<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       OR

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

           FOR THE TRANSITION PERIOD FROM ___________TO ____________

                        COMMISSION FILE NUMBER: 333-71752

                             GRAND ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                 <C>
               DELAWARE                                 13-4118624
    (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)                 Identification No.)
</TABLE>

                              119 WEST 23RD STREET
                               NEW YORK, NY 10011
          (Address, including zip code, of principal executive offices)

                                 (646) 486-3900
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

(1)Yes   X     No
       ----       ----

(2)Yes   X     No
       ----       ----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         Common stock, par value $0.001, 22,500,000 shares outstanding as of
May 15, 2002.


                                       1
<PAGE>
                             GRAND ENTERPRISES, INC.

                                   FORM 10-QSB

                                 MARCH 31, 2002

                                      INDEX

                         PART I - FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

         See financial statements beginning on page F-1.

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND PLAN OF OPERATION

FORWARD LOOKING STATEMENTS

         The following discussion should be read in conjunction with our
financial statements and the notes to our financial statements that appear in
this quarterly report. The following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results
could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below and elsewhere in this quarterly report.

OVERVIEW

         Prior to April 16, 2001, we were an inactive publicly company. On April
16, 2001, pursuant to an agreement and plan of reorganization and merger,
EC2000, Inc., a Delaware corporation, merged with and into our wholly owned
subsidiary, Grand Acquisition Corp. In connection with this transaction, we
issued 18,500,000 shares of our common stock to the stockholders of EC2000, Inc.
in exchange for all of the outstanding shares of EC2000, Inc. held by such
stockholders. After the merger, the stockholders of EC2000, Inc. owned the
majority of the issued and outstanding shares of our company. Accordingly, we
have treated the combination as a reverse acquisition and, for accounting
purposes, EC2000, Inc. was the accounting acquirer and we were the accounting
acquiree.

         Our financial statements are the historical financial statements of
EC2000, Inc. from April 6, 2000 through April 16, 2001. After April 16, 2001,
our assets and liabilities were combined with those of EC2000, Inc. Prior to our
combination with EC2000, Inc., we had no assets or liabilities. For accounting
purposes, we adopted a December 31 year end.

         We are party to a license agreement with Dr. Mario Pandolfo, Maurizio
DeCarli and Massimo DeCarli that grants us the exclusive right to manufacture
and market the Fuel Energizing Cell in the United States, Canada, South America,
Malaysia, Singapore, Japan, Philippines, Thailand, North Korea, South Korea and
China. The license was originally granted


                                       2
<PAGE>
to EC2000, Inc. in August 2000 and, pursuant to the terms of the license, our
rights granted pursuant to the license shall continue in perpetuity. In
consideration for the license grant, EC2000, Inc. issued to the licensors an
aggregate of 9,250,000 shares of its common stock.

         Pursuant to the terms of the license agreement, upon the effective date
of EC2000, Inc.'s merger with and into Grand Acquisition Corp., the license was
automatically assigned to Grand Acquisition Corp. We have valued the license at
the patent's historical cost basis, which is nil.

         As of March 31, 2002, our operations were limited to organizational
activities. We have not generated any revenue from operations through that date.
Accordingly, we are considered a "development stage company" for accounting
purposes.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES:

         Our discussion and analysis of our financial condition and plan of
operation are based upon our consolidated financial statements which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these consolidated financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, expenses and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates. We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

RESULTS OF OPERATIONS:

         Comparison of results of operations for the three months ended March
31, 2002 and 2001.

         Revenues. We did not have any revenues during the three months ended
March 31, 2002 or 2001.

         General and Administrative Expenses. General and administrative
expenses increased by approximately $77,000 to $85,000 for the three months
ended March 31, 2002 from $8,000 for the three months ended March 31, 2001. This
increase was attributable to professional fees of approximately $71,000 expended
in connection with the preparation of our regulatory filings and consulting
fees of $7,000 relating to the grant of stock options. From our inception, we
have incurred general and administrative expenses of approximately $265,000.

         Interest Income. Interest income was $9,000 for the three months ended
March 31, 2002 and $11,000 for the three months ended March 31, 2001 and
consists of interest earned on the notes receivable from Dr. Mario Pandolfo.
From inception, we have earned approximately $55,000 of interest in these
notes.

         Interest Expense. Interest expense was approximately $4,000 for the
three months ended March 31, 2002 and was nil for the three months ended March
31, 2001, which consists of interest on the advances from stockholders. From
inception, we have incurred interest expense of approximately $10,000 on these
advances.

         Net Income (Loss). Net loss was $79,000 for the three months ended
March 31, 2002. Net income was $4,000 for the three months ended March 31, 2001.
Since our inception, our accumulated loss was approximately $226,000. The
reasons for our net loss and net income are explained above.


                                       3
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:

         Our consolidated financial statements have been prepared assuming that
we will continue as a going concern. However, we have not generated any revenue
from operations and are still in a development stage. We have incurred a
cumulative loss of approximately $226,000 through March 31, 2002 and have very
little cash on hand. We believe that we will need total additional financing of
$250,000 to continue to operate as planned during the twelve-month period
subsequent to March 31, 2002. These matters raise substantial doubt about our
ability to continue as a going concern.

         We plan to obtain financing through private offerings of debt and
equity securities. However, we cannot assure you that we will be able to obtain
any or all of the additional financing we will need in order to continue to
operate at least through March 31, 2003 or that, ultimately, we will be able to
generate any profits from the sale of the Fuel Energizing Cell. If we are unable
to obtain the financing we require, we may have to curtail or terminate our
operations, liquidate our remaining assets and liabilities, and/or seek
protection from our creditors under federal or state bankruptcy laws.

         Prior to our merger with EC2000, Inc., on October 26, 2000, EC2000,
Inc., sold 6,250,000 shares of its common stock through a private offering and
received gross proceeds of $1,050,000. Through March 31, 2002, we have used
these proceeds, in part, to fund our loss of approximately $226,000, advance
$150,000 to effectuate the combination with EC 2000, Inc., as well as pay a
deposit of $388,000 to Sonical S.R.L., a company controlled by Dr. Mario
Pandolfo, a principal stockholder of our company, for the future purchase of
10,000 units of inventory aggregating a total cost of $958,795. In addition,
through March 31, 2002, we received advances from our principal stockholders
of approximately $422,000 and we loaned $797,000 in the form of two notes to
Dr. Pandolfo, a principal stockholder. These notes bear interest at the prime
rate and are due on November 2, 2003 and are secured by shares of our common
stock owned by Dr. Pandolfo.

PLAN OF OPERATION

         Our plan of operation for the next twelve months is to begin to
implement our business strategy, including finalizing and expanding
non-exclusive marketing and distribution arrangements. We expect our principal
expenditures during the next 18 months to include operating expenses, including
general and administrative expenses.

                                    PART II.
                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

         None.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.


                                       4
<PAGE>
ITEM 3.   DEFAULTS BY THE COMPANY UPON ITS SENIOR SECURITIES

         None.

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

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

ITEM 5.   OTHER INFORMATION

         None.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

         a)  Exhibits

             None.

         b)  Reports on Form 8-K

             None.


                                       5
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)




         INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                   <C>
CONDENSED CONSOLIDATED BALANCE SHEETS
     MARCH 31, 2002 (UNAUDITED) AND DECEMBER 31, 2001                                   F-2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     THREE MONTHS ENDED MARCH 31, 2002 AND 2001 AND PERIOD
     FROM APRIL 6, 2000 (DATE OF INCEPTION) TO MARCH 31, 2002
     (UNAUDITED)                                                                        F-3

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIENCY)
     PERIOD FROM APRIL 6, 2000 (DATE OF INCEPTION) TO MARCH 31, 2002
     (UNAUDITED)                                                                        F-4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
     THREE MONTHS ENDED MARCH 31, 2002 AND 2001 AND PERIOD FROM
     APRIL 6, 2000 (DATE OF INCEPTION) TO MARCH 31, 2002 (UNAUDITED)                    F-5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)                                                                           F-6/9
</TABLE>


                                      * * *


                                      F-1
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                MARCH 31, 2002 (UNAUDITED) AND DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                                                March          December
                                              ASSETS                          31, 2002          31, 2001
                                              ------                         -----------      -----------
                                                                             (Unaudited)
<S>                                                                          <C>              <C>
Current assets:
     Cash                                                                    $        89      $     2,733
     Deposit with related party                                                  388,000          388,000
     Other current assets                                                          6,000            6,000
                                                                             -----------      -----------

          Totals                                                                $394,089         $396,733
                                                                                ========         ========


                       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                       -------------------------------------------------

Current liabilities:
     Accounts payable and accrued expenses                                     $  74,175        $  56,311
     Advances from stockholders                                                  422,439          188,052
                                                                               ---------        ---------
          Total liabilities                                                      496,614          244,363
                                                                               ---------        ---------

Stockholders' equity (deficiency):
    Preferred stock, par value $.001 per share; 20,000,000 shares
       authorized; none issued                                                        --               --
    Common stock, par value $.001 per share; 80,000,000 shares
       authorized; 22,500,000 shares issued and outstanding                       22,500           22,500
    Unearned compensation                                                        (72,223)
    Additional paid-in capital                                                   970,650          887,250
    Notes receivable - stockholder                                              (797,000)        (610,000)
    Deficit accumulated during the development stage                            (226,452)        (147,380)
                                                                               ---------        ---------
          Total stockholders' equity (deficiency)                               (102,525)         152,370
                                                                               ---------        ---------

          Totals                                                                $394,089         $396,733
                                                                                ========         ========
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.


                                      F-2
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              THREE MONTHS ENDED MARCH 31, 2002 AND 2001 AND PERIOD
            FROM APRIL 6, 2000 (DATE OF INCEPTION) TO MARCH 31, 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                           Three                Three
                                                           Months              Months
                                                           Ended                Ended
                                                           March                March
                                                          31, 2002             31, 2001             Cumulative
                                                        ------------         ------------         ------------
<S>                                                     <C>                  <C>                  <C>
General and administrative expenses                     $     85,007         $      8,051         $    265,009

Research and development expenses                                 --                   --                6,000
                                                        ------------         ------------         ------------

Operating loss                                               (85,007)              (8,051)            (271,009)
                                                        ------------         ------------         ------------

Other:
     Interest expense                                         (3,400)                                  (10,150)
     Interest income                                           9,335               11,712               54,707
                                                        ------------         ------------         ------------
        Totals                                                 5,935               11,712               44,557
                                                        ------------         ------------         ------------

Net income (loss)                                       $    (79,072)        $      3,661         $   (226,452)
                                                        ============         ============         ============

Basic net income (loss) per share                       $       (--)         $         --
                                                        ============         ============

Basic weighted average common shares outstanding          22,500,000           22,500,000
                                                        ============         ============
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.


                                      F-3
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
  (DEFICIENCY) PERIOD FROM APRIL 6, 2000 (DATE OF INCEPTION) TO MARCH 31, 2002
<TABLE>
<CAPTION>
                                            Preferred Stock              Common Stock
                                         --------------------    ----------------------------      Unearned
                                         Shares        Amount      Shares           Amount       Compensation
                                         ------        ------    -----------     ------------    ------------
<S>                                      <C>           <C>       <C>             <C>             <C>
Proceeds from the issuance of shares
     to founders                             --        $   --      3,000,000     $      3,000

Effects of reverse acquisition                                     4,000,000            4,000

Note receivable from stockholder

Issuance of shares to founders
     for patent rights                                             9,250,000            9,250

Shares sold through private placement                              6,250,000            6,250

Net loss
                                         ------        ------    -----------     ------------

Balance, December 31, 2000                   --            --     22,500,000           22,500

Note receivable from stockholder

Interest to stockholders

Net loss
                                         ------        ------    -----------     ------------

Balance, December 31, 2001                   --            --     22,500,000           22,500

Note receivable from stockholder

Interest to stockholders

Stock options issued for unearned
     consulting services                                                                         $    (80,000)

Amortization of unearned consulting
     services                                                                                           7,777

Net loss
                                         ------        ------    -----------     ------------    ------------

Balance, March 31, 2002                      --        $   --     22,500,000     $     22,500    $    (72,223)
                                         ======        ======    ===========     ============    ============
</TABLE>
<TABLE>
<CAPTION>
                                                                                        Deficit
                                                                         Note         Accumulated
                                                        Additional    Receivable      During the
                                                         Paid-in         from         Development
                                                         Capital      Stockholder        Stage          Total
                                                        ----------    -----------     -----------   ----------
<S>                                                     <C>           <C>             <C>            <C>
Proceeds from the issuance of shares
     to founders                                                                                     $    3,000

Effects of reverse acquisition                          $ (154,000)                                    (150,000)

Note receivable from stockholder                                      $  (500,000)                     (500,000)

Issuance of shares to founders
     for patent rights                                      (9,250)

Shares sold through private placement                    1,043,750                                    1,050,000

Net loss                                                                              $   (64,439)      (64,439)
                                                        ----------    -----------     -----------    ----------

Balance, December 31, 2000                                 880,500       (500,000)        (64,439)      338,561

Note receivable from stockholder                                         (110,000)                     (110,000)

Interest to stockholders                                     6,750                                        6,750

Net loss                                                                                  (82,941)      (82,941)
                                                        ----------    -----------     -----------    ----------

Balance, December 31, 2001                                 887,250       (610,000)       (147,380)      152,370

Note receivable from stockholder                                         (187,000)                     (187,000)

Interest to stockholders                                     3,400                                        3,400

Stock options issued for unearned
     consulting services                                    80,000

Amortization of unearned consulting
     services                                                                                             7,777

Net loss                                                                                  (79,072)      (79,072)
                                                        ----------    -----------     -----------    ----------

Balance, March 31, 2002                                 $  970,650    $  (797,000)    $  (226,452)   $ (102,525)
                                                        ==========    ===========     ===========    ==========
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.

                                     F-4
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           THREE MONTHS ENDED MARCH 31, 2002 AND 2001 AND PERIOD FROM
               APRIL 6, 2000 (DATE OF INCEPTION) TO MARCH 31, 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Three                Three
                                                                                Months              Months
                                                                                 Ended              Ended
                                                                                 March              March
                                                                                31, 2002            31, 2001          Cumulative
                                                                              -----------         -----------         -----------
<S>                                                                           <C>                 <C>                 <C>
Operating activities:
     Net income (loss)                                                        $   (79,072)        $     3,661         $  (226,452)
     Adjustments to reconcile net (loss) income
        to net cash used in operating activities:
        Amortization of stock options issued
           for services                                                             7,777                                   7,777
        Interest expense on advances to stock-
           holders                                                                  3,400                                  10,150
        Changes in operating assets and liabilities:
           Prepaid expenses and other current assets                                                                       (6,000)
           Deposit with related party                                                                                    (388,000)
           Accounts payable and accrued expenses                                   17,864               8,000              74,175
                                                                              -----------         -----------         -----------
               Net cash provided by (used in)
                   operating activities                                           (50,031)             11,661            (528,350)
                                                                              -----------         -----------         -----------

Investing activities:
     Issuance of notes receivable - stockholder                                  (187,000)                               (797,000)
     Repayments from (advances to) stockholders                                   234,387             (69,712)            422,439
                                                                              -----------         -----------         -----------
               Net cash provided by (used in)
                   investing activities                                            47,387             (69,712)           (374,561)
                                                                              -----------         -----------         -----------

Financing activities:
     Proceeds from issuance of common stock to
        founders                                                                                                            3,000
     Proceeds from issuances of common stock                                                                            1,050,000
     Payment in connection with reverse acquisition                                                                      (150,000)
                                                                                                                      -----------
               Net cash provided by financing activities                                                                  903,000
                                                                                                                      -----------

Net increase (decrease) in cash                                                    (2,644)            (58,051)                 89

Cash, beginning of period                                                           2,733              84,988                  --
                                                                              -----------         -----------         -----------

Cash, end of period                                                           $        89         $    26,937         $        89
                                                                              ===========         ===========         ===========

Supplemental disclosure of noncash investing and financing activities:

     Issuance of stock options                                                $    80,000                             $    80,000
                                                                              ===========                             ===========
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.


                                      F-5
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1 - Business and basis of presentation:

         On April 16, 2001, pursuant to an agreement and plan of reorganization
         and merger, Grand Enterprises, Inc. ("Grand"), an inactive
         publicly-held company, acquired EC 2000, Inc. ("EC 2000") by issuing
         18,500,000 shares of its common stock to stockholders of EC 2000 in
         exchange for all of the outstanding shares of EC 2000. The stockholders
         of EC 2000, after the acquisition, owned the majority of the combined
         company. Accordingly, the combination has been accounted for as a
         reverse acquisition whereby, for accounting purposes, EC 2000 is the
         accounting acquirer and Grand is the accounting acquiree. Grand and EC
         2000 are collectively referred to as (the "Company").

         EC 2000 was incorporated in the State of Delaware on April 6, 2000. The
         Company plans to market a fuel treatment system (the "Property") that
         will increase fuel efficiency and reduce harmful exhaust emissions. The
         Company has adopted a December 31 year end.

         The unaudited condensed consolidated financial statements of the
         Company are the historical condensed financial statements of EC 2000
         and include the accounts of Grand since the acquisition date.

         In the opinion of management, the accompanying unaudited condensed
         consolidated financial statements reflect all adjustments, consisting
         of normal recurring accruals, necessary to present fairly the financial
         position of the Company as of March 31, 2002, its results of operations
         and cash flows for the three months ended March 31, 2002, the changes
         in stockholders' equity (deficiency) for the period from April 6, 2000
         (date of inception) to March 31, 2002 and the related cumulative
         amounts for the period from April 6, 2000 (date of inception) to March
         31, 2002. Pursuant to the rules and regulations of the United States
         Securities and Exchange Commission, certain information and disclosures
         normally included in financial statements prepared in accordance with
         accounting principles generally accepted in the United States of
         America have been condensed in or omitted from these financial
         statements unless significant changes have taken place since the end of
         the most recent fiscal year. Accordingly, these unaudited condensed
         consolidated financial statements should be read in conjunction with
         the audited financial statements and notes thereto as of December 31,
         2001 and for the period April 6, 2000 (date of inception) to December
         31, 2001.

         The results of operations for the three months ended March 31, 2002 are
         not necessarily indicative of the results to be expected for the full
         year.


                                      F-6
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1 - Business and basis of presentation (concluded):

         On August 29, 2000, the Company signed an exclusive license agreement
         (the "License Agreement") with Mr. Mario Pandolfo (the "Owner"). The
         license agreement gave the Company the right to file for a patent for
         the Property, in certain countries, as defined. As an inducement for
         Mr. Pandolfo to enter into the License Agreement, the Company issued
         him 9,250,000 shares of common stock. The patent was valued at its
         historical cost basis of nil.

         As of March 31, 2002, the Company's operations were limited to
         organizational activities. It has not generated any revenue from
         operations through that date. Accordingly, it is considered a
         "development stage company" for accounting purposes.

         The accompanying unaudited condensed consolidated financial statements
         have been prepared assuming the Company will continue as a going
         concern. However, as of March 31, 2002, the Company has not generated
         any revenue from its operations. Management believes that the Company
         will not generate any revenue until it obtains the license and U.S.
         patents for the Property. Management believes that the Company will
         need total additional financing of $250,000 to continue to operate as
         planned during the twelve-month period subsequent to March 31, 2002.
         These conditions raise substantial doubt about the Company's ability to
         continue as a going concern.

         Management plans to obtain such financing through private offerings of
         debt and equity securities. However, management cannot assure that the
         Company will be able to obtain any or all of the additional financing
         it will need in order to continue to operate through at least March 31,
         2003 or that, ultimately, it will be able to generate any profits from
         the sale of the Property. If the Company is unable to obtain the
         required financing, it may have to curtail its operations or terminate
         its operations and liquidate its remaining assets and liabilities.

         The accompanying unaudited condensed consolidated financial statements
         do not include any adjustments related to the recoverability and
         classifications of assets or the amounts and classification of
         liabilities that might be necessary should the Company be unable to
         continue its operations as a going concern.

Note 2 - Summary of significant accounting policies:

         Principles of consolidation:

         The unaudited condensed consolidated financial statements include the
         accounts of EC 2000 and Grand. All significant intercompany balances
         and transactions have been eliminated in consolidation.


                                      F-7
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 2 - Summary of significant accounting policies (concluded):

         Use of estimates:

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America requires
         management to make estimates and assumptions that affect certain
         reported amounts and disclosures. Accordingly, actual results could
         differ from those estimates.

         Earnings (loss) per share:

         The Company presents "basic" earnings (loss) per share and, if
         applicable, "diluted" earnings per share pursuant to the provisions of
         Statement of Financial Accounting Standards No. 128, "Earnings per
         Share" ("SFAS 128"). Basic earnings (loss) per share is calculated by
         dividing net income or loss by the weighted average number of common
         shares outstanding during each period. The calculation of diluted
         earnings per share is similar to that of basic earnings per share,
         except that the denominator is increased to include the number of
         additional common shares that would have been outstanding if all
         potentially dilutive common shares, such as those issuable upon the
         exercise of stock options, were issued during the period. The Company
         did not have any potentially dilutive common shares outstanding during
         the period from April 6, 2000 (date of inception) to March 31, 2002.

Note 3 - Notes receivable:

         On November 3, 2000, the Company entered into an agreement with Mr.
         Pandolfo to lend him up to $1,000,000 in the form of two notes. The
         notes that are due on November 2, 2003, bear interest at the prime rate
         and are collateralized by the Company's stock. Upon the due date, the
         Company has the option to convert the outstanding balances into shares
         of treasury stock at $1 per share. However, if at any time during the
         term of the notes, the bid price equals or exceeds $4 per share for a
         period of twenty consecutive trading days, the outstanding balances are
         automatically converted into treasury stock at $1 per share. The
         Company earned interest of $9,335, $11,712 and $54,707 on the
         aforementioned notes for the three months ended March 31, 2002 and 2001
         and for the period from April 6, 2000 (date of inception) to March 31,
         2002, respectively.

Note 4 - Advances from stockholders:

         As of March 31, 2002, the Company had received advances of $422,439
         from its stockholders. These advances bear interest at 5.25% at March
         31, 2002 and are due on demand. Interest expense was $3,400 and $10,150
         for the three months ended March 31, 2002 and for the period from April
         6, 2000 (date of inception) to March 31, 2002, respectively, and was
         credited to additional paid-in capital.


                                      F-8
<PAGE>
                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 4 - Advances from stockholders (concluded):

         At March 31, 2002, the Company had a deposit of $388,000 with a related
         party for the future purchase of 10,000 units of inventory aggregating
         a total cost of $958,795.

         The founders provided services to the Company for the three months
         ended March 31, 2002 and 2001 and for the period from April 6, 2000
         (date of inception) to March 31, 2002 for which they were not
         compensated.

Note 5 - Consulting agreement:

         The Company entered into a consulting agreement with English
         Automotive, Ltd. ("English") for consulting services related to
         testing, marketing and distribution of the Property. The term of the
         agreement is for three years. In consideration for the services English
         will provide, the Company will issue options to purchase 200,000 shares
         of the Company's common stock at an exercise price of $.50, $1.00 and
         $2.00 per share for an option period of three years from the date of
         issuance of the option.

         As of March 31, 2002, the Company recorded unearned consulting services
         of $80,000 which represents the excess of the fair value of the
         underlying stock price over the exercise price for the three months
         ended March 31, 2002 and the period from April 6, 2000 (date of
         inception) to March 31, 2002. The Company recorded consulting expenses
         of $7,777.


                                      F-9
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

                               GRAND ENTERPRISES, INC.
                                                (Registrant)

                               By   /s/ Teodosio V. Pangia
                                    ------------------------------
                                    Teodosio V. Pangia
                                    Chairman, Chief Executive Officer and
                                    President (Principal Accounting Officer)


Date:  May 20, 2002