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

                                   FORM 10-KSB

            ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                      For the year ended December 31, 2002
                        Commission File Number 000-33481


                          SAILTECH INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)


              Nevada                                      65-1060612
  (State or other jurisdiction of                     (I. R. S. Employer
   incorporation or organization)                     Identification No.)


              13330 Leopard St., Ste. 27, Corpus Christi, TX 78410
                     (Address of principal executive office)

                                  361-241-2330
                           (Issuer's Telephone Number)

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

           Securities Registered Pursuant of Section 12(g) of the Act:
                         Common Stock, $0.001 Par Value



Check  whether the issuer (1) 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 the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [ ] No [X]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment of
this Form 10-KSB. [ ]

The issuer had operating revenues of $-0- for the year ended December 31, 2002.

This report contains a total of 27 pages. The Exhibit Index appears on page 13.

As of December 31, 2002,  there were  10,092,435  shares of the issuer's  common
stock  outstanding.  The aggregate  market value of the 9,292,435  shares of the
issuer's voting stock held by  non-affiliates  was $650,470 based on the low bid
price on that date as reported by the NASD OTC Electronic  Bulletin  Board.  The
sum excludes  the shares held by officers,  directors,  and  stockholders  whose
ownership  exceeded 10% of the outstanding  shares at December 31, 2002, in that
such persons may be deemed  affiliates  of the Company.  This  determination  of
affiliate  status  is not  necessarily  a  conclusive  determination  for  other
purposes.

<PAGE>

                          Sailtech International, Inc.
                                   FORM 10-KSB
                                December 31, 2002

                                                                            Page

PART I.......................................................................  2

ITEM 1.  Business............................................................  2
ITEM 2.  Properties..........................................................  3
ITEM 3.  Legal Proceedings...................................................  3
ITEM 4.  Submission of Matters to vote of Security Holders...................  3

PART II......................................................................  3

ITEM 5.  Market for Common Equity and Related Stockholder Matters............  3
ITEM 6.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.............................  4
ITEM 7.  Financial Statements................................................  6
ITEM 8.  Changes In and Disagreements With Accounting and
         Financial Disclosure................................................  6

PART III.....................................................................  7

ITEM 9.   Directors, Executive Officers, Promoters, and Control
           Persons: Compliance With Section 16(a) of the Exchange Act........  7
ITEM 10.  Executive Compensation.............................................  9
ITEM 11.  Security Ownership of Certain Beneficial Owners and Management..... 10
ITEM 12.  Certain Relationships and Related Transactions..................... 11

PART IV...................................................................... 11

ITEM 13.  Exhibits and Reports on Form 8-K................................... 11
ITEM 14.  Controls and Procedures............................................ 12
SIGNATURES................................................................... 12
EXHIBIT INDEX................................................................ 13


                                     PART I

ITEM 1.   Business.

Business Overview

The Business

On  December  31,  2002,  Sailtech  ceased  operations  of  its  proposed  yacht
manufacturing  business.  We disposed  of our  subsidiary  companies  in British
Columbia, Canada and Florida.  SailTech International,  Inc. (the "Company") was
incorporated  on  September  16,  1998  under the laws of the state of Nevada as
Argonaut  Resources  Ltd. On December  15, 2000 the Company  changed its name to
Sailtech  International  Inc. to reflect its business  objectives of becoming an
aluminum yacht  manufacturer.  Sailtech was a development stage enterprise which
had just initiated operations as a manufacturer of a line of aluminum yachts and
work vessels using a proprietary  software  technology  which aids in the design
and construction of aluminum boats. We had four yacht  manufacturing  contracts,
none of which were completed. We conducted our business through two wholly owned
subsidiary corporations, organized in Florida and British Columbia, Canada.


                                       2
<PAGE>

Employees

As of December 31, 2002, we had one part-time employee officer.  No employee was
subject to a collective bargaining agreement.

ITEM 2.   Properties

In order to  settle  our  obligation  as a result of our  default  under a lease
agreement,  we agreed to surrender,  to the landlord,  all of our capital assets
located on the leased  manufacturing  premises.  As of  December  31,  2002,  we
maintained a shared corporate  address at 580 Hornby St., Suite 900,  Vancouver,
British Columbia, Canada.

ITEM 3.   Legal Proceedings

         N/A

ITEM 4.   Submission of Matters to vote of Security Holders

No matters  were brought to a vote of the  security  holders  during the quarter
ended December 31, 2002.

                                     PART II

ITEM 5.   Market for Common Equity and Related Stockholder Matters

Common Stock:

         Our common stock trades Over-the-Counter (OTC) on the Pink Sheets under
the symbol SAIL.  Table 1. sets forth the high and low bid  information  for the
past two years. These quotations  reflect  inter-dealer  prices,  without retail
mark-up,  mark-down or  commission  and may not represent  actual  transactions.
These data provided by Pink Sheets, LLC.

Table 1.

Bid Information

Fiscal Quarter Ended                High             Low

December 31, 2002                   0.25             0.07
September 30, 2002                  0.30             0.125
June 30, 2002                       0.72             0.28
March 31, 2002                      0.80             0.60
December 31, 2001                   1.05             0.70
September 30, 2001                  1.20             0.70
June 30, 2001                       1.15             0.90
March 31, 2001                      1.29             0.98


         According  to our  records,  the  Company had  approximately  52 record
shareholders  of our common  stock as of December  31, 2002  holding  10,092,435
common  shares.   This  number  of  shareholders  does  not  include  individual
beneficial shareholders whose shares may be held in their brokers' street name.

Dividends and Dividend Policy

         There  are no  restrictions  imposed  on the  Company  which  limit its
ability to declare or pay  dividends on its common  stock,  except as limited by
state corporation law. During the year ended December 31, 2002, no cash or stock
dividends  were  declared  or  paid  and  none  are  expected  to be paid in the
foreseeable future.


                                       3
<PAGE>

Recent Sales of Unregistered Securities

         During the period October 1 through December 31, 2002, we did not offer
or sell any securities.

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

Our  financial  statements  were  prepared  in  accordance  with  United  States
generally accepted accounting principles ("US GAAP").

Forward Looking Statements

Under the "safe harbor" provisions of the Private  Securities  Litigation Reform
Act of  1995  (the  "PSLRA"),  we  caution  readers  regarding  forward  looking
statements  found in this report and in any other  statement  made by, or on our
behalf,  whether  or not in future  filings  with the  Securities  and  Exchange
Commission.  Forward-looking  statements  are statements not based on historical
information and which relate to future operations, strategies, financial results
or other  developments.  Forward looking  statements are necessarily  based upon
estimates and assumptions that are inherently  subject to significant  business,
economic and  competitive  uncertainties  and  contingencies,  many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change.  These  uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward  looking  statements  made by or on our behalf.  We disclaim  any
obligation to update forward-looking statements.  Readers should also understand
that under  Section  27A(b)(2)(D)  of the  Securities  Act of 1933,  and Section
21E(b)(2)(D)  of  the  Securities  Exchange  Act  of  1934,  the  "safe  harbor"
provisions  of the PSLRA do not apply to statements  made in connection  with an
initial public offering.

OVERVIEW

Sailtech  International Inc ("Sailtech") up until the current fiscal quarter was
a manufacturer of aluminum yachts based in Florida through a Florida  subsidiary
company Sailtech Design Inc.  Sailtech was originally  incorporated in the State
of  Nevada in  September  of 1998  under the name  Argonaut  Resources  Ltd.  On
December 15, 2000 the Company changed its name to Sailtech  International Inc to
reflect its business objectives of becoming an aluminum yacht manufacturer.

On July 1,  2002  the  company's  subsidiary  company  became  insolvent.  Major
creditors of Sailtech Design accepted  delivery of capital assets related to the
yacht  manufacturing  business as full and final settlement of outstanding debts
related to Sailtech Design Inc. On December 31, 2002, the Company  completed the
redemption  of the  7,500,000  common  shares by way of  payment of $25,000 to a
major  investor in the Sailtech  business  plan. As part of the  settlement  the
investor agreed to cancel certain agreements he had with the Company. The shares
were returned to treasury subsequent to the fiscal year end.

The Company had inadequate  cash to maintain  operations and the settlement with
the major investor  represented the wind up of the aluminum yacht  manufacturing
business (see Note 3 of the Financial  Statements).  For the twelve-month period
ended  December  31,  2002,  the  Company  anticipates  that  its  minimum  cash
requirements  to continue as a going concern will be $130,000.  This is to cover
current liabilities of $124,00 as well as all expenses necessary to complete the


                                       4
<PAGE>

Ecoloclean  acquisition  announced  in  January  of  2003.  In order to meet the
foregoing  cash  requirements,  the Company will have to sell  securities to, or
obtain a loan from,  potential  investors in the Company.  These liabilities are
expected to be  addressed  as part of the  Ecoloclean  acquisition.  There is no
assurance,  however,  that the Company  will be able to sell any  securities  or
obtain a loan.

Liquidity and Capital Resources

The  Company  had a decline in working  capital in the first  quarter of 2002 of
$399,000,  from $459,000 to $60,000,  resulting primarily from an operating loss
for the period as the Company began the prototype phase of its operation. Second
quarter working capital turned negative due to the increase in accounts  payable
and  reclassification of the obligation arising from common stock subject to put
option. The Third Quarter working capital deficit had grown to ($1,766,544).  As
part of the settlement and  restructuring,  the working  capital defict had been
reduced to  ($123,466) at year end.  During the same period the  Company's  long
term debt decreased for $1,500,000 to (nil) as a result of the  reclassification
of an obligation arising from common stock subject to put option. (See note 2 to
the Financial  Statements).  This  obligation  related to the 7.5 million shares
issued to a non-arm's length investor of the company.  The Company completed the
redemption  of the common  shares for  $25,000  and the  investor  has agreed to
cancel  certain   agreements  he  had  with  the  Company.   The  other  factors
attributable to the reduction in working capital were the reduction of cash from
$765,297 as at December  31, 2001 to (nil) in the current  quarter.  In addition
the Company  recorded a decrease in inventory from $261,686 at December 31, 2001
to (nil) as of September 30, 2002.  Both the reduction in cash and the reduction
in  inventory  are a direct  result of the  Company  ceasing  operations  in the
aluminum  yacht  industry.  These and other items related to the  manufacture of
aluminum  yachts were all  expensed in the period and are  reflected in the Loss
from Discontinued  Operations totaling $2,088,583.  This loss was increased by a
loss from operations of $79,249 related to the administration of the Company and
are partially  offset by a Gain on the  Disposition of Subsidiaries of $178,059.
Current assets  decreased from  $1,033,000 to $592,000  during the first quarter
2002, and to $443,000 in the second quarter,  and further decreased to $7,176 in
the third  quarter and finally to $345 at year end.  This decrease was primarily
attributable  to the cash  requirements  for the startup of  production  and the
reduction  in inventory in the  beginning of the year and  culminating  with the
cessation of activities at year-end. Current liabilities decreased from $574,000
to $532,000  during the first quarter,  primarily due to the recognition of some
customer deposits as revenue,  and increased to $2,202,106 in the second quarter
due to increases in the put option  obligation,  accounts payable,  and customer
deposits,  but decreased to  $1,773,720 in the third quarter  primarily due to a
reduction  in customer  deposits  from the  accounting  records at the point the
company ceased manufacturing aluminum yachts and finally to $123,811 at year end
reflecting the  elimination of the put option  obligation.  The company began to
experience cash shortage problems in the second quarter and some of its accounts
payable  were past due.  The  company has no  material  commitments  for capital
expenditures.  Management  notes  that funds  generated  by  operations  did not
satisfy the Company's working capital requirements and as the Company was unable
to  secure  the  necessary  funding  to  continue  operations,   aluminum  yacht
manufacturing  operations  are no longer being  undertaken by the company or its
subsidiary Sailtech Design Inc.

Results of Operations

Prior to the Company  discontinuing  aluminum yacht  manufacturing,  it began to
recognize revenues in the first nine months of 2002 from its Florida facilities.
However all revenues and expenses  related to the  generation of these  revenues
were written down as part of the  Discontinuation  of  Operations  (see note 3).
Income of $2,505 was bank interest. Operating Expenses increased by 82% compared
with the same  period in 2001 as all  expenses  related  to the  manufacture  of
aluminum  yachts were  accounted for in the Loss from  Discontinued  Operations.
Significant  remaining  operating  expenses were Investor  relations of $27,818;
Management fees of $22,500 and Professional Fees of $20,190.


                                       5
<PAGE>

Critical accounting policies

We have identified the policies below as critical to our business operations and
the  understanding  of our results of operations.  The impact and any associated
risks  related  to  these  policies  on our  business  operations  is  discussed
throughout  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of  Operations  where such  policies  affect our  reported  and expected
financial  results.  Note that our  preparation  of this  Annual  Report on Form
10-KSB and the Quarterly Report on Form 10-QSB requires us to make estimates and
assumptions   that  affect  the  reported  amount  of  assets  and  liabilities,
disclosure of  contingent  assets and  liabilities  at the date of our financial
statements,  and the  reported  amounts  of  revenue  and  expenses  during  the
reporting period.  There can be no assurance that actual results will not differ
from those estimates.

Recent accounting pronouncements
--------------------------------

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or  Disposal  Activities"  ("SFAS No.  146").  SFAS No. 146  addresses
significant  issues  regarding the  recognition,  measurement,  and reporting of
costs  associated  with exit and disposal  activities,  including  restructuring
activities.  SFAS No. 146 also addresses recognition of certain costs related to
terminating  a  contract  that is not a  capital  lease,  costs  to  consolidate
facilities or relocate employees, and termination benefits provided to employees
that  are  involuntarily  terminated  under  the  terms  of a  one-time  benefit
arrangement  that  is  not  an  ongoing  benefit  arrangement  or an  individual
deferred-compensation  contract.  SFAS No. 146 is effective for exit or disposal
activities that are initiated  after December 31, 2002.  Given that SFAS No. 146
was issued in June 2002 and is not yet  effective,  the impact on the  Company's
financial  position or results of operations  from adopting SFAS No. 146 has not
been determined.

ITEM 7.   Financial Statements

                          Index to Financial Statements


Independent Accountant's Report..........................................     15
Financial Statements
       Balance Sheets....................................................     16
       Statements of Operations..........................................     17
       Statements of Stockholder's Equity................................  18-19
       Statements of Cash Flows..........................................  20-21
       Notes to Financial Statements.....................................  22-28



ITEM 8.   Changes In and Disagreements With Accountants on Accounting and
          Financial Disclosure.

None


                                       6
<PAGE>

PART III


ITEM 9.       Directors, Executive Officers, Promoters, and Control Persons:
              Compliance With Section 16(a) of the Exchange Act

         The  following  table  lists the  names,  ages,  and  positions  of the
executive  officers and  directors  of the Company  that served  during the year
ending  December 31, 2002.  All officers and  directors  have been  appointed to
serve until their successors are elected and qualified.  Additional  information
regarding the business experience,  length of time served in each capacity,  and
other matters relevant to each individual is set forth following the table.

The officers and directors of the Company are as follows:

Name                     Age        Position

Gunter H. Richtler       59         President  and a  member  of  the  Board  of
                                    Directors
Cortland Steck           48         Vice  President and a member of the Board of
                                    Directors
Carey Phillips           47         Vice President,  Treasurer,  Chief Financial
                                    Officer   and  a  member  of  the  Board  of
                                    Directors
Patrick Reischmann       49         Vice  President and a member of the Board of
                                    Directors
Barry Girling            42         Secretary  and a  member  of  the  Board  of
                                    Directors President, Treasurer since 8-12-02

Royis Ward               69         President, Director

Michael Ward             47         Secretary/Treasurer, Director


All  directors  hold office until the next annual  meeting of  shareholders  and
until their successors have been elected and qualified.  The Company's  officers
are elected by the Board of Directors after each annual meeting of the Company's
shareholders  and hold office  until their  death,  or until they resign or have
been removed from office.

Gunter H.  Richtler - President and a member of the Board of Directors Jan 2002-
August 12, 2002

Mr. Richter was the President and a member of the Board of Directors of the
Company until his resignation on August 12, 2002. Mr. Richtler was the President
and a member of the Board of Directors of SailTech Design Inc., the Company's
British Columbia subsidiary corporation and since June 2001, he has been
President and a member of the Board of Directors of SailTech Design Inc., the
Company's Florida subsidiary corporation.

Cortland  Steck - Vice  President and a member of the Board of Directors.  Term:
June 2001-July 17, 2002

Mr. Steck was the Vice  President  and a member of the Board of Directors of the
Company until his resignation on July 17, 2002. Mr. Steck was the Vice President
and a member of the Board of Directors of SailTech  Design Inc.,  the  Company's
British  Columbia  subsidiary  corporation and since July 2000, he has been Vice
President  and a member of the Board of Directors of SailTech  Design Inc.,  the
Company's Florida subsidiary  corporation.  From January 1999 to April 2000, Mr.
Steck was Vice President of Manufacturing by McKinna Corporation located in West
Palm Beach,  Florida.  McKinna  manufactured a line of luxury motor yachts.  Mr.
Steck was  responsible  for design,  engineering  and manufacture of the yachts.
>From June 1994 to December  1999,  Mr. Steck was employed as Chief Engineer and
Director of  Engineering by Trident  Shipworks  located in Tampa,  Florida.  Mr.
Steck was  responsible  for the design and engineering of sail and power yachts.
Since 1984,  Mr. Steck has also owned and operated  Cortland Steck Yacht Designs
which contracts for design and engineering of vessels.

Carey M. Phillips - Chief Financial Officer, Treasurer and a member of the Board
of Directors. Term: September 2001-July 1, 2002

Mr. Phillips was the Vice President,  Chief Financial  Officer,  Treasurer and a
member of the Board of Directors of the Company until his resignation on July 1,
2002. Mr.  Phillips was the Chief Financial  Officer,  Treasurer and a member of
the Board of Directors of SailTech Design Inc., the Company's  British  Columbia
subsidiary  corporation  and since  September  2001, he has been Chief Financial
Officer,  Treasurer  and a member of the Board of Directors  of SailTech  Design
Inc.,  the  Company's  Florida  subsidiary  corporation.  Since June  1988,  Mr.
Phillips  has been  Chairman  and  Chief  Executive  Officer  of  Phillips  Kiln
Services, Ltd. located in Sioux City, Iowa. Phillips Kiln Services is engaged in
the business of industrial contracting and engineering.


                                       7
<PAGE>

Patrick  Reischmann  - Vice  President  and a member of the Board of  Directors.
Term: June 2001-August 12, 2002

Mr.  Reischmann was the Vice President and a member of the Board of Directors of
the Company until his  resignation  on August 12, 2002.  Mr.  Reischmann was the
Vice  President and a member of the Board of Directors of SailTech  Design Inc.,
the Company's  British Columbia  subsidiary  corporation and since June 2001, he
has been  Vice  President  and a member of the Board of  Directors  of  SailTech
Design Inc.,  the Company's  Florida  subsidiary  corporation.  Since 1995,  Mr.
Reischmann  has been  President  of Florida  Catamaran  Inc.,  a  manufacturer's
representative  of Manta Catamarans and Ocean Cat. Mr. Reischmann is responsible
for product development, marketing, sales and customer service and support.

Barry Girling - Secretary and a member of the Board of Directors.

Mr.  Girling  assumed the role as sole  officer  and  director of the Company on
August  12,  2002.  Since  that  date he has  acted  in the  role of  President,
Secretary,  Treasurer and sole  director.  Prior to August 12, 2002, Mr. Girling
had acted as  Secretary  and a member of the Board of  Directors of the Company.
Since August 2001,  Mr.  Girling has been Secretary and a member of the Board of
Directors of SailTech  Design Inc., the Company's  British  Columbia  subsidiary
corporation  and since August 2001,  he has been  Secretary  and a member of the
Board of Directors of SailTech  Design Inc.,  the Company's  Florida  subsidiary
corporation.  Since January 1998,  Mr. Girling has been President of RJG Capital
Corp.  located in  Vancouver,  British  Columbia.  RJG Capital is engaged in the
business of public  company  management and  investments.  From November 1996 to
January 1998, Mr. Girling was Consultant to Formation  Capital Corp.  located in
Vancouver,  British  Columbia.  Formation Capital was engaged in the business of
mineral  exploration.  From  November  1993 to November  1996,  Mr.  Girling was
Consultant  to and a member of the Board of Directors of Abacus  Minerals  Corp.
located in  Vancouver,  British  Columbia.  Abacus  Minerals  was engaged in the
business of mineral  exploration.  Abacus  Minerals is a foreign  private issuer
whose  securities are registered with the Untied States  Securities and Exchange
Commission.  Mr. Girling devoted  approximately 10% of his time to the operation
of the Company.

Royis Ward has been the President  and Director of Sailtech  since January 2003.
He is  also  the  Secretary/Treasurer  and a  Director  of  Tidelands  Oil & Gas
Corporation,  a publicly  held  company.  Mr. Ward has served in the  Tideland's
offices  since October 21, 1998. He has been engaged in the oil and gas industry
since graduation from Tyler Junior College,  Tyler, Texas in 1952. Initially, he
was employed as a production  superintendent and landman for Coffield & Guthrie,
Inc., a large  independent oil and gas operator and thereafter  placed in charge
of pipeline and drilling operations from 1952-1955. In 1955. he began to develop
oil  and  gas  properties  for his own  account  as an  independent  oil and gas
operator  throughout the southwest until 1962. At that time, he became President
of Omega Petroleum Corporation,  Shreveport, Louisiana. Thereafter, he continued
as an independent oil and gas operator drilling individual in excess of 50 wells
in the South  Texas  Area.  In 1968,  he became the  President  and CEO of Omega
Minerals,  Inc. and was instrumental in acquiring vast oil and gas properties by
drilling, development, and re-acquisitions.  In 1985, Tidelands Oil Corporation,
a Texas  Corporation,  was formed for the purpose of drilling and developing oil
and gas properties in South Texas.

Michael Ward has bee the  Secretary/Treasurer  and a Director of Sailtech  since
January 2003. He is also the President,  Chief Executive Officer and Director of
the Tidelands Oil & Gas  Corporation.  Michael Ward has served in the Tideland's
offices since October 21, 1998.  Mr. Ward has more than 25 years of  diversified
experience  as an  oil  and  gas  professional.  He  was  educated  in  business
management  and  administration  at  Southwest  Texas State  University  and the
University  of  Texas.  He has  wide  experience  in the  capacity  in  which he
successfully  served in operating  oil and gas  companies in the United  States.
During the past 20 years, he has been associated with Century Energy Corporation
where  his  duties   and   responsibilities   were   production   and   drilling
superintendent and supervised 300 re-completions and new drills in Duval County,
Texas. In association with Omega Minerals, Inc., where he was vice president and
part owner,  he  operated  65 wells in 23  counties in South and West Texas:  17
wells in Seminole and Osage  Counties,  Oklahoma,  44 wells in Neosho and Wilson
Counties,  Kansas and 125 wells in Brown,  Pike,  Schuyler  and Scott  Counties.
Illinois.  He was president and owner of Major  Petroleum  Company.  He drilled,
completed  and produced 42 wells in South and West Texas  counties.  The company
was sold. With Tidelands Oil  Corporation,  his duties included  supervising and
performing  remedial  well  work,  work-overs  and  economic  evaluation  of the
corporate  properties.  The  primary  area of interest  was in Maverick  County,
Texas. He has performed  project  financing  analysis and consulting of refinery
acquisitions  for the Yemen  government.  Currently,  he is negotiating  new gas
purchase and sale contracts,  supervising and administering the sale of gas line
connections and hookups.

                                       8
<PAGE>

Compliance  with Section  16(a) of the  Securities  Exchange Act of  1934Section
16(a) of the  Securities  Exchange Act of 1934 requires the Company's  directors
and  executive  officers,  and  persons  who own more than 10% of the  Company's
Common  Stock,  to file with the  Securities  and  Exchange  Commission  initial
reports of beneficial  ownership and reports of changes in beneficial  ownership
of  Common  Stock of the  Company.  Officers,  directors  and  greater  than 10%
shareholders  are required by the Securities and Exchange  Commission to furnish
the Company with copies of all section 16(a) reports they file.  Based solely on
copies of such forms  furnished as provided  above,  or written  representations
that no Forms 5 were required,  the Company believes that during the fiscal year
ended December 31, 2002, all Section 16(a) filing requirements applicable to its
executive  officers,  directors  and  beneficial  owners of more than  10%of its
Common Stock were complied with, except as follows:

CODE OF ETHICAL CONDUCT.

On May 15, 2003, our board of directors adopted our code of ethical conduct that
applies to all of our employees and directors, including our principal executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller, and persons performing similar functions.

We believe the adoption of our Code of Ethical  Conduct is  consistent  with the
requirements of the Sarbanes-Oxley Act of 2002.

         Our Code of Ethical  Conduct is  designed  to deter  wrongdoing  and to
         promote:

         Honest and ethical conduct, including the ethical handling of actual or
         apparent  conflicts  of  interest  between  personal  and  professional
         relationships;

         Full, fair, accurate,  timely and understandable  disclosure in reports
         and  documents  that we file or submit  to the  Securities  &  Exchange
         omission and in other public communications made by us;

         Compliance with applicable governmental laws, rules and regulations,

         The  prompt  internal  reporting  to an  appropriate  person or persons
         indentified  in the code of violations of our Code of Ethical  Conduct;
         and

         Accountability for adherence to the Code.

ITEM 10.  Executive Compensation


The following sets forth the  compensation of the officers of the Company in the
year ended December 31, 2002.

Summary Compensation.

The  following  table sets forth the  compensation  paid by the  Company  during
fiscal year 2002 to its officers.  This information includes the dollar value of
base  salaries,  bonus awards and number of stock options  granted,  and certain
other compensation, if any.

Table 1.
                                                                    Securities
                                                                    Underlying
Name and Position          Year        Salary            Bonus      Options/SARs

Barry Girling              2002        -0-                -0-          -0-(6)
Director,Pres.,
Secretary

Gunter H. Richtler(1)      2002        $34,355(5)         -0-          -0-(6)
V.P., Director

Cary Phillips     (2)      2002        $38,942(5)         -0-          -0-(6)
V.P., Tres.,Director

Cortland Steck(3)          2002        $64,904(5)         -0-          -0-(6)
V.P., Director
Patrick Reischmann(4)      2002        -0-                -0-          -0-

Notes:

(1) Richtler resigned all positions August 12, 2002.
(2) Cary Phillips resigned all positions July 1, 2002.
(3) Cortland Steck resigned all positions July 17, 2002.
(4) Patrick Rieschmann resigned all positions August 12, 2002.
(5) Compensation appears in financial statements in "Discontinued Operations".
(6) As of the end of 2002, the 800,000 common stock options  granted to officers
and disclosed in prior reports, were cancelled.


                                       9
<PAGE>

Compensation of Directors.
--------------------------

The members of the Board of  Directors  are not  compensated  by the Company for
acting as such.

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management

The  following  table sets forth the Common Stock  ownership  information  as of
December 31, 2002, with respect to(i) each person known to the Company to be the
beneficial  owner of more  than 5% of the  Company's  Common  Stock;  (ii)  each
director  of the  Company;  and  (iii) all  directors,  executive  officers  and
designated  stockholders  of the  Company  as a group.  This  information  as to
beneficial ownership was furnished to the Company by or on behalf of the persons
named.  Unless  otherwise  indicated,  each has sole voting and investment power
with respect to the shares  beneficially  owned.  The  percentages  are based on
10,092,435 shares issued and outstanding as of December 31, 2002.

(a) Beneficial Ownership of more than 5% based on 10,092,435 common shares.

Beneficial Ownership of 5%.
Table 1.

         (1)                   (2)                            (3)
Name and Address               Number of Shares               Percent of Shares
of Owner

Gunter H. Richtler(1)          1,000,000                            9.9%
209-230 Ash St.
New Westminster, B.C.
Canada V3M 3M3

Brent Bandfield                 680,000                             6.7%
Duke St. P.O. Box 192
Turks & Caicos Islands
West Indies

Richard Hamilton                710,000                             7.0%
4105-44 Ave.
Stony Plain, Alberta
Canada T7Z 1x3

(1) Held in the name of 617265 B.C. Ltd.
(b) Security Ownership of Management. Based on 10,092,435 shares as set forth in
(a) above as of December 31, 2002.

Table 2.

         (1)                 (2)                  (3)                 (4)
Name and Address       Number of Shares         Position       Percent of Shares

Barry Girling              800,000              President              7.9%
2082 East 6th Ave.
Vancouver, B.C.
Canada V5N 1P9

Officers  and  Directors  as a group  owned  7.9% of the  Company's  issued  and
outstanding stock on December 31, 2002.


                                       10
<PAGE>

ITEM 12.  Certain Relationships and Related Transactions

On August 30, 2001, the Company,  its  subsidiaries,  Gunter  Richtler and Barry
Girling entered into a Stock Purchase Agreement with the Phillips Family Limited
Partnership and Carey Phillips,  individually.  In  consideration  of $1,500,000
paid by the Phillips  Family Limited  Partnership  the Company issued  7,500,000
restricted  shares of the Company's  common stock to the Phillips Family Limited
Partnership. We had granted Phillips a Put Option on these shares exercisable in
certain  default  conditions.  Additionally,  the Company issued Phillips common
stock purchase warrants to purchase up to 2,000,000  additional shares of common
stock at an exercise price of $0.75 per share.

On September  12, 2001,  as part of the Stock  Purchase  Agreement,  the Company
granted demand and piggy-back registration rights to the Phillips Family Limited
Partnership  relating to all Company  common  stock and  warrants  issued to the
Phillips  Family  Limited  Partnership.  Demand  registration  rights  began  on
September 12, 2002.

During  the last  quarter  of 2002,  we  entered  into a  Settlement  and  Stock
Redemption  Agreement with the Phillips  Family Limited  Partnership  and others
regarding  the original  purchase of the 7,500,000  shares.  The purpose of this
Settlement  Agreement was to remedy the Company's $5,625,000 default pursuant to
Phillips'  exercise of the  7,500,000  share Put Option.  We settled the default
with the execution of the Settlement Agreement by executing a promissory note in
the amount of $31,000. The $31,000 represents $25,000 paid for the redemption of
the 7,500,000 and $6,000 in related legal expenses.  The Agreement  provided for
the  cancellation  of  the  2,000,000  common  share  warrants.  The  Settlement
Agreement  is subject  to the  transactions  and  provisions  of the  Settlement
Agreement not being successfully  challenged by any Company shareholder,  or the
Subsidiaries or any other person. The Settlement  Agreement was filed as Exhibit
10.2 to our Current Report on Form 8-K filed on January 14, 2003.

                                     PART IV

ITEM 13.      Exhibits and Reports on Form 8-K

(a)      Reports on Form 8-K.

         1.       No  Current  Reports  on Form 8-K were  filed  during the last
                  quarter of the fiscal year.

(b)      Exhibits

         *3.1     Articles of Incorporation of Sailtech International,  Inc.., a
                  Nevada corporation, formerly Argonaut Resources, Ltd.


         *3.2     Articles of Amendment Sailtech  International,  Inc., formerly
                  Argonaut Resources, Ltd.

         *3.3     Bylaws of Sailtech International, Inc.

         20.1     Code of Ethical Conduct

         99.1     Chief  Executive/Financial  Officer-Section  302 Certification
                  pursuant to Sarbane-Oxley Act.

         99.2     Chief  Executive/Financial  Officer- Section 906 Certification
                  pursuant to Sarbane-Oxley Act.


* Previously filed.













                                       11
<PAGE>

ITEM 14.  CONTROLS AND PROCEDURES.

(a)      Evaluation of Disclosure Controls and Procedures.

         Within the 90 days prior to the date of this Annual Report for the year
ended  December 31, 2002, we believe that the former  management  carried out an
evaluation,  under the supervision and with the participation of our management,
including  the  Company's  Chairman  and Chief  Executive  Officer and the Chief
Financial  Officer,  of the  effectiveness  of the design and  operation  of our
disclosure  controls and  procedures  pursuant to Rule 13a-14 of the  Securities
Exchange  Act of 1934  (the  "Exchange  Act"),  which  disclosure  controls  and
procedures are designed to insure that information required to be disclosed by a
company  in the  reports  that it files  under  the  Exchange  Act is  recorded,
processed, summarized and reported within required time periods specified by the
SEC's rules and forms.  Based upon that  evaluation,  the Chairman and the Chief
Financial  Officer  concluded  that our  disclosure  controls and procedures are
effective  in timely  alerting  them to  material  information  relating  to the
Company required to be included in the Company's period SEC filings.

(b)      Changes in Internal Control.

         Subsequent   to  the  date  of  such   evaluation   as   described   in
subparagraph(a)above, there were no significant changes in our internal controls
or other factors that could significantly  affect these controls,  including any
corrective   action  with  regard  to  significant   deficiencies  and  material
weaknesses.


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) to the Securities  Exchange
Act of 1934,  the Company has duly caused this Form 10-KSB Report for the period
ending  December  31,  2002  to be  signed  on its  behalf  by the  undersigned,
thereunto duly authorized on this 16th day of June, 2003.


                                            SAILTECH INTERNATIONAL, INC.


                                            BY: /s/ Royis Ward
                                               ---------------------------------
                                               Royis Ward, President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of the Company and in
the capacities and on the dates indicated.


Date: June 16, 2003                   /s/ Royis Ward
                                     -------------------------------------------
                                     Royis Ward, President, Director


                                      /s/ Michael Ward
                                     -------------------------------------------
                                     Michael Ward, Secretary/Treasurer, Director









                                       12
<PAGE>

                                  Exhibit Index


Exhibit
Number                        Description
------                        -----------

*3.1     Articles of  Incorporation  of Sailtech  International,  Inc., a Nevada
         corporation, formerly Argonaut Resources, Ltd.


*3.2     Articles of Amendment Sailtech  International,  Inc., formerly Argonaut
         Resources, Ltd.

*3.3     Bylaws of Sailtech International, Inc.

20.1     Code of Ethical Conduct

99.1     Chief  Executive   Officer-Section   302   Certification   pursuant  to
         Sarbane-Oxley Act.

99.2     Chief  Financial   Officer-  Section  302  Certification   pursuant  to
         Sarbane-Oxley Act.




























                                       13
<PAGE>


                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)


                        CONSOLIDATED FINANCIAL STATEMENTS


                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)


<PAGE>

                                AUDITORS' REPORT




To the Shareholders
Sailtech International Inc.
(A Development Stage Company)


We have audited the consolidated  balance sheets of Sailtech  International Inc.
(a  development  stage  company)  as at  December  31,  2002 and  2001,  and the
consolidated statements of operations,  cash flows, and stockholders' equity for
the years ended  December 31, 2002 and 2001,  and for the period from  September
16, 1998 (date of inception) to December 31, 2002. These consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in  accordance  with 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.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2002
and 2001,  and the results of its  operations and cash flows for the years ended
December 31, 2002 and 2001,  and for the period from September 16, 1998 (date of
inception)  to December 31, 2002, in  accordance  with United  States  generally
accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue as a going  concern.  As discussed  in Note (c) to the  financial
statements, the Company has incurred substantial losses since inception, has not
attained  profitable  operations,  and is dependent upon obtaining  financing to
fulfil its development  activities.  These factors raise  substantial doubt that
the Company will continue as a going concern.  These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.




Vancouver, B.C.                                               "Morgan & Company"

March 31, 2003                                             Chartered Accountants




<PAGE>
<TABLE>
<CAPTION>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                           CONSOLIDATED BALANCE SHEETS
                            (Stated in U.S. Dollars)



------------------------------------------------------------------------------------------------
                                                                             DECEMBER 31
                                                                          2002           2001
------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>
ASSETS
Current
     Cash                                                             $       345    $   765,297
     Accounts receivable                                                     --            3,285
     Prepaid expenses                                                        --            2,301
     Inventory (Note 4)                                                      --          261,686
                                                                      --------------------------
                                                                              345      1,032,569
Capital Assets (Note 5)                                                      --          495,320
Goodwill (Note 6)                                                            --          836,034
                                                                      --------------------------

                                                                      $       345    $ 2,363,923
================================================================================================

LIABILITIES
Current
     Accounts payable and accrued liabilities                         $    89,964    $    96,573
     Loans payable (Note 7)                                                 2,847         17,077
     Notes payable (Note 9)                                                31,000           --
     Customer deposits                                                       --          358,966
                                                                      --------------------------
                                                                          123,811        472,616
                                                                      --------------------------

Obligation Arising From Common Stock Subject To Put Option (Note 9)          --        1,500,000
                                                                      --------------------------

SHAREHOLDER'S EQUITY (DEFICIENCY)

Share Capital
     Preferred Stock
          1,000,000 shares authorized at $0.01 par value,
          none issued

     Common Stock
         50,000,000 shares authorized at $0.001 par value
         10,092,435 shares issued and outstanding at
         December 31, 2002 and 17,592,435 at December
         31, 2001                                                          10,092         17,592

     Additional paid-in capital                                         3,258,034      1,775,534

Deficit Accumulated During The Development Stage                       (3,391,592)    (1,401,819)
                                                                      --------------------------
                                                                         (123,466)       391,307
                                                                      --------------------------

                                                                      $       345    $ 2,363,923
================================================================================================
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            (Stated in U.S. Dollars)



--------------------------------------------------------------------------------------------
                                                                                PERIOD FROM
                                                                                 INCEPTION
                                                                                SEPTEMBER 16
                                                         YEARS ENDED              1998 TO
                                                         DECEMBER 31            DECEMBER 31
                                                    2002            2001            2002
--------------------------------------------------------------------------------------------
<S>                                             <C>             <C>             <C>
Revenue
     Interest income                            $      2,505    $      7,444    $      9,949
                                                --------------------------------------------

Expenses
     Advertising and promotion                         7,583           9,833          17,703
     Amortization of goodwill                           --            10,714          10,714
     Automotive and travel                              --             5,906           5,906
     Investor relations                               27,818         125,500         153,318
     Bank charges and exchange                           410           1,391           2,125
     Consulting fees                                    --             1,080          10,796
     Filing and transfer fees                          3,007           7,088          10,905
     Management fees                                  22,500          30,000          82,000
     Office supplies and sundry                          246           6,330          11,786
     Professional fees                                20,190          21,325          85,984
     Rent and utilities                                 --              --            18,000
     Salaries and benefits                              --           225,297         237,797
     Telephone                                          --               682             682
     Write off mineral property                         --              --                50
                                                --------------------------------------------
                                                      81,754         445,146         647,766
                                                -----------------------------   ------------

Loss For The Year Before The Following               (79,249)       (437,702)       (637,817)

Gain On Disposition Of Subsidiaries                  178,059            --           178,059
Loss From Discontinued Operations                 (2,088,583)       (765,580)     (2,931,834)
                                                --------------------------------------------

Loss For The Year                               $ (1,989,773)   $ (1,203,282)   $ (3,391,592)
============================================================================================


Loss Per Share, basic and diluted               $      (0.11)   $      (0.10)
============================================================================


Weighted Average Number Of Shares Outstanding     17,592,435      12,138,076
============================================================================
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            (Stated in U.S. Dollars)




                                                       COMMON STOCK                 DEFICIT
                                      ----------------------------------------    ACCUMULATED
                                         NUMBER                    ADDITIONAL      DURING THE
                                           OF                        PAID-IN      DEVELOPMENT
                                         SHARES       AMOUNT         CAPITAL        STAGE           TOTAL
                                      ----------------------------------------------------------------------
<S>                                   <C>           <C>            <C>            <C>            <C>
Issuance of common stock
     September 23, 1998                    50,000   $        50    $      --      $      --      $        50
     October 26, 1998                   4,000,000         4,000         36,000           --           40,000
     October 28, 1998                     135,000           135         33,615           --           33,750
Loss for the period                          --            --             --          (50,817)       (50,817)
                                      ----------------------------------------------------------------------

Balance, December 31, 1998              4,185,000         4,185         69,615        (50,817)        22,983

Loss for the year                            --            --             --          (15,007)       (15,007)
                                      ----------------------------------------------------------------------

Balance, December 31, 1999              4,185,000         4,185         69,615        (65,824)         7,976

Issuance of common stock
     March 31, 2000                        50,000            50            450           --              500
Issuance of common stock
     November 22, 2000                    500,000           500        999,500           --        1,000,000
                                      ----------------------------------------------------------------------
                                        4,735,000         4,735      1,069,565        (65,824)     1,008,476
Adjustment to number of shares
  issued and outstanding as a
  result of a 2 for 1 forward split
                                        4,735,000         4,735         (4,735)          --             --
Loss for the year                            --            --             --         (132,713)      (132,713)
                                      ----------------------------------------------------------------------

Balance, December 31, 2000              9,470,000         9,470      1,064,830       (198,537)       875,763
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Continued)
                            (Stated in U.S. Dollars)




                                                       COMMON STOCK                  DEFICIT
                                      -----------------------------------------    ACCUMULATED
                                        NUMBER                       ADDITIONAL     DURING THE
                                          OF                          PAID-IN      DEVELOPMENT
                                        SHARES          AMOUNT        CAPITAL         STAGE          TOTAL
                                      -----------    -----------    -----------    -----------    -----------
<S>                                   <C>            <C>            <C>            <C>            <C>
Balance, December 31, 2000              9,470,000    $     9,470    $ 1,064,830    $  (198,537)   $   875,763

Issuance of common stock
     May 24, 2001                         100,000            100        100,900           --          101,000
Issuance of common stock
     June 5, 2001                         133,334            133         99,867           --          100,000
Issuance of common stock
     July 26, 2001                         10,000             10          9,490           --            9,500
Issuance of common stock
     December 12, 2001                    379,101            379        283,947           --          284,326
Issuance of common stock
     August 31, 2001                    7,500,000          7,500      1,492,500           --        1,500,000
Obligation arising from common
  stock subject to put option
                                             --             --       (1,500,000)          --       (1,500,000)
Warrants granted on issuance of
  common stock, subject to put
  option August 31, 2001
                                             --             --        1,075,257           --        1,075,257
Warrants issued on equity financing
                                             --             --       (1,075,257)          --       (1,075,257)
Compensation on grant of stock
  options                                    --             --          224,000           --          224,000
Loss for the year                            --             --             --       (1,203,282)    (1,203,282)
                                      -----------    -----------    -----------    -----------    -----------

Balance, December 31, 2001             17,592,435         17,592      1,775,534     (1,401,819)       391,307

Cancellation of obligation arising
  from common stock subject to put
  option                                     --             --        1,500,000           --        1,500,000
Redemption of common stock subject
  to put option                        (7,500,000)        (7,500)       (17,500)          --          (25,000)
Loss for the year                            --             --             --       (1,989,773)    (1,989,773)
                                      -----------    -----------    -----------    -----------    -----------

Balance, December 31, 2002             10,092,435    $    10,092    $ 3,258,034    $(3,391,592)   $  (123,466)
                                      ===========    ===========    ===========    ===========    ===========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Stated in U.S. Dollars)



-----------------------------------------------------------------------------------------------------
                                                                                          PERIOD FROM
                                                                                           INCEPTION
                                                                                         SEPTEMBER 16
                                                                    YEARS ENDED             1998 TO
                                                                    DECEMBER 31           DECEMBER 31
                                                                2002           2001           2002
-----------------------------------------------------------------------------------------------------
<S>                                                         <C>            <C>            <C>
Cash Flows From Operating Activities
     Loss for the year                                      $   (79,249)   $  (437,702)   $  (637,817)

Adjustments To Reconcile Net Loss To Net Cash Used By
  Operating Activities
     Stock based compensation                                      --          334,500        334,500
     Amortization                                                  --           10,714         10,714
     Write off of mineral property                                 --             --               50
     Change in accounts payable                                  56,731         15,305         89,964
                                                            -----------------------------------------
                                                                (22,518)       (77,183)      (202,589)
                                                            -----------------------------------------

Cash Flows From Financing Activities
     Common stock issued subject to put option                     --        1,500,000      1,500,000
     Common stock issued                                           --          100,000        174,300
     Loans payable                                                 --          (46,078)        11,422
                                                            -----------------------------------------
                                                                   --        1,553,922      1,685,722
                                                            -----------------------------------------

Cash Flows From Investing Activities
     Cash acquired on acquisition of subsidiary company
                                                                   --             --           31,896
     Proceeds on disposition of subsidiaries, net of cash
       divested                                                  (1,443)          --           (1,443)
                                                            -----------------------------------------
                                                                 (1,443)          --           30,453
                                                            -----------------------------------------

Net Increase (Decrease) In Cash                                 (23,961)     1,476,739      1,513,586

Net Cash Used In Discontinued Operations                       (740,991)      (720,507)    (1,513,241)

Cash, Beginning Of Year                                         765,297          9,065           --
                                                            ----------------------------- -----------

Cash, End Of Year                                           $       345    $   765,297    $       345
=====================================================================================================
</TABLE>



<PAGE>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                            (Stated in U.S. Dollars)



SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:

During the year ended  December  31, 2001,  the Company  issued  379,101  common
shares to settle loans payable of $284,326.

On August 31, 2001,  the Company  granted stock options to directors to purchase
up to 800,000 common shares at a price of $0.75 per share.  Compensation expense
of $224,000 has been recorded  representing the difference  between the exercise
price and the fair market value at grant date.

During the year ended  December 31, 2001,  the Company  issued 110,000 shares of
common stock for investor relations services of $110,500.

During the year ended December 31, 2002, the Company received proceeds of $8,575
by way of a reduction in loans payable on the disposition of its subsidiaries.

During the year ended December 31, 2002, the Company  redeemed  7,500,000 common
shares for $25,000 evidenced by the issue of a note payable.


<PAGE>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



1.   NATURE OF OPERATIONS

     a)   Organization

          The  Company  was  incorporated  in the State of  Nevada,  U.S.A.,  on
          September 16, 1998. The Company's  wholly-owned  subsidiary,  Sailtech
          Design Inc., was  incorporated  under the British Columbia Company Act
          on  December  11,  1996,  and  its  wholly-owned  Florida  subsidiary,
          Sailtech Design, Inc. was incorporated on July 28, 2000.

     b)   Development Stage Activities

          Sailtech International Inc. is in the business of manufacturing a line
          of  aluminum  yachts and work  vessels  using a  proprietary  software
          technology  that aids in the design and  construction of its aluminium
          boats.  The  Company's  continuing   operation,   and  ultimately  the
          attainment  of  profitable  operations,  is dependent  upon  obtaining
          adequate  financing  to fulfil its business  objectives  and achieve a
          level of sales adequate to support the Company's cost structure  (Note
          2).

     c)   Going Concern

          Since  inception,  the Company has suffered  recurring  losses and net
          cash  outflows  from  operations.  The Company  expects to continue to
          incur substantial  losses to complete the development of its business.
          Since its inception,  the Company has funded operations through common
          stock issuances and related party loans in order to meet its strategic
          objectives.  Management  believes  that  sufficient  funding  will  be
          available to meet its business objectives,  including anticipated cash
          needs  for  working  capital,  and  is  currently  evaluating  several
          financing options. However, there can be no assurance that the Company
          will be able to obtain sufficient funds to continue the development of
          and,  if  successful,  to  commence  the  sale of its  products  under
          development.  As a result of the foregoing,  there exists  substantial
          doubt about the  Company's  ability to  continue  as a going  concern.
          These financial  statements do not include any adjustments  that might
          result from the outcome of this uncertainty.


2.   SIGNIFICANT ACCOUNTING POLICIES

     The consolidated  financial statements of the Company have been prepared in
     accordance  with  generally  accepted  accounting  principles in the United
     States.  Because a precise  determination of many assets and liabilities is
     dependent upon future events,  the  preparation of  consolidated  financial
     statements  for a period  necessarily  involves the use of estimates  which
     have been made using careful judgement.


<PAGE>


                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



2.   SIGNIFICANT ACCOUNTING POLICIES (Continued)

     The consolidated  financial statements have, in management's  opinion, been
     properly prepared within  reasonable limits of materiality,  and within the
     framework of the significant accounting policies summarized below:

     a)   Consolidation

          These  consolidated  financial  statements include the accounts of the
          Company and its  wholly-owned  Canadian  subsidiary,  Sailtech  Design
          Inc., and its wholly-owned U.S. subsidiary, Sailtech Design Inc.

     b)   Inventory

          Inventory of work in progress on long-term boat construction contracts
          represent accumulated costs of labor and materials.

          Inventory  of  trade-in  boats is recorded at the lower of cost or net
          realizable value.

          Inventory  of  materials  is  recorded  at the  lower  of  cost or net
          realizable value. Cost is determined in a first-in, first-out basis.

     c)   Capital Assets

          Capital  assets are recorded at cost and amortized over their economic
          lives as follows:

                Office furniture and equipment        20% straight line basis
                Computer equipment                    30% straight line basis
                Shop equipment                        20% straight line basis
                Tooling and molds                     30% straight line basis
                Automobiles                           30% straight line basis

     d)   Goodwill

          Goodwill  is  amortized  on a  straight-line  basis over seven  years.
          Management reviews goodwill for impairment  whenever events or changes
          in  circumstances  indicate  that  the  carrying  amount  may  not  be
          reasonable.

     e)   Revenue Recognition

          Sales under  construction  contracts are recognized on a percentage of
          completion  basis. As construction  projects are performed,  costs and
          estimated  gross margins are recorded as sales on the percentage  that
          incurred  costs bear to estimated  total costs,  using the most recent
          estimates of completion costs.


<PAGE>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



2.   SIGNIFICANT ACCOUNTING POLICIES (Continued)

     e)   Revenue Recognition (Continued)

          When a current contract estimate indicates a loss, a provision is made
          for total anticipated loss in the current period.

          A provision  for warranty  costs of  approximately  1% of the new boat
          sale is  recorded  at the time of sale  closing  and  delivery  to the
          customer.  The warranty provision is reviewed on a continual basis and
          the  percentage  adjusted  based on actual  warranty  costs  incurred.
          Revenue on used boats is recognized at time of delivery.

     f)   Income Taxes

          The Company has adopted  Statement of Financial  Accounting  Standards
          No. 109 -  "Accounting  for Income  Taxes" (SFAS 109).  This  standard
          requires  the use of an asset and  liability  approach  for  financial
          accounting  and reporting on income  taxes.  If it is more likely than
          not that some  portion,  or all if a deferred  tax asset,  will not be
          realized, a valuation allowance is recognized.

     g)   Shipping and Handling Fees and Costs

          Shipping and handling fees,  representing revenues for goods provided,
          are  included in revenue.  Costs  related to shipping and handling are
          included in cost of sales.

     h)   Stock Based Compensation

          The Company measures  compensation expense for employees and directors
          for its  stock  option  plan  using the  intrinsic  value  method  and
          provides pro-forma disclosures of net income and earnings per share as
          if the fair value method had been  applied in  measuring  compensation
          expense.  When  options  are  issued  to  consultants  or other  third
          parties, expense is determined under the fair value method required by
          SFAS 123 - "Accounting for Stock-Based Compensation".

     i)   Foreign Currency Translation

          Transactions  in  foreign  currency  have  been  translated  using the
          current  method whereby the assets and  liabilities  are translated at
          the year end exchange rate, capital assets at the historical  exchange
          rate,  and revenues and expenses at the average  exchange rate for the
          period.



<PAGE>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



2.   SIGNIFICANT ACCOUNTING POLICIES (Continued)

     j)   Financial Instruments

          The  Company's   financial   instruments  consist  of  cash,  accounts
          receivable, accounts payable, loans payable and notes payable.

          Unless otherwise  noted, it is management's  opinion that this Company
          is not exposed to  significant  interest or credit risks  arising from
          these  financial  instruments.  The  fair  value  of  these  financial
          instruments approximate their carrying values, unless otherwise noted.

     k)   Loss Per Share

          Loss per share is  calculated  using the  weighted  average  number of
          common shares  outstanding  during the period.  Fully diluted loss per
          share is not  presented  as the impact of the  exercise  of options is
          anti-dilutive.


3.   DISCONTINUED OPERATIONS

     On  December  31,  2002,  the  Company  ceased   operations  of  its  yacht
     manufacturing  business and disposed of its subsidiary companies in British
     Columbia  and Florida for  proceeds of the  reduction  of a loan payable of
     $8,575.

     The revenue and expenses  related to the yacht  manufacturing  business for
     the years  ended  December  31,  2002 and 2001,  and for the  period  since
     inception to December 31, 2002 are reflected as discontinued  operations in
     the statements of operations and cash flows.

     The assets and liabilities of the yacht manufacturing  business included in
     the balance sheet at December 31, 2001 are as follows:

     Cash                                                            $    50,468
     Accounts receivable                                                   3,285
     Prepaid expenses                                                      2,301
     Inventory                                                           261,686
     Capital assets                                                      495,320
                                                                     -----------

     Total assets of discontinued operations                         $   813,060
                                                                     ===========

     Accounts payable and accrued liabilities                        $    63,340
     Loans payable                                                         5,655
     Customer deposits                                                   358,966
                                                                     -----------

     Total liabilities of discontinued operations                    $   427,961
                                                                     ===========


<PAGE>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



4.   INVENTORY

                                                            2002         2001
                                                         -----------------------

Materials                                                $     --     $   55,686
Used boat                                                      --        206,000
                                                         -----------------------

                                                         $     --     $  261,686
                                                         =======================


5.   CAPITAL ASSETS

                                                            2002         2001
                                                         -----------------------

Office furniture and equipment                           $     --     $   25,608
Computer equipment                                             --         40,972
Shop equipment                                                 --        405,588
Tooling and molds                                              --         66,397
Automobiles                                                    --          7,271
Leaseholds                                                     --         22,047
                                                         -----------------------
                                                               --        567,883
Accumulated amortization                                       --         72,563
                                                         -----------------------

                                                         $     --     $  495,320
                                                         =======================


6.   GOODWILL

                                                            2002         2001
                                                         -----------------------

Goodwill                                                 $     --     $1,001,098
Accumulated amortization                                       --        165,064
                                                         -----------------------

                                                         $     --     $  836,034
                                                         =======================


7.   LOANS PAYABLE

     Loans payable are due on demand and have no specified terms of repayment or
     interest.



<PAGE>
<TABLE>
<CAPTION>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



8.   STOCK OPTIONS

     A summary of the Company's  outstanding  stock options in 2002 and 2001 are
     as follows:

                                                2002                        2001
                                      ------------------------    -----------------------
                                                     WEIGHTED                   WEIGHTED
                                        NUMBER        AVERAGE       NUMBER       AVERAGE
                                          OF         EXERCISE         OF        EXERCISE
                                        SHARES        PRICE         SHARES       PRICE
                                      ------------------------    -----------------------
     <S>                              <C>           <C>           <C>          <C>
     Outstanding, beginning of year      800,000    $     0.75          --     $     --

     Granted                                --            --         800,000         0.75
     Forfeited/Cancelled                (800,000)        (0.75)         --           --
                                      ------------------------    -----------------------

     Outstanding, end of year               --      $     --         800,000   $     0.75
                                      ========================    =======================
</TABLE>

     Had compensation  cost for the Company's option plans been determined based
     on the fair value at the grant dates,  as  prescribed by SFAS No. 123, loss
     and loss per share would have been as follows:

                                                      2002              2001
                                                 -------------    --------------

     Loss
          As reported                            $  (1,989,773)   $  (1,203,282)
          Pro-forma                                 (1,989,773)      (1,633,385)

     Loss per share
          As reported, basic and diluted                 (0.11)           (0.10)
          Pro-forma, basic and diluted                   (0.11)           (0.13)

     The Black-Scholes  option-pricing model was developed for use in estimating
     the fair value of traded options that have no vesting  restrictions and are
     fully transferable.  In addition, option valuation models require the input
     of highly  subjective  assumptions,  including  the  expected  stock  price
     volatility.  The Company uses  projected  volatility  rates which are based
     upon historical volatility rates.

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted average
     assumptions used for grants:

     Dividend yield                                                     0%
     Expected volatility                                              53.62%
     Risk-free interest rate                                          5.25%
     Expected life                                                   4 years



<PAGE>

                           SAILTECH INTERNATIONAL INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



9.   OBLIGATION ARISING FROM COMMON STOCK SUBJECT TO PUT OPTION

     On August 30, 2000, the Company issued  7,500,000 shares of common stock at
     a price of $0.20 per share for total cash  consideration of $1,500,000.  In
     addition,   the  Company  issued  warrants  to  purchase  up  to  2,000,000
     additional  shares  of  common  stock at a price of $0.75  per  share up to
     August 30, 2006.

     Under the terms of the  agreement  with the  investor,  the  Company may be
     required to purchase  any or all shares of common stock at a price equal to
     the greater of $0.75 or the last price at which the Company sold any shares
     of its common stock.  This put option may only be exercised in the event of
     default by the Company.

     As the put option is not under the control of the Company,  the proceeds of
     $1,500,000 were excluded from shareholders equity.

     On July 1, 2002, the Company defaulted under the terms of the agreement due
     to the insolvency of the operating subsidiary.

     In August 2002, the Company entered into a settlement and stock  redemption
     agreement by which the Company  redeemed  7,500,000  shares of common stock
     for $25,000.

     On December  27,  2002,  the Company  acknowledged  the above  indebtedness
     (including  reimbursement  of legal fees of $6,000) by the issuance of a 9%
     promissory note of $31,000 due January 31, 2003.


10.  SUBSEQUENT EVENT

     On January 1, 2003, the Company issued 20,000,000 shares of common stock to
     acquire  50,000  shares  of  Ecoloclean,   Inc.  ("Ecoloclean"),   a  Texas
     corporation,  representing  all of the  issued  and  outstanding  shares of
     Ecoloclean.

     This  acquisition  will  result in the former  shareholders  of  Ecoloclean
     owning 65.7% of the Company's outstanding common shares.