U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


     [ X ] QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

     For the quarterly period ended May 31, 2002

     [ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

     For the transition period from        to

                           Commission File No. 0-31343

                                 OZOLUTIONS INC.
        (Exact name of small business issuer as specified in its charter)

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

         30 Denver Crescent, Suite 200, Toronto, Ontario, Canada M2J 1G8
                    (Address of principal executive offices)

                                 (416) 490-0254
                           (Issuer's telephone number)

                                 Not Applicable
      (Former name, address and fiscal year, if changed since last report)

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

APPLICABLE  ONLY TO  ISSUERS  INVOLVED  IN  BANKRUPTCY  PROCEEDINGS  DURING  THE
PRECEDING FIVE YEARS:

Check whether the registrant has filed all documents and reports  required to be
filed by  Sections  12,  13,  or 15(d) of the  Exchange  Act  subsequent  to the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity,  as of  the  latest  practicable  date:  At May  31,  2002,  there  were
25,724,577 shares of common stock outstanding.





<PAGE>

                                   FORM 10-QSB
                                OZOLUTIONS, INC.

                                      INDEX
                                                                        Page

PART I.       Item 1. Financial Information                              3

              Independent Accountants' Report                            3

              Balance Sheets at May 31, 2002 (Unaudited)                 4
                and August 31, 2001

              Statements of Changes in Stockholders' Deficit             5
                for the Nine Months Ended May 31, 2002
                and 2001 (Unaudited)

              Statements of Operations for the Three and Nine            6
                Months Ended May 31, 2002 and 2001 (Unaudited)

              Statements of Cash Flows for the Six Months Ended          7
                May 31, 2002 and 2001 (Unaudited)

              Notes to Financial Statements                              9

              Item 2. Management's Discussion and Analysis or           14
              Plan of Operation

PART II.      Other Information                                         17

              Item 1. Legal Proceedings                                 17

              Item 2. Changes in Securities and Use of Proceeds         18

Signatures                                                              18



                                       2
<PAGE>


                                     Part I
                          Item 1. Financial Information



            INDEPENDENT ACCOUNTANT'S REPORT


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


     We have reviewed the  accompanying  balance  sheets of  Ozolutions  Inc. (A
Delaware  Corporation) as of May 31, 2002, the related  statements of operations
for the three and nine months ended May 31, 2002 and 2001, and the statements of
changes in  stockholders'  equity  (deficit)  and cash flows for the nine months
ended May 31, 2002 and 2001. These financial  statements are the  responsibility
of the Company's management.

     We conducted our review in accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial data and of making inquiries of persons  responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing  standards  generally  accepted in the United States of
America,  the objective of which is the  expression of an opinion  regarding the
financial  statements taken as a whole.  Accordingly,  we do not express such an
opinion.

     Based on our review,  we are not aware of any material  modifications  that
should  be  made  to  such  financial  statements  in  order  for  them to be in
conformity  with the  accounting  principles  generally  accepted  in the United
States of America.

     We have previously audited, in accordance with auditing standards generally
accepted in the United States of America,  the balance sheet of Ozolutions  Inc.
as of August 31, 2001 (presented herein),  and the related statements of changes
in stockholders'  deficit (presented  herein),  operations,  and cash flows (not
presented herein) for the year then ended; and in our report,  dated October 26,
2001, we expressed an unqualified opinion on those financial statements.  In our
opinion,  the  information  set forth in the  accompanying  balance  sheet as of
August 31, 2001, and the related statement of stockholders' deficit for the year
then ended, is fairly stated, in all material respects.  No auditing  procedures
have been performed subsequent to the date of our report.

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



/s/ Rotenberg & Co., LLP

Rotenberg & Co., LLP
Rochester, New York
  July 2, 2002

                                       3
<PAGE>



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

BALANCE SHEETS
--------------------------------------------------------------------------------
                                                             (U.S. Dollars)
                                                       (Unaudited)        August
                                                         May 31,            31,
                                                           2002            2001
--------------------------------------------------------------------------------
ASSETS

Current Assets
Cash and Cash Equivalents                               $ 51,755         $   --
Accounts Receivable                                       92,232             --
Other Receivables                                          7,774             --
Inventory                                                 69,150             --
Prepaid Expenses                                          70,000             --
--------------------------------------------------------------------------------
Total Current Assets                                     290,911             --

Other Assets
Marketing Rights - Net of Accumulated Amortization       215,689        841,485
Deposits                                                 108,684         56,292
--------------------------------------------------------------------------------
Total Assets                                           $ 615,284      $ 897,777
--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts Payable                                         $ 3,850      $  40,711
Deferred Revenue                                          34,000         34,000
Due to 1421209 Ontario Limited - Due Within One Year          --      1,000,000
Due to Director                                           44,828         72,317
Due to Stockholders                                       47,490        123,848
--------------------------------------------------------------------------------
Total Liabilities                                        130,168      1,270,876
--------------------------------------------------------------------------------
Stockholders' Equity (Deficit)
Common Stock:  $.001 Par; 50,000,000 Shares Authorized;
               25,724,577 and 19,799,133 Issued and
               Outstanding, Respectively                  25,724         19,799
Additional Paid-In Capital                             1,304,197        238,496
Accumulated Deficit                                     (844,805)      (631,394)
--------------------------------------------------------------------------------
Total Stockholders' Equity (Deficit)                     485,116       (373,099)
--------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity (Deficit)   $ 615,284      $ 897,777
--------------------------------------------------------------------------------

    The accompanying notes are an integral part of this financial statement.
                          See Accountants Review Report

                                        4
<PAGE>



OZOLUTIONS INC.
(A DELAWARE CORPORATION)
Toronto, Ontario Canada
<TABLE>
<S>                                                   <C>           <C>        <C>          <C>         <C>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE NINE MONTHS ENDED MAY 31, 2002 AND 2001 (UNAUDITED)
  AND FOR THE YEAR ENDED AUGUST 31, 2001
---------------------------------------------------------------------------------------------------------------------
                                                                               (U.S. Dollars)

                                                                               Additional                    Total
                                                          Number      Common      Paid-In   Accumulated  Stockholders'
                                                       of Shares      Stock       Capital     Deficit   Equity (Deficit)
---------------------------------------------------------------------------------------------------------------------
Balance - August 31, 2000                             18,999,133    $ 18,999    $  33,217     $(88,975)    $(36,759)

Consulting Services Contributed by
Officers/Directors/Consultants                                --          --       33,000           --       33,000
Net Loss for the Period (Unaudited)                           --          --           --     (281,274)    (281,274)
---------------------------------------------------------------------------------------------------------------------
Balance - May 31, 2001 (Unaudited)                    18,999,133      18,999       66,217     (370,249)    (285,033)

Consulting Services Contributed by
Officers/Directors/Consultants                                --          --        9,000           --        9,000
Shares Issued to Advisors in Exchange for Services       800,000         800      127,200           --      128,000
Stock Options Granted - Compensation for Services
  Rendered                                                    --          --       20,429           --       20,429
Capital Contribution - Interest Expense                       --          --       15,650           --       15,650
Net Loss for the Period (Unaudited)                           --          --           --     (261,145)    (261,145)
---------------------------------------------------------------------------------------------------------------------
Balance - August 31, 2001                             19,799,133      19,799      238,496     (631,394)    (373,099)

Shares Issued and Stock Options Granted as
Consideration for
  Acquisition of Marketing Rights                         25,000          25      237,975           --      238,000
Consulting Services Contributed by
Officers/Directors/Consultants                                --          --        6,000           --        6,000
Consulting Services Paid by Shareholders on Behalf
of the Corporation                                            --          --      135,000           --      135,000
Shares Issued to Consultants in Exchange for Services    700,000         700       89,300           --       90,000
Shares Issued under Stock Purchase Agreement           5,200,444       5,200      578,504           --      583,704
Stock Options Granted - Compensation for Services
  Rendered                                                    --          --       11,750           --       11,750
Capital Contribution - Interest Expense                       --          --        7,172           --        7,172
Net Loss for the Period (Unaudited)                           --          --           --     (213,411)    (213,411)
---------------------------------------------------------------------------------------------------------------------
Balance - May 31, 2002 (Unaudited)                    25,724,577    $ 25,724   $1,304,197    $(844,805)   $ 485,116
=====================================================================================================================
</TABLE>
    The accompanying notes are an integral part of this financial statement.
                          See Accountants Review Report

                                        5

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

<TABLE>
<S>                              <C>             <C>         <C>            <C>
STATEMENTS OF OPERATIONS (UNAUDITED)
-------------------------------------------------------------------------------------
                                                  (U.S. Dollars)
                                Three Months Ended May      Nine Months Ended May
                                          31,                        31,
                               --------------------------- --------------------------

                                    2002          2001         2002          2001
-------------------------------------------------------------------------------------
Revenues, Net                    $  89,574       $    --     $  89,574      $    --

Cost of Goods Sold                  62,576            --        62,576           --
-------------------------------------------------------------------------------------
Gross Profit                        26,998            --        26,998           --
-------------------------------------------------------------------------------------
Expenses
Marketing Rights                    64,874        39,372       151,053      118,116
Consulting Fees                    126,260        28,376       236,148       98,938
Territory Fee                           --            --         5,333           --
General and Administrative          27,817        20,256        77,960       64,222
Interest Expense                     1,852            --         7,172           --
-------------------------------------------------------------------------------------
Total Expenses                     220,803        88,004       477,666      281,276
-------------------------------------------------------------------------------------
Loss Before Provision for Taxes   (193,805)      (88,004)     (450,668)    (281,276)

Provision for Taxes                     --            --            --           --
-------------------------------------------------------------------------------------
Loss from Continuing Operations   (193,805)      (88,004)     (450,668)    (281,276)

Extraordinary Items
Gain from Cancellation of
  Marketing Rights Agreement,
  Net of Income Tax of $-0-        237,257            --       237,257           --
-------------------------------------------------------------------------------------
Net Income (Loss) for the
Period                           $  43,452    $  (88,004)   $ (213,411)  $ (281,276)
=====================================================================================
Weighted Average Number of
  Common Shares Outstanding
  - Basic and Diluted           23,323,873    18,999,133    21,148,867   18,999,133
=====================================================================================
Income (Loss) per Common Share
  - Basic and Diluted:
      Loss from Continuing
        Operations               $   (0.01)    $    0.00     $   (0.02)   $   (0.01)
      Extraordinary Items             0.01          0.00          0.01         0.00
-------------------------------------------------------------------------------------
Net Income (Loss)                $    0.00     $    0.00     $   (0.01)   $   (0.01)
=====================================================================================
</TABLE>

    The accompanying notes are an integral part of this financial statement.
                          See Accountants Review Report

                                        6

<PAGE>


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

<TABLE>
<S>                                                         <C>           <C>
STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------------------------------------------

                                                                 (U.S. Dollars)
Nine Months Ended May 31,                                      2002          2001
-------------------------------------------------------------------------------------

Cash Flows from Operating Activities

Net Loss for the Period                                     $(213,411)    $(281,276)

Non-Cash Adjustments:
Amortization of Marketing Rights                              101,053       118,116
Contributed Services                                            6,000        33,000
Shares Issued to Consultants                                   90,000            --
Compensation Expense                                           11,750            --
Interest on Loans                                               7,172            --
Consulting Services Paid by Shareholders                      135,000            --
Gain from Cancellation of Marketing Rights Agreement         (237,257)           --

Changes in Assets and Liabilities:
Accounts Receivable                                           (92,232)           --
Other Receivables                                              (7,774)           --
Inventory                                                     (69,150)           --
Prepaid Expenses                                              (70,000)           --
Deposits                                                      (52,392)      (56,292)
Accounts Payable                                              (36,861)       16,957
Deferred Revenue                                                   --        33,000
-------------------------------------------------------------------------------------
Net Cash Flows from Operating Activities                     (428,102)     (136,495)
-------------------------------------------------------------------------------------
Cash Flows from Investing Activities                               --            --
-------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Due to Director                                               (27,489)       54,503
Due to Stockholders                                           (76,358)       82,052
Proceeds from Stock Purchase Agreement                        583,704            --
-------------------------------------------------------------------------------------
Net Cash Flows from Financing Activities                      479,857       136,555
-------------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents                      51,755            60

Cash and Cash Equivalents - Beginning of Period                    --            --
-------------------------------------------------------------------------------------
Cash and Cash Equivalents - End of Period                    $ 51,755        $   60
=====================================================================================
                                                                         -continued -
</TABLE>

    The accompanying notes are an integral part of this financial statement.
                          See Accountants Review Report

                                        7

<PAGE>


OZOLUTIONS INC.
(A DELAWARE CORPORATION)
Toronto, Ontario Canada
<TABLE>
<S>                                                        <C>                <C>
STATEMENTS OF CASH FLOWS (UNAUDITED) - continued
-------------------------------------------------------------------------------------
                                                                  (U.S. Dollars)

Nine Months Ended May 31,                                       2002          2001
-------------------------------------------------------------------------------------
Supplemental Disclosures
-------------------------------------------------------------------------------------
Interest Paid                                              $       --         $  --
Income Taxes Paid                                          $       --         $  --
=====================================================================================
Non-Cash Investing and Financing Activities
-------------------------------------------------------------------------------------
Write-Off of Marketing Rights, Net of Accumulated
Amortization                                               $ (762,743)        $  --
Cancellation of Obligation to 1421209 Ontario Limited       1,000,000            --
-------------------------------------------------------------------------------------
Gain from Cancellation of Marketing Rights Agreement       $  237,257         $  --
=====================================================================================
Acquisition of Marketing Rights                            $  238,000         $  --
Purchase Price Paid via Issuance of Common Stock                  (25)           --
Purchase Price Paid via Granting of Stock Options            (237,975)           --
-------------------------------------------------------------------------------------
Total Cash Paid for Marketing Rights                       $       --         $  --
=====================================================================================
</TABLE>

    The accompanying notes are an integral part of this financial statement.
                          See Accountants Review Report

                                        8

<PAGE>

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


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



Note A - Basis of Presentation
     The  condensed  financial  statements of  Ozolutions  Inc. (the  "Company")
included  herein have been prepared by the Company,  without audit,  pursuant to
the rules and regulations of the Securities and Exchange Commission (the "SEC").
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in conjunction with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company  believes that the  disclosures are adequate to make the information
presented not misleading. These condensed financial statements should be read in
conjunction with the annual audited  financial  statements and the notes thereto
included in the Company's Form 10-KSB, and other reports filed with the SEC.

     The  accompanying   unaudited  interim  financial  statements  reflect  all
adjustments  of a normal  and  recurring  nature  which are,  in the  opinion of
management,  necessary  to present  fairly the  financial  position,  results of
operations and cash flows of the Company for the interim periods presented.  The
results of operations  for these periods are not  necessarily  comparable to, or
indicative  of,  results of any other  interim  period of or for the fiscal year
taken as a whole.  Factors that affect the  comparability of financial data from
year to year and for comparable interim periods include  non-recurring  expenses
associated  with the Company's costs incurred to raise capital and stock options
and awards.  Certain  financial  information  that is not  required  for interim
financial reporting purposes has been omitted.

        Reclassifications
     Certain amounts in the prior year financial statements have been classified
to conform with the current year presentation.

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

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

                                                                   - continued -
                                       9

<PAGE>


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


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

Note C - Marketing Rights - continued

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

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

     The sum of  $550,000  was payable on or before the 90th day  following  the
qualification  for trading of  Ozolutions  Inc.  common  shares on a  recognized
United States  Securities  Exchange but in no case later than June 30, 2001, and
the delivery of 8,000,000  common  shares of stock were payable on or before the
30th day following the  qualification  for trading of the Ozolutions Inc. common
shares on a recognized United States Securities  Exchange,  but in no case later
than April 30, 2001.  The sum of $250,000 was payable on or before the 150th day
following the  qualification for trading of the Ozolutions Inc. common shares on
a recognized United States Securities Exchange, but in no case later than August
31, 2001.  The  remainder  of the  purchase  price of $200,000 was payable on or
before the 180th day following the  qualification  for trading of the Ozolutions
Inc. common shares on a recognized United States Securities Exchange,  but in no
case later than September 30, 2001.

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

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

                                                                   - continued -
                                       10

<PAGE>


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


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

Note C - Marketing Rights - continued

     ELCE International Inc.
     The Company  purchased the  exclusive  marketing  rights to distribute  the
water activator  products of "ELCE  International  Inc." ("ELCE") in Canada from
ELCE  International  Inc. The acquisition  occurred on January 15, 2002 in which
Ozolutions Inc.  received the rights to begin  distributing the products of ELCE
International Inc. For the rights received, the Company issued 25,000 restricted
shares of Ozolutions Inc. common stock and granted options to purchase  500,0000
common shares at $0.50 per share. The options have a one-year term.

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

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

     The  agreement is for a one-year  term with an automatic  renewal for three
additional years if all terms of the agreement are fulfilled. Such terms require
the purchase of a minimum of ten units every month for the first year with a 30%
increase in the minimum purchase  commitment amount each year. The Company is in
compliance with all terms of the agreement as of May 31, 2002.

Note D - Consulting and Advisory Agreements
     On June 5, 2001,  the Company  entered into  advisory  agreements  with the
firms of David  Michael LLC and Feng Shui  Consulting,  Inc.  The purpose of the
advisory  agreements  was to assist the  Company in  effecting  the  purchase of
businesses and assets relative to its business and growth strategy,  acquisition
of other operations or businesses,  general  business and financial  consulting,
and the  introduction  of the Company to public  relations firms and consultants
and others that may assist the Company in its plans. For the services  described
in  their  respective  agreements,  each  of  the  advisors  were  to be  issued
restricted  shares of Ozolutions  Inc.  common stock on the following  schedule:
June 5, 2001 - 400,000 shares;  September 5, 2001 - 200,000 shares;  December 5,
2001 - 200,000  shares;  March 5, 2002 - 150,000  shares.  The  agreements  were
subsequently  cancelled on February 19, 2002.  On June 5, 2001,  400,000  shares
were issued to each of the firms. The Company charged  operations in 2001 in the
amount of $128,000 for the fair value of the services rendered.  A fair value of
the common stock awarded  could not be  determined at the date of the award,  as
the stock had not begun  trading.  No  additional  shares  will be  issued.  See
additional discussion in Note H.

                                                                   - continued -

                                       11
<PAGE>


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


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

Note D - Consulting and Advisory Agreements - continued

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

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

     On March 28, 2002, the Company entered into a strategic business consulting
and marketing  services agreement with Monique Del Medico in Canada. The purpose
of the  agreement is to assist the Company  with  marketing,  distribution,  and
product  promotion  strategies with industrial,  commercial,  and  institutional
customers.  The  agreement  is for nine  months,  commencing  April 1,  2002 and
terminating  December 31,  2002.  In exchange  for these  services,  the Company
issued 700,000 shares of Ozolutions Inc.  common stock.  The Company has charged
operations for $20,000 for the fair value of services rendered, recorded $70,000
as a prepaid for the fair value of future services, and charged common stock and
additional paid-in-capital for $700 and $89,300, respectively.

Note E - Stock Purchase Agreement
     The Company entered into a Stock Purchase Agreement on October 1, 2001 with
First Chartered Capital Corporation,  Inc. ("First Chartered").  First Chartered
purchases  stock  of the  Company  for 30% of the  market  value  on the date of
purchase.  Through May 31, 2002,  5,200,444  restricted  common shares have been
purchased by First Chartered with the Company receiving $583,704.

                                       12

<PAGE>


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


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

Note F - Proposed Acquisitions
     In May 2002, the Company signed a letter of intent to acquire the assets of
Electrical  Systems  Engineering  ("ESE") and 100% of the outstanding common and
preferred shares of Specdex Inc. The Company will pay  approximately  $1,500,000
in cash to acquire the assets of ESE. The Company  plans to obtain the necessary
advance of funds for the  purchase  by posting as  collateral,  or selling to an
agreed upon  financial  institution  arranged by Specdex  Inc.,  up to 8,000,000
common  shares of the Company.  Upon  completion of the  acquisition  of the ESE
assets, the Company will issue 4,536,500 restricted common shares to acquire all
outstanding common and preferred shares of Specdex Inc. Specdex Inc. will become
a wholly owned  subsidiary of the Company,  with Specdex Inc. fully  responsible
for managing the ESE division. If the Specdex Inc. acquisition is not completed,
the ESE  acquisition  will revert to Specdex Inc. Upon completion of the Specdex
Inc. acquisition,  Patent #P190-1 APP 3-60/307,896 (Business Process Modeling of
Wholesale  Procurement),  whose  rights are held by William A.  Hurley,  will be
assigned to Specdex Inc.  and  subsequently  assigned to  Ozolutions  Inc.  upon
completion of certain  compensation to William A. Hurley by Specdex Inc. covered
by an  existing  agreement.  Completion  of these  transactions  is subject to a
number of  contingencies,  including,  completion of due diligence review of the
parties involved,  negotiation of definitive agreements between the parties, and
arranging for the financing  required to pay the consideration for the companies
and assets to be acquired.

Note G - Going Concern
     The Company's financial statements have been presented on the basis that it
is a going  concern,  which  contemplates  the  realization  of  assets  and the
satisfaction  of liabilities  in the normal course of business.  The Company has
reported net losses of $844,805  through May 31, 2002. As a result,  there is an
accumulated deficit of $844,805 at May 31, 2002.

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

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

     In June 2002,  Chapman,  Spira & Carson  LLC made a demand for  arbitration
through the  American  Arbitration  Association  as  provided  in the  agreement
claming $50,000 in fees, plus nine per cent interest, and 200,0000 shares of the
Company's  common  stock.  Management  believes  the suit is  without  merit and
intends  to  vigorously  defend  its  position.  Due  to  uncertainties  in  the
arbitration  process,  management is unable to estimate the potential  financial
impact of these  proceedings.  Accordingly,  no provision  for possible loss has
been made in these financial statements.

                                       13

<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation

     Ozolutions  Inc. is an  international  marketer  and  distributor  of water
purification  systems using two  distinctive  water  treatment  technologies  --
ozonation and activated water. The strategy for both  technologies is based on a
"chemical free" approach to water treatment to capitalize on growing  regulatory
and public resistance to the continued introduction of persistent chemicals into
the  environment.  The  markets  we are  primarily  targeting  are  Mexico,  the
Caribbean Zone,  including  Panama,  Costa Rica,  Jamaica and Ecuador as well as
Ontario Canada.

Acquisition of Distribution Rights of Hankin Atlas Ozone Systems, Ltd. Products

     In June 2000,  Ozolutions  acquired  the  marketing  rights to Hankin Atlas
Ozone  Systems,  Ltd.  ("Hankin")  products  from  1421209  Ontario  Limited for
8,000,000 shares of Ozolutions common stock,  $17,217 cash paid at closing,  and
an additional $1,000,000 payable in installments.

     Ozolutions was originally required to make a payment of $550,000 to 1421209
Ontario  Limited no later than November 21, 2000. In November  2000,  Ozolutions
was  granted  an  extension  to June 30,  2001 in order  to  provide  Ozolutions
additional time to commence operations and raise capital. Additional payments of
$250,000 and $200,000  were due no later than August 31, 2001 and  September 30,
2001, respectively.

     Ozolutions did not make any of these required payments.  In April 2002, the
agreement  with 1421209  Ontario  Limited was  cancelled  and the  obligation of
$1,000,000 was no longer due. The Company wrote off the net marketing  rights of
$762,743  and  the   outstanding   obligation  of  $1,000,000  and  recorded  an
extraordinary gain from the cancellation of the agreement of $237,257. There was
no affiliation  between 1421209 Ontario Limited and Ozolutions Inc. prior to the
purchase of the marketing rights.

     In April  2002,  Ozolutions  paid  $50,000  directly to Hankin for the same
exclusive marketing rights to its products as outlined in the original agreement
with 1421209 Ontario Limited.  Ozolutions recorded the payment as expense in the
quarter ended May 31, 2002.

     We have orders for 56 EntrOzone  units through May 31, 2002, but production
and delivery by Hankin of the first  EntrOzone  water  treatment units have been
delayed for over a year. However, upgrading of the EntrOzone unit to incorporate
additional  multi-barrier  protection  against water borne  contaminants  is now
complete and delivery of initial units is expected soon.

Acquisition of Distribution  rights of ELCE  International  Inc. Activated Water
Products

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

     In January  2002, we acquired the exclusive  ELCE  distribution  rights for
Canada.  We issued  25,000  restricted  common  shares  and  granted  options to
purchase 500,000 common shares at $0.50 per share.  These securities were issued
in reliance on the exemption set forth in Section 4(2) of the  Securities Act of
1933 or the exclusion from  registration  under  Regulation S. No commission was
paid in connection with the  transaction.  In March 2002, we obtained  exclusive
marketing  rights for Costa  Rica.  We are  required to purchase a minimum of 75

                                       14
<PAGE>

ELCE  units in  Canada  and 30 ELCE  units in Costa  Rica per  quarter  for this
exclusivity.  We have met these minimum  purchase  requirements  through May 31,
2002.

     ELCE's water  activation  systems use water  flowing over ceramic  balls to
generate  electrical  charges which alter the physical  properties of water. The
resulting properties of activated water facilitate the removal of scale build-up
in water pipes and enhance plant  productivity  and improve  growth,  health and
uniformity in fish and shrimp farming.  Currently,  we are conducting ELCE field
trials in shrimp hatcheries in Panama and Ecuador,  which, if successful,  could
lead to significant shrimp farm  opportunities in Central and South America.  In
Canada, we are working with a Canadian  distributor with an extensive industrial
and  commercial  customer  base and  currently  have several test  installations
underway.

     During the third quarter of 2002,  Ozolutions recorded their first sales of
ELCE  products in the amount of $90,000 with a related  gross profit of $27,000.
Ozolutions is no longer  considered a development  stage company.  In the fourth
quarter of 2002,  Ozolutions  plans to continue to  concentrate on marketing and
selling the ELCE products.

     We are currently  attempting to raise capital privately to meet our working
capital  requirements.  Under a Stock Purchase  Agreement  with First  Chartered
Capital  Corporation  Inc.,  First  Capital has purchased  5,200,444  restricted
common shares for $583,704 as of May 31, 2002. During the three months ended May
31, 2002,  3,931,794 of these shares were sold to First Capital at a total price
of $453,135.

     Until Ozolutions  receives  adequate outside  financing to fund its capital
commitments,  its operations will be limited to those that can be effected under
the stock purchase agreement discussed above and through its officers, directors
and  consultants.  These  persons  have  verbally  agreed  to defer  payment  of
compensation  from Ozolutions until revenue  generated from sales of product and
financing  from outside  sources  provides  sufficient  working  capital to fund
operations and payment of their  compensation.  In addition,  they have advanced
money to  Ozolutions to cover sales and  administrative  expenses and an initial
deposit of $22,292 made by  Ozolutions  for the  purchase of 25 EntrOzone  water
treatment systems.  The amounts  outstanding to D. Brian Robertson,  Joseph Cira
and Lou Shefsky at May 31, 2002, were $22,440, $7,333 and $17,717, respectively.
Max  Weissengruber,  President  and a  Director,  has  also  advanced  money  to
Ozolutions to cover expenses. At May 31, 2002, the amount outstanding to him was
$44,828.  These  advances  do not bear  interest  and the  parties  have not set
repayment terms.  These individuals have verbally indicated their willingness to
make further advances in the future as may be required to fund ongoing sales and
administrative  operating costs. There is no written or fixed obligation to make
further advances, so there is no assurance that Ozolutions will have the capital
resources to fund its operations over the next 12 months.

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

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

                                       15

<PAGE>


Proposed Acquisition

     On May 22, 2002, Ozolutions signed a letter of intent to acquire the assets
of Electrical Systems Engineering ("ESE") and 100% of the outstanding common and
preferred shares of Specdex Inc. Ozolutions will pay approximately $1,500,000 in
cash to acquire  the  assets of ESE.  Ozolutions  plans to obtain the  necessary
advance of funds for the  purchase  by posting as  collateral,  or selling to an
agreed upon  financial  institution  arranged by Specdex  Inc.,  up to 8,000,000
common  shares of  Ozolutions.  Upon  completion of the  acquisition  of the ESE
assets,  Ozolutions will issue 4,536,500 restricted common shares to acquire all
outstanding common and preferred shares of Specdex Inc. Specdex Inc. will become
a wholly owned subsidiary of Ozolutions, with Specdex Inc. fully responsible for
managing the ESE division. If the Specdex Inc. acquisition is not completed, the
ESE acquisition  will revert to Specdex Inc. Upon completion of the Specdex Inc.
acquisition,  Patent  #P190-1 APP  3-60/307,896  (Business  Process  Modeling of
Wholesale  Procurement),  whose  rights are held by William A.  Hurley,  will be
assigned to Specdex Inc.  and  subsequently  assigned to  Ozolutions  Inc.  upon
completion of certain  compensation to William A. Hurley by Specdex Inc. covered
by an  existing  agreement.  Completion  of these  transactions  is subject to a
number of  contingencies,  including,  completion of due diligence review of the
parties involved,  negotiation of definitive agreements between the parties, and
arranging for the financing  required to pay the consideration for the companies
and assets to be acquired.

Business Consulting Agreement

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

Results of Operations

     For the quarter  ended May 31, 2002,  Ozolutions  recorded  revenues in the
amount of $90,000  for the sale of ELCE  products.  This  represented  the first
quarter of revenues for Ozolutions. Cost of goods sold for the quarter ended May
31, 2002 was $63,000 related to the sale of the ELCE products.

     Expenses  through May 31,  2002  increased  by  $197,000  to $478,000  from
$281,000  in  fiscal  2001.  This  increase  is  mainly  due to an  increase  in
consulting fees of $73,000 due to the investor relations  consulting  agreements
and the new strategic  business  consulting  agreement.  In addition,  marketing
rights expense increased $137,000 due to amortization for the new ELCE marketing
rights and the $50,000 paid to Hankin for the Hankin marketing rights.

     The net loss from continuing  operations  through May 31, 2002 increased by
$170,000 to $451,000 from  $281,000 in fiscal 2001 due to the factors  discussed
above.

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

     During the quarter  ended May 31, 2002,  net income of $43,000 was recorded
as compared to a loss of $88,000 in the quarter ended May 31, 2001. For the nine
months ended May 31, 2002,  the net loss  decreased by $68,000 to $213,000  from
$281,000. These changes are due to the factors discussed above.

                                       16
<PAGE>

     Ozolutions believes its general, selling and administrative expenses during
the 12-month period following the date it can obtain  additional  financing will
be approximately $300,000. Approximately $200,000 will be used for marketing and
sales expenses including:

      *   production of printed sales materials

      *   advertising in industry publications

      *   travel expenses associated with advancing proposed projects in Mexico,
          the Caribbean Zone and South America

      *   travel expenses associated with establishing an Ontario dealer network

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

Forward-Looking Statements

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

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     On June 5, 2001, Ozolutions entered into advisory agreements with the firms
of David  Michael,  LLC,  and Feng Shui  Consulting,  Inc.  The  purpose  of the
advisory  agreements  was to assist  Ozolutions  in  effecting  the  purchase of
businesses and assets relative to its business and growth strategy,  acquisition
of other operations or businesses,  general  business and financial  consulting,
and the introduction of Ozolutions to public relations firms and consultants and
others that may assist  Ozolutions in its plans.  For the services  described in
their respective agreements,  the advisors were to receive shares of Ozolutions,
Inc.  common stock on the  following  schedule:  June 5, 2001 - 400,000  shares;
September 5, 2001 - 200,000 shares;  December 5, 2001 - 200,000 shares; March 5,
2002 - 150,000 shares. Pursuant to this schedule,  400,000 shares were issued to
each of the consulting  firms.  The  agreements  were cancelled by Ozolutions on
September  26,  2001,  and  subsequently  efforts were made to  renegotiate  the
agreements  without  success.  In June 2002,  David Michael,  LLC, and Feng Shui
Consulting, Inc., filed a suit in Federal district Court, District of Utah, case
number  2:02CV-0538 ST, against Ozolutions for breach of contract for failure to
issue additional shares of common stock under the agreements. Ozolutions intends
to file an  answer,  counter  claims,  and third  party  complaint  denying  the
substantive  allegations  of the complaint and asserting  breach of contract and
fraud  in  connection  with the  transaction.  Management  believes  the suit is
without merit and intends to vigorously defend its position. Management does not
believe the range of loss, if any, can be reasonably estimated at this time.

                                       17
<PAGE>

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

Item 2.  Changes in Securities and Use of Proceeds

     Ozolutions  entered into a Stock Purchase Agreement on October 1, 2001 with
First Chartered Capital Corporation,  Inc. Under the agreement,  First Chartered
is entitled to purchase  common stock of Ozolutions for 30 percent of the market
value on the date of purchase in reliance  on the  exclusion  from  registration
under Regulation S promulgated under the Securities Act of 1933. Through May 31,
2002,  5,200,444  shares have been purchased by First Chartered with the Company
receiving  $583,704.  During the three months  ended May 31, 2002,  3,931,794 of
these shares were sold to First Capital at a total price of $453,135.

Item 6.  Exhibits and Reports on Form 8-K

Exhibits:

SEC Ref. No.    Title of Document                                   Location

10.1            Stock Purchase Agreement with First Chartered       Page E-1
                Capital Corporation, Inc., dated October 1, 2001


Reports on Form 8-K:  None

                                   SIGNATURES

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

                                          OZOLUTIONS, INC.


Date:  July 15, 2002                      By: /s/ Max Weissengruber, President



                                       18