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, 2002, 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:  $134,885.

The aggregate  market value of voting stock held by  non-affiliates  computed on
the basis of the last sale price on November 25, 2002, was $2,761,493.

As of November 25, 2002,  the Registrant had  outstanding  33,614,926  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 Matters             9

6.    Management's Discussion and Analysis or Plan of Operation            10

7.    Financial Statements                                                 15

8.    Changes in and Disagreements with Accountants on Accounting and      15
      Financial Disclosure

Part III

9.    Directors, Executive Officers, Promoters and Contro Persons;         15
      Compliance with Section 16(a) of the Exchange Act

10.   Executive Compensation                                               16

11.   Security Ownership of Certain Beneficial Owners and Management       18

12.   Certain Relationships and Related Transactions                       19

13.   Exhibits and Reports on Form 8-K                                     19

14.   Controls and Procedures                                              20

Signatures                                                                 21

                                       2

<PAGE>


                                     PART I

                         ITEM 1. DESCRIPTION OF BUSINESS

Our Company

     Ozolutions  Inc.,  a  Delaware  corporation,  is a 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  granules 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 have yet to generate  significant revenue from operations.  Revenues for
the year ended August 31, 2002 were $134,885.  We had a net loss of $386,422 for
the year  ended  August  31,  2002.  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

     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  multi  barrier  ozone process
system which also uses ultra violet and carbon filtration to protect against the
widest  possible  range of  contaminents.  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:

      *     Laboratory use

      *     Ultra pure water

                                       3

<PAGE>

      *     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.

     We have ordered 25 EntrOzones for delivery expected in the first quarter of
2003. 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.

     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.

     In Ontario,  Canada,  Ozolutions is the exclusive  distributor for Hankin's
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  territory  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.

     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 2003. 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$642,000 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 2003. 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,  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

                                       4

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     * 10%  of  the  first  CDN$100,000  of the  contract  price  (approximately
     USD$64,000 based on current exchange rates),

     * 7.5% of the next CDN$100,000  (approximately  USD$64,000 based on current
     exchange rates),

     * 6% of the next CDN$300,000  (approximately  USD$193,000  based on current
     exchange rates),

     * 2% of the next CDN$500,000  (approximately  USD$321,000  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.

ELCE Products

     ELCE  International's  water activation systems use water flow over ceramic
granules to generate,  from the resulting  friction,  an electric  charge in the
water.  This  activated  water is believed by ELCE 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.

     The ELCE water system is a stainless  steel container with inlet and outlet
pipes. The container holds the ceramic granules,  which are made up primarily of
natural  silica and  alumina.  When  attached to a water  source,  water  forced
through  the ELCE  water  system  sets the  ceramic  granules  in motion and the
interaction  of the granules in the water creates a  micro-electrolysis  effect.
This effect on the water leaving the system creates the apparent benefits of:

     * Higher penetrating  capability through cell membranes in living organisms
     and plants;

     * Higher sanitary capability;

     * Deodorizing effect; and

     * Stronger dispersing capability.

     Ozolutions has exclusive distributorship agreements with ELCE International
to market its products in Canada and Costa Rica.  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.

     Our distribution  agreement in Canada dated January 15, 2002,  grants to us
the exclusive  right to market the ELCE water system in Canada for a term of one
year and is  automatically  renewed for three years  subject to  complying  with

                                       5

<PAGE>

certain terms of the agreement.  During the first years,  Ozolutions is required
to purchase 75 units every three months,  and this minimum purchase  requirement
increases  by 30 percent in each  subsequent  year.  We are entitled to purchase
each unit at a 40 percent discount from ELCE  International's  stated prices. We
must retain a technician for training purposes at USD$2,000 per month for a term
of one year, and retain engineers and other professional consultants appropriate
for the sale and  installation  of ELCE  water  systems  in  different  industry
applications.  The agreement  contemplates that product will be delivered within
45 days following order.  For the marketing rights in Canada,  we issued to ELCE
International  25,000 shares of the  restricted  common stock of Ozolutions  and
options to purchase  500,000  common  shares at an  exercise  price of $0.50 per
share.  Our  distribution  agreement  for Costa  Rica dated  March 1,  2002,  is
similar,  except our minimum purchase  requirement in the first year is 10 units
per month, we are not required to retain a technician for training purposes, and
we did not issue any shares of common stock or pay any other  consideration  for
the marketing  rights.  We have met all purchase  requirements  as of August 31,
2002.

Marketing Strategy

     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 are currently
looking for dealers for the product.  Our  objective is to have dealers ready to
offer  the  EntrOzone  in the first  quarter  of 2003 to take  advantage  of the
beginning of the construction season in the spring of 2003.

     Ozolutions  intends to market  Hankin  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.

     We began our  marketing  efforts in Mexico and the  Caribbean  Zone in July
2000,  and have  identified a significant  number of 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 2003.  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 ozone water treatment
systems,  but we expect we will complete  sales of our first systems  before the
end of 2003. A system is sold when the water  treatment  unit is  delivered  and
billed.  In the Cribbean Zone,  several  large-scale  municipal  water treatment
proposals have been submitted at the request of local authorities.

                                       6

<PAGE>

     We have aggressively  marketed the ELCE water system in Central America and
Canada  and  use the  same  type  of  marketing  approach  as  Hankin  products.
Ozolutions has  successfully  conducted shrimp larvae and algae tests in Panama.
In Peru,  we will be  installing  ELCE  units in the  ships and  factories  that
service  the  fishmeal  industry.  Once  further  tests  have been  successfully
completed,  we intend  to make a focused  marketing  effort  in the  shrimp  and
fishmeal industry.

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 unit 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  licensing  requirements  represent a
significant barrier to our distribution business.  Generally,  on sale of Hankin
or ELCE  products  in  various  countries  Hankin  or ELCE  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 and ELCE products in the countries  where
we are pursuing our sales efforts.

Employees

     As of August 31, 2002, Ozolutions utilized a total of up to six consultants
including two  executives  and one part time clerical  employee.  Ozolutions has
experienced  no  work  stoppages  and  believes  that  its  relations  with  its
consultants are good.

                                       7

<PAGE>

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
rents  storage  space in Toronto on a  month-to-month  basis for  maintaining  a
limited inventory of product. The cost of this space is USD$325 per month.

                            ITEM 3. LEGAL PROCEEDINGS

     On June 5, 2001, Ozolutions entered into advisory agreements with the firms
of David  Michael,  LLC,  and Feng Shui  Consulting,  Inc.  The  purpose  of the
advisory  agreements  was to assist  Ozolutions  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 Ozolutions to public relations firms and consultants and
others that may assist  Ozolutions in its plans.  For the services  described in
their respective  agreements,  the advisors were to receive shares of Ozolutions
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. Pursuant to this schedule, 400,000 shares were issued to each of
the consulting  firms.  The agreements were cancelled by Ozolutions on September
26, 2001,  and  subsequently  efforts were made to  renegotiate  the  agreements
without  success.  In June 2002,  David Michael,  LLC, and Feng Shui Consulting,
Inc.,  filed a suit in Federal  District  Court,  District of Utah,  case number
2:02CV-0538  ST, against  Ozolutions for breach of contract for failure to issue
additional  shares of common  stock under the  agreements.  Ozolutions  filed an
answer,  counter  claims,  and third party  complaint  denying  the  substantive
allegations  of the  complaint  and  asserting  breach of contract  and fraud in
connection with the transaction.  Management  believes the suit is without merit
and intends to vigorously  defend its position.  Management does not believe the
range of loss, if any, can be reasonably estimated at this time.

                                       8

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     On January 11, 2002,  Ozolutions  entered into a financial  consulting  and
investment  banking  agreement with Chapman,  Spira & Carson LLC. The purpose of
the  agreement  was to assist  Ozolutions  with general  business and  financial
consulting  and  obtain  equity  and debt  financing  up to $2  million on terms
agreeable  to  Ozolutions.  Ozolutions  believes  that  under  the  terms of the
agreement it was obligated to pay a  non-refundable  retainer fee of $25,000 and
issue 200,000  shares of  Ozolutions  common stock on the receipt of the initial
financing proceeds.  In addition,  Ozolutions would then become obligated to pay
$5,000 per month for  consulting  and service fees for the subsequent 24 months.
Finally,  the agreement provides that Ozolutions would pay a commission of 7 1/2
percent on any subsequent financing arrangements and would be obligated to issue
an additional 1,000,000 shares of Ozolutions common stock upon completion of the
full $2 million financing.  As of February 28, 2002,  Ozolutions had paid $3,000
of the $25,000  retainer fee in advance.  In May 2002,  Chapman,  Spira & Carson
made a claim that $30,000 was then due under the agreement, even though no funds
had been raised for  Ozolutions.  In June 2002,  Chapman,  Spira & Carson made a
demand for arbitration through the American Arbitration  Association as provided
in the  agreement  claiming  $50,000 in fees,  plus nine percent  interest,  and
200,000  shares of  Ozolutions  common stock.  Management  believes the claim is
without   merit  and  intends  to  vigorously   defend  its  position.   Due  to
uncertainties in the arbitration  process,  management is unable to estimate the
potential financial impact of these proceedings.

         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 August 31, 2002.

                                     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
November 30, 2001                     2.40                       0.32
February 28, 2002                     1.00                       0.21
May 31, 2002                          0.76                       0.09
August 31, 2002                       0.30                       0.09

     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.

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<PAGE>

     At August 31, 2002, there were approximately 1,895 holders of record of our
Common Stock.

Recent Sales of Securities

     Ozolutions  entered into a Stock Purchase Agreement on October 1, 2001 with
First Chartered Capital Corporation,  Inc. Under the agreement,  First Chartered
is entitled to purchase  common stock of Ozolutions for 30 percent of the market
value on the date of purchase in reliance  on the  exclusion  from  registration
under Regulation S promulgated under the Securities Act of 1933.  Through August
31, 2002,  12,209,193 restricted common shares were purchased by First Chartered
with Ozolutions receiving $1,030,609.  The shares were issued in reliance on the
safe harbor exclusion from  registration set forth in Regulation S adopted under
the Securities Act of 1933. The agreement with First  Chartered was cancelled in
August 2002.

     In January  2002, we acquired the exclusive  ELCE  distribution  rights for
Canada and in March 2002 to Costa Rica. We issued to ELCE  International  25,000
restricted  common shares and granted options to purchase  500,000 common shares
at $0.50 per share that expire in February 2004. These securities were issued in
reliance on the  exemption  set forth in Section 4(2) of the  Securities  Act of
1933 or the exclusion from  registration  under  Regulation S. No commission was
paid in connection with the transaction.

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

General

     Ozolutions  is  an   international   marketer  and   distributor  of  water
purification systems using ozone and water activator technology.  The markets we
are primarily targeting are Mexico; the Caribbean zone,  including Panama, Costa
Rica, and Jamaica; El Salvador; Ecuador; Peru; and Canada.

Ozone Technology

     Ozolutions  purchased  the  distribution  rights  to Hankin  products  from
1421209 Ontario Limited for 8,000,000 shares of Ozolutions common stock, $17,217
cash paid at closing, and an additional $1,000,000 payable in installments.  The
8,000,000  shares of common stock were delivered to 1421209  Ontario  Limited in
November 2000.  There was no affiliation  between  1421209  Ontario  Limited and
Ozolutions prior to the purchase of the distribution rights.

     Ozolutions  did not make any of the required cash  payments  related to the
$1,000,000.

     In April 2002, the agreement with 1421209 Ontario Limited was cancelled and
the  obligation  of  $1,000,000  to 1421209  Ontario  Limited was no longer due.
Ozolutions  wrote-off the net marketing  rights of $762,743 and the  outstanding
obligation  of  $1,000,000,   and  recorded  an  extraordinary   gain  from  the
cancellation of the agreement of $237,257. Ozolutions then paid $50,000 directly
to Hankin for the same exclusive marketing rights.

     1421209  Ontario Limited had also agreed to lend Ozolutions up to $300,000,
at our option,  to provide  financing  for our  operations  at the time  1421209

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<PAGE>

Ontario Limited received its first payment of $550,000 from Ozolutions under the
purchase  agreement  for  the  distribution  rights  to  Hankin  products.  This
agreement was cancelled in April 2002 in conjunction  with the  cancellation  of
the marketing rights agreement with 1421209 Ontario Limited.

     We have orders for 25 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 the first quarter of 2003.

     In  August  2002,  the  President  of  Hankin  made a number  of  technical
presentations to public and private water authorities in Costa Rica resulting in
several multi million  dollar ozone based water  treatment  proposals  currently
under consideration. A significant Hankin/Ozolutions proposal is also pending in
El Salvador.

Water-activated Technology

     In  August  2001,  we  acquired  non-exclusive  distribution  rights  to an
activated water system from ELCE  International Inc. ("ELCE") for Mexico and the
Caribbean  Markets including Panama,  Costa Rica,  Ecuador and Jamaica.  No fees
were paid for these rights.

     In January 2002, we acquired the exclusive  marketing  rights to distribute
the  water-activated  products  of ELCE in Canada  from ELCE.  We issued  25,000
restricted  common shares and granted options to purchase  500,000 common shares
at $0.50 per share that expire in  February  2004.  In March  2002,  we obtained
exclusive marketing rights for Costa Rica from ELCE. We were not required to pay
monetary consideration for this agreement. We are required to purchase a minimum
of 75 ELCE units in Canada and 30 ELCE units in Costa Rica per  quarter for this
exclusivity.  We have met these minimum purchase requirements through August 31,
2002.

     We have  successfully  conducted  ELCE  shrimp  larvae  and algae  tests in
Panama.  In Peru, we will be installing  ELCE units in ships and factories  that
service  the  fishmeal  industry.  Once  further  tests  have been  successfully
completed,  we  believe  shrimp  and  fishmeal  operations  in  Panama  and Peru
represent  major sales  opportunities.  We will also be installing,  through our
Peruvian  agent,   ELCE  units  in  medical   clinics,   hospitals  and  various
agricultural sites.

     Through our Canadian  West Coast agent ELCE units are being  installed  for
use in connection  with certain fish industry  operations.  Tree seedlings being
grown  for  reforestation  projects  will  soon be  evaluated  to  determine  if
activated  water can produce larger and healthier  seedlings in a shorter period
of time.

     In  Ontario,  ELCE  units  are  being  installed  in a  large  boiler  in a
recreation  facility,  boilers and  cooling  towers in  hospitals  and in dental
offices.

     We recorded  our first sale of ELCE  products in April 2002.  During  2002,
sales of ELCE  products  amounted to  $135,000  with a related  gross  profit of
$37,000. Ozolutions is no longer considered a development stage company.

                                       11

<PAGE>

Business Consulting Agreements

     In March 2002,  Ozolutions entered into a strategic business consulting and
marketing  services  agreement with Monique Del Medico in Canada. The purpose of
the agreement is to assist Ozolutions with marketing,  distribution, and product
promotion strategies with industrial,  commercial,  and institutional customers.
The  agreement is for nine  months,  commencing  on April 1, 2002.  In May 2002,
Ozolutions  issued  700,000  shares of its  common  stock to Ms.  Del  Medico as
compensation  for her  services  valued at $90,000.  The shares were  registered
under the Securities Act of 1933 under Form S-8.

     In July 2002,  Ozolutions entered into a strategic business  consulting and
marketing services agreement with Adriana Quiras Solis in the United States. The
purpose of the agreement is to assist  Ozolutions with marketing,  distribution,
and product promotion strategies with industrial,  commercial, and institutional
customers.  The agreement is for six months,  commencing  July 15, 2002. In July
2002,  Ozolutions  issued  600,000  shares of its common  stock to Mr.  Solis as
compensation  for his  services  valued at $60,000.  The shares were  registered
under the Securities Act of 1933 under Form S-8.

Proposed Acquisition

     On May 22, 2002, Ozolutions signed a letter of intent to acquire the assets
of Electrical Systems Engineering ("ESE") and 100% of the outstanding common and
preferred shares of Specdex Inc. As proposed,  Ozolutions will pay approximately
$1,500,000 in cash to acquire the assets of ESE and,  following  acquisition  of
the ESE assets,  Ozolutions  will issue  4,536,500  restricted  common shares to
acquire all outstanding common and preferred shares of Specdex Inc. Specdex Inc.
will become a wholly owned  subsidiary of  Ozolutions,  with Specdex Inc.  fully
responsible  for managing the ESE division.  If the Specdex Inc.  acquisition is
not completed,  the ESE acquisition  will revert to Specdex Inc. Upon completion
of the Specdex  Inc.  acquisition,  Patent  #P190-1 APP  3-60/307,896  (Business
Process Modeling of Wholesale Procurement),  whose rights are held by William A.
Hurley, will be assigned to Specdex Inc. and subsequently assigned to Ozolutions
Inc.  upon  completion of certain  compensation  to William A. Hurley by Specdex
Inc.  covered by an existing  agreement.  Completion  of these  transactions  is
subject to a number of  contingencies,  including,  completion  of due diligence
review of the parties involved, negotiation of definitive agreements between the
parties,  and arranging for the financing  required to pay the consideration for
the  companies  and  assets to be  acquired.  Ozolutions  has not  obtained  any
commitments to provide the financing necessary for the acquisition. Should we be
unable to obtain the required financing,  we may be forced to abandon the letter
of intent and the proposed acquisition.

Results of Operations for the Years ended August 31, 2002 and 2001.

     For the year ended August 31,  2002,  Ozolutions  recorded  revenues in the
amount of $135,000 for the sale of ELCE  products.  This  represented  the first
sales for Ozolutions.  Cost of goods sold for the year ended August 31, 2002 was
$98,000 related to the sale of ELCE products.

     Expenses for the year ended August 31, 2002 increased  $118,000 to $660,000
from  $542,000 for the year ended August 31, 2001.  This increase was mainly due
to an  increase  in  consulting  fees  of  $70,000  attributable  to  consulting
agreements we implemented to promote  product  sales.  In addition,  general and
administrative  expenses  increased $61,000 due to an increase in accounting and

                                       12

<PAGE>

legal fees of $17,000  related to  regulatory  filings with the  Securities  and
Exchange  Commission,  travel expenses  increased $32,000 due to increased sales
trips to market our products, and telephone expense increased $8,000.

     The net loss from continuing  operations for the year ended August 31, 2002
increased  by $82,000 to $624,000  from  $542,000  for the year ended August 31,
2001 due to the factors discussed above.

     During the year ended August 31, 2002,  an  extraordinary  gain of $237,000
was recorded  related to the  cancellation of the marketing  rights agreement as
discussed above.

     The net loss for the year  ended  August 31,  2002  decreased  $156,000  to
$386,000  from  $542,000  for the year ended  August 31, 2001 due to the factors
discussed above.

Liquidity and Capital Resources

     During  2002,  we raised  capital  privately  to meet our  working  capital
requirements.  We entered into a Stock Purchase  Agreement with First  Chartered
Capital Corporation Inc. ("First Chartered") on October 1, 2001. First Chartered
purchased  stock  of  Ozolutions  for 30% of the  market  value  on the  date of
purchase.  Through  August 31, 2002,  12,209,193  restricted  common shares were
purchased by First Chartered with Ozolutions  receiving  $1,030,609.  Ozolutions
cancelled this agreement in August 2002.

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

     We plan to keep ELCE purchases to a minimum and do not  anticipate  holding
large amounts of ELCE product  inventory at any one time. We have arranged for a
warehouse facility to store the ELCE inventory at $325 per month.

     As  discussed  above  under  the  caption  "Item  3.  Legal   Proceedings,"
Ozolutions is a party to two disputes.  Management  cannot  predict at this time
whether  Ozolutions  will  incur  any  liability  as  a  result  of  an  adverse
determination or ruling in these disputes. Should Ozolutions incur a substantial
liability  as a result  of these  disputes,  it is  likely  Ozolutions'  working
capital  would be  adversely  affected,  which  could cause  Ozolutions  to seek
outside  financing to improve its working  capital  position.  We cannot predict
whether   financing  would  be  available  on  acceptable   terms  should  these
circumstances arise.

     Ozolutions believes its general, selling and administrative expenses during
fiscal year 2003 will be approximately  $250,000, of which $150,000 will be used
for marketing and sales expenses including:

     * production of printed sales and marketing materials;

     * advertising, promotion and trade show participation;

                                       13

<PAGE>

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

     * travel expenses associated with establishing an Ontario dealer network.

     The  remaining  $100,000 is the estimated  cost of clerical and  management
staff and facilities required to operate over the next year.

     Currently  Ozolutions  has  approximately  $220,000 in cash and $138,000 in
receivables.  Management  believes  that these  resources,  together  with funds
generated  internally from product sales,  will be sufficient to fund operations
through  fiscal  year  2003.   Nevertheless,   we  expect  to  pursue  financing
opportunities  that  might  arise  during  the year in order to make  additional
capital available for expanding our business.

Application of Critical Accounting Policies

     Ozolution's  financial  statements and  accompanying  notes are prepared in
accordance with generally accepted  accounting  principles in the United States.
Preparing  financial  statements  requires  management  to  make  estimates  and
assumptions  that affect the reported amounts of assets,  liabilities,  revenue,
and expenses.  These  estimates  and  assumptions  are affected by  management's
application of accounting policies.  Critical accounting policies for Ozolutions
include revenue  recognition,  impairment of marketing rights and accounting for
legal contingencies.

     Ozolutions  recognizes revenue in accordance with Staff Accounting Bulletin
No.101,  "Revenue Recognition in Financial  Statements." Sales are recorded when
products  are shipped to  customers.  Provisions  for  discounts  and rebates to
customers,  estimated  returns and allowances and other adjustments are provided
for in the same period the related sales are recorded.

     Ozolutions  evaluates its long-lived  assets for financial  impairment on a
regular basis in accordance with Statement of Financial Accounting Standards No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of." Ozolutions 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.

     Ozolutions is subject to various legal proceedings and claims, the outcomes
of  which  are  subject  to  significant  uncertainty.  Statement  of  Financial
Accounting  Standards No. 5,  "Accounting for  Contingencies",  requires that an
estimated loss from a loss  contingency  should be accrued by a charge to income
if it is  probable  that an asset  has been  impaired  or a  liability  has been
incurred and the amount of the loss can be reasonably estimated. Disclosure of a
contingency  is required if there is at least a  reasonable  possibility  that a
loss has been incurred. Ozolutions evaluates, among other factors, the degree of
probability  of an  unfavorable  outcome  and the  ability to make a  reasonable
estimate of the amount of loss. Changes in these factors could materially impact
Ozolutions financial position or its results of operations.

                                       14

<PAGE>


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 25.

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

     Not applicable.

                                    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                               Since

Max Weissengruber          64   President and Director                April 2000

James A. Clemenger         46   Secretary, Treasurer and Director     April 2000

Douglas R. Robertson       64   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 served as an executive  officer of Ozolutions since
April  2000.  He was  previously  a  Managing  Partner  and sole  owner of Acris
Partners of Toronto,  Ontario from May 1993 to March 2000.  Acris Partners was a

                                       15

<PAGE>

marketing  and  communications  consulting  firm  engaged  in  the  business  of
conducting employee surveys and developing  marketing  communications  materials
and customized training packages.

     James A. Clemenger has been employed as an executive  officer by Ozolutions
since April 2000.  Since May 2000,  Mr.  Clemenger has been  self-employed  as a
business  consultant.  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.

     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.

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, 2002,  2001,  and 2000, 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)    2002            44,000
                                    2001            36,000
                                    2000             6,000

     Since July 1, 2000, Max Weissengruber has devoted  substantially all of his
time to getting the business of Ozolutions started.  Beginning in November 2001,

                                       16

<PAGE>

consulting  fees  were paid to Mr.  Weissengruber  in the  amount of $3,000  per
month.  This amount was increased to $4,000 per month in January 2002.  Prior to
such time, Mr. Weissengruber was not receiving any cash payments and contributed
his services in the amount of $6,000,  $36,000, and $6,000 in fiscal years 2000,
2001 and 2002,  respectively.  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  significant revenue from product sales.  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,  2002,  to the Named
Executive Officers.

                            Number of     % of Total
                            Securities    Options/SARs
                            Underlying    Granted to     Exercise or
Name and Principal           Options      Employees in   Base Price  Expiration
    Position                 Granted      Fiscal Year      ($/Sh)       Date
------------------          ----------    ------------   ----------- ----------
Max Weissengruber            300,000          80           $0.40       2/18/04
  President


     James A.  Clemenger,  an officer and  director,  also received an option to
purchase  75,000 shares at an exercise  price of $0.40 per share that expires in
February 2004. An option to purchase 50,000 shares at an exercise price of $0.40
per share that expires in February 2004 was also granted to Douglas Robertson, a
director.

     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, 2002.

                              Number of Securities      Value of Unexercised
                             Underlying Unexercised     In-the-Money Options
                                     Options           At Fiscal Year End ($)
                              at Fiscal YearEnd (#)              (1)
                                  Exercisable/              Exercisable/
Name and Principal Position       Unexercisable             Unexercisable
---------------------------  ----------------------    ----------------------
Max Weissengruber                  475,000/ -0-               -0-/ -0-
President
Executive Officer


(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, 2002. The fair market value of Ozolutions' common stock at August 31,
2002,  is  determined by the average of the closing bid and asked prices on that
date, which was $0.175 per share.

                                       17

<PAGE>


           ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

     The  following  table sets forth as of November  12,  2002,  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.

                                      Amount and Nature of Beneficial Ownership

                                             Common              Percent
Name and Address                             Shares              of Class

1421209 Ontario Limited (1)                6,000,000               20.3
Carl Lavoie
134 Melrose Avenue
Toronto, Ontario CN M5M 1Y7

Max Weissengruber (2)(3)                    475,000                1.6
30 Denver Crescent, Suite 200
Toronto, Ontario, CN M2J 1G8

James A. Clemenger (2)(3)                   175,000                0.6
53 Duggan Avenue
Toronto, Ontario, CN M4V 1Y1

Douglas R. Robertson (2)(3)                  50,000                0.2
52189 Castlestone Court
Mississauga, Ontario CN L5B 1X9

All Executive officers and                  700,000                2.3
  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
     6,000,000 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

                                       18

<PAGE>
     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.

           ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In June 2000,  Ozolutions  acquired the marketing rights to Hankin products
from 1421209  Ontario Limited for 8,000,000  shares of Ozolutions  common stock,
$17,217  cash  paid  at  closing,  and  an  additional   $1,000,000  payable  in
installments.  Ozolutions was originally  required to make a payment of $550,000
to 1421209  Ontario  Limited no later than November 21, 2000. In November  2000,
Ozolutions  was  granted  an  extension  to June 30,  2001 in  order 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, respectively.  Ozolutions did not make any of these required
payments.  In April  2002,  the  agreement  with  1421209  Ontario  Limited  was
cancelled  and, in the view of  Ozolutions,  the  obligation of $1,000,000 is no
longer  due.  We  wrote  off  the  net  marketing  rights  of  $762,743  and the
outstanding obligation of $1,000,000 and recorded an extraordinary gain from the
cancellation  of the  agreement of $237,257.  There was no  affiliation  between
1421209  Ontario  Limited and Ozolutions  prior to the purchase of the marketing
rights.

     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. No.   Title of Document                                   Location

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

      3.2        By-Laws                                                *

      10.1       Distribution Agreement with ELCE International         **
                   Dated August 18, 2001

      10.2       Distribution Agreement with ELCE International    This filing
                   Dated January 15, 2002

      10.3       Distribution Agreement with ELCE International    This filing
                   Dated March 1, 2002

      10.4       Consulting Agreement with Monique Del Medico      This filing
                   Dated March 28, 2002

      10.5       Consulting Agreement with Adriana Quiras Solis    This Filing
                   Dated July 15, 2002

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<PAGE>

      10.6       Form of Option Agreement issued to Directors           **

* 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.

** These exhibits are incorporated herein by this reference to the Annual Report
on Form 10-KSB of Ozolutions for the year ended August 31, 2001,  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, 2002.

                        ITEM 14. CONTROLS AND PROCEDURES

     With the  participation of management,  Ozolutions' chief executive officer
and chief financial officer evaluated its disclosure  controls and procedures on
August 31, 2002. Based on this evaluation,  the chief executive  officer and the
chief financial  officer  concluded that the disclosure  controls and procedures
are effective in connection with Ozolutions' filing of its annual report on Form
10-KSB for the year ended August 31, 2002.

     Subsequent  to August 31,  2002,  through  the date of this  filing of Form
10-KSB  for the year  ended  August 31,  2002,  there  have been no  significant
changes  in  Ozolutions'  internal  controls  or in  other  factors  that  could
significantly affect these controls,  including any significant  deficiencies or
material weaknesses of internal controls that would require corrective action.

                                       20

<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 27, 2002             By: /s/ Max Weissengruber, Chief Executive
                                        Officer


Date: November 27, 2002             By: /s/ James A. Clemenger, Chief Financial
                                        and Accounting 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 27, 2002            /s/ Max Weissengruber, Director


Dated: November 27, 2002            /s/ James A. Clemenger, Director


Dated: November 27, 2002            /s/ Douglas R. Robertson, Director



                                       21

<PAGE>


   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
                 Section 906 of the Sarbanes-Oxley Act of 2002.

     In connection  with the Annual Report of Ozolutions Inc. (the "Company") on
Form 10-KSB for the period ending  August 31, 2002 as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"), I, Max Weissengruber,
Chief Executive  Officer of the Company,  certify pursuant to 18 U.S.C.  Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
that:  (1) The Report fully complies with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and (2) The information  contained
in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.


Date: November 27, 2002             By: /s/ Max Weissengruber, Chief Executive
                                        Officer


     In connection  with the Annual Report of Ozolutions Inc. (the "Company") on
Form 10-KSB for the period ending  August 31, 2002 as filed with the  Securities
and  Exchange  Commission  on the  date  hereof  (the  "Report"),  I,  James  A.
Clemenger, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C.
Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002, that: (1) The Report fully complies with the requirements of Section 13(a)
or  15(d)  of the  Securities  Exchange  Act of  1934;  and (2) The  information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.


Date: November 27, 2002             By: /s/ James A. Clemenger, Chief Financial
                                        Officer

                                       22

<PAGE>


                                  CERTIFICATION

I, Max Weissengruber, certify that:

1. I have reviewed this annual report on Form 10-KSB of Ozolutions Inc.;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the  period  in which  this  annual  report  is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.


Date: November 27, 2002                 /s/ Max Weissengruber, Chief Executive
                                        Officer

                                       23

<PAGE>


                                  CERTIFICATION

I, James A. Clemenger, certify that:

1. I have reviewed this annual report on Form 10-KSB of Ozolutions Inc.;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the  period  in which  this  annual  report  is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.


Date: November 27, 2002               /s/ James A. Clemenger, Chief Financial
                                      Officer


                                       24

<PAGE>


                                 OZOLUTIONS INC.

                              Financial Statements

                                 August 31, 2002

                                      INDEX

                                                                          Page

Independent Auditors' Report                                               26

Balance Sheets at August 31, 2002 and 2001                                 27

Statements of Changes in Stockholders' Equity                              28
  (Deficit) for the Two Years Ended August 31, 2002

Statements of Operations for the Two Years                                 29
  Ended August 31, 2002

Statements of Cash Flows for the Two Years                                 30
  Ended August 31, 2002

Notes to Financial Statements                                              32


                                       25

<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
Delaware Corporation) as of August 31, 2002 and 2001, and the related statements
of operations,  changes in stockholders'  equity  (deficit),  and cash flows for
each of the two years in the period  ended  August  31,  2002.  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
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial position of Ozolutions Inc. (A Delaware
Corporation)  as of August 31, 2002 and 2001,  and the results of its operations
and its cash  flows for each of the two years in the  period  ended  August  31,
2002, in conformity with accounting  principles generally accepted in the United
States of America.

     The  accompanying   financial   statements  have  been  prepared   assuming
Ozolutions Inc. (A Delaware  Corporation)  will continue as a going concern.  As
discussed in Note G to the financial statements, 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.  Management's
plans regarding this matter are described in Note G. 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 18, 2002

                                       26

<PAGE>

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


BALANCE SHEETS
--------------------------------------------------------------------------------
                                                               (U.S. Dollars)

August 31,                                                    2002        2001
--------------------------------------------------------------------------------

ASSETS

Current Assets
Cash and Cash Equivalents                               $   223,157  $       --
Accounts Receivable                                         137,543          --
Inventory                                                   167,370          --
Prepaid Expenses                                             98,500          --
--------------------------------------------------------------------------------

Total Current Assets                                        626,570          --

Other Assets
Marketing Rights, Net of Accumulated Amortization           200,815     841,485
Deposits                                                     32,532      56,292
--------------------------------------------------------------------------------

Total Assets                                            $   859,917  $  897,777
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts Payable                                        $     7,117  $   40,711
Deferred Revenue                                                 --      34,000
Due to 1421209 Ontario Limited - Due Within One Year             --   1,000,000
Due to Director                                              14,956      72,317
Due to Stockholders                                           4,811     123,848
--------------------------------------------------------------------------------

Total Liabilities                                            26,884   1,270,876
--------------------------------------------------------------------------------

Stockholders' Equity (Deficit)
Common Stock:  $.001 Par; 50,000,000 Shares Authorized;
               33,333,326 and 19,799,133 Issued and
               Outstanding, respectively.                    33,333      19,799

Additional Paid-In Capital                                1,817,516     238,496
Accumulated Deficit                                      (1,017,816)   (631,394)
--------------------------------------------------------------------------------

Total Stockholders' Equity (Deficit)                        833,033    (373,099)
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity (Deficit)    $   859,917  $  897,777
================================================================================

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

                                       27


<PAGE>

OZOLUTIONS INC.
(A DELAWARE CORPORATION)
Toronto, Ontario Canada
<TABLE>
<CAPTION>

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------------------------------------------------------------------------------------
                                                                              (U.S. Dollars)
                                                                                                                Total
                                                                              Additional                     Stockholders'
                                                    Number        Common       Paid-In      Accumulated         Equity
                                                   of Shares      Stock        Capital        Deficit          (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 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)

Shares Issued and Stock Options Granted as
Consideration for Acquisition of Marketing Rights     25,000           25       237,975             --           238,000

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

Consulting Services Paid by Shareholders
  on Behalf of the Corporation                            --           --       135,000             --           135,000

Shares Issued to Consultants in Exchange for
  Services                                         1,300,000        1,300       148,700             --           150,000

Shares Issued under Stock Purchase Agreement      12,209,193       12,209     1,018,400             --         1,030,609

Cash Contribution of Capital                              --           --        13,217             --            13,217

Stock Options Granted - Compensation for
  Services Rendered                                       --           --        11,750             --            11,750

Capital Contribution - Interest Expense                   --           --         7,978             --             7,978

Net Loss                                                  --           --            --       (386,422)         (386,422)
--------------------------------------------------------------------------------------------------------------------------

Balance - August 31, 2002                         33,333,326     $ 33,333    $1,817,516    $(1,017,816)       $  833,033
==========================================================================================================================
</TABLE>

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

                                       28


<PAGE>

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


STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
                                                                  (U.S. Dollars)

Years Ended August 31,                                      2002         2001
--------------------------------------------------------------------------------

Revenues, Net                                          $   134,885    $      --

Cost of Goods Sold                                          98,234           --
--------------------------------------------------------------------------------

Gross Profit                                                36,651           --
--------------------------------------------------------------------------------

Expenses
Consulting Fees                                            330,397      260,000
Marketing, Including Amortization of Marketing Rights      171,260      177,249
General and Administrative                                 150,695       89,520
Interest Expense                                             7,978       15,650
--------------------------------------------------------------------------------

Total Expenses                                             660,330      542,419
--------------------------------------------------------------------------------

Loss Before Provision for Taxes                           (623,679)    (542,419)

Provision for Taxes                                             --           --
--------------------------------------------------------------------------------

Loss from Continuing Operations                           (623,679)    (542,419)

Extraordinary Items
Gain from Cancellation of Marketing Rights
  Agreement, Net of Income Taxes of $-0-                   237,257           --
--------------------------------------------------------------------------------

Net Loss                                               $  (386,422)   $(542,419)
================================================================================

Weighted Average Number of Common Shares
  Outstanding - Basic and Diluted                       23,563,332   19,192,010

Income (Loss) per Common Share - Basic and Diluted
     Loss from Continuing Operations                   $     (0.03)    $  (0.03)
     Extraordinary Items                                      0.01         0.00
--------------------------------------------------------------------------------

Net Loss                                               $     (0.02)    $  (0.03)
================================================================================

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

                                       29


<PAGE>

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


STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
                                                              (U.S. Dollars)

Years Ended August 31,                                       2002        2001
--------------------------------------------------------------------------------

Cash Flows from Operating Activities

Net Loss                                                $  (386,422)  $(542,419)

Non-Cash Adjustments:
Amortization of Marketing Rights                            115,927     157,484
Contributed Services                                          6,000      42,000
Shares Issued to Advisors and Consultants                   150,000     128,000
Shares Issued for Compensation                               11,750      20,429
Interest on Director/ Stockholder Loans                       7,978      15,650
Consulting Services Paid by Shareholders                    135,000          --
Gain from Cancellation of Marketing Rights Agreement       (237,257)         --

Changes in Assets and Liabilities:
Accounts Receivable                                        (137,543)         --
Inventory                                                  (167,370)         --
Prepaid Expenses                                            (98,500)         --
Deposits                                                     23,760     (56,292)
Accounts Payable                                            (33,594)     33,866
Deferred Revenue                                            (34,000)     34,000
--------------------------------------------------------------------------------

Net Cash Flows
   from Operating Activities                               (644,271)   (167,282)
--------------------------------------------------------------------------------

Cash Flows from Investing Activities

Cash Flows from Financing Activities
(Repayments to) Advances from Director                      (57,361)     72,317
(Repayments to) Advances from Stockholders                 (119,037)     94,965
Contribution by Stockholder                                  13,217          --
Proceeds from Stock Purchase Agreement                    1,030,609          --
--------------------------------------------------------------------------------

Net Cash Flows from Financing Activities                    867,428     167,282
--------------------------------------------------------------------------------

Net Increase in Cash and Cash Equivalents                   223,157          --

Cash and Cash Equivalents - Beginning of Year                    --          --
--------------------------------------------------------------------------------

Cash and Cash Equivalents - End of Year                  $  223,157   $      --
================================================================================

                                                                   - continued -

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

                                       30


<PAGE>

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


STATEMENTS OF CASH FLOWS - continued
--------------------------------------------------------------------------------
                                                                  (U.S. Dollars)

Years Ended August 31,                                      2002           2001
--------------------------------------------------------------------------------

Supplemental Disclosures
--------------------------------------------------------------------------------

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

Non-Cash Investing and Financing Activities
--------------------------------------------------------------------------------

Acquisition of Marketing Rights                             238,000       $  --
Purchase Price Paid via Issuance of Common Stock                (25)         --
Purchase Price Paid via Granting of Stock Options          (237,975)         --
--------------------------------------------------------------------------------

Total Cash Paid for Marketing Rights                     $       --       $  --
--------------------------------------------------------------------------------

Write-Off of Marketing Rights,
  Net of Accumulated Amortization                        $ (762,743)      $  --
Cancellation of Obligation to 1421209 Ontario Limited     1,000,000          --
--------------------------------------------------------------------------------

Gain from Cancellation of Marketing Rights Agreement     $  237,257       $  --
--------------------------------------------------------------------------------

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

                                       31


<PAGE>


OZOLUTIONS INC.
(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 Unipak  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
          The Company is an  international  marketer  and  distributor  of water
          purification systems using ozone and water activator  technology.  The
          markets the Company targets are Mexico; the Caribbean zone,  including
          Panama, Costa Rica, and Jamaica; Ecuador; Peru and 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.

          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.  The Company  maintains  cash and
          cash  equivalents at financial  institutions,  which  periodically may
          exceed federally insured amounts.

          Inventory
          Inventory consists of merchandise held for resale and is stated at the
          lower of cost or market using the first-in, first-out method.

          Revenue Recognition
          Sales are recorded when products are shipped to customers.  Provisions
          for  discounts  and  rebates  to  customers,   estimated  returns  and
          allowances and other  adjustments  are provided for in the same period
          the related sales are recorded.

          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.

          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 (loss)  available to common  stockholders by weighted
          average number of common shares outstanding for each period.


                                                                   - continued -
                                       32

<PAGE>


OZOLUTIONS INC.
(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
          For  2001,   marketing   rights  represent  the  exclusive  rights  to
          distribute the products of "Hankin Ozone  Systems,  LTD" acquired from
          1421209 Ontario  Limited.  For 2002,  marketing  rights  represent the
          exclusive  rights to  distribute  the products of "ELCE  International
          Inc." acquired from ELCE  International Inc. 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 for the years ended  August 31,
          2002 or 2001.

Note C -  Marketing Rights

          The Company purchased the exclusive marketing rights to distribute the
          products of "Hankin Ozone Systems, LTD" in Canada, the Caribbean,  and
          Mexico from 1421209 Ontario Limited.  The acquisition occurred on June
          21,  2000 in  which  Ozolutions  Inc.  received  the  rights  to begin
          distributing  the  products of Hankin  Ozone  Systems,  LTD and became
          obligated to 1421209  Ontario Limited for the purchase price described
          below.

                                                                   - continued -

                                       33

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada


NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


Note C -  Marketing Rights - continued

          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 April 21, 2001.

          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  31,  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 September 30, 2001.

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

          In  April  2002,  the  agreement  with  1421209  Ontario  Limited  was
          cancelled and the obligation of $1,000,000 to 1421209  Ontario Limited
          was no longer due. The Company  wrote-off the net marketing  rights of
          $762,743 and the outstanding obligation of $1,000,000, and recorded an
          extraordinary gain from the cancellation of the agreement of $237,257.
          The Company paid $50,000 directly to Hankin Ozone Systems, LTD for the
          same marketing  rights.  The Company  recorded the $50,000  payment to
          Hankin Ozone  Systems,  LTD as an expense during the year ended August
          31, 2002.

          The  aggregate  purchase  price  for the  marketing  rights  had  been
          allocated  to the  three  territories  based  upon the  estimated  net
          revenue of each of the territories.

                                                                   - continued -

                                       34

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note C -  Marketing Rights - continued

          Contracts  for  the  Canada  and  Caribbean   territories  were  being
          amortized over the remainder of their useful lives of nine years which
          represented  the  contractual  terms of three years plus two automatic
          renewal  extensions  of three years each.  The contract for the Mexico
          territory  was  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 was uncertain as of the date of the financial statements.

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

                  Canada Territory                            102 Months
                  Caribbean Territory                         105 Months
                  Mexico Territory                             33 Months

          ELCE International Inc.
          The Company purchased the exclusive marketing rights to distribute the
          water  activator  products of "ELCE  International  Inc."  ("ELCE") in
          Canada  from ELCE  International  Inc.  The  acquisition  occurred  on
          January 15, 2002 in which Ozolutions Inc. received the rights to begin
          distributing  the products of ELCE  International  Inc. For the rights
          received,  the Company issued 25,000  restricted  shares of Ozolutions
          Inc.  common  stock and  granted  options to purchase  500,000  common
          shares at $0.50 per share. The options have a one-year term.

          The  agreement  is for one-year  with an  automatic  renewal for three
          additional  years if all terms of the  agreement are  fulfilled.  Such
          terms require the purchase of a minimum of 75 units every three months
          for  the  first  year  with a 30%  increase  in the  minimum  purchase
          commitment  amount each year.  In  addition,  the Company  must hire a
          technician,  appointed  by ELCE,  for one year  for  training  Company
          personnel.  Monthly salary,  lodging,  and incidental  expenses of the
          technician are the  responsibility  of the Company.  The Company is in
          compliance with all terms of the agreement as of August 31, 2002.

          The Company acquired the exclusive  marketing rights to distribute the
          water activator  products of "ELCE  International  Inc." in Costa Rica
          from ELCE International Inc. The acquisition occurred on March 1, 2002
          in which Ozolutions Inc. received the rights to begin distributing the
          products of ELCE  International  Inc.  The Company was not required to
          pay anything for this agreement.

          The  agreement is for a one-year  term with an  automatic  renewal for
          three  additional  years if all terms of the agreement are  fulfilled.
          Such terms  require the purchase of a minimum of ten units every month
          for  the  first  year  with a 30%  increase  in the  minimum  purchase
          commitment  amount each year.  The Company is in  compliance  with all
          terms of the  agreement  as of August 31,  2002.  The contract for the
          Canada territory is being amortized over the useful life of four years
          which represents the contractual term of one year plus three automatic
          renewal extensions of one year each.

                                                                   - continued -

                                       35

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note C -  Marketing Rights - continued

          Marketing rights consisted of the following:

          ----------------------------------------------------------------------
          August 31,                                        2002         2001
          ----------------------------------------------------------------------

          Hankin Ozone Systems, LTD
          Canada Territory                               $      --   $  798,644
          Mexico Territory                                      --      150,912
          Caribbean Territory                                   --       75,661

          ELCE International Inc.
          Canada Territory                                 238,000           --
          Costa Rica Territory                                  --           --
          ----------------------------------------------------------------------

          Total Marketing Contracts                      $ 238,000   $1,025,217
          Less:  Accumulated Amortization                   37,185      183,732
          ----------------------------------------------------------------------

          Net Marketing Contracts                        $ 200,815   $  841,485
        ------------------------------------------------------------------------

          Amortization expense amounted to $115,927 and $157,484 for the periods
          ended August 31, 2002 and 2001, respectively.

Note D -  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  shareholders  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.

          Stock Purchase Agreement
          The Company entered into a Stock Purchase Agreement on October 1, 2001
          with First Chartered Capital  Corporation,  Inc. ("First  Chartered").
          First  Chartered  purchased stock of the Company for 30% of the market
          value on the date of purchase.  Through  August 31,  2002,  12,209,193
          restricted  common shares had been  purchased by First  Chartered with
          the Company receiving $1,030,609. The Company cancelled this agreement
          in August 2002.

                                       36

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note E -  Consulting and Advisory Agreements
          The Company entered into a consulting  agreement on May 5, 2000, which
          consisted of the  development of sales,  marketing and  application of
          technology  for the use of ozone related  technologies.  The agreement
          was 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.

          The  Company  signed  a  consulting  agreement  on July 1,  2000.  The
          consulting  services  consisted 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  agreed upon. The agreement was
          in effect September 1, 2000 through August 31, 2003 with an annual fee
          of $90,000. The agreement was cancelled on August 31, 2001.

          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 was 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 would each be issued  restricted
          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 February 19, 2002. On June
          5, 2001,  400,000 shares were issued to each of the firms. The Company
          charged  operations  in 2001 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. No additional shares will be issued.

          In June 2002, David Michael LLC and Feng Shui Consulting, Inc. filed a
          suit  against the Company for breach of contract  for failure to issue
          additional  shares of common stock under the  agreements.  The Company
          filed  a  counter  claim  and  third  party   complaint   denying  the
          substantive  allegations  of the  complaint  and  asserting  breach of
          contract  and fraud in  connection  with the  transaction.  Management
          believes the suit is without  merit and intends to  vigorously  defend
          its position.  Management  does not believe the range of loss, if any,
          cannot be reasonably estimated at this time. Accordingly, no provision
          for possible loss has been made in these financial statements.

          On December 20, 2001, the Company  entered into an advisory  agreement
          with  inaVest,  Inc.  The purpose of the  agreement  was to assist the
          Company with public  relations,  communications,  and provide  general
          advisory and consulting  services.  The agreement was for three months
          with an automatic  renewal for an additional three months,  unless the
          Company cancelled the agreement during the original  three-month term.
          In  exchange  for  these   services,   shareholders   of  the  Company
          transferred  ownership of 550,000  shares of  Ozolutions  Inc.  common
          stock as  payment,  in lieu of issuing  new  shares.  The  Company has
          charged operations and additional paid-in capital for $135,000 for the
          fair  value of  services  rendered.  In May 2002,  the  agreement  was
          mutually cancelled by the Company and inaVest, Inc.

                                                                   - continued -

                                       37

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada


NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


Note E -  Consulting and Advisory Agreements - continued

          On January 11, 2002, the Company  entered into a financial  consulting
          and investment banking agreement with Chapman, Spira & Carson LLC. The
          purpose  of the  agreement  was to assist  the  Company  with  general
          business and financial consulting and obtain equity and debt financing
          up to $2 million on terms  agreeable to the Company.  Upon the receipt
          of  the  initial   financing   proceeds,   the  Company  would  pay  a
          non-refundable  retainer  fee  of  $25,000  and  would  issue  200,000
          restricted  shares of Ozolutions Inc.  common stock. In addition,  the
          Company  would then begin to pay $5,000 per month for  consulting  and
          service fees for the  subsequent  24 months.  The Company  would pay a
          commission of 7 1/2% on any subsequent financing  arrangements and was
          obligated to issue an additional  1,000,000  shares of Ozolutions Inc.
          common stock upon completion of the full $2 million  financing.  As of
          August 31, 2002,  the Company had paid $3,000 of the $25,000  retainer
          fee in advance.  In June 2002,  Chapman,  Spira & Carson LLC cancelled
          this agreement.

          In  June  2002,  Chapman,  Spira  &  Carson  LLC  made  a  demand  for
          arbitration through the American  Arbitration  Association as provided
          in the agreement claiming $50,000 in fees, plus nine percent interest,
          and 200,000 shares of the Company's common stock.  Management believes
          the suit is  without  merit  and  intends  to  vigorously  defend  its
          position. Due to uncertainties in the arbitration process,  management
          is  unable  to  estimate  the  potential  financial  impact  of  these
          proceedings. Accordingly, no provision for possible loss has been made
          in these financial statements.

          On March 28,  2002,  the Company  entered  into a  strategic  business
          consulting and marketing services agreement with Monique Del Medico in
          Canada.  The purpose of the  agreement  is to assist the Company  with
          marketing,   distribution,   and  product  promotion  strategies  with
          industrial,  commercial,  and institutional  customers in Canada.  The
          agreement is for nine months, commencing April 1, 2002 and terminating
          December 31, 2002. In exchange for these services,  the Company issued
          700,000  shares of  Ozolutions  Inc.  common stock.  During 2002,  the
          Company charged  operations for $50,000 for the fair value of services
          rendered,  recorded  $40,000 as a prepaid for the fair value of future
          services,  and charged common stock and additional paid-in capital for
          $700 and $89,300, respectively.

          On July 17,  2002,  the  Company  entered  into a  strategic  business
          consulting and marketing services agreement with Adriana Quiras Solis.
          The purpose of the agreement is to assist the Company with  marketing,
          distribution  and  product   promotion   strategies  with  industrial,
          commercial  and  institutional  customers  in the United  States.  The
          agreement is for six months,  commencing July 15, 2002 and terminating
          January 1, 2003. In exchange for these  services,  the Company  issued
          600,000  shares of  Ozolutions  Inc.  common stock.  During 2002,  the
          Company charged  operations for $20,000 for the fair value of services
          rendered,  recorded  $40,000 as a prepaid for the fair value of future
          services,  and charged common stock and additional paid-in capital for
          $600 and $59,400, respectively.

Note F -  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,  2002 and 2001 is  $14,956  and  $72,317,
          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.

                                                                   - continued -

                                       38

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


Note F -  Related Party Transactions - continued

          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,  2002 and 2001 is $4,811  and  $123,848,
          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  signed a loan  agreement  on June 21,  2000 with  1421209
          Ontario Limited (A Related Party) for $300,000.  The proceeds would be
          made available to the Company at its option for use as working capital
          during the start up phase of the operation.  The proceeds would 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, 2002 or 2001. The loan would be payable  quarterly in arrears with
          an  interest  rate of 6.5% per annum,  and would be payable in full in
          two years from the date the money was  advanced.  This  agreement  was
          cancelled in April 2002 in conjunction  with the  cancellation  of the
          marketing rights agreement with 1421209 Ontario Limited.

          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.

Note G -  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 has reported net losses of $386,422 for the year
          ended August 31, 2002. As a result, there is an accumulated deficit of
          $1,017,816 at August 31, 2002.

          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 H -  Stock Options
          The Company has a stock  option plan under which it may grant  options
          to  purchase  shares  of the  Company's  common  stock.  Options  vest
          immediately and have varying expiration dates.

          The Company has elected to follow Accounting  Principles Board Opinion
          (APBO)  No.  25 and  related  interpretations  in  accounting  for its
          stock-based  compensation made to its employees.  APBO No. 25 requires
          no recognition  of  compensation  expense for most of the  stock-based
          compensation arrangements provided by the Company, namely, broad-based
          employee  stock  purchase  plans and option  grants where the exercise
          price is equal to or less than the market  value at the date of grant.
          However,  APBO No. 25 requires recognition of compensation expense for
          variable  award  plans over the vesting  periods of such plans,  based
          upon the  then-current  market  values  of the  underlying  stock.  In
          contrast,  Statement of Financial Accounting Standards (SFAS) No. 123,
          Accounting  for  Stock-Based  Compensation,  requires  recognition  of
          compensation  expense for grants of stock,  stock  options,  and other
          equity instruments,  over the vesting periods of such grants, based on
          the estimated  grant-date  fair values of those grants.  Stock options
          and awards made to directors, investors and consultants are subject to
          the provisions of SFAS No. 123.
                                                                   - continued -

                                       39

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


Note H -  Stock Options - continued

          Directors
          During 2002 and 2001,  the Company  granted  stock options for 425,000
          and 325,000  shares,  respectively,  of common  stock to  directors as
          compensation for services  rendered.  In accordance with SFAS No. 123,
          the Company  recognized  compensation  expense during 2002 and 2001 of
          $11,750 and $20,429,  respectively,  for the fair value of the options
          at the date of the grant using a Black Scholes option-pricing model.

          Vendors
          During 2002 the Company  granted stock  options for 500,000  shares of
          common  stock  to  vendors  in  exchange  for  marketing   rights.  In
          accordance  with SFAS No. 123, the Company  recorded  these  marketing
          rights at $237,975  which  represents the fair value of the options at
          the date of grant using a Black Scholes option-pricing model.

          The following assumptions were used:

          ----------------------------------------------------------------------
          August 31,                                           2002        2001
          ----------------------------------------------------------------------

          Weighted Average Fair Value of Options             $ 0.25      $ 1.00
          Weighted Average Exercise Price                    $ 0.45      $ 1.00
          Expected Market Volatility                           7.00%       7.00%
          Risk Free Interest Rate                              2.47%       4.15%
          Expected Life (Years)                                1.5         2.0
          Expected Dividend Yield                              0.00%       0.00%
          ----------------------------------------------------------------------

          Stock option transactions for the two years ending August 31, 2002 are
          summarized as follows:

          ----------------------------------------------------------------------
                                                                    Weighted
                                                                     Average
                                      Outstanding   Exercisable   Exercise Price
          ----------------------------------------------------------------------

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

          At August 31, 2001             275,000       275,000        $ 1.00
          Granted                        925,000       925,000        $ 0.45
          ----------------------------------------------------------------------

          At August 31, 2002           1,200,000     1,200,000        $ 0.58
          ----------------------------------------------------------------------

                                                                   - continued -
                                       40

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------

Note H -  Stock Options - continued

          The following table summarizes  information  about fixed stock options
          outstanding at August 31, 2002:

          ----------------------------------------------------------------------
                                                    Weighted        Weighted
                                     Shares          Average         Average
          Exercise Price          Under Option    Remaining Life  Exercise Price
          ----------------------------------------------------------------------

              $ 0.40                 425,000         1.47           $ 0.40
              $ 0.50                 500,000          .37           $ 0.50
              $ 1.00                 275,000          .76           $ 1.00
          ----------------------------------------------------------------------

          All of the above outstanding options are fully vested and exercisable.

Note I -  Income Taxes
          At August 31, 2002 and 2001, the Company had approximately  $1,013,397
          and  $624,765,  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.

Note J -  Fair Value of Financial Instruments
          The fair  value of cash and  cash  equivalents,  accounts  receivable,
          inventory,   prepaid   expenses,   deposits  and   accounts   payable,
          approximated  book value at August  31,  2002 and 2001  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.

Note K -  Proposed Acquisitions
          In May 2002,  the  Company  signed a letter of intent to  acquire  the
          assets of Electrical  Systems in  Engineering  ("ESE") and 100% of the
          outstanding  common and preferred  shares of Specdex Inc. As proposed,
          the Company will pay  approximately  $1,500,000 in cash to acquire the
          assets of ESE and, following acquisition of the ESE assets, Ozolutions
          will  issue  4,536,500   restricted   common  shares  to  acquire  all
          outstanding common and preferred shares of Specdex,  Inc. Specdex Inc.
          will become a wholly owned  subsidiary  of the  Company,  with Specdex
          Inc. fully  responsible for managing the ESE division.  If the Specdex
          Inc. acquisition is not completed,  the ESE acquisition will revert to
          Specdex Inc. Upon completion of the Specdex Inc.  acquisition,  Patent
          #P190-1 APP  3-60/307,  896  (Business  Process  Modeling of Wholesale
          Procurement),  whose  rights are held by William  A.  Hurley,  will be
          assigned to Specdex Inc. and subsequently  assigned to Ozolutions Inc.
          upon  completion  of certain  compensation  to  William  A.  Hurley by
          Specdex Inc.  covered by an existing  agreement.  Completion  of these
          transactions  is  subject  to a number  of  contingencies,  including,
          completion   of  due  diligence   review  of  the  parties   involved,
          negotiation  of  definitive   agreements  between  the  parties,   and
          arranging for the financing  required to pay the consideration for the
          companies and assets to be acquired.

                                       41

<PAGE>



OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note L -  Recently Issued Accounting Standards
          In June 2001,  the Financial  Accounting  Standards  Board issued FASB
          Statement  No 142,  Goodwill and Other  Intangible  Assets (SFAS 142).
          SFAS 142  requires,  among  other  things,  that  companies  no longer
          amortize  goodwill,  but instead test goodwill for impairment at least
          annually.  In addition,  SFAS 142 requires  that the Company  identify
          reporting  units  for  the  purposes  of  assessing  potential  future
          impairment  of goodwill,  reassess the useful lives of other  existing
          recognized  intangible  assets,  and cease amortization of intangibles
          with an indefinite useful life. An intangible asset with an indefinite
          useful life should be tested for  impairment in  accordance  with SFAS
          142.  SFAS 142 is  required  to be applied in fiscal  years  beginning
          after  December 15, 2001 to all goodwill and other  intangible  assets
          recognized  at  that  date,  regardless  of  when  those  assets  were
          initially  recognized.  It also  requires  the  Company to  complete a
          transitional  goodwill  impairment test by six months from the date of
          adoption. The Company is also required to reassess the useful lives of
          other  intangible  assets  within  the  first  interim  quarter  after
          adoption of SFAS 142. Management does not anticipate that the adoption
          of SFAS 142 will have a material impact on the financial statements.

          In June 2001,  the Financial  Accounting  Standards  Board issued FASB
          Statement No. 143,  Accounting for Asset Retirement  Obligations (SFAS
          143).  SFAS 143 requires that companies  recognize the fair value of a
          liability for an asset retirement obligation in the period in which it
          is incurred or reasonably  estimated.  The associated retirement costs
          will be  capitalized  as part of the  carrying  amount of the  related
          asset and subsequently allocated to expense over the asset's remaining
          useful  life.  SFAS 143 is  required  to be  applied  in fiscal  years
          beginning after December 15, 2001. Management does not anticipate that
          the  adoption  of SFAS  143  will  have  any  material  impact  on the
          financial statements.

          In August 2001, the Financial  Accounting  Standards Board issued FASB
          Statement  No.  144,  Accounting  for the  Impairment  or  Disposal of
          Long-Lived  Assets (SFAS 144).  SFAS 144 supercedes FASB Statement No.
          121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
          Long-Lived  Assets  to Be  Disposed  Of.  SFAS  144  also  amends  the
          accounting  and reporting  provisions for the disposal of a segment of
          business in Accounting  Principles Board Opinion No. 30, Reporting the
          Results of Operations - Reporting the Effects of Disposal of a Segment
          of a Business,  and Extraordinary,  Unusual and Infrequently Occurring
          Events and  Transactions  (Opinion  30).  SFAS 144 is  required  to be
          applied in fiscal years beginning after December 15, 2001.  Management
          does not  anticipate  that  the  adoption  of SFAS  144 will  have any
          material impact on the financial statements.

          In April 2002, the Financial  Accounting  Standards  Board issued FASB
          Statement No. 145,  Rescission of FASB  Statements  No. 4, 44, and 64,
          Amendment of FASB  Statement No. 13, and Technical  Corrections  (SFAS
          145). SFAS 145 requires that gains and losses from  extinguishment  of
          debt be  classified  as  extraordinary  items  only if they  meet  the
          criteria in Opinion 30.  Applying  the  provisions  of Opinion 30 will
          distinguish  transactions  that  are  part  of an  entity's  recurring
          operations  from those that are unusual and  infrequent  and therefore
          meet the criteria for  classification  as an extraordinary  item. SFAS
          145 also requires that  modifications  to a capital lease that make it
          an operating lease be accounted for, as applicable, in accordance with
          FASB Statement No. 98,  Accounting  for Leases,  or FASB Statement No.
          28,  Accounting for Sales with Leasebacks.  SFAS 145 is required to be
          applied in fiscal years beginning after May 15, 2002 and to provisions
          relating to modifications of a capital lease that make it an operating
          lease as of May 15, 2002.  Upon adoption of SFAS 145, gains and losses
          on debt extinguishment that have been shown on the income statement as
          extraordinary  items in prior periods should be  reclassified,  unless
          they meet the  criteria  for  extraordinary  status  per  Opinion  30.
          Management does not anticipate that the adoption of SFAS 145 will have
          any material impact on the financial statements.

                                                                   - continued -

                                       42

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


Note L -  Recently Issued Accounting Standards - continued

          In June 2002,  the Financial  Accounting  Standards  Board issued FASB
          Statement  No.  146,  Accounting  for  Costs  Associated  with Exit or
          Disposal   Activities   (SFAS  146).  SFAS  146  addresses   financial
          accounting  and reporting for costs  associated  with exit or disposal
          activities  and nullifies  Emerging  Issues Task Force Issue No. 94-3,
          Liability  Recognition for Certain Employee  Termination  Benefits and
          Other Costs to Exit an Activity (including Certain Costs Incurred in a
          Restructuring).   SFAS  146  requires  companies  to  recognize  costs
          associated with exit or disposal  activities when they incurred rather
          than at the date of a commitment  to an exit or disposal  plan.  Costs
          covered  by SFAS 146  include  lease  termination  costs  and  certain
          employee  severance  costs that are associated  with a  restructuring,
          discontinued  operation,  plant  closing,  or other  exit or  disposal
          activity.  SFAS  146  applies  to  all  exit  or  disposal  activities
          initiated after December 31, 2002. Management does not anticipate that
          the  adoption  of SFAS  146  will  have  any  material  impact  on the
          financial statement.

          In October 2002, the Financial  Accounting Standards Board issued FASB
          Statement No. 147,  Accounting for  Acquisitions of Certain  Financial
          Institutions - an amendment of FASB Statements No. 72 and 144 and FASB
          Interpretation No. 9 (SFAS 147). SFAS 147 amends SFAS 72 and no longer
          requires companies to recognize, and subsequently amortize, any excess
          of the  fair  value of  liabilities  assumed  over  the fair  value of
          tangible   and   identifiable   intangible   assets   acquired  as  an
          unidentifiable intangible asset. In addition, SFAS 147 amends SFAS 144
          to include  in its scope  long-term  customer-relationship  intangible
          assets  of  financial  institutions  such as  depositor  and  borrower
          relationship   intangible  assets  and  credit  cardholder  intangible
          assets. Consequently,  those intangible assets are subject to the same
          undiscounted  cash  flow   recoverability  test  and  impairment  loss
          recognition  and  measurement  provisions  that SFAS 144  requires for
          other  long-lived  assets that are held and used.  Management does not
          anticipate that the adoption of SFAS 147 will have any material impact
          on the financial statements.

Note M -  Concentrations
          The Company  recorded its first sales in April 2002.  During 2002, the
          two largest  customers  accounted for 64% and 28% of net sales.  Also,
          70% of net sales  during 2002 were made to foreign  customers.  As the
          Company  has just begun to sell its  products,  the  Company  does not
          believe  that they are  dependent  on the  current  customer  base for
          future sales.

          The Company is dependent on a third-party vendor for all of its supply
          of water-activated  purification  systems. The Company is dependent on
          the ability of its supplier to provide  products on a timely basis and
          on favorable pricing terms. The loss of this supplier or a significant
          reduction  in product  availability  from this  supplier  could have a
          material adverse effect on the Company.  The Company believes that its
          relationship with this supplier is excellent.

Note N -  Subsequent Events
          In October 2002,  the Company  entered into an agreement with Cybertek
          Capital  Management  Inc.  ("Cybertek") or its assignees to distribute
          Ozolutions  products.  The  agreement  is for a five year  period.  In
          exchange for these  services,  the Company granted options to purchase
          2,000,000 common shares at $0.50 per share. The options will vest at a
          rate of 10% per  quarter  beginning  November  1, 2002 and have a five
          year  term.  This  issuance  will  have  no  impact  on the  Company's
          financial statements.

          In October 2002, the Company extended the options that were granted to
          ELCE by one year. This will have no impact on the Company's  financial
          statements.

                                       43

<PAGE>


OZOLUTIONS INC.
(A Delaware Corporation)
Toronto, Ontario Canada

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note N -  Subsequent Events - continued

          In October 2002, the Company  extended  options issued to directors in
          2001 by one year. In addition,  these options were repriced from $1.00
          to  $0.40.  This  will  have  no  impact  on the  Company's  financial
          statements.

          In October 2002, the Company entered into a consulting  agreement with
          de Bruyne Ivo. The purpose of this  agreement  is to provide  investor
          relations  services  and  increase  exposure  of  the  Company  in the
          investing  community.  The  agreement  is for  six  months  commencing
          October 14, 2002. In exchange for these  services,  the Company issued
          300,000 restricted shares of Ozolutions Inc. common stock. The Company
          will charge  operations  for $15,000 during 2003 for the fair value of
          services rendered.

          On November 18, 2002, the Company had an arbitration hearing regarding
          the Chapman,  Spira & LLC.  Issue.  At this time,  the judge sent both
          parties back to prepare additional  information.  Due to uncertainties
          in the  arbitration  process,  management  is unable to  estimate  the
          potential  financial  impact  of these  proceedings.  Accordingly,  no
          provision  for  possible  loss  has  been  made  in  these   financial
          statements.

                                       44