UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB
(MARK ONE)

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

                   FOR THE FISCAL YEAR ENDED - AUGUST 31, 2006

                                       OR

          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 FOR THE TRANSITION PERIOD FROM ______ TO ______

                        COMMISSION FILE NUMBER 000-27629

              SHEERVISION INC. F/K/A CLEAN WATER TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)

               Delaware                                          23-2426437
     (State or other jurisdiction of                          (I.R.S. Employer
      incorporation or organization)                         Identification No.)



      4030 Palos Verdes Drive North
               Suite 104
    Rolling Hills Estates, California                              90274
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number:                                    (310) 265-8918

Securities registered pursuant to Section 12(b) of the Act:   None

Name of Exchange on which registered:

Securities registered pursuant to Section 12(g) of the Act:   Common Stock,
                                                              par value $0.001
                                                              per share

Name of exchange on which registered:                         OTCBB

Check  whether the issuer (1) filed all reports  required to be filed by section
13 or 15(d) of the  Securities  Exchange  Act of 1934  during the  preceding  12
months  (or for such  shorter  period  that  issuer  was  required  to file such
reports) and (2) has been subject to such filing  requirements  for at least the
past 90 days. Yes [X] No [_]

<PAGE>

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. [_]

Indicate by check mark whether the issuer is a shell company (as defined in Rule
12b-2 of the Act). Yes [_] No [X]

The issuer's revenues for fiscal year ended August 31, 2006 were $2,980,584

As of October 31, 2006, the aggregate  market value of the voting and non-voting
common equity held by non-affiliates  (2,690,950) was approximately $753,466
based upon the October 31, 2006 closing price ($0.28) of one share on such date.

Issuer had 12,278,169  issued and outstanding  shares of common stock, par value
$.001 per share, as of October 31, 2006.

Transitional Small Business Disclosure Format (Check one):  Yes [_]    No [X]




<PAGE>


                           FORWARD LOOKING STATEMENTS

         THIS ANNUAL REPORT ON FORM 10-KSB AND ANY DOCUMENTS INCORPORATED HEREIN
CONTAIN   "FORWARD-LOOKING   STATEMENTS"  WITHIN  THE  MEANING  OF  THE  PRIVATE
SECURITIES  LITIGATION  REFORM  ACT OF  1995.  SUCH  FORWARD-LOOKING  STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE
THE ACTUAL  RESULTS,  PERFORMANCE OR  ACHIEVEMENTS  OF THE COMPANY,  OR INDUSTRY
RESULTS,  TO BE MATERIALLY  DIFFERENT  FROM ANY FUTURE  RESULTS,  PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING  STATEMENTS. WHEN USED
IN THIS  ANNUAL  REPORT,  STATEMENTS  THAT  ARE NOT  STATEMENTS  OF  CURRENT  OR
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "PLAN",  "INTEND",  "MAY," "WILL," "EXPECT," "BELIEVE",
"COULD," "ANTICIPATE," "ESTIMATE," OR "CONTINUE" OR SIMILAR EXPRESSIONS OR OTHER
VARIATIONS   OR   COMPARABLE   TERMINOLOGY   ARE   INTENDED  TO  IDENTIFY   SUCH
FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. EXCEPT
AS  REQUIRED  BY LAW,  THE  COMPANY  UNDERTAKES  NO  OBLIGATION  TO  UPDATE  ANY
FORWARD-LOOKING  STATEMENTS,  WHETHER  AS A RESULT  OF NEW  INFORMATION,  FUTURE
EVENTS OR OTHERWISE.

         ANY REFERENCE TO THE "COMPANY",  "SHEERVISION",  THE "REGISTRANT",  THE
"SMALL BUSINESS ISSUER", "WE", "OUR" OR "US" MEANS SHEERVISION INC.




<PAGE>


                                TABLE OF CONTENTS

                                Form 10-KSB Index



Item 1.  Description of Business...............................................2
Item 1A. Risk Factors.........................................................10
Item 2.  Description of Property..............................................16
Item 3.  Legal Proceedings....................................................16
Item 4.  Submission of Matters to a Vote of Security Holders..................16
Item 5.  Market for Registrant's Common Equity and
         Related Stockholder Matters..........................................17
Item 6.  Management's Discussion and Analysis of Financial Condition..........18
Item 7.  Financial Statements.................................................30
Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.................................................30
Item 8A. Controls and Procedures..............................................30
Item 8B. Other Information....................................................30
Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(A) of the Exchange Act....................31
Item 10. Executive Compensation...............................................36
Item 11. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters......................................37
Item 12. Certain Relationships and Related Transactions.......................37
Item 13. Exhibits and Index of Exhibits.......................................39
Item 14. Principal Accountant Fees and Services...............................45









<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         We design and sell proprietary surgical loupes and light systems to the
dental,  medical  and  veterinary  markets and have  quickly  captured a leading
position in the dental hygiene market segment. Through our exclusive arrangement
with  manufacturers  based in Asia, we can provide top quality  loupes and light
systems   directly  to  end-users  at   substantially   lower  prices  than  our
competitors.

         Since our inception in 1999, we have rapidly  established a significant
base of operations  characterized  by steady sales growth,  the  deployment of a
top-notch  dedicated sales force, the  implementation  of a strategic  marketing
program,  the initiation of an aggressive web presence  through the introduction
of a new online retail store and continued product development activities.

GROWTH STRATEGY

         Our objective is to become the leading manufacturer and global marketer
of high  quality,  value-priced  surgical  loupes,  light  systems  and  related
products and services for the dental,  medical, and veterinary markets. In order
to achieve this objective, we intend to employ the following strategy:

o    DRAMATICALLY  HEIGHTEN  BRAND  AWARENESS  THROUGH A HIGHLY  VISIBLE  ONLINE
     PRESENCE.  Since  launching our newly  revamped  website in August 2006, we
     have experienced  sequential  online sales growth of 188 percent in August,
     70 percent in  September  and 310 percent in October.  We  anticipate  that
     online revenues will become a significant  portion of overall sales as more
     search  engine  marketing  ("SEM"),   and  direct  marketing  programs  are
     launched.

o    EXPAND  NEW  PRODUCT  OFFERINGS  TO  BECOME  A  FULL-SERVICE   OPTICAL  AND
     ILLUMINATION  COMPANY.  With the introduction of our new "through the lens"
     (TTL) loupe system,  we can now offer this state of the art TTL  technology
     in  addition  to  our  current  award  winning  flip  up  design.  Our  new
     proprietary  SureFit TTL (TM)  alignment  system also allows  customers  to
     order  our  TTLs  through  our  online   store,   providing  a  significant
     competitive edge.

o    CONTINUE TO BUILD OUR DEDICATED DENTAL HYGIENE DIVISION.  As the only loupe
     company in the dental industry with a separate dental hygiene division,  we
     have become  recognized as the leading  provider of surgical loupes in this
     market niche. This sales force has also helped us make significant  inroads
     into the general  dental  market,  with unit sales from trade shows  nearly
     doubling over the same period last year.

SURGICAL LOUPES

         Although  dental  offices  have  used some  form of  magnification  for
decades,  the need for surgical loupes and light sources in the regular practice
of everyday dentistry is rapidly becoming


                                       2
<PAGE>

the  standard  of  practice  for  all  dental  professionals,  including  dental
hygienists.  The visual  aspects of  magnification  may appear to be the primary
benefit,  but there are significant  ergonomic issues improved by using surgical
loupes.  Many medical  careers have been cut short due to the effects of chronic
neck and back pain, a condition that can be minimized or eliminated  through the
proper use of surgical loupes.

         Regular  magnifying glasses create a larger image but flatten the image
out and do not give the user any depth of field. To solve this problem,  medical
professionals use special "loupes" that provide a three-dimensional image. These
loupes  are: 1) Galilean  (compound)  loupes,  which range in price from $800 to
$1,200; or 2) Panoramic (prism) loupes,  which generally cost $1,200 to $1,800 a
pair. SheerVision Galilean products range in price from $600 to $800.

         CRITERIA FOR SELECTION OF SURGICAL LOUPES

         Based upon our market experiences, we believe that the factors that are
important in the selection of compound loupes include the following:

         o    VALUE. Price combined with quality is the primary driver of brand
              choice in the marketplace;

         o    MAGNIFICATION/CLARITY. Top quality optics are critical in this
              regard;

         o    FIELD-OF-VIEW. A wide field of vision is better than a smaller
              one;

         o    DEPTH-OF-FIELD. An extended depth of field is preferable;

         o    WEIGHT OF SURGICAL LOUPES. Lighter surgical loupes are generally
              preferable to heavier loupes;

         o    BRAND REPUTATION AND LOYALTY;

         o    ABILITY TO OFFER A FLIP-UP OR THROUGH-THE-LENS (TTL) LOUPE OPTION
              (to appeal to either customer preference); and

         o    ABILITY TO OFFER A FRAME STYLE THAT SUITS CUSTOMER PREFERENCE (for
              quality, protection capability, weight, and style).

LIGHT SYSTEMS

         As surgical  loupes allow the area under view to become more magnified,
it tends to require  more light or  illumination.  Illumination  can be added to
surgical loupes in either a head mount (headband) or a direct mount on the frame
of the surgical loupes. One of the key benefits of this co-axial illumination is
to provide  clinicians  with  shadow-free  images.  With the  introduction  of a
superior  quality  portable  LED light  source,  we are able to provide the next
generation  of  illumination  products  to  practitioners  that  currently   use
magnification.


                                       3
<PAGE>

         CRITERIA FOR SELECTION OF LIGHT SYSTEMS

         Based upon our market  experiences,  factors that are  important in the
selection of light sources are:

PORTABLE LIGHT SOURCE:

o    PORTABILITY.  A portable  light  system  allows for  maximum  movement  and
     flexibility. End users are no longer tethered to a light box.

o    LED. A portable  light  source with an LED bulb is the  brightest,  whitest
     light on the  market.  It is also  economical  in that it  eliminates  bulb
     replacement.

o    COMPACT. The light source should be small to save valuable counter space.

o    MOUNTING. The light source should mount on either a headband or directly to
     the  loupes.  The unit  should be able to be mounted  onto  loupes from all
     major competing manufactures to appeal to the widest possible user base.

o    RECHARGEABLE  BATTERY. The battery should have a quick recharge,  no longer
     than two hours to assure  continued  usage.  The battery pack should have a
     minimum of five plus hours of usage per  charge.  The light  source  should
     include  two or more  battery  packs,  so that one can be used while one is
     being charged.

o    LIGHTWEIGHT. A good portable light should have a small, lightweight battery
     pack and the headlight should be sleek and worn seamlessly.

OUR PRODUCT OFFERINGS

         We offer 2.5x, 3.0x, and 3.5x magnification surgical loupes, as well as
double-x models (2.5xx and 3.0xx) that provide ultra-lightweight surgical loupes
for added comfort.  The ultra-light  loupes are available in either a flip-up or
"through the lens"  design.  All loupes can be mounted on either a  light-weight
titanium frame or a fashionable  sports frame available in eight vibrant colors.
Additional  designer carrying cases are also available.  We believe that the key
selling points are high quality,  low price, and attentive customer service.  In
addition,  we offer an unlimited  lifetime warranty against defects in materials
and workmanship on all working parts, a program  unmatched by any other surgical
loupe supplier.

THE ADVANTAGES OF OUR PRODUCTS AND SERVICES

         When we entered  the  market,  there was no  competition  for a quality
surgical loupe at an affordable  price. We designed our own products and entered
into an exclusive manufacturing  relationship to produce cost effective surgical
loupes. As a result, we are able to sell our surgical loupes for $600 to $800, a
significant  savings to the end user and a distinct  competitive  advantage over
other similar products.

         Our  surgical  loupes  are  being  used in  private  dental  practices,
clinical settings,  college campuses,  and medical  institutions  throughout the
United States. Our surgical loupes are also


                                       4
<PAGE>

         endorsed by an  independent  non-profit  dental  education  and product
testing foundation and were featured in the foundation's 2005 Buyer's Guide. Our
surgical  loupes were also featured in "Dental Lab Products"  2005 Buyer's Guide
"Best of the  Best"  Offering  as well as being  listed  in the 2006  edition of
Dentistry Today's Top 100 Products.  They are also sold internationally  through
dealers located in Mexico, United Kingdom, Spain, Italy and Portugal.

         One of our key  primary  target  markets  has been the  dental  hygiene
segment of the dental market, until recently a largely overlooked group in terms
of  magnification.  Increasing  concerns among  practicing  hygienists about the
career-ending  risks of neck and back pain, as well as the recent move by dental
hygiene  schools to incorporate  the use of surgical loupes into the curriculum,
have dramatically expanded the universe of potential buyers of surgical loupes.

         Our new  Through-the-Lens  (TTL)  technology  opens new  markets  where
customers have a preference for this type of loupe.  Estimated market preference
for TTL loupes is 50% compared with 50% for the Flip-Up type loupes that we have
traditionally  offered. We are the first major U.S. company to offer a TTL loupe
with a  manufacturer-direct  model.  We can  offer  this  state  of the  art TTL
technology  in either our new  fashion  sports  frame or our  designer  titanium
frame. With the introduction of our proprietary SureFit TTL(TM) alignment system
customers  are now able to order our TTL loupes  through our online  store or by
telephone, providing us with a significant competitive advantage.

         Forthcoming  prism  loupes  will help to open new markets for us with a
planned market  introduction by the end of calendar year 2006. This will greatly
expand our offering to the surgery marketplace beyond what we now have currently
in place. This introduction will help us bring our distinctive business model to
this large well established market.

         The newly  introduced  SheerVision  SV Sports Frame  provides a product
advantage  when  compared  with some of our  competitors  who  currently  do not
provide a similar  alternative for their loupe optics. This is a product for the
fashion  conscious  user that  features a  wrap-around  sports frame and that is
available in eight vibrant  colors and  accommodates  both the flip up loupe and
the TTL loupe.  This sports  frame can also we worn as a stand  alone item.  Our
FireFly LED(TM) light system can also be fitted to this frame.

         There are hundreds of accredited dental hygiene schools in the U.S. and
Canada.  In addition,  industry experts believe that, of the 160,000  practicing
hygienists in the U.S., 15% to 18% are currently  using surgical loupes in their
practices.  We identified  this largely  untapped market in 2003 and initiated a
marketing  strategy to capture a leading position selling to dental  hygienists.
We were  able to  design  and  bring to  market - in less than one year - a new,
ultra-light  surgical  loupe that has  become our number one best  seller in the
dental hygiene market.

         Our value  proposition of high quality surgical loupes at an affordable
price  is  particularly   meaningful  to  the  price-sensitive   dental  hygiene
practitioners.  Most  competitors in the industry focus on the high-end  dentist
and  physician   markets,   including   practicing   professionals  as  well  as
medical/dental  schools.  These markets are highly  competitive and more heavily
penetrated.  Nonetheless,  there are  always  selling  opportunities  for a high
quality,  low cost provider such as us. We believe that, to date,  our products'
price points are unmatched in the marketplace  when coupled with our exceptional
quality.

                                       5
<PAGE>

         Finally,  we believe that the  international  market  represents a huge
ongoing  opportunity,   as  there  are  over  500,000  international  practicing
dentists,  approximately  50% of whom are currently  using surgical  loupes.  We
believe that our ability to offer the best price-quality trade-off enables us to
be an effective  participant in any  dental/medical  market  segment.  The major
factors   driving  our  success  in  the  United   States  appear  to  apply  in
English-speaking  international  markets.  As English  has  become  the  leading
language  of the  worldwide  business  and medical  communities,  our ability to
market to these groups grows.  We have  processed  orders from over twenty major
countries as our product's and service  advantages coupled with our direct sales
model  is  well-suited  to the  needs of  international  customers  through  our
e-commerce  enabled  website and  telephone  call center.  Our growing sales and
brand  name  recognition  has  also  attracted  numerous  inquires  from  volume
purchasers in international  markets. In terms of the international markets, the
introduction  process  is  rather  long,  but  we  continue  to  develop  strong
relationships  in a number of countries.  We are working with dealers in Mexico,
United  Kingdom,  Spain,  Italy and  Portugal  and have also  engaged in further
discussions with companies in Asia and South America. We are also selling direct
to Canada.

SALES AND MARKETING

         We have a dedicated outside sales staff of 8 dental  professionals that
has penetrated  over 80% of the nation's  dental hygiene  schools.  Covering the
U.S. and Canada,  sales  representatives  make  presentations  to dental hygiene
schools, call on individual dental offices and participate in local professional
organization  events and meetings.  To date, we are the only  competitor  with a
separate  dental hygiene  division  comprised  exclusively of registered  dental
hygienists.  All  have  advanced  degrees,  as well  as  clinical  and  teaching
experience,  enabling them to speak with  authority in sales  presentations.  In
addition, we exhibit at over 90 trade shows each year, undertake numerous direct
marketing  campaigns,  contribute  articles  to trade  magazines  and oversee an
aggressive internet search engine marketing program.

         We believe  advertising and marketing will continue to be our key areas
of  strategic  investment.  During  mid-September  we  initiated  a direct  mail
campaign targeted at the practicing dentist, dental school, practicing hygienist
and hygiene  school  markets  with a goal of  expanding  our sales of loupes and
lights. We have also received  additional  creditability from our transformation
into a publicly  traded  company.  We plan to continue our rollout of our direct
mail, SEM, and trade advertising  campaigns to accelerate growth. In addition to
the  direct  mail   campaign   discussed   above,   we  have  placed   full-page
advertisements  in seven major dental and dental hygiene  publications.  We have
also  increased our library of marketing  materials to use in future printed and
online marketing efforts and increased our online marketing efforts in the areas
of SEM, and online  advertising.  We believe that our online  marketing  program
will  allows us to extend our reach  into new  markets  beyond  our  traditional
medical, dental, and veterinary marketplaces in the United States.

         As  part  of our  marketing  programs,  we have  developed  a  branding
campaign  to  reinforce  recognition  of our unique  business  model,  products,
services,  and  technologies.  The SheerVision  brand has been reinforced by the
publicity  received  by the  company  becoming a publicly  traded  company,  and
through its direct mail and  advertising  initiatives.  On June 20, 2006 we were
granted  federal  registration of the trademark,  SheerVision(R),  by the United
States  Patent and  Trademark  Office,  in our efforts to build and maintain our
brand names and market recognition.

         A typical  SheerVision buyer will place an order for our 2.5x, 3.0x, or
3.5x  surgical  loupes,  or for the newer  2.5xx or 3.0xx  ultra-light  surgical
loupes. Those needing prescription


                                       6
<PAGE>

lenses can place special orders  through us for an additional  fee. As customers
often  seek  illumination  along  with  magnification,  we offer a new  portable
FireFly  LED(TM)  light system that is the brightest and lightest on the market,
and can be purchased along with the surgical loupes or as a separate item.

         We believe  that our  product  quality  is  excellent  and that  market
acceptance is exceptionally high.

OEM OPERATIONS

         In addition to manufacturing and offering surgical loupes under our own
brand name, we offer our surgical loupes as an OEM for major optical  companies.
During  the years  ended  August 31,  2006 and 2005 the sales to such  customers
represented 6%, and 5%, respectively,  of our total revenues. We believe that by
offering our products directly,  as well as through major optical companies,  we
are able to gain market share not only by focusing on cost and quality conscious
consumers, but by focusing on brand name conscious consumers as well.

MANUFACTURING

         Our contract manufacturers supply proprietary company-designed surgical
loupe and light system  components on an exclusive basis. An inventory of loupes
and light  systems is  maintained  at our offices in order to assure rapid order
processing and fulfillment.  Production  capacity is adequate to support a level
of sales  approximately twice the current level, and there are alternate sources
of supply of the raw  materials  needed to  produce  surgical  loupes  and light
systems.  We believe that the quality of our  products is a principal  driver of
purchasing decisions, and our third party manufacturers conduct rigorous quality
testing on a regular basis.  SheerVision  currently  owns and operates  computer
controlled  assembly  equipment to build  customized  loupe products and has key
personnel assigned to perform production staging,  final unit assembly,  quality
control, and shipping procedures.

COMPETITION

         The surgical loupe market is characterized by a number of participants,
each dominant in one or more segments of the market. In each market segment,  we
compete with  established  manufacturers  of surgical loupes and other specialty
optical products,  including Designs for Vision,  Orascoptic,  and Surgitel.  We
believe that competition is principally based upon the following factors:

         o    PRODUCT QUALITY AND DURABILITY;

         o    PRODUCT PRICING;

         o    PRODUCT ATTRIBUTES, INCLUDING THE FOLLOWING:

              o    MAGNIFICATION/CLARITY. Top quality optics are critical in
                   this regard;

              o    FIELD-OF-VIEW. A wide field of vision is  better than a
                   smaller one;

              o    DEPTH-OF-FIELD. An extended depth of field is preferable; and

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<PAGE>

              o    WEIGHT OF SURGICAL LOUPES. Lighter loupes are generally
                   preferable to heavier loupes; and

         o    BRAND REPUTATION AND LOYALTY.

         We believe that we compete  favorably in the dental  hygiene  market on
the basis of these  criteria  and are rapidly  expanding  our  products in other
markets as well.

         We have a number of valuable trade secrets that have demonstrated their
effectiveness as significant  barriers to competition.  They relate to products,
to proprietary manufacturing processes and to sales and marketing techniques. We
have  filed a  domestic  patent  application  for one of the  components  to our
product  offerings and are evaluating  the  possibility of filing further patent
applications for components and/or products under development..

RESEARCH AND DEVELOPMENT

         We are committed to an ongoing  program of research and  development to
maintain our reputation for  cutting-edge  products that meet the evolving needs
of the market.  We conduct  research and  development  activities  to design and
develop products that will enhance our competitive marketing position. Our newly
developed  products include a fully portable LED light system,  Through the lens
loupe,  a wrap around sports  frame,  and  fashionable  loupe  accessories.  The
FireFly  LED(TM)  light  has  become a best  seller  in the  dental  market  and
contributed  significantly  to our rapid expansion into that market niche during
the last several months.

         SheerVision has made strides in building its R&D program. Over the past
fiscal year, we have launched several new products  including our TTL loupe, our
SV Sports frame, and developed the prototype of our prism loupe, which should be
available  for sale to the surgical  market by the end of the 2006. In addition,
we have developed a number of new loupe  accessories  including a loupe mounting
hinge, several LED lighting loupe mount clips, and a number of new loupe and LED
storage cases.  We remain focused on expanding our product lines, as well as the
pursuit  of  additional  opportunities  in the LED light  division.

GOVERNMENT REGULATION

         Our products are classified as Class I Non-Invasive Medical Devices and
as such,  there is no  requirement to obtain FDA approval.  We have  nonetheless
registered with the FDA on a voluntary basis and also have CE certifications for
international  sales.  All of our light  systems are safety tested and rated and
have their ETL, CE and Canadian certifications.

EMPLOYEES

         As of October 31, 2006, we had employed 24 individuals  and engaged the
services of several consultants.  Of our employees, 10 were engaged in sales and
marketing,  6 in  customer  service/inside  sales,  4  in  quality  control  and
production, and 4 in executive/administrative.


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<PAGE>

OUR BACKGROUND

         SheerVision,   Inc.,  a  Delaware  corporation,   was  incorporated  as
"Escalator,  Inc." under the General Corporation Law of the State of Delaware on
April 17, 1986. On June 3, 1986,  Lone Pine  Resources,  Inc. was merged with us
through a reverse merger whereby the  shareholders of Lone Pine Resources,  Inc.
received an equal number of shares in Escalator,  Inc. Lone Pine Resources, Inc.
was incorporated under the laws of Utah on June 23, 1983.

         In  the  past,  we  conducted  operations  through  three  wholly-owned
subsidiaries, Escalator Securities, Inc., Escalator Investments, Inc., and Frank
Communications Corp., each a Pennsylvania  corporation.  Escalator  Investments,
Inc.  was  incorporated  in the State of  Pennsylvania  on August  15,  1984 and
conducted  financial  planning  activities  through   approximately  1992  as  a
Registered  Investment Advisor under the Investment  Advisors Act of 1940. Since
1992, Escalator Investments,  Inc. has had no operations.  Escalator Securities,
Inc. was  incorporated  in the State of  Pennsylvania  on August 22,  1985,  and
conducted business as a registered  broker-dealer  under the Securities Exchange
Act of 1934, as amended, and the Pennsylvania Securities Act of 1972 until 1997.
On December 31, 1997, Escalator  Securities,  Inc. was closed by the NASD. Since
this date, Escalator Securities, Inc. has had no operations. On July of 1990, we
acquired Frank Communications Corp., a Pennsylvania  corporation incorporated on
May 30,  1989,  which was in the  business of  financial  public  relations.  In
consideration of this acquisition,  we paid $1,000.  Frank  Communications Corp.
has no operations.  On June 30, 1997, we  transferred  our holdings in Escalator
Securities,  Inc. to  Escalator  Investments,  Inc.  pursuant to the terms of an
Agreement and Plan of Spinoff. The shareholders of Escalator,  Inc. received all
of  the  outstanding  stock  of  Escalator   Investments,   Inc.  and  Escalator
Securities, Inc., which then ceased being our wholly-owned subsidiaries.

         On April 22, 1998, we changed our name to Nu Electric  Corporation.  On
June 30, 1999, we acquired Clean Water  Technologies,  Inc.  (hereinafter "Clean
Water"), a Florida limited liability  company,  through an agreement and plan of
merger  whereby  all of the  outstanding  and issued  shares of Clean Water were
exchanged for shares of Nu Electric. Pursuant to this agreement, we acquired all
of the assets of the business of Clean Water. On September 21, 2000, we acquired
Zorax, Inc. (hereinafter  "Zorax"), a Florida corporation,  through an agreement
and plan of merger  whereby  all of the issued and  outstanding  shares of Zorax
were  exchanged  for  shares of Nu  Electric.  Pursuant  to this  agreement,  we
acquired all of the assets of Zorax.  On April 4, 2005, we eliminated  our Zorax
subsidiary.

         On April 2, 2002, we changed our name to Clean Water Technologies, Inc.

         On March 27, 2006, we entered into a Share Exchange and  Reorganization
Agreement  (the  "Exchange  Agreement")  with  SheerVision,  Inc.,  a California
corporation (including its predecessor,  "Sheervision-CA") and Suzanne Lewsadder
and Jeffrey Lewsadder, our Chief Executive Officer and President,  respectively,
and  the  beneficial  holders  of  all  of  the  outstanding  capital  stock  of
SheerVision-CA,  which  set  forth the  terms  and  conditions  of the  business
combination of us and SheerVision-CA in which all shareholders of SheerVision-CA
exchanged all of the outstanding and issued capital stock of SheerVision-CA  for
an aggregate of 9,525,137  shares of our common stock,  representing  95% of the
outstanding common stock immediately after giving effect to such transaction. As
a result of this transaction, SheerVision-CA became our wholly-owned subsidiary,
and the shareholders of SheerVision-CA became our controlling stockholders.

                                       9
<PAGE>

         On June 15, 2006, we changed our name to SheerVision,  Inc. We have not
been a party to any bankruptcy,  receivership or similar proceeding.  Since such
date,  except as  described  herein,  we have not been  involved in any material
reclassification,  merger,  consolidation,  or purchase or sale of a significant
amount of assets not in the ordinary course of business.


ITEM 1A.  RISK FACTORS

OUR BUSINESS,  PROSPECTS,  FINANCIAL CONDITION, AND RESULTS OF OPERATIONS MAY BE
MATERIALLY AND ADVERSELY AFFECTED DUE TO ANY OF THE FOLLOWING RISKS. THE TRADING
OF OUR  COMMON  STOCK  COULD  DECLINE  DUE TO ANY OF  THESE  RISKS.  SOME OF THE
STATEMENTS IN "RISK FACTORS" ARE FORWARD LOOKING  STATEMENTS.  SEE "SPECIAL NOTE
REGARDING FORWARD LOOKING STATEMENTS".

RISKS RELATED TO OUR BUSINESS

         AS WE HAVE A  LIMITED  OPERATING  HISTORY,  INVESTORS  MAY  NOT  HAVE A
SUFFICIENT  HISTORY ON WHICH TO BASE AN  INVESTMENT  DECISION.  Although we were
incorporated  in  April  1986,  our  recently  acquired   operating   subsidiary
SheerVision-CA  commenced operations in 1999.  Accordingly,  we may be deemed to
have a  limited  operating  history.  Investors  must  consider  the  risks  and
difficulties  frequently  encountered by early stage companies,  particularly in
rapidly evolving markets such as the medial optical industry. Such risks include
the following:

         o    competition;

         o    need for acceptance of products;

         o    ability to anticipate and adapt to a competitive market and rapid
              technological developments;

         o    amount and timing of operating costs and capital expenditures
              relating to expansion of our business, operations, and
              infrastructure; and

         o    dependence upon key personnel.

         We cannot be certain our strategy  will be  successful  or that we will
successfully  address  these  risks.  In the event  that we do not  successfully
address these risks, our business,  prospects,  financial condition, and results
of operations could be materially and adversely affected.  Information regarding
all of our  past  operations  can be  found  in  our  reports  and  registration
statements  that have been  previously  filed with the  Securities  and Exchange
Commission.

         WE DO HAVE A LIMITED HISTORY OF PROFITABILITY AND, CONSEQUENTLY, CANNOT
PREDICT  WHETHER  WE  WILL  BE  PROFITABLE.  Although  SheerVision-CA  commenced
operations in 1999,  it has recorded  profits  inconsistently  to date as it has
endeavored to expand its business, product line, and operations.  SheerVision-CA
net income  (loss) for the years ended August 31, 2005 and 2004 were $21,006 and
$(18,875), respectively and SheerVision's net loss for the year ended August 31,
2006 was  $(2,349,374).  Moreover,  we will need to increase  significantly  our
operating  expenses to implement our business plan. As a result of the foregoing
factors,  we could incur significant  losses on a quarterly and annual basis for
the foreseeable  future. Our ability to generate revenue and profits in the long
term will depend  primarily upon the successful  implementation  of our business
plan. We can provide no assurance


                                       10
<PAGE>

that we will be  successful  in  implementing  our business plan or that we will
generate sufficient revenue to achieve profitability.

         OUR FINANCIAL  RESULTS MAY FLUCTUATE  FROM PERIOD TO PERIOD AS A RESULT
OF SEVERAL FACTORS WHICH COULD ADVERSELY  AFFECT OUR STOCK PRICE.  Our operating
results may  fluctuate  significantly  in the future as a result of a variety of
factors,  many of which are  outside  our  control.  As a result of our  limited
operating history, we believe that period to period comparisons of our operating
results may not be a good indication of our future  performance.  It is possible
that our future operating  results may be below the expectations of investors or
market analysts.  If this occurs, our stock price may go down. Factors that will
impact our financial results include:

         o    the  amount and timing of  capital  expenditures  and other  costs
              relating to the  implementation  of our business  plan,  including
              acquisitions  of, and investments in,  competing or  complementary
              companies or technologies;

         o    the introduction of new products by our competitors;

         o    pricing   changes  in  the  surgical   loupe  and  light   systems
              manufacturing or assembly industries;

         o    technical difficulties with respect to the use of our products;

         o    regulatory changes; and

         o    general economic  conditions and economic  conditions  specific to
              our industry.

         As a strategic response to changes in the competitive  environment,  we
may from time to time make certain pricing,  service,  or marketing decisions or
acquisitions  that  could  have a  material  adverse  effect  on  our  business,
prospects, financial condition, and results of operations.

         WE WILL  NEED  ADDITIONAL  CAPITAL  IN  CONNECTION  WITH  OUR  PROPOSED
EXPANSION IN ORDER TO ACCELERATE OUR EXPANSION  PLANS. To date, we have financed
our operations  principally  through internally  generated funds, a bank line of
credit, and offerings of securities exempt from the registration requirements of
the Securities  Act. We believe that our available  resources and cash flow will
be sufficient to meet our anticipated operating cash needs for at least the next
12 months.  Notwithstanding  the  foregoing,  we estimate  that we will  require
substantial  additional  financing  at  various  intervals  for  our  sales  and
marketing and research and development  programs.  We also estimate  significant
requirements for operating expenses including  intellectual  property protection
and  enforcement,  and for pursuit of  regulatory  approvals.  We can provide no
assurance  that  additional  funding will be available on a timely basis,  terms
acceptable  to us,  or at all.  Accordingly,  we may not be able to  secure  the
funding  which is  required  to expand  sales and  marketing  and  research  and
development beyond their current levels or at levels that may be required in the
future.  If we cannot secure  adequate  financing,  we may be required to delay,
scale back or eliminate  one or more of our sales and marketing  initiatives  or
research and development programs or to enter into license or other arrangements
with third parties to market  products or  technologies  that we would otherwise
seek to develop and market  ourselves.  In such event, our business,  prospects,
financial  condition,  and results of operations may be adversely affected as we
may be required to delay expansion or product introductions or

                                       11
<PAGE>

enter into  royalty,  sales or other  agreements  with third parties in order to
commercialize our products.

         WE HAVE LIMITED MANUFACTURING FACILITIES AND ARE LARGELY DEPENDENT UPON
THIRD  PARTIES  TO  MANUFACTURE  OUR  PRODUCTS.  We have  limited  manufacturing
facilities or expertise and have entered into  manufacturing  arrangements  with
third  parties  to  manufacture  our  products.   Accordingly,  our  ability  to
commercialize our products is dependent,  in part, on our relationships with our
third  party  contract  manufacturers  and the ability of our  manufacturers  to
manufacture   our   products  on  a  timely   basis  in   accordance   with  our
specifications.  While we believe  that there are  numerous  other  third  party
manufacturers  capable of manufacturing  our products,  should we not be able to
continue to obtain contract  manufacturing on commercially  reasonable terms, or
obtain  our  products  rapidly  when  needed,   we  may  experience   difficulty
commercializing  our  products.  Any of such  events may  materially,  adversely
affect our business, prospects, financial condition, and results of operations.

         WE ARE  DEPENDENT  ON KEY MEMBERS OF  MANAGEMENT.  Our  performance  is
substantially  dependent  on our  key  executive  officers,  Suzanne  Lewsadder,
Jeffrey Lewsadder, our Chief Executive Officer, and President, respectively, for
sales and marketing, research and development,  manufacturing,  and intellectual
property  protection  and  licensing.  Although  these  officers  are our  major
stockholders, there can be no assurance these officers will continue to serve as
our officers or  directors.  The inability to retain and continue to attract and
retain qualified  management and staff could significantly delay and may prevent
the achievement of our research,  development and business objectives, and could
have a material adverse effect on our business, prospects, financial conditions,
and results of operations. See "Management - Employment Agreement".

         OUR  FAILURE TO MAINTAIN  AND  DEVELOP OUR BRAND NAMES COULD  ADVERSELY
AFFECT OUR REVENUES. We believe that maintaining and developing our brand names,
including  the  trademark  "SHEERVISION(R)",  are critical to our  success.  The
importance  of our name  recognition  may increase as our  products  gain market
acceptance  and as we enter  additional  markets.  We are incurring  substantial
expenditures to create and maintain brand name  recognition and loyalty.  If our
brand building strategy is unsuccessful, we may be unable to increase our future
revenues or expand our products and services.  Such events would have a material
adverse effect on our business,  prospects,  financial  condition and results of
operations.

         THE  INDUSTRY  IN WHICH WE  OPERATE  IS  HIGHLY  COMPETITIVE.  Numerous
well-known  companies,  which have substantially  greater capital,  research and
development  capabilities and experience than we have, are presently  engaged in
the  surgical  loupe  market.  By virtue of  having or  introducing  competitive
products  on the  market  before  us,  these  entities  may  gain a  competitive
advantage.  Further future technological  developments may render some or all of
our current or future  products  noncompetitive  or obsolete,  and we may not be
able to make the enhancements to our products necessary to compete  successfully
with newly emerging  technologies.  If we are unable to successfully  compete in
our chosen markets, our business prospects,  financial condition, and results of
operations would be materially adversely affected.

         AS THE  OWNERSHIP  OF OUR  VOTING  SECURITIES  IS  CONCENTRATED  IN OUR
FOUNDERS,  EXECUTIVE  OFFICERS,  AND DIRECTORS,  SUCH INDIVIDUALS CONTROL US. At
October 31, 2006, Suzanne Lewsadder and Jeffrey  Lewsadder,  our Chief Executive
Officer and President, respectively, beneficially own approximately 77.6% of the
outstanding common stock. Accordingly, these individuals will


                                       12
<PAGE>

be able to elect  our  directors  and  control  the  outcome  of  virtually  all
important  stockholder  decisions  and may make  such  decisions  in  their  own
interest, which may not be in the best interests of other stockholders.

         OUR FAILURE TO PROTECT OUR INTELLECTUAL  PROPERTY COULD HAVE AN ADVERSE
AFFECT ON US. We rely on  trademark,  patent and trade  secrets  to protect  our
intellectual property. We cannot be sure that these intellectual property rights
can be  successfully  asserted  in  the  future  or  will  not  be  invalidated,
circumvented, or challenged. Our failure to protect our proprietary information,
and any successful intellectual property challenges or infringement  proceedings
against us could  have a material  adverse  effect on our  business,  prospects,
financial condition and results of operations.

         ANY  INABILITY  BY US TO RESPOND TO  CHANGES IN  CONSUMER  DEMANDS IN A
TIMELY  MANNER  COULD  MATERIALLY  ADVERSELY  AFFECT  OUR  BUSINESS,  PROSPECTS,
FINANCIAL  CONDITION,  AND RESULTS OF  OPERATIONS.  Our  success  depends on our
ability to identify, originate and define product trends in our markets, as well
as to  anticipate,  gauge and react to  changing  consumer  demands  in a timely
manner. Our products must appeal to a broad range of consumers whose preferences
cannot be predicted  with certainty and are subject to periodic  change.  We may
not be able to meet changing  consumer demands in the future. If we misjudge the
market for our products, we may be faced with significant excess inventories for
some products and missed opportunities for other products. Either of such events
could have a  material  adverse  effect on our  business,  prospects,  financial
condition, and results of operations.

                        RISKS RELATED TO OUR COMMON STOCK

         IN RECENT YEARS,  THE STOCK MARKET IN GENERAL HAS  EXPERIENCED  EXTREME
PRICE AND VOLUME  FLUCTUATIONS.  THIS VOLATILITY HAS HAD A SIGNIFICANT EFFECT ON
THE MARKET  PRICE OF  SECURITIES  ISSUED BY MANY  COMPANIES  FOR  REASONS  OFTEN
UNRELATED TO THEIR OPERATING  PERFORMANCE.  THESE BROAD MARKET  FLUCTUATIONS MAY
ADVERSELY AFFECT OUR STOCK PRICE,  REGARDLESS OF OUR OPERATING  RESULTS.  AS THE
MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY,  AND THIS MAY MAKE
IT  DIFFICULT  FOR YOU TO RESELL YOUR SHARES OF COMMON STOCK WHEN YOU WANT OR AT
PRICES YOU FIND ATTRACTIVE. The price of the common stock is quoted on the OTCBB
and constantly changes. We expect that the market price of the common stock will
continue to fluctuate.  These fluctuations may result from a variety of factors,
many of which are beyond our control. These factors include:

         o    quarterly variations in our operating results;

         o    operating results that vary from the expectations of management,
              securities analysts and investors;

         o    changes in expectations as to our business, prospects, financial
              condition, and results of operations;

         o    announcements by us, our partners or our competitors of material
              developments;

         o    the operating and securities price performance of other companies
              that investors believe are comparable to us;

         o    future sales of our equity or equity-related securities;

                                       13
<PAGE>

         o    changes in general conditions in our industry and in the economy,
              the financial markets and the domestic or international political
              situation;

         o    fluctuations in oil and gas prices;

         o    departures of key personnel; and

         o    regulatory considerations.

         As a  result  of  these  fluctuations,  you may  experience  difficulty
selling shares of our common stock when desired or at acceptable prices.

         FUTURE SALES OF COMMON STOCK OR THE  ISSUANCE OF  SECURITIES  SENIOR TO
THE COMMON STOCK OR CONVERTIBLE INTO, OR EXCHANGEABLE OR EXERCISABLE FOR, COMMON
STOCK COULD  ADVERSELY  AFFECT THE TRADING  PRICE OF THE COMMON  STOCK,  AND OUR
ABILITY TO RAISE  FUNDS IN NEW EQUITY  OFFERINGS.  Future  sales of  substantial
amounts of our common  stock or other  equity-related  securities  in the public
market or  privately,  or the  perception  that such sales  could  occur,  could
adversely affect prevailing  trading prices of our common stock and could impair
our  ability  to raise  capital  through  future  offerings  of  equity or other
equity-related  securities.  We can make no prediction as to the effect, if any,
that future sales of shares of common stock or equity-related securities, or the
availability of shares of common stock for future sale, will have on the trading
price of our common stock.

         THE MARKET FOR THE  COMMON  STOCK MAY SUFFER IN THE EVENT OF  DELISTING
FROM THE OTCBB OR IF OUR COMMON STOCK IS "PENNY STOCK". If our common stock were
delisted from the OTCBB or no exclusion  from the  definition of a "PENNY STOCK"
under the  Securities  Exchange Act of 1934,  as amended,  were  available,  our
common  stock could be subject to the penny  stock rules that impose  additional
sales  practice  requirements  on  broker-dealers  who sell these  securities to
persons other than established  customers and accredited  investors.  Accredited
investors are generally  those  investors with net worth in excess of $1,000,000
or annual income  exceeding  $200,000 or $300,000  together  with a spouse.  For
transactions  covered  by these  rules,  the  broker-dealer  must make a special
suitability   determination  for  the  purchase,  and  must  have  received  the
purchaser's  written  consent  to the  transaction  prior to sale.  As a result,
delisting, if it were to occur, could materially adversely affect the ability of
broker-dealers  to sell our common stock and the ability of  purchasers  to sell
their shares in the secondary market.

         FUTURE  SALES  OF  COMMON  STOCK  BY OUR  EXISTING  STOCKHOLDERS  COULD
ADVERSELY  AFFECT OUR STOCK  PRICE.  The market  price of our common stock could
decline as a result of sales of a large  number of shares of our common stock in
the market,  or the  perception  that these sales could occur.  These sales also
might make it more difficult for us to sell equity securities in the future at a
time and at a price that we deem  appropriate.  As of October 31, 2006,  we have
outstanding 12,278,169 shares of common stock. Of these shares, 2,753,032 shares
are freely  tradeable.  Giving effect to the exercise in full of our outstanding
warrants,  conversion in full of our  outstanding  Series A Preferred  Stock, at
October 31, 2006, we would have outstanding  17,184,352  shares of common stock.
Of  these  shares,  7,659,215  shares  will be  freely  tradeable.  This  leaves
9,525,137  shares  eligible  for sale in the  public  market,  all of which  are
beneficially  owned by  Suzanne  Lewsadder  and  Jeffrey  Lewsadder,  our  Chief
Executive Officer and President, respectively.


                                       14
<PAGE>


         Some  of  our   warrantholders,   holding   warrants   exercisable  for
approximately  988,700  shares of common  stock,  have the  right,  subject to a
number of conditions and  limitations,  to include their shares in  registration
statements  relating to our securities.  By exercising their registration rights
and  causing a large  number of shares to be  registered  and sold in the public
market, these holders may cause the market price of the common stock to fall. In
addition,  any demand to include  these  shares in our  registration  statements
could have an adverse effect on our ability to raise needed capital.

         WE DO NOT  EXPECT  TO PAY CASH  DIVIDENDS  ON OUR  COMMON  STOCK IN THE
FORESEEABLE  FUTURE.  We have not  declared  or paid any cash  dividends  on our
common stock and do not expect to pay cash dividends in the foreseeable  future.
As a result,  investors  may have to sell their  shares of our  common  stock to
realize their investment.  We currently intend to retain all future earnings for
use in the operation of our business and to fund future growth. In addition, the
terms of our Series A Preferred  Stock limit our  ability to pay  dividends.  If
this prohibition were to be waived,  our ability to pay future cash dividends on
our  common  stock  would  depend  upon our  results  of  operations,  financial
condition, cash requirements, the availability of a surplus and other factors.

         WE ARE SUBJECT TO ANTI-TAKEOVER  PROVISIONS THAT COULD AFFECT THE PRICE
OF OUR COMMON STOCK.  Some  provisions of our certificate of  incorporation,  as
amended,  our  by-laws,  and laws of the State of  Delaware  could  make it more
difficult  for a third party to acquire us, even if doing so might be beneficial
to our stockholders.

         We are subject to the provisions of Section 203 of the Delaware General
Corporation Law ("SECTION 203"). Section 203 provides,  with certain exceptions,
that a Delaware  corporation  may not engage in any of a broad range of business
combinations with a person or an affiliate,  or an associate of such person, who
is an  "interested  stockholder"  for a period of three years from the date that
such  person  became  an  interested  stockholder  unless:  (i) the  transaction
resulting  in a person  becoming  an  interested  stockholder,  or the  business
combination, is approved by the board of directors of the corporation before the
person  becomes  an  interested  stockholder;  (ii) the  interested  stockholder
acquired 85% or more of the  outstanding  voting stock of the corporation in the
same  transaction  that makes such person an interested  stockholder  (excluding
shares owned by persons who are both officers and directors of the  corporation,
and the shares held by certain employee stock ownership  plans);  or (iii) on or
after the date the  person  becomes  an  interested  stockholder,  the  business
combination  is  approved by the  corporation's  board of  directors  and by the
holders of at least 66-2/3% of the corporations  outstanding  voting stock at an
annual  or  special  meeting,  excluding  the  shares  owned  by the  interested
stockholder.  Under Section 203, an "interested  stockholder"  is defined as any
person who is: (i) the owner of 15% or more of the  outstanding  voting stock of
the corporation or (ii) an affiliate or associate of the corporation and who was
the owner of 15% or more of the  outstanding  voting stock of the corporation at
any time within the three-year period  immediately prior to the date on which it
is sought to be determined whether such person is an interested stockholder.

         A  corporation  may, at its  option,  exclude  itself from  coverage of
Section 203 by amending its certificate of incorporation or bylaws, by action of
its stockholders, to exempt itself from coverage, provided that such certificate
of  incorporation  amendment or bylaw shall not become effective until 12 months
after the date it is  adopted.  We have not  adopted  such an  amendment  to our
second amended and restated certificate of incorporation or by-laws.

                                       15
<PAGE>

         In  addition,   our  second   amended  and  restated   certificate   of
incorporation,  as amended,  authorizes  our board of  directors  to issue up to
10,000,000 shares of preferred stock, which may be issued in one or more series,
the terms of which  may be  determined  at the time of  issuance  by the  board,
without further action by stockholders, and may include voting rights (including
the  right  to  vote as a  series  on  particular  matters),  preferences  as to
dividends and  liquidation,  conversion and  redemption  rights and sinking fund
provisions.  Following the conversion of our  convertible  preferred  stock,  no
shares of preferred stock shall be outstanding, and we have no present plans for
the  issuance  of any  preferred  stock  other  than  the  outstanding  Series A
Preferred  Stock.  However,  the  issuance  of any such  preferred  stock  could
materially  adversely affect the rights of holders of shares of our common stock
and,  therefore,  could  reduce  the value of our  common  stock.  In  addition,
specific  rights granted to future  holders of preferred  stock could be used to
restrict our ability to merge with,  or sell our assets to, a third  party.  The
ability of our board of directors to issue preferred stock could have the effect
of rendering more difficult,  delaying,  discouraging,  preventing, or rendering
more  costly an  acquisition  or a change in control  of us  thereby  preserving
control of by the current controlling stockholders.

ITEM 2.  DESCRIPTION OF PROPERTY

         Our corporate  office,  customer  service and shipping  operations  are
located at 4030 Palos  Verdes  Drive  North,  Suite 104 Rolling  Hills  Estates,
California,  and is comprised  of  approximately  2090 square feet.  SheerVision
leases  this  facility  from an  unaffiliated  third  party  pursuant to a lease
expiring  on October  31,  2007 and  providing  for annual  rental  payments  of
approximately $50,000. Light manufacturing and storage facilities are located at
4000 Palos Verdes Drive North,  Suite 110 and comprise  approximately 610 square
feet. Annual rental payments are approximately $5,300 and this lease is expiring
on  October  31,  2007.  Satellite  operations  are  currently  in the states of
Arizona,  California,  Georgia, Illinois,  Massachusetts and Texas. In the event
that we should  require  additional or alternative  facilities,  we believe that
such facilities can be obtained on short notice at competitive rates.

ITEM 3.  LEGAL PROCEEDINGS

         In the  ordinary  course of  business  the  Company  may be  subject to
litigation  from time to time.  There is no past,  pending or, to the  Company's
knowledge,  threatened litigation or administrative action (including litigation
or action  involving the Company's  officers,  directors or other key personnel)
which in the  Company's  opinion has or is expected to have, a material  adverse
effect upon its business, prospects financial condition or operations.

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

         No matters  were  submitted  to a vote of our  shareholders  during the
fourth quarter of the fiscal year 2006.



                                       16
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

         Our common  stock is quoted on the OTC  Bulletin  Board  (the  "OTCBB")
under the symbol "SVSO".  From March 22, 2006 to June 15, 2006, our common stock
traded on the OTCBB  under the  symbol  "CWTT"  and prior to such  earlier  date
traded on the OTCBB under the symbol "CWTI". The quarterly high and low reported
sales  prices  for our  common  stock as quoted  on the  OTCBB  for the  periods
indicated are as follows:


                YEAR ENDED AUGUST 31, 2006              HIGH          LOW

 Three Months Ended November 30, 2005                   .10           .06
 Three Months Ended February 28, 2006                   .14           .04
 Three Months Ended May 31, 2006                        4.50          .04
 Three Months Ended August 31, 2006                     1.50          1.00

                 YEAR ENDED AUGUST 31, 2005             HIGH          LOW

 Three Months Ended November 30, 2004                    .30          .12
 Three Months Ended February 28, 2005                    .27          .07
 Three Months Ended May 31, 2005                         .20          .07
 Three Months Ended August 31, 2005                      .15          .07

         The  foregoing  quotations  were  provided  by  Yahoo  finance  and the
quotations reflect  inter-dealer  prices,  without retail mark-up,  mark-down or
commission and may not represent actual transactions.

         On October 31, 2006,  the last  reported sale price per share of common
stock as quoted  on the OTCBB was  $0.28.  As of such  date,  we had  12,278,169
shares of common stock  outstanding.  Based on  information  available  from our
registrar  and  transfer  agent,  we  estimate  that  we had  approximately  184
stockholders of record on October 31, 2006.

         The Company has not paid any  dividends to date.  In addition,  it does
not anticipate  paying  dividends in the foreseeable  future although holders of
Series A Preferred Stock are entitled to a dividend preference at the rate of 9%
of the  stated  value of $10 per  share  per  annum  payable  every  June 30 and
December 31,  commencing  June 30, 2006 and to the extent not paid accrues until
paid. The Board of Directors of the Company will review its dividend policy from
time to time to determine the  desirability  and feasibility of paying dividends
after giving  consideration  to the  Company's  earnings,  financial  condition,
capital requirements and such other factors as the Board may deem relevant.

         The Company has no  securities  authorized  for  issuance  under equity
compensation plans.


                                       17
<PAGE>



ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

            The following  discussion and analysis should be read in conjunction
with our audited financial statements for each of the two years ended August 31,
2006 and 2005,  and the notes  thereto,  all of which  financial  statements are
included  elsewhere in this Form 10-KSB. In addition to historical  information,
the following  discussion  and other parts of this Form 10-KSB  contain  forward
looking information that involves risks and uncertainties.  Actual results could
differ materially from those anticipated by such forward-looking information due
to factors discussed under  "Description of Business" and elsewhere in this Form
10KSB.

OVERVIEW

         We design and sell proprietary surgical loupes and light systems to the
dental,  medical  and  veterinary  markets and have  quickly  captured a leading
position in the dental hygiene market segment. In addition, we act as the OEM to
major optical companies, supplying proprietary loupes under such company's brand
name.  Through our exclusive  arrangement with a manufacturer  based in Asia, we
can provide top quality  surgical loupes directly to end-users at  substantially
lower  prices than  similar  products.  Our  objective  is to become the leading
manufacturer and global marketer of high quality,  value-priced surgical loupes,
light  systems and related  products and services for the dental,  medical,  and
veterinary markets.

         Since  the   inception  of  our  business  in  1999,  we  have  rapidly
established  a  significant  base of  operations  characterized  by steady sales
growth, the deployment of a top-notch  dedicated sales force, the implementation
of a strategic marketing program, and continued product development activities.

         For the years  ended  August 31, 2006 and August 31,  2005,  two of the
largest customers accounted for 10% and 6% of our revenues  respectively.  As of
August  31,  2006 and August 31,  2005,  we had  working  capital  (deficit)  of
$1,178,605 and $(62,578), respectively, and an accumulated deficit of $3,590,065
and $59,998,  respectively.  We generated  revenues of $2,980,584 and $1,972,460
for the years  ended  August  31,  2006 and August 31,  2005  respectively,  and
recorded a net income (loss) of $(2,349,374) and $21,006,  respectively,  during
such periods. In addition,  during the year ended August 31, 2006 and the August
31,  2005 net cash used in  operating  activities  was  $1,865,679  and  $7,312,
respectively.

         On March  27,  2006,  we  entered  into  the  Exchange  Agreement  with
SheerVision-CA and Suzanne Lewsadder and Jeffrey Lewsadder,  our Chief Executive
Officer and President,  respectively,  and the beneficial  holders of all of the
outstanding  capital  stock of  SheerVision-CA,  which  sets forth the terms and
conditions of the business  combination  of us and  SheerVision-CA  in which all
shareholders  of  SheerVision-CA  exchanged  all of the  outstanding  and issued
capital  stock of  SheerVision-CA  for an aggregate  of 9,525,137  shares of our
common stock, representing 95% of the outstanding common stock immediately after
giving  effect  to  such   transaction.   As  a  result  of  this   transaction,
SheerVision-CA became our wholly-owned  subsidiary effective April 13, 2006, and
the  shareholders of  SheerVision-CA  became our controlling  stockholders.  For
financial   reporting   purposes,   this  transaction  has  been  treated  as  a
reverse-merger,  where SheerVision-CA is the acquirer.  Because this transaction
is treated as a purchase  of  SheerVision,  Inc.,  a Delaware  corporation,  the
historical  financial   statements  of  SheerVision-CA   became  our  historical
financial statements after the transaction.


                                       18
<PAGE>



YEAR IN REVIEW

          Fiscal  year  2006  was a time of  growth  and  transformation  at our
company.  Entering our seventh year in business, as a supplier to the dental and
dental  hygiene  industries,  management  chose to exploit a market share growth
opportunity  by rapidly  expanding  our  operations.  This decision was based on
reputation  and our products and services,  our loyal customer base, the quality
of our products, and the industry  differentiation  provided by our manufacturer
direct  sales  model.  In  September  2005,  we  completed  an  offering  of 12%
convertible  notes.  This  funding  allowed the Company to purchase 54% of Clean
Water  Technologies,  a  publicly-traded  shell  company and  complete a reverse
merger in March, 2006.  Committing to this rapid growth plan required additional
infusion  of  capital,  which was  achieved by  completing  a private  placement
offering  resulting  in gross  proceeds of $4.1 million and net proceeds of $3.5
million.

         This  new  capital  was  immediately  put to use in  several  areas  to
increase our value  proposition  by improving  the  operations of the company to
support our planned market expansion. Investments were first made in new product
development  and to support  the launch of two key  product  lines to the market
place: the Firefly LED(TM) Portable Light System, and our Through-The-Lens (TTL)
loupes.  Investments  were made in the  addition of staff,  the  purchase of new
production  equipment,  and an  increase  in the  inventory  levels  of key  raw
materials.  Additional  investments  were made in the  company's  infrastructure
including a new computer system, new networking equipment,  and the installation
of a new telephone  system.  The company's sales force was upgraded and expanded
to continue  to grow our sales in existing  and new  markets.  The company  also
replaced its website with anew e-commerce  enabled storefront to support greater
online sales.  Direct response and online marketing programs will become a major
focus going into 2007.

          More recently,  company  management  focused the company's  efforts on
brand  building  and sales  growth.  During  the  summer of 2006 we  launched  a
comprehensive  marketing program to build sales of our new products, and to gain
entry into new markets.  This program  included a  combination  of  advertising,
direct marketing,  sales collateral materials, and online marketing efforts that
are facilitated by our manufacturer direct sales model.

         We did encounter a few challenges  throughout the year which we believe
moderated  our  results.  The first  involved the Firefly LED light source which
experienced  a setback due to  challenges  in obtaining all of the necessary raw
materials. As a result, significant sales were not achieved until late in fiscal
year 2006.  We expect  that the Firefly  LED will be a  substantial  part of our
future  sales,  and to  date,  it has  exceeded  our  expectations.  The  second
challenge  was a delay in the launch of our  "Through  the Lens"  loupe  product
line.  It was delayed by several  months due to issues with a key  supplier.  We
resolved this barrier by partnering  with an alternative  supplier that aided us
in  developing  new  proprietary  technologies,  and rapidly  installed and made
operational the equipment necessary to bring the production in-house.

          Our current  operations are  characterized by low fixed costs, are not
capital intensive,  and our multiple sales channels mitigate the risk associated
with the loss, or disruption, of any one customer or outlet.


                                       19
<PAGE>


CRITICAL ACCOUNTING POLICIES

         Our financial  statements  are prepared in accordance  with  accounting
principles  generally accepted in the United States of America.  The preparation
of our financial  statements requires management to make estimates and judgments
that affect the reported amounts of assets, liabilities,  revenues, expenses and
related disclosures.  We base our estimates on historical experience and various
other  assumptions that are believed to be reasonable  under the  circumstances,
the  results  of which form the basis for making  judgments  about the  carrying
values of assets  and  liabilities  that are not  readily  apparent  from  other
sources.  Actual  results  may  differ  from these  estimates.  Below is a brief
description of our critical accounting policies:

         REVENUES. Sales revenues are recognized upon the shipment of products.

         COST OF  GOODS  SOLD.  Cost of  goods  sold  consists  of  costs of raw
materials  and finished  goods  purchased  from several  manufacturers.  Factors
affecting  our cost of goods sold,  include,  but are not  limited to,  currency
fluctuations as it relates to our foreign  manufacturers and inflationary  price
increases.

         ACCOUNTS  RECEIVABLE.  Accounts  receivable  are  reported  net  of any
write-off   for   uncollectible   accounts.   Accounts   are  written  off  when
significantly past due after exhaustive efforts at collection.

         INVENTORY.  Inventory  is  stated  at  the  lower  of  cost  (first-in,
first-out  method) or market and consists of raw materials  and finished  goods.
Materials  associated  with the  manufacturing  of our product lines are readily
available within the US and international markets with relatively short ordering
cycles and therefore  inventory on hand normally represents a two to three month
selling cycle.  Inventory valuations depend on quantities on hand, sales history
and expected near term sales prospects.  No inventory  valuations were warranted
as of August 31, 2006 and 2005.

         DEFERRED FINANCING COSTS.  Deferred financing costs represent legal and
other fees  associated  with the issuance by us of 12% Bridge Notes in September
2005. The Value of the warrants  issued in connection  with the 12% Bridge Notes
and warrants issued in connection with the 9% private placement  offering in May
2006. We amortize these costs over the life of the related debt.

         INCOME TAXES. We account for income taxes using the liability method as
prescribed by Statement of Financial  Accounting  Standards No. 109,  ACCOUNTING
FOR INCOME  TAXES.  Deferred  income  taxes  reflect  temporary  differences  in
reporting  assets  and  liabilities  for  income  tax and  financial  accounting
purposes. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.

         LONG LIVED ASSETS.  Our management  evaluates the recoverability of our
long-lived  assets  whenever  events or changes in  circumstances  indicate that
their carrying  amounts may not be recoverable.  Any impairment of value will be
recognized as an expense in the statement of operations.


                                       20
<PAGE>

         CONCENTRATION  OF CREDIT RISK.  We maintain  cash balances with various
financial institutions,  which at times may exceed the Federal Deposit Insurance
Corporation  limit.  We have not  experienced  any losses to date as a result of
this policy and management believes that there is little risk of loss.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE

         In December 2004, the FASB issued Statement of Financial  Standards No.
123  (revised  2004),  SHARE-BASED  PAYMENT  ("SFAS No.  123  (R)"),  which is a
revision  of SFAS No.  123.  SFAS No. 123 (R)  supersedes  APB  Opinion  No. 25,
ACCOUNTING  FOR STOCK  ISSUED TO  EMPLOYEES  and amends FASB  Statement  No. 95,
STATEMENT OF CASHFLOWS.  Generally,  the approach to accounting for  share-based
payments in SFAS No.  123(R) is similar to the  approach  described  in SFAS No.
123.  However,  SFAS No. 123(R) requires all share-based  payments to employees,
including  grants of employee stock  options,  to be recognized in the financial
statements based on their fair values. Pro forma disclosure of the fair value of
share-based  payments  is  no  longer  an  alternative  to  financial  statement
recognition.  SFAS No. 123(R) is effective for small public business  issuers at
the beginning of the first fiscal year  beginning  after  December 15, 2005, and
therefore  effective  for the year ending  August 31, 2007 for the Company.  The
Company does not expect that this  pronouncement  will have a significant effect
on future financial statements.

         Statement of Financial Accounting Standards No. 154, ACCOUNTING CHANGES
AND ERROR  CORRECTIONS,  a replacement  of APB Opinion No. 20 and FASB Statement
No. 3 (SFAS 154) was issued in May 2005 and  becomes  effective  for  accounting
changes and  corrections of errors made in fiscal years beginning after December
15, 2005.  The Company  does not expect that SFAS 154 will have any  significant
effect on future financial statements.

         Statement of Financial  Accounting  Standards No. 155,  ACCOUNTING  FOR
CERTAIN HYBRID  FINANCIAL  INSTRUMENTS - AN AMENDMENT OF FASB STATEMENTS NO. 133
AND 140,  was  issued  in  February  2006  and is  effective  for all  financial
instruments  acquired or issued after the beginning of an entity's  first fiscal
year that begins after  September 15, 2006.  Certain parts of this Statement may
be  applied  prior  to the  adoption  of this  Statement.  Earlier  adoption  is
permitted as of the  beginning of an entity's  fiscal year,  provided the entity
has not yet issued financial statements,  including financial statements for any
interim period for that fiscal year. Provisions of this Statement may be applied
to   instruments   that  an  entity   holds  at  the  date  of  adoption  on  an
instrument-by-instrument  basis.  The Company does not expect that SFAS 155 will
have any significant effect on future financial statements.

         Statement of Financial  Accounting  Standards No. 156,  ACCOUNTING  FOR
SERVICING OF FINANCIAL  ASSETS-AN  AMENDMENT OF FASB STATEMENT NO. 140, pertains
to the servicing of financial  assets and was issued in March 2006 and should be
adopted as of the beginning of its first fiscal year that begins after September
15,  2006.  Earlier  adoption is  permitted  as of the  beginning of an entity's
fiscal  year,  provided  the  entity has not yet  issued  financial  statements,
including interim financial statements,  for any period of that fiscal year. The
Company does not expect that SFAS 156 will have any significant effect on future
financial statements.

         Statement  of  Financial   Accounting   Standards  No.157,  FAIR  VALUE
MEASUREMENTS.  This  Statement  defines fair value,  establishes a framework for
measuring fair value,  and expands  disclosures  about fair value  measurements.
This Statement  applies under other  accounting  pronouncements  that require or
permit fair value measurements,  the Board having previously  concluded in those
accounting pronouncements that fair value is the relevant measurement


                                       21
<PAGE>

attribute.  Accordingly,  this  Statement  does not  require  any new fair value
measurements. However, for some entities, the application of this Statement will
change current  practice.  This Statement is effective for financial  statements
issued for fiscal years  beginning  after November 15, 2007, and interim periods
within those fiscal years. Earlier application is encouraged,  provided that the
reporting entity has not yet issued  financial  statements for that fiscal year,
including  financial  statements  for an interim period within that fiscal year.
The Company does not expect that this  pronouncement  will have any  significant
effect on future financial statements.

         The FASB issued  Interpretation  No. 48,  ACCOUNTING FOR UNCERTAINTY IN
INCOME  TAXES - AN  INTERPRETATION  OF FASB  STATEMENT  NO. 109 (FIN 48) in June
2006. This  Interpretation  primarily relates to tax positions taken or expected
to be taken in a tax return and  clarifies the  accounting  for  uncertainty  in
income taxes  recognized in an  enterprise's  financial  statements.  Under this
Interpretation the effects of a tax position would be recognized or derecognized
depending  on what  outcome is more likely than not to occur with respect to the
position.   The   Interpretation   also  provides   guidance  on  derecognition,
classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosure,  and  transition.  It requires  that all tax  positions be evaluated
using the  more-likely-than-not  recognition threshold,  and that the enterprise
should  presume that the  position  will be examined by the  appropriate  taxing
authority  that  would  have full  knowledge  of all  relevant  information  for
recognition,   derecognition,   and  measurement   using  consistent   criteria.
Disclosures are required about the effect of unrecognized  tax benefits  related
to tax positions as well as  information  about the nature of the  uncertainties
related to tax positions where it is reasonably possible that changes in the tax
provision will occur in the next 12 months of this  Interpretation  will provide
more  information  about the  uncertainty in income tax assets and  liabilities.
This  Interpretation  is effective for fiscal years beginning after December 15,
2006. Earlier application of the provisions of this Interpretation is encouraged
if the enterprise has not yet issued  financial  statements,  including  interim
financial statements,  in the period this Interpretation is adopted. The Company
has not yet determined what effect, if any, FIN 48 will have on future financial
statements.

         In March 2005, FASB  Interpretation  No. 47, ACCOUNTING FOR CONDITIONAL
ASSET RETIREMENT  OBLIGATIONS-AN  INTERPRETATION  OF FASB STATEMENT NO. 143 (FIN
47).  FIN 47 is  effective  no later than the end of fiscal  years  ending after
December  15,  2005   (December  31,  2005,  for   calendar-year   enterprises).
Retrospective  application for interim financial information is permitted but is
not required.  Early adoption of this Interpretation is encouraged.  The Company
does not expect that FIN 47 will have any significant effect on future financial
statements.

         In December 2004, the Accounting  Standards  Executive Committee of the
American Institute of Certified Public  Accountants  (AcSEC) issued Statement of
Position 04-2,  ACCOUNTING FOR REAL-TIME  SHARING  TRANSACTIONS  (SOP 04-2). SOP
04-2 is effective for  financial  statements  issued for fiscal years  beginning
after June 15, 2005, with earlier application  encouraged.  The Company does not
expect that SOP 04-2 will have any effect on future financial statements.

         In September 2005, AcSEC issued Statement of Position 05-1:  ACCOUNTING
BY INSURANCE  ENTERPRISES  FOR DEFERRED  ACQUISITION  COSTS IN  CONNECTION  WITH
MODIFICATIONS  OR  EXCHANGES  OF  INSURANCE  CONTRACTS  (SOP 05-1).  SOP 05-1 is
effective  for fiscal years  beginning  after  December  15, 2006,  with earlier
adoption  encouraged.  The  Company  does not expect that SOP 05-1 will have any
effect on future financial statements.

                                       22
<PAGE>

         FASB Staff Position (FSP) FAS 13-1 ACCOUNTING FOR RENTAL COSTS INCURRED
DURING A  CONSTRUCTION  PERIOD,  was  issued  on  October  6,  2005 and  becomes
effective for the for new  transactions or  arrangements  entered into after the
beginning of the first fiscal  quarter  following the date that the final FSP is
posted by the FASB.  The  Company  does not  expect  that FSP 13-1 will have any
significant effect on future financial statements.

         FASB  Staff  Position  (FSP)  No.  FTB  85-4-1,   ACCOUNTING  FOR  LIFE
SETTLEMENT CONTRACTS BY THIRD-PARTY INVESTORS,  was posted in March 27, 2006 and
is effective for fiscal years beginning after June 15, 2006. It provides initial
and subsequent  measurement  guidance and financial  statement  presentation and
disclosure guidance for investments by third-party  investors in life settlement
contracts.  This FSP also amends certain  provisions of FASB Technical  Bulletin
No. 85-4,  ACCOUNTING  FOR PURCHASES OF LIFE  INSURANCE,  and FASB Statement No.
133, ACCOUNTING FOR DERIVATIVE  INSTRUMENTS AND HEDGING ACTIVITIES.  The Company
does not  expect  that  (FSP) No.  FTB  85-4-1  will  have any  effect on future
financial statements.

         FASB Staff Position  (FSP) NO. SOP 94-6-1,  TERMS OF LOAN PRODUCTS THAT
MAY GIVE RISE TO A  CONCENTRATION  OF CREDIT RISK.  Posted on December 19, 2005,
the  guidance  in  Question 1 of this FSP is  effective  for  interim and annual
periods  ending after the date the FSP is posted to the FASB website.  An entity
shall  provide the  disclosures  required by Statement 107 for the products that
are determined to represent a  concentration  of credit risk in accordance  with
the  guidance in Question 1 for all  periods  presented.  Question 2 of this FSP
references only existing effective literature;  therefore,  no effective date or
transition  guidance  is  required.  The  Company  does  not  expect  that  this
pronouncement will have any significant effect on future financial statements.

         FASB Staff  Position  (FSP) No. AAG INV-1 and SOP 94-4-1,  REPORTING OF
FULLY  BENEFIT-RESPONSIVE   INVESTMENT  CONTRACTS  HELD  BY  CERTAIN  INVESTMENT
COMPANIES SUBJECT TO THE AICPA INVESTMENT COMPANY GUIDE AND DEFINED-CONTRIBUTION
HEALTH AND WELFARE AND PENSION PLANS. Posted on December 29, 2005, the financial
statement  presentation and disclosure  guidance in paragraphs 8-11 of this FSP,
considering  the  special  transition  guidance  outlined  in  paragraph  13  if
effective for financial  statements for annual periods ending after December 15,
2006. The revised definition of fully  benefit-responsive in paragraph 7 of this
FSP shall be effective  for all  investment  contracts as of the last day of the
annual period ending after December 15, 2006. Earlier  application to interim or
annual periods is permitted.  If comparative financial statements are presented,
the  guidance in this FSP shall be applied  retroactively  to all prior  periods
presented.  If an  investment  contract is considered  fully  benefit-responsive
under the  revised  definition  as of the last day of the annual  period  ending
after   December  15,   2006,   that   contract   shall  be   considered   fully
benefit-responsive  in accordance with the then existing provisions of SOP 94-4.
The Company does not expect that this  pronouncement  will have any  significant
effect on future financial statements.

         FASB Staff Position  (FSP) No. AUG AIR-1,  ACCOUNTING FOR PLANNED MAJOR
MAINTENANCE ACTIVITIES,  as posted on September 8, 2006 and is effective for the
first fiscal year  beginning  after  December 15, 2006.  This FSP  addresses the
accounting  for  planned  major   maintenance   activities  and  amends  certain
provisions  in the AICPA  Industry  Audit  Guide,  AUDITS OF  AIRLINES  (Airline
Guide),  and APB Opinon No. 28, INTERIM FINANCIAL  REPORTING.  The Airline Guide
permits four  alternative  methods of accounting  for planned major  maintenance
activities:   direct   expense   built-in   overhaul,   deferral,   and  accrual
(accrue-in-advance). Those methods are widely used by other


                                       23
<PAGE>

industries.  The FSP  prohibits  the use of the  accrue-in-advance  method.  The
Company does not expect that this pronouncement will have any significant effect
on future financial statements.

         Issue 06-2,  ACCOUNTING FOR SABBATICAL LEAVE AND OTHER SIMILAR BENEFITS
PURSUANT TO FASB  STATEMENT NO. 43,  "ACCOUNTING  FOR  COMPENSATED  ABSENCES" An
employer  may provide  its  employees  with  sabbatical  leave or other  similar
benefits.  Sabbatical leave involves an employee receiving time off upon working
at the  employer  for a  specific  period  of time.  When an  employer  provides
sabbatical leave or another similar benefit, the employer must determine whether
such benefit  should be accrued based on the guidance in FASB  Statement No. 43,
ACCOUNTING FOR COMPENSATED ABSENCES.  The Task Force reached a consensus that an
employee's  right to a  compensated  absence under a sabbatical or other similar
benefit arrangement (a) that requires the completion of a minimum service period
and (b) in which the benefit does not increase with additional  years of service
accumulates  pursuant to Statement 43 for  arrangements  in which the individual
continues to be a compensated employee and is not required to perform duties for
the entity during the absence.  Therefore,  assuming all of the other conditions
of Statement 43 are met, the  compensation  cost associated with a sabbatical or
other similar benefit  arrangement  should be accrued over the requisite service
period.  The Company  does not expect  that EITF 06-2 will have any  significant
effect on future financial statements.

         EITF Issue 06-3, HOW SALES TAXES  COLLECTED FROM CUSTOMERS AND REMITTED
TO GOVERNMENTAL  AUTHORITIES  SHOULD BE PRESENTED IN THE INCOME  STATEMENT (THAT
IS, GROSS VERSUS NET PRESENTATION). To issue concerns whether various non-income
taxes assessed by governmental  authorities  should be presented gross or net in
an entity's income statement. Non-income taxes on which this question has arisen
include  sales tax,  use tax,  excise tax,  value added tax,  and various  taxes
related to  specific  industries  (e.g.,  the  severance  tax in the oil and gas
industry and the franchise tax in the cable industry).  The Task Force reached a
consensus  that  the  scope  of  this  Issue  includes  any  tax  assessed  by a
governmental   authority  that  is  directly  imposed  on  a   revenue-producing
transaction between a seller and a customer and may include,  but is not limited
to, sales,  use, value added, and some excise taxes. The Task Force also reached
a  consensus  that the  presentation  of taxes on  either a gross  (included  in
revenues and costs) or a net  (excluded  from  revenues)  basis is an accounting
policy  decision  that should be disclosed  pursuant to Opinion 22. In addition,
for any such taxes that are reported on a gross basis, a company should disclose
the amounts on those taxes in interim and annual  financial  statements for each
period  for  which  an  income  statement  is  presented  if those  amounts  are
significant.  The  disclosure of those taxes can be done on an aggregate  basis.
The Company does not expect that EITF 06-3 will have any  significant  effect on
future financial statements



                                       24
<PAGE>



RESULTS OF OPERATION

The following table sets forth, for the periods indicated, financial information
related to  operations,  as well as expressed as a percentage  of our net sales:
(in thousands)

<TABLE>
<CAPTION>
                                                                  YEARS ENDED AUGUST 31,
                                                                  ----------------------
                                                            2006                          2005
                                                            ----                          ----
<S>                                                     <C>         <C>                <C>      <C>
Net Sales                                               $2,981      100.0%             $1,972   100.0%
Cost of Goods Sold                                       1,135       38.1%                700    35.5%
Gross Profit                                             1,846       61.9%              1,272    64.5%
Operating Expenses
         Shipping Expenses                                 135        4.5%                 93     4.7%
         Selling Expenses                                1,525       51.2%                512    26.0%
         General and Administrative Expenses             1,418       47.6%                641    32.5%
         Product Development Expenses                       30        1.0%                 .8     0.4%
         Total Operating Expenses                        3,108      104.3%              1,254    63.6%
Income (Loss) from Operations                           (1,261)     (42.3)%                18      .9%
Other (Income)/Expense                                   1,108       37.2%
Provision (Benefit) for Income Tax
         Current                                             2        0.1%                  8     0.4%
         Deferred                                          (22)      (0.7)%               (11)   (0.6)%
Net Income (Loss)                                       (2,349)     (78.9)%                21    (1.1)%
</TABLE>


         NET SALES. Net Sales increased by $1,008,124, or 51.1%, from $1,972,460
for the year ended August 31, 2005 to  $2,980,584  for the year ended August 31,
2006. This increase resulted from new product introductions, such as the Firefly
LED(TM)  which  represented  18% of sales as well as an increase of sales of the
traditional  Flip-Up  loupes  as a result  of  advertising  and  direct  mailing
campaigns.  The Company maintained the position on its competitive  pricing edge
and therefore did not institute price increases to the customer during the year.
Increases in sales volume were attributable to increased volume,  not the effect
of price increases.

         COST OF GOODS SOLD. Cost of goods sold increased by $434,385, or 62.0%,
from  $700,131  for the year ended  August 31, 2005 to  $1,134,516  for the year
ended August 31, 2006. The increase in cost of sales resulted  directly from the
increase in sales volume. As a percentage of sales, cost of goods sold increased
from 35.5% of sales in the year ended  August 31,  2005 to 38.1% of sales in the
year ended August 31, 2006. This increase in due to slight  increases in product
costs  throughout  the year  without  the  addition  of  increased  costs to the
customer  as well as in  increase  in  distributor  sales  which was 11% for the
period  ending  August 31, 2006  compared to 6% for the period ending August 31,
2005.

         GROSS  PROFIT.  Gross  profit  increased  by  $573,739,  or 45.1%  from
$1,272,329  for the year ended August 31, 2005 to $1,846,068  for the year ended
August 31,  2006.  The increase in gross  profit was  directly  attributable  to
increase sales volume.  The gross profit was 64.5% of revenue for the year ended
August 31, 2005 compared to 61.9% of revenue for the year ended August 31, 2006.
Factors  affecting  the decrease of 2.6% in gross profit  included  product cost
increases  that the Company  absorbed as well as the 5% increase in  distributor
sales over the prior period.


                                       25
<PAGE>

         OPERATING EXPENSES. Operating expenses, which include shipping expense,
selling  expense,  general and  administrative  expense and product  development
increased by $1,853,099,  or 147.7%, to $3,107,544 for the year ended August 31,
2006 as compared to $1,254,445 for the year ended August 31, 2005.

         Shipping expenses were $135,044 or 4.5% of net sales for the year ended
August 31,  2006 as  compared to $92,985 or 4.7% of net sales for the year ended
August 31,  2005.  This  increase of $42,059 was  directly  attributable  to the
increase in sales volume.  The Company continues to improve  procedures and find
volume efficiencies with its common carriers.

         Selling  and  marketing  expenses  were  $1,524,957  for the year ended
August 31,  2006 an  increase  of  $1,013,259  or 198% over the  previous  years
selling  expense of $511,698.  During fiscal year 2006 the Company  aggressively
positioned  itself through its strategic sales and marketing  program to develop
brand awareness,  and enhance market share.  Outside sales staffing was expanded
from 4 regional sales  representatives to 10  representatives.  This increase in
sales personnel also allowed us to increase our industry  presence at tradeshows
and professional  meetings in which we incurred  additional training expenses of
new  personnel.  In addition to outside  sales  personnel,  the company  took an
aggressive  position  with  online  sales  and  marketing  and added a full time
manager  in  July,  2006 to build  its  online  presence.  Online  sales  volume
increased  140% during the fiscal  period ended August 31, 2006  compared to the
prior year. A sales and  marketing  agency was hired in June 2006 to implement a
"DIRECT  RESPONSE  INITIATIVE"  that will  result  in,  driving  product  sales,
building  awareness of SheerVision,  our products and key  differentiators.  The
Company incurred initial expenses for this program in July and August of 2006 in
which revenues were not as yet being generated through this program.

         General and administrative expenses increased $776,449, or 121.1%, from
$641,312  for the year ended  August 31, 2005 to  $1,417,762  for the year ended
August  31,  2006.  The  increase  was  particularly  attributable  to  salaries
associated  with the Chief  Executive  Officer,  President and the addition of a
Chief  Financial   Officer  in  December,   2005  of   approximately   $350,000.
Professional  fees for legal expenses,  accounting costs and investor  relations
accounted for  approximately  $400,000.  These expenses are directly  associated
with the  companies  position as  privately  held  during  fiscal year 2005 to a
publicly traded company and are expected to continue in the future.

         Product  Development  Costs  increased by $21,332 or 251.3% from $8,450
for the year ended August 31, 2005 to $29,782 for the year ended August 31, 2006
primarily due to expenses  incurred in obtaining ETL  certifications  for safety
and electrical performance standards on the Company's LED light source product.

         LOSS FROM  OPERATIONS.  As of result of the  aforementioned,  loss from
operations  was  $1,261,476  for the twelve  months  ended  August  31,  2006 as
compared to a profit of $17,884 for the twelve months ended August 31, 2005.

         INTEREST  EXPENSE.  Interest  expense of $227,355 for the twelve months
ended  August  31,  2006  consisted  of  approximately  $138,517  related to the
issuance of 12% secured convertible notes and 9% preferred  convertible notes, a
discount of $68,838 was  attributed to warrants  related to the 12%  convertible
note and $20,000 of interest expense  attributable to the Company's bank line of
credit and other revolving lines.

                                       26
<PAGE>

         INTEREST INCOME. Interest income for the twelve months ended August 31,
2006 of $31,909 was earned through investments at variable money market rates of
funds generated primarily through the private placement offering in May 2006.

         REGISTRATION  PENALTIES.  The  Company  had  an  obligation  under  the
registration  rights  agreement with respect to its 9% convertible  notes to pay
penalties if it failed to meet the registration deadline for the preferred stock
issuance.  The company recorded a registration penalty of $45,105 for the twelve
months ending August 31, 2006.  Accordingly,  this amount has been recorded as a
liability.

         AMORTIZATION AND DEPRECIATION. Amortization for the twelve months ended
August 31, 2006 amounted to $864,117 of which  $272,996  related to the deferred
financing  costs  associated with the issuance of secured  convertible  notes in
September 2005,  $182,711 represents the amortization of the placement agent and
financial  advisor  warrants issued in connection  with the secured  convertible
notes in  September  2005,  and  $408,410  represents  the  amortization  of the
warrants  issued in connection  with the 9% convertible  preferred  notes in May
2006. Depreciation for the twelve months ended August 31, 2006 was $3,906 and $0
for the twelve months ended August 31, 2005.

         For the year ended  August 31,  2006 we  recorded a current  income tax
provision  of $1,721,  and a deferred  tax  benefit of $22,397 as  compared to a
current income tax provision of $8,077 and a deferred tax benefit of $11,199 for
the year ended August 31, 2005.

         As a result of the  foregoing,  we had a net loss of $2,349,374 for the
twelve  months ended  August 31, 2006  compared to net income of $21,006 for the
year ended August 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

         To  date,  we  (including   SheerVision-CA)  have  financed  operations
principally  through  internally  generated  funds,  a bank line of credit,  and
offerings  of  securities  exempt  from  the  registration  requirements  of the
Securities  Act. We believe that our available  resources and cash flows will be
sufficient to meet our  anticipated  operating cash needs for at least 12 months
ended  August 31, 2007 based on the current  level of  operation.  We  estimate,
however,  that we will  require  substantial  additional  financing  at  various
intervals  for sales and  marketing,  and  research  and  development  programs,
including  significant  requirements for operating expenses and for intellectual
property protection and enforcement. We can provide no assurance that additional
funding  will be available on a timely  basis on  acceptable  terms,  or at all.
Accordingly, we may not be able to secure the funding that is required to expand
sales and marketing and research and development  beyond their current levels or
at levels  that may be  required in the  future.  If we cannot  secure  adequate
financing,  we may be required to delay,  scale back or eliminate one or more of
our sales and marketing  initiatives or research and  development  programs,  or
enter into license or other  arrangements  with third  parties to  commercialize
products  or   technologies   that  we  would  otherwise  seek  to  develop  and
commercialize  ourself.  In such an event,  our business,  prospects,  financial
condition,  and results of operations could be adversely affected, as delays may
be required for  expansion or product  introductions,  or entrance into royalty,
sales or other  agreements  with  third  parties  for the  commercialization  of
products.

         As a result of a Share  Exchange  and  Reorganization  Agreement  dated
March 27, 2006, SheerVision-CA became our wholly-owned subsidiary.  Consequently
SheerVision-CA's  business operations  constitute all of the business operations
of the combined company since we were not


                                       27
<PAGE>

an operating  business prior to entering into the Agreement.  In September 2005,
SheerVision-CA  consummated a private offering (the "2005 Private Placement") of
24 units,  at an offering price of $50,000 per unit, each unit consisting of one
year 12% senior  secured  convertible  notes in the principal  amount of $50,000
(the "12% Notes"), and warrants to purchase an aggregate of 11,430 shares of our
common stock through  Northeast  Securities  Corp.,  a registered  broker-dealer
("NESEC").  The 12%  Notes  which  were  paid in  full by  conversion  to the 9%
offering  or by cash by August  31,  2006 were  secured  by a lien on all of the
assets of SheerVision,  subject to  subordination to the Credit Line (as defined
in the  following  paragraph).  Twenty-two  and a half  percent  (22.5%)  of the
principal  amount of the 12% Notes was  convertible  into  shares of our  common
stock at the effective conversion price of approximately $0.28346 per share. The
warrants  are  exercisable  at the  effective  exercise  price of  approximately
$0.28346 per share at any time and from time to time until  September  2010. The
conversion  and exercise  prices are subject to  adjustment  upon  adjustment or
reclassification  of the  securities  issuable  upon the  conversion or exercise
thereof and in the event of certain  issuances  at  effective  prices  below the
exercise price. All purchasers in such offering were  "Accredited  Investors" as
defined in Rule 501(a) of Regulation D under the  Securities  Act. In connection
with such offering, SheerVision paid to NESEC a cash commission in the amount of
approximately $273,000 and granted to NESEC warrants to purchase an aggregate of
238,129  shares of its common stock  exercisable  at $0.28346 per share for five
years.

         In December 2005,  SheerVision  entered into an agreement with Vineyard
Bank for a revolving  credit  facility of up to $300,000  (the  "Credit  Line"),
expiring on January 15, 2007.  The Credit Line bears interest at 1.25% above the
bank  prime rate and is  collateralized  by a  security  interest  in all of the
assets of SheerVision.  In addition,  all obligations to the bank are personally
guaranteed  by Suzanne  Lewsadder  and Jeffrey  Lewsadder,  our Chief  Executive
Officer  and  President,   respectively.  On  August  31,  2006,  there  was  no
outstanding indebtedness under the Credit Line.

         On May 8, 2006, in a private  offering  (the "2006 Private  Placement")
conducted  through  NESEC  exempt  from  the  registration  requirements  of the
Securities  Act, the Company sold an aggregate of 70 units (each comprised of 9%
convertible  notes in the principal  amount of $37,500,  16,667 shares of common
stock and warrants to acquire an aggregate of 3,750 shares of common  stock) for
$3,500,000.  The warrants are  exercisable at $1.00 per share of common stock at
any time or from time to time prior to April 28, 2009. In addition,  the holders
of $775,000 aggregate  principal amount of the 12% Notes agreed to convert these
notes into an aggregate  of 12.0125  Units.  The Company paid NESEC  $273,000 in
commissions  and offering  expenses of $29,883.44 and issued its  designees,  in
connection  with  the  sale  of the 70  Units,  204,167  warrants.  Each  of the
purchasers of the Units has  represented  that the  purchaser is an  "Accredited
Investor"  and has agreed that the  securities  issued in the private  placement
bear  a  restrictive  legend  against  resale  without  registration  under  the
Securities Act. The securities  constituting  the Units were sold by the Company
pursuant to the  exemption  from  registration  afforded by Section  4(2) of the
Securities Act and Regulation D.

         Net  proceeds  of  approximately  $3,480,000  were raised from the 2005
Private  Placement  and 2006  Private  Placement.  During the fiscal  year ended
August 31, 2006,  we used  approximately  $2,366,000 of the said net proceeds in
the following amounts and for the following purposes:


<TABLE>
<S>               <C>                                                           <C>
         o        Purchase price of Clean Water Technologies, Inc. stock        $625,000

         o        Purchase of office systems and manufacturing equipment        $105,000

         o        Legal and accounting costs related to going public            $400,000

         o        General and administrative costs                              $350,000

         o        Marketing and selling costs                                   $886,000
</TABLE>

         As of August 31, 2006,  approximately  $1,114,000  in cash remains from
the said net proceeds.

                                       28

<PAGE>

         The  following  factors,  among others,  could cause actual  results to
differ from those  indicated in the above  forward-looking  statements:  pricing
pressures in the industry;  an  unexpected  decrease in demand for our products;
our ability to attract new customers;  an increase in competition in the optical
products market;  and the ability of some of our customers to obtain  financing.
These factors or additional risks and  uncertainties  not known to us or that we
deem immaterial may  impair business operations and may cause our actual results
to differ materially from any forward-looking statement.

         Although we believe the expectations  reflected in the  forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  levels of
activity, performance or achievements. We are under no duty to update any of the
forward-looking  statements  after the date of this  report to  conform  them to
actual results or to make changes in our expectations.

         During the year ended August 31, 2006,  in net cash used in  operations
was $1,865,679, as compared to net cash used in operations of $7,312 in the year
ended August 31, 2005.  This  increase  was caused by  substantial  increases in
operating  expenses as the company  transitioned to becoming a major  competitor
within the optical and lighting industry through  aggressive sales and marketing
programs and  increases in its  professional  staffing to support being a public
company.   Inventory  levels  increased  by  $137,028  and  accounts  receivable
increased  by $35,922 as  distributor  sales  increased  and payment  terms were
instituted.  Deferred  financing  costs  decreased  by $50,573 in the year ended
August 31, 2006.

         In December  14,  2004,  SheerVision  entered  into an  agreement  with
Hallmark  Capital  Corp.   ("HALLMARK")  pursuant  to  which  Hallmark  provided
financial  advisory  services  to  SheerVision  through  September  15,  2005 in
exchange  for a  non-refundable  advisory  fee of $15,000  and  specified  fixed
success fees.  SheerVision entered into a second agreement,  dated September 15,
2005,  with Hallmark  pursuant to which  Hallmark  agreed to provide  additional
advisory  services in exchange  for  consulting  fees of $25,000 per quarter for
eight  quarters,  commencing  on September  30, 2005,  and five year warrants to
acquire an aggregate of 476,257 shares of common stock at the price of $0.28 per
share.

CONTRACTUAL OBLIGATIONS

         The Company leases space under a non-cancellable  lease that expires in
October 2007, with minimum annual rentals as follows:

FISCAL YEAR ENDING AUGUST 31,                                 ANNUAL RENTAL
---------------------------------------------------------------------------
            2007                                                 $48,468
            2008                                                   8,078
                                                                 $56,546
                                                                 =======

OFF BALANCE SHEET ADJUSTMENTS

         We have no off-balance sheet adjustments.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are exposed to market risk for changes in interest rates as our bank
borrowings  accrue  interest at floating  rates of 1.25% over the Prime  Lending
Rate  (currently at 8.75% per annum).  We believe that changes in interest rates
shall  not have a  material  effect on our  liquidity,  financial  condition  or
results of operations.

                                       29
<PAGE>

IMPACT OF INFLATION

         Management  believes that results of operations  are not dependent upon
moderate  changes  in  inflation  rates as it  expects  to be able to pass along
component  price  increases to our customers.  Although the Company has incurred
minor  price  increases  in  its  cost of  goods  purchased,  to date it has not
chosen to pass these increases along to its customers.

SEASONALITY

         We have not experienced any material  seasonality in sales fluctuations
over the past two years in the  surgical  loupe and light  systems  markets.  We
experience some  immaterial  seasonality in the dental hygiene market due to the
nature of the school year.  This  fluctuation  does not effect our overall sales
due to the demand in other market segments.

ITEM 7. FINANCIAL STATEMENTS

         Attached  hereto  and  filed as a part of this  Annual  Report  on Form
10-KSB are our Consolidated Financial Statements, beginning on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

            None.

ITEM 8A. CONTROLS AND PROCEDURES

         As of the end of the period  covered by this report,  we carried out an
evaluation,  under the  supervision  and with the  participation  of management,
including  our Chief  Executive  Officer  and Chief  Financial  officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  as  defined  in Rules  13a-15(e)  and  15d-15(e)  of the  Securities
Exchange Act of 1934.  Based upon that evaluation,  our Chief Executive  Officer
and  Chief  Financial  officer  concluded  that  our  disclosure   controls  and
procedures  were  not  effective  to  ensure  that  information  required  to be
disclosed  by us in the reports  filed or submitted by us under the Exchange Act
is  accumulated,  recorded,  processed,  summarized  and reported to management,
including  our  Chief  Executive  Officer  and  Chief  Financial   Officer,   as
appropriate,  and to allow timely decisions  regarding whether or not disclosure
is required. We are taking steps to remedy this deficiency through a combination
of  increased   documentation,   increasing  the  accounting   staff,   engaging
independent  auditors  to provide  us with  accounting  advice and  implementing
internal procedures including the distribution of documents.  These deficiencies
have been  reported  to our Board of  Directors  and we  intend to  improve  and
strengthen our controls and procedures.

ITEM 8B. OTHER INFORMATION

         None.


                                       30
<PAGE>

                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS
         Set forth below is certain  information with respect to the individuals
who are our directors and executive officers.

Name                   Age   Position
-----------------      ---   -----------------------------------------------
Suzanne Lewsadder      60    Chief Executive Officer, Director and Treasurer
Jeffrey Lewsadder      50    President, Director and Secretary
Suzanne Puente         48    Chief Financial Officer
Shemiran Hart          48    Director
Sharon Biddle          54    Director
David Frankel          58    Director

         Suzanne Lewsadder has served as our Chief Executive Officer,  Treasurer
and a director  since  November  30,  2005.  Ms.  Lewsadder  has also  served as
SheerVision-CA's  Chief Executive Officer since co-founding the company in 1999.
Ms.  Lewsadder  has over  twenty-five  years  experience  starting  and building
enterprises,  with a focus on  operational  management  and  strategic  business
development.  As our Chief  Executive  Officer,  Ms.  Lewsadder runs  day-to-day
operations,  oversees strategic alliances and develops marketing strategies. Ms.
Lewsadder holds a B.A. degree in Organization  Communications,  cum laude,  from
California State University.  She holds no other  directorships in any reporting
companies. Suzanne Lewsadder is the wife of Jeffery Lewsadder.

         Jeffrey Lewsadder has served as our President, Secretary and a director
since  November  30, 2005.  Mr.  Lewsadder  has also served as  SheerVision-CA's
President  since  co-founding  the company in 1999.  Mr.  Lewsadder is a veteran
sales and marketing  executive largely from the medical device industry.  As our
President,  Mr.  Lewsadder is  responsible  for the overall  sales and marketing
activities of the firm,  including trade shows, as well as product  development.
He is credited with the design and  development of our product line. He holds no
other directorships in any reporting companies. Jeffrey Lewsadder is the husband
of Suzanne Lewsadder.

         Suzanne  Puente has served as  SheerVision's  Chief  Financial  Officer
since  December,  2005.  Ms.  Puente has over 15 years  experience  in financial
management and strategic planning in public and private  companies.  Previously,
she was Vice President,  Finance and Human Resources for a medical  research and
development firm, where she managed all accounting,  financial, personnel and IT
system  activities from 1995 to 2005. Ms Puente holds a B.S., degree in Business
Administration/Accounting from California State University.

         Shemiran Hart has served as one of our directors  since March 16, 2006.
Ms. Hart is Senior Director of Operations at Veeco Instruments,  Inc. She brings
over fifteen years experience in public company financial management to her role
as Board  director.  Previously,  Ms. Hart was Division  Controller of Teradyne,
Inc.,  an S&P 500  corporation,  from 1999 to 2005.  Ms.  Hart  holds a B.S.  in
Business  Administration,  Magna Cum  Laude,  from the  University  of  Southern
California.

                                       31
<PAGE>

         Sharon Biddle has served as one of our directors  since March 16, 2006.
Ms.  Biddle is  President  and  Publisher  of The Real  Estate Book for San Luis
Obispo County, California, where she has served in that capacity since 1999. She
brings over  twenty-five  years  experience  in corporate  marketing  and public
relations to her role as Board  director.  Previously,  Ms. Biddle served as the
Vice  President of Marketing  for  Jazzercise,  Inc. Ms.  Biddle holds a B.S. in
Journalism and Marketing from Long Beach State University.

         David Frankel has served as one of our directors  since March 16, 2006.
Mr.  Frankel  is a  CPA/ABV  and a  principal  in the  accounting  firm of David
Frankel,  an  accountancy  corporation.  Prior to July 1, 2006 Mr. Frankel was a
partner for 13 years in the accounting  firm of Frankel and Kohn. He brings over
twenty-five  years  experience  in  financial  consulting  to his  role as Board
director.  Mr. Frankel has been a financial and tax consultant to SheerVision-CA
since its  inception in 1999 and briefly  served as its interim CFO during 2005.
Mr. Frankel holds a B.S. in Business Administration and is ABV accredited.

DIRECTORS AND OFFICERS

         Each director is elected for a period of one year at our annual meeting
of  stockholders  and serves  until the next such  meeting  and until his or her
successor is duly elected and  qualified.  Officers are elected by, and serve at
the  discretion  of, our board of  directors.  Our  directors  do not  presently
receive any compensation for their services as directors. The board of directors
may also appoint  additional  directors up to the maximum number permitted under
our by-laws.  A director so chosen or appointed  will hold office until the next
annual meeting of stockholders.

         Each of our executive officers serves at the discretion of our board of
directors and holds office until his or her successor is elected or until his or
her  earlier  resignation  or  removal in  accordance  with our  certificate  of
incorporation and by-laws.

MEETINGS AND COMMITTEES OF THE BOARD

         During the year ended  August 31, 2006 our board of  directors  held no
meetings and took actions by written consent on nine  occasions.  From March 16,
2006 (the  date of our  acquisition  of  SheerVision-CA)  to date,  our board of
directors  held no  meetings  and  took  actions  by  written  consent  on three
occasions.

COMMITTEES OF THE BOARD OF DIRECTORS

         On April 21, 2006, we established an audit committee and a compensation
committee, which shall be responsible,  respectively,  for the matters described
below.

         AUDIT COMMITTEE
         The audit committee shall be responsible for the following:

         o    reviewing the results of the audit engagement with the independent
              auditors;

         o    identifying irregularities in the management of our business in
              consultation with our independent accountants, and suggesting an
              appropriate course of action;

         o    reviewing the adequacy, scope, and results of the internal
              accounting controls and procedures;

                                       32
<PAGE>

         o    reviewing the degree of independence of the auditors, as well as
              the nature and scope of our relationship with our independent
              auditors;

         o    reviewing the auditors' fees; and

         o    recommending the engagement of auditors to the full board of
              directors.

         A charter has been adopted to govern the audit  committee.  The members
of the audit  committee are David Frankel and Shemiran Hart. At the date hereof,
each of member is deemed an audit committee financial expert.

         COMPENSATION COMMITTEE
         The  compensation  committee  determines  the  salaries  and  incentive
compensation of our officers and provides  recommendations  for the salaries and
incentive  compensation of its other employees and  consultants.  The members of
the compensation committee are Shemiran Hart and Sharon Biddle.

         The compensation of our executive  officers is generally  determined by
the  compensation  committee of the board of  directors,  subject to  applicable
employment  agreements.  Our  compensation  programs  are intended to enable the
attraction,  motivation, reward, and retention of the management talent required
to achieve  corporate  objectives and thereby  increase  stockholder  value. Our
policy has been to provide  incentives to our senior  management to achieve both
short-term and long-term  objectives and to reward  exceptional  performance and
contributions  to the development of our business.  To attain these  objectives,
the executive  compensation  program may include a competitive base salary, cash
incentive bonuses, and stock-based compensation.

         The  compensation  committee  annually  establishes,   subject  to  the
approval of our board of directors and any applicable employment agreements, the
salaries that will be paid to our executive  officers during the coming year. In
setting  salaries,  the  compensation  committee  intends  to take into  account
several factors, including the following:

         o    competitive compensation data;

         o    the extent to which an individual may participate in the stock
              plans which may be maintained by us; and

         o    qualitative factors bearing on an individual's experience,
              responsibilities, management and leadership abilities, and job
              performance.

         NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
         Each member of our board of directors participates in the consideration
of  director  nominees.   Stockholders  may  submit  the  names  and  five  year
backgrounds  for the  board of  directors'  consideration  in its  selection  of
nominees  for  directors  in writing to our  secretary  at our address set forth
elsewhere in this Annual Report on Form 10-KSB.  Currently,  our share ownership
is relatively concentrated in Suzanne Lewsadder and Jeffrey Lewsadder, our Chief
Executive  Officer and President,  respectively;  as such, it is improbable that
any board  nominee  found to be  unqualified  or  unacceptable  by the  majority
stockholders could be selected as a


                                       33
<PAGE>

member of the board of directors.  Accordingly, there is no nominating committee
and we do not rely on  pre-approval  policies and  procedures for our nomination
process.  We  intend  to  implement  the  necessary  formation  of a  nominating
committee and will establish  proper  policies and procedures  upon such time as
our share ownership is more diversified.

COMPENSATION OF DIRECTORS

         To date, none of our directors has so far received any compensation for
his or her services as a director other than reimbursement of certain expenses.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         During  this  period,  our  officers  and  directors   participated  in
deliberations   of  our  board  of  directors   concerning   executive   officer
compensation.  There  were no  interlocking  relationships  between us and other
entities  that  might  affect  the  determination  of  the  compensation  of our
directors and executive officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

         None of our directors, executive officers, promoters or control persons
have been involved in any of the following events during the past five years:

         o    any bankruptcy  petition filed by or against any business of which
              such person was a general  partner or executive  officer either at
              the time of the bankruptcy or within two years prior to that time;

         o    any  conviction  in a criminal  proceeding  or being  subject to a
              pending  criminal  proceeding  (excluding  traffic  violations and
              other minor offences);

         o    being subject to any order,  judgment, or decree, not subsequently
              reversed,   suspended  or  vacated,  of  any  court  of  competent
              jurisdiction,   permanently  or  temporarily  enjoining,  barring,
              suspending or otherwise  limiting his  involvement  in any type of
              business, securities or banking activities; or

         o    being  found  by a court  of  competent  jurisdiction  (in a civil
              action),   the  Commission  or  the  Commodity   Futures   Trading
              Commission  to have  violated  a federal  or state  securities  or
              commodities   law,  and  the  judgment  has  not  been   reversed,
              suspended, or vacated.

CODE OF ETHICS

         We adopted a Code of Ethics that applies to our officers, employees and
directors,  including  our principal  executive  officers,  principal  financial
officers  and  principal  accounting  officers.  The code of ethics  sets  forth
written standards that are designated to deter wrongdoing and to promote:

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

                                       34
<PAGE>

         o    Full, fair, accurate, timely and understandable disclosure in
              reports and documents that a we file with, or submit to, the SEC
              and in other public communications made by us;

         o    Compliance with applicable governmental laws, rules and
              regulations;

         o    The prompt internal reporting of violations of the code to an
              appropriate person or persons identified in the code of ethics;
              and

         o    Accountability for adherence to the code of ethics.

         We will  provide  a copy of our Code of Ethics  to any  person  without
charge,  upon request.  Requests can be made to:  Sheervision,  Inc., 4030 Palos
Verdes Drive North, Suite 104 Rolling Hills Estates, California 90274.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Section 16(a) of the Exchange Act requires the Company's  directors and
officers,  and  persons  who own  more  than  10% of a  registered  class of the
Company's  equity  securities,  to file  reports  of  ownership  and  changes in
ownership with the SEC.  Officers,  directors and greater than 10%  stockholders
are  required by SEC  regulation  to furnish the Company  with copies of all the
Section 16(a) forms they file.

         Based  solely  upon a  review  of  Forms  3, 4 and 5  furnished  to the
Company,  the  Company is not aware of any person  who,  at any time  during the
fiscal year ended August 31, 2006, was a director,  officer, or beneficial owner
of more than 10% of the common stock of the Company, and who failed to file on a
timely basis reports required by Section 16(a) of the Securities Exchange Act of
1934 during such fiscal year except with  respect to the  following  individuals
who have not made filings  and/or  timely filed for the fiscal year ended August
31, 2006:  Sharon Biddle,  David  Frankel,  Shemiran  Hart,  Jeffrey  Lewsadder,
Suzanne Lewsadder and SheerVision CA.





                                       35
<PAGE>



ITEM 10.          EXECUTIVE COMPENSATION

         The following table sets forth the compensation earned during the years
ended August 31, 2006, 2005 and 2004 by our former Chief Executive Officer,  our
current Chief Executive Officer and of each executive whose annual  compensation
in the fiscal year ended August 31, 2006, 2005 and 2004 exceeded $100,000:

<TABLE>
<CAPTION>
                                                    SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION                                                       LONG TERM COMPENSATION
---------------------------------------------------------------------     ----------------------------------------
      (A)            (B)         (C)          (D)             (E)             (F)            (G)           (H)             (I)
   NAME AND       FISCAL       SALARY        BONUS       OTHER ANNUAL     RESTRICTED     SECURITIES       LTIP          ALL OTHER
   ---------      -------      ------        -----       ------------     -----------    -----------      ----          ---------
   PRINCIPAL        YEAR         ($)          ($)        COMPENSATION        STOCK       UNDERLYING      PAYOUTS      COMPENSATION
   ---------        ----         ---          ---        ------------        -----       ----------    -----------  ----------------
    POSITION                                                  ($)           AWARDS         OPTIONS         ($)             ($)
    --------                                                  ---           -------        -------         ---             ---
                                                                              ($)            (#)
<S>                 <C>       <C>            <C>             <C>              <C>           <C>           <C>             <C>
Howard Scala (1)    2006          0          None            None             None          None          None            None
                    2005          0          None            None             None          None          None            None
                    2004          0          None            None             None          None          None            None

Laurie              2006          0          None            None             None          None          None            None
Scala (1)           2005          0          None            None             None          None          None            None
                    2004          0          None            None             None          None          None            None

Suzanne             2006      $112,500       None            None             None          None          None            None
Lewsadder,          2005          0          None            None             None          None          None            None
Chief Executive     2004         N/A          N/A             N/A             N/A            N/A           N/A             N/A
Officer and
Treasurer

Jeffrey             2006      $112,500       None            None             None          None          None            None
Lewsadder,          2005          0          None            None             None          None          None            None
President and       2004         N/A          N/A             N/A             N/A            N/A           N/A             N/A
Secretary

Suzanne Puente,     2006     $75,000(2)      None            None             None          None          None            None
Chief Financial     2005         N/A          N/A             N/A             N/A            N/A           N/A             N/A
Officer             2004         N/A          N/A             N/A             N/A            N/A           N/A             N/A
</TABLE>

(1)  The referenced individuals resigned as officers as of November 30, 2005 and
     resigned as directors effective January 19, 2006.

(2)  The  referenced  individual  is entitled to a salary of $100,000  per annum
     however she  received a salary of $75,000 for fiscal year 2006  because she
     commenced employment during the second fiscal quarter of 2006.


         We have not granted any options and/or  freestanding stock appreciation
rights to any executive  officer during the years ended August 31, 2006 or 2005.
We have no stock option or other incentive benefit plans.

COMPENSATION OF DIRECTORS

         During the fiscal year ended August 31, 2006 and as of the date of this
report,  directors  received no  compensation  for their  services as directors.
Pursuant  to our  Bylaws,  directors  may receive  such  compensation  for their
services and such  reimbursement of expenses for attending meetings as our board
of directors may determine from time to time.

EMPLOYMENT AGREEMENTS

         Currently,  we do not maintain employment agreements with our executive
officers.  We intend to enter into an employment  agreement  with each executive
officer  prior to December 31, 2006. We anticipate  that these  agreements  will
contain  provisions  which will be  comparable  to those of  similarly  situated
companies in our industry with respect to  confidentiality,  non-competition and
assignment of intellectual property.

                                       36
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

         The following  table sets forth,  as of August 31, 2006 (i) each person
known  by the  Company  to  beneficially  own five  percent  (5%) or more of the
outstanding  shares;  (ii) the Company's  officers and directors;  and (iii) the
Company's officers and directors as a group.

         As used in the table below and  elsewhere in this Annual Report on Form
10-KSB,  the term "beneficial  ownership" with respect to a security consists of
sole or shared  voting  power,  including  the power to vote or direct  the vote
and/or sole or shared investment power, including the power to dispose or direct
the disposition, with respect to the security through any contract, arrangement,
understanding,  relationship,  or  otherwise,  including a right to acquire such
power(s) during the next 60 days following the date hereof.  Except as otherwise
indicated,  the stockholders listed in the table have sole voting and investment
powers with respect to the shares indicated.

         Except as otherwise noted, the address of the referenced  individual is
c/o SheerVision,  Inc., 4030 Palos Verdes Drive North, Suite 104, Rolling Hills,
California 90274.


    NAME AND ADDRESS OF          SHARES OF COMMON STOCK    PERCENTAGE OF CLASS
    BENEFICIAL OWNER               BENEFICIALLY OWNED       BENEFICIALLY OWNED
------------------------------------------------------------------------------

Suzanne Lewsadder(1)(2)(3)              9,525,137                  77.6%

Jeffrey Lewsadder(1)(2)(3)              9,525,137                  77.6%

Sharon Biddle(1)                         31,041                      *

David Frankel(1)                         31,041                      *

Shemiran Hart (1)                          0                        0%

All Current Executive
Officers and Directors as
a group (5 persons)                     9,587,219                78.08%

* Less than one percent.

(1)  Indicates Director.

(2)  Indicates Officer.

(3)  In the case of  Suzanne  Lewsadder,  includes  the  shares of common  stock
     beneficially owned by Jeffrey Lewsadder.  In the case of Jeffrey Lewsadder,
     includes  the  shares  of  common  stock   beneficially  owned  by  Suzanne
     Lewsadder.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Our policy is to enter into  transactions with related parties on terms
that,  on the  whole,  are more  favorable,  or no less  favorable,  than  those
available  from  unaffiliated  third  parties.  Based on our  experience  in the
business  sectors in which we  operate  and the terms of our  transactions  with
unaffiliated  third parties,  we believe that all of the transactions  described
below met this policy standard at the time they occurred.

                                       37
<PAGE>

         On December 1, 2005 we entered into the a Securities Purchase Agreement
with SheerVision-CA and Laurie C. Scala and Howard A. Scala (the "Scalas"),  who
collectively then owned beneficially and of record 610,514 shares (the "Shares")
of our common stock,  whereby the Scalas sold the Shares to SheerVision for cash
consideration in the total aggregate  amount of US$625,000.  The Shares included
all shares of common stock owned beneficially or of record thereby,  or issuable
upon the exercise, conversion, or exchange of securities or obligations held by,
or owed to, either of the Scalas,  other than an immaterial  number of shares of
common  stock  held  by the  Scalas  in a  custodial  capacity  and  one or more
individual  retirement  accounts.  As a  result  of the  closing  of  the  Stock
Purchase,  SheerVision-CA  acquired 54.6% of our total outstanding common stock.
Prior to the Stock Purchase, the board approved such transaction.

         On  March  27,  2006  we  entered  into  the  Exchange  Agreement  with
SheerVision-CA and Suzanne Lewsadder and Jeffrey Lewsadder,  our Chief Executive
Officer and President,  respectively,  and the beneficial  holders of all of the
outstanding  capital  stock of  SheerVision-CA,  which  sets forth the terms and
conditions of the business  combination  of us and  SheerVision-CA  in which all
shareholders  of  SheerVision-CA  exchanged  all of the  outstanding  and issued
capital  stock of  SheerVision-CA  for an aggregate  of 9,525,137  shares of our
common stock, representing 95% of the outstanding common stock immediately after
giving effect to such  transaction.  We effected such transaction based upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933,  as  amended.  As a result of this  transaction,  SheerVision-CA  became a
wholly-owned  subsidiary of ours, and the shareholders of SheerVision-CA  became
our controlling stockholders. In connection with this transaction, all shares of
our common stock owned of record by  SheerVision-CA  were  cancelled  and became
authorized,  but  unissued,  shares  of  common  stock.  All  options,  warrants
exercisable  for, and  securities  convertible  into,  shares of  SheerVision-CA
common stock, upon the closing of this transaction,  became exercisable for such
number of shares of our common stock as the holder  thereof  would have received
if such options and warrants had been exercised,  or such convertible securities
converted, immediately prior to such closing.

         In December  2005,  we entered into a Credit Line,  providing us with a
revolving  credit  facility  of up to  $300,000.  The Credit Line will expire on
January 15, 2007.  The Credit Line bears  interest at 1.25% above the bank prime
rate and is  collateralized  by a  security  interest  in all of the  assets  of
SheerVision-CA.  All obligations under the Credit Line are personally guaranteed
by Suzanne  Lewsadder and Jeffrey  Lewsadder,  our Chief  Executive  Officer and
President, respectively.  Outstanding indedbtedness under the Credit Line was $0
in each of the years ended August 31, 2006 and 2005.




                                       38
<PAGE>

ITEM 13.  EXHIBITS AND INDEX OF EXHIBITS.

The Exhibits below are included as part of this Annual Report on Form 10-KSB.

Exhibit        Description
  No.

2.1      Acquisition  of Escalator,  Inc. (incorporated  by reference to Exhibit
         2.1 to Current  Report on Form 10-SB of  SheerVision,  Inc., a Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on October 13, 1999).

2.2      Lone Pine Resources, Inc. Merger (incorporated  by reference to Exhibit
         2.2 to Current  Report on Form 10-SB of  SheerVision,  Inc., a Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on October 13, 1999).

2.3      Agreement and Plan of Spinoff (incorporated by reference to Exhibit 2.3
         to  Current  Report on Form  10-SB of  SheerVision,  Inc.,  a  Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on October 13, 1999).

2.4      Acquisition  of  Clean  Water  Technologies,   Inc.  (incorporated   by
         reference   to  Exhibit  2.4  to  Current   Report  on  Form  10-SB  of
         SheerVision,   Inc.,  a  Delaware  corporation  (formerly  Clean  Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on October 13, 1999).

2.5      Acquisition of Zorax, Inc. (incorporated by reference to Exhibit 2.5 to
         Current  Report  on  Form  10-KSB  of  SheerVision,  Inc.,  a  Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on August 16, 2001).

2.6      Acquisition  of  Clean  Water  Technologies,   Inc.   (incorporated  by
         reference   to  Exhibit  2.1  to  Current   Report  on  Form  8-K/A  of
         SheerVision,   Inc.,  a  Delaware  corporation  (formerly  Clean  Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on March 28, 2006)

3.1      Second   Amended  and  Restated   Certificate   of   Incorporation   of
         SheerVision,  Inc. (incorporated by reference to Exhibit 3.1 to Current
         Report  on  Form  8-K of  SheerVision,  Inc.,  a  Delaware  corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on June 20, 2006).

3.2      By-laws of SheerVision,  Inc., a Delaware corporation  (incorporated by
         reference  to  Exhibit  3.2  to  Current   Report  on  Form  10-QSB  of
         SheerVision,  Inc., a Delaware corporation),  filed with the Securities
         and Exchange Commission on October 13, 1999).

                                       39
<PAGE>

3.3      Form of Common Stock Certificate  (incorporated by reference to Exhibit
         3.3 to Current  Report on Form SB-2A of  SheerVision  Inc.,  a Delaware
         corporation,  filed with the  Securities  and  Exchange  Commission  on
         September 29, 2006).

3.4      Articles  of   Incorporation   of   SheerVision,   Inc.,  a  California
         corporation (incorporated by reference to Exhibit 3.3 to Current Report
         on Form 8-K/A of SheerVision,  Inc., a Delaware  corporation  (formerly
         Clean Water Technologies, Inc.), filed with the Securities and Exchange
         Commission on March 28, 2006).

3.5      Certificate of Amendment to Articles of  Incorporation  of SheerVision,
         Inc., a California  corporation  (incorporated  by reference to Exhibit
         3.4 to Current  Report on Form 8-K/A of  SheerVision,  Inc., a Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on March 28, 2006).

3.6      By-laws of SheerVision, Inc., a California corporation (incorporated by
         reference   to  Exhibit  3.5  to  Current   Report  on  Form  8-K/A  of
         SheerVision,   Inc.,  a  Delaware  corporation  (formerly  Clean  Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on March 28, 2006).

3.7      Form of Certificate of Designations, Preferences and Rights of Series A
         Preferred  Stock  as  filed  with the  Secretary  of State of  Delaware
         (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K
         of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on May 11, 2006)

4.1      Warrant,  issued  to  Patricia  Hall  (Hallmark  Capital),  dated as of
         September 28, 2005 (incorporated by reference to Exhibit 4.1 to Current
         Report on Form  8-K/A of  SheerVision,  Inc.,  a  Delaware  corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on March 28, 2006).

4.2      Warrant,  issued to Northeast  Securities,  dated as of  September  19,
         2005, in connection with the 2005 private  Placement  (incorporated  by
         reference   to  Exhibit  4.2  to  Current   Report  on  Form  8-K/A  of
         SheerVision,   Inc.,  a  Delaware  corporation  (formerly  Clean  Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on March 28, 2006).

4.3      Form of  Warrant  issued to  investors  in the 2005  Private  Placement
         (incorporated  by  reference  to Exhibit 4.3 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

4.4      Form of 12% Secured  Promissory  Note issued to  investors  in the 2005
         Private  Placement  (incorporated  by  reference  to  Exhibit  10.15 to
         Current  Report  on  Form  8-K/A  of  SheerVision,   Inc.,  a  Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on March 28, 2006).

                                       40
<PAGE>

4.5      Form  of  Warrant  issued  to investors in  the 2006 Private  Placement
         (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K
         of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on May 11, 2006).

4.6      Form of  Warrant,  issued to  Northeast  Securities,  dated as of April
         ____, 2006, in connection with the 2006 Private Placement (incorporated
         by  reference  to  Exhibit  4.2  to  Current  Report  on  Form  8-K  of
         SheerVision,   Inc.,  a  Delaware  corporation  (formerly  Clean  Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on May 11, 2006).

4.7      Form of 9% Convertible  Promissory Note issued to investors in the 2006
         Private Placement (incorporated by reference to Exhibit 10.2 to Current
         Report  on  Form  8-K of  SheerVision,  Inc.,  a  Delaware  corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on May 11, 2006).

10.1     Sublicense  Agreement,  effective  as  of  October  22,  1999,  between
         SheerVision,   Inc.,  a  Delaware  corporation  (formerly  Clean  Water
         Technologies,  Inc.), and GSA Resources,  Inc., an Arizona  corporation
         (incorporated  by  reference  to Exhibit  10 to Current  Report on Form
         10-KSB of  SheerVision,  Inc., a Delaware  corporation  (formerly Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on September 26, 2000).

10.2     Securities  Purchase  Agreement,  dated as of November 30, 2005,  among
         SheerVision, Inc., a California corporation, Laurie C. Scala and Howard
         A. Scala,  and  SheerVision,  Inc., a Delaware  corporation  (formerly,
         Clean  Water  Technologies,  Inc.)  (Schedules  intentionally  omitted)
         (incorporated  by reference  to Exhibit 10.1 to Current  Report on Form
         8-K of SheerVision,  Inc., a Delaware corporation (formerly Clean Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on December 7, 2005).

10.3     License  Assignment  Agreement,  dated March 16,  2006,  by and between
         SheerVision,  Inc.,  a  Delaware  corporation  (formerly,  Clean  Water
         Technologies,  Inc.)  and  Water  Technology  Partners  LLC,  a Florida
         limited liability company (incorporated by reference to Exhibit 10.1 to
         Current Report on Form 8-K of SheerVision, Inc., a Delaware corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on March 22, 2006).

10.4     Sublicense Assignment  Agreement,  dated March 16, 2006, by and between
         SheerVision,  Inc.,  a  Delaware  corporation  (formerly,  Clean  Water
         Technologies,  Inc.)  and  Water  Technology  Partners  LLC,  a Florida
         limited liability company (incorporated by reference to Exhibit 10.2 to
         Current Report on Form 8-K of SheerVision, Inc., a Delaware corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on March 22, 2006).

                                       41
<PAGE>

10.5     Commercial  Real  Estate  Lease,  by and among  Academy  Center LLC and
         Suzanne  Lewsadder (d/b/a  SheerVision,  Inc.),  dated as of August 26,
         2005  (incorporated  by reference to Exhibit 10.2 to Current  Report on
         Form 8-K/A of SheerVision, Inc., a Delaware corporation (formerly Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.6     Letter of Engagement with Northeast  Securities,  dated as of August 3,
         2005  (incorporated  by reference to Exhibit 10.3 to Current  Report on
         Form 8-K/A of SheerVision, Inc., a Delaware corporation (formerly Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.7     Confidentiality  and  Non-Disclosure  Agreement,  dated as of August 3,
         2005,  between  SheerVision,   Inc.,  a  California  corporation,   and
         Northeastern  Securities  (incorporated by reference to Exhibit 10.4 to
         Current Report on Form 8-K of SheerVision, Inc., a Delaware corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on March 28, 2006).

10.8     Letter  of  Engagement,   dated  as  of  December  14,  2005,   between
         SheerVision, Inc., a California corporation, and Hallmark Capital Corp.
         (incorporated  by reference  to Exhibit 10.5 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.9     Letter of Engagement, dated as of October 1, 2005, between SheerVision,
         Inc.,   a  California   corporation,   and   Hallmark   Capital   Corp.
         (incorporated  by reference  to Exhibit 10.6 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.10    Letter Agreement,  dated as of November 14, 2005, between  SheerVision,
         Inc., a California  corporation,  and Javier Schmidt & Kalma,  S.A, and
         addendum  (incorporated  by reference to Exhibit 10.7 to Current Report
         on Form 8-K/A of SheerVision,  Inc., a Delaware  corporation  (formerly
         Clean Water Technologies, Inc.), filed with the Securities and Exchange
         Commission on March 28, 2006).

10.11    Promissory Note,  dated as of December 7, 2005,  issued by SheerVision,
         Inc. in favor of Vineyard  Bank,  in the  principal  amount of $300,000
         (incorporated  by reference  to Exhibit 10.8 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.12    Commercial  Security  Agreement,  dated as of December 7, 2005, between
         SheerVision,   Inc.,  a  California  corporation,   and  Vineyard  Bank
         (incorporated  by reference  to Exhibit 10.9 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

                                       42
<PAGE>

10.13    Business  Loan  Agreement,  dated  as  of  December  7,  2005,  between
         SheerVision,   Inc.,  a  California  corporation,   and  Vineyard  Bank
         (incorporated  by reference to Exhibit 10.10 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.14    Agreement to Provide  Insurance,  dated as of December 7, 2005, between
         SheerVision,   Inc.,  a  California  corporation,   and  Vineyard  Bank
         (incorporated  by reference to Exhibit 10.11 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.15    Commercial  Guaranty,   dated  as  of  December  7,  2005,  by  Suzanne
         Lewsadder,  on behalf of  SheerVision,  Inc., a California  corporation
         (incorporated  by reference to Exhibit 10.12 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.16    Commercial  Guaranty,   dated  as  of  December  7,  2005,  by  Jeffrey
         Lewsadder,  on behalf of  SheerVision,  Inc., a California  corporation
         (incorporated  by reference to Exhibit 10.13 to Current  Report on Form
         8-K/A of  SheerVision,  Inc., a Delaware  corporation  (formerly  Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on March 28, 2006).

10.17    Change  in  Terms  Agreement,  dated as of  January  5,  2006,  between
         SheerVision,  Inc., a  California  corporation,  and Vineyard  Bank and
         accompanying  Disbursement  Request and  Authorization for the Variable
         Rate Nondisclosable Revolving Line of Credit (incorporated by reference
         to Exhibit 10.14 to Current Report on Form 8-K of SheerVision,  Inc., a
         Delaware corporation  (formerly Clean Water Technologies,  Inc.), filed
         with the Securities and Exchange Commission on March 28, 2006).

10.18    Form of Intercreditor  Agreement,  dated as of September 13, 2005, with
         SheerVision,  Inc., a California corporation (incorporated by reference
         to Exhibit 10.17 to Current Report on Form 8-K/A of SheerVision,  Inc.,
         a Delaware corporation (formerly Clean Water Technologies, Inc.), filed
         with the Securities and Exchange Commission on March 28, 2006).

10.19    Letter Agreement,  dated as of April 6, 2003, and Addendum, dated as of
         April 5, 2003  (filed  in  redacted  form  pursuant  to a  confidential
         treatment  request)  (incorporated  by  reference  to Exhibit  10.19 to
         Current Report on Form 8-K of SheerVision, Inc., a Delaware corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on April 5, 2006).

10.20    Consulting  Agreement,  dated as of February  15, 2005,  and  Addendum,
         dated as of  March 6,  2005  (filed  in  redacted  form  pursuant  to a
         confidential  treatment request)  (incorporated by reference to Exhibit
         10.20 to Current  Report on Form 8-K of  SheerVision,  Inc., a Delaware
         corporation  (formerly Clean Water Technologies,  Inc.), filed with the
         Securities and Exchange Commission on April 5, 2006).

                                       43
<PAGE>

10.21    Supply  and  License  Agreement,  dated as of April 7,  2003  (filed in
         redacted   form   pursuant  to  a   confidential   treatment   request)
         (incorporated  by reference to Exhibit 10.21 to Current  Report on Form
         8-K of SheerVision,  Inc., a Delaware corporation (formerly Clean Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on April 5, 2006).

10.22    Form of  Engagement  Letter,  dated April 11, 2006,  between  Northeast
         Securities  and  Clean  Water  Technologies,   Inc.   (incorporated  by
         reference to Exhibit 10.3 to Current Report on Form 8-K of SheerVision,
         Inc., a Delaware corporation (formerly Clean Water Technologies, Inc.),
         filed with the Securities and Exchange Commission on May 11, 2006).

10.23    Form of Side  Letter,  dated as of  April  20,2006,  between  Northeast
         Securities  and  Clean  Water  Technologies,   Inc.   (incorporated  by
         reference to Exhibit 10.4 to Current Report on Form 8-K of SheerVision,
         Inc., a Delaware corporation (formerly Clean Water Technologies, Inc.),
         filed with the Securities and Exchange Commission on May 11, 2006).

10.24    Form  of   Registration   Rights   Letter   delivered  by  Clean  Water
         Technologies,  Inc.  in  connection  with  the 2006  Private  Placement
         (incorporated  by reference  to Exhibit 10.5 to Current  Report on Form
         8-K of SheerVision,  Inc., a Delaware corporation (formerly Clean Water
         Technologies,  Inc.), filed with the Securities and Exchange Commission
         on May 11, 2006).

10.25    Form  of   Registration   Rights   Letter   delivered  by  Clean  Water
         Technologies,  Inc.  in  connection  with  the 2005  Private  Placement
         (incorporated  by reference to Exhibit 10.25 to Current  Report on Form
         SB-2/A of  SheerVision,  Inc., a Delaware  corporation  (formerly Clean
         Water  Technologies,  Inc.),  filed with the  Securities  and  Exchange
         Commission on May 11, 2006).

14.1     Code of Ethics  (incorporated  by  reference to Exhibit 14.1 to Current
         Report on Form  8-K/A of  SheerVision,  Inc.,  a  Delaware  corporation
         (formerly Clean Water  Technologies,  Inc.),  filed with the Securities
         and Exchange Commission on March 28, 2006).

21.1     Subsidiaries of SheerVision, Inc.

31.1     Certification of Principal Executive Officer required by Rule 13a-14(a)
         or Rule  15d-14(a) of the  Securities  Exchange Act of 1934, as adopted
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                                       44
<PAGE>

31.2     Certification of Principal Financial Officer required by Rule 13a-14(a)
         or Rule  15d-14(a) of the  Securities  Exchange Act of 1934, as adopted
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1     Certification of Chief Executive Officer pursuant to 18 U.S.C.  Section
         1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley  Act of
         2002.

32.2     Certification of Chief Financial Officer pursuant to 18 U.S.C.  Section
         1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley  Act of
         2002.


ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES


                          2004             2005                 2006
                          ----             ----                 ----
SUMMARY:
--------
Audit fees                -----            -----               110,407
Audit related fees        -----            -----                -----
Tax fees                  -----            -----                -----
Other fees                -----            -----                -----
                      ----------------------------------------------------




                                       45
<PAGE>



                                   SIGNATURES

            In accordance  with Section 13 or 15(d) 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.

Dated: November 28, 2006

                                              SHEERVISION INC.

                                              By:   /s/ Suzanne Lewsadder
                                                  ----------------------------
                                                   Suzanne Lewsadder
                                                   Chief Executive Officer


            In accordance with the Securities  Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of  registrant  and in
the capacities and on the dates indicated.

                            Title                              Date
                            -----                              ----

/s/ Suzannne Lewsadder      Chief Executive Officer            November 28, 2006
-------------------------   and Director
Suzanne Lewsadder           (Principal Executive Officer)


/s/ Jeffrey Lewsadder       President and Director             November 28, 2006
-------------------------
Jeffrey Lewsadder


/s/ Suzanne Puente          Chief Financial Officer            November 28, 2006
-------------------------   (Principal Financial and
Suzanne Puente              Accounting Officer)


/s/ Shemiran Hart           Director                           November 28, 2006
-------------------------
Shemiran Hart

/s/ Sharon Biddle           Director                           November 28, 2006
-------------------------
Sharon Biddle

/s/ David Frankel           Director                           November 28, 2006
-------------------------
David Frankel





                                       46
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Board of Directors and Shareholders,
    SheerVision, Inc.

We have audited the accompanying balance sheet of SheerVision, Inc., as of
August 31, 2006 and the related statements of operations, stockholders' equity,
and cash flows for the years ended August 31, 2006 and 2005. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal controls over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SheerVision, Inc. as of August
31, 2006 and the result of its operations and its cash flows for the years ended
August 31, 2006 and 2005, in conformity with accounting principles generally
accepted in the United States of America.

/s/ Miller Ellin & Company, LLP
MILLER ELLIN & COMPANY, LLP



New York, New York
November 27, 2006




                                      F-1
<PAGE>

                                SHEERVISION, INC.
                                  BALANCE SHEET
                                 AUGUST 31, 2006


                              ASSETS

CURRENT ASSETS:
      Cash and cash equivalents                                     $ 1,114,626
      Accounts receivable, net                                           73,864
      Inventory                                                         276,922
      Prepaid expenses and other current assets                          76,429
                                                                    -----------
            Total Current Assets                                      1,541,841
                                                                    -----------

PROPERTY AND EQUIPMENT, net                                             101,345

                                                                    $ 1,643,186
                                                                    ===========

            LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
      Accounts payable                                              $   204,153
      Accrued expenses and other current liabilities                    103,725
      Accrued dividends preferred series A                               55,358
                                                                    -----------
            Total Current Liabilities                                   363,236
                                                                    -----------

STOCKHOLDERS' EQUITY:
      Preferred Stock, Series A, 9% cumulative convertible;
         $.001 par value, $10 per share, Authorized 350,000
            issued and outstanding 307,546 shares                           308
      Common Stock: par value $.001;
         Authorized 90,000,000 shares -
           issued and outstanding 12,278,169                             12,278
      Additional paid in capital                                      4,857,429
      Accumulated deficit                                            (3,590,065)
                                                                    -----------
            Total Stockholders' Equity                                1,279,950
                                                                    -----------

                                                                    $ 1,643,186
                                                                    ===========

                 See accompanying notes to financial statements

                                      F-2
<PAGE>

                                SHEERVISION, INC.
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                          YEARS ENDED
                                                                                           AUGUST 31,
                                                                                --------------------------------
                                                                                     2006               2005
                                                                                --------------------------------
<S>                                                                             <C>                 <C>
NET SALES                                                                       $  2,980,584        $  1,972,460

COST OF GOODS SOLD                                                                 1,134,516             700,131

                                                                                --------------------------------
GROSS PROFIT                                                                       1,846,068           1,272,329
                                                                                --------------------------------

OPERATING EXPENSES:
       Shipping                                                                      135,044              92,985
       Selling                                                                     1,524,957             511,698
       General and administrative                                                  1,417,761             641,312
       Product development                                                            29,782               8,450
                                                                                --------------------------------
                          Total operating expenses                                 3,107,544           1,254,445
                                                                                --------------------------------

(LOSS) INCOME FROM OPERATIONS                                                     (1,261,476)             17,884
                                                                                --------------------------------

OTHER INCOME (EXPENSE):
       Interest expense                                                             (227,355)                 --
       Interest income                                                                31,909                  --
       Registration penalty on preferred stock issuance                              (45,105)                 --
       Amortization of deferred financing costs                                     (864,117)                 --
       Depreciation                                                                   (3,906)                 --
                                                                                --------------------------------
                             Total other expense                                  (1,108,574)                 --

                                                                                --------------------------------
(LOSS) INCOME BEFORE BENEFIT FOR INCOME TAX                                       (2,370,050)             17,884

BENEFIT FOR INCOME TAX:
       Current                                                                         1,721               8,077
       Deferred                                                                      (22,397)            (11,199)
                                                                                --------------------------------
                                                                                     (20,676)             (3,122)

NET (LOSS) INCOME                                                                 (2,349,374)             21,006

ACCRUED PREFERRED STOCK DIVIDENDS                                                    (55,358)                 --
                                                                                --------------------------------
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS                             $ (2,404,732)       $     21,006
                                                                                ================================

BASIC AND DILUTED (LOSS) INCOME PER SHARE APPLICABLE TO COMMON SHAREHOLDERS:
       Basic and Diluted                                                        $      (0.47)       $       0.16
                                                                                ================================

WEIGHTED AVERAGE SHARES OUTSTANDING:
       Basic and Diluted                                                           5,072,015             135,135
                                                                                ================================
</TABLE>

                 See accompanying notes to financial statements

                                      F-3
<PAGE>

                                SHEERVISION, INC.
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             12 MONTHS ENDING AUGUST 31
                                                                          -------------------------------
                                                                              2006                2005
                                                                          -------------       -----------
<S>                                                                       <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net (loss) income                                                   $  (2,349,374)      $    21,006
      Adjustments to reconcile net (loss) income to net
         cash used in operating activities:
         Depreciation                                                             3,906                --
         Amortization of deferred financing costs                               864,117                --
         Deferred interest expense                                               68,838                --
         Changes in assets and liabilities:
             Accounts receivable                                                (35,922)          (13,420)
             Inventory                                                         (137,028)         (108,170)
             Deferred financing costs                                          (222,422)          (50,573)
             Prepaid expenses                                                    (9,510)          (33,094)
             Accounts payable                                                   (22,319)          137,354
             Other current assets                                                 3,580            (3,580)
             Other current liabilities                                          (29,545)           54,364
             Deferred income tax payable                                             --           (11,199)
                                                                          -------------       -----------
NET CASH USED IN OPERATING ACTIVITIES                                        (1,865,679)           (7,312)
                                                                          -------------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
             Purchase of property and equipment                                (105,251)               --
             Due from affiliates                                                     --             4,100
             Due from stockholders                                                   --           (87,651)
             Purchase of stock - CWTI                                          (625,000)               --
                                                                          -------------       -----------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                            (730,251)          (83,551)
                                                                          -------------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
             Net proceeds from conversion of convertible notes                4,345,577                --
             Offering costs                                                    (642,645)               --
             Issuance of common stock                                             2,251                --
             Issuance of preferred stock                                            308                --
             Proceeds from exercise of warrants                                   3,229                --
             Loans to shareholders                                                   --            48,634
                                                                          -------------       -----------
NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES                            3,708,720            48,634
                                                                          -------------       -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                       1,112,790           (42,229)

CASH AND CASH EQUIVALENTS - beginning                                             1,836            44,065
                                                                          -------------       -----------

CASH AND CASH EQUIVALENTS - ending                                        $   1,114,626       $     1,836
                                                                          =============       ===========

SUPPLEMENTRY DISCLOSURES OF CASH FLOWS:
             Cash paid during the period for:
                Interest                                                  $     158,759       $        --
                                                                          -------------------------------
                Income taxes                                              $       3,340       $     7,852
                                                                          -------------------------------
SCHEDULE OF NON - CASH FINANCING ACTIVITIES:
                Non cash asset distributed to shareholders'                          --       $   264,806
                                                                          -------------------------------
                Adjustments related to reverse merger into public shell   $   1,125,335       $        --
                                                                          -------------------------------
</TABLE>

                 See accompanying notes to financial statements

                                      F-4
<PAGE>

                                SHEERVISION, INC.
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                            Additional                     Total
                                                Preferred Stock        Common Stock          Paid-in       Retained    Stockholders'
                                               Shares      Amount     Shares    Amount       Capital       Earnings     Deficiency
                                              --------------------------------------------------------------------------------------

<S>                                           <C>       <C>        <C>          <C>        <C>            <C>           <C>
BALANCE, September 1, 2004                                            135,135   $    135   $       865    $   183,802   $   184,802

Distribution                                                                                                 (264,806)     (264,806)

Net Income                                                                                                     21,006        21,006
                                              --------------------------------------------------------------------------------------

BALANCE, August 31, 2005                                              135,135   $    135   $       865    $   (59,998)  $   (58,998)

Fair Value of warrant issued
with 12% notes                                                             --         --        68,838             --        68,838

Fair Value of  agent warrants
issued with 12% notes                                                      --         --       182,711             --       182,711

Purchase of majority ownership
of Clean Water Technologies, Inc. (CWTI)                                   --         --      (625,000)            --      (625,000)

Recapitalization from acquisition transaction                       9,891,593      9,892     1,115,445     (1,125,335)           --

Issuance of common stock in connection
with private placement offering, net of
offering expenses                                                   1,366,874      1,367       382,510             --       383,878

Conversion of 12% convertible notes                                   773,917        774       217,234             --       218,009

Fair value of warrants issued with
9% convertible notes                                                       --         --       245,460             --       245,460

Fair value of agent warrants issued in
connection with private placement                                          --         --       162,950                      162,950

Issuance of preferred stock for
9% convertible preferred notes                307,546        308                             3,075,161                    3,075,469

Conversion of 12% convertible notes                                    99,220         99        28,026             --        28,125

Warrants exercised                                                     11,430         11         3,229                        3,240

Dividend Accrued on Preferred Stock                                                                           (55,358)      (55,358)

Net Loss                                                                   --         --            --     (2,349,374)   (2,349,374)
                                              --------------------------------------------------------------------------------------
BALANCE, August 31, 2006                      307,546   $    308   12,278,169   $ 12,278   $ 4,857,429    $(3,590,065)  $ 1,279,950
                                              ======================================================================================
</TABLE>

** All share and per share amounts have been adjusted to reflect the 1 for 7.4
   reverse stock split completed in January, 2006

                 See accompanying notes to financial statements

                                      F-5
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 1 - DESCRIPTION OF BUSINESS

     SheerVision,  Inc.  designs and sells high quality,  value-priced  surgical
     loupes, light systems and related optical products for the dental,  medical
     and   veterinary   markets.   Through  our   exclusive   arrangement   with
     manufacturers based in Asia, we can provide top quality surgical loupes and
     light  systems  directly to  end-users at  substantially  lower prices than
     similar competitors products.  Effective June 19, 2006 the company formally
     changed it name from Clean Water  Technologies,  Inc. (CWTI) to SheerVison,
     Inc.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION

     The accompanying financial statements have been prepared in accordance with
     accounting principals generally accepted in the United States of America.

     REVENUE RECOGNITION

     The Company's  surgical  loupes and lighting  products need no installation
     and are ready  for use upon  receipt  by the  customer.  Products  sold are
     delivered  by  shipments   made  through  common  carrier  and  revenue  is
     recognized upon shipment to the customer.  Discounts, and sales incentives,
     are  recognized as a reduction of revenue at the time of sale.  The Company
     offers an  unconditional  satisfaction  guarantee  for a 30 day  period and
     permits product  returns within 30 days of purchase,  at which time returns
     are accepted and refunds are made.  Shipping charges and special orders are
     nonrefundable.

     CASH AND CASH EQUIVALENTS

     The Company  considers highly liquid  investments with an original maturity
     of three months or less to be cash equivalents

     ACCOUNTS RECEIVABLE

     Accounts  receivable  represent balances due from customers for the sale of
     our  products.  An allowance  for  doubtful  accounts is provided for those
     accounts receivable  considered to be uncollectible,  based upon historical
     experience and management's  evaluation of outstanding  accounts receivable
     at the end of the year.  Management  has provided an allowance for doubtful
     accounts  of  $1,723  and -0- at  August  31,  2006 and  August  31,  2005,
     respectively.


                                      F-6
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     CONCENTRATIONS OF CREDIT RISK

     Financial  instruments  and  related  items which  potentially  subject the
     Company to  concentrations  of credit risk consist  primarily of cash, cash
     equivalents  and  trade  receivables.  The  Company  places  its  cash  and
     temporary cash investments with credit quality institutions. At times, such
     investments  may be in excess of the FDIC  insurance  limit.  To date,  the
     Company has not  experienced any such losses and believes it is not exposed
     to any significant credit risk.

     Credit risk  represents the accounting loss that would be recognized at the
     reporting  date  if   counterparties   failed   completely  to  perform  as
     contracted.  Significant  technological changes in the industry or customer
     requirements,   or  the   emergence  of   competitive   products  with  new
     capabilities or technologies,  could adversely  affect  operating  results.
     Concentrations  of credit risk (whether on or off balance sheet) that arise
     from financial  instruments exist for groups of customers or counterparties
     when they have  similar  economic  characteristics  that would  cause their
     ability to meet contractual obligations to be similarly affected by changes
     in economic or other conditions  described below. The Company  periodically
     reviews its trade  receivables  in  determining  its allowance for doubtful
     accounts.  The Company had an allowance for doubtful  accounts of $1,723 at
     August 31, 2006 and $0 at August 31, 2005.

     INVENTORY

     Inventory  is  valued  at the  lower  of cost or  market,  determined  on a
     first-in, first-out basis. At August 31, 2006 and 2005, inventory consisted
     of finished goods and raw materials. Because of the technical nature of the
     products,  the  Company  may be exposed  to a number of factors  that could
     result in portions of its inventory  becoming  either obsolete or in excess
     of  anticipated  usage.  These  factors  include,  but are not  limited to,
     technological changes in its markets, competitive pressures in products and
     prices,  and the introduction of new product lines.  The Company  regularly
     evaluates  its  ability to realize  the value of its  inventory  based on a
     combination of factors, including historical usage rates, forecasted sales,
     product life cycles, and market acceptance of new products.  When inventory
     that is obsolete or in excess of  anticipated  usage is  identified,  it is
     written  down to  realizable  value or an  inventory  valuation  reserve is
     established.  At August 31, 2006 and 2005 there are no inventory  valuation
     reserves deemed necessary.



                                      F-7
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     PROPERTY AND EQUIPMENT

     The Company follows the practice of charging maintenance renewals and minor
     repairs to expense as incurred.  Renewals and betterments  which materially
     increase the value of the property are capitalized.

     INCOME TAXES

     Deferred  income taxes are  recognized  for temporary  differences  between
     financial statement and income tax basis of assets and liabilities and loss
     carry forwards for which income tax benefits are expected to be realized in
     future years. A valuation  allowance is  established,  when  necessary,  to
     reduce  deferred  tax  assets to the amount  expected  to be  realized.  In
     estimating  future tax  consequences,  we  generally  consider all expected
     future  events other than an enactment of changes in the tax laws or rates.
     The deferred tax asset is continually  evaluated for realizability.  To the
     extent our judgment  regarding the  realization  of the deferred tax assets
     changes and  adjustment to the  allowance is recorded,  with an off setting
     increase  or  decrease,  as  appropriate,   in  income  tax  expense.  Such
     adjustments  are  recorded  in the period in which our  estimate  as to the
     realizability  of the asset  changed that it is "more likely than not" that
     all of the deferred tax assets will be realized. The "more likely than not"
     standard is  subjective,  and is based upon our  estimate of a greater than
     50% probability that our long range business plan can be realized. Deferred
     tax liabilities  and assets are classified as current or non-current  based
     on the  classification  of the related  asset or  liability  for  financial
     reporting.  A deferred  tax  liability  or asset that is not  related to an
     asset or liability for financial  reporting,  including deferred tax assets
     related to NOL carry  forwards,  are  classified  according to the expected
     revenue date of the temporary difference.


                                      F-8
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     LONG-LIVED ASSETS

     Property,  equipment and certain other long lived assets are amortized over
     their useful lives. Useful lives are based on management's estimates of the
     period that the assets will  generate  revenues.  Management  evaluates the
     recoverability  of the  Company's  long-lived  assets  whenever  events  or
     changes in  circumstances  indicate that their carrying  amounts may not be
     recoverable.  Any  impairment  of value will be recognized as an expense in
     the statement of operations.  The Company  recorded no impairments  for the
     years ended August 31, 2006 and 2005.

     BASIC AND DILUTED LOSS PER SHARE

     In accordance with the Financial Accounting Standards Board's ("FASB") SFAS
     No.  128,  "Earnings  Per Share,"  the basic loss per common  share,  which
     excludes dilution, is computed by dividing the net loss available to common
     shareholders by the weighted  average number of common shares  outstanding.
     Diluted loss per common share  reflects the  potential  dilution that could
     occur if all potential  common shares had been issued and if the additional
     common shares were dilutive.

     RESEARCH AND DEVELOPMENT

     Research and development costs are expensed as incurred.


     USE OF ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
     principals  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that  affect the  amounts
     reported in the financial  statements and accompanying  notes.  Significant
     estimates and assumptions relate to estimates of collectibility of accounts
     receivable,  the  realizability  of deferred tax assets and the adequacy of
     inventory  reserves.  Management  bases its  estimates and  assumptions  on
     historical experience and on various other assumptions that it believes are
     reasonable under the circumstances.  Actual results could differ from those
     estimates.



                                      F-9
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


     FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  estimated  fair values for financial  instruments  under SFAS No. 107,
     "Disclosures about Fair Value of Financial  Instruments," are determined at
     discrete  points  in time  based  on  relevant  market  information.  These
     estimates  involve  uncertainties  and cannot be determined with precision.
     For  certain of the  Company's  financial  instruments,  including  certain
     assets,  accounts  payable and accrued  liabilities,  the carrying  amounts
     approximate fair value due to their short term nature.


     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In December 2004, the FASB issued SFAS No. 153,  "Exchanges of Non monetary
     Assets".  SFAS  No.  153  amends  the  guidance  in  APB  Opinion  No.  29,
     "Accounting for Non-monetary Transactions", to eliminate certain exceptions
     for non monetary  exchanges of similar  productive  assets, and replaces it
     with a general  exception for exchanges of non monetary  assets that do not
     have  commercial  substance.  The Company does not believe that adoption of
     SFAS No. 153 will have a material effect on its financial position, results
     of operations, or cash flows.

     In September  2004, the Emerging Issues Task Force ("EITF") issued EITF No.
     04-8, "The  Effect  of  Contingently  Convertible  Instruments  on  Diluted
     Earnings  per  Share."  EITF No. 04-8  provides  new  guidance  on when the
     dilutive effect of contingently  convertible securities with a market price
     trigger should be included in diluted  earnings per share. The new guidance
     states that these securities should be included in the diluted earnings per
     share  computation  regardless of whether the market price trigger has been
     met. The guidance in EITF 04-8 is  effective  for all periods  ending after
     December  15,  2004  and  would be  applied  by  retrospectively  restating
     previously  reported earnings per share. The adoption of this pronouncement
     is  not  expected  to  have  material  effect  on the  Company's  financial
     statements.

     On June 29,  2005,  the FASB  ratified the  consensus  reached for Emerging
     Issues Task Force (EITF) Issue No. 05-5, ACCOUNTING FOR EARLY RETIREMENT OR
     POSTEMPLOYMENT  PROGRAMS WITH SPECIFIC FEATURES (SUCH AS TERMS SPECIFIED IN
     ALTERSTEILZEIT EARLY RETIREMENT ARRANGEMENTS).  The consensus in this Issue
     should be applied to fiscal years  beginning  after  December 15, 2005, and
     reported  as a change  in  accounting  estimate  effected  by a  change  in
     accounting  principle as described in paragraph 19 of FASB  Statement  154.
     The Company does not expect that EITF 05-5 will have any significant effect
     on future financial statements.


                                      F-10
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     On September 28, 2005,  the FASB  ratified the  consensus  reached for EITF
     Issue No.05-7,  ACCOUNTING FOR MODIFICATIONS TO CONVERSION OPTIONS EMBEDDED
     IN DEBT INSTRUMENTS AND RELATED ISSUES. The provisions of this Issue should
     be applied to future  modifications  of debt  instruments  beginning in the
     first interim or annual reporting period beginning after December 15, 2005.
     The Company  expects that the application of EITF 05-7 could have an effect
     on interest and debt valuations in future financial  statements.  It is not
     possible to determine the impact,  if any, from the  application  since the
     Company does not presently have any convertible debt.

     On September 28, 2005,  the FASB  ratified the  consensus  reached for EITF
     Issue No. 05-8, INCOME TAX CONSEQUENCES OF ISSUING  CONVERTIBLE DEBT WITH A
     BENEFICIAL  CONVERSION  FEATURE.  The  provisions  of this Issue  should be
     applied beginning in the first interim or annual reporting period beginning
     after December 15, 2005. The Company  expects that the  application of EITF
     05-8  could have an effect on the income  tax  expense  reported  in future
     financial  statements.  It is not possible to determine the impact, if any,
     from  the  application  since  the  Company  does  not  presently  have any
     convertible debt.


NOTE 3 - ACQUISITION TRANSACTIONS

     ACQUISITION OF SHARES OF CWTI

     On December 1, 2005, the Company acquired 4,517,800 shares (610,514 shares
     after  giving  effect  of the 1 for 7.4  reverse  stock  split  to its then
     stockholders) of the common stock, par value $0.001, of CWTI, or 54.579% of
     the outstanding shares, of CWTI from two individuals for a purchase price
     of $625,000.

     MERGER OF CWTI AND SHEERVISION

     On March 27, 2006,  CWTI entered into a Share  Exchange and  Reorganization
     Agreement  with  SheerVision,  Inc.,  a  California  corporation,  and  its
     shareholders thereof, in which SheerVision's  shareholders exchanged all of
     the  outstanding and issued common stock of SheerVision for an aggregate of
     9,525,137 shares of CWTI common stock,  representing 95% of its outstanding
     common  stock  after  giving  effect  to  the  transaction.  As  a  result,
     SheerVision  became a  wholly-owned  subsidiary  of CWTI  and all  options,
     warrants  exercisable  for,  and  securities  convertible  into,  shares of
     SheerVision  common stock,  became exercisable for or convertible into such
     number of shares of CWTI  common  stock as the  holder  thereof  would have
     received


                                      F-11
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


     if such  options  and  warrants  had been  exercised,  or such  convertible
     securities converted, immediately prior to closing.

NOTE 4 -  LINE OF CREDIT

     In December  2005 the Company  entered into an agreement  with a bank for a
     revolving credit facility of up to $300,000.  The credit line ("Line") will
     expire on January  15,  2007.  The Line bears  interest  at 1.25% above the
     bank's prime rate and is  collateralized  by a security  interest in all of
     the assets of the Company.  In addition,  all  obligations  to the bank are
     personally  guaranteed  by two  stockholders  of the  Company  who are also
     officers and directors. There were no outstanding borrowings under the Line
     as of August 31, 2006.  Interest expense for the 12 months ended August 31,
     2006 and  August  31,  2005  under the Line  amounted  to  $6,945,  and $0,
     respectively.

NOTE 5 -  INVENTORIES

     Inventory is valued at the lower of cost  (first-in,  first-out  method) or
     market, and consists of the following at August 31, 2006.

                           Finished goods               $196,026
                           Raw Materials                  80,896
                                                        --------

                           Total Inventories            $276,922
                                                        --------


NOTE 6 - PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost less accumulated depreciation and
     amortization.  At August 31, 2006  property and  equipment  consists of the
     following:

                                            Estimated Useful Lives
                                            ----------------------
          Furniture and equipment                  7 years              $ 57,923
          Office and computer equipment            5 years                40,148
          Leasehold improvements                  15 years                 7,179
                                                              ------------------
                                                                        $105,250
          Less:  Accumulated depreciation and amortization                 3,905
                                                              ------------------
                                                                        $101,345

     Depreciation  expense for the years ended August 31, 2006 and 2005 amounted
to $3,906 and $0, respectively.



                                      F-12
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 7 - INCOME TAXES

     Provision  (benefit)  for  income  taxes for the  years  ended  August  31,
consists of the following:

                                                       YEARS ENDED
                                                        AUGUST 31,
                                                -------------------------
                                                   2006            2005
                                                ---------      ----------
              Current     - federal             $      -0-     $  2,447
                          - state                   1,721          5,630
                                                ---------      ----------
                                                    1,721          8,077
                                                ---------      ----------

              Deferred    - federal               (17,975)        (8,988)
                          - state                  (4,422)        (2,211)
                                                ---------      ----------
                                                  (22,397)       (11,199)
                                                ---------      ----------

                          Total                 $ (20,676)     $  (3,122)
                                                =========      ==========



     Deferred income taxes reflect the net tax effects of temporary  differences
     between  the  carrying  amounts of assets  and  liabilities  for  financial
     reporting  purposes  and the  amounts  used for  income tax  purposes.  For
     financial reporting purposes,  the Company has incurred  substantial losses
     which have caused  management to doubt,  based on the  available  objective
     evidence;  whether it was more  likely than not that the net  deferred  tax
     assets would be fully realizable. Accordingly, the Company has provided for
     a full  valuation  allowance  against  its  net  deferred  tax  asset.  The
     components  of the  Company's  deferred tax asset at August 31, 2006 are as
     follows:

       Net operating losses carryforwards                          $928,000
       Less:  Valuation allowance                                  (928,000)
                                                                   --------
       Net deferred tax asset                                      $      -
                                                                   ========

     The Company has net operating loss  carry forwards for federal tax purposes
     of approximately $2,538,000 which expire in years 2024 through 2026.



                                      F-13
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 8 - COMMITMENTS AND CONTINGENCIES

     OPERATING LEASES

     The Company  leases  space  under a  noncancellable  lease that  expires in
     October 2007, with minimum annual rentals as follows:

             FISCAL YEAR ENDING

                    2007                 48,468
                    2008                  8,078
                                        -------
                                        $56,546
                                        =======

     Rent  expense  for the years  ended  August 31,  2006 and 2005  amounted to
     $35,646 and $18,141, respectively.

     LITIGATION

     In the ordinary course of business the Company may be subject to litigation
     from  time  to  time.  There  is no  past,  pending  or,  to the  Company's
     knowledge,   threatened  litigation  or  administrative  action  (including
     litigation or action involving the Company's  officers,  directors or other
     key personnel) which in the Company's opinion has or is expected to have, a
     material adverse effect upon its financial condition or operations.

NOTE 9. - FINANCING TRANSACTIONS

     12% SECURED CONVERTIBLE NOTE

     In a September 12, 2005 private placement, the Company issued 24 investment
     units  each  consisting  of a $50,000  12%  secured  convertible  note that
     matured on September 12, 2006 (the "12% notes") and 1,200 five-year  common
     stock purchase  warrants  entitling the holder to purchase  common stock at
     $2.70 per share, or $0.28346 after giving effect to the exchange  agreement
     with Clean Water  Technologies,  Inc. ("CWTI").  The conversion of the "12%
     notes" is subject to anti-dilution adjustment. Each note-holder is entitled
     to convert up to 22.5% of the principal amount of the 12% notes into shares
     of common stock.  Interest is payable at the date of maturity. As of August
     31, 2006 principal and interest were paid in full.

     Based on relative fair values,  the Company has  attributed  $68,838 of the
     total  proceeds  to  the  warrants,  accounted  for  as a  discount  to the
     convertible note and as additional paid-in capital.



                                      F-14
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 9 - FINANCING TRANSACTIONS (CONTINUED)

     In  connection  with the  issuance of the 12% notes,  the Company  gave its
     placement agent warrants to purchase 238,128 shares of common stock and its
     financial advisor warrants to purchase 476,257 shares of common stock at an
     exercise price of $0.28346 per share,  for a term of 5 years.  Accordingly,
     the fair values  totaling  $182,711 of those  warrants  has been charged to
     deferred  financing  costs and was amortized  over the 12-month term of the
     12% notes.

     Interest  expense for  12-months  ended August 31, 2006 and August 31, 2005
     amounted  to $101,550  and $0, respectively.  The  Company was  required to
     prepay the  principal  and any  accrued  interest on the 12% notes upon the
     closing  of an equity  financing  having  gross  proceeds  of at least $3.0
     million.  In  connection  with a private  placement in May 2006 of units of
     securities  described below, eleven holders of the Notes elected to convert
     22.5%  ($174,375)  of their 12% notes in the  aggregate  amount of $775,000
     into 615,165 shares of common stock, with the $600,625 balance from the May
     2006 private  placement  converted  into an aggregate  principal  amount of
     $450,000  of 9%  convertible  notes,  200,004  shares of  common  stock and
     warrants to acquire 45,000  additional  shares of common stock. Six holders
     elected to extend their 12% notes  having an  aggregate  amount of $263,750
     for the  remaining  term,  one  holder  elected  to  convert  22.5%  of the
     principal  ($11,250)  into 39,688 shares of common stock,  and four holders
     elected to receive cash of $116,250 and 119,064 shares of common stock with
     a value of $33,750 in full  payment of the 12% notes.  Accrued  interest of
     $70,375 on the 12% notes  surrendered for conversion or payment was paid on
     June 4, 2006.

     Upon the  maturity  date of August 31,  2006 of the 12% notes,  two holders
     elected to convert 22.5%  principal of $28,125 into 99,220 shares of common
     stock at a purchase  price of $.28346 per share.  The  remaining  principal
     balance of all  remaining  holders of  $235,625  and  accrued  interest  of
     $31,175 was repaid in cash at August 31, 2006.

     9% CONVERTIBLE NOTES

     In May 2006, the Company  completed a private  offering of convertible debt
     and equity securities.  The Company sold 82 units for $4,100,625,  of which
     $3,500,000  (70 units) was paid in cash and $600,625 (12 units) was paid by
     the surrender of 12% notes in the principal  amount of $600,625.  Each unit
     comprised a 9%  convertible  note ("9% notes") in the  principal  amount of
     $37,500,  16,667  shares of common stock and three year warrants to acquire
     an aggregate of 3,750 shares of common stock at a price of $1.00 per share.
     The purchase price per unit was $50,000. The 9% notes were convertible into
     shares of the Company's series A 9% cumulative convertible preferred stock,
     at a price of $.90 per share, with a stated value of $10 per share.



                                      F-15
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 9 - FINANCING TRANSACTIONS (CONTINUED)

     In  connection  with the  issuance of the 9% notes,  the  Company  gave its
     placement  agent warrants to purchase  204,167 shares of common stock at an
     exercise  price of $1.00  per  share  for a term of 3 years,  having a fair
     value of $245,460.

     On June 12,  2006,  the 9% notes in the  aggregate  amount  of  $3,075,469,
     automatically  converted into 307,546 shares of the Company's 9% cumulative
     convertible  preferred  stock upon the  effectiveness  of the filing of the
     Company's  amended and restated  certificate of incorporation to change the
     Company's name from CWTI to  SheerVision,  Inc.,  and make a  corresponding
     designation regarding such preferred stock. Dividends accrue at the rate of
     9% per annum and are payable every June 30 and December 31, commencing June
     30, 2006. To the extent not paid,  accrued  dividends  shall be accumulated
     until paid. At the option of the holder,  preferred  stock may be converted
     into common stock at any time at a conversion price of $0.90 per share.

     If the  Company  does  not  timely  perform  under  a  registration  rights
     agreement, or if the Company is unable to timely register its common stock,
     it has agreed to pay its investors  damages in the amount equal to .05% per
     month, up to a maximum of 5%, of the aggregate amount invested. The Company
     recorded  an  expense  of  $45,106  as of August  31,  2006  related to the
     registration penalty it was required to pay.

     Commencing  on  November  8, 2006,  a date six months  following  the final
     closing, the preferred shares convert without any action by a holder of the
     Company,  in the event that the closing  price in its trading  market for a
     share of the  common  stock  equals or exceeds  200% of the then  preferred
     stock  conversion  price for 15 of any 30  consecutive  trading  days.  The
     conversion price of the preferred stock and the number of shares subject to
     conversion  are to be subject to  adjustment  in the event of stock splits,
     stock dividends,  reverse stock splits, and similar events. Further, in the
     event that the Company  issues  shares of its common  stock at an effective
     price per share less than  $0.90,  the  conversion  price and the number of
     shares  subject  to the  preferred  stock  conversion  adjust on a weighted
     average basis to reflect the dilution.

     The Company paid the placement  agent for the May 2006 private  placement a
     cash  commission  of $273,000  (approximately  8% of the net  proceeds) and
     issued to it  warrants to  purchase  at $1.00 per share  204,167  shares of
     common  stock,  (5%  of  the  shares  of  common  stock  and  common  stock
     equivalents  sold).  The warrants  expire April 28, 2009.  The Company also
     paid a financial  consultant an advisory fee of 5 % of the gross  proceeds,
     or $205,000, of which the advisor paid $100,000 to acquire two units in the
     private placement.

     The  values  of  the  warrants  issued  has  been   determined   using  the
     Black-Scholes option-pricing model (with the same assumptions as those used
     for the  option),  assuming  expected  lives of 3 or 5 years,  a risk  free
     interest rate of 3.67%, no


                                      F-16
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 9 - FINANCING TRANSACTIONS (CONTINUED)

     expected  dividends,  and a stock  price  volatility  of 144%  based on the
     volatilities of companies comparable in size and type of business.

     A total of  511,714  warrants  having  an  exercise  of $1.00 per share and
     988,719  warrants  having an exercise of $0.28346 per share  (after  giving
     effect to the  exchange  agreement)  were issued  during the twelve  months
     ended August 31, 2006.

     On August 31, 2006 the remaining two holders of 12% note holders elected to
     convert  $28,125 of their notes into  99,220  shares of common  stock.  The
     balance of their notes of $96,875 was repaid in cash.


NOTE 10 - STOCKHOLDERS EQUITY

PREFERRED STOCK

     The Company has authorized  350,000 shares of series A preferred stock, par
     value $0.001. As of August 31, 2006 the Company had 307,546 preferred stock
     issued and  outstanding.  The Company had issued 9%  convertible  preferred
     notes in the aggregate  amount of $3,075,469  which converted at $10.00 per
     share on June 18,  2006.  Dividends  accrue at the rate of 9% per annum and
     are payable every June 30 and December 31 commencing  June 30, 2006. To the
     extent not paid,  accrued dividends shall be accumulated until paid. At the
     option of the holder, preferred stock may be converted into common stock at
     any time at a  conversion  price of $0.90 per share.  As of August 31, 2006
     cumulative  preferred  dividends  were  $55,358  and are  reflected  in the
     balance sheet.

COMMON STOCK

     The  Company has  authorized  90,000,000  shares of common  stock par value
     $0.001.  As of August 31,  2006 the  Company had  12,278,169  common  stock
     shares issued and outstanding.

     On December 1, 2005, the Company acquired  4,517,800  (610,514 shares after
     giving   effect  of  the  1  for  7.4  reverse  stock  split  to  its  then
     stockholders) of the common stock, par value $0.001, of CWTI, or 54.579% of
     the outstanding  shares,  of CWTI from two individuals for a purchase price
     of $625,000.

     On March 27, 2006,  CWTI entered into a Share  Exchange and  Reorganization
     Agreement  with  SheerVision,  Inc.,  a  California  corporation,  and  its
     shareholders thereof, in which all SheerVision  shareholders  exchanged all
     of the outstanding and issued capital stock of SheerVision for an aggregate
     of 9,525,137 shares of CWTI


                                      F-17
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 10 - STOCKHOLDERS EQUITY - (CONTINUED)

     common stock, representing 95% of its outstanding common stock after giving
     effect to the transaction.

     On May 8, 2006 the  Company  issued  1,366,874  shares of commons  stock in
     connection  with the 9% private  placement  offering and 773,917  shares of
     common stock in connection with the conversion of the 12% convertible notes
     (see Note 8).

     On August 17, 2006 the Company  issued  11,430  shares of common stock upon
     the election to exercise  warrants by a certain investor in connection with
     the Company's 12% Notes.  Original issue of 1,200 warrants on September 13,
     2005 which  through  the actions of the  reverse  stock split and  exchange
     agreement  converted to 11,430 warrants  exercised for a of total of $3,240
     or $0.28346 per share.

     On August 31,  2006,  two  holders of the  remaining  12% Notes  elected to
     convert 22.5%  principal of $28,125 into 99,220 shares of common stock at a
     purchase price of $.28346 per share.

NOTE 11 -  ECONOMIC DEPENDENCE

     MAJOR CUSTOMER

     For the years ended August 31, 2006 and 2005,  two customers  accounted for
     approximately 10% and 6%, respectively, of the Company's net sales.

     As of August 31, 2006 and 2005, these customers accounted for approximately
     -0-% and 13%,  respectively,  of the  Company's  accounts  receivable.  The
     Company believes that its  relationship  with these customers is strong and
     has never experienced any losses with these customers.

     MAJOR VENDORS

     For the years ended  August 31,  2006 and 2005,  one vendor  accounted  for
     approximately 51% and 73% of the Company's purchases.  The Company believes
     that its relationship with this vendor is good.

     As of  August 31, 2006 and 2005, this vendor accounted for approximately 0%
     and 28%, respectively, of the Company's accounts payable.

NOTE 12 - RELATED PARTY TRANSACTIONS

     For the year ended August 31, 2006 consulting service fees in the amount of
     $11,500  were  paid  to  an  individual  that  is a  relative  of  a  major
     shareholder and officer of the


                                      F-18
<PAGE>

                                SHEERVISION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2006 AND 2005


NOTE 12 - RELATED PARTY TRANSACTIONS (CONTINUED)

     Company.  This individual  provides  consulting services in connection with
     online marketing strategies and planning. The consulting agreement is for a
     total of $25,000 plus  out-of-pocket  expenses with an expected  completion
     date of November 30, 2006.







                                      F-19