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 JUNE 30, 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: 000-30731


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

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


                            1133 BROADWAY, 8TH FLOOR
                               NEW YORK, NY 10010
          (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. 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 August
9, 2002.

                                       1
<PAGE>


                             GRAND ENTERPRISES, INC.

                                   FORM 10-QSB

                                  JUNE 30, 2002

                                      INDEX

                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

     See financial statements beginning on page F-1.

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

     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 on Form 10-QSB. 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


                                       2
<PAGE>


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 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 June 30, 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:

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.

Stock based compensation

     In accordance with the provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), we will recognize
compensation costs as a result of the issuance of stock options granted to
employees based on the excess, if any, of the fair value of the underlying stock
at the date of grant or award (or at an appropriate subsequent measurement date)
over the amount the employee must pay to acquire the stock. Therefore, we will
not be required to recognize compensation expense as a result of any grants of
stock options to employees at an exercise price that is equivalent to or greater
than fair value. We will also make pro forma disclosures, as required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), of net income or loss as if a fair value based
method of accounting for stock options granted to employees has been applied
instead if such amounts differ materially from the historical amounts.

     In accordance with SFAS 123, we will also recognize the cost of shares,
options, warrants and other equity instruments issued to nonemployees as
consideration for services as expense over the periods in which the related
services are rendered by a charge to compensation cost and corresponding credit
to additional paid-in capital. Generally, cost will be determined based on the
fair value of the equity instruments at the date of issuance. The fair value of
options, warrants and similar equity instruments will be estimated based on the
Black-Scholes option-pricing model, which meets the criteria set forth in SFAS
123, and the assumption that all the options or other equity instruments will
ultimately vest. The effect of actual forfeitures will be recognized as they
occur.

RESULTS OF OPERATIONS:

     COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2002 AND 2001.

     REVENUES. We did not have any revenues during the three or six months ended
June 30, 2002 or 2001.

     GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased by approximately $20,000 to $45,000 for the three months ended June
30, 2002 from $65,000 for the three months ended June 30, 2001. However, these
expenses increased by approximately $57,000 to $130,000 for the six months ended
June 30, 2002 as compared to $73,000 for the comparable prior period. This
increase and decrease was primarily attributable to timing of professional fees
expended in connection with the preparation of our regulatory filings and, in
2002, consulting fees of $14,000 relating to the grant of stock options. From
our inception, we have incurred general and administrative expenses of
approximately $310,000.

     RESEARCH AND DEVELOPMENT: During the six months ended June 30, 2002, we
continued the development activity of our product and incurred research and
development expenses of approximately $41,000 during this period. From
inception, we incurred research and development expenses of approximately
$47,000.

     INTEREST INCOME. Interest income was $9,000 and $19,000 for the three and
six months ended June 30, 2002 and $12,000 and $24,000 for the three and six
months ended June 30, 2001 and consists of interest earned on the notes
receivable from Dr. Mario Pandolfo. From inception, we have earned approximately
$64,000 of interest on these notes.

                                       3
<PAGE>


     INTEREST EXPENSE. Interest expense was approximately $3,000 and $7,000 for
the three and six months ended June 30, 2002 and was nil for the three and six
months ended June 30, 2001, which consists of interest on the advances from
stockholders. From inception, we have incurred interest expense of approximately
$13,000 on these advances.

     NET LOSS. Net loss was approximately $80,000 and $160,000 for the three and
six months ended June 30, 2002. Net loss was $53,000 and $50,000 for the three
and six months ended June 30, 2001. Since our inception, our accumulated loss
was approximately $307,000. The reasons for our net loss are explained above.

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 in a development stage. We have incurred a cumulative
loss of approximately $307,000 through June 30, 2002 and have very little cash
on hand. Further, our stockholders' deficiency increased by approximately
$325,000 from a deficit of $236,000 at December 31, 2001 to a deficit of
$561,000 at June 30, 2002. The primary reason for this increase was funding
approximately $187,000 of Dr. Pandolfo's loan (see below) and our loss for the
six months ended June 30, 2002. 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 June 30, 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 June 30, 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 June 30, 2002, we have used these
proceeds, in part, to fund our loss of approximately $307,000, advance $150,000
to effectuate the combination with EC 2000, Inc., as well as pay a cash deposit
of $388,000 to Sonical S.R.L., a company controlled by Dr. Mario Pandolfo, a
principal stockholder of our company, toward an open purchase order for 10,000
units of inventory. We are not required to purchase all of the units. However,
if we do, the aggregate purchase price will be $958,795. Our deposit of $388,000
represents payment for what we believe will be the minimum units of inventory we
will require at the initial introduction of our products in the marketplace.
Further, we believe, if for any reason we cannot take title to inventory, the
deposit will be refunded by Sonical S.R.L. The open purchase order is for our
anticipated inventory requirements for our initial year of operations, based on
our business plan. We will purchase the inventory of fuel energizing cells as a
finished product ready for sale pursuant to European marketing and safety
standards. We recently identified an independent third party that will modify
the inventory (fuel energizing cells) to comply with standards in the United
States prior to being packaged for sale in the United States and Canada. Such
modifications will include how the fuel energizing cell is packaged for sale, as
well as attaching certain couplings to the product, enabling the product to be
installed to motors in accordance with United States Safety Standards. We plan
to introduce our products to the market during the fourth quarter of 2002.

     In addition, through June 30, 2002, we received advances from our principal
stockholders of approximately $460,000, 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, are due on November 2, 2003 and are secured by shares of our
common stock owned by Dr. Pandolfo. Management of our company and Dr. Pandolfo
both expect that these notes will be repaid pursuant to their terms.

PLAN OF OPERATION

     Our plan of operation for the next 12 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.

                                       4
<PAGE>



                                    PART II.
                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     None.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.

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 June 30, 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>


                                   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 Financial and Accounting Officer)


Date: August 19, 2002

                                       6

<PAGE>


                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)



         INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                                                            PAGE
                                                                            ----
CONDENSED CONSOLIDATED BALANCE SHEETS
     JUNE 30, 2002 (UNAUDITED) AND DECEMBER 31, 2001                        F-2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001 AND PERIOD
     FROM APRIL 6, 2000 (DATE OF INCEPTION) TO JUNE 30, 2002 (UNAUDITED)    F-3

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' DEFICIENCY
     PERIOD FROM APRIL 6, 2000 (DATE OF INCEPTION) TO JUNE 30, 2002
     (UNAUDITED)                                                            F-4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
     SIX MONTHS ENDED JUNE 30, 2002 AND 2001 AND PERIOD FROM
     APRIL 6, 2000 (DATE OF INCEPTION) TO JUNE 30, 2002 (UNAUDITED)         F-5

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



                                      * * *







                                      F-1
<PAGE>


                     GRAND ENTERPRISES, INC. AND SUBSIDIARY
                          (A Development Stage Company)

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 JUNE 30, 2002 (UNAUDITED) AND DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                                          June          December
                                                                        30, 2002        31, 2001
                                                                       ---------       ---------
                                      ASSETS                          (Unaudited)
<S>                                                                    <C>             <C>
Current assets:
     Cash                                                                              $   2,733
     Other current assets                                                                  6,000
                                                                       ---------       ---------

          Totals                                                       $      --       $   8,733
                                                                       =========       =========

                      LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable and accrued expenses                             $ 100,760       $  56,311
     Advances from stockholders                                          460,247         188,052
                                                                       ---------       ---------
          Total liabilities                                              561,007         244,363
                                                                       ---------       ---------

Stockholders' 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                                                (65,557)
    Additional paid-in capital                                           973,950         887,250
    Notes receivable - stockholder                                      (797,000)       (610,000)
    Deposit on future inventory purchases - related party               (388,000)       (388,000)
    Deficit accumulated during the development stage                    (306,900)       (147,380)
                                                                       ---------       ---------
          Total stockholders' deficiency                                (561,007)       (235,630)
                                                                       ---------       ---------

          Totals                                                       $      --       $   8,733
                                                                       =========       =========
</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 AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001 AND PERIOD
             FROM APRIL 6, 2000 (DATE OF INCEPTION) TO JUNE 30, 2002
                                   (Unaudited)


<TABLE>
<CAPTION>
                                           Three            Six             Three             Six
                                          Months           Months           Months           Months
                                        Ended June       Ended June       Ended June       Ended June
                                         30, 2002         30, 2002         30, 2001         30, 2001        Cumulative
                                       ------------     ------------     ------------     ------------     ------------
<S>                                    <C>              <C>              <C>              <C>              <C>
General and administrative expenses    $     45,186     $    130,193     $     65,038     $     73,089     $    310,195

Research and development expenses            41,400           41,400                                             47,400
                                       ------------     ------------     ------------     ------------     ------------

Operating loss                              (86,586)        (171,593)         (65,038)         (73,089)        (357,595)
                                       ------------     ------------     ------------     ------------     ------------
Other:
   Interest expense                          (3,300)          (6,700)                                           (13,450)
   Interest income                            9,438           18,773           11,842           23,554           64,145
                                       ------------     ------------     ------------     ------------     ------------
      Totals                                  6,138           12,073           11,842           23,554           50,695
                                       ------------     ------------     ------------     ------------     ------------

Net loss                               $    (80,448)    $   (159,520)    $    (53,196)    $    (49,535)    $   (306,900)
                                       ============     ============     ============     ============     ============

Basic net loss per share                       $(-)            $(.01)            $(-)             $(-)
                                               ====            =====             ====             ====
Basic weighted average number of
   common shares outstanding             22,500,000       22,500,000       21,788,888       20,144,444
                                       ============     ============     ============     ============
</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' DEFICIENCY
         PERIOD FROM APRIL 6, 2000 (DATE OF INCEPTION) TO JUNE 30, 2002

<TABLE>
<CAPTION>
                                                                                                                Note
                                           Preferred Stock      Common Stock                    Additional    Receivable
                                           ---------------  -------------------     Unearned      Paid-in       from
                                           Shares   Amount    Shares     Amount   Compensation    Capital    Stockholder
                                           ------   ------  ----------  --------  ------------  ----------   -----------
<S>                                          <C>    <C>     <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                $ (154,000)
Note receivable from stockholder                                                                               $(500,000)
Issuance of shares to founders
  for patent rights                                          9,250,000     9,250                    (9,250)
Shares sold through private placement                        6,250,000     6,250                 1,043,750
Net loss
                                           ------   -----   ----------  --------                ----------     ----------
Balance, December 31, 2000                   --             22,500,000    22,500                   880,500      (500,000)
Note receivable from stockholder                                                                                (110,000)
Deposit on future inventory purchases -
  related party
Interest to stockholders                                                                             6,750
Net loss
                                           ------   -----   ----------  --------                ----------     ----------
Balance, December 31, 2001                   --             22,500,000    22,500                   887,250      (610,000)
Note receivable from stockholder                                                                                (187,000)
Interest to stockholders                                                                             6,700
Stock options issued for unearned
  consulting services                                                               $(80,000)       80,000
Amortization of unearned consulting
  services                                                                            14,443
Net loss
                                           ------   -----   ----------  --------    --------   -----------    ----------
Balance, June 30, 2002                       --     $  --   22,500,000   $22,500    $(65,557)   $  973,950    $ (797,000)
                                           ======   =====   ==========  ========    ========   ===========    ==========
</TABLE>


                                             Deposit      Deficit
                                            on Future   Accumulated
                                            Inventory    During the
                                          Purchases -   Development
                                         Related Party     Stage        Total
                                         -------------  -----------   ---------
Proceeds from the issuance of shares
  to founders                                                         $   3,000
Effects of reverse acquisition                                         (150,000)
Note receivable from stockholder                                       (500,000)
Issuance of shares to founders
  for patent rights
Shares sold through private placement                                 1,050,000
Net loss                                                $ (64,439)      (64,439)
                                                        ---------     ---------
Balance, December 31, 2000                                (64,439)      338,561
Note receivable from stockholder                                       (110,000)
Deposit on future inventory purchases -
  related party                            $(388,000)                  (388,000)
Interest to stockholders                                                  6,750
Net loss                                                  (82,941)      (82,941)
                                           ---------    ---------     ---------
Balance, December 31, 2001                  (388,000)    (147,380)     (235,630)
Note receivable from stockholder                                       (187,000)
Interest to stockholders                                                  6,700
Stock options issued for unearned
  consulting services
Amortization of unearned consulting
  services                                                               14,443
Net loss                                                 (159,520)     (159,520)
                                           ---------    ---------     ---------
Balance, June 30, 2002                     $(388,000)   $(306,900)    $(561,007)
                                           =========    =========     =========


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
             SIX MONTHS ENDED JUNE 30, 2002 AND 2001 AND PERIOD FROM
               APRIL 6, 2000 (DATE OF INCEPTION) TO JUNE 30, 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Six            Six
                                                                Months          Months
                                                                 Ended          Ended
                                                                 June            June
                                                               30, 2002        30, 2001       Cumulative
                                                             -----------     -----------     -----------
<S>                                                          <C>             <C>             <C>
Operating activities:
     Net loss                                                $  (159,520)    $   (49,535)    $  (306,900)
     Adjustments to reconcile net loss to net cash
        provided by (used in) operating activities:
        Amortization of stock options issued
           for services                                           14,443                          14,443
        Interest expense on advances to stock-
           holders                                                 6,700                          13,450
        Changes in operating assets and liabilities:
           Prepaid expenses and other current assets               6,000          50,000
           Deposit with related party                                                           (388,000)
           Accounts payable and accrued expenses                  44,449          16,098         100,760
                                                             -----------     -----------     -----------
               Net cash provided by (used in)
                   operating activities                          (87,928)         16,563        (566,247)
                                                             -----------     -----------     -----------
Investing activities:
     Issuance of notes receivable - stockholder                 (187,000)                       (797,000)
     Repayments from stockholders                                272,195          60,434         460,247
                                                             -----------     -----------     -----------
               Net cash provided by (used in)
                   investing activities                           85,195          60,434        (336,753)
                                                             -----------     -----------     -----------
Financing activities:
     Proceeds from issuance of common stock to
        founders                                                                                   3,000
     Proceeds from issuances of common stock                                                   1,050,000
     Repayment of due related party                                             (160,000)
     Payment in connection with reverse acquisition                                             (150,000)
                                                                             -----------     -----------
               Net cash provided by (used in) financing
                   activities                                                   (160,000)        903,000
                                                                             -----------     -----------

Net decrease in cash                                              (2,733)        (83,003)             --

Cash, beginning of period                                          2,733          84,988              --
                                                             -----------     -----------     -----------
Cash, end of period                                          $        --     $     1,985     $        --
                                                             ===========     ===========     ===========
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 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
               June 30, 2002,  its results of  operations  for the three and six
               months ended June 30, 2002 and 2001, the changes in stockholders'
               equity  (deficiency)  for the period  from April 6, 2000 (date of
               inception)  to June 30,  2002 and cash  flows for the six  months
               ended June 30, 2002 and 2001 and the related  cumulative  amounts
               for the period from April 6, 2000 (date of inception) to June 30,
               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 and six months ended June
               30,  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 June 30, 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 June 30, 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 June 30, 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 June 30, 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 June 30, 2002.

               Inventory:
                  The  Company  will record its  inventory  at the lower of cost
                  (first-in,  first-out method) or market.  Assuming the Company
                  sells its  product  in the  future to third  parties,  it will
                  reclassify the applicable  unit cost for the inventory to cost
                  of sales.


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 $9,438, $18,773,  $11,842, $23,554 and
               $64,145 on the aforementioned  notes for the three and six months
               ended  June 30,  2002 and 2001 and for the  period  from April 6,
               2000 (date of inception) to June 30, 2002, respectively.


Note 4 - Advances from stockholders:
               As of June  30,  2002,  the  Company  had  received  advances  of
               $460,247 from its  stockholders.  These advances bear interest at
               4.75% at June 30,  2002 and are due on demand.  Interest  expense
               was $3,300, $6,700 and $13,450 for the three and six months ended
               June 30,  2002 and for the  period  from  April 6, 2000  (date of
               inception)  to June 30, 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 June 30,  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 and
               six months  ended June 30,  2002 and 2001 and for the period from
               April 6, 2000 (date of inception) to June 30, 2002 for which they
               were not compensated.


Note 5 - Consulting agreement:
               On December  31,  2001,  the Company  entered  into a  consulting
               agreement with English Automotive,  Ltd.  ("English"),  a company
               owned by one of the Company's directors,  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.

               The  Company  recorded  unearned  consulting  services of $80,000
               recognized  based on the fair  value of the  options at the grant
               date using the Black-Scholes  method, as required by Statement of
               Financial  Accounting  Standards  No. 123.  The Company  recorded
               consulting  expenses related to the  aforementioned  agreement of
               $6,666,  $14,443 and  $14,443 for the three and six months  ended
               June 30,  2002 and for the  period  from  April 6, 2000  (date of
               inception) to June 30, 2002, respectively.



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                                      F-9