised of a loss from continuing operations of $3,867,928, the net loss on the sale of SelectForce of $663,618 and net income from the discontinued SelectForce operation of $172,063. Operating activities resulted in a net cash outflow of $3,472,528, which was primarily attributable to the Company’s net cash operating loss from continuing operations of $1,800,730 and increase in operating assets and liabilities of $1,633,823. The Company incurred non-cash charges ofCosts:

35The favorable interest expense variance in the 2008 Period is primarily attributable to the aggregate conversion of the $300,000 Secured Promissory Notes and the $1,115,000 12% Unsecured Promissory Notes. The favorable deferred financing costs in the 2008 Period is the direct result of the 2007 Period write down of the Shelter Island loan, which was recognized as an expense, as the loan was paid in the 2007 Period.

~~$2,029,223 during the nine months ended March 31, 2005 relating primarily to depreciation, amortization, interest on beneficial conversion and non-cash compensation.~~ Net ~~cash provided by investing activities of~~ $1,564,979 was comprised of net proceeds from the sale of the discontinued SelectForce operation of $878,522 net of equipment purchases of $135,834, net loans to related parties of $40,000, net cash paid for the Food Brokers and R.S. Services acquisitions of $327,056 and $78,653, respectively and funds released from the restricted cash account of $1,268,000. Host’s financing activities resulted in a net cash outflow of $661,823, which was comprised of principal payments on long-term debt and deferred financing costs of $1,207,114 and $13,960, respectively, offset by net proceeds received of $459,251 from the issuance of common stock on the exercise of options and warrants and an equity private placement, and proceeds from a subordinated debt private placement of $100,000.Loss:

OnEnerLume incurred ~~March 31,~~a ~~2005~~net loss of $1,696,723 ~~Host~~for ~~and~~the ~~T.E.D.~~2008 ~~Corporation~~Period, ~~(“Purchaser”)~~as ~~entered~~compared ~~into~~to a ~~Share~~net ~~Purchase~~loss of ~~Agreement~~$1,946,429 ~~(“Agreement”)~~for ~~whereby~~the ~~Host~~2007 ~~sold~~Period. The tonet loss in the ~~Purchaser~~2008 ~~all~~Period resulted oflargely ~~its~~from ~~shares~~the inloss ~~SelectForce,~~from ~~Inc. (“SelectForce”),~~operations aand ~~wholly~~the ~~owned~~interest ~~subsidiary~~expense from the non-cash beneficial conversion charge of ~~Host~~convertible debt issued and non cash debt discount charges. The ~~President~~net ofloss in the ~~Purchaser~~2007 isPeriod ~~Tammi~~primarily resulted ~~Didlot~~from the loss from operations, anon ~~former~~cash ~~director~~charges of ~~Host~~debt discount amortization, beneficial conversion charges and andeferred ~~officer~~financing ofcosts associated ~~SelectForce~~with our debt financings.

Pursuant to the Agreement, the sales price of $2,070,000 was payable was follows: (i) $896,482 in cash at the closing; (ii) cancellation of $973,518 of obligations owed by Host to SelectForce; and (iii) the assumption ofResults ~~two~~ of Host’s subordinated promissory notes in the principal amount of $200,000. As a result of this transaction, Host incurred a loss on the sale of discontinued operations of $663,618, including transaction costs of $17,960.Operations

~~The~~Six months ~~Company~~ended ~~issued 162~~December 31,~~340~~ ~~shares~~2008 of(the ~~common~~“2008 ~~stock~~Period”) ~~for~~vs. ~~warrants~~six ~~exercised during the nine~~ months ended ~~March~~ December 31, ~~2005. The~~2007 ~~Company~~(the ~~received~~“2007 ~~$324,680 in gross proceeds from these warrants, which were exercised at a price of $2.00 per share.~~Period”)

~~On March 4, 2005, the Company issued 16,250 shares of common stock for options exercised.~~ The following ~~Company~~are ~~received~~our ~~$34,906~~net inrevenues ~~gross proceeds~~ from ~~these~~continuing ~~options,~~operations ~~which were exercised at prices of $2.00 and $2.69 per share.~~for:

On January 15, 2005, Host issued and sold one unit at $200,000 in a private placement to a current member of its board of directors. The unit consists of 24,390 shares of its common stock at $4.10 per share, the approximate fair value, or $100,000 and one 7.5% unsecured convertible promissory note in the face amount of $100,000. The outstanding principal balance due on the promissory note is convertible at the election of the holder into shares of Host’s common stock at anytime after January 19, 2006 at $4.10 per share. The promissory note is due and payable on January 19, 2007. The offer and sale was made by Host’s officers and directors and no commission or other remuneration was paid in connection with the private placement. The gross proceeds from the offering were $200,000.

	2008 Period		2007 Period		Variance			% Variance

Energy Services	$	2,369,014	$	4,264,929	$	(1,895,915	)		-44.5	%
Energy Products		71,614		134,859		(63,245	)		-46.9	%

Total Revenues	$	2,440,628	$	4,399,788	$	(1,959,160	)		-44.5	%

OnWe have ~~October 29,~~experienced ~~2004,~~an ~~Host~~aggregate ~~entered~~revenue ~~into~~decrease anfrom ~~Asset~~continuing ~~Purchase~~operations ~~Agreement~~of 44.5% ~~with~~as ~~Food~~compared ~~Brokers,~~to ~~Inc~~the 2007 Period., anThe ~~unaffiliated~~decrease ~~Bridgeport,~~in ~~Connecticut~~energy ~~based~~services ~~food~~revenue ~~service~~is directly ~~company. Pursuant~~related to the ~~agreement,~~absence ~~Host~~of ~~issued~~switchgear and retrofit service revenue from both multi-location contractor and subcontractor contracts and resulted in a decrease by approximately $~~655~~1,024,000. Additionally, installation and product ~~promissory~~servicing ~~note~~services torevenue ~~Food~~decreased ~~Brokers~~by ~~bearing~~approximately ~~interest~~$986,000 atfrom 7the 2007 Period.5% ~~per~~These ~~year~~variances ~~and~~were ~~maturing~~partially onoffset ~~December 1~~by a favorable revenue variance of approximately $114,000 ~~2008~~from the 2007 Period relating to a one time revenue adjustment associated with ground-up construction billing adjustments. In We ~~addition~~believe that the lapse of switchgear and retrofit services, ~~Host~~which ~~will~~include ~~issue~~replacing toolder, ~~Food~~less ~~Brokers~~efficient ~~$250~~equipment and similar electrical devices and replacing them with new,~~000~~ inand ~~shares~~more ofupdated ~~its~~energy efficient ~~common~~devices ~~stock.~~such as

On September 17, 2004, January 18, 2005 and March 16, 2005, Laurus Master Fund, Ltd. exercised its right to receive shares of Host’s common stock in payment of both principal and interest, pursuant to the terms of a Securities Purchase Agreement. Accordingly, Host issued the following shares of its common stock, in lieu of cash consideration, on the Laurus Note A: 10,000 shares at the initial “Fixed Conversion Price” of $5.03 per share for payment of $30,000 of principal and $20,300 of interest; 34,325 shares at $3.40 per share for payment of $99,032 of principal and $17,675 of interest; and, 15,000 shares at $3.50 per share for payment of $52,500 of principal, respectively.35

36circuit breakers and florescent lighting tubes and ballasts, is a direct reflection of the overall downturn in the macro-economic environment which commenced in the 2008 Period. To this end, a major customer has decreased its overall capital spending and, as a result, has halted its switchgear installations. We anticipate this revenue decrease from the 2007 Period to continue until improvements in the macro-economic environment take hold.

InOur principal ~~accordance~~energy efficiency product, EnerLume | EM®, has experienced a longer sales cycle than initially anticipated. We have also experienced a more cautious approach from public acceptance and had to overcome a proof of concept stage with new energy efficiency technology from channel partner clients and prospects which was heretofore difficult to forecast. Additionally, current economic conditions that have negatively affected retail and other overall consumer confidence measurements have created a challenge to the ~~terms~~timely execution of ~~one~~our ofbusiness plan. We do not anticipate this trend to continue in the ~~three~~second ~~promissory~~half of ~~notes~~fiscal ~~assumed~~year byof ~~Host~~2009, as we have recently contracted with a ~~result~~retail chain to install our EnerLume | EM® product in 96 of the ~~GlobalNet~~retail ~~acquisition,~~chain’s astores. Such ~~major~~installation ~~stockholder~~will commence in the fourth quarter of ~~Host,~~the ~~who~~fiscal ~~provided~~year of 2009. Revenues from technical service support of $71,614 in the ~~financing~~2008 onPeriod ~~these~~include ~~notes~~the services, ~~demanded~~as well ~~payment~~as onconsulting ~~one~~and training of ~~them~~ support for our channel partner network. ~~Accordingly,~~ Technical onservice ~~July 7,~~support ~~2004,~~sales ~~Host~~recorded ~~repaid~~in the ~~balance~~2007 ofPeriod were approximately $~~280~~134,~~640~~859. We onalso anticipate technical service support sales to increase with the ~~note~~anticipated increase in product sales. We continue to research new product line opportunities to support our energy products segment. Our EnerLume | EM® is a lighting energy efficiency device that is designed to reduce excess kilowatts ordinarily required for operating magnetic or electronic ballasts used in fluorescent lighting systems, and manages the incoming power so the ballasts draw energy when the power transmission is most efficient. This reduces energy costs while reducing light level by amounts virtually undetectable by the human eye. We intend to continue to market EnerLume | EM® via channel partners to market leaders in industry segments (retail, commercial, industrial, and institutional), which ~~had~~we anbelieve ~~original~~will ~~maturity~~lend ~~date~~credibility ofand ~~February 21~~name brand recognition to our product. Since our fiscal year end June 30, 2008, ~~2006~~we have signed agreements with three direct channel partners to market EnerLume | EM® and we have recently signed a 2 year private brand label agreement with a global technology leader in electrical systems.

~~On February 13, 2004, the Company repaid the balances due of $983,778 and $324,889 on its term and demand note obligations, respectively, plus accrued interest of $2,327.~~ The ~~Company utilized substantially all of~~ ~~the~~following ~~net~~are ~~proceeds~~our ~~from~~direct ~~the~~costs ~~issuance of subordinated promissory notes to liquidate its debt obligations with the bank. The Company is currently negotiating with financial institutions to secure additional financing~~ and ~~provide~~margins ~~long-term~~from ~~liquidity;~~continuing however, the Company cannot predict what the outcomeof its capital raising efforts will be. If the Company is unsuccessful in its efforts to secure additional debt or equity financing, it could have a material adverse effect upon its ability to fund future acquisitions and operations. for:

Host business dining does not anticipate making any substantial capital expenditures during the balance of the fiscal year that are not typically reimbursed by its customers. Initial capital expenditures primarily incurred when a new food service agreement is in its initial start up phase will be financed by cash flows from operations. On July 27, and August 4, 2004, Lindley entered into a five-year installment note to acquire a 2004 Ford Van and a one-year capital lease agreement to purchase two double stack ovens, respectively, for its Bridgeport, CT location. In October and November 2004, Lindley purchased three new Chevrolet trucks, three additional ovens and a walk-in cooler for its Everett, MA location, which will be used for its new program with The Northeast Massachusetts Consortium of Elder Nutrition Programs. The trucks will be financed by an installment note and the equipment will be financed by capital leases. If Lindley is awarded any of the additional senior feeding or Head Start programs it is currently bidding on, it may be required to purchase trucks and food processing equipment to operate these programs. Lindley expects to fund its equipment requirements through capital leases with its current finance company. Any additional trucks will be financed through installment notes. R.S. Services also expects to finance its truck and equipment requirements through installment notes and capital leases. In addition, in accordance with the terms of the Securities Purchase Agreement with Laurus Master Fund, Ltd., funds may be released from the restricted cash account in an amount up to 50% of gross revenues to be earned from customers of our energy management division upon delivery of customer contracts/purchase orders satisfactory to Laurus, subject to an effective registration statement as defined. As of March 31, 2005, Laurus has released $1,268,000 in gross proceeds under Term Note B.

	2008 Period		2007 Period		Variance			% Variance
Cost of revenues from:
Energy Services	$	2,087,401	$	2,526,713	$	(439,312	)		-17.4	%
Energy Products		55,476		168,964		(113,488	)		-67.2	%

Total costs of revenues	$	2,142,877	$	2,695,677	$	(552,800	)		-20.5	%

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

	2008 Period			2007 Period			Variance
Direct cost margins from:
Energy Services		11.9	%		40.8	%		-28.9	%
Energy Products		22.5	%		-25.3	%		47.8	%

Total direct cost margin		12.2	%		38.7	%		-26.5	%

The Company is exposed to changes in interest rates. The Company has a stated interest rate of prime plus 1% on the Laurus Fund fixed price convertible Note A for $4,000,000. The Laurus Fund fixed price convertible Note B for $4,000,000, which has been placed in a restricted cash account has a stated interest rate of 1%; however, when funds are released from the restricted cash account, they will bear the same interest rate as Note A. The Company has drawn $1,268,000 from the restricted cash account as of March 31, 2005. All of the Company’s other debt are at fixed stated interest rates.36

37The Company’s cost of revenues from continuing operations represent the direct cost of job materials, direct wages for electrical installations relating to energy services, direct product costs and labor associated with technical training and servicing our channel partners for our energy products segment. Energy services costs throughout the 2008 Period were reduced by approximately $646,500 directly related to subcontractor and other related cost reductions. This savings reduction was partially offset by increased direct wage costs of approximately $171,300. Material costs also increased by approximately $59,600. Depreciation directly related to cost of goods sold decreased by $23,700 from the 2007 Period. Our energy products segment direct costs experienced a favorable variance from the 2007 period of $113,488, as we recorded cost savings in technical service support sales. The 2008 and 2007 Period direct cost margins reflect the out of pocket labor and technical training tools associated with the ramp up of technical service support sales to support the growth in the energy products segment. We anticipate a higher margin trend from energy products to continue in the future as product sales increase.

~~SUMMARY~~The following OFis ~~INDEBTEDNESS~~our other operating costs from continuing operations for:

Long-term debt as of March 31 and June 30, 2004 consists of the following:

	2008 Period		2007 Period		Variance

SG&A	$	2,734,834	$	3,820,411	$	(1,085,577	)
Depreciation and amortization		89,947		89,823		124
Research and development		71,243		9,310		61,933

Total other operating costs	$	2,896,024	$	3,919,544	$	(1,023,520	)

	March 31, 2005 (Unaudited)		June 30, 2004 (Audited)
Laurus Funds notes, net of unamortized debt discount of $1,567,189 and $1,994,000 at March 31, 2005 and June 30, 2004, respectively	$	6,251,281	$	6,006,000
Notes payable		1,110,266		522,734
Capital leases payable		90,374		131,951
Subordinated debt, net of unamortized debt discount of $442,487 and $546,610 at March 31, 2005 and June 30, 2004, respectively		2,932,513		2,928,390
Totals		10,384,434		9,589,075
Less: current portion		1,582,023		1,136,849
Long-term portion	$	8,802,411	$	8,452,226

Selling, general and administrative expenses from continuing operations consist primarily of management and clerical salaries, legal, accounting and other professional fees, liability insurance, facility rentals, repairs, maintenance, utilities, commissions, travel and various other costs. The substantial SG&A decrease over the 2007 Period is primarily attributable to a 2007 Period one time charge relating to employee compensation of approximately $933,000 related to the issuance of stock and option compensation. Additionally, reductions in overall general and administrative costs and legal and other services netted additional cost savings of approximately $130,000. Depreciation and amortization increased nominally by $124 in the 2008 Period. The balance of operating costs and expenses is related to the research and development costs of the EnerLume | EM® product. We recognized an increase in research and development costs by $61,933 associated with our energy management product.

~~The aggregate maturities of the long-term debt in each of the five years subsequent to March 31, 2005 and thereafter are~~Other Costs:

2006	$	1,895,461
2007		1,875,372
2008		4,750,069
2009		1,796,462
2010		2,076,746
(1)	$	12,394,110

The favorable interest expense variance in the 2008 Period is primarily attributable to the aggregate conversion of the $300,000 Secured Promissory Notes and the $1,115,000 12% Unsecured Promissory Notes, being partially offset with beneficial conversion charges to interest expense mainly associated with the repricing of all our outstanding convertible notes to $0.47 per share, and with the issuance of the 6 month, 18% convertible note during the 2008 Period. The decrease in the 2008 Period for deferred financing costs is the direct result of a 2007 Period write down of the Shelter Island loan, which was reorganized as an expense, as the loan was paid in the 2007 Period.

~~(1) Includes unamortized debt discount as of March 31, 2005 of $1,567,189 and $442,487 on the Laurus notes and subordinated debt, respectively.~~Net Loss:

~~ITEM~~EnerLume incurred a net loss of $4,040,588 for the 2008 Period, as compared to a net loss of $3,086,505 for the 2007 Period. The ~~CONTROLS~~net ~~AND~~loss ~~PROCEDURES~~in the 2008 Period resulted largely from the loss from operations and the interest expense from the non-cash beneficial conversion charge of convertible debt issued and the repricing

~~(a) Evaluation of disclosure controls and procedures~~ 37

~~Our~~of convertible ~~principal~~debt ~~executive officer~~ and ~~principal~~outstanding ~~financial~~warrants ~~officer~~associated ~~have~~with ~~evaluated the effectiveness of the design and operation of~~ our ~~disclosure~~prior ~~controls~~debt financings and ~~procedures~~equity ~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934~~funding, as ~~amended)~~well as ofnon ~~the~~cash ~~end~~debt ~~of the period covered by this quarterly report~~discount charges. ~~Based~~ The onnet ~~this~~loss ~~evaluation,~~in ~~our~~the ~~principal~~2007 ~~executive~~Period ~~officer~~primarily ~~and principal financial officer concluded that these disclosure controls and procedures are~~resulted ~~effective~~from ~~and designed to ensure that~~ the ~~information~~loss ~~required~~from tooperations, benon ~~disclosed~~cash incharges ~~our reports filed or submitted under the Securities Exchange Act~~ of ~~1934~~debt isdiscount ~~recorded~~amortization, beneficial ~~processed,~~conversion ~~summarized~~charges and ~~reported~~deferred ~~within~~financing ~~the~~costs ~~requisite~~associated ~~time~~with ~~periods~~our debt financings.

Based on the evaluation, which disclosed no significant deficiencies or material weaknesses that are not being addressed in the actions currently being taken to improve its disclosure controls and procedures, the Company hasLiquidity ~~identified certain deficiencies~~ and ~~issues~~Capital ~~with its internal controls that occurred in the quarter ended March 31, 2005. These deficiencies and issues include, but are not limited to:~~Resources

•Our overall ~~During~~short ~~the~~term ~~third~~going ~~quarter~~concern outlook is directly dependent on the success of immediate ~~fiscal~~fundraising ~~2005~~efforts, which are imperative for the Company ~~determined~~to ~~that~~continue as ita ~~had~~going ~~not~~concern. There ~~timely~~is ~~considered~~inadequate ~~the~~cash ~~impact~~on ofthe ~~modifications~~balance sheet to support the ~~conversion~~Company’s ~~terms~~present ofobligations. We ~~its~~have ~~convertible~~suffered ~~debt~~recurring losses ~~and~~from ~~the~~continuing ~~compensation~~operations, ~~issue~~have ofhad ~~stock~~negative ~~option~~cash ~~awards.~~flows ~~Management~~from ~~has~~operations, have ~~put~~had ina ~~place~~working ~~appropriate~~capital ~~controls~~and tostockholders’ ~~mitigate~~deficiency ~~these~~at ~~type~~December of31, ~~events~~2008 ~~from~~and are ~~occurring~~currently involved in ~~future~~litigation ~~periods~~that can have an adverse effect on our operations. These conditions raise substantial doubt about our ability to continue as a going concern.

~~(b) Changes~~We are currently having difficulty meeting unpaid vendors and other support obligations. In the event that we are unable to extend or refinance our debt or obtain additional capital on a timely basis and on acceptable terms, we will be required to take further steps to attempt to acquire the funds necessary to satisfy our short-term cash needs or may be forced to restructure operations. Our inability to address our debt maturities in ~~internal~~a ~~control~~satisfactory fashion ~~over~~also ~~financing~~raises ~~reporting~~substantial doubts as to our ability to continue as a going concern.

~~There~~Our cash ~~were~~flow nohad ~~changes~~been inmainly ~~the~~consumed ~~Company’s~~by ~~internal~~operational ~~control~~costs ~~over~~associated ~~financial~~with ~~reporting~~general and ~~(as~~administrative ~~defined~~and inlegal ~~Rule~~and ~~13a-15(f)~~professional ~~under~~fees, ~~the~~as ~~Exchange~~well ~~Act)~~as ~~that~~increasing ~~occurred~~costs pertaining ~~during~~to the ~~quarter~~deployment ~~ended~~of ~~March 31,~~our ~~2005~~EnerLume ~~that~~| ~~have~~EM® ~~materially~~energy ~~affected,~~efficiency orproduct. We ~~are~~anticipate ~~reasonable~~securing ~~likely~~near term debt and/or equity financings to ~~materially~~continue ~~affect,~~as ~~the~~a ~~Company’s~~going ~~internal~~concern ~~control~~until ~~over~~we ~~financial~~can ~~reporting~~sustain positive free cash flow from operations.

38In the fiscal year of 2008 we reported that we experienced longer sales cycles with our product than initially anticipated and also experienced a more cautious approach from public acceptance and had to overcome a proof of concept stage with new energy efficiency technology from channel partner clients and prospects which was difficult to forecast. Additionally, current economic and credit market conditions have negatively affected retail and other overall consumer confidence measurements which in turn have created challenge to the timely execution of our business plan. We do not anticipate the impact of the macro economic trends to continue, and our ability to market our energy efficiency has experienced a favorable success rate with initial demonstration sites. We feel confident that our solution to energy efficiency will be embraced as a part of an overall nationwide energy reduction plan that can provide cost efficiencies and savings to end users of electrical energy.

~~PART~~We plan IIto –improve ~~OTHER~~our ~~INFORMATION~~operational cash flow through continued focus, deployment and promotion of our energy management segment and the underlying technology associated with our EnerLume | EM® electrical energy efficiency product, as well as introducing new products in the electrical energy efficiency markets. We also plan to continue our efforts to identify ways of reducing operating costs and to increase liquidity through additional equity and debt financings and have entered into an agreement with an institutional investment firm that could provide additional equity and debt financings. The completion of these financings and the operational initiatives are expected to improve our cash flow and to help foster the implementation of our current initiatives and business plan.

~~Item~~We have experienced a cash decrease in the 2009 Period of $383,305. The net cash used in operating activities of continuing operations was $1,156,130. Net ~~Legal~~cash ~~Proceedings~~used in investing activities of continuing

Sherwin v. Host America Corp., Geoffrey Ramsey, et al., Case No. 04CC08892 (Superior Court, Riverside County, California): Ralph Sherwin and Blaine Sherwin, former employees of Host, filed suit on August 25, 2004, against Host, its subsidiary GlobalNet, Geoffrey Ramsey, Roger Lockhart, Eric Barger, and Ronald Sparks. The amended complaint claims that Host breached written employment agreements with the Sherwins when it terminated such agreements; that Host allegedly breached a written contract to purchase from the Sherwins the exclusive right to distribute and sell a product known as the “Fansaver” in exchange for Host common stock and the three-year employment agreements; and that Host and GlobalNet allegedly engaged in securities fraud, fraud and deceit, and interference with prospective economic advantage.38

~~The~~operations was ~~Sherwins seek damages of at least~~ $~~250~~35,~~000~~764 ~~each. They~~from ~~claim~~purchases ~~in their complaint that Host owes the financial equivalent~~ of ~~292,000~~equipment ~~shares of its common stock, salary for the remaining two~~ and ~~one-half~~improvements. Net ~~years on each of~~cash ~~the~~provided ~~two~~by ~~employment~~financing ~~contracts,~~activities ~~and~~of ~~punitive~~continuing ~~damages. The~~operations ~~range~~ of ~~potential loss~~$808,589 ~~therefore,~~resulted largely is from ~~approximately~~cash ~~$350,000~~received tofrom ~~$1.5~~debt ~~million~~fundraisings atnet ~~current prices for Host stock, excluding the claim for punitive damages. However, Host believes it is too early to provide an evaluation~~ of ~~the~~payment ~~likelihood~~ of ~~an unfavorable outcome~~long-term debt.

~~Host~~We anticipate ~~intends~~additional tocash ~~vigorously~~outflows ~~defend~~in ~~this action. Host has answered~~ the ~~complaint~~fiscal ~~and~~year ~~also~~of ~~asserted~~2009 ato ~~cross-complaint,~~pay ~~which~~down current ~~alleges~~and ~~that~~past ~~the~~payable ~~Sherwins~~obligations ~~breached~~associated ~~the~~with ~~employment~~existing ~~contract~~legal ~~by their poor sales performance~~obligations, ~~and~~ ~~that~~as ~~they~~well ~~engaged~~as inpast ~~fraud~~vendor and ~~deceit~~other bysupport ~~making misrepresentations about the extent of their distribution channels and probable sales of the Fan Saver~~obligations. ~~The lawsuit is currently in the discovery phase, and the parties are taking depositions of key witnesses in May 2005. No trial has been scheduled.~~

InOur current ~~addition,~~ratio as ~~with~~of ~~most~~December ~~business~~31, ~~there~~2008 ~~exists~~was ~~routine~~.19 ~~litigation~~and ~~incidental~~at toJune 30, ~~our~~2008 ~~business~~was .33. Our current liabilities increased mainly as a result of the issuance of the short term 18% bridge loan financing. We had due and payable a short term obligation in January 2009 of $562,500 ~~none~~before unamortized debt discount associated with the holders of the 7.5% unsecured promissory note, for which iswe ~~anticipated~~reached out to have their maturities extended. We also had due and payable a ~~material~~short ~~adverse~~term ~~impact~~obligation onin ~~our~~January ~~financial~~2009 ~~position~~of $500,000, ~~results~~associated with ofthe ~~operations~~18% convertible bridge loan we entered into on July 30, ~~liquidity~~2008 orfor ~~cash~~which ~~flows~~we also reached out to have that maturity extended.

~~Item~~Our accounts 2.payable ~~Unregistered~~obligations ~~Sales~~mainly comprise of ~~Equity~~aged ~~Securities~~legal and ~~Use~~professional fees primarily associated with the events surrounding the July 12, 2005 press release of ~~Proceeds~~approximately $975,000. In the event that we are unable to extend or refinance our debt or obtain additional capital on a timely basis and on acceptable terms, we will be required to take further steps to attempt to acquire the funds necessary to satisfy our short-term cash needs. Our potential inability to address our January 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern.

~~During~~At December 31, 2008 the ~~quarter~~Company ~~ended~~had ~~March 31,~~a ~~2005,~~working ~~Host~~capital ~~issued~~deficiency ~~the~~and ~~following~~a stockholders’ ~~securities~~deficiency inof ~~private~~$5,557,658 ~~transactions~~and ~~pursuant~~$7,796,578 torespectively, anand ~~exemption~~a ~~from~~net loss ~~the~~of ~~registration~~$4,040,588. ~~requirements~~These ~~provided~~matters byraise ~~Section 4(2)~~substantial ofdoubt ~~the~~about ~~Securities~~our ~~Act~~ability ofto ~~1933,~~continue as ~~amended:~~a going concern.

Purchaser/Recipient of Securities	Date	Terms of Exercise, if Convertible	Title of Security	Number Sold or Granted	Consideration Received
Laurus Master Fund, Ltd.	January 18, 2005	N/A	Common Stock	34,325	(1)
C. Michael Horton	January 21, 2005	(2)	Common Stock and Note (2)	24,390	$200,000
Laurus Master Fund, Ltd.	February 15, 2005	$5.98	Common Stock Warrant	25,000	(3)
Ronald R. Sparks	February 16, 2005	N/A	Common Stock	431,777	(4)
Thomas Eagan	March 4, 2005	N/A	Common Stock (5)	16,250	$32,500
Various accredited investors	March 9, 2005	N/A	Common Stock (6)	34,900	$69,800
Two accredited investors	March 16, 2005	N/A	Common Stock (7)	14,160	$28,320
Laurus Master Fund, Ltd.	March 16, 2005	N/A	Common Stock	15,000	(8)

Private Placements:

39On July 30, 2008, we completed the sale of one unit consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to one investor that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933 (“Securities Act”). The total net proceeds to the Company were $500,000. The unit was sold for $500,000 and entitled the unit holder to 250,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full on January 30, 2009. The Holder may convert the note and any accrued interest thereon, on January 30, 2009 into shares of common stock at a conversion rate of $0.47 per share. The Company did not pay a sales commission or other remuneration in connection with the sale of the note. The unit was purchased by the brother of Nicholas Troiano, a current director.

(1)	On January 18, 2005, Laurus Master Fund, Ltd. exercised its right to receive shares of Host’s common stock in payment of both principal and interest due pursuant to the terms of the securities purchase agreement between Host and Laurus. Accordingly, Host issued 34,325 shares of its common stock at $3.40 per share, in lieu of cash consideration, for payment of $99,032 of principal and $17,675 of interest on the Laurus Note A.
(2)	On January 21, 2005, Host issued and sold one unit at $200,000, consisting of 24,390 shares of its common stock and one 7.5% unsecured convertible promissory note in the face amount of $100,000, in a private placement to C. Michael Horton, a current member of its board of directors. The outstanding principal balance due on the promissory note is convertible at the election of the holder into shares of Host’s common stock at anytime after January 19, 2006 at $4.10 per share. The promissory note is due and payable on January 19, 2007. The offer and sale was made by Host’s officers and directors and no commission or other remuneration was paid in connection with the private placement. The gross proceeds from the offering were $200,000.
(3)	On February 15, 2005, Host entered into Amendment No. 1 and Consent with Laurus Master Funds, Ltd. In connection with the Amendment Agreement and as partial consideration for entering into the Amendment Agreement, Host issued to Laurus Master Funds, Ltd. a common stock purchase warrant for 25,000 shares of Host’s common stock exercisable through June 23, 2014 at an exercise price of $5.98 per share.
(4)	On February 16, 2005, in connection with the R.S. Services merger, Host issued 431,777 shares of its restricted common stock to Ronald Sparks, the President and sole shareholder of R.S. Services, in consideration for all of the issued and outstanding shares of R.S. common stock.
(5)	On March 4, 2005, Thomas Eagan exercised options to purchase 16,250 shares of Host’s common stock at $2.00 per share.
(6)	On March 9, 2005, several accredited investors exercised warrants to purchase 34,900 shares of common stock at $2.00 per share.
(7)	On March 16, 2005, two accredited investors exercised warrants to purchase 14,160 shares of common stock at $2.00 per share.
(8)	On March 16, 2005, Laurus Master Fund, Ltd. exercised its right to receive shares of Host’s common stock in payment of both principal and interest due pursuant to the terms of the securities purchase agreement between Host and Laurus. Accordingly, Host issued 15,000 shares of its common stock at $3.50 per share, in lieu of cash consideration, for payment of $52,500 of principal on the Laurus Note A.

On September 30, 2008, we completed the sale of 2.5 units consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to five investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $125,000. The units were sold for $50,000 and entitled the unit holder to 25,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full six months from the date of issuance. The Holders may convert the note and any accrued interest thereon after six months from the date of issuance into shares of common stock

~~Item 3. Defaults Upon Senior Securities~~39

~~Not~~at a ~~Applicable~~conversion rate of $0.47 per share. We did not pay a sales commission or other remuneration in connection with the sale of the note.

~~Item~~On December 2, 42008, we completed the sale of 3.9 ~~Submission~~units consisting of ~~Matters~~an 18% convertible unsecured promissory note and common stock purchase warrants to four investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $195,000. Each unit was sold for $50,000 and entitled the unit holder to 25,000 common stock purchase warrants which are exercisable for a ~~Vote~~five year period at $0.54 per warrant. The note bears interest at a rate of ~~Security~~18% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full six months from the dates of issuance. The Holders may convert the note and any accrued interest thereon after six months from the date of issuance into shares of common stock at a conversion rate of $0.47 per share. We did not pay a sales commission or other remuneration in connection with the sale of the note.

On ~~January~~ December 31, ~~2005~~2008, ~~Host~~we ~~held~~completed the sale of a ~~special~~$125,000 ~~meeting~~12% oftwo ~~stockholders~~month unsecured ~~for~~promissory ~~the~~note ~~purpose~~and ofcommon ~~(1)~~stock ~~approving~~purchase warrants to two investors that met the ~~Agreement~~definition of ~~Merger~~an ~~and~~“accredited ~~Plan~~investor” ofpursuant ~~Reorganization~~to ~~dated~~Regulation ~~September 29,~~D ~~2004~~of the ~~with~~Securities ~~R.S. Services,~~Act ~~Inc~~of 1933. Each ~~pursuant~~note entitled the holder to an ~~which~~aggregate ~~R.S.~~200% ~~Services~~common ~~will~~stock ~~become~~purchase warrants which are exercisable for a ~~wholly-owned~~five year ~~subsidiary~~period ofat ~~Host;~~$0.26 ~~and~~per ~~(2)~~warrant. The ~~approving~~note ~~the~~bears ~~issuance~~interest at a rate of ~~$250~~12% per annum,~~000~~ inpayable ~~shares~~at ofmaturity ~~Host~~in ~~common~~arrears ~~stock~~in ~~pursuant~~cash. The tonote will anmature ~~Asset~~and ~~Purchase~~be ~~Agreement~~payable ~~dated~~in ~~October 29,~~full ~~2004~~two bymonths ~~which~~from ~~Host~~the ~~acquired~~date ~~certain~~of issuance. We ~~assets~~paid ~~related~~a to10% ~~its~~sales ~~food service~~commission ~~operations~~in ~~from~~connection ~~Food~~with ~~Brokers,~~the ~~Inc~~sale of the note.

On January 5, 2009, we completed the sale of a 12% unsecured promissory note and common stock purchase warrants to one investor that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The ~~following~~total ~~votes~~net proceeds to the Company were $25,000. The ~~cast~~note byentitled ~~stockholders:~~the unit holder to 50,000 common stock purchase warrants which are exercisable for a five year period at $0.27 per warrant. The note bears interest at a rate of 12% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full two months from the date of issuance. we did not pay a sales commission or other remuneration in connection with the sale of the note.

~~Approve~~On February 12, 2009, we entered into a promissory note extension agreement with the ~~Agreement~~holder of ~~Merger~~the ~~and~~18% ~~Plan~~convertible unsecured promissory note to amend the terms of ~~Reorganization~~the ~~dated~~note ~~September~~issued 29on July 30, ~~2004~~2008. The unsecured note was originally issued for the principal amount of $500,000, ~~among~~convertible Rinto common stock at $0.S.47 ~~Services~~per share, ~~Inc.~~accrued interest at the rate of 18% per annum, anand ~~Oklahoma~~was originally ~~corporation~~due on January 30, ~~Ronald~~2009. Pursuant ~~Ray~~to ~~Sparks~~the promissory note extension agreement, the ~~sole~~principle ~~stockholder~~on ofthe Rnote has been increased to $545,000 which includes the prior accrued interest.S The conversion feature on the note was adjusted to $0.37 ~~Services~~per share and the maturity date for the unsecured note was extended to July 30, ~~GlobalNet~~2009 ~~Acquisition~~and ~~Corp~~shall continue to accrue interest at the rate of 18% per annum in accordance with the original terms of the unsecured note. In addition, athe ~~Connecticut~~holder ~~corporation~~will receive an additional warrant to purchase 310,000 ~~and~~shares ~~Host~~of the Company’s common stock exercisable until January 31, ~~pursuant~~2014 toat ~~which~~$0.54 Rper share.S. The holder ~~Services~~of ~~will~~the ~~become~~note is a ~~wholly-owned~~brother ~~subsidiary~~of Nicholas Troiano, a current member of ~~Host~~the Board of Directors. Nicholas Troiano did not participate in the Board’s decision to extend the notes or the revised terms thereof.

40On February 26, 2009, we entered into a promissory note extension agreement with the holder of the 12% unsecured promissory note due February 19, 2009 to amend the terms of the note issued to him on December 19, 2008. The unsecured note was originally issued for the principal amount of $100,000, accrued interest at the rate of 12% per annum. Pursuant to the promissory note extension agreement, the principle on the note has been increased to $102,000 which includes the prior accrued interest. The

Shares Vote For		Shares Voted Against		Shares Abstained
2,639,760(1)		13,185		200

~~Approve~~maturity date for the ~~issuance~~unsecured ofnote ~~$250~~was extended to June 19,~~000~~ in2009 ~~shares~~and ofshall continue ~~Host~~to ~~common~~accrue ~~stock~~interest ~~pursuant~~at tothe anrate ~~Asset~~of ~~Purchase~~12% ~~Agreement~~per ~~dated~~annum ~~October~~in ~~29,~~accordance ~~2004~~with bythe original ~~which~~terms ~~Host~~of ~~acquired~~the ~~certain~~unsecured ~~assets~~note. In ~~related~~addition, tothe ~~its~~holder ~~food~~will receive ~~service~~an ~~operations~~additional ~~from~~warrant ~~Food~~to ~~Brokers,~~purchase ~~Inc.~~200,000 ashares ~~Bridgeport~~of the Company’s common stock exercisable until January 31, ~~Connecticut~~2014 ~~based~~at ~~food~~$0.26 ~~service~~per ~~company~~share.

Shares Vote For		Shares Voted Against		Shares Abstained
2,550,850(1)		2,285		100,000

The units and the underlying securities were offered and sold without registration under the Securities Act in reliance upon the exemption provided by Section 4(2) and Rule 506 of Regulation D promulgated thereunder, and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements under the Securities Act. An appropriate restricted legend was placed on the securities issued.

~~____________________~~Critical Accounting Policies

~~(1)~~There have ~~Includes~~been ~~266~~no major changes to the critical accounting policies as outlined in the Company’s June 30,~~667~~ ~~shares~~2008 ofAnnual ~~series~~Report Bon ~~preferred~~Form ~~stock~~10-K.

~~Item~~ITEM 53. Quantitative ~~Other~~and ~~Information~~Qualitative Disclosures About Market Risk

~~Not~~The Company ~~Applicable~~is a small reporting company and is not required to provide this information.

~~Item~~ITEM 64(T). Controls ~~Exhibits~~and Procedures

	(a)	Exhibits
	31.1	Principal Executive Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Principal Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Principal Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Principal Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

41The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company’s are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~SIGNATURES~~In connection with the preparation of this quarterly report on Form 10-Q for the six months ended December 31, 2008, an evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2008.

InTo correct ~~accordance~~prior ~~with~~deficiencies, we had retained the ~~requirements~~services of ~~the~~a ~~Exchange~~third ~~Act,~~party contractor ~~the~~to ~~Registrant~~review ~~caused~~our ~~this~~internal ~~report~~controls and recommend additional procedures. Our service provider had prepared, and we had initiated, recommendations to befurther ~~signed~~improve onour ~~its~~controls ~~behalf~~and bydevise systems to facilitate the ~~undersigned~~segregation ~~thereunto~~of ~~duly~~duties ~~authorized~~and procedures with our existing accounting staff levels.

	HOST AMERICA CORPORATION
Date: May 20, 2005	By: /s/ Geoffrey W. Ramsey
	Geoffrey W. Ramsey, President and Chief Executive Officer
Date: May 20, 2005	By: /s/ David J. Murphy
	David J. Murphy, Executive Vice President and Chief Financial Officer

42Management’s Annual Report on Internal Control Over Financial Reporting

Our management, under the supervision of our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of the inherent limitations of internal control over financial reporting, misstatements may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future period are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), referred to as the Internal Control- Integrated Framework. Based on this assessment, management, with the participation of our principal executive officer and principal financial officer, has determined that we have maintained effective internal controls over financial reporting as of December 31, 2008.

Changes in Internal Control over Financial Reporting

There have been no changes in internal controls over financial reporting during the Company’s last fiscal quarter that have materially affected, or are reasonable likely to materially affect, the Company’s internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

State Court Derivative Action

On September 28, 2005, the Company was named as a nominal defendant in a derivative action filed in the Connecticut Superior Court in Bart Hester v. Geoffrey W. Ramsey, et al., Docket No. UWY-CV-05-5001448-S (“Hester” action). The action named as defendants the Company’s then existing board, Geoffrey Ramsey and Roger Lockhart. The Hester complaint asserted claims based on a press release issued by the Company in July 2005 regarding its commercial relationship with a major retail chain. The Hester action essentially duplicated an earlier-filed derivative action in federal court. Following the settlement of the federal action, all parties in Hester filed a joint motion to dismiss the suit with prejudice, which the court granted on September 2, 2008.

State and Federal Court Individual Suits

On May 2, 2006, 47 plaintiffs who alleged that they had purchased the Company’s securities at artificially inflated prices in reliance on the July 2005 press release sued the Company in the Connecticut Superior Court in Enrique Jose Contreras, et al., v. Host America Corp., Docket No. No. UWY-CV-06-4013754-S (“Contreras” action). The Contreras amended complaint asserts claims under state law, including fraud and negligent misrepresentation. On June 25, 2007, the same plaintiffs’ group filed a separate complaint under the federal securities laws in the federal district court in Connecticut against David J. Murphy, Geoffrey Ramsey, Peter Sarmanian, and Roger D. Lockhart, in the matter Anil Sawant, et al. v. Geoffrey W. Ramsey, et. al., Civil Action No. 07-cv-980 (VLB). Plaintiffs in the two cases claim aggregate damages of approximately $2.93 million. The Company and its past and present officer and director defendants have tentatively agreed in principle with the plaintiffs to settle both actions. The tentative agreement is subject to various contingencies and will not become binding until the parties have executed a written settlement stipulation. There is no assurance that a settlement will be finalized. In the event a settlement is not concluded, the Company believes that it has substantial and meritorious defenses to the action.

Anne and Debra Ramsey Arbitration

On December 2, 2005, a Demand for Arbitration was filed by Anne Ramsey and Debra Ramsey alleging that their employment was terminated in breach of employment agreements that they purportedly entered into with the Company. Anne Ramsey, the sister of Geoffrey Ramsey, was the Company’s former Human Resource Director and had served on the Board of Directors until June 18, 2007. Debra Ramsey is the wife of Geoffrey Ramsey and was a former administrative assistant for the Company. The Company terminated both individuals on November 23, 2005. On or about March 20, 2006, the Company instituted an injunction proceeding in the New Haven Superior Court to permanently enjoin this arbitration on the basis that the Company never authorized the employment agreements relied upon by Anne and Debra and therefore such contracts were void. The matter was tried in November, 2006 and the Court rendered a decision on January 8, 2007 denying a permanent injunction. On January 26, 2007 the Company filed an appeal of the Superior Court decision in the Connecticut Appellate Court and thereafter filed a Motion for Stay with the Superior Court which was granted. On July 5, 2007 the Company filed its brief with the Appellate Court and oral argument occurred on March 10, 2008. On May 20, 2008, the Connecticut Appellate affirmed the Superior Court’s decision. Thereafter the Company filed a petition for certification on June 27, 2008 with the Supreme Court in the State of Connecticut which the Supreme

Court denied. An arbitration hearing occurred on March 3rd and 5th 2009, and briefs from both parties were filed on March 24, 2009. The Company intends to continue to vigorously defend itself against the claims of Anne and Debra Ramsey.

Wal-Mart Stores, Inc. v. Eaton Corp. & RS Services

On July 9, 2008, RS Services, Inc., was named as a co-defendant with Eaton in a lawsuit initiated by Wal-Mart arising from an industrial accident in July 2006. The case is docket number 08CV1141and was filed in Adams County District Court in the State of Colorado. Wal-Mart claims breach of contract and negligence against the defendants. It seeks damages for worker’s compensation benefits paid to its employees, property damage, lost profits, and other items. In accordance with the liability insurance policy, RS Services, Inc. has submitted the defense of this case to its liability carrier. Management believes that the liability carrier for RS Services, Inc. will cover all expenses, including damages, relating to this suit as part of the liability policy and without additional expense by RS Services, Inc.

Other

In addition, there exists routine litigation incidental to the Company’s business, none of which is anticipated to have a material adverse impact on our financial position, results of operations, liquidity or cash flows.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for fiscal year 2008.

Item 2. Unregistered Sales of Equity Securities

Set forth below are the sales of unregistered securities that occurred during the quarter ended December 31, 2008. Other than as described below, during the quarter ended December 31, 2008, we did not have any sales of securities in transactions that were not registered under the Securities Act of 1933, as amended, that have not been reported in a Form 8-K.

On December 2, 2008, we completed the sale of 3.9 units consisting of an 18% convertible unsecured promissory note and common stock purchase warrants to four investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $195,000. Each unit was sold for $50,000 and entitled the unit holder to 25,000 common stock purchase warrants which are exercisable for a five year period at $0.54 per warrant. The note bears interest at a rate of 18% per annum, payable at maturity in arrears in cash. The note will

mature and be payable in full six months from the date of issuance. The Holders may convert the note and any accrued interest thereon after six months from the date of issuance into shares of common stock at a conversion rate of $0.47 per share. We did not pay a sales commission or other remuneration in connection with the sale of the note.

On December 31, 2008, we completed the sale of $125,000 12% two month unsecured promissory note and common stock purchase warrants to two investors that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. Each note entitled the holder to an aggregate 200% common stock purchase warrants which are exercisable for a five year period at $0.26 per warrant. The note bears interest at a rate of 12% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full two months from the date of issuance. We paid a 10% sales commission in connection with the sale of the note.

On January 5, 2009, we completed the sale of a 12% unsecured promissory note and common stock purchase warrants to one investor that met the definition of an “accredited investor” pursuant to Regulation D of the Securities Act of 1933. The total net proceeds to the Company were $25,000. The note entitled the unit holder to 50,000 common stock purchase warrants which are exercisable for a five year period at $0.27 per warrant. The note bears interest at a rate of 12% per annum, payable at maturity in arrears in cash. The note will mature and be payable in full two months from the date of issuance. We did not pay a sales commission or other remuneration in connection with the sale of the note.

On February 12, 2009, we entered into a promissory note extension agreement with the holder of the 18% convertible unsecured promissory note to amend the terms of the note issued on July 30, 2008. The unsecured note was originally issued for the principal amount of $500,000, convertible into common stock at $0.47 per share, accrued interest at the rate of 18% per annum, and was originally due on January 30, 2009. Pursuant to the promissory note extension agreement, the principle on the note has been increased to $545,000 which includes the prior accrued interest. The conversion feature on the note was adjusted to $0.37 per share and the maturity date for the unsecured note was extended to July 30, 2009 and shall continue to accrue interest at the rate of 18% per annum in accordance with the original terms of the unsecured note. In addition, the holder will receive an additional warrant to purchase 310,000 shares of the Company’s common stock exercisable until January 31, 2014 at $0.54 per share. The holder of the note is a brother of Nicholas Troiano, a current member of the Board of Directors. Nicholas Troiano did not participate in the Board’s decision to extend the notes or the revised terms thereof.

On February 26, 2009, we entered into a promissory note extension agreement with the holder of the 12% unsecured promissory note due February 19, 2009 to amend the terms of the note issued to him on December 19, 2008. The unsecured note was originally issued for the principal amount of $100,000, accrued interest at the rate of 12% per annum. Pursuant to the promissory note extension agreement, the principle on the note has been increased to $102,000 which includes the prior accrued interest. The maturity date for the unsecured note was extended to June 19, 2009 and shall continue to accrue interest at the rate of 12% per annum in accordance with the original terms of the unsecured note. In addition, the holder will receive an additional warrant to purchase 200,000 shares of the Company’s common stock exercisable until January 31, 2014 at $0.26 per share.

statement or exemption from the registration requirements under the Securities Act. An appropriate restricted legend was placed on the securities issued.

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

	(a)	Exhibits
	31.1	Principal Executive Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002.*
	31.2	Principal Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002.*
	32.1	Principal Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002.*
	32.2	Principal Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002.*

	* Filed herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENERLUME ENERGY MANAGEMENT CORP.



Date: March 25, 2009	By: /s/ David J. Murphy
	David J. Murphy, President and Chief Executive Officer




Date: March 25, 2009	By: /s/ Michael C. Malota
	Michael C. Malota Chief Financial and Accounting Officer

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