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


                                 FORM 10-KSB

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



For the fiscal year ended March 30, 2002


                    BEVSYSTEMS INTERNATIONAL, INC.


COLORADO                                               EIN 84-1352529

501 Brickell Key Drive
Suite 407
Miami, Florida                                             33131


(786) 425-2201
www.lifeO2.com
--------------

Securities registered under Section 12(b) of the Exchange Act:

Common Stock par value $0.00 per share        National Association of
                                              Securities Dealers

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[x] Yes    [ ]  No

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained 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 to this Form 10-KSB.  [x]

State issuer's revenues for its most recent fiscal year.  $1,379,384

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and ask prices to such stock as of a specified date within 60
days.  $13,676,286 (Based on price of $0.37 on July 10, 2002 and
36,962,934 shares held by non-affiliates)

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.  Outstanding as of
July 10, 2002; 45,824,490 Common Stock.

Documents incorporated by reference:    None



<PAGE>   1



              BEVSYSTEMS INTERNATIONAL, INC. & SUBSIDIARIES

                            TABLE OF CONTENTS



                                  PART I

Item 1.    Description of Business
Item 2.    Description of Property
Item 3.    Legal Proceedings
Item 4.    Submission of Matters to a Vote of Security Holders

                                  PART II

Item 5.    Market for Common Equity and Related Stockholder Matters
             Dividend Policy
             Recent Sales of Unregistered Securities
Item 6.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations
Item 7.    Financial Statements
Item 8.    Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure

                                 PART III

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

                                  PART IV

Item 13.   Exhibits and Reports on Form 8-K
Signatures



<PAGE>    2

                                  PART I

Item 1. Business

BEVsystems International, Inc. ("BEVsystems") produces and markets bottled
water infused with dissolved oxygen in concentrations up to approximately
15 times greater than that found in ordinary bottled water.  Our core
product, trademarked as Life O2, combines water and oxygen, the two
essential requirements for human life.  Our products and manufacturing
processes are protected under 7 U.S. and 18 international patents, and are
marketed under various registered trademarks.  We believe that consumption
of oxygen-enriched water can be shown to improve performance and well being.
In a variety of studies, athletes that consumed Life O2 bottled water were
shown to measurably improve their performance.

Over the last four years Life O2 bottled water has been sold in 18
international markets, making Life O2 bottled water the global category
leader in super oxygenated water.  Currently, we have agreements in Europe,
Japan, Canada and Latin America.  In international markets, we sell and
license our products to  bottlers and distributors, who bottle and sell
either Life 02 branded products or co-branded products that are produced
using our equipment and processes.  In November 2001, we began to launch
our products into the United States market and are currently selling our
products in Florida, the greater New York City metropolitan area and
selected other markets.  In the United States, we bottle our products in
our own Clearwater, Florida bottling facility and under co-packing
arrangements with independent bottlers and sell them to distributors
under our Life O2 label.

Industry Background
-------------------

Bottled water has been and continues to be one of the fastest growing
segments of the beverage industry.  Growing consumer concerns over the
quality of municipal water supplies and the perceived detrimental effects
of carbonated soft drinks have propelled consumption of bottled water.
According to Beverage Industry Magazine, in 2000, 1.69 billion gallons of
water was bottled in single-serve sizes (600 ml or 20 oz, or less) in the
United States, up from 1.32 billion gallons in 1999, an increase of 28% in
one year.  According to Beverage Marketing Corporation, per capita
consumption of bottled water in the United States increased from 5.2 gallons
to 15.6 gallons from 1985 to 1999, an increase of 200% over the period.  We
believe that we will be able to position our oxygenated water product as a
distinct, value-added offering in the expanding bottled water segment.

Within the many beverage categories, there is a subcategory that is rapidly
growing in importance. This category is the functional beverage category
(sport drinks and energy drinks), of which one of the most prominent
examples is Gatorade. This type of beverage is believed to provide the
consumer with benefits beyond that of purity or taste. In the case of
Gatorade, it is commercialized on the premise that it replenishes the
body's supply of minerals depleted during the course of heavy physical
activity or dehydration. The success of this type of beverage lies in the
consumers desire to obtain and direct results from drinking the beverage.
As a category, functional beverages have also reached sales volumes in the
billions of dollars.  In the last two years, super oxygenated bottled water
has emerged as a functional beverage of growing importance.

Company Background
------------------

BEVsystems International, Ltd. was formed in March 2001 to acquire the
beverage assets and further develop the oxygenated beverage business of
Life International Products, Inc. and Life O2 Beverages, LLP ("Life
International"). The asset purchase was completed on July 13, 2001.  The
assets acquired included an exclusive, perpetual, royalty-free license to
its domestic and foreign patents for the production of super oxygenated
water in the field of use of human consumables, ownership of the Life O2
and OXYLOC trademarks, all of the oxygenating equipment and inventories
installed at various locations worldwide, as well as contracts with 10
bottlers and 13 distributors covering water production and distribution
to 18 countries in North and South America, Asia and Europe.  To acquire
the assets, BEVsystems paid Life International $1,020,000 in cash, and
issued to Life 6,991,147 shares of our common stock, representing 49% of



<PAGE>    3



BEVsystems' outstanding shares at the time.   Prior to the acquisition,
our products had already been successfully introduced in a wide variety of
international markets, and two test markets in the United States, covering
parts of Colorado and Hawaii.

On February 25, 2002, we finalized an agreement for the purchase and sale of
stock with Aqua Clara Bottling & Distribution, Inc., a Colorado corporation.
The agreement was structured as a reverse acquisition and provided for Aqua
Clara to purchase all of the shares held by BEVsystems International, Ltd.
shareholders who then became the controlling shareholders of Aqua Clara.
After the acquisition, Aqua Clara was renamed BEVsystems International,
Inc., and BEVsystems' Chairman and CEO, G. Robert Tatum, III, became the
new Chairman and CEO.  The Aqua Clara acquisition gave BEVsystems control
of a bottling facility here in the United States, which has allowed us to
launch Life O2 domestically in a cost-effective manner.  The Agreement
provided that holders of each share of BEVsystems common stock received
from Aqua Clara 1.6738 shares of Aqua Clara's common stock.   From a legal
perspective, Aqua Clara was the surviving company and thus continues its
public company reporting obligations.  However, from an accounting
perspective, BEVsystems acquired Aqua Clara, thus all financial information
in this 10K is presented using generally accepted accounting principles for
purchase accounting, and includes BEVsystems results from the period
April 1, 2001 to March 30, 2002 and Aqua Clara's results from the period
February 25, 2002 to March 30, 2002.

BEVsystems in the twelve months ending March 30 ,2002 has accomplished the
following:

  *  Hired a seasoned U.S. and International management team with
     extensive experience in the beverage industry.
  *  Launched the south Florida market utilizing a network of Independent
     distributors targeting health clubs and gyms, gourmet food, health
     foods, and convenience stores.
  *  Attained penetration in over 800 accounts, including national chains
     such as Whole Foods, Wild Oats and Walgreens.
  *  Completed over 100 Life O2 in-store sampling and promotional events
     providing trial and awareness to South Florida consumers.
  *  Formed a 5-year strategic partnership for the distribution of Life O2
     SuperOxygenated Water in key Asian countries including Japan, Korea,
     Philippines, China, and Taiwan.
  *  Launched in Chile and signed agreements for Australia / New Zealand
  *  Commenced Home and Office Delivery with two distributors.
  *  Reached agreement with a major distributor to launch Life O2 products
     in the five boroughs of metropolitan New York.
  *  Installed proprietary technology and equipment in the Aqua Clara
     bottling facility in Clearwater, Florida and began production of
     Life O2 products for distribution in Florida and New York.

Company Strategy
----------------

BEVsystems plans to continue to sell its products directly to large
merchants and distributors under its trademarked Life O2 label in selected
U.S. markets, and to license our technology to bottlers and distributors in
other markets who will bottle and sell water under their own label or co-
branded labels, using our equipment and process technology.

Our growth strategy is to:

  *  Increase Consumer Awareness and Strengthen Brand Imaging:  A key to
     the growth of our company is educating the consumer on the advantages
     of oxygen enriched water, through published research and clinical
     studies, and innovative product marketing and advertising, including
     the use of unique packaging.  We believe that these activities
     increase the visibility and range of well-known brands. We intend
     to continue to develop the type of innovative packaging that catches
     a consumer's eye and increases sales.




<PAGE>    4



  *  Expand and Improve Distribution:  We plan to continue to expand in
     existing and new geographic markets and channels of trade. We intend
     to focus our sales force on continually improving relationships with
     distributors by assisting our distributors in developing local
     marketing promotion campaigns, training personnel and participating
     in local customer visits. Finally, we intend to pursue additional
     distributors in underserved markets to drive sales.

  *  Develop multiple channels of distribution:  In addition to selling
     our products through distributors and bottlers, we believe there
     are significant opportunities to sell our products through a home
     and office delivery distribution channel, which we are currently
     in the process of exploring.

  *  Develop multiple brands:   We are continually evaluating brand
     extensions such as table waters, medical beverages and beverages
     aimed at the nightlife market that can be cost effectively
     introduced through our distribution network.  In addition, we are
     also evaluating other beverage categories that can be introduced
     through our distribution network.

  *  Provide a balanced portfolio of revenue sources:   We are developing
     multiple revenue odels such as direct selling, joint venturing and
     licensing to increase the scale and global market footprint of the
     company.   For each new market and new initiative, we select from
     a wide variety of financial and partnering options to execute the
     appropriate risk/reward solution.

We believe that the initiatives underway, the portfolio approach to our
strategic initiatives, and the expertise and success record of our
management team in having developed similar business and revenue models
in prior companies, enable us to execute on our strategy.  However, in
order to develop and expand the business, our plans call for us to expend
significant funds in marketing, sales and related product development and
there can be no assurance that such funds will be available to us or
available on commercially reasonable terms.

Marketing
---------

BEVsystems' marketing strategy is focused on positioning Life O2  as being a
new and exciting beverage that's first in its category within an important
new niche of the beverage industry.

  *  Life O2 is first in the category of oxygen-enhanced bottled waters.
     Pioneering a new category incites curiosity in the consumer and
     almost guarantees an initial trial and a desire to learn more about
     it.  By claiming to be "The Original", Life O2 is already drawing
     considerable attention to itself.  By asserting its position as
     the pioneer of the category, the consumer is urged  to consider
     Life O2 's product history and longevity in the marketplace.
     A by-product of Life O2 's claim as "The Original" pushes
     competitors to address the issue of which product is "the oldest
     and wisest" in the category.

  *  Life O2 is a new beverage.  Not only is Life O2 in a new category,
     it is also a new beverage on the market.  Consumers are constantly
     looking for the newest thing on the shelf, and Life O2, with its
     limited exposure, is still considered a new product, thereby
     sparking interest in the customer.  Life O2 's award-winning
     packaging also enhances the attraction to Life O2.  The copy on
     the label and the label's see-through design and graphics draw
     consumers to take a closer look.

  *  Life O2 has created a niche market in the production of one of the
     first "performance waters".  It is not the goal to capture the
     entire water market, but rather to position Life O2 as the leader
     and pioneer of this specific niche in both the bottled water and
     sports drink categories.

The marketing agendas for both the domestic business (including retail trade
and home and office delivery) and the international business (licensees,
bottlers and distributors) segments of BEVsystems include the following
major components:



<PAGE>    5




Published Research

Market Research - To identify target market segments and the ideal approach
for each group. Medical/ Scientific Research - To further validate the
beneficial impact of oxygenation on athletic performance and human well-being.

Public Relations

BEVsystems has contracted Thorp & Company, a PR firm, and is currently
circulating press releases to trade and consumer media regarding
corporate announcements, product information and benefits and events
of interest to the public.  The Company has developed in 2002 a consumer
awareness program focusing on product benefits. Oxygen, BEVsystems' company
newsletter is, and will continue to be, an important communication vehicle
with retailers and distributors. Oxygen chronicles the growth of BEVsystems
and its products, major events, new product announcements, additions to the
Management Team, and highlights activities throughout the global family of
Life O2 licensees, bottlers and distributors.

Website

The Company's interactive website (www.LifeO2.com) and www.Bevsystems.com
are designed to communicate with retailers, distributors and Life O2
consumers.  The content of the site includes sections and web pages
devoted to each of the following:  Company, Management, Product, Research,
Investor Information, Stock History, Press Kit, Press Releases, In The
News Calendar of Promotional Events, Frequently Asked Questions, Also to
be included are listings of retailers and distributors, both domestic and
international; an online store with product and branded merchandise
available for purchase with shipping available world-wide; and electronic
versions of the BEVsystems custom-published LifeStyle magazine and company
newsletter, Oxygen.

Print Advertising

General Circulation - To further educate consumers about the benefits of
oxygenated water and to promote interest through creative image campaigns.

Beverage Trade Journals - To attract new beverage industry partners and
alliances by promoting the goals and initiatives of BEVsystems'
international and domestic business segments.

Point-of-Purchase (P.O.P.) Materials

BEVsystems' Sales Representatives outfit many new retail stores with
stacker posters, hanging mobiles (3-sided posters), bottleneck rings,
window posters, Q&A tri-fold brochures, and barrel & refrigerated
coolers.  The Company will continue to enhance the current P.O.P.
materials and will develop new promotional pieces to attract the
attention of shoppers and to further promote the Life O2 products.

Event Marketing

BEVsystems sponsors a variety of high-profile and grass roots events and
activities to promote product and brand awareness.  In the initial model
market of South Florida, BEVsystems has focused on a mix of athletic
contests, sporting events and community-related charity activities,
including the NASDAQ-100 International Tennis Open, the Coconut Grove
Art Festival, the Veteran's Day N'SYNC Benefit Concert for Victims of 9/11,
the Miami Corporate Run and the Ocean Drive Magazine VolleyPalooza Beach
Volleyball Tournament.  Life O2 is the "Official" Water of all of these
events.  Most of the aforementioned events are negotiated to include product
sale opportunities resulting in reduced cost to the Company based on product
trade or profits earned from the sale of water in exchange for sponsorship
fees charged upfront by the event.




<PAGE>    6



Sports Endorsements

BEVsystems takes a non-traditional approach to "Sports Endorsements" by
utilizing its own Elite Athlete Program and by building relationships
with all levels of athletic teams and individuals, including NBA, NFL,
college, high school and community teams and players.  The Company's
philosophy is to encourage voluntary endorsements based on consumer
satisfaction rather than forced endorsements based on payment.

Several teams and individual athletes have "discovered the oxygen
difference" and have begun to voluntarily request that Life O2 be made
available to them.  These teams and athletes drink Life O2 during
practices and games regardless of their paid affiliations with other
brands.  This results in increased product awareness and creates an
invaluable "buzz" among consumers, throughout the athletic communities
and within the beverage industry.

Elite Athlete Program

This program consists of multiple Life O2 sponsored individuals with
members drawn from the top amateur athletes in various sport categories
including cycling, swimming and running.  Team Members wear Life O2
uniforms during competition.  They also drink Life O2 as an important
part of their training routines and rely on increased performance from
drinking Life O2 during competitions.   The Elite Athlete Program
currently includes athletes who participate in marathons, triathlons
and other cycling and swimming competitions and is expanding to include
tennis, golf, road, track and extreme cycling, and volleyball athletes.

We believe the afore-mentioned marketing plans enhance, promote and support
the message throughout the domestic and international bottled water
industries, further communicating the message that Life O2 has unique
qualities setting it apart from the non-oxygenated waters currently
available to consumers.  This marketing plan forms a general outline
that is further tailored to meet the needs of the specific agendas of
the retail trade, home and office delivery and international
licensee/bottler/distributor segments of BEVsystems business plan.

Trademarks
----------

In connection with the purchase of assets from Life International previously
described, we acquired the exclusive rights to use Life International's
patents for the oxygen enrichment of human consumables, including bottled
water. Life International has been granted seven U.S. patents and eighteen
international patents covering the processes our distributors and co-packers
use to enhance the oxygen content of bottled water. Life International has
made applications for one or more of these patents in a number of other
countries, certain of which are presently pending and certain of which
have been issued.  We also acquired the trademarks Life O2 and OXYLOC.
These trademarks have been registered in the U.S. and 35 other countries,
and applications have been made for the Life O2 mark in a number of other
nations. In many cases our distributors have chosen to market the oxygenated
water product under their own private labels, in which case the label still
displays the Life O2 logo somewhere on the bottle.

The Company believes that its common law and registered trademarks have
significant value and goodwill and that some of these trademarks are
instrumental in its ability to create demand for and market its products.
There can be no assurance that the Company's common law or registered
trademarks do not or will not violate the proprietary rights of others,
that they would be upheld if challenged or that the Company would, in
such an event, not be prevented from using the trademarks, any of which
could have an adverse effect on the Company.

Bottling Operations
-------------------

The Company owns a bottling facility in Clearwater, Florida that includes
the plant building with approximately 14,000 sq. ft. under roof with an
exposed four-bay loading dock sitting on 2.1 acres.  Approximately
2,400 sq. ft. is utilized for office facilities and the rest is used
for bottling and warehouse operations.  The building was completely
remodeled during fiscal year 1999 at a cost of approximately $600,000.



<PAGE>    7



The bottling line is rated at 160 bottles/min., or, practically,
1,350 24-bottle cases of 20-oz. bottled water each shift.

Upon delivery to the Company's facilities, the source water is passed
through a number of filtration, ion exchange, and reverse osmosis
processes by which it is reduced to a very pure 3 - 5 parts per million
of dissolved solids.  Water is oxygenated using the purest oxygen
commercially available in a proprietary process.  The water is then
treated with ultraviolet light, which effectively kills bacteria and
other microorganisms before delivery to the bottling area where the
various products are filled and capped.  The filling room is supplied
with pressurized air from high-capacity, high-efficiency particulate
filters, resulting in a clean filling and capping environment.

The manufacturing process is designed to be highly automated.  Bottles
are mechanically de-palletized, cleaned, filled and capped.  The filled
bottles are automatically coded, labeled, tamper-banded (if applicable),
and packed in cases.  After palletizing and stretch wrapping, the product
is either loaded directly onto a truck for immediate shipment or is stored
in the warehouse facility for future shipment.

The Company maintains internal quality control standards.  Each shift's
production is tested in Company laboratory facilities according to FDA
and IBWA standards, and random samples are submitted regularly to an
independent laboratory for confirmation testing.


Government Regulations
----------------------

The Federal Food and Drug Administration ("FDA") regulates bottled water as
a "food." Accordingly, the Company's bottled water must meet FDA requirements
of safety for human consumption, of processing and distribution under
sanitary conditions and of  production in accordance  with the FDA "good
manufacturing practices." To assure the safety of bottled water, the FDA
has established quality standards that address the substances that may be
present in water which may be harmful to human health as well as substances
that affect the smell, color and taste of water.  These quality standards
also require public notification whenever the microbiological, physical,
chemical or radiological quality of bottled water falls below standard.
The labels affixed to bottles and other packaging of the water is subject
to FDA restrictions on health and nutritional claims for foods  under the
Fair  Packaging  and  Labeling  Act. In addition all drinking water must
meet Environmental Protection Agency standards established under the Safe
Drinking  Water  Act for  mineral  and  chemical concentration and drinking
water quality and treatment, which are enforced by the FDA.

The Company is subject to the food labeling regulations required by the
Nutritional  Labeling and Education  Act of 1990.  The Company believes
it is in substantial compliance with these regulations.

The Company is subject to periodic, unannounced inspections by the FDA.
Upon  inspection,  the Company  must be in  compliance  with all aspects
of the quality standards and good manufacturing  practices for bottled
water, the Fair Packaging  and  Labeling  Act,  and all other applicable
regulations  that are incorporated in the FDA quality standards.

In May 1996, new FDA regulations became effective which redefined the
standards  for the identification  and  quality of bottled  water.  The
Company believes that it meets  the  current regulations  of the FDA.

The  Company's  product  labels  are  subject to state  regulation
(in addition to the federal requirements) in each state where the water
products are sold. These regulations set standards for the information
that must be provided and the basis on which any therapeutic claims for
water may be made.  The Company believes that it meets state regulations.

The   bottled   water   industry   has a   comprehensive  program  of
self-regulation.  The Company is a member of the  International  Bottled
Water Association  ("IBWA").  As a member of the IBWA, the Company's
Facilities are inspected annually by an  independent  laboratory,  the
National  Sanitation Foundation  ("NSF").  By means of unannounced NSF



<PAGE>    8



inspections, IBWA members are evaluated on their compliance with the
FDA regulations and the association's performance requirements, which
in certain respects are more stringent than those of the federal,
and various state regulations.

Employees
---------

As of June 30, 2002, the company had thirty-five employees.  Unions
represent none of our employees and we believe our employee relations
are good.  All of the senior management and officers have employment
agreements with the Company. All employees participate in the
Company's Employee Stock Option Plan after 90 days of employment.


Item 2.  Description of Property
         -----------------------

Facilities
----------

Our principal executive offices occupy approximately 5,400 square feet of
office space in Miami, Florida, at an annual cost of approximately
$150,000 per year.  We also lease approximately 750 square feet of
office space in Sarasota, Florida and 2,000 square feet of production
space in Fort Wayne, Indiana at an aggregate annual rental of
approximately $15,000.  The Company also owns a bottling facility
in Clearwater, Florida that includes the plant building with
approximately 14,000 sq. ft. under roof with an exposed four-bay
loading dock sitting on 2.1 acres.  Approximately 2,400 sq. ft. is
utilized for office facilities and the rest is used for bottling and
warehouse operations.


Item 3.  Legal Proceedings
         -----------------

The Company is party to legal proceedings as set forth below.

Civil Litigation in the Circuit Court of the Sixth Judicial Circuit in and
for Pinellas County - Rand L. Gray and Kathleen Gray v. Aqua Clara Bottling
& Distribution, Inc. et al., Pinellas County, Case No. 00-2122-C1-021.
This case arises out of an alleged breach of an employment contract.
The Plaintiffs filed an Amended Complaint on June 26, 2000.  The
Amended Complaint alleges 6 counts:  Count I - Foreclosure of Mortgage;
Count II - Foreclosure of Security Interest on Personal Property; Count
3 - Damages on promissory Note; Count IV - Damages for Breach of employment
Agreement; Count V - Damages for Breach of Severance Agreement; and Count
VI- Damages for Breach of Indemnity Agreement. Progress of the case to date:
1st part of litigation is in negotiation for settlement, Counterclaim
could erase their claim.

The company is party to other claims arising out of the ordinary course of
business, which in the aggregate management believes is not material.


Item 4.	Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

On February 25, 2002, the Board of Directors and shareholders for Aqua
Clara Bottling & Distribution, Inc. approved a Certificate of Amendment
to the Articles of Incorporation that specifies the name shall be
changed from Aqua Clara Bottling and Distribution, Inc. to
BEVsystems International, Inc. In addition, on February 25, 2002, the
Board of Directors and shareholders approved a one for ten (1:10)
reverse stock split for shareholders of record as of January 17, 2002.

Also, on February 25, 2002, the directors elected to of the Board of
Directors, Duane DuCharme, G. Robert Tatum, III, and James Davidson.
The board then appointed G. Robert Tatum, III as the Chief Executive
Officer and Chairman of the Board of Directors.

On February 25, 2002, the Board of Directors approved the relocation of
he principal executive offices to 501 Brickell Key Drive, Suite 407,
Miami, Florida 33151.


<PAGE>    9


                             PART II

Item 5.  Market for Common Equity and Related Stockholder Matters
         --------------------------------------------------------

The Company's Common Stock is eligible to be traded in the over-the-
counter market and quotations are published on the OTC Bulletin Board
under the symbol "BEVS.OB," and in the National Quotation Bureau, Inc.
("NQB") "pink sheets" under BEVsystems International, Inc.   Inclusion
on the OTC Bulletin Board permits price quotations for the Company's
shares to be published by such service.

Below is a summary of the common equity transactions from inception to
date.

In April 2001, the Company issued 4,200,000 shares of common stock to
founders of the Company for $42,000.  In July 2001, the Company
completed a private placement of $1,787,500, consisting of 3,250,000
shares of the Company's common stock at $0.55 per share and 3,250,000
warrants, exercisable at $1.10 and expiring on May 1, 2003. In
December 2001, the Company raised an additional $247,500 through a
private placement of 450,000 shares of common stock at $0.55 per
share. The issuance costs associated with these private placements
were $515,000 and is reflected in the net proceeds.

BEVsystems International, Ltd. entered into an asset purchase
agreement with Life International, an oxygenated beverage company. The
asset purchase was completed on July 13, 2001, and included patent and
trademark rights, distributor contracts, and the oxygenated equipment
and inventories. To acquire the assets, BEVsystems International, Ltd.
paid Life International $1,020,000 in cash, and issued to Life
International 6,917,647 shares of common stock and 1,991,210 warrants
for additional shares.

In December 2001, holders of convertible notes were issued 901,817
warrants to acquire shares of the Company's stock at prices ranging
from $0.33 to $0.55 per share.  Additionally, proceeds of $40,000 were
received in January 2002 for the exercise of 121,730 warrants.

In January 2002, the Company issued 13,091 shares of common stock for
services rendered.  The Company recorded $7,200 of expense during the
year ended March 30, 2002.

In February 2002, the Company raised an additional $965,000 through a
private placement of 1,286,666 shares of common stock at $0.75 per
share.

As a result of the acquisition Aqua Clara noted below, all shares of
common stock ,options and warrants in the common equity transactions
before February 25, 2002 have been restated in the accompanying
consolidated financial statements and notes.

BEVsystems International, Ltd. entered into an Agreement for the
Purchase and Sale of Stock (the "Agreement") with Aqua Clara Bottling
& Distribution, Inc. and Subsidiaries ("Aqua Clara") on January 15,
2002. As of the effective date, February 25, 2002, Aqua Clara had
79,991,535 common shares issued and outstanding prior to a 1 for 10
reverse stock split which reduced this number to 7,999,196. The
Company also had 100 shares of preferred stock issued and outstanding
as of the effective date. Upon execution of the agreement, holders
received for each share of BEVsystems International, Ltd. common stock
and warrants, 1.6738 shares of Aqua Clara's common stock and warrants.

The company recorded an additional 7,999,196 shares of common stock,
100 shares of preferred stock (valued as if converted to 174,825
shares of common stock) and 5,176,754 options to purchase shares of
common stock in connection with the acquisition of Aqua Clara.  This
transaction qualified as a tax-free exchange of property for income
tax purposes.


<PAGE>    10


The company has determined the net purchase price of Aqua Clara to be
$13,831,661 calculated as follows: A gross valuation of $14,685,806,
based on the closing price as of the date of acquisition of $1.10 per
share multiplied by the outstanding shares, options , less proceeds
from the exercise of options of $2,573,561, plus net liabilities
assumed of $1,719,416.  This amount has been allocated based on the
fair values of tangible assets acquired with the balance allocated to
intangible assets (goodwill, trademarks, customer relationships).

The following table sets forth the range of high and low bid prices
for the Company's Common Stock for each quarterly period.  Such
information reflects inter dealer prices without retail mark-up, mark-
down or commissions and may not represent actual transactions.  The
prices have been adjusted to reflect the reverse 10-for-1 split
declared on March 15, 2002.

<TABLE>
<CAPTION>

Fiscal Year Ending March 30, 2002            High           Low
---------------------------------            ----           ---
<S>                                          <C>            <C>

  First Quarter                              1.90           1.40
  Second Quarter                             1.20           0.51
  Third Quarter                              0.70           0.60
  Fourth Quarter                             1.16           0.57

Fiscal Year Ending March 31, 2001            High           Low
---------------------------------            ----           ---

  First Quarter                              3.35           1.35
  Second Quarter                             1.80           1.00
  Third Quarter                              1.20           0.48
  Fourth Quarter                             1.90           0.66

Fiscal Year Ending April 2, 2000             High           Low
---------------------------------            ----           ---

First Quarter                                4.75           2.20
  Second Quarter                             4.30           1.20
  Third Quarter                              2.00           0.80
  Fourth Quarter                             4.70           1.25
</TABLE>


As of March 30, 2002, there were approximately 545 record holders of
Company common stock, which figure does not take into account those
shareholders whose certificates are held in the name of broker-
dealers.

Subsequent Events
-----------------

A Form S-8 registration statement for 6,000,000 shares was filed on
April 18, 2002 for the sole purpose of issuing shares for past and
continued services to officers, directors, third party consultants and
certain employees.  The company has issued 5,658,949 shares to date as
follows:  2,254,046 shares to directors and officers as compensation,
3,404,903 to vendors and third party consultants for past and
continued services.

Subsequent to year end, the company also issued 3,003,002 restricted
shares as follows: 916,738 shares at prices ranging from .01 to .33
for the exercise of stock options by directors and officers,  572,140
shares at prices ranging from .33 to .66 for the exercise of warrants.
(502,140 have not yet been issued as of the date of this report),
235,598 shares at a price of .33 for the conversion of a note payable,
and 1,278,526 shares to vendors and third party consultants for past
and continued services valued on the date of issuance.  These shares
are restricted until such filing of a SB-2 Registration Statement. In
addition, the company has also issued $600,000 in convertible
securities subsequent to year end.


<PAGE>    11


Dividend Policy
---------------

The Company has not declared or paid cash dividends or made
distributions in the past on its common stock, and the Company does
not anticipate that it will pay cash dividends or make distributions
in the foreseeable future.  The Company currently intends to retain
and invest future earnings to finance its operations.  Common stock
was issued in lieu of dividends upon the conversion of Preferred A
shares, leaving 100 shares of Preferred Stock outstanding.


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

The following information should be read in conjunction with the
consolidated financial statements and notes thereto appearing
elsewhere in this Form 10-KSB.

Results of Operations
---------------------

Forward-looking statements in this report are made pursuant to the
"safe-harbor" provisions of the Private Securities Litigation Reform
Act of 1995.  The Company wishes to advise readers that actual results
may differ substantially from such forward-looking statements.
Forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from those expressed in or
implied by the statements, including, but not limited to, the
following:  Changing economic conditions, interest rate trends,
continued acceptance of the Company's products in the marketplace,
competitive factors, and other risks detailed in the Company's
periodic report filings with the Securities and Exchange Commission.

The Company's acquisition of Aqua Clara Bottling & Distribution, Inc.
and Subsidiaries was effective on February 25, 2002, and under
Generally Accepted Accounting Principles, BEVsystems International,
Ltd. ("BEVsystems") was recapitalized. From a legal perspective, Aqua
Clara (renamed BEVsystems International, Inc.) was the surviving
company and thus continues its public company reporting obligations.
However, from an accounting perspective, BEVsystems International,
Ltd. acquired Aqua Clara. As a result, all financial information in
this 10K is presented using the purchase method of accounting for the
acquisition of Aqua Clara under generally accepted accounting
principles. The financial results includes BEVsystems results from
April 1, 2001 to March 30, 2002 and Aqua Clara's results only from the
five week period February 25, 2002 to March 30, 2002.  Since
BEVsystems had no operations prior to April 1, 2001, there are no
comparative financial results to disclose.

The net sales for the fiscal year ending March 30, 2002 are $
1,379,384 after allowance for recalled products of $250,000. The Gross
Margin for the fiscal year ended March 30, 2002 was $ 172,030, less
the allowance of $250,000 related to a recall of product from Nihon
Shoken, for a gross margin of $(77,970).  The net loss was $4,585,208.
Selling and general administrative expenses for the fiscal year ended
March 30, 2002 were $4,507,238.  The introduction and branding of a
new beverage product in the domestic United States is an expensive
undertaking.  The Company incurred $1,216,023 in sales and marketing
expense launching Life O2 in the south Florida market.

The current year net loss includes a charge of $625,316 related to
accrued bonuses to directors and officers.  Subsequent to March 30,
2002, 1,203,493 shares of stock were issued as payment for this
accrual.  The remaining cash portion $191,935 is carried as an accrual
and has not been paid.

Prior to the acquisition of the Life O2 assets from Life
International, Life O2 and private labeled products were produced by
third party contractors under co-packaging licensing agreements
including, among others, World Choice Bottling Corp. in Vancouver B.C.
World Choice Bottling Corp. produced Balance Date +O2 bottled water
for Life International's Japanese customer Nihon Shokken.  Subsequent
to the acquisition of the Life O2 assets, the Balance Date + O2
bottled water product was recalled due to the growth of mould in the
product produced by World Choice Bottling Corp.  The recalled product
was produced prior to and subsequent to the Life O2 asset acquisition.
The company is indemnified against this recall by Life International.
Furthermore, the Company has initiated legal proceedings against World


<PAGE>    12


Choice Bottling Corp.  The Company has determined that the exposure
against any future claims from Nihon Shokken to be $250,000.

The Company entered into a master distribution agreement with
StonePoint Group, Ltd. for the territory of Asia.  The Company
received $400,000 as a one-time license fee.  This fee is carried on
the balance sheet as a deposit.  When Nihon Shokken releases a new
production order to replace the recalled product the Company will
begin to amortize the deposit to income.  Management believes that
StonePoint will receive the new order during our fiscal 2nd quarter
however, there can be no assurances that this will occur.

The Company does not intend to manufacture bottled water products
without firm orders in hand for its products.  The Company intends to
expend costs over the next twelve months in advertising, marketing and
distribution, which amounts are expected to be expended prior to the
receipt of significant revenues.  There can be no assurance that the
company will generate significant revenues as a result of its
investment in advertising, marketing and distribution and there can be
no assurance that the company will be able to continue to attract the
capital required to fund its business plan.

Life International Acquisition
------------------------------

BEVsystems International, Ltd. ("BEVsystems") was formed to acquire
and further develop the oxygenated beverage business of Life
International Products, Inc. and Life O2 Beverage, LLP (collectively
"Life International"). BEVsystems entered into an asset purchase
agreement with Life International that was completed on July 13, 2001,
which included patent and trademark rights, distributor contracts, and
the oxygenated equipment and inventories. To acquire the assets,
BEVsystems paid Life International $1,020,000 in cash, and issued to
Life International 6,917,647 shares of common stock and 1,991,210
warrants for additional shares, representing approximately 49% of
BEVsystems' outstanding shares.

Upon execution of the asset purchase agreement, Life International
provided BEVsystems with an exclusive, perpetual, royalty-free license
to its domestic and foreign patents for the field use of human
consumables and transfer ownership to BEVsystems of its Life O2 and
OXYLOC trademarks. BEVsystems also acquired the ability enter into
supply agreements to provide oxygenation equipment at a pass-through
cost to Life International for uses other than production of human
consumables and a royalty-free, exclusive license to use the Life O2
trademark for other than food and beverage.

Aqua Clara Bottling & Distribution, Inc. and Subsidiaries Acquisition
---------------------------------------------------------------------

Effective February 25, 2002, the Company consummated a merger with
Aqua Clara Bottling & Distribution, Inc. and Subsidiary (Aqua Clara).
Aqua Clara produces, bottles, sells and distributes oxygenated
drinking water.

The merger was accounted for as a reverse merger using the purchase
method of accounting.  Accordingly, the acquisition has been treated
as an acquisition of Aqua Clara by BEVsystems International, Ltd.
("BEVsystems") and as a recapitalization of BEVsystems.  As a result,
the assets and liabilities of BEVsystems are recorded at historical
values and the assets and liabilities of Aqua Clara are recorded at
their estimated fair values at the date of the merger.  The historical
financial statements presented prior to February 25, 2002 are those of
BEVsystems. The Company obtained an independent valuation of the
assets of Aqua Clara in order to determine the fair value of assets
purchased.

New Accounting Pronouncements
-----------------------------

On June 29, 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business
Combinations (Statement 141), and No. 142, Goodwill and Other
Intangible Assets (Statement 142).  Statement 141 eliminates the
pooling-of-interests method of accounting for business combinations
except for qualifying business combinations that were initiated prior
to July 1, 2001.  Statement 141 changes the criteria to recognize
intangible assets apart from goodwill.  The requirements of Statement
141 are effective for any business combination accounted for by the


<PAGE>    13


purchase method that is completed after June 30, 2001.

Under Statement 142, goodwill and indefinite lived intangible assets
are no longer amortized but will be reviewed annually, or more
frequently if impairment indicators arise.  Identifiable intangible
assets will continue to be amortized over their estimated useful
lives.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes
SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" SFAS No. 144 applies to all
long-lived assets (including discontinued operations) and consequently
amends APB Opinion No. 30, "Reporting the Results of Operations,
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." SFAS No. 144 develops one accounting model for long-
lived assets that are to be disposed of by sale. SFAS No. 144 requires
that long-lived assets that are to be disposed of by sale be measured
at the lower of book value or fair value less cost to sell.
Additionally SFAS No. 144 expands the scope of discontinued operations
to include all components of an entity with operations that (1) can be
distinguished from the rest of the entity and (2) will be eliminated
from the ongoing operations of the entity in a disposal transaction.
SFAS No. 144 is effective for the Company for all financial statements
issued in 2002. The adoption of SFAS No. 144 is not expected to have a
material impact on the Company's financial statements.

Net Operating Losses
--------------------

The Company has accumulated approximately $12,068,000 of net operating
loss carryforwards as of March 30, 2002, which may be offset against
future taxable income.  The carryforwards begin to expire in 2011.
The use of these losses to reduce future income taxes will be limited
based on Internal Revenue Code Section 382.  The Company has reserved
a valuation allowance for the deferred tax asset arising from net
operating loss carryforwards.

Liquidity and Capital Resources
-------------------------------

Our primary source of liquidity has historically consisted of sales of
equity securities and debt instruments.  In the fiscal year ending
March 30, 2002, the Company raised $2,527,000 through the issuance of
9,186,666 shares of common stock.  The company also received proceeds
from debt instruments of $1,000,000.  These proceeds were used to
finance our continued operations.

The company is currently engaged in discussions with numerous parties
with respect to raising additional capital.  Independent Auditors have
determined under Generally Accepted Accounting Principles that the
company has a "Going Concern" related to the liquidity for the next
twelve months.

However, the Company has no definitive plans or arrangements in place
with respect to additional capital sources at this time.  The Company
has no lines of credit available to it at this time.  There is no
assurance that additional capital will be available to the Company
when or if required.

Risk Factors and Cautionary Statements
--------------------------------------


We may not be able to raise capital as needed to maintain our
operations.

We will need to raise additional funds to promote our brand and
support all of our strategies for growth.  Additional financing may
not be available on favorable terms, if at all. We may also require
additional capital to acquire or invest in complementary businesses or
products or obtain the right to use complementary technologies. If we
cannot raise needed funds on acceptable terms, we may not be able to
develop or enhance our brands or our products, take advantage of
future opportunities or respond to competitive pressures or
unanticipated requirements, which could seriously harm our business,
financial condition and results of operations. If we issue additional
equity securities to raise funds, the ownership percentage of our


<PAGE>    14


existing stockholders would be reduced. New investors may demand
rights, preferences or privileges senior to those of existing holders
of our common stock.


If we lose key personnel, we may not be able to successfully operate
our business.

Our future success depends, in large part, on our ability to attract
and retain highly skilled personnel. The loss of the services of any
of our key personnel, the inability to attract or retain qualified
personnel in the future or delays in hiring required personnel,
particularly sales, marketing and financial personnel, may seriously
harm our business, financial condition and results of operations. We
will need to expand our sales operations and marketing operations in
order to increase market awareness of our products, generate increased
revenue and support the existing and future distributors. New sales
personnel and marketing personnel will require training and take time
to achieve full productivity. Competition for such personnel is
intense. We cannot be certain that we will successfully attract and
retain additional qualified personnel.


Our failure to manage our rapid growth effectively could negatively
affect our results of operations.

We expect to experience a period of increasing demand for support from
these distributors that would significantly strain all of our
resources. We expect that adding the personnel required to support the
demands of the new distributors will place strain on our management,
operational and financial resources. An inability to manage these
increased demands effectively could seriously harm our business,
financial condition and results of operations.  Historically, Life
International outsourced its financial and accounting function and we
plan to make similar arrangements initially.  We may not generate
timely management information or maintain control of this function on
this basis. We may not be able to install adequate control systems in
an efficient and timely manner, and our current or planned operational
systems, procedures and controls may not be adequate to support our
future operations. Delays in the implementation of new systems or
operational disruptions when we transition to new systems would impair
our ability to accurately forecast sales demand, manage our product
inventory and record and report financial and management information
on a timely and accurate basis.


Our markets are highly competitive, and we cannot assure we will be
able to compete effectively.

We compete in a new, rapidly evolving and highly competitive and
fragmented market.  We expect competition to intensify in the future.
We cannot assure you that we will be able to compete effectively. We
believe that the main competitive factors in the bottled water market
are brand recognition, product quality, product placement and
availability and cost. We compete in the oxygenated bottled water
market with Talking Rain (Airwater), O to Go and a variety of start-
ups, and in general with other bottled waters and sports drinks.  Many
of our large competitors have strong relationships with mass
merchandisers and entrenched shelf space commitments. They may be able
to leverage their existing relationships to carry alternative
oxygenated water offerings. We also expect that other companies may
enter our market with better products, greater financial resources or
greater brand recognition. We expect our competitors to continue to
improve the dissolved oxygen content and shelf life of their current
products and introduce new products. To be competitive, we must
continue to invest significant resources in research and development,
advertising and marketing. We cannot be sure that we will have
sufficient resources to make these investments or that we will be able
to make the technological advances necessary to be competitive.
Increased competition is likely to result in price reductions, reduced
gross margin and loss of market share. Our failure to compete
successfully against current or future competitors could seriously
harm our business, financial condition and results of operations.


The oxygenated water category may not achieve widespread acceptance,
which could cause our business to fail.

The oxygenated water category is relatively new. Less than 1% of all
bottled water sold worldwide has enriched oxygen content. Our ability
to increase revenue in the future depends on consumers becoming aware
of and selecting oxygenated bottled water instead of mineral waters
and sports drinks. In order to achieve acceptance, we will have to
convince consumers to prefer oxygen-enriched water. If these efforts


<PAGE>    15


fail or if oxygen enriched water does not achieve commercial
acceptance, our business, financial condition and results of
operations could be seriously harmed. As competition increases, our
inability to introduce enhanced bottling equipment and packaging could
prevent us from competing effectively with others. We expect that the
oxygenated water market will be characterized by rapid technological
change. We also expect that increased competition in the oxygenated
water category will require us to rapidly evolve and adapt our
products to remain competitive. The successful operation of our
business depends on our ability to develop new bottling technology and
packaging enhancements that respond to evolving industry standards on
a timely and cost-effective basis. We cannot be certain that we will
successfully develop these technologies or capabilities. Our failure
to produce technologically competitive products in a cost-effective
manner and on a timely basis will seriously harm our business,
financial condition and results of operations.


Our reliance on co-packers may adversely affect our revenues and
margins.

Our business sells bottled water that is produced by co-packers. While
this arrangement will permit us to avoid significant capital
expenditures to establish bottling plants of our own, it will expose
us to various risks.  Our current arrangements do not provide for any
capacity reservations or committed delivery times from these co-
packers.  Since the volumes of Life International's orders have been
low to date, Life International has not been adversely affected by the
lack of dedicated capacity.  If demand for our products increases, we
will need committed capacities and pricing.  In order to secure
committed capacity, we will be required to enter into "take-or-pay"
arrangements that commit us to fixed purchase commitments whether or
not warranted by our sales.  If any of our co-packers were to
terminate or fail to renew our arrangements, or should they have
difficulties in timely producing oxygenated water for us, our ability
to fulfill our commitments to distributors would be adversely affected
until we were able to make alternative arrangements, and our business
reputation would be adversely affected if any of the co-packers were
to produce inferior quality products. To the extent that the co-
packers increase their prices, we would in most cases not be able to
pass along the increase and our revenues, gross profit and operating
income would be adversely affected.  In addition, in order to reduce
logistics costs, we must establish numerous co-packing relationships
with strategically located co-packers.  We will need to achieve very
large volumes in order to support a geographically diverse co-packer
network.  Accordingly, our logistics costs are likely to be very high
for the foreseeable future.


We depend on entrepreneurial, local distributors to generate most of
our revenue and our operating results may be harmed if these companies
are not commercially viable.

We expect to generate most of our revenue from small, private
distributors. Failure to generate revenue from these distributors
would have a negative impact on our business. Many of these
distributors are still building their infrastructures and introducing
their products. We cannot guarantee that any of these companies will
achieve commercial viability. Given that these distributors may be
small or start-up operations with uncertain financial resources, we
cannot be sure that these distributors will be able to properly market
and sell the products in their territories, produce oxygenated water
that meets applicable quality standards, or pay their obligations to
us. Life International recently terminated a distributor that had been
delinquent for over one year in the payment of a minimum royalty for
the use of the Life O2 technology. The failure of our distributors to
achieve commercial viability or to pay their obligations to us would,
in turn, seriously harm our business, financial condition and results
of operations.


A loss of one or more of our key distributors could cause a
significant decrease in our sales.

We expect to derive a majority of our revenue from a small number of
distributors. While many of the agreements with distributors provide
minimum annual payments, failure to make such payments in most cases
would result in a reevaluation of the relationship rather than the
collection of the amount. Accordingly, we cannot be certain that
present or future distributors will not terminate their purchasing
arrangements with us or significantly reduce or delay their orders.  A
substantial number of the distributors of Life International have been
recently established and we will need to provide substantial
assistance in order for them to succeed.  Many of the distributors of
Life International have not yet reached volumes that are adequate to
achieve commercial success.  The continued inability of distributors



<PAGE>    16


to increase volumes could cause the distributors to discontinue their
efforts to bottle and sell our products.  Any termination, reduction
or delay in orders could seriously harm our business, financial
condition and results of operations.


We may not be able to expand our distribution channels, which would
harm our ability to generate revenue.

We believe that our future success is dependent upon our ability to
establish and maintain successful relationships with a variety of
international distributors. To date, Life International has entered
into agreements with distributors covering only a portion of the
territory that we plan to cover, and most of the relationships
developed to date are new. The distributor typically may terminate
these distribution agreements without cause upon short notice. We
cannot be certain that we will be able to reach agreement with
additional distributors on a timely basis or at all, or that these
distributors will devote adequate resources to marketing, selling and
supporting our products. We must successfully manage our distributor
relationships. Our inability to generate revenue from distributors may
harm our business, financial condition and results of operations.


Revenues from distributors based outside the United States have
historically accounted for most of the revenue of the business, which
exposes us to risks inherent in international operations.

Our international operations will be subject to a variety of risks
associated with conducting business internationally, any of which
could seriously harm our business, financial condition and results of
operations. These risks include:

*   greater difficulty in collecting accounts receivable;

*   satisfying import or export licensing and product certification
    requirements;

*   tariffs, duties, price controls or other restrictions on foreign
    currencies or trade barriers imposed by foreign countries;

*   potential adverse tax consequences, including restrictions on
    repatriation of earnings;

*   fluctuations in currency exchange rates;

*   seasonal reductions in business activity in some parts of the
    world;

*   unexpected changes in regulatory requirements;

*   burdens of complying with a wide variety of foreign laws,
    particularly with respect to intellectual property and license
    requirements;

*   difficulties and costs of staffing and managing foreign
    operations;

*   political instability;

*   the impact of economic recessions outside of the United States;
    and

*   limited ability to enforce agreements, intellectual property and
    other rights in some foreign countries.


Defects in our products may seriously harm our credibility and harm
our business.

While we have established quality standards, our distributors may not
comply with these standards and may ship bottled water products that
have lower oxygen content or shorter shelf life than as advertised.



<PAGE>    17



These problems would seriously harm our credibility, market acceptance
of our products and the value of our brand.  We believe that there are
inherent limitations in the shelf life of oxygen-enriched water
packaged in PET bottles.  While we are investigating alternative
packaging systems, we cannot assure you that we will be able to
discover a commercially viable solution.  The failure to utilize
packaging that provides a consumer with high oxygen content following
extended periods of shipping, handling and stocking of our products
may result in consumer dissatisfaction with our products and harm our
brand.  We also believe that additional education and monitoring of
our distributors and co-packers will be required to assure compliance
with our quality standards.  We will need to hire and train regional
field managers to improve the performance of the distributors.  The
occurrence of some of these types of problems may seriously harm our
business, financial condition and results of operations.


Government regulation could restrict our business or increase our cost
of doing business.

The bottled water industry is highly regulated in the United States by
the Food and Drug Administration, state agencies and self-regulatory
organizations, such as the International Bottled Water Association.
There are equivalent governmental and self-regulatory agencies in
other countries. These agencies impose strict production, quality,
labeling and packaging requirements on producers of bottled water. New
and more stringent government regulations may be adopted in the future
that may adversely impact on our business.


We may be liable for product liability damages.

Our distributors and we will be selling ingested consumer products
into the stream of commerce. We may, therefore, be subject to claims
by consumers if the bottled water that our appointed bottlers or we or
distributors sell injures them. Life International in the past has
maintained product liability insurance in amounts it deemed sufficient
and we plan to obtain product liability insurance. We cannot assure
you that we will obtain and maintain adequate or affordable product
liability insurance. If we incur uninsured product liability claims
our business, financial condition and results of operations could be
materially and adversely affected.


Holders of Company stock may be subject to foreign personal holding
company, passive foreign investment company, controlled foreign
corporation and personal holding company rules.

To the extent that we earn a majority of our income from the payment
of royalties, together with other "passive" income (for United States
federal income tax purposes), we may be treated as a foreign personal
holding company or a passive foreign investment company. In that
event, holders of our common stock that are United States persons
would be required to pay tax on their pro rata share of the Company's
or its relevant non-United States subsidiary's undistributed foreign
personal holding company income. If the Company were a passive foreign
investment company, then any holder of our common stock that is a
United States person could be liable to pay tax at the then prevailing
rates on ordinary income plus an interest charge upon some
distributions by the Company or when that shareholder sold our common
stock at a gain.

Furthermore, additional tax considerations would apply if the Company
or any of its affiliates were a controlled foreign corporation or a
personal holding company.


Item 7.  Financial Statements
         --------------------

Financial Statements and their footnotes are set forth on pages F-1
through F-16.


Item 8.  Changes in and Disagreements With Accountants on Accounting
         and Financial Disclosure.
         -----------------------------------------------------------

Accountants have not expressed any disagreeing opinions regarding the
Company's treatment of accounting matters.


<PAGE>   18


                          PART III


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

The following table sets forth the names, offices held with the
Company, and age of its directors and executive officers as of March
30, 2002:


Directors and Executive Officers
--------------------------------

<TABLE>
<CAPTION>
Name                    Age             Position
---------------------------------------------------------------------------
<S>                     <C>             <C>

G. Robert Tatum         59              Chief Executive Officer and
                                        Chairman of the Board

Charles E. Bird         62              Senior Vice President of Marketing

Jerry Pearring          41              Senior Vice President and General
                                        Manager for the Domestic Business
                                        Division

Barry Willson           53              Senior Vice President of Operations

James Dale Davidson	53 		Director

E. Douglas Cifers       51              Director

</TABLE>


All directors hold office until the next annual meeting of
stockholders and until there successors have been duly elected and
qualified.  There are no agreements with respect to the election of
directors.  Any non-employee director of the Company is reimbursed for
reasonable expenses incurred for attendance at meetings of the Board
of Directors and any committee of the Board of Directors.  The
Executive Committee of the Board of Directors, to the extent permitted
under Colorado law, exercises all of the power and authority of the
Board of Directors in the management of the business and affairs of
the Company between meetings of the Board of Directors.  Each
executive officer serves at the discretion of the Board of Directors.

    G. ROBERT TATUM, III, has served as our Chairman of the Board,
Chief Executive Officer and as a Director since the inception of our
company.  He has and continues to serve as Chairman of the Board and
President of Financial Partners Network Corporation, a provider of
corporate advisory services, based in Miami, Florida, since its
formation in October 2000, and since its inception in August 2001
until December 2001, he served as the Managing Director of SB Venture
Capital Management III LLC, a New York limited liability company that
serves as the member-manager of Sands Brothers Venture Capital III
LLC, a venture capital company based in New York, New York.    From


<PAGE>    19


April 1998 until August 2001, he served as President and Chief
Executive Officer of Nanovation Technologies, Inc., a developer of
fiber optic networking components.  From 1995 to 1998, Mr. Tatum
served as Senior Partner of Financial Partners Network, a sole
proprietorship.  From 1992 to 1995, Mr. Tatum was Chief Executive
Officer and Chairman of DaVinci Scientific Corporation, and from 1991
to 1992, was a candidate for U.S. Congress.  Prior to this, Mr. Tatum
founded Vitarel Microelectronics in 1986, where he served as President
until 1991, served as Senior Vice President of Technology for General
Electric Information Services Company from 1984 to 1986, served as
Senior Vice President of Operations for Mid-Continent Computer
Services from 1980 to 1984 and worked as a Sales Manager for Control
Data Corporation from 1977 to 1980.  Mr. Tatum received an A.S. from
Grossmont College in 1970, a B.S. from San Diego State University in
1972 and completed the course requirements of the M.B.A. program of
San Diego State University in 1974.

    CHARLES E. BIRD has served as our Senior Vice President,
Marketing since the inception of our company.  He has for the past six
years served as the President of the Better Image Company, a marketing
consulting firm, and plans to continue to do so.  Life International
retained the Better Image Company from 1997 through 1999 to assist in
the packaging and positioning of the Life O2 brand and to develop
marketing strategies for Life International.  Mr. Bird has served
companies in various industries, including the food and beverage
industry.  His clients have included Anheuser-Busch, Bacardi Imports,
Carling Brewery, Dr. Pepper, Olympic Brewing, Pearl Brewing, Schenley
Industries, Seagram's Distillers Co., 7-Eleven Inc., A&W International
(Canada), CLOK Restaurants (Sweden and Norway), Kellogg (Canada),
LaBatt Brewery (Canada), Pepsi Co International (Japan, Spain,
Germany, Sweden, Denmark and Norway) and Life International.  Mr. Bird
has won industry awards from The American Advertising Federation
(Addy), International Broadcasting Association (IBA), CLIO Awards,
International Bottled Water Association, and International Brand
Packaging Awards.

    JERRY PEARRING became Sr. VP for Domestic Business of the Life O2
Division in September 2001.  He has for the past five years served as
President & CEO of Total Quality Beverage, Inc., a beverage
distributor based in Keene, NH.  Some of the brands successfully
introduced by Total Quality Beverage include Maui Juice, Squeeze and
Blue Range Beverages.  From 1994-1996, Mr. Pearring served as General
Manager of Nantucket Nectars' Washington, DC operation.  From 1992-
1994, he served as National Sales Manager for Soho Beverages based in
Reston, Virginia.  Prior to this, from 1984 to 1992 he was the owner
Chesapeake Export, a seafood brokerage firm based in Arlington,
Virginia.  From 1981-1984 he held sales and marketing positions with
Anheuser-Busch, Inc.  Mr. Pearring received a BS degree from George
Mason University in 1981, and an MBA from Marymount University in
1995.

    BARRY WILSON, Senior Vice President Operations has served as
Director of Latin American Business Development and National Accounts
since June 2001 and is also responsible for worldwide operations
including Quality Assurance, New Product Development, and Production.
Mr. Willson has spent 27 years in the beverage industry, initially as
a chemist developing products, and later with marketing and general
management responsibilities.  Since 1994, he directed various projects
at Drinks International Management, a consulting company for operators
in the Latin American beverage industry.  The company's clients
include Cadbury Schweppes, Royal Crown, Snapple, Sunkist, Canadian,
Colonial Beverages, Embotelladora Andina SA and Bebidas Refrescantes
SA.  Prior to his position at Drinks International, Mr. Willson served
as General Manager of Latin American Operations for Canada Dry.  When
Cadbury Schweppes acquired Canada Dry in 1986, he became President of
the merged Latin American operation, overseeing the Crush, Schweppes,
Canada Dry, Mott's and Hawaiian Punch brands.  In 1992 Mr. Willson was
named President of Cadbury's new $325 million (US) mineral water
acquisition in Mexico, a company with five bottling plants.

    JAMES DALE DAVIDSON has served as a Director of our company since
its inception.  He is the founder of Agora, Inc., a publishing company
located in Virginia.  Mr. Davidson also serves as a principal of
Strategic Restructuring Group LLC, a private management advisory and
merchant banking firm also located in Virginia.  He is also a
principal for three money management firms, including Strategic
Advisors Corporation, Strategic Advisors Overseas, Ltd., Bermuda, and


<PAGE>   20


L.G. Strategic Asia, Hong Kong.  Additionally, Mr. Davidson is a
principal of New Paradigm Capital Ltd.; a Bermuda based financing
company and a director of Pickering and Chatto Publishers, London.
Mr. Davidson is the editor of Strategic Opportunities, a limited
circulation investment newsletter.  Mr. Davidson serves as a member of
the Board of Directors of various non-public corporations.  Mr.
Davidson is a graduate of the University of Maryland and received his
M.A. in Literature at Pembroke College, Oxford, where he now serves as
a director of the Pembroke College Foundation.  He is also an author
who has focused on economic and investment matters.

E. Douglas Cifers, Director, is former Chairman of the Board of
Aqua Clara Bottling & Distribution, and the owner and publisher of
Florida Media, Inc., Florida's largest statewide magazine publishing
company. Florida Media's publications include Florida Monthly
Magazine. Mr. Cifers has been called a "hard-charging entrepreneur
with a flair for promotion" by The Wall Street Journal (March 1998).
As chairman of Aqua Clara, he helped promote the company's oxygen-
enriched bottled water to a broad consumer market.


Directors Terms and Compensation
--------------------------------

Mr. Davidson, and any future outside directors will be entitled to
director's fees paid in monthly installments. Currently, we have set
directors fees for the outside directors at a rate of $60,000 per
year.  Mr. Douglas Cifers, Chairman of Aqua Clara Bottling &
Distribution, Inc. joined our board upon the close of the merger with
Aqua Clara.


Item 10.  Executive Compensation
          ----------------------

The Company does not have a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors.

Cash Compensation
-----------------

The following table sets forth all cash compensation paid by the
Company to its officers and directors for services rendered to the
Company for the current fiscal year.  The remuneration described in
the table does not include the cost to the Company of benefits
furnished to the named executive officers, including premiums for
health insurance and other benefits provided to such individual that
are extended in connection with the conduct of the Company's business.
The value of such benefits cannot be precisely determined, but the
executive officers named below did not receive other compensation in
excess of the lesser of $25,000 or 10% of such officer's cash
compensation.

Summary Compensation Table
--------------------------

<TABLE>
<CAPTION>
Name and                    Fiscal                                Other Annual       Common Stock
Principal Position          Year       Salary        Bonus        Compensation           (Value)
----------------------------------------------------------------------------------------------------
<S>                         <C>        <C>           <C>          <C>                <C>
G. Robert Tatum III         2001       125,000       71,844 (2)         15,625 (3)        266,097
CEO & Chairman

James Davidson              2001                     23,948 (2)         70,000
Director

Douglas Cifers              2001                     35,922 (2)                           323,299
Director

Barry Wilson                2001        87,083
SVP of Operations
</TABLE>


<PAGE>    21


<TABLE>
<CAPTION>
<S>                         <C>        <C>           <C>          <C>                <C>

Antony Leslie DaCruz (1)    2001        49,000       23,948 (2)
Pres. of Int'l Sales

Charles Bird                2001       112,500       23,948 (2)        215,532
SVP of Marketing

Jerry Pearing               2001        75,833
SVP of Domestic Sales

Kenneth Visser (1)          2001        52,708       25,000
SVP of Sales

Jorge Rodriguez (1)         2001       102,500
CFO

Michelle Tatum              2001        48,250       42,375
VP of Corp. Comm.

John Plunkett               2001        77,000       12,325 (2)        110,929
General Manager
</TABLE>

(1) Non-longer employed as of July 10, 2002.
(2) Accrued but unpaid as of July 10, 2002.
(3) Salary accrued from prior period and paid in current period


Employment Agreements
---------------------

On March 30, 2001, we entered into an employment agreement with Mr.
Tatum (the "Tatum Employment Agreement"). The Tatum Employment
Agreement provides for Mr. Tatum's employment as our Chief Executive
Officer at a base salary of $125,000 per year, with eligibility to
receive an incentive bonus as determined by the Board of Directors.
The Tatum Employment Agreements also provide for an automobile
allowance of up to $1,000 per month and other employee benefits. The
Tatum Employment Agreement provides for an initial term of five years
with automatic one-year renewal unless terminated by either the Board
of Directors or Mr. Tatum in writing at least 120 days prior to a
renewal at the end of the initial term. The Tatum Employment Agreement
contains confidentiality and noncompete provisions by Mr. Tatum in our
favor. In the event of the termination by the Company of Mr. Tatum,
other than for cause, or in the event that Mr. Tatum terminates his
employment "for good cause" as defined in the Tatum Employment
Agreement, Mr. Tatum will be entitled to $250,000 in severance
payments.

All of the senior management and officers have Employment Agreements
with the Company and they participate in the Company's Employee Stock
Option Plan.



Item 11.  Security Ownership of Certain Beneficial Owners and
          Management
          ---------------------------------------------------

The following table sets forth information, to the best knowledge of
the Company as of March 30, 2002, with respect to each person known by
the Company to own beneficially more than 5% of the Company's
outstanding common stock, each director and all directors and officers
as a group.


<PAGE>    22


<TABLE>
<CAPTION>

Name and Address             Amount and Nature of
of Beneficial Owner          Beneficial Ownership       Percent of Class(1)
<S>                          <C>                        <C>
G. Robert Tatum III (2)
277 Veleros Court
Coral Gables, FL  33143            3,469,851                    6.6%

E. Douglas Cifers
102 Drennen Road, Suite 5C
Orlando, FL  32806                   711,033                    1.4%

James Davidson
321 SO Street, Asaph
Alexandria, VA 22314                 334,760                     *

All Directors and Executive
Officers as a Group
(8 persons)                        7,658,063                   14.7%
</TABLE>

* less than 1%

(1)  Unless otherwise noted below, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of common stock beneficially owned by them.  For
purposes hereof, a person is deemed to be the beneficial owner of
securities that can be acquired by such person within 60 days from the
date hereof upon the exercise of warrants or options or the conversion
of convertible securities.  Each beneficial owner's percentage
ownership is determined by assuming that any such warrants, options or
convertible securities that are held by such person (but not those
held by any other person) and which are exercisable within 60 days
from the date hereof, have been exercised.

(2)  Includes warrants issued to Financial Partners Network
Corporation, which is owned 100% by G. Robert Tatum III.



Item 12.  Certain Relationships and Related Transactions
          ----------------------------------------------

G. ROBERT TATUM. Financial Partners Network Corporation ("FPN"), a
corporation owned 100% by G. Robert Tatum, advanced funds and provided
services to the company.  A fee of $250,000 was paid for services
rendered in connection with acquiring the assets of the beverage
division of Life International Products and the first private
placement stock offering.  FPN also advanced $314,319 for operating
expenses incurred by the company.  The operating expenses are
reflected on the statement of operations in general and administrative
expenses.  The company entered into a convertible note payable for
$262,584 with FPN for repayment of the advances.  FPN was repaid
$51,735 by the company during the year ended March 30, 2002.  The
company also purchased $48,603 of equipment from FPN, which is
included in due to shareholders at March 30, 2002.

CHARLES BIRD our Senior Vice President of Marketing, will be entitled
to payment of $0.0025 for each bottle we produce using the distinctive
see through label associated with Life O2 branded products that Mr.
Bird previously designed.  Additionally, The Better Image Company, a
marketing consulting firm owned 100% by Charles Bird, was retained to
execute certain product development and marketing plans for the
company.  As of March 30, 2002, the company had incurred $380,105 in
marketing materials and product development costs for current
marketing programs.  $65,654 is included in account payable and
accrued expenses and $77,416 is included in convertible notes payable
at March 30, 2002.


<PAGE>    23



                           PART IV

Item 13.  Exhibits and Reports on Form 8-K

        (a)   Exhibits

Exhibit No.   Exhibit Name
-----------   ------------

  * 3.1       Articles of Incorporation and all amendments thereto
  * 3.2       By-Laws
   21.1       Subsidiaries

*	Previously filed as Exhibit to Form SB-2

        (b)   The Company did file a report on Form 8-K for the year
ended March 30, 2002.



<PAGE>    24
                       SIGNATURES

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

Date: July 11, 2002                   BEVSYSTEMS INTERNATIONAL, INC.




                                      By:___/s/G. Robert Tatum______
                                         G. Robert Tatum
                                         President/C.E.O.



<PAGE>    25



============================================================================











                                               Financial Statements

                                          BEVsystems International, Inc.
                                                 And Subsidiaries

                                         For the Year Ended March 30, 2002





============================================================================



<PAGE>    26





           [GERSON, PRESTON, ROBINSON & COMPANY, P.A. LETTERHEAD]



Board of Directors and Shareholders
BEVsystems International, Inc. and Subsidiaries
Miami, Florida



                   INDEPENDENT AUDITORS' REPORT


We have audited the accompanying consolidated balance sheet of
BEVsystems International, Inc. and Subsidiaries as of March 30, 2002 and
the related consolidated statements of operations, shareholders' equity
and cash flows for the year then ended.  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 audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that
we plan and perform the audit to obtain reasonable assurance about
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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
BEVsystems International, Inc. and Subsidiaries as of March 30, 2002 and
the results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in
the United States of America.

The consolidated financial statements referred to above have been
prepared assuming that BEVsystems International, Inc. and Subsidiaries
will continue as a going concern.  As more fully described in Note 3,
the Company has incurred operating losses, negative cash flows from
operating activities, negative working capital and has a shareholders'
deficit.  These conditions raise substantial doubt about the Company's
ability to continue as a going concern.  Management's plans as to these
matters are also described in Note 3.  The accompanying consolidated
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that might
result from the outcome of this uncertainty.


                          /s/Gerson, Preston, Robinson & Company, P.A.
July 8, 2002
Miami Beach, Florida      CERTIFIED PUBLIC ACCOUNTANTS


<PAGE>   27


                               BEVsystems International, Inc. & Subsidiaries
                                                  CONSOLIDATED BALANCE SHEET
                                                           At March 30, 2002

============================================================================



                              ASSETS

Current assets
  Cash                                                         $       8,296
  Accounts receivable                                                106,143
  Inventory                                                           66,184
  Prepaid expenses and other current assets                          101,666
----------------------------------------------------------------------------

     Total current assets                                            282,289

Property, plant and equipment, net                                 1,920,003

Intangible assets                                                 18,113,032
----------------------------------------------------------------------------

     Total assets                                              $  20,315,324
============================================================================


                  LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable                                             $   1,203,281
  Accrued expenses                                                 1,852,001
  Deposit                                                            400,000
  Notes payable                                                    1,421,778
  Current portion of long-term debt                                   13,073
----------------------------------------------------------------------------

     Total current liabilities                                     4,890,133

  Long-term debt, net of current portion                             350,283
----------------------------------------------------------------------------

     Total liabilities                                             5,240,416
----------------------------------------------------------------------------

Shareholders' equity
  Preferred stock; no par value; 5,000,000
    shares authorized; 100 shares issued
    and outstanding; nonvoting and convertible
    into 174,825 shares of common stock                               74,601
  Common stock; no par value; 100,000,000 shares
    authorized; 38,431,125 shares issued and
    outstanding and additional paid-in capital                    19,585,515
  Accumulated deficit                                             (4,585,208)
----------------------------------------------------------------------------

      Total shareholders' equity                                  15,074,908
----------------------------------------------------------------------------

      Total liabilities and shareholders' equity               $  20,315,324
============================================================================


See accompanying notes.


                                                                         F-1


<PAGE>



                               BEVsystems International, Inc. & Subsidiaries
                                        CONSOLIDATED STATEMENT OF OPERATIONS
                                                 For the Year March 30, 2002
============================================================================




Net revenues                                                   $   1,379,384
----------------------------------------------------------------------------

Costs and expenses
  Cost of revenues                                                 1,457,354
  Selling and marketing                                            1,472,575
  General and administrative, including
    interest expense of $104,305                                   3,034,663
----------------------------------------------------------------------------

     Total costs and expenses                                      5,964,592
----------------------------------------------------------------------------

Net loss                                                       $  (4,585,208)
============================================================================


Basic and diluted loss per common share                        $       (0.20)
                                                               -------------

Weighted average number of common shares outstanding              23,299,620
                                                               -------------
















See accompanying notes.
                                                                         F-2


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                              CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                                   Year Ended March 30, 2002
============================================================================


<TABLE>
<CAPTION>
                                                       Common Stock
                                                and Additional Paid-in Capital
                                                ------------------------------
                                                Number of                        Preferred    Accumulated
                                                Shares          Amount           Stock        Deficit           Total
------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>              <C>         <C>             <C>

Issuance of common stock to founders             7,029,960      $    42,000         -            -           $    42,000

Issuance of common stock and warrants in
  various private placements, net of
  issuance costs                                 8,346,682        2,485,000         -            -             2,485,000

Issuance of common stock and warrants for
  the acquisition of Life International         14,911,645        4,899,871         -            -             4,899,871

Issuance of options in connection with
  convertible notes payable                         -                73,800         -            -                73,800

Common stock issued for services                    21,912            7,200         -            -                 7,200

Warrants exercised                                 121,730           40,000         -            -                40,000

Issuance of stock and warrants for the
  acquisition of Aqua Clara                      7,999,196       12,037,644       74,601         -            12,112,245

Net loss                                            -                 -             -         (4,585,208)     (4,585,208)
------------------------------------------------------------------------------------------------------------------------

Balance at March 30, 2002                       38,431,125      $19,585,515     $ 74,601     $(4,585,208)    $15,074,908
========================================================================================================================

</TABLE>





                                                                         F-3

<PAGE>




                               BEVsystems International, Inc. & Subsidiaries
                                        CONSOLIDATED STATEMENT OF CASH FLOWS
                                           For the Year Ended March 30, 2002
============================================================================


Operating activities
  Net loss                                                     $  (4,585,208)
  Adjustments to reconcile net loss to net cash (used)
    in operating activities:
      Depreciation                                                    50,418
      Amortization of debt discount                                   51,250
      Issuance of common stock for services                            7,200
      Changes in assets and liabilities, net
      of acquisitions:
        (Increase) in accounts receivable                            (83,562)
        (Increase) in inventory                                      (29,045)
        (Increase) in prepaid expenses and other
          current assets                                             (94,269)
        Increase in accounts payable and
          accrued expenses                                         1,855,261
        Increase in deposit                                          400,000
----------------------------------------------------------------------------

           Net cash (used) in operating activities                (2,427,955)
----------------------------------------------------------------------------

Investing activities
  Purchase of furniture and equipment                               (186,604)
  Acquisition of Life International                               (1,020,000)
  Cash from Aqua Clara Bottling & Distribution, Inc.
    acquisition                                                        6,559
----------------------------------------------------------------------------

           Net cash (used) in investing activities                (1,200,045)
----------------------------------------------------------------------------

Financing activities
  Proceeds from notes payable                                      1,069,296
  Issuance of common stock                                         2,527,000
  Proceeds from exercise of warrants                                  40,000
----------------------------------------------------------------------------

           Net cash provided by financing activities               3,636,296
----------------------------------------------------------------------------

Net increase in cash                                                   8,296

Cash, beginning of year                                                 -
----------------------------------------------------------------------------

Cash, end of year                                              $       8,296
============================================================================

Supplemental disclosures of cash flow information:

  Cash paid during the year for interest                       $      12,082
  Supplemental schedule of non-cash investing and
  financing activities:
    Stock and warrants issued in connection with
      the acquisition of Life International                    $   4,899,871
    Warrants issued in connection with convertible
      notes payable                                            $      73,800
    Stock and warrants issued in connection with the
      acquisition of Aqua Clara Bottling &
      Distribution, Inc.                                       $  12,112,245
    Office equipment acquired through a loan from
      a shareholder                                            $      48,603




See accompanying notes.

                                                                         F-4


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================



1.   NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES

BEVsystems International, Inc. (the "Company") is a provider of
oxygenated water.

The Company had no activity from its inception, on March 20, 2001
through March 31, 2001.

The Company's fiscal year ends on the Saturday nearest to March
31.

July 12, 2001, the Company acquired the net assets of the beverage
division of Life International, a provider of oxygenated water.
The net assets included oxygenation equipment, bottles,
proprietary seals, marketing materials, office equipment,
trademarks, patent rights and other intangible assets (see Note
4).

The Company distributes its products primarily through an
international distribution network.  Approximately 92% of the
Company sales were made to one distributor in Japan. There were no
accounts receivable from this customer at March 30, 2002.
Domestic sales, which are approximately 5% of total revenues, are
through local distributors and home delivery.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation.  The consolidated financial
statements include the accounts of the Company and its wholly
owned subsidiaries.  All significant intercompany transactions and
balances have been eliminated in consolidation.

Revenue Recognition.  The Company's revenues are derived
principally from the sale of oxygenated beverages.  Revenues are
recognized upon delivery of the product to the customers.  Revenue
recognized has been reduced for recalled water.  (See Note 17).
Upon delivery, the Company has no further obligations.

Inventory.  Inventories consist primarily of labels, bottles and
caps and are stated at the lower of cost (first-in, first-out) or
market.

Property, plant and equipment.  Property, plant and equipment are
stated at cost. Depreciation of plant and equipment is provided
over estimated useful lives of the assets using the straight-line
method.

The costs of significant improvements are capitalized. Costs of
normal repairs are charged to expense as incurred.  The cost and
accumulated depreciation of plant and equipment retired or
otherwise disposed of are eliminated from the respective accounts
and any resulting gain or loss is included in income.

Intangible Assets.  Intangible assets consist primarily of
goodwill process technology, trademarks, and customer
relationships.  Goodwill is not amortized.  All other intangible
assets are deemed to have indefinite useful lives because they are
expected to generate cash flows indefinitely and are, therefore,
not amortized.


                                                                         F-5


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

Long-Lived Assets.  The Company evaluates the recoverability of
long-lived assets for impairment on an annual basis or whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.  Such evaluation
involves the use of an independent appraisal or is based on
various analyses, including cash flows and profitability
projections.  If the sum of the expected future cash flows or the
appraised value is less than the carrying amount of the assets, an
impairment loss is recognized.  Accordingly, impairment loss is
the difference between the sum of the estimated future cash flows
or appraised value and the carrying amount of the asset.
Management believes that there is no impairment as of March 30,
2002.

Concentration of credit risk.  The Company maintains its cash in
bank accounts, which at times exceed federally insured limits.
The Company has not experienced any losses in such accounts.

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 the amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and
expenses during the reported period.  Estimates are used for, but
not limited to, accounts payable; asset impairments; depreciable
lives of assets; useful lives of intangible assets; and valuation
of intangibles.  Future events and their effects cannot be
perceived with certainty.  Accordingly our accounting estimates
require the exercise of judgment.  The accounting estimates used
in the preparation of our financial statements will change as new
events occur, as more experience is acquired, as additional
information is obtained and as the Company's operating environment
changes.  Actual results could differ from those estimates.

Advertising and Sales Promotion Costs. Advertising and sales
promotion costs are expensed as incurred. Advertising costs
consist primarily of magazine advertisements, agency fees and
other direct production costs.

Legal Fees. Legal fees are charged to expense in the period the
legal services are performed.

Research and Development. Research and development costs are
expensed as incurred.

Web-site Technology and Content.  Technology and content costs
consist principally of payroll and related costs for development,
editorial systems, consultants and costs of acquired content for
the Company's website.  Technology and content costs related to
planning, development and acquisition of content and operations of
the Company's website are expensed as incurred and included in
selling, general and administrative expenses.  Costs to acquire or


                                                                         F-6


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


develop both hardware and software, needed to operate the site are
capitalized and depreciated over estimated useful lives.

Loss Per Share.  Basic loss per share is computed by dividing loss
available to common shareholders by the weighted-average number of
common shares for the period.  The computation of diluted loss per
share is similar to basic loss per share, except the denominator
is increased to include the number of additional common shares
that would have been outstanding if the potentially dilutive
common shares, such as options, had been issued.  Diluted loss per
share is not presented because the effects would be anti-dilutive.

Fair Value of Financial Instruments.  The Company's financial
instruments, primarily consisting of cash, accounts receivable,
accounts payable, accrued expenses and debt approximate fair value
due to their short-term nature or interest rates that approximate
market.

New Accounting Pronouncements.  On June 29, 2001, the Financial
Accounting Standards Board issued Statements of Financial
Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets.  Statement 141 eliminates
the pooling-of-interests method of accounting for business
combinations except for qualifying business combinations that were
initiated prior to July 1, 2001.  Statement 141 changes the
criteria to recognize intangible assets apart from goodwill.  The
requirements of Statement 141 are effective for any business
combination accounted for by the purchase method that is completed
after June 30, 2001.

Under Statement 142, goodwill and indefinite lived intangible
assets are no longer amortized but will be reviewed annually, or
more frequently if impairment indicators arise. Identifiable
intangible assets will continue to be amortized over their
estimated useful lives.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144
supercedes SFAS No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" SFAS No.
144 applies to all long-lived assets (including discontinued
operations) and consequently amends APB Opinion No. 30, "Reporting
the Results of Operations, Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." SFAS No. 144 develops one
accounting model for long-lived assets that are to be disposed of
by sale. SFAS No. 144 requires that long-lived assets that are to
be disposed of by sale be measured at the lower of book value or
fair value less cost to sell. Additionally SFAS No. 144 expands
the scope of discontinued operations to include all components of


                                                                         F-7


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


an entity with operations that (1) can be distinguished from the
rest of the entity and (2) will be eliminated from the ongoing
operations of the entity in a disposal transaction. SFAS No. 144
is effective for the Company for all financial statements issued
in 2002. The adoption of SFAS No. 144 is not expected to have a
material impact on the Company's financial statements.

3.   GOING CONCERN - UNCERTAINTY

As shown in the accompanying consolidated financial statements,
the Company has incurred operating losses, negative cash flows
from operating activities, negative working capital and has a
shareholders' deficit.  These conditions raise substantial doubt
about the Company's ability to continue as a going concern.

The Company has initiated several actions to generate working
capital and improve operating performances, including equity and
debt financing and cost reduction measures.

There can be no assurance that the Company will be able to
successfully implement its plans, or if such plans are
successfully implemented, that the Company will achieve its goals.

Furthermore, if the Company is unable to raise additional funds,
it may be required to reduce its workforce, reduce compensation
levels, reduce dependency on outside consultants, modify its
growth and operating plans, and even be forced to terminate
operations completely.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern and do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that might result
from the outcome of this uncertainty.


4.   LIFE INTERNATIONAL ACQUISITION

Effective July 12, 2001, the Company consummated a merger with
Life International, an oxygenated beverage company.

Pursuant to the merger, the Company issued 11,578,758 shares of
common stock to Life International and 3,332,887 warrants for
additional shares.  The warrants were exercised prior to March 30,
2002 and provided Life International with a 49% ownership in the
Company.  There was no cost to exercise the warrants and they had
no expiration date.  The stocks and warrants were assigned a value
of $4,899,871, based on the sales price of common stock sold by
the Company in two separate identically priced private placements
which occurred before and after the acquisition.

The merger was accounted for using the purchase method of
accounting.  The Company has determined the purchase price to be
$5,913,490, which consists of a cash payment of $1,020,000, the


                                                                         F-8


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


value of the shares and warrants of $4,899,871, less the net
assets of $6,381, which consists of $96,381 of fixed assets, less
liabilities assumed of $90,000.  The purchase price in excess of
net assets has been allocated as follows:


4.	LIFE INTERNATIONAL ACQUISITION (Cont'd)


The Company obtained an independent valuation of the assets of
Life International in order to determine the fair value of assets
purchased.

<TABLE>
<CAPTION>

               Description             Amount
     --------------------------------------------
<S>  <C>                              <C>
     Customer relationships           $   400,000
     Process technology                 3,887,000
     Trademarks                           830,000
     Goodwill                             796,490
     --------------------------------------------

                                      $ 5,913,490
     ============================================
</TABLE>


5.   AQUA CLARA BOTTLING & DISTRIBUTION, INC. ACQUISITION

Effective February 25, 2002, the Company consummated a merger with
Aqua Clara Bottling & Distribution, Inc. and Subsidiary (Aqua
Clara), an oxygenated beverage company.

The merger was accounted for as a reverse merger using the
purchase method of accounting.  Accordingly, the acquisition has
been treated as an acquisition of Aqua Clara by BEVsystems and as
a recapitalization of BEVsystems.  As a result, the assets and
liabilities of BEVsystems are recorded at historical values and
the assets and liabilities of Aqua Clara are recorded at their
estimated fair values at the date of the merger.  The historical
financial statements presented prior to February 23, 2002 are
those of BEVsystems.

As a result, the Company recorded an additional 7,999,196 shares
of common stock, 100 shares of preferred stock (valued as if
converted to 174,825 shares of common stock) and options to
purchase 5,176,754 shares of common stock.  The Company has
determined the purchase price to be $13,831,661, which consists of
the value assigned the stocks and options of $14,685,806, based on
the closing price of the stock of $1.10 per share on February 25,
2002, the closing date of the transaction, less the estimated
proceeds from the exercise of the options of $2,573,561, plus the
net liabilities assumed of $1,719,416.  The net liabilities
assumed consisted of cash of $6,559, accounts receivable of
$22,581, inventory of $37,139, other assets of $5,891 less


                                                                         F-9


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


liabilities assumed of $1,791,586.  The purchase price has been
allocated as follows:


5.   AQUA CLARA BOTTLING & DISTRIBUTION, INC. ACQUISITION (Cont'd)


<TABLE>
<CAPTION>

               Description             Amount
     --------------------------------------------
<S>  <C>                              <C>
     Land                             $    90,000
     Building                             784,454
     Equipment                            757,665
     Goodwill                          11,149,542
     Trademarks                           910,000
     Customer relationships               140,000
     --------------------------------------------

                                      $13,831,661
     ============================================
</TABLE>

The Company obtained an independent valuation of the assets of
Aqua Clara in order to determine the fair value of assets
purchased.


6.   PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                             Useful
                                                             Lives
     -------------------------------------------------------------------
<S>  <C>                                     <C>          <C>
     Machinery & processing equipment        $  902,682    4 to 15 years
     Building                                   784,454       25 years
     Transportation equipment - Pledged          98,958       4 years
     Computer and office equipment               94,327    3 to 7 years
     Land                                        90,000        n/a
     --------------------------------------------------

                                              1,970,421
     Less accumulated depreciation              (50,418)
     --------------------------------------------------

        Property, plant and equipment, net   $1,920,003
     ==================================================
</TABLE>

Depreciation expense was $50,418 for the year ended March 30,
2002.


                                                                        F-10


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


7.   INTANGIBLE ASSETS

<TABLE>
<CAPTION>

              Description               Amount
     --------------------------------------------
<S>  <C>                             <C>

     Goodwill                        $ 11,946,032
     Process technology                 3,887,000
     Trademarks                         1,740,000
     Customer relationships               540,000
     --------------------------------------------

                                     $ 18,113,032
     ============================================
</TABLE>


There was no amortization expense for intangible assets for the
year ended March 30, 2002.


8.   ACCRUED EXPENSES

<TABLE>
<CAPTION>

              Description               Amount
     --------------------------------------------
<S>  <C>                             <C>
     Bonuses                         $  1,107,792
     Settlements (See Note 17)            350,000
     Interest                             102,216
     Payroll and related costs             95,472
     Professional fees                     52,500
     Other                                144,021
     --------------------------------------------

                                     $  1,852,001
     ============================================
</TABLE>


9.	NOTES PAYABLE

Convertible notes payable, net of debt discount;
  interest payable monthly at 10.5%; maturities
  range from October to November 2002;
  $540,000 due to shareholders and related parties   $    977,450

Demand notes payable to shareholders; interest
  at 8%; collateralized by real property                  373,635

Bank notes payable; interest payable monthly at
  9%; collateralized by equipment with a net book
  value of $88,726; matures July 17, 2002                  70,693
-----------------------------------------------------------------
       Notes payable                                 $  1,421,778
=================================================================


10.	LONG-TERM DEBT

Mortgage payable to a shareholder with interest at 8% is
collateralized by property, plant and equipment and matures
February 2017.

                                                                        F-11


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


The aggregate maturities are as follows:

<TABLE>
<CAPTION>

              Year                      Amount
     --------------------------------------------
<S>  <C>                             <C>
              2003                   $    13,073
              2004                        14,158
              2005                        15,333
              2006                        16,606
              2007                        17,984
          Thereafter                     286,202
     --------------------------------------------

                                     $   363,356
     ============================================
</TABLE>


11.  LEASES

The Company leases certain office space under an operating lease.
 Future obligations under the primary terms of the Company's long-
term operating lease as of March 30, 2002 are approximately as
follows:

<TABLE>
<CAPTION>
           Years Ended                Operating
            March 30,                   Lease
     --------------------------------------------
<S>  <C>                             <C>
              2003                   $   93,700
              2004                       15,600
     --------------------------------------------

                                     $  109,300
     ============================================
</TABLE>


Rent expense was approximately $86,000 for the year ended March
30, 2002.


12.  STOCK OPTION PLAN

In April 2001, the Company adopted a Stock Option Plan intended to
provide officers, directors, key employees and consultants of the
Company an opportunity to acquire stock in the Company.  As of
March 30, 2002, 1,732,383 options to purchase shares at $0.33 per
share had been issued and 900,000 options to purchase shares at
$0.01 per share had been issued.  1,695,055 of the options are
vested at March 30, 2002, with the remainder, of 937,328, options,
to be vested over the next two years.  No options have been
exercised at March 30, 2002.  The fair value of the options on the
grant date was $94,050 calculated using the Black-Scholes Option
Pricing Model.

The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for
stock based employee compensation arrangements whereby no
compensation cost related to stock options is deducted in
determining net loss.  Had the compensation cost for stock option
grants to the Company's employees been determined by SFAS No. 123,
"Accounting for Stock Based Compensation," the Company's net loss
would have increased for the year ended March 30, 2002, as


                                                                        F-12


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================

presented in the table below.  Using the Black-Scholes Option
Pricing Model, the Company's pro forma net loss is as follows:

<TABLE>
<CAPTION>

<S>  <C>                                  <C>
     Pro Forma Net Loss                   $  (4,653,620)
     Pro Forma Net Loss Per Share         $       (0.20)
     Risk Free Interest Rate                       5.71%
     Expected Lives                              2 Years
     Expected Volatility                            None
</TABLE>


For purposes of these pro forma disclosures, the estimated fair
value of the options granted is amortized to expense over the
options' vesting period.


13.  COMMON STOCK TRANSACTIONS

	In connection with the acquisition of Aqua Clara, all shares of
common stock outstanding prior to the acquisition date were
exchanged at the ratio of 1.6738 per share.  All shares of common
stock and prices have been restated in the accompanying
consolidated financial statements and notes.

In April 2001, the Company issued 7,029,960 shares of common stock
to founders of the Company for $42,000.

In July 2001, the Company completed a private placement of
$1,787,500, consisting of 5,439,850 shares of the Company's common
stock at $0.33 per share and 5,439,850 warrants, exercisable at
$0.66 and expiring on May 1, 2003.  The options had no value using
the Black-Scholes Option Pricing Model.

In December 2001, the Company raised an additional $247,500
through a private placement of 753,210 shares of common stock at
$0.33 per share.
In February 2002, the Company raised an additional $965,000
through a private placement of 2,153,622 shares of common stock at
$0.45 per share.

The issuance costs associated with these private placements were
$515,000 and is reflected in the net proceeds.

In January 2002, the Company issued 121,730 shares of common stock
for services rendered.  The Company recorded $7,200 of expense
during the year ended March 30, 2002.

The holders of the convertible notes payable have 1,509,461
warrants to acquire shares of the Company's stock at prices
ranging from $0.20 to $0.33 per share.  Proceeds of $40,000 were
received for the exercise of 121,730 warrants in January 2002. The
warrants expire in three to five years.  The proceeds from the
issuance of the notes payable with the warrants were allocated
between the warrants and the notes payable, based on their
relative fair values at the time of issuance.  The fair value of
the warrants on the grant date was $73,800 calculated using the


                                                                        F-13


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


Black-Scholes Option Pricing Model and was accounted for as
additional paid-in capital and as a debt discount which is
amortized to interest expense over the term of the notes.  $51,250
was charged to interest expense during the year ended March 30,
2002.


14.  DEFERRED INCOME TAXES

At March 30, 2002, the Company has available net operating loss
carryforwards of approximately $12,068,000.  These losses may be
used to offset future taxable income in limited amounts through
2022.  The limitations are based on Internal Revenue Code Section
382. After consideration of all the evidence, both positive and
negative, management has determined that a valuation allowance is
necessary to reduce the deferred tax assets to the amount that
will more likely than not be realized due to substantial
uncertainty.

Accordingly, components of the Company's net deferred income taxes
at March 30, 2002 are as follows:

<TABLE>
<CAPTION>

<S>  <C>                                  <C>
     Deferred tax assets:

     Net operating loss carryforwards     $  4,766,860
     Valuation allowance                    (4,766,860)
     -------------------------------------------------
     Total                                $     -
     =================================================
</TABLE>


15.  RELATED PARTY TRANSACTIONS

Financial Partners Network Corporation ("FPN"), a corporation
owned by the Company's Chairman and Chief Executive Officer,
advanced funds and provided services to the Company.  A fee of
$250,000 was paid for services rendered in connection with the
private placement stock offering.  FPN also advanced $314,319 for
operating expenses incurred by the Company.  The operating
expenses are reflected on the statement of operations in general
and administrative expenses.  The Company entered into a
convertible note payable for $262,584 with FPN for repayment of
the advances.  FPN was repaid $51,735 by the Company during the
year ended March 30, 2002.  The Company purchased $48,603 of
equipment from FPN which is included in loans from shareholders at
March 30, 2002.

The Company has engaged The Better Image Company, a marketing
consulting firm, to develop and execute product design and
marketing plans for the Company.  The Company's Senior Vice
President of Marketing owns The Better Image Company.  As of March


                                                                        F-14


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


30, 2002, the Company had incurred $380,105 in related costs which
are included in selling and marketing expenses of which $65,654 is
included in accounts payable and accrued expenses and $77,416 is
included in convertible notes payable at March 30, 2002.

The Company bought $35,913 worth of oxygenated water from a
corporate shareholder during the year ended March 30, 2002.  The
amounts are included in accounts payable and accrued expenses at
March 30, 2002 and cost of revenues for the year ended March 30,
2002.

As of March 30, 2002, the Company owed certain employees
$1,253,354 for payment of accrued salaries, bonuses and
reimbursement of expenses.


16.  PRO FORMA INFORMATION

The following unaudited pro forma financial information reflects
the results of operations for the year ended March 30, 2002 as if
the Life International and Aqua Clara acquisitions had occurred at
the beginning of the period presented, and after giving effect to
purchase accounting adjustments.  This unaudited pro forma
information is presented for illustrative purposes only and is not
necessarily indicative of the results of operations in future
periods or results that would have been achieved had the Company,
Life International and Aqua Clara been combined during the period.

<TABLE>
<CAPTION>
               Year Ended March 30, 2002
     --------------------------------------------
<S>  <C>                             <C>
     Net revenues                    $  3,379,860
     ============================================

     Net loss                        $ (6,234,926)
     ============================================

     Net loss per share              $      (0.18)
     ============================================
</TABLE>

17.  OTHER COMMITMENTS AND CONTINGENCIES

A former officer of Aqua Clara filed suit against Aqua Clara for
approximately $227,000 of accrued wages, loans that took the form
of a mortgage on the property, and other damages. This claim also
seeks 1,350,000 shares of the Company's common stock.  The Company
has provided approximately $180,000 related to the accrued wages,
loans and other damages in the accompanying financial statements,
which was accrued by Aqua Clara prior to the acquisition.
However, the Company asserts that all or a majority of the number
of common shares due is a frivolous claim and has not included any
amount related to these shares in the accompanying financial
statements.


                                                                        F-15


<PAGE>


                               BEVsystems International, Inc. & Subsidiaries
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


============================================================================


17.  OTHER COMMITMENTS AND CONTINGENCIES (Cont'd)

The Company received a $400,000 deposit under an exclusive license
and trademark user agreement.  Under the terms of the agreement,
the licensee has the right to produce and sell oxygenated drinking
water and beverages bearing the Company's trademarks in various
Asian countries for an initial term of five years with provisions
for successive five year renewal periods with amortization to
commence upon shipment of the product.  The licensee's major
customer is a Japanese distributor, who was also the Company's
major customer during the year ended March 30, 2002.


Sales to this customer included water, produced by a contracted
bottler, which was recalled by the Japanese government.
Management has estimated its exposure to be $250,000, which has
been recorded by the Company during the year ended March 30, 2002,
and is included as a reduction of revenue and in accounts payable
and accrued expenses.


18.  CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to
significant concentrations of credit risk, consist principally of
cash and trade accounts receivable.  The Company places its cash
investments with high quality financial institutions and believes
that the risk of loss is remote.

The Company extends credit to its customers based upon an
evaluation of the customer's financial condition and credit
history and generally does not require collateral.  The Company
has historically incurred minimal credit losses.


19.  SUBSEQUENT EVENTS

The Company issued 6,106,627 shares of common stock in lieu of
cash for services rendered by employees and non-employees.   In
addition, 986,738 options were converted to shares of the
Company's common stock.


                                                                        F-16


<PAGE>