U.S. SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 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  August
31, 2001, or

[ ]   Transition report pursuant to section 13 or 15(d)  of
the Securities Exchange act of 1934 for the transition  period
from    to

                 Commission File No.  000-31343

                         OZOLUTIONS INC.
   (Name of Small Business Issuer as specified in its charter)

           Delaware                         98-0229321
(State or Other Jurisdiction of           (IRS Employer
Incorporation or Organization)         Identification No.)

 30 Denver Crescent, Suite 200, Toronto, Ontario, Canada M2J 1G8
      (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (416) 490-0254

Securities registered under Section 12(b) of the Act:  None

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

                 Common Stock, Par Value $0.001

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

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B 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.  [X]

The issuer's revenues for its most recent fiscal year:  $-0-.

The aggregate market value of voting stock held by non-affiliates
computed on the basis of the last sale price on November 12,
2001, was $28,288,223.

As of November 12, 2001, the Registrant had outstanding
19,799,133 shares of Common Stock, par value $0.001.

Documents incorporated by reference:  None.

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                        TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                     Page

Part I

1.   Description of Business                                3

2.   Description of Properties                              8

3.   Legal Proceedings                                      8

4.   Submission of Matters to a Vote of Security Holders    9

Part II

5.   Market for Common Equity and Related Stockholder       9
     Matters

6.   Management's Discussion and Analysis of Financial      10
     Condition and Results of Operations

7.   Financial Statements                                   12

8.   Changes in and Disagreements with Accountants          12
     on Accounting and Financial Disclosure

Part III

9.   Directors, Executive Officers, Promoters and Control   13
     Persons; Compliance with Section 16(a) of the
     Exchange Act

10.  Executive Compensation                                 14

11.  Security Ownership of Certain Beneficial Owners and    15
     Management

12.  Certain Relationships and Related Transactions         17

13.  Exhibits and Reports on Form 8-K                       17

Signatures                                                  19

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<PAGE>

                             PART I

                ITEM 1.  DESCRIPTION OF BUSINESS

Our Company

     Ozolutions Inc., a Delaware corporation, is a development
stage company engaged in the business of distributing ozone and
activated water treatment systems.  Ozone water treatment systems
are based on ozonation, which is the treatment of water with
ozone gas to purify the water.  Ozone systems include an ozone
generator that applies an electrical discharge to oxygen or
ambient air to produce ozone, and a transfer system for injecting
the ozone into a water stream to oxidize or purify the water.
Activated systems use water flow over ceramic balls to generate
from the resulting friction an electric charge in the water.
This activated water is believed to facilitate the removal of
scale build-up in water pipes, enhance the operation of water
purification systems by softening the outside surface of
microorganisms, and has other potential benefits.

     We are in the development stage, in that we have yet to
generate significant revenue from operations.  We had a net loss
of $542,419 for the year ended August 31, 2001.  Ozolutions has
no history of profitable operations on which to base a judgment
regarding our future operations.  Our operations and resulting
cash flows are subject to all of the risks inherent in an
emerging business enterprise, which has not achieved
profitability.  There can be no assurance that product sales made
by us in the future will be at volumes and prices sufficient for
us to achieve and maintain profitable operations.

     Ozolutions' offices are located at 30 Denver Crescent, Suite
200, Toronto, Ontario, Canada M2J 1G8, where our telephone number
is (416) 490-0254.

Hankin Products

     Ozolutions has an exclusive distributorship agreement with
Hankin Atlas Ozone Systems, Ltd., which allows us to market and
sell the complete range of Hankin water treatment products in
Mexico and the Caribbean Zone.  In addition, Ozolutions has an
exclusive agreement to market in the Province of Ontario, Canada,
a new compact ozone power generator called the EntrOzone, which
can be used by consumers and smaller commercial and institutional
customers to purify water.

     Hankin offers a variety of medium to large size ozone
process equipment for use in treating water for recreational,
industrial, municipal and other commercial applications.  These
would include swimming and wave pool facilities, treatment of
industrial effluent, treatment of cooling tower water, municipal
water treatment, purification of drinking water, and bottled
water purification.  The equipment consists of modules or
component parts that can be configured to meet the specific
treatment needs of the customer.  In unusual applications, Hankin
can design custom systems for the customer.  The price for ozone
process systems range from $27,000 for medium-sized systems to
$200,000 for larger systems.

     The EntrOzone is a smaller, self-contained ozone process
system designed by Hankin for the consumer market.  It
incorporates the latest electronics and semi-conductor technology
integrated with a dielectric assembly to provide a low-cost, high
efficiency ozone generator.  Perhaps the most significant feature
of the EntrOzone is its great versatility.  Due to its size,
weight and energy consumption, it is well suited to a number of
small ozone treatment applications, including:

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<PAGE>

  * Small bottled water systems
  * Cooling water treatment
  * Laboratory use
  * Ultra pure water
  * Residential/cottage use

     The EntrOzone comes cabinet mounted with connections in the
rear of the unit.  Controls are front panel mounted for easy
access.  Electrical components are maintained at a cool operating
temperature by a cabinet mounted fan.  Tubing and fittings in
contact with ozonated gas are constructed of glass, 316 stainless
steel or Teflon.

     Manufacturing of the EntrOzone has been out-sourced, but not
sold, by Hankin to an independent manufacturer.  1421209 Ontario
Limited acquired a right of first refusal to purchase the
manufacturing rights on the same terms and conditions offered by
a prospective purchaser in the event Hankin ever decides to sell
the manufacturing rights.  This first right of refusal was
assigned to Ozolutions when we acquired the marketing rights to
the EntrOzone in Ontario.  We have not received any indication
that Hankin ever intends to sell the manufacturing rights, so we
cannot predict whether we would ever be in a position to exercise
this first right of refusal.

     Under our distribution agreements with Hankin for Mexico and
the Caribbean Zone, we receive a commission for completed sales.
In Ontario we are entitled to purchase from Hankin the EntrOzone
and related products at Hankin's established prices, which are no
higher than prices to other distributors, and we resell the
product to end users at a mark-up.

     We began our marketing efforts in Mexico and the Caribbean
Zone in July 2000, and have identified eight potential water
treatment projects in Mexico.  The Mexican state of Chihuahua has
three new water projects and two wastewater treatment projects
proposed for development.  As proposed, a significant portion of
the projects would consist of ozone water treatment systems.
Pemex Refinacion, the Mexican petroleum agency, has proposed
three cooling tower installations for refineries that incorporate
ozone water treatment systems.  The current schedule is to
collect field data and specifications for the projects, so that
bids for the projects can be submitted in February or March 2002.
Although we are unaware of any other bidders, there is always the
possibility that other companies will submit competitive bids for
the ozone treatment components of these projects, so there is no
assurance that one or more of the project contracts will be
awarded to the Hankin products we offer.  We have yet to realize
any revenue from the sale of water treatment systems, but we
expect we will complete sales of our first systems before the end
of 2002.  A system is sold when the water treatment unit is
delivered and billed.

     We have ordered 25 EntrOzones for delivery in January and
February 2002, at a cost to us of $1,667 per unit, or a total of
$41,675.  These units will be resold to our dealers at $2,800 per
unit for their initial inventory.  The suggested retail price for
the EntrOzone is $3,933.  When we place an order with Hankin, we
pay 50% of the total invoice price with the balance due net 30
days after delivery.  We believe we can obtain delivery of units
within 30 days of order, so we plan on placing orders for product
against orders we receive from our dealers and customers we sell
to directly.  Dealers and customers are required to pay 50% of
the invoice price at the time of ordering with the balance due on
the date of delivery.  No units will be ordered for a dealer or
customer unless Ozolutions receives the initial deposit, and
units will only be delivered against payment of the remaining
purchase price.

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<PAGE>

     The EntrOzone carries a one year warranty from Hankin
against defects in material and workmanship.  Defective units can
be returned to Ozolutions for warranty repairs by Hankin or for
replacement.

     Ozolutions acquired marketing rights to Hankin products from
1421209 Ontario Limited, a Canadian corporation, in June 2000.
We acquired the marketing rights for 8,000,000 shares of
Ozolutions common stock, or approximately 42% of the outstanding
shares, a non-refundable payment of $17,217 (CDN$25,000) made at
closing, and an additional $1,000,000 payable in installments
commencing in November 2000.  In November 2000, Ozolutions and
1421209 Ontario Limited agreed to an extension for the
installment payments scheduled as follows:

     *    $550,000 on the earlier of 90 days following the
          establishment of a public market in Ozolutions common
          stock or June 30, 2001;

     *    $250,000 on the earlier of 150 days following the
          establishment of a public market in Ozolutions common
          stock or August 30, 2001; and

     *    $200,000 on the earlier of 180 days following the
          establishment of a public market in Ozolutions common
          stock or September 30, 2001.

     We have yet to generate significant revenue from operations
and there is no assurance we will generate significant revenue
from operations prior to the end of June 2002.  Consequently,
Ozolutions is seeking financing from outside sources to make the
payment of $1,000,000 now due to 1421209 Ontario Limited, or
negotiate with 1421209 Ontario Limited a further extension on the
payment.  We have not identified any potential sources of
financing and have no written agreement with 1421209 Ontario
Limited that it will extend the payment obligation, although we
have a verbal understanding that 1421209 Ontario Limited will
work with us, provided Ozolutions makes future payments on a
regular and progressive basis.  Failure to make the payments due
is a default under the purchase contract for the marketing rights
that could result in a claim against Ozolutions and a loss of our
marketing rights to Hankin products.

     The marketing rights we acquired were valued for financial
reporting purposes at $1,025,217, which includes the non-
refundable payment made at closing in the amount of $17,217, the
$1,000,000 installment obligation, and a value of $8,000 assigned
to the common stock issued, which is the total par value for
8,000,000 shares.

     In Mexico and the Caribbean Zone (countries located in or
bordering on the Caribbean Ocean with the exception of Mexico and
Cuba) Ozolutions is entitled to market on an exclusive basis
medium to large size Hankin ozone generating equipment systems
used for water treatment in various applications.  We can also
distribute in Mexico and the Caribbean Zone the smaller
EntrOzone, but we have not developed any marketing plans for the
EntrOzone in these territories and do not expect we will do so
prior to the end of 2001.  Each distribution agreement is for a
term of three years and is renewable for two additional three-
year terms.  In order to obtain renewal of our exclusive
marketing rights in Mexico only, we must obtain at least
CDN$1,000,000 (approximately USD$666,666 based on current
exchange rates) of sales in each three-year term of the
agreement.  Due to this condition in the distribution contract
for Mexico, we have focused on marketing Hankin products in
Mexico and expect we will continue to do so through the first six
months of 2002.  We are required to use our best efforts to
procure orders in the territories and to maintain a sales force
in each territory.  Each order or contract for purchase of a
Hankin system must be submitted to Hankin for final pricing and
approval,

                                  5
<PAGE>

and we receive a commission on the final contract
price, excluding any portion of the price attributable to
consulting, engineering and design services provided by Hankin
and post installation maintenance and repair.  Our commission is

   *      10% of the first CDN$100,000 of the contract price
          (approximately  USD$66,666 based  on  current  exchange
          rates),

   *      7.5%  of  the  next  CDN$100,000  (approximately
          USD$66,666 based on current exchange rates),

   *      6%   of   the  next  CDN$300,000  (approximately
          USD$200,000 based on current exchange rates),

   *      2%   of   the  next  CDN$500,000  (approximately
          USD$333,333 based on current exchange rates), and

   *    1% of any remaining amount.

     A territory fee of CDN$50,000 (USD$33,333) was required to
secure the marketing rights in Mexico.  Of this fee, CDN$15,000
(USD$10,000) has been paid and the balance is payable out of 10%
of our commission earned on product sales.

     In Ontario, Canada, Ozolutions is the exclusive distributor
for Hankin's Point of Use and Point of Entry water treatment
units, which are referred to as the EntrOzone, and related
products.  We do not hold marketing rights for any of the larger
Hankin systems in Ontario.  The distribution agreement for this
smaller system covering Ontario is for a term of three years and
is renewable for two additional three-year terms without minimum
sale requirements.  We are required to use our best efforts to
procure orders in the territories and to maintain a sales force
for that purpose.  Under the agreement we purchase the EntrOzone
and related products from Hankin at published prices to all
distributors and, if there are no published prices, at prices no
higher than those charged other distributors.  We expect to
resell the product to our dealers at a mark-up of approximately
68% of our cost, or a price of approximately $2,800 based on our
current cost of $1,667.

ELCE Products

     ELCE International's water activation systems use water flow
over ceramic balls to generate, from the resulting friction, an
electric charge in the water.  This activated water is believed
by ELEC to facilitate the removal of scale build-up in water
pipes and enhance the operation of water purification systems by
softening the outside surface of microorganisms.  ELCE products
are also believed to enhance plant productivity and improve
growth and uniformity in fish and shrimp farming.  Ozolutions has
a non-exclusive distributorship agreement with ELCE International
to market its products in Mexico and Caribbean markets including
Costa Rica, Panama, Ecuador and Jamaica.  Ozolutions works with
existing contacts and agents already promoting Hankin ozone
technology, since these are non-competitive product lines.  ELCE
products have a commercial, industrial focus whereas Hankin
offers products with a more institutional/municipal /public
health orientation.  We acquired our distribution rights in
August 2001, and are in the process of formulating a marketing
strategy for the products.

                                  6
<PAGE>

Marketing Strategy

     Ozolutions intends to market Hankin and ELEC systems in
Mexico and the Caribbean Zone primarily to national, state, and
local governmental units and municipalities as a solution for
their water treatment needs.  These marketing efforts will be
undertaken primarily by management and through independent
contractors and consultants.  We are now establishing our
independent contractors in Mexico and the Caribbean Zone and are
pursuing directly contacts with government officials responsible
for water projects.  These efforts have resulted in the
identification of sales opportunities in food processing, water
bottling, hotels, hospitals, and industrial cooling towers.
Mexico and the Caribbean Zone represent new markets for Hankin
where it has not previously sold its large and medium size water
treatment systems.  Our marketing rights give us the opportunity
to develop these markets for Hankin.

     Historically, ozone based water treatment products were only
available to medium and larger sized municipal, industrial and
institutional users.  The EntrOzone, which is a new product
developed by Hankin, has the potential to increase greatly the
number of units sold because it opens the market to consumers and
smaller commercial and institutional customers.  We have entered
into dealer agreements with ten dealers for the EntrOzone, and
are seeking an additional five dealers.  Our objective is to have
dealers ready to offer the EntrOzone in the first quarter of 2002
to take advantage of the beginning of the construction season in
the spring of 2002.

Competition

     Hankin products compete with similar products manufactured
by other multi-national companies, many of which have greater
financial and marketing resources than Ozolutions.  Ozonia, PCI
Wedeco, Vivendi/US Filter and Mitsubishi are the major
competitors that offer medium and large size ozone water
treatment systems similar to the systems offered by Hankin.
These companies are pursuing the market for water treatment
solutions in areas such as Mexico and the Caribbean Zone where
there is a growing need for water treatment facilities, but we
have found no evidence that these companies have captured a
significant portion of the market for water treatment systems.
We believe we can compete with these companies based on price and
product performance.

     The market for smaller water treatment systems in Ontario is
fragmented with a large number of companies offering systems with
differing technologies.  The different technologies used in
available systems include filtration through active carbon or
other substances, distillation, ultra violet treatment, and
reverse osmosis.  We have found no evidence that any one
technology has a significantly greater market share than the
other.  Only one company, OzoMax, offers a product similar to the
EntrOzone.  The OzoMax is manufactured in China in the form of a
core units with add on components that must be purchased to make
the product functional, while the EntrOzone comes complete as a
fully integrated unit.  Based solely on its own examination of
the products, management of Ozolutions believes the EntrOzone is
superior in materials and workmanship to the OzoMax.  Ozolutions
has not found any evidence that there is an established dealer or
service network for the OzoMax in Ontario.  We believe we can
compete with other small water treatment systems on the basis of
price and product performance.

Government Regulation

     Ozolutions sales activity in various countries may be
subject to local business licensing requirements, to the extent
such requirements exist in a given country.  We do not believe
these

                                  7
<PAGE>

licensing requirements represent a significant barrier to
our distribution business.  Generally, on sale of Hankin products
in various countries Hankin is responsible for complying with any
import and installation regulations applicable to the systems
sold.  The adoption of NAFTA several years ago has removed any
significant barriers to the importation of Hankin products in the
countries where we are pursuing our sales efforts.

Employees

     As of August 31, 2001, Ozolutions employed a total of three
persons, including two executives and one clerical employee.
None of the its employees is represented by a labor union.
Ozolutions has experienced no work stoppages and believes that
its relations with its employees are good.

About Ozolutions

     Ozolutions was formed as a Delaware corporation in January
1996 under the name "Unipak Process, Inc." as a subsidiary of
Aban Hytek, Inc. ("AHI").  It received certain assets of AHI for
its stock and the stock was spun-off to the stockholders of AHI
in connection with a business reorganization between AHI and an
unrelated party.

     In October 1999, Ozolutions changed its name to Rico
Resources 1999, Inc., in connection with its plan at that time to
engage in the business of developing a gold mining prospect in
Costa Rica. Following further study and evaluation of the
prospect, management determined that the estimated yield of gold
from the prospect would not be sufficient based on prevailing
gold prices to cover extraction costs and produce an acceptable
profit.  Consequently, this business endeavor was abandoned.

     In June 2000, Ozolutions acquired marketing rights to
products of Hankin Atlas Ozone Systems Limited, a Canadian
corporation, from 1421209 Ontario Limited, a Canadian
corporation.  In connection with the acquisition, we changed our
name to Ozolutions Inc.

               ITEM 2.  DESCRIPTION OF PROPERTIES

     Ozolutions uses approximately 400 square feet of office
space at 30 Denver Crescent, Suite 200, Toronto, Ontario, Canada
M2J 1G8, provided by Max Weissengruber, one of its officers and
directors, at no charge.  We believe this space will be adequate
for our needs for at least the next 12 months.

     Ozolutions has a verbal understanding with an unaffiliated
person, Graham Lintell, whom we expect to employ in 2002 to
assist in managing our Ontario dealer group, to use, as needed,
1,000 square feet of warehouse space to store EntrOzone units
that are not shipped directly to end users or dealers. We expect
the cost of this temporary storage space will be approximately
$500 per month. If for any reason this arrangement is not
effected, we believe there is a substantial amount of warehouse
space available at reasonable rates in the Toronto area that can
meet our needs.

                   ITEM 3.  LEGAL PROCEEDINGS

    Ozolutions is not a party to any material pending legal
proceedings, and to the best of its knowledge, no such
proceedings by or against Ozolutions have been threatened.

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

     No matter was submitted to a vote of security holders in the
fiscal quarter ended of August 31, 2001.

                             PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market and Stockholder Information

     The common stock of Ozolutions trades in the over-the-
counter market under the symbol "OZLU."  Trading in our common
stock commenced in June 2001.  The following table sets forth for
the respective periods indicated the prices of the common stock
in the over-the-counter market, as reported and summarized on the
OTC Bulletin Board.  Such prices are based on inter-dealer bid
and asked prices, without markup, markdown, commissions, or
adjustments and may not represent actual transactions.

Fiscal Quarter Ended      High Bid ($)           Low Bid ($)

August 31, 2001             3.35                  0.50

    Since its inception, no dividends have been paid on our
common stock.  Ozolutions intends to retain any earnings for use
in its business activities, so it is not expected that any
dividends on the common stock will be declared and paid in the
foreseeable future.

    At August 31, 2001, there were approximately 1,574 holders
of record of our Common Stock.

Recent Sales of Securities

     In June 2001, we issued options to purchase common stock of
Ozolutions to our officers and directors in reliance on the
exemption set forth in Section 4(2) of the Securities Act of 1933
for transactions by an issuer not involving a public offering.
The following table shows the number of options issued to each
person and the exercise price and expiration date of the options.

Name                Number of       Exercise   Expirat
                    options           Price      ion

Max Weissengruber   175,000           $1.00     June 2003
James A. Clemenger  100,000           $1.00     June 2003
Dennis Caplice       50,000           $1.00     June 2003


The option issued to Dennis Caplice expired following his
resignation from the board of directors.

     In June 2001, we issued 400,000 shares of common stock as
compensation valued at $64,000 to David Michael, LLC, for
services to be rendered under a consulting agreement in
connection with business and financial development and advice.
Ozolutions believes David Michael, LLC, to be a sophisticated
investor with access to all information pertaining to the
business and financial condition of Ozolutions.  The shares were
issued in reliance on Section 4(2) of the Securities Act of 1933
in

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<PAGE>

transactions by an issuer not involving a public offering.  No
commissions were paid to any person in connection with the
transaction.

     In June 2001, we issued 400,000 shares of common stock as
compensation valued at $64,000 to Feng Shui Consulting, Inc., for
services to be rendered under a consulting agreement in
connection with business and financial development and advice.
Ozolutions believes Feng Shui Consulting, Inc., to be a
sophisticated investor with access to all information pertaining
to the business and financial condition of Ozolutions.  The
shares were issued in reliance on Section 4(2) of the Securities
Act of 1933 in transactions by an issuer not involving a public
offering.  No commissions were paid to any person in connection
with the transaction.

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

     Ozolutions is an international marketer and distributor of
water purification systems using ozone technology.  The markets
we are primarily targeting are Mexico, the Caribbean Zone, and
Ontario, Canada.

     Ozolutions acquired the distribution rights to Hankin
products from 1421209 Ontario Limited for 8,000,000 shares of
Ozolutions common stock $17,217 paid at closing, and an
additional $1,000,000 payable in installments.  There was no
affiliation between 1421209 Ontario Limited and Ozolutions prior
to the purchase of the distribution rights.

     Ozolutions was originally required to make a payment of
$550,000 to 1421209 Ontario Limited no later than November 21,
2000, as part of the purchase price for the distribution rights
it acquired from 1421209 Ontario Limited, but this payment
deadline was extended in November 2000 to June 30, 2001 to
provide Ozolutions additional time to commence operations and
raise capital.  Additional payments of $250,000 and $200,000 were
due no later than August 31, 2001 and September 30,2001.
Ozolutions has not made the required payments.  1421209 Ontario
Limited has verbally agreed to extend the time for payment so
long as Ozolutions will make payments on a regular and
progressive basis.  There is no assurance that we will be able to
generate sufficient revenue from operations or raise capital
within a time frame that will allow for payment of our
obligations to 1421209 Ontario Limited within a time period it
will find acceptable.  If we are unable to generate sufficient
revenue or locate financing, there is no assurance that 1421209
Ontario Limited will continue to grant us an extension of our
payment obligation.  Failure to make our payment to 1421209
Ontario Limited due under our purchase agreement would give rise
to a claim against Ozolutions that could result in a loss of our
marketing rights, which would adversely affect our business.  We
are now pursuing private financing options to complete the
required payments and provide operating capital.  1421209 Ontario
Limited had agreed to lend to Ozolutions up to $300,000 at our
option to provide financing for our operations at the time
1421209 Ontario Limited receives its first payment of $550,000
from Ozolutions under the purchase agreement for the distribution
rights to Hankin products.  However, since we failed to make our
required payments under the purchase agreement, this option is
not currently being pursued.

     We orders for 56 EntrOzone units, but Hankin has delayed
delivery of the water treatment units because of design and
development work believed by Hankin to be required by
environmental regulatory emphasis on multi-barrier treatment
systems.  The EntrOzone unit now includes ozone treatment, ultra
violet treatment, and a filtration system, which combined offer
protection against the widest possible range of contaminants.
Delivery of initial production units is now expected in January
2002.  Full production is scheduled to commence in February or
March of 2002.

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<PAGE>

     In August 2001, we entered into a distribution agreement
with ELCE International Inc., which holds the world-wide
distribution rights to an industrial and commercial water
activation treatment system manufactured in Japan.  This is a non-
exclusive distribution agreement for Mexico and the Caribbean,
including Costa Rica, Panama. Ecuador and Jamaica.  We are not
required to pay a licensing fee for these territories and receive
a 30 percent discount off ELCE list price and require a 50
percent deposit on signing with the balance payable on
installation.  Depending on the size and nature of the proposed
application, installed prices can vary from $3,500 up to
$300,000.

     Until Ozolutions receives outside financing to fund its
capital commitments, its operations will be limited to those that
can be effected through its officers, directors and consultants.
These persons have verbally agreed to defer payment of
compensation from Ozolutions until revenue generated from sales
of product and financing from outside sources provides sufficient
working capital to fund operations and payment of their
compensation.  From June 2000 through May 31, 2001, D. Brian
Robertson, Joseph Cira, and Lou Shefsky, stockholders of
Ozolutions, advanced $98,798, $7,333, and $17,717, respectively,
to Ozolutions to cover sales and administrative expenses and an
initial deposit of $22,292 made by Ozolutions for the purchase of
25 EntrOzone water treatment systems.  Max Weissengruber,
President and a Director, has also advanced $72,317 to
Ozolutions.  These advances do not bear interest and the parties
have not set repayment terms.  These individuals have verbally
indicated their willingness to make further advances in the
future as may be required to fund ongoing sales and
administrative operating costs.  These advances are currently the
sole source of capital to fund operational costs.  However, there
is no written or fixed obligation to make further advances, so
there is no assurance that Ozolutions will have the capital
resources to fund its operations over the next 12 months.

     Under distribution agreements with Hankin and ELCE
International, product is shipped by both suppliers against
purchase orders we place either directly to the end user or
dealers.  Accordingly, we do not require any significant amount
of capital for inventory or facilities required to maintain and
distribute inventory.

     Based on Management's evaluation of the potential market,
Ozolutions projects that 2,400 EntrOzone units can be sold in
Ontario by the end of 2002.  We plan making delivery of the first
31 EntrOzone units in January and February 2002, which units have
been sold directly to one dealer.  Other independent dealers will
be acquiring their initial inventory once Hankin regular
production commences.  An additional 25 units have been ordered
for delivery by March 2002 for direct customer sales.

     From the date of its inception, on January 10, 1996, through
August 31 2001, Ozolutions has not generated any revenue from the
sale of water treatment systems.  Total expenses for the fiscal
years ended August 31, 2001 and 2000, were $542,419 and $77,926,
respectively.  These totals include:  consulting and professional
fees of $302,844 in fiscal year 2001 and $32,333 in 2000;
amortization of marketing rights of $157,484 in fiscal year 2001
and $26,248 in 2000; and, general and administrative expenses,
fees and interest expense of $82,091 in fiscal year 2001, and
$19,345 in 2000.  The substantial increase in expenses from 2000
to 2001 is a result of Ozolutions acquiring its marketing rights
to Hankin products in June 2000 near the end of the fiscal year
on August 31, 2000, so that much of the expense of developing the
business was incurred in fiscal year 2001.  As a result,
Ozolutions recognized a net loss for the fiscal year ended August
31, 2001, of $542,419, compared to a net loss of $77,926 for
fiscal year 2000.  Consulting and professional fees include
$128,000, which is the value of a total of 800,000 shares of
common stock issued to David Michael, LLC, and Feng Shui

                                  11
<PAGE>

Consulting, Inc., for services under consulting contracts entered
into in June 2001 that were cancelled in September 2001, for non-
performance.

     Ozolutions believes its general, selling and administrative
expenses during fiscal year 2002 will be approximately $250,000,
of which $172,000 will be used for marketing and sales expenses
including:

     *    production of printed sales and marketing materials

     *    advertising, promotion and trade show participation

     *    travel expenses associated with advancing current and
          proposed projects in Mexico and the Caribbean Zone

     *    travel expenses associated with establishing an Ontario
          dealer network

     The remaining $78,000 is the estimated cost of clerical and
management staff and facilities required to operate over the next
year.

Forward-Looking Statements

     All statements, other than statements of historical fact,
which address activities, actions, goals, prospects, or new
developments that Ozolutions expects or anticipates will or may
occur in the future, including such things as expansion and
growth of its operations and other such matters are forward-
looking statements.  Any one or a combination of factors could
materially affect Ozolutions' operations and financial condition.
These factors include competitive pressures, success or failure
of marketing programs, changes in pricing and availability of
products, and conditions in the capital markets.  Forward-looking
statements made by Ozolutions are based on knowledge of its
business and the environment in which it operates as of the date
of this report.  Because of the factors listed above, as well as
other factors beyond its control, actual results may differ from
those in the forward-looking statements.

                  ITEM 7.  FINANCIAL STATEMENTS

     The financial statements of Ozolutions appear at the end of
this report beginning with the Index to Financial Statements on
page 20.

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

     Not applicable.

                                  12
<PAGE>

                            PART III

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

Directors and Officers

     The following table sets forth the names, ages, and
positions with the Company for each of the directors and officers
of the Company.

Name                  Age  Positions (1)                      Since

Max Weissengruber     63   President and Director            April 2000
James A. Clemenger    45   Secretary,Treasurer and Director  April 2000
Douglas R. Robertson  63   Director                          July 2001

     All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualify.
Officers serve at the discretion of the Board of Directors.  We
have an audit committee and do not expect to form any other board
committees until our operations increase.  The following is
information on the business experience of each director and
officer.

     Max Weissengruber has been a Managing Partner and sole owner
of Acris Partners of Toronto, Ontario since May 1993.  Acris
Partners is a marketing and communications consulting firm
engaged in the business of conducting employee surveys and
developing marketing communications materials and customized
training packages.  Annual revenues for Acris partners over the
four year period ended December 31, 1999, have averaged $60,000
per year.  Mr. Weissengruber began Acris Partners after retiring
from the position of Director of Marketing of Wilson Learning
Systems, a worldwide provider of strategic business development
planning and employee training program services.  He started with
Wilson Learning Systems in November 1987, and was responsible for
developing programs for a number of clients, including General
Motors and IBM Hong Kong.

     James A. Clemenger has been employed as an executive officer
by Ozolutions since April 2000.  From November 1999 to April
2000, Mr. Clemenger was employed as a Sales Manager for Dynamex
of Toronto, Ontario, where he was responsible for marketing sales
programs for Postal Promotions, a specialized high priority
courier service based in Toronto.  From May 1997 to October 1999,
he provided consulting services to MacLeod Trading Inc. on Latin
America trading opportunities and development of product
distribution strategies.  Mr. Clemenger was Consul and Trade
Commissioner for the Colombian Government trade Bureau in Toronto
form June 1991 through October 1996 where he was responsible for
promoting expansion of Colombian goods and services exports to
Canada.  He earned a Masters of Business Administration from the
University of Western Ontario in 1995.

     Douglas R. Robertson has served as general manager of MTL
Trading of Toronto, Ontario since May 2001.  MTL Trading is
engaged in the business of buying and selling meat and poultry
products.  For over five years prior to May 2001, Mr. Robertson
was the president and owner of Robertson Foods of Toronto,
Ontario, a company engaged in the business of exporting pork,
beef and poultry.

                                  13
<PAGE>

Section 16(a) Filing Compliance

     Section 16(a) of the Securities Exchange Act of 1934
requires officers and Directors of Ozolutions and persons who own
more than ten percent of a registered class of Ozolutions' equity
securities to file reports of ownership and changes in their
ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission, and forward copies of such filings to Ozolutions.
Based on the copies of filings received by Ozolutions during the
most recent fiscal year, the directors, officers, and beneficial
owners of more than ten percent of the equity securities of
Ozolutions registered pursuant to Section 12 of the Exchange Act
have filed on a timely basis all required Forms 3, 4, and 5 and
any amendments thereto.

                ITEM 10.  EXECUTIVE COMPENSATION

Annual Compensation

    The following table sets forth certain information regarding
the annual and long-term compensation for services in all
capacities to Ozolutions for the prior fiscal years ended August
31, 2001, 2000, and 1999, of those persons who were either the
chief executive officer during the last completed fiscal year or
one of the other four most highly compensated executive officers
as of the end of the last completed fiscal year whose annual
salary and bonuses exceeded US$100,000.


                                                      Annual
                                                   Compensation
Name and Principal Position              Year        Salary ($)

Max Weissengruber, President (1)         2001         36,000
                                         2000          3,000
                                         1999            -0-

     No executive compensation was paid to any officer of
Ozolutions during the year ended August 31, 2001.  Each of the
current executive officers has agreed to defer any compensation
until Ozolutions obtains sufficient capital from operations or
outside sources to cover compensation expenses.  Since July 1,
2000, Max Weissengruber has devoted substantially all of his time
to getting the business of Ozolutions started, and he has agreed
to defer compensation of $3,000 per month for his services, which
began to accrue at July 1, 2000.  James A. Clemenger has not
devoted any material amount of time to the business of
Ozolutions, and we do not expect his time commitment to us will
change until our business develops and we begin recognizing
revenue from sales of Hankin products.  Officers and directors
are reimbursed for travel expenses incurred in connection with
Ozolutions' business.

Stock Options

     The following table sets forth certain information with
respect to grants of stock options during the fiscal year ended
August 31, 2001, to the Named Executive Officers.

                                  14
<PAGE>

<TABLE>
<CAPTION>

                                % of Total
                                 Number of     Options/SARs
                                 Securities     Granted to
                                 Underlying    Employees in      Exercise or    Expiration
Name and Principal Position   Options Granted   Fiscal Year   Base Price ($/Sh)    Date
<S>                               <C>               <C>             <C>          <C>
Max Weissengruber                 175,000           53.8            $1.00        June 2003
  President
</TABLE>

     James A. Clemenger, an officer and director, also received
an option to purchase 100,000 shares at an exercise price of
$1.00 per share that expires in June 2003.  A similar option for
50,000 shares was issued to Dennis Caplice, a former director,
which has since expired without being exercised.

     The following table sets forth certain information with
respect to unexercised options held by the Named Executive
Officers.  No outstanding options held by the Named Executive
Officers were exercised in the fiscal year ended August 31, 2001.

<TABLE>
<CAPTION>

                                 Number of Securities         Value of Unexercised
                           Underlying Unexercised Options      In-the-Money Options
                                  at Fiscal YearEnd (#)      At Fiscal Year End ($)(1)
Name and Principal Position   Exercisable/ Unexercisable    Exercisable/ Unexercisable
<S>                                    <C>                          <C>
Max Weissengruber                      175,000/ -0-                 $8,750/ -0-
  President
  Executive Officer
</TABLE>


(1)  This value is determined on the basis of the difference
between the fair market value of the securities underlying the
options and the exercise price at August 31, 2001.  The fair
market value of Ozolutions' common stock at August 31, 2001, is
determined by the last sale price on that date, which was $1.05
per share.

    ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                         AND MANAGEMENT

     The following table sets forth as of November 12, 2001, the
number and percentage of the outstanding shares of common stock
which, according to the information supplied to Ozolutions, were
beneficially owned by (i) each person who is currently a
director, (ii) each executive officer, (iii) all current
directors and executive officers as a group and (iv) each person
who, to the knowledge of Ozolutions, is the beneficial owner of
more than 5% of the outstanding common stock.  Except as
otherwise indicated, the persons named in the table have sole
voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.

                                  15
<PAGE>

                               Amount and Nature of Beneficial
                                          Ownership

                                   Common           Percent
Name and Address                   Shares          of Class

1421209 Ontario Limited (1)      6,000,000           30.3
Carl Lavoie
134 Melrose Avenue
Toronto, Ontario CN M5M 1Y7

Max Weissengruber (2)(3)          175,000             0.9
30 Denver Crescent, Suite 200
Toronto, Ontario, CN M2J 1G8

James A. Clemenger (2)(3)         100,000             0.5
53 Duggan Avenue
Toronto, Ontario, CN M4V 1Y1

Douglas R. Robertson                -0-               -0-
52189 Castlestone Court
Mississauga, Ontario  CN  L5B 1X9

All Executive officers and        275,000             1.4
Directors as a Group (3 persons)
________________________________

(1)  Carl Lavoie is the sole owner of 1421209 Ontario Limited.
     Accordingly, Mr. Lavoie may be deemed to have voting and
     investment control over the 8,000,000 shares of common stock
     held of record by 1421209 Ontario Limited.  From 1991 to the
     present, Mr. Lavoie has served as a Director of Financial
     Services with CB Richard Ellis Limited of Toronto, Ontario,
     where he has provided commercial mortgage and real estate
     transaction development and consulting services.

(2)  These persons are all of the directors and executive
     officers of Ozolutions.

(3)  The figures for each of these persons represent only options
     to purchase common shares that are vested or will vest
     within 60 days from the date as of which information is
     presented in the table.  These figures represent the
     percentage of ownership of the named individuals assuming
     each of them alone has exercised his options, and percentage
     ownership of all officers and directors as a group assuming
     all purchase rights held by such individuals are exercised.

                                  16
<PAGE>

    ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In  June  2000,  Ozolutions  acquired  marketing  rights  to
products   of  Hankin  Atlas  Ozone  Systems  Ltd.,  a   Canadian
corporation,   from   1421209   Ontario   Limited,   a   Canadian
corporation.   At  the  time of the transaction  1421209  Ontario
Limited  was  not  affiliated with Ozolutions.  We  acquired  the
marketing rights for 8,000,000 shares of Ozolutions common stock,
or   approximately  42%  of  the  outstanding   shares,   $17,217
(CDN$25,000)  paid  at  closing,  and  an  additional  $1,000,000
payable  in  installments during 2001.   We  have  not  made  the
required  payments.   We have no written agreement  with  1421209
Ontario  Limited  that  it  will extend the  payment  obligation,
although  we  have  a verbal understanding that  1421209  Ontario
Limited  will  work  with  us, provided Ozolutions  makes  future
payments on a regular and progressive basis.  Failure to make the
payments  due  is a default under the purchase contract  for  the
marketing  rights that could result in a claim against Ozolutions
and a loss of our marketing rights to Hankin products.

     As a negotiated element of the transaction, 1421209 Ontario
Limited agreed to loan to Ozolutions up to $300,000, at our
option, to provide financing for our operations at the time
1421209 Ontario Limited receives its first payment of $550,000
from us under the purchase agreement.  The loan will be
represented by a note due in two years bearing interest at an
annual rate of 6.5% and payable quarterly in arrears.  However,
since we failed to make our required payments under the purchase
agreement, this option is not currently being pursued.

     Ozolutions  uses  approximately 400 square  feet  of  office
space  provided  by Max Weissengruber, one of  its  officers  and
directors, at no charge.  Ozolutions is of the opinion  that  the
value of the space provided is not material to Ozolutions or  its
financial condition.

                            ITEM 13.
                EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

     Copies of the following documents are included as exhibits
to this report.

 SEC Ref.   Title of Document                         Location
    No.

    3.1     Certificate of Incorporation, as  amended     *
            October 22, 1999 and April 12, 2000

    3.2     By-Laws                                       *

   10.1     Asset  Purchase Agreement dated June  21,     *
            2000, between 1421209 Ontario Limited and
            Ozolutions Inc.

   10.2     Addendum A dated November 7, 2000,  to        *
            Asset Purchase  Agreement  dated  June  21,
            2000, between 1421209 Ontario Limited and
            Ozolutions Inc.

   10.3     Assignment of Contract for Hankin product     *
            distribution rights in Mexico between Hankin
            Atlas Ozone systems Ltd.,  1421209  Ontario
            Limited  and Ozolutions Inc.

                                  17
<PAGE>

   10.4     Assignment   of   Contract   for   Hankin     *
            product distribution rights  in the Caribbean
            Zone  between Hankin Atlas Ozone  systems Ltd.,
            1421209  Ontario Limited and Ozolutions Inc.

   10.5     Assignment   of   Contract   for   Hankin     *
            product distribution rights in Ontario between
            Hankin Atlas Ozone systems Ltd.,  1421209
            Ontario  Limited  and Ozolutions Inc.


   10.6     Loan   Agreement  dated  June  21,   2000     *
            between 1421209 Ontario Limited and Ozolutions
            Inc.

   10.7     Consulting  Agreement between  Ozolutions     *
            Inc. and Edward G. Deans

   10.8     Consulting  Agreement between  Ozolutions     *
            Inc. and R.L. Larocque & Associates

   10.9     Form of Ozolutions Dealer Agreement           *

   10.10    Distribution    Agreement    with    ELEC   This filing
            International Dated August 18, 2001

   10.11    Form   of  Option  Agreement  issued   to   This filing
            Directors

   10.12    Advisory  Agreement with  David  Michael,   This filing
            LLC Dated June 5, 2001

   10.13    Termination Letter for Advisory Agreement   This filing
            with David  Michael,  LLC, dated  September
            26, 2001

   10.14    Advisory Agreement with Feng Shui           This filing
            Consulting, Inc., Dated June 5, 2001

   10.15    Termination Letter for Advisory Agreement   This filing
            with Feng  Shui  Consulting,  Inc.,  dated
            September 26, 2001

*    These exhibits are incorporated herein by this reference to
the Registration Statement on Form 10-SB, as amended by Amendment
No.'s 1, 2, 3, 4, and 5 thereto, filed with the Securities and
Exchange Commission.

FORM 8-K FILINGS

     No reports on Form 8-K were filed during the fiscal quarter
ended August 31, 2001.

                                  18
<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.

                                   Ozolutions Inc.


Date: November 28, 2001   By: /s/ Max Weissengruber, President and
                                  Chief Financial Officer

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


Dated: November 28, 2001    /s/ Max Weissengruber, Director


Dated: November 28, 2001    /s/ James A. Clemenger, Director


Dated: November 28, 2001    /s/ Douglas R. Robertson, Director

                                  19
<PAGE>




                         OZOLUTIONS INC.

                      Financial Statements

                    August 31, 2001 and 2000

                              INDEX

                                                         Page

Independent Auditors' Report                               21

Balance Sheets at August 31,                               22
2001 and 2000

Statements of Changes in Stockholders'                     23
  Deficit for the Period from the Date of
  Inception (January 10, 1996) through
  August 31, 2001

Statements of Operations for the Two                       25
  Years Ending August 31, 2001 and 2000
  and for the Period from the Date of
  Inception (January 10, 1996) through
  August 31, 2001

Statements of Cash Flows for the Two                       26
  Years Ending August 31, 2001 and 2000
  and for the Period from the Date of
  Inception (January 10, 1996) through
  August 31, 2001

Notes to Financial Statements                              28

                                  20
<PAGE>






                    INDEPENDENT AUDITORS' REPORT



To the Board of Directors
  and Stockholders
Ozolutions, Inc.
Toronto, Ontario Canada


       We  have  audited  the  accompanying  balance  sheets   of
Ozolutions,  Inc.  (A  Development  Stage  Company)  (A  Delaware
Corporation)  as  of August 31, 2001 and 2000,  and  the  related
statements  of operations, changes in stockholders' deficit,  and
cash flows for each of the three years in the period ended August
31,  2001  and for the period from the date of inception (January
10, 1996) through August 31, 2001. These financial statements are
the    responsibility   of   the   Company's   management.    Our
responsibility  is  to  express an  opinion  on  these  financial
statements based on our audits.

       We  conducted  our  audits  in  accordance  with  auditing
standards  generally accepted in the United  States  of  America.
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
presentation  of the financial statements.  We believe  that  our
audit provides 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  Ozolutions,  Inc. (A Development Stage Company)  (A  Delaware
Corporation) as of August 31, 2001 and 2000, and the  results  of
its operations and its cash flows for each of the three years  in
the period ended August 31, 2001 and for the period from the date
of  inception  (January 10, 1996) through  August  31,  2001,  in
conformity with accounting principles generally accepted  in  the
United States of America.

      The  accompanying financial statements have  been  prepared
assuming  Ozolutions,  Inc.  (A  Development  Stage  Company)  (A
Delaware Corporation) will continue as a going concern.  As  more
fully  described in Note H, the Company has incurred losses  that
have  resulted  in  a  retained deficit.  This  condition  raises
substantial  doubt about the Company's ability to continue  as  a
going  concern.   The  financial statements do  not  include  any
adjustments   that  might  result  from  the  outcome   of   this
uncertainty.

/s/ Rotenberg & Company, llp

Rotenberg & Company, llp
Rochester, New York
  October 26, 2001

                                  21
<PAGE>


OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

BALANCE SHEETS

                                               (U.S. Dollars)

August 31,
                                                 2001       2000

ASSETS

Current Assets
Cash and Cash Equivalents                     $      -     $        -

Other Assets
Marketing Rights, Net of Accumulated
  Amortization                                  841,485       998,969
  Deposits                                       56,292             -

Total Assets                                 $  897,777    $  998,969

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts Payable                             $   40,711    $    6,845
Deferred Revenue                                 34,000             -
Due to 1421209 Ontario Limited - Due Within
  One Year                                    1,000,000       800,000
Due to Director                                  72,317             -
Due to Stockholders                             123,848        28,883

Total Current Liabilities                     1,270,876       835,728

Other Liabilities
Due to 1421209 Ontario Limited - Due After
   One Year                                           -       200,000

Total Liabilities                             1,270,876     1,035,728

Stockholders' Deficit
Common Stock:  $.001 Par; 50,000,000 Shares
  Authorized; 19,799,133 and
  18,999,133 Issued and Outstanding as
  of August 31, 2001 and 2000, respectively.     19,799        18,999
Additional Paid-In Capital                      238,496        33,217
Deficit Accumulated During Development Stage   (631,394)      (88,975)

Total Stockholders' Deficit                    (373,099)      (36,759)

Total Liabilities and Stockholders' Deficit   $ 897,777    $  998,969

The accompanying notes are an integral part of this financial
statement.

                                  22
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM DATE OF
INCEPTION (JANUARY 10, 1996)
   THROUGH AUGUST 31, 2001 AND 2000

<TABLE>
<CAPTION)

                                                  (U.S. Dollars)
                                                                        Deficit
                                                                      Accumulated
                                                          Additional    During        Total
                                  Number       Common      Paid-In    Development  Stockholders'
                                of Shares      Stock       Capital       Stage       Deficit
<S>                           <C>            <C>         <C>          <C>          <C>
Balance - January 10, 1996              -    $      -    $       -    $       -    $        -

Common Stock Issued in
 Exchange for
 Expenses Paid by
 Shareholders                  10,999,133       10,999           -            -        10,999

Common Stock Issued as
 Partial Consideration
 for Acquisition of
 Marketing Rights               8,000,000        8,000           -            -         8,000

Cash Contribution of Capital            -            -      17,217            -        17,217

Territory Fee Paid by
 Shareholder on
 Behalf of the
 Corporation                            -            -      10,000            -        10,000

Consulting Services
 Contributed by
 Officers/Directors
                                        -            -       6,000            -         6,000

Net Loss                                -            -           -      (88,975)      (88,975)


Balance - August 31, 2000      18,999,133    $  18,999    $ 33,217    $ (88,975)   $  (36,759)
</TABLE>
                                                       -continued -
The accompanying notes are an integral part of this financial statement.

                                  23
<PAGE>


OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM DATE OF
INCEPTION (JANUARY 10, 1996)
   THROUGH AUGUST 31, 2001 AND 2000 - continued

                                                  (U.S. Dollars)
<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                         Additional    During         Total
                                Number        Common      Paid-In    Development  Stockholders'
                               of Shares      Stock       Capital       Stage        Deficit
<S>                            <C>           <C>         <C>         <C>          <C>
Balance - August 31, 2000      18,999,133    $ 18,999    $ 33,217    $ (88,975)   $  (36,759)

Consulting Services
Contributed by

Officers/Directors/Consultants          -           -      42,000            -        42,000

Shares Issued to Advisors in
 in Exchange for
 Services                         800,000         800     127,200            -       128,000

Stock Options Granted-
 Compensation for
 Services Rendered                      -           -      20,429            -        20,429

Capital Contribution -
 Interest Expense                      -            -      15,650            -        15,650

Net Loss                               -            -           -     (542,419)     (542,419)

Balance - August 31, 2001     19,799,133    $  19,799    $238,496    $(631,394)  $  (373,099)
</TABLE>


The accompanying notes are an integral part of this financial statement.

                                 24
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada


STATEMENTS OF OPERATIONS

                                           (U.S. Dollars)
                                  Period from
                               Date of Inception
                              (January 10, 1996)    Years Ended August 31,
                                    Through
                                August 31, 2001      2001            2000

Revenues                         $         -    $         -    $         -

Expenses
Amortization of Marketing Rights     183,732        157,484         26,248
Consulting Fees                      266,000        260,000          6,000
Organization Costs                    11,049              -              -
Professional Fees                     69,177         42,844         26,333
Territory Fee                         29,765         19,765         10,000
Transfer Agent Fees                   21,136         14,101          7,035
General and Administrative            34,885         32,575          2,310
Interest Expense                      15,650         15,650              -

Total Expenses                       631,394        542,419         77,926

Loss Before Provision for Taxes     (631,394)      (542,419)       (77,926)

Provision for Taxes                        -              -              -

Net Loss for the Period          $  (631,394)   $  (542,419)   $   (77,926)

Weighted Average Number of
  Common Shares Outstanding -
  Basic and Diluted               12,729,555     19,192,010     12,572,903

Loss Per Common Share -
  Basic and Diluted              $     (0.05)   $     (0.03)   $     (0.01)


The accompanying notes are an integral part of this financial statement.

                                  258
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

STATEMENTS OF CASH FLOWS

                                           (U.S. Dollars)
                                     Period From
                                  Date of Inception
                                 (January 10, 1996)    Years Ended August 31,
                                       Through
                                  August 31, 2001       2001          2000

Cash Flows from Operating Activities

Net Loss for the Period            $  (631,394)   $   (542,419)   $  (77,926)

Non-Cash Adjustments:
Amortization of Marketing Rights       183,733         157,485        26,248
Contributed Services                    48,000          42,000         6,000
Shares Issued to Advisors              128,000         128,000             -
Compensation Expense                    20,429          20,429             -
Interest on Loans                       15,650          15,650             -
Organization Costs                      10,999               -             -
Territory Fee Paid by Shareholder       10,000               -        10,000

Changes in Assets and
Liabilities:
Deposits                               (56,291)        (56,291)            -
Accounts Payable                        40,711          33,866         6,845
Deferred Revenue                        34,000          34,000             -
Due to Director                         72,317          72,317             -
Due to Stockholders                    123,848          94,965        28,833

Net Cash Flows
   from Operating Activities                 -               -             -

Cash Flows from Investing Activities
Acquistion of Marketing Rights         (17,217)              -       (17,217)

Cash Flows from Financing Activities
Contribution by Stockholder             17,217               -        17,217

Net Increase in
   Cash and Cash Equivalents                 -               -             -

Cash and Cash Equivalents -
   Beginning of Period                       -               -             -

Cash and Cash Equivalents -
   End of Period                    $        -    $          -    $        -

                                            -continued -

The accompanying notes are an integral part of this financial statement.

                                  26
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada


STATEMENTS OF CASH FLOWS -
continued

                                           (U.S. Dollars)
                                  Period From
                               Date of Inception
                              (January 10, 1996)     Years Ended August 31,
                                    Through
                                August 31, 2001      2001          2000

Supplemental Disclosures

Interest Paid                      $        -    $       -    $         -
Income Taxes Paid                  $        -    $       -    $         -


Non-Cash Investing and Financing
Activities

Acquisition of Marketing
 Contracts                         $ 1,025,217    $      -    $ 1,025,217
Less: Purchase Price Financed
 via Note Payable to 1421209
 Ontario Limited                   (1,000,000)           -     (1,000,000)

Less: Purchase Price Paid via
 Issuance of Common Stock              (8,000)           -         (8,000)

Total Cash Paid                    $   17,217     $      -    $    17,217

The accompanying notes are an integral part of this financial statement.

                                  27
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note A -       The Company
      The  Company  was  incorporated under the  laws  of  the  State  of
      Delaware on January 10, 1996 as Unipack Process, Inc.  The name  of
      the  Company  was changed to Rico Resources 1999, Inc.  on  October
      22,  1999.   On  April  12, 2000, the Board of  Directors  filed  a
      Certificate  of  Amendment  with the  Secretary  of  the  State  of
      Delaware changing the name to Ozolutions, Inc.  On April 12,  2000,
      the  Board  of  Directors amended the articles of incorporation  to
      increase  the  number  of authorized shares of  common  stock  from
      20,000,000  to  50,000,000 shares of $.001 par value common  stock.
      The  Company's  principal  office is located  in  Toronto,  Ontario
      Canada.

      Scope of Business
      At  the  present time the Company is in the development  stage  and
      does  not  provide any product or service.  The Company intends  to
      be  an international marketer and distributor of water purification
      systems  using  ozone  technology.  The markets  the  Company  will
      target are Mexico, Caribbean, and Ontario Canada.

Note B -       Summary of Significant Accounting Policies
      Method of Accounting
      The   Company  maintains  its  books  and  prepares  its  financial
      statements on the accrual basis of accounting.

      Development Stage
      The  Company  has operated as a development stage enterprise  since
      its  inception  by  devoting substantially all of  its  efforts  to
      financial planning, raising capital, research and development,  and
      developing  markets  for its services.  The  Company  prepares  its
      financial  statements  in  accordance  with  the  requirements   of
      Statement of Financial Accounting Standards No. 7, "Accounting  and
      Reporting by Development Stage Enterprises."

      Cash and Cash Equivalents
      Cash  and  cash equivalents include time deposits, certificates  of
      deposit,  and  all  highly  liquid debt instruments  with  original
      maturities of three months or less.

      Loss Per Common Share
      Loss  per common share is computed in accordance with Statement  of
      Financial  Accounting Standards No. 128, "Earnings Per  Share,"  by
      dividing  income  available  to  common  stockholders  by  weighted
      average number of common shares outstanding for each period.

      Use of Estimates
      The   preparation  of  financial  statements  in  conformity   with
      generally  accepted  accounting principles requires  management  to
      make estimates and assumptions that affect the reported amounts  of
      assets  and  liabilities and disclosure of  contingent  assets  and
      liabilities  at  the  date  of  the financial  statements  and  the
      reported  amounts  of  revenues and expense  during  the  reporting
      period.  Actual results can differ from those estimates.

      Organizational Expenses
      Organizational  expenses represent management,  consulting,  legal,
      accounting,  and filing fees incurred to date in the  formation  of
      the   Company.   Organizational  costs  are  expensed  as  incurred
      pursuant to Statement of Position 98-5, "Reporting on the Costs  of
      Start-Up Activities".
                                                           - continued -

                                  28
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note B -       Summary of Significant Accounting Policies - continued
      Income Taxes
      The  Company accounts for income taxes in accordance with Statement
      of  Financial Accounting Standards No. 109, "Accounting for  Income
      Taxes,"  using  the  asset  and liability approach,  which  require
      recognition  of  deferred  tax  liabilities  and  assets  for   the
      expected  future tax consequences of temporary differences  between
      the  carrying  amounts  and  the  tax  basis  of  such  assets  and
      liabilities.  This method utilizes enacted statutory tax  rates  in
      effect  for  the  year  in  which  the  temporary  differences  are
      expected  to  reverse  and gives immediate  effect  to  changes  in
      income   tax  rates  upon  enactment.   Deferred  tax  assets   are
      recognized,   net  of  any  valuation  allowance,   for   temporary
      differences  and net operating loss and tax credit carry  forwards.
      Deferred  income tax expense represents the change in net  deferred
      assets and liability balances.

      Marketing Rights
      Marketing  rights represent the exclusive rights to distribute  the
      products of Hankin Atlas Ozone Systems, Ltd. acquired from  1421209
      Ontario  Limited.  Contracts are recorded at cost and are amortized
      over their useful lives.

      Impairment of Marketing Rights
      The   Company   adopted  the  Statement  of  Financial   Accounting
      Standards  No.  121, "Accounting for the Impairment  of  Long-Lived
      Assets  and  for Long-Lived Assets to be Disposed Of."   Under  the
      provisions of this statement, the Company has evaluated  its  long-
      lived  assets  for  financial  impairment,  and  will  continue  to
      evaluate  them as events or changes in circumstances indicate  that
      the carrying amount of such assets may not be fully recoverable.

      The  Company evaluates the recoverability of long-lived assets  not
      held  for  sale  by  measuring the carrying amount  of  the  assets
      against the estimated discounted future cash flows associated  with
      them.  At  the  time  such  evaluations indicate  that  the  future
      discounted  cash  flows  of  certain  long-lived  assets  are   not
      sufficient  to  recover  the carrying value  of  such  assets,  the
      assets  are  adjusted  to  their  fair  values.   Based  on   these
      evaluations,  there were no adjustments to the  carrying  value  of
      long-lived assets in 2001 or 2000.

Note C -       Marketing Rights
      The  Company purchased the exclusive marketing rights to distribute
      the  products  of Hankin Atlas Ozone Systems, Ltd.  in  Canada  and
      Mexico  from 1421209 Ontario Limited.  The acquisition occurred  on
      June  21,  2000  in which Ozolutions, Inc. received the  rights  to
      begin  distributing Hankin Atlas Ozone System,  Ltd.  products  and
      became obligated to 1421209 Ontario Limited for the purchase  price
      described below.

      The  original  payment terms (subsequently amended on  November  7,
      2000)  were  for  $1,017,217, and the issuance of 8,000,000  common
      shares  of  Ozolutions,  Inc.  The  $17,217  was  a  non-refundable
      payment paid to 1421209 Ontario Limited in June 2000.  The  sum  of
      $550,000 and the delivery of 8,000,000 common shares of stock  were
      payable  on or before the 60th day following the qualification  for
      trading  of  the  Ozolutions, Inc. common shares  on  a  recognized
      United  States  Securities Exchange, but  in  no  case  later  than
      November  21, 2000.  The sum of $250,000 was payable on  or  before
      the  150th  day  following the qualification  for  trading  of  the
      Ozolutions,  Inc.  common  shares on  a  recognized  United  States
      Securities  Exchange,  but in no case later than  April  21,  2001.
      The  remainder of the purchase price of $200,000 was payable on  or
      before  the  180th day following the qualification for  trading  of
      the  Ozolutions, Inc. common shares on a recognized  United  States
      Securities Exchange, but in no case later than April21, 2001.
                                                          - continued -

                                  29
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note C -       Marketing Rights - continued

      On  November  7,  2000  the agreement was  amended  to  extend  the
      original  due  dates  of the purchase price installments  to  allow
      Ozolutions  additional  time  to  raise  capital  and  to   further
      business operations. The revised due dates of the installments  are
      as follows:

      The  sum  of  $550,000  was  payable on  or  before  the  90th  day
      following the qualification for trading of Ozolutions, Inc.  common
      shares on a recognized United States Securities Exchange but in  no
      case  later  than  June  30, 2001, and the  delivery  of  8,000,000
      common  shares  of  stock were payable on or before  the  30th  day
      following  the  qualification for trading of the  Ozolutions,  Inc.
      common  shares  on a recognized United States Securities  Exchange,
      but  in no case later than April 30, 2001.  The sum of $250,000 was
      payable on or before the 150th day following the qualification  for
      trading  of  the  Ozolutions, Inc. common shares  on  a  recognized
      United  States  Securities Exchange, but  in  no  case  later  than
      August  30,  2001. The remainder of the purchase price of  $200,000
      is  payable  on or before the 180th day following the qualification
      for  trading of the Ozolutions, Inc. common shares on a  recognized
      United  States  Securities Exchange, but  in  no  case  later  than
      September 30, 2001.

      In  November  2000,  the  8,000,000 shares  of  common  stock  were
      delivered to 1421209 Ontario Limited.

      None  of  the  three  cash payments were paid  to  1421209  Ontario
      Limited  as  required.  The loan is technically in  default  as  of
      August  31, 2001.  1421209 Ontario Limited has the right to  demand
      full  payment  if  any payment is in default  and  remains  so  for
      thirty  days or to make the agreement null and void.  It is 1421209
      Ontario  Limited's  intent to work with the  Company  in  extending
      these payment terms.

      The  aggregate  purchase price for the marketing  rights  has  been
      allocated  to  the three territories based upon the  estimated  net
      revenue of each of the territories as follows:

       August 31,                                  2001         2000

       Ontario Territory                   $    798,644   $   798,644
       Mexico Territory                         150,912       150,912
       Caribbean Territory                       75,661        75,661

       Total Marketing Contracts           $  1,025,217   $ 1,025,217

       Less: Accumulated Amortization           183,732        26,248

       Net Marketing Contracts             $    841,485   $   998,969

      Contracts  for  the  Ontario Canada and Caribbean  territories  are
      being  amortized over the remainder of their useful lives  of  nine
      years  which represents the contractual terms of three  years  plus
      two   automatic  renewal  extensions  of  three  years  each.   The
      contract  for  the  Mexico territory is being  amortized  over  the
      remainder  of  its initial contract term of three  years.   Renewal
      provisions of two three year terms in the Mexico contract were  not
      included   in  the  amortization  period  since  the  renewal   was
      contingent  upon  the company achieving approximately  $666,000  of
      sales  during each term of the contract, which is uncertain  as  of
      the date of the financial statements.
                                                          - continued -

                                  30
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note C -       Marketing Rights - continued

      The  remaining  contractual lives at the date of acquisition  (June
      21,  2000)  upon  which amortization expense is  being  charged  to
      operations is as follows:

          Ontario Territory                       102 Months
          Caribbean Territory                     105 Months
          Mexico Territory                         33 Months

      Amortization  expense amounted to $157,484, $26,248,  and  $183,732
      for  the  periods ended August 31, 2001, 2000 and the  period  from
      date  of  inception  (January 10, 1996) through  August  31,  2001,
      respectively.

Note D - Deposits
      The   Company  deposited  $56,000  with  vendors  to  purchase   56
      EntrOzone Water Purification Systems.

Note E - Stockholders' Equity
      Initial Capitalization
      The  Company  had  most of its organizational  costs  paid  by  the
      shareholders.   The  shareholders paid $10,999 for  these  services
      for  which they received 10,999,133 shares of the Company's  common
      stock.  The value assigned to the shares was $.001 per  share.   In
      addition, certain stockholders made a cash contribution of  $27,217
      which  was  used  as  the  down payment  on  the  purchase  of  the
      marketing  rights and territory fees.  The cash contributions  have
      been  recorded  as  additional paid-in capital in the  accompanying
      financial statements.

      Shares  Issued  in  Connection with the Purchase of  the  Marketing
      Contracts
      The  Company approved and issued in book form 8,000,000  shares  of
      common  stock in June 2000 as part of the purchase of the business.
      See  Note  C  for  details.  The value assigned to the  shares  was
      $.001.  The shares were subsequently delivered in November 2000.

Note F -       Consulting and Advisory Agreements
      The  Company  signed a consulting agreement on July 1,  2000.   The
      consulting  services  consist of managerial services,  advising  on
      production,  distribution, sales and promotion, labor negotiations,
      contract   negotiations,  financial  services,   and   such   other
      consulting services as the Company and consultant agree upon.   The
      agreement  is in effect September 1, 2000 through August  31,  2003
      with  an  annual  fee of $90,000.  The agreement was  cancelled  on
      August 31, 2001.

      The  Company  entered into a consulting agreement on May  5,  2000,
      which   consists  of  the  development  of  sales,  marketing   and
      application   of   technology  for  the  use   of   ozone   related
      technologies.   The agreement is for a term of one year  commencing
      September  1,  2000 with an annual fee of $12,000.   The  agreement
      was cancelled on February 28, 2001.
                                                          - continued -

                                  31
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note F -       Consulting and Advisory Agreements - continued

      On  June 5, 2001, the Company entered into advisory agreements with
      the  firms of David Michael LLC and Feng Shui Consulting, Inc.  The
      purpose  of  the  advisory agreements is to assist the  Company  in
      effecting  the  purchase of businesses and assets relative  to  its
      business  and  growth strategy, acquisition of other operations  or
      businesses,  general  business and financial  consulting,  and  the
      introduction  of  the  Company  to  public  relations   firms   and
      consultants  and others that may assist the Company in  its  plans.
      For  the  services  described in their respective  agreements,  the
      advisors  will  each  be issued shares of Ozolutions,  Inc.  common
      stock  on  the  following schedule: June 5, 2001 - 400,000  shares;
      September  5,  2001 - 200,000 shares; December 5,  2001  -  200,000
      shares;  March  5,  2002  - 150,000 shares.   The  agreements  were
      subsequently  cancelled on September 26, 2001,  and  are  currently
      being renegotiated. On June 5, 2001, 400,000 shares were issued  to
      each  of  the  firms.  The Company has charged  operations  in  the
      amount of $128,000 for the fair value of the services rendered.   A
      fair  value of the common stock awarded could not be determined  at
      the  date  of  the award as the stock had not begun  trading.   The
      September  5,  2001  shares  were  not  issued  and,  due  to   the
      agreements  being  renegotiated,  no  additional  shares  will   be
      issued.

Note G -       Related Party Transactions
      Certain  disbursements of Ozolutions, Inc.  have  been  paid  by  a
      director  of  the Company, therefore a Due to Director account  has
      been  set  up.  The balance at August 31, 2001 and 2000 is  $72,317
      and  $-0-,  respectively.  The amount due is  non-interest  bearing
      and  contains no formal repayment terms.  The Company  has  imputed
      interest at the prime rate plus 1% and charged operations  with  an
      offsetting credit to additional paid-in capital.

      Certain  disbursements  of  Ozolutions,  Inc.  have  been  paid  by
      certain  stockholders, therefore a Due to Stockholders account  has
      been  set  up.  The balance at August 31, 2001 and 2000 is $123,848
      and  $28,883, respectively.  The amount due is non-interest bearing
      and  contains no formal repayment terms.  The Company  has  imputed
      interest at the prime rate plus 1% and charged operations  with  an
      offsetting credit to additional paid-in capital.

      The  Company  purchased marketing rights from and  has  outstanding
      debt with 1421209 Ontario Limited, a company which owns 30% of  the
      outstanding stock of Ozolutions, Inc. at August 31, 2001.

      The  Company signed a loan agreement on June 21, 2000 with  1421209
      Ontario Limited (A Related Party) for $300,000.  The proceeds  will
      be  made  available to the Company at its option for use as working
      capital  during the start up phase of the operation.  The  proceeds
      become  available  to  the  company upon  1421209  Ontario  Limited
      receiving  the first installment of $550,000 of the purchase  price
      of  the  marketing rights.  No amounts were outstanding under  this
      agreement  as  of  August 31, 2001 or 2000.  The  loan  is  payable
      quarterly  in arrears with an interest rate of 6.5% per annum,  and
      is  payable  in  full  in  two years from the  date  the  money  is
      advanced.

      The  Company used office space in a facility owned by a stockholder
      at  no  cost.   The  estimated fair rental of the office  space  is
      deemed immaterial to the financial statements.

                                  32
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note H -       Going Concern
      The  Company's  financial statements have  been  presented  on  the
      basis   that  it  is  a  going  concern,  which  contemplates   the
      realization  of assets and the satisfaction of liabilities  in  the
      normal  course  of  business. The Company reported  net  losses  of
      $621,394  from  the period of inception (January 10, 1996)  through
      August31,  2001.   As  a  result there is  a  retained  deficit  of
      $621,394 at August 31, 2001.

      The Company's continued existence is dependent upon its ability  to
      raise  capital  or  to successfully market and sell  its  products.
      The  financial statements do not include any adjustments that might
      be  necessary should the Company be unable to continue as  a  going
      concern.

Note I -       Stock Options
      On  June  5,  2001, the Board of Directors approved a share  option
      agreement for directors, senior officers and key employees  of  the
      Company.

      Directors
      On  June  5,  2001, the Company granted stock options  for  325,000
      shares  to  three  directors  of the  Company.   The  options  vest
      immediately  and  have a duration of two years.  The  options  were
      granted  at exercise prices that were below the fair value  of  the
      common  stock  at  the  date  of grant.  Accordingly,  the  Company
      recognized  compensation expense of $20,049  as  a  charge  against
      operations  during 2001 for the difference between the  fair  value
      and the exercise price of the common stock at the date of grant.

      Stock  option transactions for the year ending August 31, 2001  are
      summarized as follows:

                                      Weighted
                                      Exercise  Outstanding  Exercisable
                                       Price

    Outstanding at September 1, 2000  $    -            -          -
    Granted                             1.00      325,000    325,000
    Exercised                              -            -          -
    Forfeited/Expired                   1.00      (50,000)   (50,000)

    Outstanding at August 31, 2001    $ 1.00      275,000     275,000

      The  following  table  summarizes  information  about  fixed  stock
      options outstanding:

               Options Outstanding            Options Exercisable

         Shares     Weighted    Weighted      Shares      Weighted
         under      Average      Average       under      Average
         Option    Remaining    Exercise      Option      Exercise
                      Life        Price                    Price

        275,000       1.76       $ 1.00       275,000      $ 1.00

                                                          - continued -

                                  33
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note I -       Stock Options - continued

      Directors - continued

      As  permitted  under  Statement of Financial  Accounting  Standards
      No.123 ("SFAS 123") "Accounting for Stock-Based Compensation",  the
      Company  measures stock-based compensation cost as  the  excess  of
      the  quoted market price of the Company's common stock at the  date
      of  the  grant over the amount the employee must pay for the stock.
      However,  SFAS  123  requires disclosure of pro  forma  net  income
      (loss)  and  pro forma net income (loss) per share as if  the  fair
      value-based method had been applied in measuring compensation  cost
      for the stock-based awards granted.

      Reported and pro forma net loss and loss per share amounts are  set
      forth below:

                                    Period From
                                  Date of Inception
                                 (January 10, 1996)
                                       Through       August 31,   August 31,
                                August 31, 2001        2001        2000

       Net Loss as Reported        $ (631,394)   $  (542,419)   $  (77,926)
       Net Loss Pro Forma          $ (895,815)   $  (806,840)   $  (77,926)

       Loss Per Share - Diluted    $     (.05)   $      (.03)   $     (.01)
       Loss Per Share -Pro Forma   $     (.07)   $      (.04)   $     (.01)

      The  weighted  average fair value per option at the date  of  grant
      for options granted during fiscal 2001 was $1.08.

      The  fair values of the options granted were estimated on the  date
      of  their grant using the Black-Scholes option-pricing model  based
      on the following weighted average assumptions:

       August 31,                                             2001

       Risk Free Interest Rate                                 4.15%
       Expected Life                                         2 Years
       Expected Market Volatility                                 7%
       Expected Dividend Yield                                    0%

      Forfeitures are recognized as they occur.

Note J -       Income Taxes
      At  August  31,  2001  and  2000,  the  Company  had  approximately
      $631,000  and  $89,000,  respectively,  of  net  operating   losses
      available  for Federal tax purposes, which are available to  offset
      future  taxable  income.   The net operating  loss  carry  forwards
      begin  to expire in 2011.  The Company has fully reserved  for  any
      future  tax  benefits  from the net operating loss  carry  forwards
      since  it has not generated any revenues to date.  The Company  has
      no  other  material  deferred tax assets  or  liabilities  for  the
      periods presented.

                                  34
<PAGE>

OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS

Note K -       Fair Value of Financial Instruments
      The  fair value of cash and cash equivalents, deposits and accounts
      payable,  approximated  book value at  August  31,  2001  and  2000
      because  their  maturity  is  generally  less  than  one  year   in
      duration.

      The  fair  value of due to 1421209 Ontario Limited, due to director
      and  due  to  stockholders could not be obtained without  incurring
      excessive costs as they have no readily determinable market price.

                                  35
<PAGE>