ANNUAL REPORT

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

                                   Form 10-KSB

  [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                  Act of 1934

                     For the Fiscal Year Ended July 31, 2005

 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

             For the Transition Period____________ to_____________.

                        Commission File Number 000-49816

                                   MEGOLA INC.
            ---------------------------------------------------------
                 (Name of small business issuer in its charter)

    Nevada                                         88-0492605
 -----------                                    -----------------
(State or other                       (I.R.S. employer identification number)
jurisdiction of
incorporation or
 organization)

446 Lyndock St., Suite 102                           N0N 1G0
Corunna, ON, Canada
--------------------------------------------------------------
(Address of principal executive offices)            (Zip code)

Issuer's telephone number: (519) 481-0628

Securities Registered Pursuant to Section 12(b) of the Act: NONE

Securities Registered Pursuant to Section 12(g) of the Act:

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No


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<PAGE>

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

The issuer's revenues for its most recent fiscal year were $713,135.

As of the date of this  filing,  the  Company's  Common  Stock is trading on the
OTCBB under the symbol of MGOA.

The  number of shares  outstanding  of each of the  issuer's  classes  of common
stock, as of July 31, 2005 was 35,017,429.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10- KSB (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities  Act"). The listed
documents should be clearly described for  identification  purposes (e.g. annual
report to security holders for fiscal year ended December 24, 1990).

           Transitional Small Business Disclosure Format (Check one):
                                 Yes [ ] No [ X]

PART I ........................................................................1

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

ITEM 2.  DESCRIPTION OF PROPERTY. .............................................5

ITEM 3.  LEGAL PROCEEDINGS ....................................................6

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..................6

PART II. ......................................................................6

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS .............6


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<PAGE>

ITEM 6. MANAGEMENT DISCUSSION AND PLAN OF OPERATION ...........................8

ITEM 7.  FINANCIAL STATEMENTS ................................................12

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT .......................13

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ..........................................22

ITEM 8A.  CONTROLS AND PROCEDURES ............................................22

ITEM 8B.  OTHER INFORMATION ..................................................22

PART III .....................................................................22

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT ..........................................................22

ITEM 10. EXECUTIVE COMPENSATION ..............................................25

ITEM 11. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITY HOLDERS .............................................................26

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ......................26

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K ....................................26

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES ..............................27

SIGNATURES ...................................................................27

CERTIFICATION ............................................................28, 29


                                      iii
<PAGE>

PART I - ITEM 1. DESCRIPTION OF BUSINESS.



BUSINESS DEVELOPMENT

Megola Inc. is committed to solving  environmental  problems  without the use of
harsh chemicals that, in the long run, can have  deleterious  effects on company
budgets and our environment.  Megola Inc. is the exclusive worldwide distributor
for Megola GmbH, a German company that designs and  manufactures  the ScaleGuard
series  of  physical  water  treatment  equipment.  Megola  Inc.  has  created a
distribution  network  throughout  the world in which many  companies are having
great success as the ScaleGuard family continues to perform admirably.

Since the  introduction  of the  ScaleGuard  line of  physical  water  treatment
products,  Megola has identified the need for a more  comprehensive  approach to
environmentally-friendly  water  treatment.  Now,  five years later,  Megola has
obtained rights to market and distribute  technologically  advanced products for
the industrial, commercial, residential and agricultural markets.

Also, new technology  brings new  opportunities  and Megola has further expanded
into the development and  distribution of air  purification  products for indoor
air quality  enhancement  and odor  control.  In addition to our Physical  Water
Treatment  Division  and Air  Purification  Division,  Megola Inc.  has recently
expanded to include Microbiological Control and WasteWater Treatment Divisions.

Megola,  Inc.  was  incorporated  in  Ontario,  Canada  on  August  28,  2000 as
Corporation  No.  1375595.  It was renamed  Megola,  Inc. on December  21, 2001.
Megola was  formed to sell  physical  water  treatment  devices to  residential,
commercial,  industrial and agricultural  end-users in the United States, Canada
and  other  international  locations  under  a  license  granted  by the  German
manufacturer, Megola GmbH. Initial operations and sales began in October 2000.

On  November  26,  2003,  Megola  was  acquired  by  SuperiorClean,  Inc.  in  a
transaction  accounted for as a reverse acquisition.  Megola's shareholders were
issued 13,389,591  SuperiorClean  shares in exchange for 100% of the outstanding
common and  preferred  stock of Megola,  plus  $250,000 in cash and  $200,000 in
notes payable.  Two major  shareholders of  SuperiorClean  and two other persons
then signed  consulting  contracts for  1,250,000  common  shares.  Prior to the
merger,  SuperiorClean  had no assets or  operations.  SuperiorClean's  name was
later changed to Megola Inc.

For the fiscal  year  ending July 31,  2005,  we plan to focus on sales  growth,
increasing  distribution  channels,  controlling  expenses  and  reducing  debt.
Dependent on our ability to raise further  capital to implement  the above,  our
plans may have to be modified or curtailed,  possibly to the extent of not being
able to be carried out as to part or all of such plans. We may also consider any
business opportunity that may involve a future acquisition with a private entity
having an operating business, which may be providing opportunities,  products or
services in a same service sector.

Effective  March 22, 2005 Megola  signed an agreement  with BuyMax,  LLC,  which
gives BuyMax the exclusive  distribution/selling  rights to Megola's residential
ScaleGuard units for the USA.

BuyMax, a subsidiary of VenVest (www.venvestinc.com),  is dedicated to providing
an e-commerce  purchasing platform with preferential pricing and/or cash rebates
on  virtually  every  product  necessary  to cost  effectively  operate an HVAC,
plumbing or electrical  services  company.  BuyMax offers private label products
exclusively  to its  members  as well as  hundreds  of high  quality,  universal
products provided by industry leading vendor partners and national suppliers.


                                       1
<PAGE>

In  consideration  of granting  BuyMax LLC  exclusive  resale rights to Megola's
residential  ScaleGuard devices,  BuyMax LLC had to comply with a Minimum Annual
Resale Requirement.  During each year that this Agreement is in effect, BuyMax's
purchase of products to serve customers  within the USA shall be greater than or
equal to 1,000 Product Units.  Each subsequent year this Agreement is in effect,
BuyMax's purchase of products to serve customers within the USA shall be greater
than or equal to 2,000 Product Units.
(http://biz.yahoo.com/pz/050323/75027.html)

PRINCIPAL PRODUCTS AND SERVICES

Our principal product is our ScaleGuard Systems.  Megola's ScaleGuard technology
cost  effectively  conditions  hard water while also  eliminating the historical
build-up of scale caused by hard water in residential, commercial and industrial
applications. ScaleGuard units use a revolutionary electromagnetic technology to
condition the soften water,  both  preventing the ongoing  build-up of scale and
eliminating historical scale build-up in water delivery systems and machinery.

Megola,  Inc.  is a leading  solution  provider  in  physical  water  treatment,
microbiological  control,   wastewater  treatment  and  air  purification.   Our
environmentally  friendly,   technologically  advanced  product  lines  have  us
positioned  at the  forefront  of  environmental  air and water  treatment.  Our
experience  in these fields  allows us to provide  tailor-made  solutions to our
clients using the  technology  available to us. For more  information  on Megola
products, please go to www.megola.com.

THE SCALEGUARD SYSTEM

Description of ScaleGuard:

Traditionally,  hard water problems - the underlying  cause of scale - have been
solved with ion-exchange  (salt) water softeners or chemical  treatments.  These
solutions are often  environmentally  unfriendly,  time-consuming and expensive.

Megola's scientists have invented a deceptively  simple-looking box containing a
computer-programmable  chip that delivers low-voltage,  high-frequency  magnetic
impulses that can alter the  scale-forming  properties  of water.  The company's
revolutionary solution prevents new scale formation,  while eliminating previous
scale build-up - thus potentially  solving this  multi-billion  dollar worldwide
problem!

ScaleGuard is a non-invasive,  physical water treatment device. That is, it does
not make any direct contact with the water, and it neither adds chemicals to nor
removes chemicals from the water.

Due to the high technological nature of our systems and limited knowledge of the
technical  functions by our consumers,  Megola,  at times,  installs  systems on
trial basis with  prospective  customers  in an effort to collect data and prove
ScaleGuard's   reliability   and  success.   Megola  is  confident  these  trial
installation   situations  will  convert  to  sales,  while  increasing  product
exposure.


                                       2
<PAGE>

We are currently  developing a revised  business  plan to deploy our  ScaleGuard
devices through our distribution  network  throughout the world. We believe that
the increasing data that we have been collecting, and continue to collect on our
systems,  and the increasing  market  exposure we have been getting  through our
satisfied customers, can be used as sales tools for our distributors.

ScaleGuard Models:

We currently  have eight models of  ScaleGuard  devices,  all of which have been
used in trials and sold to customers that have hardwater or scale problems. Over
the  years,  Megola  has sold  these  units  all over the  world,  ranging  from
residential  applications  to  large  industrial  applications.   The  principal
differences  between  the  eight  models,  other  than  cost,  are that they are
designed to work with different water flows and pipe sizes.

The final cost of the  individual  units may vary,  as they may be designed  for
certain customers to perform  differently  based on their specific needs.  Also,
depending on the geographic  region,  some  distributors may sell the ScaleGuard
products for more than Megola's suggested retail price.

ScaleGuard Models:         TFK
                           SG
                           SG100
                           SG200
                           SG300
                           SG400
                           SG500
                           SG1000

Manufacturing:

The ScaleGuard  devices were designed and custom  manufactured  in Germany under
the direction of Megola GmbH.  The  technology of the product is owned by Megola
GmbH and is protected under  intellectual/  software property rights.  The units
are  pre-assembled  in Germany  and are then  shipped  to China  where the final
assembly is completed and packaged.

Notable Installations of our ScaleGuard Systems:

Our systems have been in operation with various customers with some in operation
for over 5 years. Some of our more notable installations include:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
<S>                                                               <C>
LanXess                                                           Tim Horton's
Nova Chemicals                                                    Kentucky Fried Chicken
The Great Hall of the People (the national assembly of China)     Zurn Industries
Mengniu Dairy Group                                               Royal Plastics
Runan Mu Gong Shan Group                                          TRW Automotive
Zhoushan Gang Ming Foodstuff Industries                           Parmalat
Zhong Mei Coal Mining Company                                     FritoLay
Zhujiang Brewery                                                  Honeywell
Country Fresh Dairy                                               Dupont Canada
                                                                  Colgate University
-----------------------------------------------------------------------------------------
</TABLE>


                                       3
<PAGE>

Air Purification

AirGuardian System

The  AirGuardian  1000 is a  uniquely  engineered,  integrated  UVC & UVV system
designed to dramatically  reduce/control airborne allergens and toxic compounds,
such as mold,  fungus,  formaldehyde,  xylene gases and tobacco smoke along with
infectious agents, such as bacteria, influenza,  hemolytic streptococci and many
others.  This product is duct-mounted on the central HVAC system and, to enhance
system  effectiveness,  is designed to run continuously with the HVAC system fan
in the "on'  position.  This product is  certified by the American  Institute of
Toxicology  to produce only safe levels of UVV (ozone) and is  available  with a
UVC only bulb. There are 3 different AirGuardian models.
(manufactured in china)

AirGuardian Power Filter

The AirGuardian Power Filter uses an active  electromagnetic  field to magnetize
both  airborne  particles  and the fibers of the  disposable  filter  pad.  This
creates a virtual  "force  field"  within the  ductwork,  capturing  many of the
smallest,  most dangerous to breathe  submicron  particles.  This 1" filter is a
very cost  effective  and easy to  maintain  electronic  air  cleaner  and is an
essential  component of any air  purification  system.  Under  normal  operating
conditions,  each disposable filter pad remains at peak operating efficiency for
about four months before needing to be replaced.
(manufactured in USA)

Portable Ozone Systems

Equipment Master - Sports equipment Deodorizing unit
Room Blaster - Room Deodorizing unit
Air Care - Room Air Treatment unit
(all  units  manufactured  in China)

Microbiological Control and Waste Water Treatment

Ozone Treatment Systems

Megola  Inc.  is  a  North  American  distributor  of  ozone  treatment  systems
manufactured by Dalian Bingshan H203 Solutions Co., Ltd.  Utilizing the powerful
biocidal  properties  of ozone,  these  systems are an  alternative  to chemical
treatments for microbiological control.

Applications include:

      o     Cooling towers

      o     HVAC systems

      o     Drinking water (agriculture)

      o     Surface disinfection water


                                       4
<PAGE>

Bioguard UltraViolet (UV) Water Treatment Systems

Ultraviolet  treatment is the disinfection process of passing water by a special
light  source.  Immersed in the water in a protective  transparent  sleeve,  the
special light source emits UV waves that can inactivate harmful  microorganisms.
Applications include:

      o     Disinfection of fresh, process, wash, and cooling water

      o     Disinfection and biodegradability improvement of wastewater

      o     Drinking water - POE and POU systems

      o     Swimming pools and ponds

      o     Medical and pharmaceutical industries

      o     Quality control measures

      o     Vending machines

      (manufactured in China)

IonClear - Copper Ionization Systems

The IonClear System is an electronic,  non-chemical means to disinfect and treat
dirty water. The system is used for killing bacteria, viruses, pathogens & other
coliforms  together  with  the  treatment  of  algae,   typically  found  and/or
associated with the following:

      o     Swimming Pools

      o     Hydrotherapy, heated pool & spas

      o     Ornamental water gardens, fountains & ponds

      o     Water storage tanks

      o     Water cooling towers, water cooled heat exchangers, & evaporators

      (manufactured in China)

Product Liability

We currently carry our own product liability insurance. We are currently working
with our  Insurer  increasing  our  liability  coverage.  We have  deployed  and
installed a variety of extensive systems, there have been no claims made against
us.

Employees

We currently have 4 full-time employees and 3 part-time employees

PART I - ITEM 2.  DESCRIPTION OF PROPERTY

Description of Property

Our principal  executive  offices are located at 466 Lyndock Street,  Suite 102,
Corunna,  Ontario N0N 1G0. We leased this 4,000 square foot facility at a rental
of $2,928 per month for a four-year  term ending August 31, 2007.  This facility
consists  of an office and  administration  area.  To the extent that we require
additional  space in the near future,  we believe that we will be able to secure
additional leased facilities at commercially reasonable rates.

Our telephone number at the above location is 519-481-0628.


                                       5
<PAGE>

We do not intend to renovate, improve, or develop properties. We are not subject
to competitive conditions for property and currently have no property to insure.
We have no policy with  respect to  investments  in real estate or  interests in
real estate and no policy with respect to investments in real estate  mortgages.
Further,  we have no policy with  respect to  investments  in  securities  of or
interests in persons primarily engaged in real estate activities.

PART I - ITEM 3.  LEGAL PROCEEDINGS

We are not currently  involved in any legal proceedings nor do we have knowledge
of any threatened litigation.

PART I - ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We did not hold a  shareholders  meeting  in  2005,  thus  there  was no vote of
securities  holders in 2005. We anticipate holding an initial annual shareholder
meeting in the near future.

PART II

PART II - ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

The  Company's  common stock (the "Common  Stock") is traded on the OTC Bulletin
Board under the symbol "MGOA.OB".

Options, Warrants, Convertible Securities

Penny Stock Considerations

Our  shares  will be "penny  stocks"  as that term is  generally  defined in the
Securities  Exchange Act of 1934 to mean equity  securities with a price of less
than $5.00.  Our shares thus will be subject to rules that impose sales practice
and disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock.

Under the penny  stock  regulations,  a  broker-dealer  selling a penny stock to
anyone other than an  established  customer or  accredited  investor must make a
special suitability  determination  regarding the purchaser and must receive the
purchaser's  written  consent to the transaction  prior to the sale,  unless the
broker-dealer is otherwise exempt.  Generally, an individual with a net worth in
excess of  $1,000,000  or  annual  income  exceeding  $100,000  individually  or
$300,000  together with his or her spouse is considered an accredited  investor.
In addition, under the penny stock regulations the broker-dealer is required to:

*     Deliver,  prior to any  transaction  involving a penny stock, a disclosure
      schedule prepared by the Securities and Exchange  Commissions  relating to
      the penny stock market,  unless the  broker-dealer  or the  transaction is
      otherwise exempt;

*     Disclose  commissions  payable  to the  broker-dealer  and our  registered
      representatives and current bid and offer quotations for the securities;


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<PAGE>

*     Send monthly statements disclosing recent price information  pertaining to
      the penny stock held in a  customer's  account,  the  account's  value and
      information regarding the limited market in penny stocks; and

*     Make a special  written  determination  that the penny stock is a suitable
      investment for the purchaser and receive the purchaser's written agreement
      to the transaction, prior to conducting any penny stock transaction in the
      customer's account.

Because of these regulations, broker-dealers may encounter difficulties in their
attempt to sell  shares of our  common  stock,  which may affect the  ability of
selling  shareholders  or other  holders to sell their  shares in the  secondary
market and have the effect of  reducing  the level of  trading  activity  in the
secondary  market.  These additional sales practice and disclosure  requirements
could  impede the sale of our  securities,  if our  securities  become  publicly
traded. In addition,  the liquidity for our securities may be decreased,  with a
corresponding  decrease  in the  price  of our  securities.  Our  shares  in all
probability will be subject to such penny stock rules and our shareholders will,
in all likelihood, find it difficult to sell their securities.

Holders

As of the date of this registration  statement,  we had 155 holders of record of
our common stock.

Dividends

We have not declared any cash  dividends on our common stock since our inception
and do not anticipate  paying such dividends in the foreseeable  future. We plan
to retain any future  earnings  for use in our  business.  Any  decisions  as to
future payments of dividends will depend on our earnings and financial  position
and such other facts, as the board of directors deems relevant.

Reports to Shareholders

We have become  subject to the  information  and reporting  requirements  of the
Securities Exchange Act of 1934 and will file periodic reports, proxy statements
and other information with the Securities and Exchange Commission.  We intend to
voluntarily  send an annual  report with  audited  financial  statements  to our
security holders.

Where You Can Find Additional Information

For  further  information  about us and the  shares of common  stock  registered
hereunder,  please  refer to the  registration  statement  and the  exhibits and
schedules  thereto.  The  registration  statement and exhibits may be inspected,
without  charge,  and copies may be obtained at prescribed  rates,  at the SEC's
Public  Reference Room at 450 Fifth Street,  N.W.,  Washington,  D.C. 20549. The
public may obtain  information on the operation of the Public  Reference Room by
calling  the  SEC  at  1-800-SEC-0330.  The  registration  statement  and  other
information  filed with the SEC are also  available at a web site  maintained by
the SEC at http://www.sec.gov.


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<PAGE>

PART II - ITEM 6.  MANAGEMENT DISCUSSION & PLAN OF OPERATION

Overview

Megola Inc. is committed to solving  environmental  problems  without the use of
harsh chemicals that, in the long run, can have  deleterious  effects on company
budgets and our environment.  Megola Inc. is the exclusive worldwide distributor
for Megola GmbH, a German company that designs and  manufactures  the ScaleGuard
series  of  physical  water  treatment  equipment.  Megola  Inc.  has  created a
distribution  network  throughout  the world in which many  companies are having
great success as the ScaleGuard family continues to perform admirably.

Since the  introduction  of the  ScaleGuard  line of  physical  water  treatment
products,  Megola has identified the need for a more  comprehensive  approach to
environmentally-friendly  water  treatment.  Now,  five years later,  Megola has
obtained rights to market and distribute  technologically  advanced products for
the industrial, commercial, residential and agricultural markets.

Also, new technology  brings new  opportunities  and Megola has further expanded
into the development and  distribution of air  purification  products for indoor
air quality  enhancement  and odor  control.  In addition to our Physical  Water
Treatment  Division  and Air  Purification  Division,  Megola Inc.  has recently
expanded to include Microbiological Control and WasteWater Treatment Divisions.

For the fiscal  year  ending July 31,  2005,  we plan to focus on sales  growth,
increasing distribution channels, controlling expenses and reducing debt.

Current Results of Operations and Financial Status

Results of Operations

Our revenues are difficult to forecast and may vary  significantly  from quarter
to quarter and year to year.  In addition,  our expense  levels for each quarter
are, to a significant extent,  fixed in advance based upon our expectation as to
the net revenues to be generated during that quarter. We therefore are generally
unable to adjust  spending in a timely manner to compensate  for any  unexpected
shortfall in net revenues.  Further, as a result of these factors,  any delay in
product introductions,  whether due to internal delays or delays caused by third
party  difficulties,  or any significant  shortfall in demand in relation to our
expectations,  would have an almost  immediate  adverse  impact on our operating
results and on ability to maintain profitability in a quarter.

Comparison of the year ended July 31, 2005 with the year ended July 31, 2004

During the year ending July 31, 2005 our revenues  increased  from  $222,294 for
2004 to $713,135 for the year ended July 31,  2005,  an increase of 220.81% over
the prior year.  This increase is mainly because of increased  sales we had with
customers  located in North America and continued sales throughout the world. We
feel that with the working  capital that will be  provided,  and from the higher
number of contracts  anticipated,  sales will improve  throughout  the following
year.

Cost of sales  consists  of  direct  manufacturing  costs and  applied  overhead
expenses for our cost of raw materials to  manufacture  the ScaleGuard and other
systems.  Cost of sales as a  percentage  of revenues  increased to 65.1% in the
year ended July 31,  2005 to  $464,179,  as  compared  to  $117,361  or 52.8% of
revenue  for the year ended July 31,  2004.  The cost of sales  percentage  will
fluctuate  from quarter to quarter  because  absorbed  overhead  increases  when
volume is  decreasing  and  because  labor  ratios  are less than  optimized  in
manufacturing  processes when revenues are lower. As revenues increase,  cost of
goods sold as a percentage of revenue  should become more and more favorable for
us.  The  overall  increase  in the  cost  of  sales  during  2005  is  directly
attributable to the increase in revenues.


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<PAGE>

General and  administrative  (operating)  expenses  decreased to $898,084 during
2005 from  $2,071,640  in 2004, a decrease of 56.65%,  due primarily to the fact
that merger  expenses  are now behind us.  These costs were the major  causes of
increased General and Administrative costs in the 2004 year and will become more
controlled,  in relation to sales revenue as the company becomes well funded and
revenues increase.  Although our general and  administrative  expenses are, to a
significant  extent,  fixed in advance, we are making efforts to adjust spending
in relation to the expected net  revenues.  Megola  issued  1,500,000  shares of
common stock in return for various services rendered during the fiscal year. The
value  assigned  to those  shares is based on the market  price of the shares on
various  dates.  Even though the service  contracts  specify an amount per share
when  issued,  we must value them in the  financial  statements  at the  stock's
trading value on the appropriate dates. When adding these values to the costs of
the services, we end up with approximately  $557,400 of G&A expenses that appear
on the P&L Statement.  Without these  expenses,  the company's net loss wouldn't
appear to be as large.

Our  depreciation  for the year ended July 31,  2005 vs. the year ended July 31,
2004  decreased  30.82% from $9,714 to $6,720  because  various items have fully
depreciated.

Interest  expense  increased in 2005 to $293,581 from  $245,134 in 2004,  due to
interest expense incurred at the time of the reverse merger, interest accrued on
unpaid  loan/note  balances as well there were conversion  features  included on
agreement  notes that had to be  discounted  resulting  in  additional  interest
expense of $272,656. These combined factors resulted in the substantial increase
in interest  expense for this fiscal year and are not  expected to be  recurring
items.


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<PAGE>

Net Income (Loss)

For the reasons  outlined above, we realized a net loss of $968,121 for the year
ended July 31, 2005 as compared to a net loss of  $2,236,297  for the year ended
July 31, 2004, a decrease of 56.71%.

                                                     2005              2004
                                                 ------------      ------------

REVENUE                                          $    713,135      $    222,294
                                                 ------------      ------------

COST OF SALES                                         464,179           117,361
SELLING                                                 7,592            14,742
GENERAL AND ADMINISTRATIVE                            898,084         2,071,640
DEPRECIATION                                            6,720             9,714
INTEREST                                              293,581           245,134
AMORTIZATION                                           11,100                --
                                                 ------------      ------------

     Total Expenses                                 1,681,256         2,458,591
                                                 ------------      ------------

NET LOSS                                         $   (968,121)     $ (2,236,297)
                                                 ============      ============

Basic and diluted loss per share                 $      (0.03)     $      (0.11)

Weighted average shares outstanding                32,368,754        21,226,443

Liquidity and Capital Resources

Cash and cash  equivalents  at July 31,  2005 was  $17,183  and $441 at July 31,
2004. However,  our accounts receivable  increased from $55,983 at July 31, 2004
to $397,430 at July 31, 2005 or 609.91%.  Our  inventory  increased for the same
period from  $56,522 to $82,203 or 45.44%;  a sign of both  increased  available
working  capital  from  operations  and an  increase  of  available  assets  for
operations.  Assuming we collect all  receivables and convert our inventory into
sales,  we believe that we can continue  operations for  approximately 9 months.
Thereafter,  we will need to generate further operating revenues or secure other
funding on or before March 2006 in the amount of $250,000 to remain  operational
until July 31, 2006.

The  company is also  pursuing  other  financial  resources  to augment its cash
requirements for retirement of debt,  expansion of operations and acquisition of
suitable companies and products.

Our success and ongoing  financial  viability is contingent  upon its selling of
its products and the related generation of cash flows. We evaluate our liquidity
and  capital  needs on a  continuous  basis  and based on our  requirements  and
capital market  conditions may, from time to time, raise working capital through
additional debt or equity  financing.  There is no assurance that such financing
will be available in the future to meet our additional  capital  needs,  or that
any such terms or  conditions  of any such  financing  would be favorable to us.
Both our current growth and expanded business involve significant financial risk
and require significant capital investment.


                                       10
<PAGE>

In  connection  with the reverse  merger,  we issued two  promissory  notes to a
director  and a  shareholder,  each in the  amount of  $100,000  (the  "Notes"),
bearing interest at the rate of 6% simple interest per annum. The Notes shall be
paid in full,  all principal  and accrued  interest,  on or before  November 30,
2004. One note was converted by Nevada Fund in November 2004 in exchange for the
issuance of 1,000,000  shares of common  stock.  Mr Rotondi holds the other note
and has advised us that he will only require payments if cash flow is available.
In  addition  to  standard  language,  the Notes  have the  following  terms and
conditions:

[i] The Notes may assigned and may be used to satisfy debts and  obligations  of
Megola  and/or  redeem shares held by  shareholders  of Megola,  all without the
consent of Megola,  and  thereafter  any payments due on the Notes shall be paid
directly to such assignee[s]. The Notes may be pledged, sold, hypotheticated, or
assigned by any  assignee of Superior  without  consent of Megola.  All payments
shall be made by wire  transfer on the due date to accounts as  specified by the
holders the Notes.

[ii]  Holders  of the Notes  shall  have the option at any time prior to the due
date so long as there is no default to convert all unpaid  principal and accrued
interest into common shares of stock of Megola  ("Megola  Common  Stock") at the
rate of US$0.10 per share.  This option may be  exercised in whole or in part at
any time prior to  repayment  of the Notes.  If there is a default in the Notes,
then  Holders  of the Notes  shall  have the option at any time the Notes are in
default to convert  all unpaid  principal  and accrued  interest  into shares of
stock of  Superior  at the lower of (i) $0.10 per  share;  and (ii) the  average
trading price of Megola Common Stock for the twenty (20) day period  immediately
prior to the date of the option  exercise  notice from the Holders.  This option
may be  exercised  in whole or in part at any time  the  Notes  are in  default.
Further,  to the extent any shares are acquired under this option, the owners of
these shares if the option is exercised collectively shall have a one time right
to require  that Megola  register  the shares for resale  within 90 days of such
request  on  a  registration   statement  filed  with  the  Securities  Exchange
Commission  ("SEC") and kept effective until all such shares are resold,  all at
Megola's expense.

No  customers  accounted  for 100  percent  of 2005 and 2004  sales.  No vendors
accounted  for 100 percent of fiscal 2005 and 2004 cost of sales.  (The standard
for  disclosure  is 10%  instead  of 100%.  If there  were  any  customers  that
accounted for more than 10% of sales or vendors that accounted for more than 10%
of COGS, this should be disclosed in the MD&A and footnotes.)  Megola's  initial
office lease expired September 30, 2005. After that date the landlord has agreed
to a month to month basis.  Minimum lease payments of $1,431 are due in the year
ended July 31, 2006.

Our ability to continue as a going  concern is dependent on our ability to raise
funds to implement our planned development;  however we may not be able to raise
sufficient funds to do so. Our independent  auditors have indicated that here is
substantial doubt about our ability to continue as a going concern over the next
twelve months. Our poor financial condition could inhibit our ability to achieve
our business plan. Because we are currently operating at a substantial loss with
no operating history and revenues,  an investor cannot determine if we will ever
become profitable.

PART II - ITEM 7. FINANCIAL STATEMENTS

The following  documents  (pages 11-18) form part of the report on the Financial
Statements


                                       11
<PAGE>

PAGE

Report of Independent Registered Public Accounting Firm                     11

Balance Sheets                                                              12

Statements of Operations                                                    13

Statement of Stockholders' Deficit                                          14

Statement of Cash Flows                                                     15

Footnotes                                                                   16


                                       12
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
  Megola, Inc.
  Corunna, Ontario, Canada

We have audited the  accompanying  balance sheet of Megola,  Inc. as of July 31,
2005 and 2004, and the related  statements of operations,  stockholders'  equity
(deficit) and cash flows for each of the two years then ended.  These  financial
statements are the responsibility of Megola's management.  Our responsibility is
to express an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Megola,  Inc. as of July 31,
2005 and the  results of its  operations  and its cash flows for each of the two
years then ended in conformity with accounting  principles generally accepted in
the United States of America.

The accompanying  financial  statements have been prepared assuming that Megola,
Inc. will continue as a going  concern.  As discussed in Note 2 to the financial
statements,  Megola has suffered  recurring  losses from operations which raises
substantial doubt about its ability to continue as a going concern. Management's
plans  regarding  those matters also are  described in Note 2. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas

October 17, 2005


                                       13
<PAGE>

                                  MEGOLA, INC.
                                  BALANCE SHEET
                             July 31, 2005 and 2004

<TABLE>
<CAPTION>
ASSETS                                                                       2005             2004
                                                                         -----------      -----------
Current Assets
<S>                                                                      <C>              <C>
     Cash                                                                $    17,183      $       441
     Accounts Receivable-Trade                                               397,430           55,983
     Inventory                                                                82,203           56,522
     Deposits                                                                143,492               --
                                                                         -----------      -----------
     Other                                                                    11,762            9,343
                                                                         -----------      -----------
          Total Current Assets                                               122,289
                                                                                              652,070
                                                                         -----------      -----------

Property and Equipment, Net of Accumulated Depreciation of
       $37,653 and $28,124 in 2005 and 2004                                   29,311           18,652
Intangible Assets Net of Accumulated Amortization of $11,100 in 2005          99,900               --

TOTAL ASSETS                                                             $   781,281      $   140,941
                                                                         ===========      ===========

     LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities

     Bank Overdraft                                                      $    34,374      $    33,585
     Notes Payable                                                             1,302           33,811
     Accounts Payable-Trade                                                  344,456           28,725
     Accrued Interest                                                         18,248           16,375
     Accrued Expenses                                                         34,007           35,549
     Loans From Investors                                                    100,000          200,000
                                                                         -----------      -----------
          Total Current Liabilities                                          348,045
                                                                                              532,387

Note Payable - net of current portion                                             --            1,179
                                                                         -----------      -----------

TOTAL LIABILITIES                                                            532,387          349,224
                                                                         -----------      -----------

STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, No Par Value 50,000,000 Shares
     Authorized, 35,017,429 Shares Issued and Outstanding                  3,298,725        1,876,359
Paid In Capital                                                              500,000          387,500
Accumulated Deficit                                                       (3,478,258)      (2,510,137)
Other Comprehensive Income:
    Equity Adjustment on Foreign Currency Translation                        (71,573)          37,995
                                                                         -----------      -----------

                  Total Stockholders' Equity (Deficit)                       248,894         (208,283)
                                                                         -----------      -----------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                 $   781,281      $   140,941
                                                                         ===========      ===========
</TABLE>

The accompanying footnotes are an integral part of the financial statements.


                                       14
<PAGE>

                                  MEGOLA, INC.
                            STATEMENTS OF OPERATIONS
                       Years Ended July 31, 2005 and 2004

                                                   2005                 2004
                                               ------------        ------------

REVENUE                                        $    713,135        $    222,294
                                               ------------        ------------

COST OF SALES                                       464,179             117,361

SELLING                                               7,592              14,742

GENERAL AND ADMINISTRATIVE                          898,084           2,071,640

DEPRECIATION                                          6,720               9,714

INTEREST                                            293,581             245,134

AMORTIZATION                                         11,100                  --
                                               ------------        ------------

         Total Expenses                           1,681,256           2,458,591
                                               ------------        ------------

NET LOSS                                       $   (968,121)       $ (2,236,297)
                                               ============        ============

Basic and diluted loss per share               $      (0.03)       $      (0.11)

Weighted average shares outstanding              32,368,754          21,226,443

The accompanying footnotes are an integral part of the financial statements.


                                       15
<PAGE>

                                  MEGOLA, INC.

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                       YEARS ENDED JULY 31, 2005 and 2004

<TABLE>
<CAPTION>
                                      Common Stock
                             ----------------------------
                                                               Other        Additional
                                                           Comprehensive      Paid In      Accumulated
                                 Shares         Amount     Income (Loss)      Capital        Deficit         Totals
                             -------------  -------------  -------------   -------------  -------------   -------------
<S>                             <C>         <C>            <C>             <C>            <C>             <C>
Balances, July 31, 2003         13,389,591  $     236,242  $      (3,405)  $          --  $    (273,840)  $     (41,003)

Stock Exchanged at Merger        7,089,002             --             --              --             --              --

Stock for Debt                   4,035,957        400,117             --              --             --         400,117

Stock Issued For Services        3,300,000      1,240,000             --              --             --       1,240,000

Discount on Notes Payable               --             --             --         387,500             --         387,500

Net Loss                                --             --             --              --     (2,236,297)     (2,236,297)

Foreign Currency                        --             --         41,400              --             --          41,400
                             -------------  -------------  -------------   -------------  -------------   -------------

Balances, July 31, 2004         27,814,550  $   1,876,359  $      37,995   $     387,500  $  (2,510,137)  $    (208,283)
                             =============  =============  =============   =============  =============   =============

Stock Issued for Services        1,500,000        557,400             --              --             --         557,400

Discount on Notes Payable               --             --             --         112,500             --         112,500

Stock for Debt                   5,052,879        403,966             --              --             --         403,966

Stock for Intangible Assets        300,000        111,000             --              --             --         111,000

Stock for Cash                     350,000        350,000             --              --             --         350,000

Net Loss                                --             --             --              --       (968,121)       (968,121)

Foreign Currency                        --             --       (109,568)             --             --        (109,568)
                             -------------  -------------  -------------   -------------  -------------   -------------

Balances, July 31, 2005         35,017,429  $   3,298,725  $     (71,573)  $     500,000  $  (3,478,258)  $     248,894
                             =============  =============  =============   =============  =============   =============
</TABLE>

The accompanying footnotes are an integral part of the financial statements.


                                       16
<PAGE>

                                               MEGOLA, INC.
                                         STATEMENTS OF CASH FLOWS
                                    Years Ended July 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                            2005             2004
                                                                        -----------      -----------
<S>                                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Loss                                                           $  (968,121)     $(2,236,297)
     Adjustments to Reconcile Net Loss
         to Net Cash Used in Operating Activities:
           Impairment of cost of public shell                                    --          448,031
           Shares issued for services                                       552,300        1,240,000
           Depreciation & Amortization                                       17,820            9,714
           Amortization of Beneficial Conversion Feature                    272,656               --
           Discount on notes                                                     --          227,344
         Changes in:
           Accounts Receivable                                             (341,447)         (42,164)
           Inventory                                                         (9,681)         (13,232)

           Deposit on Reverse Acquisition                                        --               --
           Other Current Assets                                              (2,419)          (6,431)
                 Bank Overdraft                                                 789            1,396
           Accounts Payable                                                 320,831           26,650
           Accrued Expenses                                                   4,297           21,193
                                                                        -----------      -----------
                Net Cash Used in Operating Activities                      (323,796)
                                                                                            (152,975)
                                                                        -----------      -----------

CASH FLOWS USED IN INVESTING ACTIVITIES
     Deposit for Anticipated Merger                                        (143,492)              --
     -Deposit made toward cost of public shell                                   --          (51,465)
     Purchase of fixed assets                                                (2,506)         (20,008)
                                                                        -----------      -----------
                Net Cash Used in Investing Activities                      (145,998)         (71,473)
                                                                        -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from Notes Payable                                            112,500          386,280
     Payments on Notes Payable                                               (6,344)         (41,244)
     Loans From Investors                                                        --               --
     Proceeds from Sale of Preferred Stock                                       --               --
     Proceeds from Sale of Common Stock                                     350,000               --
     Payments on Installment Note Payable                                        --               --
                                                                        -----------      -----------
                Net Cash Provided by Financing Activities                   456,156          345,036
                                                                        -----------      -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    (140,441)          47,713
                                                                        -----------      -----------

NET INCREASE IN CASH                                                         16,742           (2,520)

BEGINNING CASH BALANCE                                                          441            2,961
                                                                        -----------      -----------

ENDING CASH BALANCE                                                     $    17,183      $       441
                                                                        ===========      ===========

SUPPLEMENTAL DISCLOSURES:
     Cash Paid For:
         Interest                                                       $       415      $    10,367

     Non-cash Transactions:
         Debt exchange for shares of common stock (5,052,879 and
           4,035,956 shares in 2005 and 2004)                           $   403,966      $   400,117
         Common stock issued for services                               $   557,400      $ 1,240,000
         Purchase of Intangible Assets for 300,000 shares of common
           stock                                                        $   111,000      $        --

The accompanying footnotes are an integral part of the financial statements.
</TABLE>


                                       17
<PAGE>

                                               MEGOLA, INC.

                                       NOTES TO FINANCIAL STATEMENTS
                                               July 31, 2005

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Megola,  Inc.  was  incorporated  in  Ontario,  Canada on August  28,  2000 as a
Corporation  No.  1375595.  It was renamed  Megola,  Inc. on December  21, 2001.
Megola  was  formed to sell  physical  water  treatment  devices  to  commercial
end-users in both the United  States and Canada  under a license  granted by the
German  manufacturer,  Megola GmbH. Initial operation and sales began in October
2000. On October 21, 2004,  Megola  entered into an agreement to acquire  Megola
GmbH by purchasing all of its outstanding  shares for cash. As of July 31, 2005,
Megola had deposited $143,492 with Megola GmbH,

Estimates

The Preparation of 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  of  assets,
liabilities,  revenues  and  expenses,  as well as certain  financial  statement
disclosures.  While management  believes that the estimates and assumptions used
in the preparation of the financial  statements are appropriate,  actual results
could differ from these estimates.

Cash Equivalents

Highly liquid  investments with original  maturities of three months or less are
considered cash equivalents.

Revenue Recognition

Revenue is  recognized  when the earning  process is complete  and the risks and
rewards of  ownership  have  transferred  to the  customer,  which is  generally
considered to have occurred upon delivery of the finished products. For 2005 and
2004, there were no refunds or warranty claims.

In the case of  exclusive  agreements  with  distributors,  finished  goods  are
shipped  directly  FOB   manufacturer/point   of  assembly.   Megola  offers  no
independent  warranty and refers any  warranty  claims to the  manufacturer  for
products it sells.  Therefore,  Megola recognizes revenue under these agreements
when the goods are shipped.

Allowance for Doubtful Accounts

An  allowance  for  doubtful  accounts is provided  based on credit  experience.
Megola had no bad debts for fiscal  2005 and 2004  respectively.  As of July 31,
2005, a $ -0- allowance is provided.

Property and Equipment

Property  and  equipment  are  stated  on the  basis  of  historical  cost  less
accumulated  depreciation.  Depreciation  is  provided  using the  straight-line
method over the  estimated  useful lives of the assets,  which range from 3 to 7
years.  Impairment  losses are recorded on  long-lived  assets used in operation
when  indicators  of  impairment  are  present and the  undiscounted  cash flows
estimated to generate by those assets are less than the assets' carrying amount.
No impairment losses have been recorded since inception.

Income Taxes

U.S. and foreign income tax expense is based on reported  earnings before income
taxes. Deferred income taxes reflect the impact of temporary differences between
assets and  liabilities  recognized  for financial  reporting  purposes and such
amounts  recognized for tax purposes,  and are measured by applying  enacted tax
rates in effect in years in which the differences are expected to reverse.

Stock-Based Compensation

Megola  periodically  issues  shares of common stock to officers,  directors and
non-employees  in exchange  for  services  provided.  The value of the shares is
equal to the quoted  market  price on either the date an  agreement to issue the
shares is executed or the date the Board of  Directors  approves  the  issuance.
Megola  records  the value of the shares in the  statement  of  operations  as a
general and administrative expense.


                                       18
<PAGE>

Megola  accounts for stock  options and warrants  issued to employees  under the
intrinsic  value  method.  Under this method Megola  recognizes no  compensation
expense for stock options  granted when the number of underlying  share is known
and  exercise  price to the option is greater  than or equal to the fair  market
value  of the  stock on the  date of  grant.  Megola  accounts  for  stock-based
compensation   to   non-employees   under  the  fair  value   method  using  the
Black-Scholes  option-pricing  modeling method. There are no options or warrants
outstanding as of July 31, 2005.

Earnings Per share

Basic earnings per share equals net earnings  divided by weighted average shares
outstanding  during the year.  Diluted  earnings per share include the impact of
common  stock  equivalents  using the  treasury  stock method when the effect is
dilutive.

Recent Accounting Pronouncements

In December  2004,  the FASB issued SFAS No.123R,  "Accounting  for  Stock-Based
Compensation"  ("SFAS No.  123R").  SFAS No.123R  establishes  standards for the
accounting for transactions in which an entity exchanges its equity  instruments
for goods or  services.  This  Statement  focuses  primarily on  accounting  for
transactions in which an entity obtains employee services in share-based payment
transactions.  SFAS  No.123R  requires  that  the  fair  value  of  such  equity
instruments be recognized as expense in the historical  financial  statements as
services  are  performed.   Prior  to  SFAS  No.123R,  only  certain  pro  forma
disclosures  of fair value were  required.  SFAS No.123R  shall be effective for
small  business  issuers  as of the  beginning  of the first  interim  or annual
reporting  period that begins after  December 15, 2005. As of June 30, 2005, the
Company has not issued any options to employees. The Company will adopt SFAS No.
123R as of January 1, 2006, the beginning of its third interim reporting period.
The impact of the adoption of SFAS No. 123R on the  financial  statements of the
Company during fiscal year 2006 will depend largely on the number of grants,  if
any, that are made to employees.

The Company does not expect the adoption of any other recently issued accounting
pronouncements to have a significant impact on its financial  position,  results
of operations or cash flows.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, Megola incurred recurring net
losses  chargeable to common  shareholders  of $968,121 and $2,236,297 in fiscal
2005 and 2004, respectively, and has an accumulated deficit of  $3,478,258 as of
July 31, 2005. These conditions  create an uncertainty as to Megola's ability to
continue as a going concern.  Management is trying to raise  additional  capital
through various funding  arrangements.  The financial statements did not include
any  adjustment  that might be  necessary  if Megola is unable to  continue as a
going concern.

NOTE 3 - NOTES PAYABLE

Megola  purchased a used car from an auto dealer on October 30, 2002. The dealer
financed  the  purchase  in 36 equal  monthly  installments  of $539,  including
interest at 8.45% APR. As of July 31, 2005, $1,594 was due in fiscal 2006.

On April 19, 2004 Megola  signed a  convertible  promissory  note,  with Premium
Financial,  Inc. for $150,000.  The note bears interest at 8% per annum and were
due May 1, 2006.  As of July 31, 2004,  $37,500 was due on this note.  On August
23, 2004 lender  exercised  its option  (with  Megola's  consent) to convert the
balance due (including interest) into common stock of Megola, Inc.

On April 19, 2004, Megola signed a convertible  promissory note with Avercap for
$150,000.  This note bears  interest at 8% per annum and was due May 1, 2006. As
of July 31, 2004  $150,000  was due on this note.  On August 23, 2004 the lender
exercised  its option  (with  Megola's  consent)  to  convert  the  balance  due
(including interest) into common stock of Megola, Inc.

NOTE 4 - INCOME TAXES

Income  taxes are not due since  Megola has had losses  since  inception.  Since
inception,  Megola has had about $3,478,258 in the U.S. dollar value of Canadian
net operating  losses,  which expire in Canada in Fiscal 2014. (Is this correct?
Will the  carryforwards  expire over multiple  years  depending on the period in
which they were generated?)

The components of deferred taxes are as follows:

      Deferred tax assets
      Net operating loss carryforwards                          $ 834,782
      Less:  valuation allowance                                 (834,782)
                                                                ---------

      Current net deferred tax assets                           $      --
                                                                =========


                                       19
<PAGE>

NOTE 5 - COMMITMENTS

Megola  currently  has two office  leases on  adjacent  properties.  They expire
September 30, 2005 and December 31, 2008  respectively.  Minimum lease  payments
are due as follows:

                                                         #1                 #2
                                                       -------           -------
Year Ended July 31, 2006                               $ 1,431           $16,776
Year Ended July 31, 2007                                    --           $16,776
Year Ended July 31, 2008                                    --           $16,776
Year Ended July 31, 2009                                    --           $ 6,990
                                                       -------           -------
Total                                                  $ 1,431           $57,318

NOTE 6 - COMMON STOCK

On August 1,  2004,  Megola  paid off $2,892 of debt with  10,000  shares of its
common stock valued at $5,100.

On August 1, 2004,  Megola issued  15,000  shares of Megola's  common stock to a
vendor under an agreement for services valued at $7,650.

On August 16, 2004, Megola received proceeds from a convertible note of $112,500
from Premium Financial,  Inc. The note bears interest of 8% per annum and is due
on May 1, 2006.  The note was issued at a discount  of  $112,500.  On August 23,
2004 the  convertible  note was converted  into Megola's  common stock,  and the
$112,500 was charged to interest expense.

On August 23, 2004, two lenders, Avercap and Premium Financial,  Inc., exercised
their  options  to convert  the  balance  due to them  (including  interest)  of
$303,966  into  Megola's  common  stock.  The  conversion  price  was  $.075 and
4,052,879 shares of Megola's common were issued.

On November 24, 2004, a consultant  exercised his option to convert  $100,000 of
the note payable due to him into 1,000,000 shares of Megola's common stock for a
price of $.10 per share.

On February 1, 2005,  Megola received  $350,000 from three investors for 350,000
shares of common  stock with one warrant  attached  per common  share.  The fair
value of the warrants was $52,281 and the relative fair value was $45,486.

On February 1, 2005,  Megola issued 1,235,000 shares of Megola's common stock to
several individuals for consulting, legal, and board member services. The shares
were valued at $493,650.

On February 9, 2005, Megola issued 300,000 shares of common stock for intangible
assets. See note 8 for more details.

On June 8,  2005,  Megola  issued  240,000  shares of common  stock to a firm to
provide investor relations services. The shares were valued at $60,000.

NOTE 7 - SEGMENT REPORTING

Megola sells in the U.S. and China, and has two reportable  geographic segments,
with summary information as follows:

                                  U.S.         International          Total
                             -------------     -------------      -------------

Year Ended July 31, 2005

     Revenues                $     653,735     $      59,400      $     713,135

     Pretax Loss                  (333,056)    $    (635,065)     $    (968,121)

     Depreciation            $          --     $       6,720      $       6,720

     Interest Expense        $          --     $     293,581      $     293,581

     Total Assets            $     781,281     $     781,281


                                       20
<PAGE>

                                  U.S.         International          Total
                             -------------     -------------      -------------

Year Ended July 31, 2004

     Revenues                $      39,025     $     183,269      $     222,294

     Pretax Loss             $     147,879     $  (2,384,176)     $  (2,236,297)

     Depreciation            $          --     $       9,714      $       9,714

     Interest Expense        $          --     $     245,134      $     245,134

     Total Assets            $          --     $     140,941      $     140,941

NOTE 8 - INTANGIBLE ASSETS

On February 9, 2005 Megola purchased  software programs,  manufacturing  rights,
and UV water systems and UV air system technologies from UV Innovations, Inc., a
company located in Ontario,  Canada for 300,000 shares of Megola's common stock.
The value of the stock  issued  was  $111,000,  which has been  recorded  on the
balance sheet as an intangible  asset and is being  amortized on a straight-line
basis over 5 years.  Megola  guaranteed on the twelve month  anniversary  of the
agreement  that the stock given will have a value of no less then  $200,000.  If
there is a  difference,  Megola will pay the amount to UV  Innovations,  Inc. in
cash and record it as an increase in the carrying value of the intangible  asset
to be amortized over the remaining useful life. On the twelve month anniversary,
Megola  will  also  have the  option  to buy back the stock for the lower of the
market price or $4 per share.

NOTE 9 - RELATED PARTY TRANSACTIONS

In connection with the reverse merger with  SuperiorClean  Inc., Megola issued a
$100,000  promissory  note to one of its  officers  that matured on November 30,
2004.  Megola has not repaid this note as of July 31, 2005,  and the officer has
indicated  that he will not  require  any  payments  until  there  is cash  flow
available.  The principal  balance  continues to accrue interest at a rate of 6%
per year.


                                       21
<PAGE>

PART II - ITEM 8. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None--Not Applicable

PART III - ITEM 8A. CONTROLS AND PROCEDURES

The Corporation  maintains disclosure controls and procedures designed to ensure
that information  required to be disclosed in reports filed under the Securities
Exchange  Act of 1934,  as  amended,  is  recorded,  processed,  summarized  and
reported within the specified time periods.  As of the end of the period covered
by this report,  the  Corporation's  Chief Executive Officer and Chief Financial
Officer evaluated the effectiveness of the Corporation's disclosure controls and
procedures. Based on the evaluation, which disclosed no significant deficiencies
or material  weaknesses,  the  Corporation's  Chief Executive  Officer and Chief
Financial  Officer  concluded  that the  Corporation's  disclosure  controls and
procedures  are  effective  as of the end of the period  covered by this report.
There were no changes  in the  Corporation's  internal  control  over  financial
reporting that occurred during the Corporation's most recent fiscal quarter that
have materially  affected,  or are reasonably likely to materially  affect,  the
Corporation's internal control over financial reporting.

PART II - ITEM 8B. OTHER INFORMATION

None--Not Applicable

PART III

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

The names, ages and positions of the Company's  directors and executive officers
are as follows:

Name                       Age              Position
--------------------------------------------------------------------------------
Joel Gardner               38               Chief Executive Officer,
                                            Director, President

Don Greer                  70               COO, Director

Todd Clark                 43               Treasurer, Director

Aldo Rotondi               42               Director of Business Development
--------------------------------------------------------------------------------

Joel  Gardner  is a  Director  and Chief  Executive  Officer,  who is a seasoned
entrepreneur  who knows a good  idea  when he sees it.  He has built his  career
developing  great ideas and seeking out  industry-changing  solutions  that hold
tremendous, unrealized potential and then taking them to market.


                                       22
<PAGE>

Joel started out his career as a professional hockey player, going straight from
university hockey - he received a BA from Colgate  University,  where he studied
Education and Geology - to playing for ten years in Canada,  USA and Europe.  In
1995,  he  started  and  served as  President  of  CartAds,  a company  that put
advertisements  on shopping  carts.  Then in 1997,  he applied the  expertise he
acquired with CartAds at another marketing venture,  COA, which sold advertising
on  outdoor  benches.  Also,  in his time  off the ice the  following  year,  he
invented and produced a golf rules trivia game, which is still being sold in pro
shops.  That same year,  he utilized the contacts he made and the  reputation he
had  built  while  in  Germany  to  become  Vice  President  and  a  partner  in
Aqua-Cristall Limited, a physical water treatment company.  Aqua-Cristall became
the first distributor of the ScaleGuard product line.

In 2000, Joel formed Megola,  Inc. to distribute the ScaleGuard products as well
as a number of other air and water treatment solutions throughout North America.
As President and CEO, he has led the company's growth and expansion into several
divisions over the past four years. Under his leadership, Megola has secured the
distribution  rights  to  a  number  of  other  product  lines  and  proprietary
technologies, grown its client base.

Don Greer, is a Director and Chief Operating Officer, Don Greer was added to the
management team in the summer of 2004. In the role of Chief  Operating  Officer,
Mr. Greer brings over 35 years of upper level business experience to the team at
Megola.  Utilizing his vast  technical,  sales and  marketing  experience in the
industrial  sector, Don is responsible for the development and implementation of
business plans and  strategies,  and personally  oversees  resource  management,
revenue models and budgeting.

Mr. Greer began his career as a chemist at Polysar Rubber Corp., which was later
purchased by Bayer,  Inc. During his nearly 30 years at the company,  he quickly
progressed through the ranks, taking on increasingly  important managerial roles
in sales and  marketing,  holding  such  positions  as Regional  Sales  Manager,
Marketing  Director of the  Industrial  Group,  and Sales  Director of North and
South America.  More recently, he served for four years as the Director of Sales
and Marketing at Chicago Rawhide,  and during the previous three years he served
as  Regional   Canadian   Sales  Manager  at   Illinois-based   Inpro/Seal,   an
international leader in the bearing seal industry. Mr. Greer received a Bachelor
of Science degree in chemistry from Queens College in Dundee, Scotland.

Todd  Clark,  Secretary,  Director.  Mr.  Clark  lends  over 20 years of  proven
experience  taking  companies to higher  levels of success.  He is a graduate of
Fanshawe College and has been a member or director of various business and civic
organizations  and boards,  including  the Sarnia  Lambton  Chamber of Commerce,
Bluewater  Franchised Auto Dealers  Association and the Sarnia Lambton  Business
Development Corporation.  Mr. Clark is a long-time entrepreneur that has founded
or taken over the reigns of numerous  successful  businesses  in the  automotive
sales and rental,  commercial,  agricultural  and sports  industries,  achieving
record revenues and profits.  Currently, he is the President and General Manager
of Ron Clark Motors, a Ford dealership in Wyoming, Ontario.

Mr. Clark joined  Megola's  board of directors on August 28, 2003 and has proven
to be an asset to the  company,  helping  to guide its  direction  as it rapidly
expands the scope of its offerings.


                                       23
<PAGE>

Aldo Rotondi, Director of Business Development. Mr. Rotondi currently offers his
management  services to the Company by  assisting  the  company  with  financing
strategies and expansion opportunities. He will be supporting Megola Inc. in the
deployment   of   the   Megola   ScaleGuard   systems   by   increasing   active
distributorships and seeking active distribution  alliances to increase Megola's
sales.  Aldo  Rotondi  began  his  business  career  in 1986  with  his  private
Architectural  Design/Build  company;  Rotondi Design & Associates.  For 6 years
with his  design  team,  he was  involved  in all  aspects of  development  from
commercial  developments in the US and Canada,  including the redevelopment of a
motel and its conversion into a new Super 8 Motel  franchise.  Mr. Rotondi was a
partner  in the  development  of  Super  8  Motels  in  Eastern  Canada  with CF
Hospitality,  Inc.,  where he served as Vice President of Development.  CF owned
the franchise  rights to the Super 8 Motel Chain for Eastern  Canada and Rotondi
assisted  in growing  the chain from two to  twenty-five  properties  in Eastern
Canada, of which, 9 properties were corporately  owned by CF Hospitality  before
the company was sold in 1997 to Westmont Hospitality.

Mr.  Rotondi then joined Royop  Properties  Corporation,  a startup  development
company that Aldo  assisted in acquiring the Canadian  franchise  rights for the
Super 8 Motel  chain.  Royop also  developed  Wingate  Inns.  Royop was publicly
traded on the Toronto  Stock  Exchange.  By working with  together  with Cendant
Corporation  (NYSE:CD),  Royop  expanded  its  Super 8  Franchise  base  from 28
properties  to  over 60  franchised  properties.  Mr.  Rotondi  oversaw  Super 8
Franchise  Developments  for Royop  Properties.  Mr.  Rotondi  later  left Royop
Corporation to focus on his business ventures with Airam Capital Group,  Inc., a
company that he founded and acts as president.  Royop was later  acquired by H&R
REIT and at the time of the sale to H&R,  Royop's assets  exceeded $150 Million.
Airam Capital is in the business of seeking out private  business  opportunities
that may be better served as public  companies.  As principal for various public
companies,  he seeks out  mergers  with  private  companies  that  will  enhance
shareholder value.

Family Relationships

There are no family  relationships  among our  officers,  directors,  or persons
nominated for such positions.

Legal Proceedings

No officer,  director,  or persons  nominated  for such  positions,  promoter or
significant  employee  has been  involved  in legal  proceedings  that  would be
material to an evaluation of our management.

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires our
directors and executive officers, and persons who beneficially own more than 10%
of a registered  class of our equity  securities,  to file reports of beneficial
ownership and changes in beneficial  ownership of our securities with the SEC on
Forms 3 (Initial Statement of Beneficial Ownership),  4 (Statement of Changes of
Beneficial  Ownership  of  Securities)  and 5 (Annual  Statement  of  Beneficial
Ownership of Securities). Directors, executive officers and beneficial owners of
more than 10% of our Common Stock are required by SEC  regulations to furnish us
with copies of all Section  16(a) forms that they file.  Except as otherwise set
forth  herein,  based solely on review of the copies of such forms  furnished to
us, or written  representations  that no reports were required,  we believe that
for the fiscal year ended  December 31, 2003  beneficial  owners  complied  with
Section 16(a) filing  requirements  applicable to them to the extent they had no
trading activity in 2002. Form 5's have now been filed.


                                       24
<PAGE>

PART III - ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth summary  information  concerning the compensation
received for services  rendered to us during the fiscal year ended July 31, 2005
by our Chief Executive  Officer.  No other executive officers received aggregate
compensation  during our last fiscal year that  exceeded,  or would exceed on an
annualized basis, $100,000.

EXECUTIVE COMPENSATION

      Particulars of compensation awarded to, earned by or paid to:

      (a) Our company's Chief  Executive  Officer (the "CEO") received an annual
      salary of $84,500 Cdn.;

      (b) Don Greer,  our Chief Operating  Officer,  works two days per week and
      receives a salary of $400.00 Cdn per day;

      (c) Aldo Rotondi,  Director,  will receive common stock in lieu of salary;
      to be determined at end of calendar year 2005

      Each member of the Advisory Board  received  10,000 shares of common stock
      in lieu of salary.

Employment Contracts or Arrangements

We do not have  employment  agreements.  We have no agreements to pay any of our
officers any compensation  and none of our officers,  except as set forth above,
has been paid any compensation in 2005.

Board Compensation

Members of our board of  directors do not receive  cash  compensation  for their
services as  directors;  however,  Don Greer  received  15,000 common shares for
services as director.  Directors are reimbursed for reasonable expenses incurred
in attending board or committee meetings.

Advisory Board

Megola Inc.  has formed an Advisory  Board that consist of  individuals  that it
believes to be an important  group of people that will play an integral  role in
assisting  Megola in the overall  growth of the company.  The Company will turn,
from time to time,  to its Advisory  Board for  direction  and advice on certain
business matters of the company.  Megola  compensated these  individuals  10,000
common shares.


                                       25
<PAGE>

PART III - ITEM 11.  SECURITY  OWNERSHIP  OF  MANAGEMENT  AND  CERTAIN  SECURITY
HOLDERS

The following tables set forth the ownership,  as of the fiscal year end, of our
common stock by each person known by us to be the beneficial  owner of more than
5% of our outstanding  common stock, our directors,  and our executive  officers
and directors as a group.  To the best of our knowledge,  the persons named have
sole  voting  and  investment  power  with  respect  to such  shares,  except as
otherwise noted. There are not any pending or anticipated  arrangements that may
cause a change in control of our company.

--------------------------------------------------------------------------------
                                     Amount and Nature of        Percentage
Name of Beneficial Owner             Beneficial Ownership        of Class(1)
--------------------------------------------------------------------------------

Joel Gardner                                3,378,297(2)             9.6%
Airam Capital Group (3)                     1,875,000                5.3%
John Gardner                                1,167,297(2)             3.3%
Todd Clark                                  2,046,204                5.8%
Mike Banovsky                               1,167,297                3.3%
Scott Kelvin                                1,441,956                4.1%
Vince Lally                                 1,510,621                4.3%
Total                                      12,586,672               35.7%
--------------------------------------------------------------------------------

(1) Based on 35,017,429 shares of common stock issued and outstanding as of July
31, 2005. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange  Commission and generally  includes voting or investment
power with respect to securities. Except as otherwise indicated, we believe that
the  beneficial  owners of the common stock listed above,  based on  information
furnished by such owners,  have sole investment and voting power with respect to
such shares, subject to community property laws where applicable.

(2) John Gardner is Joel Gardner's father.

(3) Aldo Rotondi is sole owner of Airam Capital Group, Inc.

PART III - ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None. - Not Applicable.

PART III - ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
Form: 8-K  Filing Date: 10/19/2004
Form: 8-K  Filing Date: 11/23/2004
Form: 8-K  Filing Date: 12/14/2004
Form: 8-K  Filing Date: 12/14/2004
Form: 8-K  Filing Date: 3/10/2005
Form: 8-K  Filing Date: 3/25/2005
Form: 8-K  Filing Date: 7/5/2005

PART III - ITEM 14. FEES FOR ACCOUNTING SERVICES

We paid Malone & Bailey,  PC fees for auditing services of $15,740 during fiscal
2005. There were no non-audit fees.


                                       26
<PAGE>

                                   SIGNATURES

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

                  Megola Inc.
         ------------------------------
                  (Registrant)

     Signature                   Title                            Date
   ------------             ---------------                    ----------

/s/ Joel Gardner           Chief Executive Officer           October 28, 2005
--------------------        and Director
Joel Gardner

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

     Signature                   Title                            Date
   ------------             ---------------                    ----------

/s/ Joel Gardner           Chief Executive Officer           October 28, 2005
--------------------       and Director
Joel Gardner


/s/ Todd Clark             Director                          October 28, 2005
----------------------
Todd Clark


                                       27