SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549

FORM 20-F

[  ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
  OR (g) 
  OF THE SECURITIES EXCHANGE ACT OF 1934; OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934 
  For the fiscal year ended May 31, 2002

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
  15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934 
  For the transition period ______ to

Commission File No. 000-32277

RTICA CORPORATION (RTICA)(Exact Name of Registrant as Specified in its Charter)

ONTARIO, CANADA(Jurisdiction of Incorporation or Organization)

999 Barton StreetStoney Creek, Ontario L8E 5H4 Canada 
  (905) 643-8669(Address, Including Zip Code and Telephone Number, Including
  
  Area Code, of Registrants Principal Executive Offices)

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Securities registered or to be registered pursuant to Section
  12(b) of the Act:

None

Securities registered or to be registered pursuant to Section
  12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant
  to Section 15(d) of the Act:

Common Stock, no par value

As of November 20, 2002, the registrant had 36,119,636 shares
  of Common Stock outstanding.

Indicate by check mark whether RTICA (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
  1934 during the preceding 12 months (or for such shorter period that RTICA was
  required to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days: 
  Yes [X] No []

Indicate by check mark which financial statement item RTICA
  has elected to follow:

Item 17 [] Item 18 [X ]

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PART I

|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
      AND ADVISORS
|------- | -----------------------------------------------------------
|        |                                                            
|        | Not Applicable.                                            
|        |                                                            
|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE                    
|        |                                                            
|        | Not Applicable.                                            
|        |                                                            
|ITEM 3. | KEY INFORMATION                                            

A.     SELECTED FINANCIAL DATA

The
  consolidated statements of operations data for each of the years ended May 31,
  2002, 2001 and 2000 and cumulative period from June 13, 1991 (inception) to
  May 31, 2001 and the consolidated balance sheets data as of May 31, 2002 and
  2001 are derived from our consolidated financial statements that have been audited
  by KPMG LLP, independent auditors, that are included elsewhere in this Annual
  Report.

Our
  consolidated financial statements are prepared in accordance with Canadian GAAP,
  which differ in certain respects from U.S. GAAP. For a description of the material
  differences between Canadian GAAP and U.S. GAAP in regard to our consolidated
  financial statements, see note 13 to our consolidated financial statements.
  The historical results below are not necessarily indicative of the results to
  be expected for any future period.

THE COMPANY'S ACCOUNTS ARE MAINTAINED IN CANADIAN DOLLARS.
  IN THIS ANNUAL REPORT, ALL DOLLAR AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS
  EXCEPT WHERE OTHERWISE INDICATED. Where conversions to U.S. dollars has been
  provided, the exchange rate is based on the date of the event if applicable
  or the exchange rate at the end of the relevant fiscal year if no date is specified.
  See "Exchange Rate Information" in this Item 3.A. below for historical exchange
  rate information.

The
  selected financial data should be read in conjunction with our consolidated
  financial statements and the notes to our consolidated financial statements
  included elsewhere in this Annual Report, and "Item 5. Operating and Financial
  Review and Prospects" of this Annual Report.

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SELECTED CONSOLIDATED FINANCIAL DATA OF
  RTICA CORPORATION 
  (Expressed in Canadian Dollars)

|                                  | Fiscal Years Ended May 31, |  
|--------------------------------- | -------------------------- | -
|                                  | (audited)                  |  
|                                  | 2002                       |  
|                                  |                            |  
|                                  |                            |  
|Income Statement Date             |                            |  
|                                  |                            |  
|Interest Income                   | 38,284                     |  
|Fees and licences                 | -                          |  
|Operating expenses                | 3,140,657                  |  
|Loss for the period               | (3,102,373                 | )
|Defict accumulated during         |                            |  
|development stage, end of period  | (10,407,809                | )
|                                  |                            |  
|Loss per share                    | (0                         | )
|                                  |                            |  
|Balance Sheet Data                |                            |  
|Current assets                    | 42,778                     |  
|Fixed assets                      | 334,536                    |  
|Goodwill                          | 1                          |  
|Deferred development costs        | 1                          |  
|Total assets                      | 377,316                    |  
|Current liabilities               | 1,267,357                  |  
|Due to government                 | 445,000                    |  
|Convertible debentures            | 73,264                     |  
|Shareholders' equity (deficiency) | (1,408,305                 | )

RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPALS

The
  consolidated financial statements of the Company have been prepared in accordance
  with Canadian Generally Accepted Accounting Principles, which differ materially
  in certain respects from United States Generally Accepted Accounting Principles.
  For a description of these differences see note 13 to the consolidated financial
  statements of the Company for its fiscal year ended May 31, 2002 included in
  Item 18 of this Annual Report.

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EXCHANGE RATE INFORMATION

The
  following table sets forth, for each period indicated the high and low exchange
  rates based on the noon buying rate in the city of New York for cable transfers
  in Canadian dollars as provided by the Bank of Canada, which is often referred
  to as the "noon buying rate." The exchange rates are presented as Canadian dollars
  per US$1.00. On November 19, 2002, the noon buying rate was US$1.00 equals C$1.585
  and the inverse noon buying rate was C$1.00 equals US$0.630.

|              | June 2002           |  | July 2002 |  | August 2002 |  | September 2002 |  | October 2002
|------------- | ------------------- |  | --------- |  | ----------- |  | -------------- |  | ------------
|              |                     |  |           |  |             |  |                |  |             
|High          | C$0.66              |  | C$0.66    |  | C$0.64      |  | C$0.64         |  | C$0.64      
|Low           | 0.65                |  | 0.63      |  | 0.63        |  | 0.63           |  | 0.62        
|              |                     |  |           |  |             |  |                |  |             
|              |                     |  |           |  |             |  |                |  |             
|              | YEARS ENDED MAY 31,
|              |                     |  |           |  |             |  |                |  |             
|              | 1998                |  | 1999      |  | 2000        |  | 2001           |  | 2002        
|              |                     |  |           |  |             |  |                |  |             
|High          | C$0.73              |  | C$0.70    |  | C$0.70      |  | C$0.68         |  | C$0.66      
|Low           | 0.68                |  | 0.63      |  | 0.66        |  | 0.63           |  | 0.60        
|Average (1)   | 0.71                |  | 0.66      |  | 0.68        |  | 0.66           |  | 0.63        
|End of Period | 0.69                |  | 0.68      |  | 0.67        |  | 0.65           |  | 0.64        

|(1) | The average is based on the average of the noon buying rates
      on the last business day of each month in the period indicated.
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                   
|B.  | CAPITALIZATION AND INDEBTEDNESS
      Not Applicable.                                                                             
|    |                                                                                                                                   
|C.  | REASONS FOR THE OFFER AND USE OF PROCEEDS
      Not Applicable.                                                                   
|    |                                                                                                                                   
|D.  | RISK FACTORS                                                                                                                      

We only
  have a limited operating history upon which you can analyze our potential profitability.Because of our limited operating history, our strategies may not prove to
  be effective in dealing with problems associated with the formation of a new
  business and as a result our Rtica® product may never be successfully commercialized.
  Since inception, we have been engaged primarily in manufacturing start-up commercialization
  activities related to our Rtica® insulating products. We may encounter problems,
  expenses, complications and delays in connection with the development, application
  or the utilization of our technology, particularly because that technology is
  new and commercially unproven and because of the competitive environment in
  which we plan to operate. In addition, we have shipped test product to the United
  States for installation during the fiscal period and anticipate commercial shipments
  to begin in early calendar 2003. However, we may experience delays or unanticipated
  problems, which will prevent us from meeting this goal or continuing to ship
  commercial amounts of product.

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We have
  operated at a loss since inception.Since inception we have operated at
  a loss and we may never be able to operate profitably. On May 31, 2002, we had
  an accumulated deficit from inception of C$10,407,809 (approx. US$6,635,094),
  and we have incurred a loss for the three months ended August 31, 2002 of C$564,736
  (approx. US$360,026). We anticipate that we will continue to experience significant
  operating and net losses through the end of our fiscal year ending May 31, 2003
  as a result of costs associated with expanding the commercial manufacture and
  distribution of our product. Such losses will continue until such time, if ever,
  that our products can successfully be brought to market and generate sufficient
  operating revenues. We may never become profitable or may not be able to sustain
  profitability if achieved. Based upon these factors and others discussed in
  Note 1 to the Financial Statements for the fiscal year ended May 31, 2002, our
  independent auditors have issued a qualified opinion, indicating that the continuation
  of RTICA as a going concern is dependent upon achieving additional financing
  and, ultimately, upon the achievement of profitable operations. See Item
  5. Operating and Financial Review and Prospects and the Financial Statements.

Subsequent
  to May 31, 2002, the Company raised $2.2 million in 12% convertible debentures
  due in 2007, convertible into units consisting of one voting preference share
  of the Companys subsidiary Rtica Inc. exchangeable into common shares
  of the Company and one warrant to purchase one additional preference share of
  that company at $0.30. Each warrant entitles the holder to purchase one additional
  preference share at $0.40 per share. In addition, the Company raised C$300,000
  in a private placement of 1,000,000 units at $0.30, each unit consisting of
  one common share and one common share purchase warrant at $0.40 per share for
  a period of 24 months from the date of issuance. After paying past due payables,
  we estimate that we have sufficient cash resources to fund our operations for
  approximately six (6) months from the date of this report based on our current
  cash requirements, which result principally from the implementation of our business
  plan and working capital needs and start-up costs. Unless we generate significant
  revenues during calendar 2003, our failure to obtain additional financing prior
  to May 31, 2003, may prevent us from entering commercial production, force us
  to scale back our operations and limit our ability to effectively compete in
  the insulation and building materials industry.

Our projected
  manufacturing cost estimates and gross margin percentages for commercial operations
  may not be accurate since they are based principally upon assumptions drawn
  from small scale, test operations.Given that we have no history of commercial
  scale operations, and because we are producing a new and innovative product,
  our current projections with respect to manufacturing costs and gross margins
  per unit of production may not be realized. In the event that the gross margin
  percentage is less than currently projected by management, cash flow contributions
  from operations may be less than we have projected which would limit our growth
  potential and may prevent us from achieving profitability or becoming a large
  scale commercial producer.

We may
  be unable to protect our patent and proprietary technology related to the manufacture
  of Rtica® products due to our limited financial resources.Our success
  and competitive position are dependent in large part on our ability to defend
  our technology against infringement from others. Although we have patents in
  the United States and Canada, as well as proprietary technology and trade secrets
  protected by non-disclosure agreements, the cost of defending our technology
  and intellectual property could be beyond our present or future financial resources.
  In addition, our competitors may independently develop technology, which is
  substantially equivalent or superior to our technology, or our competitors may
  develop functionally similar products outside the protection of any licenses,
  patents or other intellectual property rights that we have or may obtain.

We lack
  operating experience, which may impede our ability to effectively produce and
  market our product.Because we are a development stage enterprise and have
  only limited operating

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experience, we may not be able to effectively produce and
  market our product. The transition from a startup operation to an enterprise
  capable of effectively marketing Rtica® products may require additional
  management, technical personnel, capital and other resources. While we have
  expanded our employee base over the past year, competition for qualified personnel
  in these areas is intense. Failure to obtain qualified personnel or to meet
  marketing standards could prevent or delay the effective commercialization of
  our products, even if successfully developed by us.

Our current
  marketing and sales strategy is directed at a single, targeted customer base.If we cannot successfully implement our marketing strategy, we may not be
  able to successfully commercialize and sell our product. We do not currently
  have well-established sales and distribution channels for our product. We are
  currently focusing our marketing and sales effort on certain major insulation
  subcontractors in the United States and Canada. We believe that these users
  represent a significant potential customer base for the Rtica® products.
  Marketing to this directed group can be accomplished with a limited number of
  our personnel and at a relatively low cost. If our strategy is not successful
  and we do not succeed in selling our product to this targeted customer base,
  we may be forced to develop a broad, national based sales and distribution network
  to generate customer demand and to sell our products on a national basis. The
  development of such a network would likely involve significant costs and additional
  risks and uncertainties. Therefore, the failure of our current marketing and
  sales strategy would likely have a material adverse effect on our business,
  results of operations and financial condition.

Our current
  manufacturing capacity is extremely limited and we cannot be sure that our efforts
  to expand our capacity to a commercial scale will be successful.We currently
  have limited manufacturing capacity and we may encounter problems scaling up
  our system to commercial scale. The failure to expand our current manufacturing
  facility to a commercial level or relocate to a larger facility would limit
  our ability to manufacture significant quantities of our product and thereby
  limit our sales potential. Although we currently have a manufacturing facility
  in Stoney Creek, Ontario, Canada, our plant as currently configured is not large
  enough to produce commercial quantities profitably. To manufacture Rtica®
  in sufficient quantities and at acceptable costs under our plan we must expand
  or relocate our current facility. In connection with our expansion effort, we
  may encounter equipment and process problems when we attempt to duplicate our
  results at commercial production levels. In addition, we will need financing
  to accomplish such expansion and can make no assurances that such financing
  will be available or available on terms acceptable to us.

Our business
  is based solely on the success of Rtica®, which is not commercially proven. Our reliance upon one product to generate revenues exposes us to commercial
  risks reflecting lack of product diversification. We have not generated any
  revenues to date and our revenues over at least the next year will be entirely
  dependent upon the sale of our Rtica® insulation and related technology
  and licensing opportunities. If our Rtica® insulation does not achieve market
  acceptance, our lack of diversification could have material adverse effects
  on our business.

The technology
  that we use in producing Rtica® may not pass long-term testing.Because
  Rtica® represents a new product that has not undergone long-term testing,
  our products may experience unanticipated problems. While we believe that Rtica®
  represents a novel technology in insulating materials, commercialization has
  only just begun. Our product and technology may not provide equal or superior
  performance compared with competitive products and commercialization may not
  be successful. Moreover, although we have completed both internal testing and
  testing by an independent laboratory, and although the initial results from
  presenting our products to established users have demonstrated advantages over
  other products, there has been no long-term testing done on the product to ensure
  our integrity over significant time periods. Thus, Rtica® products may experience
  unanticipated problems.

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We have
  only begun to commercialize the manufacture and sale of our Rtica® product,
  and we cannot be sure that it will receive broad market acceptance.Even
  if our technology is successful after long-term testing, as discussed above,
  Rtica® products may not be accepted by the market. Factors that may limit
  the market acceptance of Rtica® may include:

- obstacles in market entry relative to competitive products,
- the availability of alternative products,
- the price of our products relative to alternative products, and
- the possible lack of motivation of potential customers to change suppliers.

We have
  a limited number of employees and limited financial resources, which could limit
  our ability to manage the growth of our business. We may not have adequately
  provided for the costs and risks associated with rapid future growth. Any such
  growth could place a significant strain on our managerial, operational and financial
  resources, and we would be required to implement and improve our managerial
  controls and procedures and operational and financial systems. In addition,
  we will be required to hire, train, integrate, manage and retain our workforce
  including our technology, manufacturing, engineering, sales and business development
  staff. Locating and retaining qualified personnel in the insulation industry
  is extremely competitive. We may not have adequately allowed for the costs and
  risks associated with our proposed expansion and our systems, procedures or
  controls may not be adequate to support our operations. Furthermore, we may
  not be able to successfully locate, train and integrate personnel into our workforce.

The insulation
  industry is highly competitive; we may not be able to compete successfully with
  other companies in our industry because some of our competitors are better known
  and have substantially greater resources than we do.We may not be able
  to effectively compete against such well entrenched industry competitors with
  much greater technical resources and broad distribution networks. The insulation
  industry is dominated by a small number of very large and well-capitalized multinational
  participants. In response to environmental and health concerns, these companies
  are utilizing increasing percentages of recycled materials in their production
  processes, and are developing new products which are perceived to have fewer
  health related concerns.

We may
  not be able to obtain the recycled plastic needed to manufacture our product.
  Because the largest percentage of the production cost of Rtica® is the cost
  of the recycled plastic used in its production, the lack of availability of
  that raw material or a significant increase in its cost could impair our ability
  to profitably produce our product. We rely on a plentiful and continuing supply
  of a specific type of low cost recycled plastic. While we currently believe
  that there are adequate supplies of the recycled plastic that we use from several
  sources, if supply of the type of recycled plastic we use becomes more difficult
  to obtain or the price for that raw material increases significantly we may
  not be able to secure adequate raw material supplies to profitably produce and
  market Rtica®.

We may
  not be able to secure timely building code certification. Although we are
  in the process of obtaining building code certification and listing of Rtica®
  in all required jurisdictions in Canada and the United States, we cannot be
  sure that we will obtain such approvals. Customer acceptance and sales of our
  product may be adversely impacted if we do not obtain certification under United
  States and Canadian building codes. Although building code approval is not legally
  required to sell our product to our target market in either the United States
  or Canada, certification would enable us to bypass the review of our product
  specifications on a case by case basis in connection with each sale, and to
  market our product with a listing reference number. We are currently in the
  process of applying for certification in Canada and the United States; however,
  certification will not be obtained until we are able to demonstrate our ability
  to generate consistent, approved product quality on an on going basis using
  a

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commercial scale plant. There is no guarantee that our standard
  will be accepted or that we will be certified and establish a listing. Our failure
  to achieve certification could impair our ability to market and sell our product
  on a large scale. See Item 4.B. Business Overview -- Government Regulation.

Our directors
  and officers may be able to control or significantly influence us due to their
  concentrated stock ownership. Directors and officers beneficially own approximately
  26.7% of our issued and outstanding stock (without giving effect to the exercise
  of options held by said persons) and, therefore, may be able to influence or
  control the outcome of substantially all actions requiring stockholder approval,
  including the election of the entire Board of Directors, and the outcome of
  any stockholder votes concerning a merger, asset sale, or other major corporate
  transaction affecting RTICA. Such control could also delay, deter, or prevent
  an unsolicited takeover of RTICA.

Currency
  fluctuations that devalue the Canadian dollar against the United States dollar
  could adversely effect our results of operations.In the event that the
  Canadian dollar was materially devalued against the United States dollar, our
  operating results could be materially adversely affected. The volatility of
  the Canadian dollar against United States currency may affect our profits, as
  certain supplies and equipment purchased by us are manufactured and exported
  to Canada by foreign companies. Accordingly, the relationship of the Canadian
  dollar to the value of the United States dollar may materially affect our operating
  results.

We may
  qualify as a passive foreign investment company (PFIC) for United
  States Federal income tax purposes for our taxable year ended May 31, 2002 and
  prior years.If it is determined that we were a PFIC for our taxable year
  ended May 31, 2002 or for any prior period, there could be adverse tax consequences
  for U.S. shareholders who acquired or owned their shares while we qualified
  as a PFIC. See Item 10.E. Taxation - United States Tax Consequences -
  The Companys Status as a Passive Foreign Investment Company."

An investment
  in RTICA may have limited liquidity if an active trading market in the United
  States does not develop.Although our common stock currently trades on the
  Canadian Venture Exchange (TSE-V) the trading history suggests there is limited
  liquidity in the public market for our securities and liquidity may not increase
  and/or be sustained. While, we may attempt to have our common stock listed on
  the OTC-BB, we can make no assurances that our common stock will ever be listed
  or if listed that an active U.S. market will develop. In addition, factors such
  as announcements of quarterly variations in our financial results and changes
  in general market conditions, among other things, could cause the market price
  of the shares to fluctuate significantly. In recent years, the stock market
  has experienced significant price and volume fluctuations.

If our
  stock is listed on a U.S. exchange, it may be subject to penny stock regulation. Disclosure requirements adopted by the Commission may have the effect of
  reducing the trading activity in the secondary market for our stock if it becomes
  subject to the penny stock rules. In addition, if our common stock becomes subject
  to the penny stock rules, purchasers of shares may find it more difficult to
  sell their shares. These rules regulate broker-dealer practices in connection
  with transactions in "penny stocks. Penny stocks generally are equity
  securities with a price of less than $5.00 (other than securities registered
  on certain national securities exchanges or quoted on the NASDAQ system, provided
  that current price and volume information with respect to transactions in such
  securities is provided by the exchange or system). The penny stock rules require
  a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
  from those rules, to deliver a standardized risk disclosure document prepared
  by the Commission, which specifies information about penny stocks and the nature
  and significance of risks of the penny stock market. The broker-dealer also
  must provide the customer with bid and offer quotations for the penny stock,
  the compensation of the broker-dealer and our salesperson in the

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transaction, and monthly account statements showing the market
  value of each penny stock held in the customer's account. In addition, the penny
  stock rules require that prior to a transaction in a penny stock not otherwise
  exempt from those rules the broker-dealer must make a special written determination
  that the penny stock is a suitable investment for the purchaser and receive
  the purchaser's written agreement to the transaction. Based on the recent trading
  prices of common stock in Canada (C$0.18 (approximately US$0.11) on November
  20, 2002), it is likely that our stock will be subject to the penny stock regulations
  for the foreseeable future.

We may
  be subject to claims by users of our Rtica® product and we may not have
  sufficient insurance to cover such claims.Although our product has been
  tested, it is newly developed and only has a short performance history. While
  we have general liability insurance, including product liability coverage, in
  effect, we may not have sufficient coverage to protect us against such claims.

The sale
  of insulation products is seasonal and the seasonality of our product sales
  could adversely effect the value of our stock. Once we begin manufacturing
  and sales, our business will probably experience seasonal fluctuations in sales
  and operating results from quarter to quarter. In general, operating results
  in the industry are weakest in the first calendar quarter because of the effects
  of winter weather on construction and the consequent reduction in sales of insulation.
  Fluctuations in our quarterly sales and operating results caused by the seasonality
  of our industry could result in significant volatility in, and otherwise adversely
  affect, the market price of the common stock.

FORWARD-LOOKING STATEMENTS

This
  Annual Report contains forward-looking statements within the meaning of the
  safe harbor provisions of the Private Securities Litigation Reform
  Act of 1995, that involve risks and uncertainties. These statements relate to
  our future plans, objectives, expectations and intentions. We have identified
  these statements by the use of words such as "may," "will," "expect," "anticipate,"
  "intend," "plan," "estimate," "believe," "continue" or other similar expressions.
  These forward-looking statements reflect our current expectations and assumptions
  as to future events that may not prove to be accurate. Our actual results are
  subject to a number of risks and uncertainties and could differ immediately
  from those discussed in these statements. Factors that could contribute to these
  differences include, but are not limited to, our ability to adapt to current
  and future changes in technology; our ability to successfully commercialize
  development and sale of our product; our ability to introduce new and enhanced
  products on a timely basis; our ability to overcome significant and increasing
  competition in our industry; the impact of depending on a single supplier or
  a limited number of suppliers for key components and materials in our products;
  our ability to attract and retain sufficient numbers of highly skilled technical,
  sales and marketing and other personnel; our ability to sustain research and
  development activities and other factors discussed in the Risk Factor
  section of this Annual Report. In addition, such forward-looking statements
  could be affected by general industry and market conditions as well as growth
  rates, general international economic conditions including exchange rate fluctuations,
  and other future factors. In light of the many risks and uncertainties surrounding
  our business and operations, you should keep in mind that we cannot guarantee
  that the forward-looking statements described in this Annual Report will transpire.
  We undertake no obligation and do not intend to update or revise any forward-looking
  statements, whether as a result of new information, future events or otherwise,
  except as required under applicable law.

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ITEM 4.    INFORMATION ON THE COMPANY

A.     HISTORY AND DEVELOPMENT OF THE COMPANY

We
  were incorporated by Certificate of Incorporation issued pursuant to the provisions
  of the Business Corporations Act(Alberta) on May 30, 1997 under the
  name Inzeco Holdings, Inc. In April 2001, we changed our name to Rtica Corporation
  and continued the corporations existence under the laws of the province
  of Ontario.

Our
  principal office is located at 999 Barton Street, Stoney Creek, Ontario, Canada
  L8E 5H4. Our registered office is located at Suite 700, 220 Bay Street, Toronto,
  Ontario M5J 2W4. We maintain a website at www.rtica.com.

We
  are a public corporation whose shares are listed for trading, since October
  1997, on the Canadian Venture Exchange (CDNX). In connection with our name change,
  we changed our trading symbol on the CDNX from IZE to RTN, effective the opening
  of the market on April 9, 2001. The CDNX is now known as the Canadian Venture
  Exchange, TSE-V, and our trading symbol remains RTN. Our authorized capital
  consists of an unlimited number of shares of Common Stock, of which 36,119,636
  were issued and outstanding as of November 20, 2002, and an unlimited number
  of shares of Preferred Stock, none of which are issued or outstanding.

B.     BUSINESS OVERVIEW

We
  are in the business (through our wholly owned subsidiary, Rtica Inc.) of developing
  and producing insulating materials for use in the residential and commercial
  building market. Our insulating products are marketed under the name Rtica®.
  Rtica® is a non-irritating insulating material for thermal and acoustical
  applications. We manufacture Rtica® utilizing polyethylene terephthalate
  (PET), a plastic commonly used in soft drink bottles, packaging,
  film and fibers. PET is a commodity raw material available from many sources
  in Canada and the United States. For more than the past five years, we have
  endeavored to improve the insulating properties of our product while increasing
  production levels of consistent, high quality product.

Rtica®
  looks and is applied like fiberglass in both blowing wool and batt applications.
  Results from internal and independent laboratory testing demonstrate that Rtica®
  provides an equivalent thermal performance to glass and rock wool fibers, cellulose
  and expanded polystyrene foam insulating materials. In addition, based on our
  manufacturing costs, we believe that Rtica® can be sold at competitive prices.

Rtica®
  can be produced in a variety of forms and shapes to satisfy most insulation
  applications. This includes, flexible batts, boards, shapes, and blowing wool
  (loose fill). In addition, no special protection is needed to handle the material.
  These qualities, combined with lower production costs associated with Rtica®
  than required for the production of traditional insulation materials make RTICA®
  competitive with all but the lowest performance insulation.

We
  are currently in the process of expanding our manufacturing capabilities and
  over the past six months have shipped quantities of product of Rtica® for
  demonstration and testing to potential customers in the United States and Canada.
  No revenues were booked from these shipments. We are targeting our sales efforts
  to professional contractors in the United States. We have been working with
  groups of U.S. contractors on product development and market testing over the
  past year. While we anticipate that this will facilitate our introduction of
  Rtica® to the retail side in the U.S. market, there can be no assurances

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that we will be able to successfully implement our expansion
  strategy of offering increasing quantities of our products.

To
  facilitate our transition to operations, we have shifted virtually all Research
  and Development to our long-standing research collaborator, the National Research
  Council Industrial Materials Institute, (NRC-IMI) in Boucherville, Quebec. NRC-IMI
  has a worldwide reputation as a leader in plastic processing and technology.
  We have engineered, built and installed at NRC-IMIs facility a Research
  and Development scale manufacturing line that incorporates all of our technical
  processing advances to date. This new arrangement allows us to direct the activities
  of the Stoney Creek plant solely towards product and market development.

Our
  success will depend in large part upon the ability of our products to meet targeted
  performance and cost objectives. We are committing considerable time, effort
  and resources to finalize development of our products and product enhancements.
  Although we have shipped product in fiscal 2002, significant commercial production
  will not occur until late calendar 2002 at the earliest. Our ability to produce
  large-scale commercial quantities of Rtica® of consistent high quality is
  unproven. Large-scale commercial production is subject to unanticipated delays,
  expenses, difficulties, the possible insufficiency of funding as well as other
  risks inherent in the development of new products and technologies. There can
  be no assurance as to when, or whether, such large scale commercialization of
  Rtica® will be successfully completed. See Risk Factors -- We only
  have a limited operating history upon which you can analyze our potential profitability.

Our
  future operating results will also depend upon our ability to gain market acceptance
  of RTICA®. Although we are working with U.S. contractors on marketing and
  development, the market for our product is still new and evolving, and it is
  difficult to assess or predict with any assurance the growth rate, if any, or
  the size of the market for Rtica®. There can be no assurance that the market
  for our product will develop, or that our product will achieve market acceptance.
  If the market fails to develop, develops more slowly than expected or becomes
  saturated with competitors, or if Rtica® does not achieve significant market
  acceptance, our business, operating results or financial condition will be materially
  adversely affected. See Risk Factors  Our Rtica® product has
  not yet been sold on a commercial basis, we cannot be sure it will receive broad
  market acceptance.

Once
  we begin manufacturing and distributing commercial quantities of product, we
  anticipate seasonal fluctuations in our sales and operating results from quarter
  to quarter. In general, operating results in the industry are weakest in the
  first calendar quarter because of the effects of winter weather on construction
  and the consequent reduction in sales of insulation. The effects of seasonality
  on our operating results could adversely affect the market price of the common
  stock. See Risk Factors  The sale of insulation products is seasonal
  and the seasonality of our product sales could adversely effect the value of
  our stock.

Competition

We believe that certain
  attributes of Rtica® provide us with a competitive advantage. These attributes
  include the following:

- User Friendly Product: Rtica® neither causes skin
        irritation on contact nor poses a threat to respiratory health due to
        dust inhalation. Such ease and comfort in handling are factors that we
        believe provide the most significant advantage of our product for all
        users, especially professional installation contractors.

12

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- Thermal Performance: Rtica® provides excellent
        thermal performance properties with optimum cost-efficiency.
- Energy Conservation: Rtica® requires less energy
        to make than most competitive products, yet conserves more energy when
        in place; it utilizes significant quantities of recycled PET, an inducement
        to recycling of plastic waste.

While
  we believe that there is no insulation product on the market in North America
  that competes directly with Rtica® in terms of achieving significant savings
  through the use of recycled plastic to produce insulation material, Rtica®
  will compete in the extremely competitive building insulation market, principally
  composed of large domestic and multinational companies which have significantly
  greater assets, working capital and marketing personnel than us. See Risk
  Factors -- The insulation industry is highly competitive; we may not be able
  to compete successfully with other companies in our industry because some of
  our competitors are better known and have substantially greater resources than
  we do. In addition, we expect that if our products become successful,
  competitors will be more likely to develop and introduce into the marketplace
  comparable products and technologies. In such event, we will likely be competing
  with larger, better capitalized and nationally recognized competitors.

Marketing, Sales and Seasonality

Products
  produced from fiberglass and other mineral fiber products currently dominate
  the residential segment of the insulation market in North America. We believe
  our Rtica® product is well positioned to supply product for high performance
  thermal and acoustical applications in construction and manufacturing sectors
  currently occupied by fiberglass and plastic foams. However, Rtica® is a
  new product with no broad based recognition and we do not currently have any
  established sales and distribution channels for Rtica®. To overcome the
  lack of an existing market, we have adopted a strategy of a focused marketing
  effort directed at large insulation contractors in Canada and the East Coast
  of the United States. We believe that this market represents a significant customer
  base that can be targeted at relatively low cost, rather than expending significant
  funds for the creation of a broad-based national sales network. Relationships
  developed with large insulation contractors will assist and enhance our marketing
  efforts by providing product validation as well as important anticipated customer
  endorsements for Rtica® which will generate additional consumer demand.
  Based on the success of our marketing and sales effort, we can then consider
  expanding our marketing program to include architects, builders, sub-contractors
  and retail outlets throughout Canada and the United States.

Consistent
  with our marketing strategy, we are presently negotiating with United States
  installation contractors, who we believe will purchase all of the initial output
  of our production facility subject to competitive pricing. Such sales will likely
  be subject to the purchaser obtaining building code approval for the intended
  product application. To date, no sales contracts have been entered into and
  there can be no assurance that any sales will actually be made to these contractors.

We
  believe that in the future, we will have the potential to sell licenses to manufacture,
  use and sell Rtica® products using our patented technology and trademarks
  outside of Canada and the United States. Potential licensees include contractors,
  distributors of construction materials and end users who require large quantities
  of insulation materials. We may also seek strategic partners among product users
  and manufacturers that use and/or produce PET, as well as other investors who
  are interested in participating to bring Rtica® to market.

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On
  September 1, 1997, we sold for a fee of C$20,000 (approx. US$14,417), an option
  for an exclusive ten-year license to make, use and sell our insulation products
  in four provinces located in western Canada using our technology. The option
  may be exercised at any time within six months after the date we produce Rtica®
  at a rate of 500 kilograms per hour at our Ontario facility. The exercise price
  for the option is C$500,000 (approx. US$323,885). Although the license would
  be exclusive even as to RTICA®, management believes that the territory covered
  by the license represents approximately 2% of the potential customer base (by
  population) in Canada and the United States. There can be no assurance that
  the optionee will exercise its option for the license.

Government Regulation

RTICA
  must seek approval from key building code organizations so that in turn, Rtica®
  products qualify for acceptance by local building officials, and by extension,
  by our customer, the contractor. Approvals are granted in the form of Evaluation
  Reports, a process in which we actively participate directly with the code organization
  and/or a recognized, materials testing agency. This obligation is permanent
  and must be addressed each time a new product is introduced, an existing product
  is modified substantively or the process to make the material significantly
  altered. Based on our product testing, we believe that Rtica® will meet
  applicable residential building code standards in jurisdictions in Canada and
  the United States. Licenses for use have been granted by California, Minnesota
  and New York states, clearing the way for Rtica® sales in these areas. Additionally,
  an Evaluation Report has been issued by SBCCI certifying that Rtica® conforms
  as an alternate to material specified in the 1999 Standard Building Code and
  the International One and Two Family Dwelling Code, allowing use in the south
  East US. We are in the process of applying for certification in Canada and the
  balance of the United States. There is no guarantee that our standard will be
  accepted or that we will be certified and establish a listing. The failure to
  obtain certification could have a significant adverse affect on our ability
  to successfully commercialize our product. See Risk Factors  We
  may not be able to secure timely building code certification.

Pricing

There
  are a number of parameters that impact upon the pricing of insulation products.
  These include costs of raw materials, costs of energy, the density of the fiber,
  fiber thickness, direct labor and packaging. In addition, numerous factors are
  likely to influence cost competitiveness considerations, including ease of installation
  and resistance to heat flow. Our pricing assumptions are based upon underlying
  assumptions with respect to direct labor, materials, and yield, which in turn
  is predicated upon certain mean assumptions with respect to production output,
  fiber physical properties, thickness, loft, resultant density and thermal performance.
  While we have made test installations of Rtica®, we have sold limited quantities
  of product. Therefore, our ability to fully test the reasonableness of our pricing
  assumptions is not yet evident. This will be necessary if we are to instill
  confidence in builders and distributors, and in various trade associations,
  which might then be willing to promote the dissemination of Rtica® in the
  marketplace.

Legal Proceedings

There
  are no pending legal proceedings to which we are a party, and we are not aware
  of any threatened legal proceedings involving us.

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C.     ORGANIZATIONAL STRUCTURE

We
  have three active wholly-owned subsidiaries, Rtica Inc., Inzeco Overseas, Ltd.,
  and Rtica Environmental Systems Inc. We develop and manage our technology through
  RTICA Inc., a corporation formed under the laws of the province of Ontario,
  Canada. Inzeco Overseas, Ltd., a Barbados corporation, licenses the technology
  from RTICA Inc., and may in the future license such technology to business outside
  of North America. Rtica Environmental Systems Inc. manufactures Rtica® products
  for sales and distribution.

Our
  corporate governance issues became more complicated during the year. On January
  9, 2001, the Securities Exchange Commission declared our initial registration
  statement on Form SB-2 effective. The registration statement covered the resale
  of shares acquired by certain purchasers in our recent private placement. As
  a result, we now have ongoing disclosure responsibility both in Canada and the
  United States. In addition, our audited financial statements include a U.S.
  GAAP reconciliation. We monitored the Fair Disclosure guidelines by the SEC
  and similar guidelines in Canada and used them accordingly as templates to structure
  our own corporate disclosure policy.

Also
  during the year, our investor relations/communications program was expanded
  significantly. New hits on the Company web site were up and a steady flow of
  information packages was directed to the investment community, as were regular,
  in-person presentations.

Keeping
  pace with a dramatic increase in administrative and manufacturing activity led
  to a significant strengthening of the Companys human resources. New staff
  appointments include a controller, office coordinator, project manager, plant
  supervisor, plant mechanic and technician. Based on our capital and the size
  of our facility, our staff can now operate the plant 24 hours per day, four
  days per week. We expect to be able to operate the plant 24 hours a day, seven
  days per week during starting in calendar 2003, however we can make no assurances
  that we will obtain the proper financing and be able to expand the capacity
  of the plant in order to achieve that objective within that time frame if at
  all.

D.    PROPERTY, PLANTS AND EQUIPMENT

We
  lease 10,000 square feet of plant and office facilities in Stoney Creek, Ontario,
  Canada, which is about halfway between Buffalo, New York and Toronto, Ontario.
  The site is equipped with production, office and test laboratory facilities
  and is under a lease expiring May 31, 2004 and has a monthly rent of C$7,291
  (approx. US$4,648) plus taxes. Although commercial production does not occur
  at this facility, machinery and equipment at this facility has annual capacity
  of 1,500,000 kilograms assuming a twenty-four hour day, year round production
  schedule. Other than a general security agreement attributable to the $2.2 million
  in 12% convertible debentures as well as $353,000 in 10% convertible debentures
  due on May 31, 2005, there are no encumbrances on company owned capital assets.

Our
  facility is zoned for industrial applications, and we are subject to certain
  workplace health and safety guidelines, including forklift licensing and workplace
  safety policies and procedures, with which we believe we are in compliance.
  In addition, we believe that we are in compliance with all of the applicable
  regulations and statutes that govern the disposal of waste inventory, machine
  parts, and other similar items.

The
  plant at Stoney Creek was designed and constructed as a research and development
  facility and is therefore limited in terms of space and machinery. While we
  anticipate commencing commercial production at a limited scale at this facility
  beginning in calendar 2003, we may experience delays or unanticipated problems,
  which prevent us from meting this goal.

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It is
  our intention to expand the plants capacity either through the renovation
  of the existing facility or by locating an appropriate facility elsewhere. The
  increase in our production capacity resulting from the expansion of our production
  facility will depend on the amount of capital which the company can raise. Although
  we presently intend to finance any such expansion or relocation through a combination
  of equity and debt financing, with an emphasis on equity financing, we can make
  no assurances that such financing will be available, or available on terms acceptable
  to us. See Risk Factors - Our current manufacturing capacity is extremely
  limited and we cannot be sure that our efforts to expand our capacity to a commercial
  scale will be successful.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.     OPERATING RESULTS

The
  following discussion and analysis should be read in conjunction with our consolidated
  financial statements and the related notes included elsewhere in this Annual
  Report. Our consolidated financial statements are reported in Canadian collars
  and have been prepared in accordance with accounting principles generally accepted
  in Canada, or Canadian GAAP. To the extent applicable to our consolidated financial
  statements included elsewhere in this Annual Report, these principles conform
  in all material respects with accounting principles generally accepted in the
  United States, or U.S. GAAP, except as described in note 13 of our consolidated
  financial statements.

We have
  not yet commenced commercial production, and we earned no income from operations
  in the fiscal year ended 2002. We expended larger amounts of resources to develop
  manufacturing parameters and processes during fiscal 2002.

Our
  consolidated assets during the fiscal year ended May 31, 2002 decreased from
  C$1,938,395 (US$1,254,141) to C$377,316 (US$243,477). Cash, short-term investments
  and cash in trust comprised C$4,152 (US$2,679) and C$1,394,051(US$901,951) of
  total assets at May 31, 2002 and 2001 respectively.

During
  the fiscal year ended 2002, we raised a total of C$209,400 (US$133,495) (2001:
  C$2,759,241 (US$1,843,173)) from the issuance of special warrants, share purchase
  warrants and the exercise of stock options. During 2002, the Company raised
  $86,000 (US$54,826) from the issuance of convertible debentures. Subsequent
  to year end, an additional C$267,000 (US$170,215) was raised from the issuance
  of convertible debentures.

On
  May 29, 2001, convertible debentures were converted into 900,000 common shares
  of the Company with an assigned value of C$370,722 (US$239,857). In the fiscal
  year ended 2000, we raised C$1,680,570 (US$1,122,621) pursuant to a private
  placement.

As
  a development stage company, we have generated no revenues from the sale of
  product during the fiscal year ended 2002. Interest income of C$38,284 (US$24,406)
  was earned during the year versus C$97,101 (US$62,824) in the prior year, as
  a result of higher cash balances following the share issuance previously discussed.

Operating
  expenses of C$3,102,373 (US$1,977,797) were comparable with the prior year of
  C$3,061,814 (US$1,980,993), as a result of product and market development activities
  undertaken.

During the year, we received
  C$244,306 (US$155,748) in repayable contributions received from the National
  Research Council ("NRC") to assist in pre-commercialization. In addition, we
  have been

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reimbursed for C$14,000 (US$8,925) in the current year for
  research and development projects carried out by the NRC.

We
  are exposed to currency fluctuations between the US and Canadian currency for
  the purchase of US supplies. The size and nature of our operations do not allow
  the managing of risk through the use of hedging instruments.

B.     LIQUIDITY AND CAPITAL RESERVE

We generate
  cash from private placement equity financings, interest income on cash balances,
  receipt of recoverable goods and services tax, and government assistance for
  research and development initiatives. We currently have sufficient funds to
  operate for the next six months. See Risk Factors - We only have sufficient
  funds to operate for the next six months as of the date of this report and we
  cannot be sure that we will generate the necessary additional capital to finance
  the growth of our business.

In 2002,
  we raised money through the issuance of 10% convertible debentures for C$86,000
  (US$54,826), and raised an additional $267,000 (US$170,215) subsequent to year
  end. As security for the payment and performance of the obligations, the Company
  granted to the holders a security interest in the present and future undertaking
  and property of the Company, including but not limited to receivables, inventory,
  equipment, chattel paper, documents of title, intangibles, securities and instruments,
  books and records. These debentures are payable in May 2005.

Subsequent
  to May 31, 2002, the Company raised $2.2 million (US$1,402,525) in 12% convertible
  debentures due in 2007, convertible into units consisting of one voting preference
  share and one warrant to purchase one additional preference share at $0.30.
  Each warrant entitles the holder to purchase one additional preference share
  at $0.40 per share. The debentures are subject to a general security agreement.
  In addition, the Company completed a private placement of 1,000,000 units at
  $0.30 for a total of $300,000 (US$191,253), each unit consisting of one common
  share and one common share purchase warrant at $0.40 per share expiring 24 months
  from the date of issuance.

During
  fiscal 2002, the Company issued promissory notes of $150,000 with interest at
  15% (US$95,627) due on October 31, 2002; $190,000 (US$121,127) with interest
  at 15% due on October 31, 2002 ; and US$10,000 with interest at 4.75%. All of
  these notes were repaid subsequent to year end.

Our
  cash balances are invested in bank balances and short-term money market instruments.
  As cash is required, money market instruments are redeemed and transferred to
  bank balances to satisfy accounts payable. All of our cash and cash equivalents
  are held in either United States or Canadian dollars. We do not currently use
  any financial instruments for hedging purposes.

As
  at May 31, 2002 and through the date of this report, we have no commitments
  for any material additions to our capital equipment.

C.     RESEARCH AND DEVELOPMENT,
  PATENTS AND LICENSES

From
  inception to May 31, 2002, we have incurred C$3,911,647 (approx. US$2,493,718)
  on research and development. To facilitate our transition to operations, we
  shifted virtually all Research and Development to our long-standing research
  collaborator, the National Research Council Industrial Materials Institute,
  (NRC-IMI), an outside agency in Quebec, Canada with a specialized infrastructure
  and personnel relating to our products. These R&D activities are focused
  on making production of our products more cost effective and improving product
  features to add value. Already at NRC-IMIs facility

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is an R&D scale manufacturing line engineered, built and
  installed by the Company that incorporates all our technical processing advances
  to date. This new arrangement allows us to direct the activities of the Stoney
  Creek plant solely towards product and market development.

Under
  a grant program with the Canadian federal government through the National Research
  Council Canada (NRC-Canada), we are eligible to be reimbursed for
  a portion of R&D expenses paid by us to NRC-IMI. In addition, we are parties
  to a Repayable Contribution Agreement with NRC-Canada under which NRC Canada
  agrees to make repayable contributions up to C$445,000 (approx. US$288,257)
  for the performance of certain work we undertake. Amounts contributed by NRC-Canada
  are repayable commencing January 1, 2004.

During
  the year we achieved breakthroughs in fiber properties, processing methods,
  equipment design and product features. Aside from broadening our know-how, these
  advances have led to an application for another patent. Most significantly,
  we developed R-Buds, an innovation in blowing wool configuration with
  far reaching benefits. R-Buds allows us to ship product cost-effectively
  on a national basis, and radically simplifies the handling and installation
  of blowing wool by professional contractors.

Patents

We
  have US patent number 5,582,905 (published on December 10, 1996) and Canadian
  patent number 2,190,957 (published on April 6, 1999). These patents cover fiber
  based plastic insulating products made without using adhesives or mechanical
  methods to create thickness, or loft, which is a fundamental requirement for
  efficient insulating performance. Although Rtica® is made of recycled PET,
  we believe that the patents cover a wide range of polymers. The US patent will
  expire on December 9, 2016, and the Canadian patent will expire on April 5,
  2019. Applications for such patents are also pending in the European Patent
  Office. Even though our patents do not prevent others from making thermoplastic
  fiber insulation, we believe that they will result in their incurring higher
  manufacturing costs due to the need to use more difficult methods to create
  the loft. A patent application titled Melt blowing apparatus with parallel
  flow filament attenuating slot was filed in the US July 20, 2000 and globally
  under the World Patent Co-operation Treaty, July 11, 2001 and has pending status.
  A patent application titled A lofted product of orientable polymer and
  an apparatus and method of producing such a product was filed on Oct 1,
  2001 and has been granted provisional status and was filed in the world September
  30, 2002 and has pending status. See Risk Factors -- We may be unable
  to protect our patent and proprietary technology related to the manufacture
  of Rtica® due to our limited financial resources.

D.     TREND INFORMATION

As
  a development stage company, we cannot yet determine what trends will develop
  for our production, sales and inventory. While our marketing research provides
  support that market demand for Rtica® will continue once commercial production
  begins, we can make no assurances that demand will actually continue once we
  are capable of the production and sale of commercial quantities of product.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.     DIRECTORS AND SENIOR MANAGEMENT

The following table
  sets forth the information about our directors and executive officers as of
  November 20, 2002.

| | Name               | Age |  | Position with RTICA                
| | ------------------ | --- |  | -----------------------------------
| |                    |     |  |                                    
| | Warren D. Arseneau | 54  |  | Director & President               
| |                    |     |  |                                    
| | Roger J. Short     | 63  |  | Director                           
| |                    |     |  |                                    
| | Robert H. Stikeman | 57  |  | Director, Chief Financial Officer &
| |                    |     |  | Secretary                          
| |                    |     |  |                                    
| | Martin H. Beck     | 50  |  | Director                           
| |                    |     |  |                                    
| | Michael Boyd       | 51  |  | Director                           
| |                    |     |  |                                    
| | Steve Letwin       | 47  |  | Director                           

Warren
  Arseneau Warren Arseneau - President and Director since inception
  of the Company in April of 1987. Mr. Arseneau has occupied a key role in guiding
  the development of Rtica Inc. since its establishment in 1991. Rtica Inc. is
  our wholly owned subsidiary of RTICA and was named E2 Development Corporation
  prior to its name change in 1999. From June 1991 to June 1998, Mr. Arseneau
  served as a consultant to Rtica pursuant to a management contract between E2
  Development Corporation and Mr. Arseneau. From June 1998 through December 1999,
  Mr. Arseneau provided services to E2 Development Corporation, Rtica Inc. and
  RTICA pursuant to a management contract with Flat Rock Management, a sole proprietorship
  in Ontario engaged in management consulting which is wholly owned by Mr. Arseneau.
  From December 1999 through May 15, 2000, Mr. Arseneau worked without a written
  agreement. On May 15, 2000, a second consulting agreement was effected between
  Flat Rock Management and Rtica Inc. Mr. Arseneau currently serves as a consultant
  to Rtica under this contract which will remain in effect until December 31,
  2004. See Executive Compensation  Contracts with Executives.

Roger J.
  Short  Director since inception. Since September 1996, Mr. Short
  has owned Lecourt Enterprises Investment Management and Consulting. From September
  1994 to September 1996, Mr. Short was chairman and chief executive officer of
  ES&S Limited, a privately held Canadian corporation in the industrial distribution
  business. Mr. Short is not standing for election at the upcoming Annual Shareholders
  Meeting.

Robert
  H. Stikeman Counsel, Director and Chief Financial Officer since inception.
  Mr. Robert Stikeman has practised law in the Province of Ontario for approximately
  twenty years. Since 1986 he has served as senior partner in Stikeman, Graham,
  Keeley & Spiegel, a law firm which he was instrumental in establishing.
  Prior to that he was employed in private practice since approximately 1975.

Martin
  H. Beck Vice President, Technology and Director since inception.
  Since 1988, Mr. Beck has been the principal shareholder and director of Dev
  Tech Labs, Inc., a private corporation providing a research and development
  facility. In 1986, Mr. Beck founded Dev Tech, Inc., a consulting and engineering
  corporation. In 1991, Dev Tech, Inc. and Dev Tech Labs, Inc. merged.

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Michael
  M. Boyd Director since inception. From May 1995 to the present, Mr.
  Boyd has served as President, Junior Industrial Finance Corp. a private investment
  company and the Bridge Fund, a private mezzanine financing company. Prior to
  January 2002, Mr. Boyd had been Vice-President of Merchant Banking with HSBC
  Capital (Canada) Inc. HSBC Capital (Canada) Inc. is a subsidiary of the HSBC
  Bank Canada, a member of the HSBC Group, which is one of the largest financial
  institutions in the world. Mr. Boyd has over twenty-six years of business experience
  in the areas of venture capital investment, corporate finance and merchant banking.

Steven
  Letwin Director since November 2000. Mr. Letwin is currently the
  Vice-President, Distribution & Services of Enbridge Inc. and prior to holding
  this position he was the President and Chief Operating Officer of Energy Services
  for Enbridge Inc. during the period of March 1999 through August 2000. Prior
  to his employment with Enbridge Inc., he was employed as the Chief Financial
  Officer (from March 1998 to March 1999) and Vice-President, Marketing (from
  October 1995 to March 1998) of TransCanada Pipelines. Mr. Letwin has held senior
  executive positions with a number of companies in the energy transmission, exploration
  and production sectors. He has been responsible for acquisitions and divestitures,
  corporate economics and planning, corporate services and information systems,
  and financial services in companies that were involved in gas transmission,
  oil, refined products and electrical power.

All
  Directors hold office until the next annual meeting of stockholders and the
  election and qualification of their successors. Directors currently receive
  no compensation for serving on the Board of Directors other than reimbursement
  of reasonable expenses incurred in attending meetings. Officers are elected
  annually by the Board of Directors and serve at the discretion of the Board.
  There is no family relationship between any Director or Officer and any other
  Director or Officer.

**B.**EXECUTIVE COMPENSATION

The
  following table sets forth all compensation paid in respect of the Chief Executive
  Officer and those individuals who received compensation in excess of US$100,000
  per year (Named Executive Officer). We have one Named Executive
  Officer. There were no other individuals who received compensation in excess
  of US$100,000 in the most recently completed fiscal year. During our most recently
  completed financial year the Named Executive Officer received an aggregate cash
  compensation by us and our wholly owned subsidiary, Rtica Inc. in the amount
  of C$158,500 (approx. US$99,032).

|                   | Annual Compensation |  | Long-Term Compensation
|------------------ | ------------------- |  | ----------------------
|                   |                     |  |                       
|Name and Principal | Year                |  | Salary (C$)           
|Position           |                     |  |                       
|                   |                     |  |                       
|Warren Arseneau,   |                     |  |                       
|President          | 2002                |  | 158,500(1)            
|                   |                     |  |                       

|(1) | This represents management fees paid
        under a consulting contract pursuant to which office, support and administrative
        expenses of approximately C$40,000 (approx. US$25,806) incurred by Mr.
        Arseneau and were to be paid by Mr. Arseneau to various suppliers without
        reimbursement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                      
|(2) | Under the terms of Mr. Arseneaus
        contract with Rtica, over the four year term of the agreement, Mr. Arseneau
        is entitled to bonuses totaling up to C$325,000 if Rtica meets certain
        economic and strategic goals. See Contracts with Executives.                                          

20

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|(3) | On December 1, 2000, Mr. Arseneau was
        granted 100,000 options, which were immediately exercisable as to 100,000
        shares of Common Stock of Rtica at an exercise price of C$0.70 (US$0.45)
        per share and an expiration date of December 1, 2003. On January 15, 2001,
        Mr. Arseneau was granted another 100,000 options, which were immediately
        exercisable as to 100,000 shares of Common Stock of Rtica at C$0.57 (US$0.37)
        per share and an expiration date of January 15, 2004. On January 17, 2002
        Mr. Arseneau was granted another 100,000 options, which were immediately
        exercisable as to 100,000 Common Stock of Rtica at $$0.48 and an expiration
        of January 17, 2005. The options were granted pursuant to the terms of
        the Arseneau Consulting Agreement described below under Contracts
        with Executives.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EMPLOYMENT AGREEMENTS

Rtica Inc., the wholly
  owned subsidiary of RTICA, signed a consulting agreement with Warren Arseneau
  dated May 15, 2000 to manage Rtica (the Arseneau Consulting Agreement).
  The Arseneau Consulting Agreement terminates on December 31, 2004. In consideration
  for the services to be provided by Mr. Arseneau, we have agreed to pay the following
  consulting fees to Mr. Arseneau: C$13,000 (approx. US$8,513) per month during
  calendar 2001; C$13,500 (approx. US$8,840) per month during calendar 2002; C$14,000
  (approx. US$9,168) per month during calendar 2003; C$1,500 (approx. US$982)
  per day, for a maximum of 100 days during calendar 2004. Mr. Arseneau is also
  entitled to bonuses totaling C$325,000, in the event the company meets certain
  economic and strategic goals. In the event of a sale of Rtica, Mr. Arseneau
  will be entitled to one percent (1%) of the sale proceeds. In addition, in the
  event of a change in control, we will owe Mr. Arseneau a penalty fee of C$750,000
  (approx. US$485,286) if the Arseneau Consulting Agreement is terminated within
  24 months of the change in control.

In
  addition, the Arseneau Consulting Agreement provides for Mr. Arseneau to be
  granted options to purchase a total of 425,000 shares of Rtica's common stock.
  The options are to be issued as to 100,000 shares on each of December 1, 2000,
  January 15, 2001, January 15, 2002, and January 15, 2003, and as to the remaining
  25,000 shares underlying the options on January 15, 2004. The options shall
  be immediately exercisable at the fair market value on the date of issuance.
  Mr. Arseneau has been granted 300,000 options pursuant this grant. Mr. Arseneau
  is also reimbursed for certain travel expenses and other direct expenses made
  on behalf of Rtica Inc. and RTICA.

Rtica
  Inc. has also signed a confidentiality, non-competition and intellectual property
  agreement with Warren Arseneau dated May 15, 2000. The term of the agreement
  is for 3 years after termination of the consulting agreement with Mr. Arseneau.

Mr.
  Michael Boyd, through Junior Industrial Finance Corp., (JIFC) provided
  financing, strategic planning and other consulting services to RTICA pursuant
  to a consulting agreement between Rtica Inc., a wholly owned subsidiary of RTICA,
  and JIFC. The agreement was effective as of April 1, 2000 and terminated on
  December 30, 2001. Under the agreement, Mr. Boyd received $500 per month plus
  $50 per month expense allowance and reimbursement for out of pocket expenses
  incurred in connection with services performed.

Mr.
  Martin Beck provides financing, strategic planning and other consulting services
  to RTICA pursuant to a consulting agreement with Rtica Inc., a wholly owned
  subsidiary of RTICA. The agreement is effective as of April 1, 2000 and terminates
  on December 30, 2002. Under the agreement, Mr. Beck receives US$1,000 for up
  to ten hours consulting services per month plus US$100 expense allowance for
  up to twenty hours consulting services per month. For consulting services over
  ten hours per month, Mr.

21

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Beck is paid fees of US$1,000 per day and US$50 per day for
  expenses incurred over twenty hours of consulting services per month.

Mr.
  Roger Short serves RTICA pursuant to a consulting agreement executed by Rtica
  Inc. and Mr. Short. The agreement is effective as of January 1, 2000 and terminates
  on December 31, 2002. Under the agreement, Mr. Short receives C$1,600 (approx.
  US$1,035) per day plus C$300 (approx. US$203) per month expense allowance for
  consulting services andreimbursement for out of pocket expenses incurred
  by Mr. Short in connection with services performed.

None
  of our other executive officers or directors presently receives or has received
  a salary or other compensation from Rtica or Rtica Inc. However, while certain
  of our officers may be employed in the future pursuant to written employment
  agreements, RTICA does not a this time plan to renew the agreements that will
  expire December 31, 2002. We presently believe that none of the salaries with
  officers will exceed C$30,000 (approx. US$20,634) during the fiscal year ending
  2002.

STOCK OPTION PLAN

The
  shareholders of RTICA have adopted the RTICA Corporation Stock Option Plan in
  order to provide an incentive for key directors, officers and employees. RTICAs
  stock option plan provides that the Board of Directors of RTICA may, from time
  to time in its discretion, grant to key directors, officers and employees and
  consultants providing significant time and attention to RTICA under contract
  to RTICA, or the registered retirement savings plan, or holding companies of
  them, the option to purchase shares of RTICA's common stock. The Board of Directors
  may determine the market price per share of common stock and the number of shares
  of common stock which may be allotted to each such person or plan and all other
  terms and conditions of the option, in accordance with the applicable policies
  of any relevant regulatory authority or the Canadian Venture Exchange. These
  options will be exercisable for a period not exceeding 5 years from the date
  of grant. The shareholders have authorized the granting of up to 3,500,000 options
  by the directors. Currently there are 2,373,250 outstanding options, which have
  been granted at the following exercise prices: 813,250 at $0.20 per share; 5,000
  at $0.22 per share; 90,000 at $0.39 per share; 225,000 at $0.48 per share; 95,000
  at $0.53 per share; 100,000 at $0.55 per share; 100,000 at $0.57 per share;
  10,000 at $0.66 per share; 85,000 at $0.68 per share; 235,000 at $0.70 per share;
  100,000 at $0.72 per share; and 515,000 at $0.75 per share.

RTICAs
  stock option plan provides that if a participant ceases to be eligible due to
  the loss of corporate office (being that of an officer or director) or employment
  or consultant status, the option shall expire after 90 days. The stock option
  plan also provides that the estate of a deceased participant can exercise the
  deceaseds options for a period not exceeding six months following the
  date of the death.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OFLIABILITY

Part
  VII of the Companys By-Laws limits the personal liability of directors
  and officers to the Company or its shareholders for monetary damages arising
  from a breach of their fiduciary duty in certain circumstances. Part VII of
  the Companys By-Laws also provides that the Company may indemnify its
  officers and directors to the fullest extent permitted by the Alberta Business
  Corporations Act from any liability and all costs, charges and expenses that
  such officer or director sustains in respect to any action, suit or proceeding
  that is proposed or commenced against him or her for or in respect the execution
  of the duties of his or her office. Part 9 of the Alberta Business Corporations
  Act authorizes a corporation to indemnify directors and officers unless such
  party has been adjudicated in any proceeding not to have acted in good faith
  in the reasonable belief that his action was in the best interests of the corporation.
  The

22

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effect of these provisions is to permit such indemnification
  by us for liabilities arising under the Securities Act.

C.    COMMITTEES OF THE BOARD OF DIRECTORS

There
  are two Board Committees, the Audit Committee, comprised of three members, two
  of whom are unrelated directors and the Compensation Committee, comprised of
  three members, two of whom are unrelated directors.

AUDIT COMMITTEE

The
  Audit Committee of the Board of Directors (the Committee) is composed
  of three directors, two of whom are non-management directors. The current members
  of the Committee are Robert Stikeman, Martin Beck and Michael Boyd. The Audit
  Committee has direct communications channels with internal personnel responsible
  for financial statement preparation and with the Corporation's external auditors.
  The Committee monitors audit functions and the preparation of financial statements
  and meets with outside auditors independent of management. Additional responsibilities
  include the review of any auditors reports to management and review of
  internal controls and transactions between officers and the Corporation. The
  Audit Committee met three times between May 31, 2001 and May 31, 2002.

COMPENSATION COMMITTEE

The
  Compensation Committee of the Board of Directors (the Committee)
  is composed of three directors, two of whom are non-management directors. The
  current members of the Committee are Robert Stikeman, Martin Beck and Michael
  Boyd. The Compensation Committee reviews the executive officers compensation
  and managements recommendations on stock option grants to employees. The
  Committee meets as required to make recommendations to the Board of Directors
  with respect to senior executive compensation.

The
  compensation of the Corporations executive officers including those named
  in the Summary Compensation Table below (the Named Executive Officers)
  is determined by the Board of Directors based on recommendations made by the
  Committee.

Compensation
  for executive officers, including each of the Named Executive Officers, consists
  of a base salary and long-term share-based incentives, all of which are administered
  by the Committee.

The
  Committee establishes salary ranges for the positions held by executive officers
  following an annual review of the responsibilities of the officer, the officers
  performance, experience and years of service and the salary levels for comparable
  positions in other comparable companies. The Compensation Committee met once
  between May 31, 2001 and May 31, 2002.

D.    EMPLOYEES

We
  currently employ twelve full-time employees and three full-time consultants,
  including Warren Arseneau, President of RTICA, who provides services pursuant
  to a written consulting agreement. See Management -- Contracts with Executives.
  All of our full-time employees work for us at our Stoney Creek facility. As
  we grow, we will be required to hire, train, integrate, manage and retain our
  workforce including our technology, manufacturing, engineering, sales and business
  development staff.

23

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**E.** SHARE OWNERSHIP

The
  following table sets forth the beneficial ownership of shares of Common Stock
  of the Company as of November 20, 2002 of (i) the Chief Executive Officer and
  each of the Company's other executive officers, (ii) each director and nominee
  to serve as a director and (iii) all directors and executive officers of the
  Company as a group:



* Less than one percent.

|(1) | Includes 510,000 shares of common stock subject to options granted to
      Mr. Arseneau that are currently exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Includes 4,083,212 shares of common stock owned by Greensulate L.L.C.,
      a private U.S. company controlled by Martin Beck. Also includes 368,250
      shares subject to options granted to Mr. Beck that are currently exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | Includes 352,631 shares of common stock owned directly by Mr. Boyd; 141,937
      shares owned indirectly through Investor Services in Trust for Mr. Boyds
      RRSP; and 362,154 shares owned indirectly through Junior Industrial Finance
      Corp., a private company wholly owned by Mr. Boyd. Includes 135,000 shares
      subject to options granted to Mr. Boyd that are currently exercisable. Also
      includes an aggregate of 95,000 shares that Mr. Boyd has the right to acquire
      from various persons including 25,000 shares from each of Messrs. Arseneau,
      Short and Beck. The options with respect to the 95,000 shares are exercisable
      at C$0.60 and expire on June 14, 2003.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(4) | Includes 100,000 shares of common stock subject to options granted to
      Mr. Letwin that are currently exercisable. Does not include 3,627,723 shares
      of common stock owned by Enbridge, Inc., where Mr. Letwin is an officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(5) | Not used.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(6) | Includes 100,000 shares of common stock subject to options granted to
      Mr. Stikeman that are currently exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(7) | Includes an aggregate of 2,085,250 shares of common stock issuable upon
      exercise of currently outstanding options granted to officers and directors
      of RTICA that are currently exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(8) | Shares of common stock which a person has the right to acquire within
      60 days of the date of this annual report pursuant to the exercise of options,
      warrants or other convertible securities are deemed to be                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

24

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| | outstanding for the purpose of computing the percentage ownership of such
      individual or group, but are not deemed to be outstanding for the purpose
      of computing the percentage ownership of any other person shown in the table.
      See "Directors and Executive Officers  Compensation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

**A.**     MAJOR SHAREHOLDERS

To
  our knowledge, we are not directly or indirectly owned or controlled by another
  corporation or by any foreign government.

The
  following table sets forth information as of November 20, 2002 with respect
  to the beneficial ownership of shares of common stock currently issued and outstanding
  by (i) each person known to us to be the owner of more than 5% of the outstanding
  shares of common stock, (ii) each officer and director, and (iii) all officers
  and directors as a group. Unless otherwise indicated, the address for each individual
  listed is 999 Barton Street, Stoney Creek, Ontario L8E 5H4 Canada.



____________________

|(1) | Shares of common stock which a person has the right to acquire within
      60 days of the date of this annual report pursuant to the exercise of options,
      warrants or other convertible securities are deemed to be outstanding for
      the purpose of computing the percentage ownership of such individual or
      group, but are not deemed to be outstanding for the purpose of computing
      the percentage ownership of any other person shown in the table. See "Directors
      and Executive Officers  Compensation.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | Includes 510,000 shares subject to options granted to Mr. Arseneau that
      are currently exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                   

25

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|(3) | Includes 4,083,212 shares owned by Greensulate L.L.C., a private U.S.
      company controlled by Martin Beck. Also includes 368,250 shares subject
      to options granted to Mr. Beck that are currently exercisable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                         
|(4) | Enbridge Inc. is a public company that trades on the Toronto Stock Exchange
      under the symbol ENB and on NASDAQ under the symbol ENBR.                                                                             
|    |                                                                                                                                                                                                                         
|(5) | Nice Investments LLC is a Delaware limited liability company owned by
      members of a trade association in the construction industry.                                                                                

B.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as set forth
  below, from the beginning of our last fiscal year through the date of this report
  we have not entered into any transactions with any director, executive officer,
  director nominee, 5% or more shareholder, or any member of the immediate families
  of the foregoing persons (including spouses, parents, children, siblings and
  in-laws).

|1. | Since January 1, 2000, we have paid Mr. Beck US$1,100 per
      month as consulting fees. The terms of this contract are set forth in the
      section entitled Executive Compensation Contracts with Executives.                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | On November 23, 1999, DevTech loaned Rtica, Inc, a wholly
      owned subsidiary of RTICA, US$25,000 pursuant to a promissory note bearing
      interest at a rate of 5.42% per annum with a maturity date of November 22,
      2000. There was no prepayment penalty under the terms of the note. Rtica
      Inc. repaid the total indebtedness due under the note prior to the maturity
      date. During 2002, DevTech loan Rtica Inc. US$10,000 at 4.75% and expiring
      on May 31, 2003. These funds were repaid subsequent to May 31, 2002.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | Messrs. Arseneau, Boyd and Short, all of whom are Directors
      of RTICA, performed services for the company pursuant to consulting contracts.
      The terms of these contracts are set forth in the section entitled Executive
      Compensation  Contracts with Executives.                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4. | Mr. Robert Stikeman through Stikeman, Graham, Keeley &
      Spiegel receives fees from RTICA in consideration for legal services provided
      to RTICA.                                                                                                                                                                                                                                                                                                                                                                                              

We believe that the
  terms of the transactions described above were comparable to those, which could
  have been obtained from non-affiliated parties.

ITEM 8.     FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS Pages F-1 to F-26

|Independent Auditors Report                                               | F-1 | 
|-------------------------------------------------------------------------- | --- | 
|Comments by Auditors for U.S. Readers on Canada-U.S. Reporting Differences | F-2 | 
|Consolidated Balance Sheets as of May 31, 2002 and 2001                    | F-3 | 
|Consolidated Statements of Operations and Deficit for the Years ended      |     | 
|May 31, 2002 and 2001 and cumulative period from June
      13, 1991       |     | 

26

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|(inception) to May 31, 2002                                          | F-4 | 
|-------------------------------------------------------------------- | --- | 
|Consolidated Statements of Cash Flows for the Years ended            |     | 
|May 31, 2002 and 2001 and cumulative
      period from June 13, 1991 |     | 
|(inception) to May 31, 2002                                          | F-5 | 
|Notes to Consolidated Financial Statements                           | F-6 | 

ITEM 9.     THE OFFER AND LISTING

Not
  Applicable, except for Item 9.A.4 and Item 9.C.

A.     PRICE RANGE OF COMMON STOCK

Our authorized capital stock consists of an unlimited number of shares of
  common stock, of which 36,119,636 were issued and outstanding as of November
  20, 2002, and an unlimited number of Preferred Stock, none of which is outstanding.
  Our common stock currently trades on the Canadian Venture Exchange (CDNX) under
  the symbol RTN. We have no established trading market in the United States.

The following table sets forth, for the period indicated, the high and low
  bid prices, in Canadian Dollars for our shares of common stock from June 1,
  2001 through May 31, 2002, as reported by the CDNX:

| |                          | High                  |  | Low  
| | ------------------------ | --------------------- |  | -----
| |                          | (In Canadian Dollars)
| | Year Ending May 31, 2001 | $0.90                 |  | $0.46
| | First Quarter            | 0.90                  |  | 0.57 
| | Second Quarter           | 0.84                  |  | 0.58 
| | Third Quarter            | 0.76                  |  | 0.50 
| | Fourth Quarter           | 0.71                  |  | 0.46 
| | Year Ending May 31, 2002 | 0.90                  |  | 0.35 
| | First Quarter            | 0.90                  |  | 0.55 
| | Second Quarter           | 0.74                  |  | 0.55 
| | Third Quarter            | 0.70                  |  | 0.43 
| | Fourth Quarter           | 0.62                  |  | 0.35 

________

The following table sets forth, for the past six months, the high and low
  bid prices, in Canadian Dollars for our shares of common stock, as reported
  by the CDNX:

| | Month Ended        | High                  |  | Low  
| | ------------------ | --------------------- |  | -----
| |                    | (In Canadian Dollars)
| | May 31, 2002       | $0.62                 |  | $0.35
| | June 30, 2002      | 0.47                  |  | 0.35 
| | July 31, 2002      | 0.42                  |  | 0.22 
| | August 31, 2002    | 0.40                  |  | 0.30 
| | September 30, 2002 | 0.39                  |  | 0.21 
| | October 31, 2002   | 0.25                  |  | 0.12 

27

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On November 20, 2002, both the high and low bid prices, in Canadian dollars
  for shares of our common stock were $0.18 (US$0.12) and $0.16 (US$0.11) respectively.

**C.** MARKETS

Our common stock currently
  trades on the Canadian Venture Exchange (CDNX) under the symbol RTN. We have
  no established trading market in the United States. Although we are seeking
  a market maker to apply to the National Association of Securities Dealers to
  quote our stock on the Over the Counter Bulletin Board (OTCBB), no assurances
  can be made that any market maker will agree to quote our stock on the OTCBB
  or that a public market for our shares will ever develop in the United States.

ITEM 10. ADDITIONAL INFORMATION

A.     SHARE CAPITAL

Not Applicable.

B.     MEMORANDUM AND ARTICLES OF ASSOCIATION

Incorporated by reference
  to exhibits 3.1.1 to 3.1.3 to our registration statement on Form SB-2 (Reg.
  No. 333-50212) filed November 17, 2000.

C.     MATERIAL CONTRACTS

Other than the NRC-IMI
  contract for research and development services (see Item 5. Operating
  and Financial Review and Prospects -- Research and Development) and the
  consulting contracts with Messrs. Arseneau, Beck, Boyd and Short (see Item
  6.B. Executive Compensation -- Employment Agreements), in the past two
  years, we have not entered into any material contracts other than contracts
  entered into in the ordinary course of our business.

D.     EXCHANGE CONTROLS

There is no law or
  governmental decree or regulation in Canada that restricts the export or import
  of capital, or affects the remittance of dividends, interest or other payments
  to non-resident holders of our Common Stock, other than withholding tax requirements.

There is no limitation
  imposed by Canadian law or by our articles of incorporation or our other charter
  documents on the right of a non-resident to hold or vote Common Stock, other
  than as provided by the INVESTMENT CANADA ACT, the NORTH AMERICAN FREE TRADE
  AGREEMENT IMPLEMENTATION ACT (Canada) and the WORLD TRADE ORGANIZATION AGREEMENT
  IMPLEMENTATION ACT. The INVESTMENT CANADA ACT requires notification and, in
  certain cases, advance review and approval by the Government of Canada of the
  acquisition by a "non-Canadian" of "control" of a "Canadian business", all as
  defined in the INVESTMENT CANADA ACT. Generally, the threshold for review will
  be higher in monetary terms for a member of the World Trade Organization or
  North American Free Trade Agreement.

28

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E.     MATERIAL UNITED STATES AND CANADIAN FEDERAL INCOME
  TAX CONSIDERATIONS

The Canada-United States
  Income Tax Convention, 1980, as amended (the "Treaty") essentially calls for
  taxation of shareholders by the shareholder's country of residence. In those
  instances in which a tax may be assessed by the other country, a corresponding
  credit against the tax owed in the country of residence is generally available,
  subject to limitations.

UNITED STATES

The following describes
  material United States federal income tax consequences of the purchase, ownership
  and disposition of RTICA shares of common stock by a shareholder who is a citizen
  or resident of the United States or a United States domestic corporation or
  who otherwise will be subject to United States federal income tax. This summary
  is based on the United States Internal Revenue Code of 1986 (the Code),
  as amended, administrative pronouncements, judicial decisions and existing and
  proposed Treasury Regulations, changes to any of which subsequent to the date
  of this prospectus may affect the tax consequences described herein. This summary
  discusses only the material United States federal income tax consequences to
  those beneficial owners holding the securities as capital assets within the
  meaning of Section 1221 of the Code and does not address the tax treatment of
  a beneficial owner that owns 10% or more of shares of the Companys common
  stock. It is for general guidance only and does not address the consequences
  applicable to certain specialized classes of taxpayers such as certain financial
  institutions, insurance companies, dealers in securities or foreign currencies,
  certain religious, scientific, charitable and similar tax-exempt organizations,
  or United States persons whose functional currency (as defined in Section 985
  of the Code) is not the United States dollar. Persons considering the purchase
  of these securities should consult their own tax advisors with regard to the
  application of the United States and other income tax laws to their particular
  situations. In particular, a United States shareholder should consult his own
  tax advisor with regard to the application of the United States federal income
  tax laws to his situation.

**1.**     Companys Status As A Passive
  Foreign Investment Company

The Company believes
  that it may have qualified as a passive foreign investment company (PFIC)
  for United States federal income tax purposes for one or more of its taxable
  years and may in future years qualify as a PFIC. Consequently, a U.S. shareholder
  who owns (directly or indirectly) shares of the Companys common stock
  may be subject to the PFIC tax rules discussed below.

A corporation is considered
  a PFIC for any taxable year if either (i) at least 75% of its gross income is
  "passive income", or (ii) at least 50% of the value of its assets (based on
  an average of the quarterly values of the assets during the taxable year) is
  attributable to assets that are held for the production of passive income. For
  purposes of this test, the Company would be treated as owning the Companys
  proportionate share of the assets and earning its proportionate share of the
  income of any other corporation in which the Company owns, directly or indirectly,
  more than 25% (by value) of the stock.

The Company has not
  determined whether it qualified as a PFIC in its taxable year ended May 31,
  2002 or in any prior year, and does not intend to assess the likelihood of whether
  it will qualify as a PFIC during the current taxable year. You should consult
  your tax advisor to determine whether the Company qualified as a PFIC in any
  taxable year.

If you are a U.S.
  person who directly or indirectly holds shares of the Companys common
  stock during any taxable year in which the Company qualified as a PFIC, you
  will be subject to special tax rules with respect to any "excess distributions"
  that you receive and any gain you may realize from a (direct or indirect) sale
  or other disposition (including a pledge) of the shares, unless you make a Section
  1295

29

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election to have the Company treated as a "qualified electing fund" (a "QEF").
  If you do not make such an election to have the Company treated as a
  QEF, the following rules will apply:

|1. | Distributions to a U.S. shareholder made by the Company during
      a taxable year that are "excess distributions" (defined generally as distributions
      in any taxable year which exceed 125% of the average distributions in the
      three preceding taxable years (or such fewer number of preceding taxable
      years in the shareholders holding period)) must be allocated ratably
      to each day of such shareholder's holding period. The portion of any excess
      distribution allocated to the U.S. shareholders current taxable year
      and to taxable years when the Company was not a PFIC must be included in
      the shareholder's gross income for the year of the distribution as ordinary
      income. The remainder of the excess distribution is subject to a "deferred
      tax," which, in general, is the tax (computed at the highest rate of tax)
      that would have been owed if that remainder had been included in the shareholders
      income in a previous year, plus an interest charge. The portion of any distribution
      that is not an "excess distribution" will be subject to the tax rules regarding
      dividends (which generally treat such distributions as ordinary income to
      the extent of the distributing corporations allocable earnings and
      profits, and treat any excess either as a return of capital or as capital
      gain).
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | The entire amount of any gain realized upon the (direct or
      indirect) sale or other disposition (including certain dispositions, such
      as a pledge, which might not otherwise result in the recognition of gain
      for U.S. income tax purposes) of shares of the Company stock will be treated
      as an excess distribution in the year of such (direct or indirect) sale
      or other disposition and as a consequence will be taxed as ordinary income
      and, to the extent allocable to taxable years prior to the year of such
      sale or disposition, will be subject to an interest charge. Limitations
      may apply to the recognition of losses on any such sale or other disposition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

If you are
  a U.S. person who directly or indirectly holds shares of the Companys
  common stock during any taxable year in which the Company qualified as a PFIC
  and you make a Section 1295 election to have the Company treated as a QEF, you
  will be currently taxable on your pro rata share of the Company's ordinary earnings
  and capital gain (at ordinary income and capital gains rates, respectively)
  for each taxable year of the Company, regardless of whether or not distributions
  are made to the shareholders. Your tax basis in your shares will be increased
  to reflect taxed but undistributed income. Distributions of income that had
  previously been taxed will result in a corresponding reduction of tax basis
  in the shares and will not be taxed again as a distribution to you.

A shareholder may
  make a Section 1295 election with respect to a PFIC for any taxable year of
  the shareholder. Once a Section 1295 election is made, it remains in effect,
  although not applicable, during those years that the corporation is not a PFIC.
  If in a subsequent year the corporation again qualifies as a PFIC, the Section
  1295 election previously made is still valid and binding on the shareholder.
  Once a shareholder makes a Section 1295 election, the shareholder may revoke
  the election only with the consent of the IRS.

If a shareholder
  timely makes a Section 1295 election for the first taxable year of the Company
  in which it qualified as a PFIC that is included in the shareholder's holding
  period, then the "excess distribution" rules described above will not apply
  to such shareholder; if the shareholder makes a Section 1295 election but it
  is not for such first taxable year, then the "excess distribution" rules and
  the rules governing shareholders who make a Section 1295 election may both apply
  to such shareholder. A shareholder who timely files a Section 1295 election
  for the first taxable year of the Company in which it

30

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qualified as a PFIC that is included in the shareholders holding period
  will be taxable at capital gains rates when he sells or otherwise disposes of
  his Company stock (assuming the stock is otherwise a capital asset in his hands).

A shareholder making
  the Section 1295 election must make the election on or before the due date,
  as extended, for filing the shareholder's income tax return for the first taxable
  year to which the election will apply. In making the election, the shareholder
  must provide various information (required by the IRS regulations) to the IRS.
  The rules relating to the Section 1295 election are complex and require considerable
  information to be supplied to the IRS. Any shareholder contemplating making
  a Section 1295 election should consult with his own tax advisor with respect
  to the timing, mechanics and consequences of making such an election.

Alternatively, a U.S.
  person who directly or indirectly holds shares of the Companys common
  stock during any taxable year in which the Company qualified as a PFIC may elect
  to mark the Companys stock to market each year. In general, such a shareholder
  would include in income each year an amount equal to the excess, if any, of
  the fair market value of the Companys stock as of the close of the Companys
  taxable year over the shareholder's adjusted tax basis in such stock. Such increase
  would be taxable to the electing shareholder as ordinary income. An electing
  shareholder would generally be allowed a deduction if the electing shareholders
  adjusted tax basis in the Companys stock exceeds its fair market value
  as of the close of the Companys taxable year. However, such deductions
  would be allowed only to the extent of any net mark-to-market gains with respect
  to the stock that were included an income by the shareholder for prior taxable
  years. A shareholder who makes this election for the first taxable year in his
  holding period for which the Company qualified as a PFIC would not be subject
  to the excess distribution rules referred to above; however, if the mark-to-market
  election is not made for such first taxable year, a special coordination rule
  will apply for the first taxable year for which the election is in effect. A
  mark-to-market election may not be revoked without the consent of the IRS and
  once made, would apply to all taxable years during which the Companys
  common stock is traded on an established securities exchange.

Any shareholder wishing
  to make the mark-to-market election should consult his own tax advisor as to
  the timing, mechanics and consequences of making such an election.

Special rules apply
  with respect to the calculation of the foreign tax credit with respect to income
  attributable to a PFIC.

Each U.S. shareholder
  should consult his own tax advisor with respect to how the PFIC rules may affect
  such shareholder's tax situation, in particular the annual reporting requirements
  and any available shareholder elections.

**2.**     If the Company is not a PFIC

If the Company does
  not qualify as a PFIC for anytaxable year in which a U.S. shareholder
  holds (directly or indirectly) stock in the Company, the following discussion
  describes the United States federal income tax consequences arising from the
  holding and disposition of the Companys common stock.

A United States shareholder
  generally will realize (to the extent of the Companys current and accumulated
  earnings and profits) foreign source ordinary income on the receipt of cash
  dividends, if any, with respect to shares of the Companys common stock
  equal to the United States dollar value of such dividends, determined by reference
  to the exchange rate in effect on the day the dividends are received by (or
  credited to) the United States shareholder (with the value of such dividends
  computed before any

31

---

reduction for any Canadian withholding tax). To the extent that distributions
  exceed the current and accumulated earnings and profits of the Company, such
  excess will be treated first as a return of capital (up to the U.S. shareholders
  adjusted tax basis in the shares) and thereafter as gain from the sale or exchange
  of such shares. United States shareholders should consult their own tax advisors
  regarding the treatment of foreign currency gain or loss, if any, on any dividends
  received which are converted into United States dollars on a date subsequent
  to receipt.

Subject to
  the requirements and limitations imposed by the Code, a U.S. shareholder may
  elect to claim (as a foreign tax credit against the U.S. federal income tax
  liability of such holder) the amount of any Canadian tax withheld or paid with
  respect to dividends on the shares of the Companys common stock. Dividends
  on the shares of the Companys common stock generally will constitute passive
  income or, in the case of certain U.S. shareholders, financial services
  income, for U.S. foreign tax credit purposes. Subject to the requirements
  and limitations imposed by the Code, U.S. shareholders who do not elect to claim
  any foreign tax credits may claim a deduction (in computing their United States
  taxable income) for any Canadian income tax withheld or paid with respect to
  such dividends. Dividends paid on the shares of the Companys common stock
  will generally not be eligible for the dividends received deduction available
  in certain cases to U.S. corporations.

Upon a sale or exchange
  of a share of the Companys common stock, a U.S. shareholder will generally
  recognize gain or loss equal to the difference between the amount realized on
  such sale or exchange and the adjusted tax basis of such share of common stock.
  Generally, any gain or loss recognized as a result of the foregoing will be
  taxed as capital gain or loss (assuming the stock was a capital asset in the
  shareholders hands) and will be either long-term or short-term depending
  upon the period of time the shares that were sold or exchanged, as the case
  may be, were held. Preferential tax rates for long term capital gains apply
  generally to a U.S. shareholder which is an individual, estate or trust. Deductions
  for capital losses, however, may be subject to significant limitations.

Each investor should
  consult his own tax advisor to discuss the tax consequences of owning shares
  in view of his particular situation.

CANADA

The following
  is a summary of material Canadian federal income tax considerations generally
  applicable to the acquisition, holding and disposition of shares of our common
  stock purchased pursuant to this prospectus by a United States shareholder who,
  for the purposes of the Income Tax Act (Canada) and the Canada-United States
  Income Tax Convention, as applicable and at all relevant times:

- is resident in the United States and not resident in Canada;
- holds shares of our common stock as capital property;
- does not have a permanent establishment or fixed base
      in Canada; and
- deals with us at arm's length.

Special rules, which are not discussed in this summary, may apply to financial
  institutions and to nonresident insurers carrying on an insurance business
  in Canada and elsewhere.

This summary is based
  on the current provisions of the Income Tax Act (Canada) and the regulations
  thereunder and the Canada-United States Income Tax Convention, all specific
  proposals to amend the Income Tax Act (Canada) or the regulations thereunder
  announced by the Canadian Minister of Finance prior to the date of this prospectus
  and the current published administrative practices of Revenue Canada. This summary
  does not otherwise take into account or anticipate any changes in law or

32

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administrative practice nor does it take into account income tax laws or considerations
  of any province or territory of Canada or any jurisdiction other than Canada,
  which may differ from the federal income tax consequences described herein.

Each investor
  should consult his tax advisor to discuss the tax consequences of owning shares
  in view of his particular situation.

Dividends

Under the Income Tax
  Act (Canada) and the Canada-United States Income Tax Convention, dividends paid
  or credited, or deemed to be paid or credited, on the shares of our common stock
  to a United States shareholder who owns less than 10% of our voting shares will
  be subject to Canadian withholding tax at the rate of 15% of the gross amount
  of such dividends or deemed dividends.

Under the Canada-United
  States Income Tax Convention, dividends paid or credited to certain religious,
  scientific, charitable and similar tax exempt organizations and certain pension
  organizations that are resident, and exempt from tax, in the United States and
  that have complied with certain administrative procedures are exempt from this
  Canadian withholding tax.

Each investor should
  consult his tax advisor to discuss the tax consequences of owning shares in
  view of his particular situation.

Disposition of Shares of Common Stock

A capital
  gain realized by a United States shareholder on a disposition or deemed disposition
  of shares of our common stock will not be subject to tax under the Income Tax
  Act (Canada) unless such shares constitute taxable Canadian property within
  the meaning of the Income Tax Act (Canada) at the time of the disposition or
  deemed disposition. In general, the shares of our common stock will not be taxable
  Canadian property if they are listed on a prescribed exchange, which includes
  the Canadian Venture Exchange on which our shares are listed, or at any time
  within the five-year period immediately preceding the disposition the United
  States shareholder, persons with whom the United States shareholder did not
  deal at arm's length, or the United States shareholder together with such persons
  owned or had an interest in or a right to acquire more than 25% of any class
  or series of our shares. A deemed disposition of shares of our common stock
  will arise on the death of a United States shareholder.

Each investor
  should consult his tax advisor to discuss the tax consequences of owning shares
  in view of his particular situation.

F.     DIVIDENDS AND PAYING AGENTS

Not Applicable.

G.     STATEMENT BY EXPERTS

Not Applicable.

H.     DOCUMENTS ON DISPLAY

Any statement
  in this Annual Report about any of our contracts or other documents is not necessarily
  complete. If the contract or document is filed as an exhibit to the registration
  statement, the

33

---

contract or document is deemed to modify the description contained in this
  Annual Report. You must review the exhibits themselves for a complete description
  of the contract or document.

You may review a copy
  of our filings with the SEC, including exhibits and schedules filed with it,
  at the SECs public reference facilities in Room 1024, Judiciary Plaza,
  450 Fifth Street, N.W., Washington, D.C. 20549 and the Regional Offices of the
  SEC located at 233 Broadway, New York, New York 10279 and at the Citicorp Center,
  500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may also obtain
  copies of such materials from the Public Reference Section of the SEC, Room
  1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
  rates. You may call the SEC at 1-800-SEC-0330 for further information on the
  public reference rooms. The SEC maintains a Web site (HTTP://WWW.SEC.GOV) that
  contains reports, proxy and information statements and other information regarding
  registrants that file electronically with the SEC. Although we make many of
  our filings with the SEC electronically as a foreign private issuer, we are
  not obligated to do so.

You may read and copy
  any reports, statements or other information that we file with the SEC at the
  addresses indicated above and you may also access them electronically at the
  Web site set forth above. These SEC filings are also available to the public
  from commercial document retrieval services.

WE ARE REQUIRED
  TO FILE REPORTS AND OTHER INFORMATION WITH THE SEC UNDER THE SECURITIES EXCHANGE
  ACT OF 1934. REPORTS AND OTHER INFORMATION FILED BY US WITH THE SEC MAY BE INSPECTED
  AND COPIED AT THE SECS PUBLIC REFERENCE FACILITIES DESCRIBED ABOVE. AS
  A FOREIGN PRIVATE ISSUER, WE ARE EXEMPT FROM THE RULES UNDER THE EXCHANGE ACT
  PRESCRIBING AND FURNISHING AND CONTENT OF PROXY STATEMENTS AND OUR OFFICERS,
  DIRECTORS AND PRINCIPAL SHAREHOLDERS ARE EXEMPT FROM THE REPORTING AND SHORT-SWING
  PROFIT RECOVERY PROVISIONS CONTAINED IN SECTION 16 OF THE EXCHANGE ACT. UNDER
  THE EXCHANGE ACT, AS A FOREIGN PRIVATE ISSUER, WE ARE NOT REQUIRED TO PUBLISH
  FINANCIAL STATEMENTS AS FREQUENCY OR AS PROMPTLY AS UNITED STATES COMPANIES.

I.       SUBSIDIARY INFORMATION

See Item 4.C. of this
  Annual Report.

ITEM 11.     QUALITATIVE AND QUANTITATIVE DISCLOSURES
  ABOUT RISK

Not applicable. The Company is a small business
  issuer.

ITEM 12.     DESCRIPTION OF SECURITIES OTHER THAN EQUITY
  SECURITIES

Not Applicable.

PART II

ITEM 13.     DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES

Not Applicable.

34

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ITEM 14.     MATERIAL MODIFICATIONS TO THE RIGHTS OF
  SECURITY HOLDERS AND USE OF PROCEEDS

Not Applicable.

ITEM 15.

There were no significant changes in RTICAs systems of internal controls
  or in other factors that could significantly affect these controls subsequent
  to the date of evaluation of the controls or any corrective actions required
  on the control system during the reporting period.

ITEM 16.[RESERVED]

PART III

ITEM 17.     FINANCIAL STATEMENTS

Not Applicable.

ITEM 18.     FINANCIAL STATEMENTS

See pages F-1 to F-24.

ITEM 19.     EXHIBITS

|EXHIBIT |  |                                                                                          
|------- |  | -----------------------------------------------------------------------------------------
|NUMBER  |  | DESCRIPTION                                                                              
|        |  |                                                                                          
|1.1     |  | Articles of Incorporation (incorporated herein by reference
      to Exhibit 3.1.1 to the
|        |  | Companys registration statement on Form SB-2 filed on
      November 17, 2000).         
|1.2     |  | Amendment to Articles of Incorporation (incorporated herein
      by reference to        
|        |  | Exhibit 3.1.2 to the Companys registration statement
      on Form SB-2 filed on        
|        |  | November 17, 2000).                                                                      
|1.3     |  | Restated and Amended Articles of Incorporation (incorporated
      herein by             
|        |  | reference to Exhibit 3.1.3 to the Companys registration
      statement on Form SB-2    
|        |  | filed on November 17, 2000).                                                             
|1.4     |  | Bylaws of the Corporation (incorporated herein by reference
      to Exhibit 3.2.1 to    
|        |  | the Companys registration statement on Form SB-2 filed
      on November 17,            
|        |  | 2000).                                                                                   
|1.5     |  | Amendment to Bylaws (incorporated herein by reference to Exhibit
      3.2.2 to the      
|        |  | Companys registration statement on Form SB-2 filed on
      November 17, 2000).         
|2.1     |  | Form of Common Stock (incorporated herein by reference to
      Exhibit 4.1 to the       
|        |  | Companys registration statement on Form SB-2 filed on
      November 17, 2000).         
|2.2     |  | Form of share purchase warrants for debentures issued on November
      7, 2002          
|        |  | during private placement.                                                                
|2.3     |  | Form of share purchase warrants for units issued on November
      7, 2002 during        
|        |  | private placement.                                                                       

35

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|2.4  |  | Form of 10% convertible debentures issued May 31, 2002 to
      September 12,         
|---- |  | --------------------------------------------------------------------------------------
|     |  | 2002.                                                                                 
|2.5  |  | Form of 12% convertible debentures issued November 5, 2002.                           
|4.1  |  | Consulting Contract with Warren Arseneau dated May 15, 2000
      (incorporated       
|     |  | herein by reference to Exhibit 10.1 to the Companys
      registration statement on  
|     |  | Form SB-2 filed on November 17, 2000).                                                
|4.2  |  | Consulting Contract with Martin H. Beck dated April 1, 2000
      (incorporated       
|     |  | herein by reference to Exhibit 10.2 to the Companys
      registration statement on  
|     |  | Form SB-2 filed on November 17, 2000).                                                
|4.3  |  | Consulting Contract with Michael Boyd dated April 1, 2000
      (incorporated herein  
|     |  | by reference to Exhibit 10.3 to the Companys registration
      statement on Form    
|     |  | SB-2 filed on November 17, 2000).                                                     
|4.4  |  | Consulting Contract with Roger Short dated January 1, 2000
      (incorporated herein 
|     |  | by reference to Exhibit 10.4 to the Companys registration
      statement on Form    
|     |  | SB-2 filed on November 17, 2000).                                                     
|4.5  |  | Confidentiality, Non-competition and intellectual property
      agreement with       
|     |  | Warren Arseneau dated May 15, 2000 (incorporated herein by
      reference to         
|     |  | Exhibit 10.5 to the Companys registration statement
      on Form SB-2 filed on      
|     |  | November 17, 2000).                                                                   
|4.6  |  | Escrow Agreement dated as of September 18, 1997 among the
      Corporation,          
|     |  | Montreal Trust Company of Canada and those shareholders that
      executed such      
|     |  | Escrow Agreement (incorporated herein by reference to Exhibit
      10.6 to the       
|     |  | Companys registration statement on Form SB-2 filed on
      November 17, 2000).      
|4.7  |  | Timed Release Escrow Agreement dated April 28, 1998 between
      the Corporation     
|     |  | and those shareholders that executed such Escrow Agreement
      (incorporated        
|     |  | herein by reference to Exhibit 10.7 to the Companys
      registration statement on  
|     |  | Form SB-2 filed on November 17, 2000).                                                
|4.8  |  | Performance Release Escrow Agreement dated April 28, 1998
      between the           
|     |  | Corporation and those shareholders that executed such Escrow
      Agreement          
|     |  | (incorporated herein by reference to Exhibit 10.8 to the Companys
      registration 
|     |  | statement on Form SB-2 filed on November 17, 2000).                                   
|4.9  |  | Transfer Agency and Registrarship Agreement dated as of September
      18, 1997,     
|     |  | between the Corporation and Montreal Trust Company of Canada
      (incorporated      
|     |  | herein by reference to Exhibit 10.9 to the Companys
      registration statement on  
|     |  | Form SB-2 filed on November 17, 2000).                                                
|4.10 |  | Standard Terms for R&D Project of Service (incorporated
      herein by reference to  
|     |  | Exhibit 10.11 to the Companys registration statement
      on Form SB-2 filed on     
|     |  | November 17, 2000).                                                                   
|4.11 |  | Industrial Research Assistance Program Repayable Contribution
      Agreement         
|     |  | (incorporated herein by reference to Exhibit 10.12 to the
      Companys registration
|     |  | statement on Form SB-2 filed on November 17, 2000).                                   
|4.12 |  | RTICA Corporation Stock Option Plan (incorporated herein by
      reference to        
|     |  | Exhibit 10.10 to the Companys registration statement
      on Form SB-2 filed on     
|     |  | November 17, 2000).                                                                   
|4.13 |  | Form of Stock Option Agreement (incorporated herein by reference
      to Exhibit     
|     |  | 10.13 to the Companys registration statement on Form
      SB-2 filed on November    
|     |  | 17, 2000).                                                                            
|6    |  | Computation of per share earnings (included in Financial Statements).                 
|7    |  | Ratio of earning to fixed charges (included in Financial Statements).                 

36

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|8    | . | Subsidiaries of Company (incorporated herein by reference
      to Exhibit 21 to the
|---- | - | ------------------------------------------------------------------------------------
|     |   | Companys registration statement on Form SB-2 filed on
      November 17, 2000).    
|10.1 |   | Certificate 10.1 pursuant to 18 U.S.C. section 1350, as adopted
      pursuant to   
|     |   | section 906 of the Sarbanes-Oxley act of 2002.                                      
|10.2 |   | Certificate 10.2 pursuant to 18 U.S.C. section 1350, as adopted
      pursuant to   
|     |   | section 906 of the Sarbanes-Oxley act of 2002.                                      

37

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SIGNATURES

The registrant hereby
  certifies that it meets all of the requirements for filing on Form 20-F and
  that it has duly caused and authorized the undersigned to sign this registration
  statement on its behalf.

| | RTICA CORPORATION         
| | --------------------------
| |                           
| | BY:/s/ Warren Arseneau    
| | Warren Arseneau, President

Date: November 29, 2002

38

---

CERTIFICATION PURSUANT TO SECTION 302 of the SARBANES-OXLEY ACT OF 2002

I, Warren Arseneau,
  as Chief Executive Officer of RTICA, Corporation ("RTICA"), hereby certify as
  follows with respect to the pending Report (the "Report") on Form 20-F of RTICA
  for the period ended May 31, 2002:

|(1) | I have reviewed the Report being filed;                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Based on my knowledge, the 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 the Report; and                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | Based on my knowledge, the financial information included
      in the Report, and the financial statements on which the financial information
      is based, fairly present in all material respects the financial condition,
      results of operations, changes in net assets, and cash flows (if the financial
      statements are required to include a statement of cash flows) of the investment
      company as of, and for, the periods presented in the Report.

BY:/s/ Warren Arseneau
      Warren Arseneau, CEO

November 29, 2002

39

---

CERTIFICATION PURSUANT TO SECTION 302 of the SARBANES-OXLEY ACT OF 2002

I, Robert
  H. Stikeman, as Chief Financial Officer of RTICA, Corporation ("RTICA"), hereby
  certify as follows with respect to the pending Report (the "Report") on Form
  20-F of RTICA for the period ended May 31, 2002:

|(1) | I have reviewed the Report being filed;                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Based on my knowledge, the 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 the Report; and                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | Based on my knowledge, the financial information included
      in the Report, and the financial statements on which the financial information
      is based, fairly present in all material respects the financial condition,
      results of operations, changes in net assets, and cash flows (if the financial
      statements are required to include a statement of cash flows) of the investment
      company as of, and for, the periods presented in the Report.

BY:/s/ Robert Stikeman
  Robert H. Stikeman

Chief Financial Officer
  November 29, 2000

40

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| | Consolidated Financial Statements 
        (Expressed in Canadian dollars)
      RTICA CORPORATION 
        (A DEVELOPMENT STAGE COMPANY)
      Years ended May 31, 2002, 2001 and 2000
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| | KPMGLLP                      |             |               
| | ---------------------------- | ----------- | --------------
| | Chartered Accountants        | Telephone   | (905) 949-7800
| | Mississauga Executive Centre | Telefax     | (905) 949-7799
| | Four Robert Speck Parkway    | www.kpmg.ca |               
| | Suite 1500                   |             |               
| | Mississauga ON L4Z 1S1       |             |               



AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of RTICA Corporation
  (a development stage company) as at May 31, 2002 and 2001 and the consolidated
  statements of operations and deficit and cash flows for the years ended May
  31, 2002, 2001 and 2000 and for the cumulative period from June 13, 1991 (inception)
  to May 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 Canadian generally
  accepted auditing standards and United States generally accepted auditing standards.
  Those standards require that we plan and perform an audit to obtain reasonable
  assurance 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.

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  May 31, 2002 and 2001 and the results of its operations and its cash flows for
  the years ended May 31, 2002, 2001 and 2000 and for the cumulative period from
  June 13, 1991 (inception) to May 31, 2002 in accordance with Canadian generally
  accepted accounting principles.



Chartered Accountants

Mississauga, Canada

July 26, 2002, except as 
  to note 14 which is as of
  October 31, 2002

---



| | KPMGLLP                      |             |               
| | ---------------------------- | ----------- | --------------
| | Chartered Accountants        | Telephone   | (905) 949-7800
| | Mississauga Executive Centre | Telefax     | (905) 949-7799
| | Four Robert Speck Parkway    | www.kpmg.ca |               
| | Suite 1500                   |             |               
| | Mississauga ON L4Z 1S1       |             |               

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING
  DIFFERENCES



In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph (following the opinion paragraph) when
  the financial statements are affected by conditions and events that cast substantial
  doubt on the Company's ability to continue as a going concern, such as those
  described in note 1 to the consolidated financial statements. Our report to
  the shareholders dated July 26, 2002 (except as to note 14 which is as of October
  31, 2002) is expressed in accordance with Canadian reporting standards which
  do not permit a reference to such events and conditions in the auditors' report
  when these are adequately disclosed in the financial statements.



Chartered Accountants

Mississauga, Canada

July 26, 2002, except as 
  to note 14 which is as of 
  October 31, 2002

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Consolidated Balance Sheets 
  (Expressed in Canadian dollars)

May 31, 2002 and 2001

|                                                                    |      |             |      |  
|------------------------------------------------------------------- | ---- | ----------- | ---- | -
|                                                                    | 2002 |             | 2001 |  
|                                                                    |      |             |      |  
|                                                                    |      |             |      |  
|Assets                                                              |      |             |      |  
|                                                                    |      |             |      |  
|Current assets:                                                     |      |             |      |  
|Cash and short-term investments                                     | $    | 4,152       |      | $
|GST and other receivables                                           |      | 27,941      |      |  
|Prepaid expenses                                                    |      | 10,685      |      |  
|                                                                    |      |             |      |  
|                                                                    |      | 42,778      |      |  
|Fixed assets (note 3)                                               |      | 334,536     |      |  
|Goodwill, net of accumulated amortization                           |      | 1           |      |  
|Deferred development costs                                          |      | 1           |      |  
|                                                                    |      |             |      |  
|                                                                    | $    | 377,316     |      | $
|                                                                    |      |             |      |  
|                                                                    |      |             |      |  
|Liabilities and Shareholders' Equity
      (Deficiency)             |      |             |      |  
|                                                                    |      |             |      |  
|Current liabilities:                                                |      |             |      |  
|Accounts payable and accrued liabilities                            | $    | 912,077     |      | $
|Promissory notes (note 4)                                           |      | 355,280     |      |  
|                                                                    |      |             |      |  
|                                                                    |      | 1,267,357   |      |  
|Due to government (note 5)                                          |      | 445,000     |      |  
|                                                                    |      |             |      |  
|Convertible debenture (note 6)                                      |      | 73,264      |      |  
|                                                                    |      |             |      |  
|Shareholders' equity (deficiency):                                  |      |             |      |  
|Share capital (note 7)                                              |      | 8,986,768   |      |  
|Equity component of convertible debenture
      (note 6)            |      | 12,736      |      |  
|Deficit accumulated during development
      stage                  |      | (10,407,809 | )    |  
|                                                                    |      |             |      |  
|                                                                    |      | (1,408,305  | )    |  
|Going concern (note 1)                                              |      |             |      |  
|Commitments and contingencies (note 12)                             |      |             |      |  
|Differences between Canadian and United States GAAP (note
      13) |      |             |      |  
|Subsequent events (note 14)                                         |      |             |      |  
|                                                                    |      |             |      |  
|                                                                    | $    | 377,316     |      | $
|                                                                    |      |             |      |  

See accompanying notes to consolidated financial statements.

On behalf of the Board:

/s/ Warren Arseneau
  Director

/s/ Michael Boyd
  Director

1

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Consolidated Statements of Operations and Deficit 
  (Expressed in Canadian dollars)

|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|---------------------------------------- | - | ------------------- | - | - | -------------- | - | - | ---------- | - | - | ------------- | -
|                                         |   |                     |   |   |                |   |   |            |   |   | Cumulative    |  
|                                         |   |                     |   |   |                |   |   |            |   |   | period from   |  
|                                         |   |                     |   |   |                |   |   |            |   |   | June 13, 1991 |  
|                                         |   | Years ended May 31, |   |   | (inception) to |  
|                                         |   | 2002                |   |   | 2001           |   |   | 2000       |   |   | May 31, 2002  |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|Income:                                  |   |                     |   |   |                |   |   |            |   |   |               |  
|Interest                                 | $ | 38,284              |   | $ | 97,101         |   | $ | 7,095      |   | $ | 205,808       |  
|Fees and licences                        |   |                    |   |   |               |   |   | 6,077      |   |   | 622,482       |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   | 38,284              |   |   | 97,101         |   |   | 13,172     |   |   | 828,290       |  
|Operating expenses:                      |   |                     |   |   |                |   |   |            |   |   |               |  
|Development                              |   | 1,254,347           |   |   | 947,651        |   |   | 246,870    |   |   | 3,911,647     |  
|Consulting                               |   | 690,132             |   |   | 610,354        |   |   | 354,110    |   |   | 2,117,320     |  
|Sales and marketing                      |   | 273,019             |   |   | 262,895        |   |   | 93,600     |   |   | 656,574       |  
|Professional fees                        |   | 233,179             |   |   | 445,138        |   |   | 117,109    |   |   | 1,142,550     |  
|General and administrative               |   | 168,021             |   |   | 238,276        |   |   | 160,660    |   |   | 801,687       |  
|Management fees                          |   | 146,000             |   |   | 127,000        |   |   | 129,174    |   |   | 1,019,386     |  
|Rent and property taxes                  |   | 114,817             |   |   | 123,822        |   |   | 68,187     |   |   | 338,359       |  
|Amortization of fixed
      assets       |   | 114,670             |   |   | 149,139        |   |   | 8,025      |   |   | 287,923       |  
|Factory overhead                         |   | 55,512              |   |   | 34,393         |   |   | 18,673     |   |   | 108,578       |  
|Travel                                   |   | 53,589              |   |   | 58,863         |   |   | 44,795     |   |   | 409,914       |  
|Amortization of goodwill                 |   | 26,363              |   |   | 26,364         |   |   | 26,364     |   |   | 108,937       |  
|Interest and bank charges                |   | 11,008              |   |   | 1,333          |   |   | 10,764     |   |   | 147,104       |  
|Interest on convertible
      debentures |   |                    |   |   | 36,586         |   |   | 40,248     |   |   | 141,834       |  
|Patents                                  |   |                    |   |   |               |   |   |           |   |   | 44,286        |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   | 3,140,657           |   |   | 3,061,814      |   |   | 1,318,579  |   |   | 11,236,099    |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|Loss for the period                      |   | (3,102,373          | ) |   | (2,964,713     | ) |   | (1,305,407 | ) |   | (10,407,809   | )
|Deficit accumulated during development   |   |                     |   |   |                |   |   |            |   |   |               |  
|stage, beginning of period               |   | (7,305,436          | ) |   | (4,340,723     | ) |   | (3,035,316 | ) |   |              |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|Deficit accumulated during development   |   |                     |   |   |                |   |   |            |   |   |               |  
|stage, end of period                     | $ | (10,407,809         | ) | $ | (7,305,436     | ) | $ | (4,340,723 | ) | $ | (10,407,809   | )
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|Loss per share (notes 2(i) and 10)       | $ | (0.12               | ) | $ | (0.13          | ) | $ | (0.09      | ) |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  
|Weighted average number of shares        |   |                     |   |   |                |   |   |            |   |   |               |  
|outstanding                              |   | 25,134,655          |   |   | 22,050,619     |   |   | 14,194,298 |   |   |               |  
|                                         |   |                     |   |   |                |   |   |            |   |   |               |  

See accompanying notes to consolidated financial statements.

2

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Consolidated Statements of Cash Flows 
  (Expressed in Canadian dollars)

|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|------------------------------------------------ | - | ------------------- | - | - | -------------- | - | - | ---------- | - | - | ------------- | -
|                                                 |   |                     |   |   |                |   |   |            |   |   | Cumulative    |  
|                                                 |   |                     |   |   |                |   |   |            |   |   | period from   |  
|                                                 |   |                     |   |   |                |   |   |            |   |   | June 13, 1991 |  
|                                                 |   | Years ended May 31, |   |   | (inception) to |  
|                                                 |   | 2002                |   |   | 2001           |   |   | 2000       |   |   | May 31, 2002  |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Cash provided by (used in):                      |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Operating activities:                            |   |                     |   |   |                |   |   |            |   |   |               |  
|Loss for the period                              | $ | (3,102,373          | ) | $ | (2,964,713     | ) | $ | (1,305,407 | ) | $ | (10,407,809   | )
|Items not involving
      cash:                  |   |                     |   |   |                |   |   |            |   |   |               |  
|Interest
      on convertible debentures         |   |                    |   |   | 10,722         |   |   | 40,248     |   |   | 115,970       |  
|Amortization                                     |   | 141,033             |   |   | 175,503        |   |   | 34,389     |   |   | 396,860       |  
|Interest
      expense on converted loan         |   |                    |   |   |               |   |   |           |   |   | 96,000        |  
|Expenses
      settled by issuance of            |   |                     |   |   |                |   |   |            |   |   |               |  
|common
      shares (note 7(f))                  |   | 33,600              |   |   |               |   |   |           |   |   | 464,988       |  
|Foreign
      exchange loss (gain)               |   | 1,268               |   |   | (23,590        | ) |   | (3,281     | ) |   | (25,603       | )
|Change in non-cash
      operating working       |   |                     |   |   |                |   |   |            |   |   |               |  
|capital
      balances:                          |   |                     |   |   |                |   |   |            |   |   |               |  
|GST
      and other receivables                  |   | 46,360              |   |   | 18,652         |   |   | (15,494    | ) |   | (27,941       | )
|Prepaid
      expenses                           |   | (2,243              | ) |   |               |   |   | 13,524     |   |   | (10,685       | )
|Accounts
      payable and accrued liabilities   |   | 612,708             |   |   | (468,879       | ) |   | 726,898    |   |   | 830,732       |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   | (2,269,647          | ) |   | (3,252,305     | ) |   | (509,123   | ) |   | (8,567,488    | )
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Financing activities:                            |   |                     |   |   |                |   |   |            |   |   |               |  
|Proceeds from promissory
      notes             |   | 355,280             |   |   |               |   |   |           |   |   | 609,280       |  
|Due to government                                |   | 244,306             |   |   | 200,694        |   |   |           |   |   | 445,000       |  
|Issuance of convertible
      debentures         |   | 86,000              |   |   |               |   |   | 360,000    |   |   | 1,946,000     |  
|Issuance of common
      shares                  |   | 209,400             |   |   | 3,000          |   |   | 1,715,854  |   |   | 2,482,167     |  
|Issuance of special
      warrants               |   |                    |   |   | 2,202,700      |   |   |           |   |   | 2,870,659     |  
|Exercise of share purchase
      warrants        |   |                    |   |   | 553,541        |   |   |           |   |   | 553,541       |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   | 894,986             |   |   | 2,959,935      |   |   | 2,075,854  |   |   | 8,906,647     |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Investing activities:                            |   |                     |   |   |                |   |   |            |   |   |               |  
|Purchase of fixed assets                         |   | (13,970             | ) |   | (49,894        | ) |   | (523,716   | ) |   | (622,459      | )
|Deferred development
      costs                 |   |                    |   |   |               |   |   |           |   |   | (1            | )
|Cash acquired on reverse
      takeover          |   |                    |   |   |               |   |   |           |   |   | 261,850       |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   | (13,970             | ) |   | (49,894        | ) |   | (523,716   | ) |   | (360,610      | )
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Foreign exchange gain (loss) on cash held        |   |                     |   |   |                |   |   |            |   |   |               |  
|in foreign currency                              |   | (1,268              | ) |   | 23,590         |   |   | 3,281      |   |   | 25,603        |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Increase (decrease) in cash and cash equivalents |   | (1,389,899          | ) |   | (318,674       | ) |   | 1,046,296  |   |   | 4,152         |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Cash and cash equivalents, beginning of period   |   | 1,394,051           |   |   | 1,712,725      |   |   | 666,429    |   |   |              |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  
|Cash and cash equivalents, end of period         | $ | 4,152               |   | $ | 1,394,051      |   | $ | 1,712,725  |   | $ | 4,152         |  
|                                                 |   |                     |   |   |                |   |   |            |   |   |               |  

Cash and cash equivalents are comprised of cash and short-term investments.

For further cash flow information, see note 11.

See accompanying notes to consolidated financial statements.

3

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements
  (Expressed in Canadian dollars)

---

|RTICA Corporation (the
        "Company") is a public company that was incorporated on May 30, 1997 under
        the Business Corporations Act (Alberta), was continued under the Business
        Corporations Act (Ontario) on April 25, 2001 and is listed on the TSX
        Venture Exchange (formerly Canadian Venture Exchange). The Company is
        engaged in the commercialization of technology and productivity processes
        that converts 100% recycled polyethylene terephthalate ("PET") plastics
        into insulation products. The Company currently operates in one business
        segment.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

4

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|   |                                             
|   | (i)                                         
|   |                                             
|   | (ii)                                        
|   |                                             
|   |                                             
|   |                                             
|   | (b)                                         
|   |                                             
|   | (c)                                         

| |                                |    |  
| | ------------------------------ | -- | -
| | Machinery and equipment        | 25 | %
| | Furniture                      | 25 | %
| | Vehicles                       | 30 | %
| | Computer hardware and software | 30 | %
| |                                |    |  

| | (d) | Goodwill:
      Goodwill is recorded at cost less accumulated amortization
        and is being amortized on a straight-line basis over five years. On an
        annual basis, management reviews the recoverability of goodwill by assessing
        future cash flows on an undiscounted basis.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued)
  (Expressed in Canadian dollars)

---

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|   | (e)                                         
|   |                                             
|   | (f)                                         
|   |                                             
|   | (g)                                         
|   |                                             
|   | (h)                                         

6

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|   | (i)                                         
|   |                                             
|   | (j)                                         
|   |                                             
|   | (k)                                         

7

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|3. | Fixed assets:
|-- | -------------

| |                                |   |         |  |              |         |  |          |        
| | ------------------------------ | - | ------- |  | ------------ | ------- |  | -------- | -------
| |                                |   |         |  | Accumulated  |         |  | Net book |        
| | 2002                           |   | Cost    |  | amortization |         |  | value    |        
| |                                |   |         |  |              |         |  |          |        
| | Machinery and equipment        | $ | 530,917 |  | $            | 235,674 |  | $        | 295,243
| | Furniture                      |   | 11,910  |  |              | 5,771   |  |          | 6,139  
| | Vehicles                       |   | 15,848  |  |              | 8,634   |  |          | 7,214  
| | Computer hardware and software |   | 63,782  |  |              | 37,842  |  |          | 25,940 
| |                                |   |         |  |              |         |  |          |        
| |                                | $ | 622,457 |  | $            | 287,921 |  | $        | 334,536
| |                                |   |         |  |              |         |  |          |        
| |                                |   |         |  |              |         |  |          |        
| |                                |   |         |  |              |         |  |          |        
| |                                |   |         |  | Accumulated  |         |  | Net book |        
| | 2001                           |   | Cost    |  | amortization |         |  | value    |        
| |                                |   |         |  |              |         |  |          |        
| | Machinery and equipment        | $ | 525,292 |  | $            | 137,263 |  | $        | 388,029
| | Furniture                      |   | 11,108  |  |              | 3,724   |  |          | 7,384  
| | Vehicles                       |   | 15,848  |  |              | 5,542   |  |          | 10,306 
| | Computer hardware and software |   | 56,241  |  |              | 26,724  |  |          | 29,517 
| |                                |   |         |  |              |         |  |          |        
| |                                | $ | 608,489 |  | $            | 173,253 |  | $        | 435,236
| |                                |   |         |  |              |         |  |          |        

|4. | Promissory notes:
|-- | -----------------

| |                                                           |   |         | 
| | --------------------------------------------------------- | - | ------- | 
| | Promissory note, 15% interest, repayable on               |   |         | 
| | October 31, 2002 (a)                                      | $ | 150,000 | 
| | Promissory note, 15% interest, repayable on               |   |         | 
| | the earlier of October 31, 2002 or upon
      the Company |   |         | 
| | completing financing of at least $700,000
      (b)       |   | 190,000 | 
| | Promissory note, 4.75% interest, repayable on             |   |         | 
| | May 31, 2003 (c)                                          |   | 15,280  | 
| |                                                           |   |         | 
| |                                                           | $ | 355,280 | 
| |                                                           |   |         | 

|(a) | The promissory note is unsecured.                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                   
|(b) | The promissory note is secured by a
        general security agreement against the assets of the Company. Pursuant
        to the terms of the agreement underlying this promissory note, the Company
        issued 80,000 common shares as described in note 7(f). Of this promissory
        note, $75,000 is due to a director of the Company.
|    |                                                                                                                                                                                                                                                                                                                                                   
|(c) | The promissory note is secured by a
        general security agreement against the assets of the Company and has first
        priority. The note is due to a company related to a director. Subsequent
        to year end, the note was redeemed.                                                                                               

8

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|5. | Due to government:
      On November 1, 2000, the Company signed a contract with
        the National Research Council Canada, whereby the Company has received
        $445,000 as a repayable contribution for various research and development
        projects carried out by the Company. Repayment of these contributions
        begins on January 1, 2004 based on 1% of the Company's gross revenue up
        to a maximum of $667,500.
      The Company is required to contribute two-thirds of
        the total project costs; otherwise, its reimbursements will be proportionately
        reduced. If the Company is found to be in breach of the contract, the
        National Research Council Canada is able to demand repayment of up to
        three times the total amount of advances already made. For the year ended
        May 31, 2002, the Company has incurred costs of $916,937 (2001 - $899,000)
        and has received $244,306 (2001 -$200,694) of the repayable contribution.                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6. | Convertible debentures:
      On May 26, 1998, the Company issued a $1,500,000 Series
        I Convertible Senior Debenture. The principal was convertible at any time,
        in whole or in part, at the option of the holder into common shares at
        $0.55 per common share. Once the Company built a plant which produced
        a specified output, the debenture was convertible at the Company's option.
        On December 21, 1999, the debenture was converted at the Company's option
        into 2,727,723 common shares at $0.55 per common share.
      On April 15, 2000, the Company issued three $120,000
        convertible debentures for total proceeds of $360,000. The principal and
        any accrued and unpaid interest was convertible at any time, in whole
        or in part, at the option of the holder into common shares at $0.40 per
        common share. The principal outstanding was interest-bearing at 6.5% per
        annum payable semi-annually and in arrears on June 15 and December 15
        of each year, commencing on June 15, 2000 and was due on June 30, 2001.
        The debentures were secured by the tangible assets of the Company and
        could have been subordinated to other debt incurred by the Company up
        to $1,250,000. On May 29, 2001, the debentures were converted into 900,000
        common shares at $0.40 per common share.

9

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|**6.** | Convertible debentures (continued):
      In May 2002, the Company arranged a private placement
        of $1,000,000. As at May 31, 2002, proceeds of $86,000 were received,
        of which $40,000 was received from directors of the Company. Subsequent
        to year end, an additional $267,000 was received, of which $46,000 was
        from a director.
      The convertible debentures bear interest at 10% per
        annum, with interest calculated semi-annually in arrears at June 30 and
        December 31. Subject to the exercise of conversion rights, the principal
        and interest then outstanding are due on May 31, 2005.
      The holders of the convertible debentures have the right
        to convert the debenture into that number of units as is obtained by dividing
        the amount due (excluding interest) by $0.45. Each unit consists of one
        common and one common share purchase warrant, which entitled the holder
        to purchase one common share for $0.54 per share for two years.
      After May 31, 2003 but prior to May 31, 2005, the Company
        may redeem the debentures for the principal amount, or issue such common
        shares by dividing the principal amount and interest accrued by an amount
        equal to the current market price of the Company's shares, provided such
        price exceeds $0.70 for one continuous calendar month from the date of
        the convertible debenture.
      As security for the payment and performance of obligations,
        the Company grants to the holders a security interest in the present and
        future undertaking and property of the Company, including but not limited
        to receivables, inventory, equipment, chattel paper, documents of title,
        intangibles, securities and instruments, books and records.
      There was no interest recorded in the current year prior
        to conversion (2001 - $36,586; 2000 -$40,248).
      These debentures represent compound financial instruments
        with their component parts measured at their respective fair values at
        the time of issue. The debt component has been calculated at the present
        value of the required payment at maturity, discounted at 15%, which approximates
        the interest rate that would have been applicable to non-convertible debt
        at the date of issue. The original value assigned will increase over time
        to the settlement amount on maturity, with a corresponding charge to interest
        expense for the year. The equity component represents the excess of the
        face value over the debt component.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|**6.** | Convertible debentures (continued):
      The equity component represents the excess of the face
        value over the debt component at the date of issuance. The continuity
        of the equity component of convertible debentures from inception is as
        follows:
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                          |   |          |  
| | ---------------------------------------- | - | -------- | -
| | Equity component of $ 1,500,000          |   |          |  
| | convertible debenture, May 26, 1998      | $ | 105,000  |  
| |                                          |   |          |  
| | Balance, May 31, 1998 and 1999           |   | 105,000  |  
| | Conversion of $1,500,000 convertible     |   |          |  
| | debenture, December 21, 1999             |   | (105,000 | )
| | Equity component of three $ 120,000      |   |          |  
| | convertible debentures, April 15, 2000   |   | 10,722   |  
| |                                          |   |          |  
| | Balance, May 31, 2000                    |   | 10,722   |  
| | Conversion of three $120,000 convertible |   |          |  
| | debentures, May 29, 2001                 |   | (10,722  | )
| |                                          |   |          |  
| | Balance, May 31, 2001                    |   |         |  
| | Equity component of $86,000 convertible  |   |          |  
| | debentures, May 2002                     |   | 12,736   |  
| |                                          |   |          |  
| |                                          |   |          |  
| | Balance, May 31, 2002                    | $ | 12,736   |  
| |                                          |   |          |  

11

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|**7.** | Share capital:
      The authorized share capital of the Company consists
        of unlimited preference shares issuable in series and unlimited common
        shares.
      Common share transactions from inception are as follows:
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                    |            |  |   |           | 
| | ------------------------------------------------------------------ | ---------- |  | - | --------- | 
| |                                                                    | Shares     |  |   | Amount    | 
| |                                                                    |            |  |   |           | 
| |                                                                    |            |  |   |           | 
| | Shares issued for cash, fiscal 1992                                | 1,000      |  | $ | 10        | 
| | Shares issued on stock split, fiscal 1996                          | 2,199,000  |  |   |          | 
| | Shares issued for consulting services, fiscal 1996                 | 456,166    |  |   | 431,388   | 
| | Shares issued for cash, fiscal 1998                                | 825,000    |  |   | 275,000   | 
| | Shares issued on conversion of warrants, fiscal 1998               | 299,583    |  |   | 249,653   | 
| | Shares issued for debt and accrued interest, fiscal 1998           | 236,830    |  |   | 350,000   | 
| | Shares exchanged on reverse takeover, April 28, 1998, net          | 16,387,166 |  |   | 289,443   | 
| | Shares issued on conversion of RTICA warrants, fiscal 1998         | 20,250     |  |   |          | 
| | Shares issued on exercise of options, fiscal 1998                  | 20,000     |  |   | 4,000     | 
| | Shares issued on conversion of special warrants, fiscal
      1999 | 1,666,667  |  |   | 667,959   | 
| | Shares issued on exercise of options, fiscal 1999                  | 126,250    |  |   | 25,250    | 
| |                                                                    |            |  |   |           | 
| |                                                                    |            |  |   |           | 
| | Balance, May 31, 1999                                              | 22,237,912 |  |   | 2,292,703 | 
| | Shares issued on conversion of debenture,                          |            |  |   |           | 
| | December 21, 1999                                                  | 2,727,723  |  |   | 1,605,248 | 
| | Shares issued on exercise of options, October 26, 1999             | 75,000     |  |   | 33,750    | 
| | Shares issued on exercise of options, November 26, 1999            | 125,000    |  |   | 25,000    | 
| | Shares issued for cash, May 31, 2000                               | 2,807,500  |  |   | 1,657,104 | 
| |                                                                    |            |  |   |           | 
| |                                                                    |            |  |   |           | 
| | Balance, May 31, 2000                                              | 27,973,135 |  |   | 5,613,805 | 
| | Shares issued on exercise of share purchase warrants,              |            |  |   |           | 
| | June 30, 2000                                                      | 850,418    |  |   | 553,541   | 
| | Shares issued on conversion of special warrants,                   |            |  |   |           | 
| | October 15, 2000                                                   | 4,033,333  |  |   | 2,202,700 | 
| | Shares issued on exercise of options, October 31, 2000             | 15,000     |  |   | 3,000     | 
| | Shares issued on Registration Statement not being filed            |            |  |   |           | 
| | and declared effective by December 31,
      2000,                 |            |  |   |           | 
| | April 19, 2001                                                     | 280,750    |  |   |          | 
| | Shares issued on conversion of debentures, May 29, 2001            | 900,000    |  |   | 370,722   | 
| |                                                                    |            |  |   |           | 
| |                                                                    |            |  |   |           | 
| | Balance, May 31, 2001                                              | 34,052,636 |  |   | 8,743,768 | 
| | Shares issued on exercise of options, December 14, 2001            | 85,000     |  |   | 24,250    | 
| | Shares issued on exercise of options, January 25, 2002             | 577,500    |  |   | 115,500   | 
| | Shares issued on exercise of options, February 25, 2002            | 120,500    |  |   | 24,100    | 
| | Shares issued on exercise of options, March 12, 2002               | 179,000    |  |   | 35,800    | 
| | Shares issued on exercise of options, March 20, 2002               | 25,000     |  |   | 9,750     | 
| | Shares issued in connection with promissory note,                  |            |  |   |           | 
| | April 16, 2002                                                     | 80,000     |  |   | 33,600    | 
| |                                                                    |            |  |   |           | 
| |                                                                    |            |  |   |           | 
| | Balance, May 31, 2002                                              | 35,119,636 |  | $ | 8,986,768 | 
| |                                                                    |            |  |   |           | 

12

---

RTICA CORPORATION(A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|7. | Share capital (continued):
|-- | --------------------------
|   | (a)                       
|   |                           
|   | (b)                       

13

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued)
  (Expressed in Canadian dollars)

---

|7. | Share capital (continued):
|-- | --------------------------
|   | (c)                       
|   |                           
|   | (d)                       
|   |                           
|   | (e)                       
|   |                           
|   | (f)                       

14

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|7. | Share capital (continued):
|-- | --------------------------
|   | (g)                       

| |               |           |  |   |             |  |                  |  |            |  |   |         
| | ------------- | --------- |  | - | ----------- |  | ---------------- |  | ---------- |  | - | --------
| |               |           |  |   |             |  |                  |  | Weighted   |  |   |         
| |               |           |  |   |             |  |                  |  | average    |  |   | Weighted
| |               |           |  |   | Range of    |  |                  |  | remaining  |  |   | average 
| |               | Number    |  |   | exercise    |  | contractual      |  | exercise   |  |   |         
| | Year of issue | of shares |  |   | price       |  | Expiry           |  | life       |  |   | price   
| |               |           |  |   |             |  |                  |  |            |  |   |         
| |               |           |  |   |             |  |                  |  |            |  |   |         
| | 1998          | 813,250   |  | $ | 0.20        |  | April 29, 2003   |  | 0.92 years |  | $ | 0.20    
| | 2000          | 95,000    |  |   | 0.22 - 0.39 |  | February 8, 2003 |  |            |  |   |         
| |               |           |  |   |             |  | to March 2, 2003 |  | 0.75 years |  |   | 0.38    
| | 2001          | 1,115,000 |  |   | 0.53 - 0.75 |  | June 6, 2003 to  |  |            |  |   |         
| |               |           |  |   |             |  | March 30, 2004   |  | 1.43 years |  |   | 0.68    
| | 2002          | 350,000   |  |   | 0.48 - 0.70 |  | July 31, 2004 to |  |            |  |   |         
| |               |           |  |   |             |  | January 17, 2005 |  | 2.49 years |  |   | 0.56    
| |               |           |  |   |             |  |                  |  |            |  |   |         
| |               | 2,373,250 |  |   |             |  |                  |  |            |  |   |         
| |               |           |  |   |             |  |                  |  |            |  |   |         

| | The Company has established a stock option plan for
        its directors and officers and certain consultants and has reserved for
        issuance 3,094,500 common shares. Pursuant to the plan, stock options
        vest immediately and are exercisable for a period of between three and
        five years from the date of grant. Options are granted at the closing
        market price of the Company's common stock on the date of grant. At year
        end, 2,373,250 options (2001 - 3,115,250; 2000 - 2,015,250) are outstanding
        at exercise prices ranging from $0.20 to $0.75 per share with 1,213,250
        options (2001 - 1,990,250; 2000 - 1,705,250) issued to five directors
        and officers.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|7. | Share capital (continued):
|-- | --------------------------
|   |                           
|   |                           

| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| | ------------------------ | --------- | - | ---- | -------- | ---- | --------- | - | - | -------- |  | --------- | - | - | --------
| |                          | 2002      |   | 2001 |          | 2000
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| |                          |           |   |      | Weighted |      |           |   |   | Weighted |  |           |   |   | Weighted
| |                          | Number of |   |      | average  |      | Number of |   |   | average  |  | Number of |   |   | average 
| |                          | stock     |   |      | exercise |      | stock     |   |   | exercise |  | stock     |   |   | exercise
| |                          | options   |   |      | price    |      | options   |   |   | price    |  | options   |   |   | price   
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| | Outstanding, beginning   |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| | of year                  | 3,115,250 |   | $    | 0.38     |      | 2,015,250 |   | $ | 0.21     |  | 2,020,250 |   | $ | 0.20    
| | Granted                  | 350,000   |   |      | 0.56     |      | 1,115,000 |   |   | 0.68     |  | 120,000   |   |   | 0.38    
| | Exercised                | (987,000  | ) |      | 0.20     |      | (15,000   | ) |   | 0.20     |  | (125,000  | ) |   | 0.20    
| | Forfeited                | (105,000  | ) |      | 0.20     |      |          |   |   |         |  |          |   |   |        
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| | Outstanding, end of year | 2,373,250 |   |      | 0.49     |      | 3,115,250 |   |   | 0.38     |  | 2,015,250 |   |   | 0.21    
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| | Exercisable, end of year | 2,373,250 |   | $    | 0.49     |      | 3,115,250 |   | $ | 0.38     |  | 2,015,250 |   | $ | 0.21    
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| | Available for grant      | 678,500   |   |      |          |      | 173,500   |   |   |          |  | 488,500   |   |   |         
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         
| |                          |           |   |      |          |      |           |   |   |          |  |           |   |   |         

| | During 2002, the maximum number of shares issuable
        under the stock option plan was increased by 750,000 to 4,250,000.
| | -----------------------------------------------------------------------------------------------------------------------------

16

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|**8.** | Related party transactions:
      In the normal course of operations, the Company had
        the following transactions, which were measured at the exchange amount,
        with certain related parties:
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                          |                         |   |         |  |   |         |  |   |        
| | ------------------------ | ----------------------- | - | ------- |  | - | ------- |  | - | -------
| |                          | Nature of relationship  |   | 2002    |  |   | 2001    |  |   | 2000   
| |                          |                         |   |         |  |   |         |  |   |        
| |                          |                         |   |         |  |   |         |  |   |        
| | Sales and marketing      | Shareholder and officer | $ | 189,000 |  | $ | 174,000 |  | $ | 86,000 
| | Management fees          | Shareholders, officers  |   |         |  |   |         |  |   |        
| |                          | and directors           |   | 146,000 |  |   | 127,000 |  |   | 129,000
| | Development charges      | Shareholders, officer   |   |         |  |   |         |  |   |        
| |                          | and director            |   | 149,000 |  |   | 117,000 |  |   | 57,000 
| | Consulting               | Shareholders, officers  |   |         |  |   |         |  |   |        
| |                          | and directors           |   | 21,000  |  |   | 90,000  |  |   | 163,000
| | Professional fees        | Shareholder, officer    |   |         |  |   |         |  |   |        
| |                          | and director            |   | 27,000  |  |   | 69,000  |  |   | 26,000 
| | Purchase of fixed assets | Shareholder             |   |        |  |   |        |  |   | 330,000
| |                          |                         |   |         |  |   |         |  |   |        

| | Included in accounts payable and accrued liabilities
        are $192,000 (2001 - $18,000) owing to shareholders, officers and directors.
| | -----------------------------------------------------------------------------------------------------------------------------------------

|9. | Income taxes:
|-- | -------------
|   | (a)          

| |  |                                |   |            |   |   |            |   |   |            |  
| |  | ------------------------------ | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |  |                                |   | 2002       |   |   | 2001       |   |   | 2000       |  
| |  |                                |   |            |   |   |            |   |   |            |  
| |  | Long-term future tax assets:   |   |            |   |   |            |   |   |            |  
| |  | Non-capital loss carryforwards | $ | 2,304,000  |   | $ | 1,553,000  |   | $ | 1,085,000  |  
| |  | Research and development       |   |            |   |   |            |   |   |            |  
| |  | expenses                       |   | 171,000    |   |   | 101,000    |   |   | 51,000     |  
| |  | Fixed assets                   |   | 102,000    |   |   | 67,000     |   |   | 29,000     |  
| |  | Reserve for repayment of       |   |            |   |   |            |   |   |            |  
| |  | government assistance          |   | 134,000    |   |   | 60,000     |   |   |           |  
| |  | Investment tax credits         |   | 112,000    |   |   | 44,000     |   |   | 12,000     |  
| |  | Deferred financing costs       |   | 11,000     |   |   | 35,000     |   |   | 74,000     |  
| |  | Cumulative eligible capital    |   | 1,000      |   |   | 1,000      |   |   | 1,000      |  
| |  |                                |   |            |   |   |            |   |   |            |  
| |  |                                |   | 2,835,000  |   |   | 1,861,000  |   |   | 1,252,000  |  
| |  | Valuation allowance            |   | (2,835,000 | ) |   | (1,861,000 | ) |   | (1,252,000 | )
| |  |                                |   |            |   |   |            |   |   |            |  
| |  |                                | $ |           |   | $ |           |   | $ |           |  
| |  |                                |   |            |   |   |            |   |   |            |  

17

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|9. | Income taxes (continued):
|-- | -------------------------
|   |                          
|   |                          
|   |                          
|   | (b)                      

| |                                               |   |           | 
| | --------------------------------------------- | - | --------- | 
| | Non-capital losses:                           |   |           | 
| | 2003                                          | $ | 200,000   | 
| | 2004                                          |   | 210,000   | 
| | 2005                                          |   | 813,000   | 
| | 2006                                          |   | 349,000   | 
| | 2007                                          |   | 1,025,000 | 
| | 2008                                          |   | 2,400,000 | 
| | 2009                                          |   | 2,553,000 | 
| | 2010                                          |   | 71,000    | 
| | 2011                                          |   | 61,000    | 
| |                                               |   |           | 
| | Research and development expenses - no expiry |   | 571,000   | 
| |                                               |   |           | 

18

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|10. | Loss per share:
      Loss per share figures are calculated using the weighted
        average number of common shares outstanding calculated on a daily basis.
        The effect of the exercise of the special warrants, share purchase options
        and share purchase warrants and the conversion of the convertible debenture
        would not have had a dilutive effect on the years presented. The following
        are items which could potentially dilute basic earnings per share in the
        future:
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|11. | Consolidated statements of cash flows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                                      |                     |        |  |                |         |  |   |           |  |   |              
| | ------------------------------------ | ------------------- | ------ |  | -------------- | ------- |  | - | --------- |  | - | -------------
| |                                      |                     |        |  |                |         |  |   |           |  |   | Cumulative   
| |                                      |                     |        |  |                |         |  |   |           |  |   | period from  
| |                                      |                     |        |  |                |         |  |   |           |  |   | June 13, 1991
| |                                      | Years ended May 31, |        |  | (inception) to
| |                                      |                     | 2002   |  |                | 2001    |  |   | 2000      |  |   | May 31, 2002 
| |                                      |                     |        |  |                |         |  |   |           |  |   |              
| |                                      |                     |        |  |                |         |  |   |           |  |   |              
| | Supplemental cash flow information:  |                     |        |  |                |         |  |   |           |  |   |              
| | Interest paid                        | $                   |       |  | $              | 18,464  |  | $ | 10,214    |  | $ | 65,216       
| | Supplemental disclosures relating    |                     |        |  |                |         |  |   |           |  |   |              
| | to non-cash financing activities:    |                     |        |  |                |         |  |   |           |  |   |              
| | Conversion of debentures             |                     |       |  |                | 370,722 |  |   | 1,605,248 |  |   | 1,975,970    
| | Other non-cash share
      issuances |                     | 33,600 |  |                |        |  |   |          |  |   | 1,070,831    
| |                                      |                     |        |  |                |         |  |   |           |  |   |              

|12. | Commitments and contingencies:
|--- | ------------------------------
|    | (a)                           

19

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued)
  (Expressed in Canadian dollars)

---

|12. | Commitments and contingencies (continued):
|--- | ------------------------------------------
|    | (b)                                       

| |      |   |        
| | ---- | - | -------
| | 2003 | $ | 87,500 
| | 2004 |   | 90,000 
| |      |   |        
| |      |   |        
| |      | $ | 177,500
| |      |   |        

|        | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | On June 21, 1999, the Company signed
        a contract with the National Research Council Canada which is to perform
        certain research and development projects on the Company's behalf. The
        Company is committed to pay $745,000 to June 1, 2002. The Company is eligible
        to be reimbursed up to 40% of total expenditures incurred, to a maximum
        of $200,000. For the year ended May 31, 2002, the Company has paid the
        National Research Council Canada $75,000 (2001 - $385,000; 2000 - $115,000)
        and $170,000 (2001 - nil; 2000 - nil) is included in accounts payable
        and accrued liabilities. In addition, the Company has been reimbursed
        for $14,000 (2001 - $156,000; 2000 - $30,000), of which nil (2001 -$10,000;
        2000 - nil) is included in other receivables under the contract.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|**13.** | Differences between Canadian and United
        States generally accepted accounting principles:
      These consolidated financial statements have been prepared
        in accordance with accounting principles generally accepted in Canada
        ("Canadian GAAP") which differ in certain respects with those principles
        and practices that the Company would have followed had its financial statements
        been prepared in accordance with accounting principles and practices generally
        accepted in the United States ("U.S. GAAP").

20

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|13. | Differences between Canadian and United
        States generally accepted accounting principles (continued):
      The Company's accounting principles generally accepted
        in Canada for measurement of the consolidated balance sheets and the consolidated
        statements of operations and deficit and cash flows differ from accounting
        principles generally accepted in the United States as follows:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                          

21

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|13. | Differences between Canadian and United States
      generally accepted accounting principles (continued):
|--- | ----------------------------------------------------------------------------------------------------------
|    | (b)                                                                                                       
|    |                                                                                                           
|    | (c)                                                                                                       
|    |                                                                                                           
|    | (d)                                                                                                       

22

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|13. | Differences between Canadian and United States
      generally accepted accounting principles (continued):
|--- | ----------------------------------------------------------------------------------------------------------
|    | (e)                                                                                                       
|    |                                                                                                           
|    | (f)                                                                                                       

23

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued)
  (Expressed in Canadian dollars)

---

|13. | Differences between Canadian and United States generally
      accepted accounting principles (continued):
|--- | ----------------------------------------------------------------------------------------------------------
|    |                                                                                                           
|    |                                                                                                           
|    |                                                                                                           
|    | The impact of the items noted above on the financial statements
      is as follows:                      

| |                                               |   |            |   |   |            |   |   |            |  
| | --------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                               |   | 2002       |   |   | 2001       |   |   | 2000       |  
| |                                               |   |            |   |   |            |   |   |            |  
| |                                               |   |            |   |   |            |   |   |            |  
| | Loss for the year per Canadian GAAP           | $ | (3,102,373 | ) | $ | (2,964,713 | ) | $ | (1,305,407 | )
| | Goodwill amortization (note 13(d))            |   | 26,363     |   |   | 26,364     |   |   | 26,364     |  
| | Compensation expense from stock options       |   |            |   |   |            |   |   |            |  
| | issued to non-employees (note 13(a))          |   | (133,164   | ) |   | (675,565   | ) |   | (45,950    | )
| | Additional interest resulting from beneficial |   |            |   |   |            |   |   |            |  
| | conversion feature on convertible debt        |   |            |   |   |            |   |   |            |  
| | (note 13(b))                                  |   |           |   |   |           |   |   | (180,000   | )
| |                                               |   |            |   |   |            |   |   |            |  
| | Loss for the year per U.S. GAAP               | $ | (3,209,174 | ) | $ | (3,613,914 | ) | $ | (1,504,993 | )
| |                                               |   |            |   |   |            |   |   |            |  
| |                                               |   |            |   |   |            |   |   |            |  
| | Basic loss per share per U.S. GAAP            | $ | (0.13      | ) | $ | (0.16      | ) | $ | (0.11      | )
| |                                               |   |            |   |   |            |   |   |            |  
| |                                               |   |            |   |   |            |   |   |            |  
| | Weighted average number of shares             |   |            |   |   |            |   |   |            |  
| | outstanding per U.S. GAAP                     |   | 25,134,655 |   |   | 22,050,619 |   |   | 14,194,298 |  
| |                                               |   |            |   |   |            |   |   |            |  

24

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RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|**13.** | Differences between Canadian and United States generally accepted accounting
      principles (continued):
|------- | ----------------------------------------------------------------------------------------------------------

| |                                                         |   |           |   |   |           |  
| | ------------------------------------------------------- | - | --------- | - | - | --------- | -
| |                                                         |   | 2002      |   |   | 2001      |  
| |                                                         |   |           |   |   |           |  
| |                                                         |   |           |   |   |           |  
| | Total convertible debentures per Canadian GAAP          | $ | 73,264    |   | $ |          |  
| | Reclass equity component of convertible debentures      |   | 12,736    |   |   |          |  
| |                                                         |   |           |   |   |           |  
| |                                                         |   |           |   |   |           |  
| | Total convertible debentures per U.S. GAAP              | $ | 86,000    |   | $ |          |  
| |                                                         |   |           |   |   |           |  
| |                                                         |   |           |   |   |           |  
| | Fair value of stock options issued to non-employees     | $ | 1,028,548 |   | $ | 1,100,947 |  
| | Beneficial conversion feature of convertible debentures |   | 180,000   |   |   | 180,000   |  
| |                                                         |   |           |   |   |           |  
| |                                                         |   |           |   |   |           |  
| | Other paid-in capital, end of the year per U.S. GAAP    | $ | 1,208,548 |   | $ | 1,280,947 |  
| |                                                         |   |           |   |   |           |  
| |                                                         |   |           |   |   |           |  
| | Share capital, end of the year per Canadian GAAP        | $ | 8,986,768 |   | $ | 8,743,768 |  
| | Additional shares issued (note 13(c))                   |   | 193,718   |   |   | 193,718   |  
| | Elimination of goodwill                                 |   | (108,938  | ) |   | (108,938  | )
| | Fair value of stock options exercised                   |   | 218,376   |   |   | 12,813    |  
| |                                                         |   |           |   |   |           |  
| | Share capital, end of the year per U.S. GAAP            | $ | 9,289,924 |   | $ | 8,841,361 |  
| |                                                         |   |           |   |   |           |  

| | The consolidated statements of deficit under U.S. GAAP are as follows:
| | ----------------------------------------------------------------------

| |                                          |   |             |   |   |            |   |   |            |  
| | ---------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                          |   | 2002        |   |   | 2001       |   |   | 2000       |  
| |                                          |   |             |   |   |            |   |   |            |  
| |                                          |   |             |   |   |            |   |   |            |  
| | Deficit, beginning of year,              |   |             |   |   |            |   |   |            |  
| | per Canadian GAAP                        | $ | (7,305,436  | ) | $ | (4,340,723 | ) | $ | (3,035,316 | )
| | Cumulative adjustments:                  |   |             |   |   |            |   |   |            |  
| | Goodwill amortization                    |   | 82,574      |   |   | 56,210     |   |   | 29,846     |  
| | Compensation expense
      from          |   |             |   |   |            |   |   |            |  
| | stock
      options issued to            |   |             |   |   |            |   |   |            |  
| | non-employees                            |   | (1,113,760  | ) |   | (438,195   | ) |   | (392,245   | )
| | Additional interest
      resulting from |   |             |   |   |            |   |   |            |  
| | beneficial
      conversion feature      |   |             |   |   |            |   |   |            |  
| | on
      convertible debt                |   | (180,000    | ) |   | (180,000   | ) |   |           |  
| | Additional shares issued (note 13(c))    |   | (193,718    | ) |   | (193,718   | ) |   |           |  
| | Loss for the year per U.S. GAAP          |   | (3,209,174  | ) |   | (3,613,914 | ) |   | (1,504,993 | )
| |                                          |   |             |   |   |            |   |   |            |  
| |                                          |   |             |   |   |            |   |   |            |  
| | Deficit, end of year, per U.S. GAAP      | $ | (11,919,514 | ) | $ | (8,710,340 | ) | $ | (4,902,708 | )
| |                                          |   |             |   |   |            |   |   |            |  

25

---

RTICA CORPORATION 
  (A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements (continued) 
  (Expressed in Canadian dollars)

---

|**14.** | Subsequent events:
      On October 31, 2002, RTICA Inc. received subscription
        for issuance of $2.2 million in 12% convertible debentures due in 2007.
        Such debentures are subject to a general security agreement and are convertible
        at the option of the holder at any time and subject to certain conditions
        into units consisting of one voting preference share and one warrant to
        purchase one additional preference share at a price of $0.30 per unit.
        Each warrant entitles the holder to purchase one additional preference
        share at $0.40 per share. The debentures are subject to a number of other
        conditions including, for example, reduction of interest on the occurrence
        of certain events and take over protection provisions. The preference
        shares are also accompanied by a right to exchange them on a one-for-one
        basis with common shares of the Company. The transaction is scheduled
        to close on November 1, 2002. The net proceeds on issuance of the debentures
        are expected to amount to approximately $2 million.
      The Company has also arranged for a private placement
        of 1,000,000 units at $0.30 per unit, each unit consisting of one common
        share and one warrant to purchase one-half of a common share at $0.40
        per share for a period of 24 months from date of issuance. The transaction
        will close immediately after closure of the matter referred to above.
        The net proceeds on the private placement are expected to amount to $280,000.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

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