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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2009

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File No. 333-140595

FRESHWATER TECHNOLOGIES,
INC.(Exact name of registrant as specified in its
charter)

|Nevada                                                               | 98-0508360                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

30 Denver Crescent, Suite 200, Toronto, Ontario, Canada
M2J 1G8(Address of principal executive offices) (zip code)

(416) 490-0254(Registrants telephone
number, including area code)

Not Applicable(Former name, former
address and former fiscal year, if changed since last report)

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

Yes [X]    No [   ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of large accelerated filer,
accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):

|Large accelerated filer [   ]                 | Accelerated
      filer                   
      [   ]
|--------------------------------------------- | ------------------------------------------------------
|Non-accelerated filer   [   ]                 | Smaller reporting company [X]                         
|(Do not check if a smaller reporting company) |                                                       

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November 13, 2009, there were 152,120,000 shares of common
stock, par value $0.001, outstanding.

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1

Freshwater Technologies, Inc. (A Development Stage Company)

September 30, 2009







|                                  | Index
|--------------------------------- | -----
|                                  |      
|Balance Sheets                    | F-1  
|                                  |      
|Statements of Operations          | F-2  
|                                  |      
|Statements of Cash Flows          | F-3  
|                                  |      
|Notes to the Financial Statements | F-4  

---

Freshwater Technologies, Inc. 
  (A Development Stage Company) 
  Balance Sheets 
  (expressed in U.S. dollars)

|                                                                        |  | (Unaudited)   |   |  |              |  
|----------------------------------------------------------------------- |  | ------------- | - |  | ------------ | -
|                                                                        |  | September 30, |   |  | December 31, |  
|                                                                        |  | 2009          |   |  | 2008         |  
|                                                                        |  | $             |   |  | $            |  
|                                                                        |  |               |   |  |              |  
|ASSETS                                                                  |  |               |   |  |              |  
|                                                                        |  |               |   |  |              |  
|Current Assets                                                          |  |               |   |  |              |  
|                                                                        |  |               |   |  |              |  
|Cash                                                                    |  | 464           |   |  | 160          |  
|Receivables                                                             |  | 4,698         |   |  | 1,716        |  
|Inventory                                                               |  | 82,694        |   |  |             |  
|                                                                        |  |               |   |  |              |  
|Total Current Assets                                                    |  | 87,856        |   |  | 1,876        |  
|Intangible Assets
      (Notes 2(k) and 4(d))                           |  | 297,124       |   |  |             |  
|                                                                        |  |               |   |  |              |  
|Total Assets                                                            |  | 384,980       |   |  | 1,876        |  
|                                                                        |  |               |   |  |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                          |  |               |   |  |              |  
|                                                                        |  |               |   |  |              |  
|Current Liabilities                                                     |  |               |   |  |              |  
|                                                                        |  |               |   |  |              |  
|Accounts payable                                                        |  | 21,054        |   |  | 21,054       |  
|Accrued liabilities                                                     |  | 56,879        |   |  | 17,537       |  
|Due to related
      parties (Note 3(b))                                |  | 24,160        |   |  | 167,957      |  
|                                                                        |  |               |   |  |              |  
|Total Liabilities                                                       |  | 102,093       |   |  | 206,548      |  
|                                                                        |  |               |   |  |              |  
|Going Concern (Note 1)                                                  |  |               |   |  |              |  
|Commitments and Contingencies (Notes 3(a) and
      6)                  |  |               |   |  |              |  
|                                                                        |  |               |   |  |              |  
|Stockholders Equity (Deficit)                                          |  |               |   |  |              |  
|                                                                        |  |               |   |  |              |  
|Class A Common Stock (Notes 4 and 5)                                    |  |               |   |  |              |  
|Authorized: 300,000,000 common shares, with a par value
      of $0.001 |  |               |   |  |              |  
|Issued and outstanding: 152,120,000 shares
      (2008  112,120,000)   |  | 152,120       |   |  | 112,120      |  
|                                                                        |  |               |   |  |              |  
|Class B Common Stock                                                    |  |               |   |  |              |  
|Authorized: 100,000,000 common shares, with a par value
      of $0.001 |  |               |   |  |              |  
|Issued and outstanding: none                                            |  |              |   |  |             |  
|                                                                        |  |               |   |  |              |  
|Additional Paid-in Capital (Notes 4 and 5)                              |  | 1,259,015     |   |  | 686,589      |  
|                                                                        |  |               |   |  |              |  
|Class A Common Stock Issuable (Note 4(d))                               |  | 225,000       |   |  |             |  
|                                                                        |  |               |   |  |              |  
|Deficit Accumulated During the Development Stage                        |  | (1,353,248    | ) |  | (1,003,381   | )
|                                                                        |  |               |   |  |              |  
|Total Stockholders Equity (Deficit)                                    |  | 282,887       |   |  | (204,672     | )
|                                                                        |  |               |   |  |              |  
|Total Liabilities and Stockholders Equity (Deficit)                    |  | 384,980       |   |  | 1,876        |  

(The accompanying notes are an integral part of these financial
  statements)

---

Freshwater Technologies, Inc. 
  (A Development Stage Company) 
  Statements of Operations 
  (expressed in U.S. dollars) 
  (Unaudited)

Accumulatedfrom January 21,2005 (Date of
      
      
      Three Months
      
      
      Three Months
      
      
      Nine Months
      
      
      Nine MonthsInception)
      
      
      Ended
      
      
      Ended
      
      
      Ended
      
      
      Endedto September
      
      
      September 30,
      
      
      September 30,
      
      
      September 30,
      
      
      September 30,30, 2009
      
      
      2009
      
      
      2008
      
      
      2009
      
      
      2008$
      
      
      $
      
      
      $
      
      
      $
      
      
      $Revenue
      
      468,984
      
      
      6,500
      
      
      200
      
      
      7,185
      
      
      1,626Cost of Sales
      
      214,439
      
      
      
      
      
      104
      
      
      166
      
      
      705Gross Profit
      
      254,545
      
      
      6,500
      
      
      96
      
      
      7,019
      
      
      921ExpensesAmortization of intangible assets
      
      152,876
      
      
      56,712
      
      
      
      
      
      152,876
      
      
      Consulting (Note 3(a))
      
      238,000
      
      
      9,000
      
      
      9,000
      
      
      27,000
      
      
      27,000General and administrative
      
      128,862
      
      
      4,173
      
      
      3,130
      
      
      15,628
      
      
      7,220Imputed interest (Note 3(b))
      
      110,484
      
      
      5,225
      
      
      1,475
      
      
      12,426
      
      
      17,641Marketing and sales (Note 3(a))
      
      429,553
      
      
      49,004
      
      
      23,251
      
      
      150,007
      
      
      50,760Professional fees (Note 3(c))
      
      178,290
      
      
      3,500
      
      
      11,610
      
      
      35,837
      
      
      40,005Bad debts expense (recovery)
      
      368,278
      
      
      (1,400
      )
      
      (5,900
      )
      
      (40,338
      )
      
      (6,780
      )Commission Expense
      
      3,450
      
      
      3,250
      
      
      
      
      
      3,450
      
      
      Total Expenses
      
      1,609,793
      
      
      129,464
      
      
      42,566
      
      
      356,886
      
      
      135,846Net Loss From Operations
      
      (1,355,248
      )
      
      (122,964
      )
      
      (42,470
      )
      
      (349,867
      )
      
      (134,925
      )Other IncomeGain on settlement of debt
      
      2,000
      
      
      
      
      
      
      
      
      
      
      
      Net Loss
      
      (1,353,248
      )
      
      (122,964
      )
      
      (42,470
      )
      
      (349,867
      )
      
      (134,925
      )Net Loss Per Share  Basic and Diluted
      
      
      
      
      
      
      
      
      
      
      
      
      
      Weighted Average Shares Outstanding
      
      
      
      
      136,903,000
      
      
      102,700,000
      
      
      126,186,000
      
      
      102,700,000


(The accompanying notes are an integral part of these financial
  statements)

---

Freshwater Technologies, Inc. 
  (A Development Stage Company) 
  Statements of Cash Flows 
  (expressed in U.S. dollars) 
  (Unaudited)

|                                                             |  | Nine Months   |   |  | Nine Months  |  
|------------------------------------------------------------ |  | ------------- | - |  | ------------ | -
|                                                             |  | Ended         |   |  | Ended        |  
|                                                             |  | September 30, |   |  | September 30 |  
|                                                             |  | 2009          |   |  | 2008         |  
|                                                             |  | $             |   |  | $            |  
|Operating Activities                                         |  |               |   |  |              |  
|Net loss                                                     |  | (349,867      | ) |  | (134,925     | )
|Adjustments to reconcile net loss to net cash
      provided |  |               |   |  |              |  
|by operating activities:                                     |  |               |   |  |              |  
|Amortization of intangible assets                            |  | 152,876       |   |  |             |  
|Donated costs                                                |  |              |   |  | 12,156       |  
|Imputed interest                                             |  | 12,426        |   |  | 17,641       |  
|Forgiveness of debt                                          |  |              |   |  |             |  
|Provision for inventory obsolescence                         |  |              |   |  |             |  
|Changes in operating assets and liabilities:                 |  |               |   |  |              |  
|Accounts receivable                                          |  | (2,982        | ) |  | 57           |  
|Other receivables                                            |  |              |   |  | 987          |  
|Inventory                                                    |  | (82,694       | ) |  |             |  
|Prepaid expenses                                             |  |              |   |  |             |  
|Accounts payable and accrued liabilities                     |  | 39,342        |   |  | (1,131       | )
|Due to
      related parties                                 |  | 54,000        |   |  | 54,000       |  
|                                                             |  |               |   |  |              |  
|Net Cash Provided
      (Used) By Operating Activities       |  | (176,899      | ) |  | (51,215      | )
|Financing Activities                                         |  |               |   |  |              |  
|Advances from related parties                                |  | 193,645       |   |  | 60,187       |  
|Repayments to related parties                                |  | (16,442       | ) |  | (4,000       | )
|Net Cash Provided
      (Used) By Financing Activities       |  | 177,203       |   |  | 56,187       |  
|Increase (Decrease) in Cash                                  |  | 304           |   |  | 4,972        |  
|Cash  Beginning
      of Period                             |  | 160           |   |  | 224          |  
|Cash  End of Period                                         |  | 464           |   |  | 5,196        |  
|Non-cash Investing and Financing Activities:                 |  |               |   |  |              |  
|Issuance of shares of common stock
      for intangible      |  |               |   |  |              |  
|assets                                                       |  | 450,000       |   |  |             |  
|Issuance of shares of common stock to settle
      debt      |  | 375,000       |   |  | 566,000      |  
|                                                             |  |               |   |  |              |  
|Supplemental Disclosures                                     |  |               |   |  |              |  
|                                                             |  |               |   |  |              |  
|Interest paid                                                |  |              |   |  |             |  
|Income
      tax paid                                        |  |              |   |  |             |  

(The accompanying notes are an integral part of these financial
  statements)

---

Freshwater Technologies Inc. 
  (A Development Stage Company) 
  Notes to Financial Statements 
  (expressed in U.S. dollars) 
  (Unaudited)

|1. | Nature of Operations and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | On January 1, 2006 Freshwater Technologies
        Inc. (formerly HMI Technologies Inc.) (HMI) entered into an
        Asset Acquisition Agreement to acquire the business of Freshwater Technologies
        (Freshwater). HMI was incorporated in the State of Nevada,
        U.S.A. on December 10, 1999. Its principal business now involves the distribution
        and marketing of drinking water products and water activation products.
        HMI is a Development Stage Company, as defined by Financial Accounting
        Standards Board (FASB) Accounting Standards Codification (ASC)
        915, Development Stage Entities. Effective January 1, 2006,
        the acquisition of the Freshwater business was completed through the issuance
        of 80,000,000 split-adjusted restricted shares of common stock, and as
        a result, the former owners of the Freshwater business owned approximately
        79% of the outstanding common stock of HMI.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Prior to the acquisition of Freshwater, HMI
        was a non-operating shell company with nominal net assets. The acquisition
        is a capital transaction in substance and therefore has been accounted
        for as a recapitalization, which is outside the scope of ASC 805 Business
        Combinations. Under recapitalization accounting, Freshwater
        is considered the acquirer for accounting and financial reporting purposes,
        and acquired the assets and assumed the liabilities of HMI. Assets acquired
        and liabilities assumed are reported at their historical amounts. These
        financial statements include the accounts of HMI since the effective date
        of the recapitalization (January 1, 2006) and the historical accounts
        of the business of Freshwater since inception (collectively, the Company).
        Refer to Note 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | These financial statements have been prepared
        on a going concern basis, which implies that the Company will continue
        to realize its assets and discharge its liabilities in the normal course
        of business. The Company has generated limited revenues to date and has
        never paid any dividends and is unlikely to pay dividends or generate
        significant earnings in the immediate or foreseeable future. In order
        to fund the proposed plan of operation, the Company will require an additional
        $1,000,000 to $1,400,000 in funding through the next twelve month period.
        As at September 30, 2009, the Company had an accumulated deficit of $1,353,248
        and a working capital deficit of $14,237. The continuation of the Company
        as a going concern is dependent upon the continued financial support from
        its directors and officers, the ability to raise equity or debt financing,
        and the attainment of profitable operations from the business. These factors
        raise substantial doubt regarding the Companys ability to continue
        as a going concern. These financial statements do not include any adjustments
        to the recoverability and classification of recorded asset amounts and
        classification of liabilities that might be necessary should the Company
        be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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---

Freshwater Technologies Inc. 
  (A Development Stage Company) 
  Notes to Financial Statements 
  (expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | c)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | d)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | e)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | f)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | g)                                                            
|   |                                                               
|   |                                                               

Level 1

Level 1 applies to assets or liabilities
  for which there are quoted prices in active markets for identical assets or
  liabilities.

Level 2

Level 2 applies to assets or liabilities
  for which there are inputs other than quoted prices that are observable for
  the asset or liability such as quoted prices for similar assets or liabilities
  in active markets; quoted prices for identical assets or liabilities in markets
  with insufficient volume or infrequent transactions (less active markets); or
  model-derived valuations in which significant inputs are observable or can be
  derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities
  for which there are unobservable inputs to the valuation methodology that are
  significant to the measurement of the fair value of the assets or liabilities.

---

Freshwater Technologies Inc. 
  (A Development Stage Company) 
  Notes to Financial Statements 
  (expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | g)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | h)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | i)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | j)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | k)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | l)                                                            
|   |                                                               
|   |                                                               

---

Freshwater Technologies Inc. 
  (A Development Stage Company) 
  Notes to Financial Statements 
  (expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | m)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | n)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|3. | Related Party Transactions                                    
|   |                                                               
|   | a)                                                            
|   |                                                               
|   | b)                                                            
|   |                                                               
|   | c)                                                            
|   |                                                               
|   | d)                                                            
|   |                                                               
|   | e)                                                            
|   |                                                               
|   | f)                                                            

---

Freshwater Technologies Inc. 
  (A Development Stage Company) 
  Notes to Financial Statements 
  (expressed in U.S. dollars) 
  (Unaudited)

|4. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | Recapitalization Transaction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | On January 1, 2006, Freshwater Technologies
        Inc. (formerly HMI Technologies Inc.) (HMI) entered into an
        Asset Acquisition Agreement to acquire the business of Freshwater Technologies
        (Freshwater) which involves the distribution and marketing
        of drinking water products and water activation products. Effective January
        1, 2006, the acquisition of the Freshwater business was completed through
        the issuance of 80,000,000 split-adjusted restricted shares of common
        stock, and as a result, the former owners of the Freshwater business owned
        approximately 79% of the outstanding common stock of HMI.                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Prior to the acquisition of Freshwater, HMI
        was a non-operating shell company with nominal net assets. The acquisition
        is a capital transaction in substance and therefore has been accounted
        for as a recapitalization, which is outside the scope of ASC 805, Business
        Combinations. The acquisition has been accounted for as a continuation
        of the Freshwater Technologies business in accordance with ASC 805. Under
        recapitalization accounting, Freshwater is considered the acquirer for
        accounting and financial reporting purposes, and acquired the assets and
        assumed the liabilities of HMI. Assets acquired and liabilities assumed
        are reported at their historical amounts. These financial statements include
        the accounts of HMI since the effective date of the recapitalization (January
        1, 2006) and the historical accounts of the business of Freshwater since
        inception (collectively, the Company).

| |                               |  | $       |  
| | ----------------------------- |  | ------- | -
| |                               |  |         |  
| | Advances from related parties |  | (45,301 | )
| |                               |  |         |  
| | Net liabilities assumed       |  | (45,301 | )

---

Freshwater Technologies Inc. 
  (A Development Stage Company) 
  Notes to Financial Statements 
  (expressed in U.S. dollars) 
  (Unaudited)

|6. | Commitments
|-- | -----------
|   |            
|   | a)         
|   |            
|   | b)         

$4,500 per month until May 2009; 
  $6,000 per month thereafter until August 2009; 
  $7,500 per month thereafter until November 2009; and 
  $9,000 per month thereafter until the agreement is terminated.

| |    | Under the agreement, the Company has agreed to pay to
        ELCE 50% of the net profits relating to sales of ELCE water products and
        to maintain minimum inventories of ELCE water products for each country
        specified in the agreement in due course. As at September 30, 2009, the
        purchase cost of minimum inventory quantities was estimated to be $881,000
        in total.                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | In February 2009, the Company entered into an Agency
        Agreement with Ancizar Rendon Ramirez to act as Agent for ELCE sales in
        the Southern Region of Colombia, South America. The Company will pay $1,000
        monthly for these consulting services including related sales expenses
        and a commission of 10% for all collected ELCE sales initiated by the
        Agent in the Southern Region of Colombia. The agreement is for a one year
        term which expires January 31, 2010, is renewable annually and can be
        terminated by the Company with three months notice.                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | In July 2009, the Company entered into an Agency Agreement
        with Luis Alberto Buitrago Gonzalez to act as Agent for FW Activator sales
        in the Valle de Cauca Region of Colombia, South America. The Company will
        pay $400 monthly increasing to $600 per month after three months for these
        consulting services including related sales expenses and a commission
        of 5% for all collected FW Activator sales initiated by the agent in the
        Valle de Cauca Region of Colombia. The agreement is for a one year term
        which expires July 15, 2010, is renewable annually and can be terminated
        by the Company with three months notice.                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | e) | In April 2009, the Company entered into an Agency Agreement
        with German Guerra Guerra to act as Agent for FW Activator sales made
        by RyC Refrigeracion E.I.R.L. and ASAP Consulting Group S.A.C. in Peru,
        South America. The Company will pay a commission of 5% for all collected
        FW Activator sales made by RyC Refrigeracion E.I.R.L. and ASAP Consulting
        Group S.A.C. in Peru, South America. The agreement is for a one year term
        which expires in April 2010, is renewable annually and can be terminated
        by the Company with three months notice. On July 1, 2009 the Company
        formalized its Distributors Agreement with RyC Refrigeracion E.I.R.L.

|7. | Economic Dependence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company relies solely upon VIQUA- a Trojan Technologies
        Company (formerly R-Can Environmental Inc.) (VIQUA), as the
        sole supplier of their drinking water products, ELCE International Corp.
        (ELCE), as the sole supplier of their water activation products
        and Ozocan Corporation as sole supplier of ozone water treatment systems.
        VIQUA and ELCE supplied the Company with 100% of the products that the
        Company offered and sold during the nine months ended September 30, 2009
        and 2008. VIQUA, Ozocan and ELCE are the sole manufacturers and primary
        developers of the respective technologies in such products. As a result,
        the Company could be adversely affected by changes in the cost of the
        suppliers products, the financial condition of the suppliers or
        by the deterioration or termination of its relationship with the suppliers.

---

- 2 -

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

This quarterly report contains forward-looking statements.
Forward-looking statements are projections of events, revenues, income, future
economic performance or managements plans and objectives for our future
operations. In some cases, you can identify forward-looking statements by
terminology such as may, should, expects, plans, anticipates,
believes, estimates, predicts, potential or continue or the negative
of these terms or other comparable terminology. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks in the section entitled Risk Factors and the
risks set out below, any of which may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding the direction of our business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars and all references to
common stock refer to the common shares in our capital stock.

As used in this quarterly report, the terms we, us, our,
and Freshwater mean Freshwater Technologies, Inc., unless otherwise indicated.

Corporate History

We were incorporated in the State of Nevada on December 10,
1999 under the name HMI Technologies Inc. Following incorporation until January
1, 2006, we sought out prospective businesses with which to enter into a merger
or business combination. On January 1, 2006, we entered into and closed an asset
sale agreement with Max Weissengruber and D. Brian Robertson, whereby we
acquired all of the assets related to the business as operated by Mr.
Weissengruber and Mr. Robertson under the name Freshwater Technologies in
consideration for the issuance of 40,000,000 common shares to each individual.
Following the closing of the asset sale agreement, we commenced the business of
distributing and selling drinking water products and water activation products.
On July 5, 2006, we changed our name from HMI Technologies Inc. to Freshwater
Technologies, Inc. to better reflect our new business direction. Following the
closing of the asset sale agreement, we appointed Max Weissengruber as our
President and director and Brian Robertson as our Chief Financial Officer and
director.

Current Business

We are a distributor of water treatment products to local
distributors and retailers for household and commercial applications. We
currently offer three product lines consisting of drinking water treatment
products and water activation products. The drinking water treatment products
feature Sterilight branded ultra violet products that are supplied to our
company by VIQUA(formerly R-Can Environmental Inc.), a manufacturer based out of
Guelph, Ontario, Canada. Sterilight branded ultraviolet water treatment systems
incorporate ultraviolet light energy that eradicates harmful microbiological
contaminants in drinking water. Traditional disinfectant methods such as
chlorination reacts with natural organic matter to produce objectionable taste
and odor and also forms substances with known carcinogenic properties such as
trihalomethane. Genetic components in organisms carry hereditary characteristics
that are copied and transmitted from each cell of water borne contaminants such
as bacteria, viruses and parasites. The Sterilight ultraviolet lamp emits
powerful ultraviolet light energy which, when absorbed by these contaminants,
causes disruption of the DNA Structure of those contaminants preventing
reproduction. It is the

---

- 3 -

prevention of reproduction by microbial contaminants that
renders ultraviolet treated water safe for human consumption. Sterilight lamps
provide consistent UV output over the 9,000 hour life of the lamp and uniform
temperature distribution calculated to achieve the desired levels of
decontamination.

Our drinking water treatment products also feature the ozone
water treatment systems of Ozocan Corporation for the countries of Argentina,
Chile, Peru, Costa Rica and Panama. As a proven disinfectant, ozone is more
powerful than chlorine and, unlike chlorine, it discharges no potentially
harmful substances into the environment. Used in a variety of water treatment
applications, Ozocans products effectively treat municipal and industrial
drinking water and wastewater and are used in bottled water applications as well
as treating air conditioning and cooling tower installations. Ozocan systems can
be found throughout the globe either as custom designed applications or in one
of a number of standard sized units that can meet the effective treatment needs
of a wide variety of customers.

Our water activation products are designed to improve the
operating efficiency of commercial and industrial boilers and refrigeration
systems without the use of chemicals. Our water activation products are supplied
to our company by ELCE International Corp., the worldwide distributor of ELCE
products invented by Nihon Jisui Co. Ltd. of Japan. We order units from ELCE
International Corp. which are then shipped against customer orders or shipped
directly to one of our local distributors located in Argentina, Chile, Colombia,
Costa Rica, Panama and Peru. ELCE water activation treatment systems remove
rust, scale and corrosion within heating and cooling systems. The water
activation units, which range in water flow capacity from 11 liters per minute
to over 2,000 liters per minute, change water properties physically without
removing or adding chemical impurities, ions or minerals.

We will only purchase limited quantities of replacement filters
and lamps for our water purification products for inventory as our distributors
will be inventorying the majority of replacement parts. We will purchase all
other finished product from our three supplier-manufacturers in quantities
sufficient to satisfy product orders of our customers.

In January 2009, we signed a Joint Venture Agreement with ELCE
International Corp., the company who has been a significant supplier to our
company for a number of years. In July 2009 we were approved for a private
labelling program whereby all ELCE Activators made for our companys rental or
sale would now be labelled FW Activators. In July we introduced a FW Activator
rental program to our distributors and, as a result, we will inventory rental
units installed by our distributors. Pursuant to the joint venture agreement,
ELCE International will supply its FW water activation units at manufacturers
cost to Freshwater and will participate with Freshwater to market and sell FW
products in Argentina, Chile, Columbia, Costa Rica, Panama and Peru. ELCE
International has compiled technical information on ELCE equipment installed
world-wide in a variety of commercial, industrial, agricultural and aquacultural
applications. We intend to target industries and companies for whom ELCE has
already provided effective solutions in terms of eliminating or reducing
encrustations and corrosion, improving energy efficiency and improving
productivity and output.

The essential elements of the FW device lie in the properties
of its ceramic balls, hardened to 1200 degrees Centigrade. As water passes
through the stainless steel chamber containing the ceramic balls, the balls
rotate and rub against each other generating several forms of electrical energy
which act to reduce and eliminate the accumulated rust, scale and corrosion that
is caused by minerals and salts in the source water. As a result, FW water
activation eliminates the conventional use and ongoing costs of continually
using harsh chemicals to clean out deposits within heating and cooling systems.
We have formalized our relationship with ELCE International Corp. with a
non-exclusive distribution agreement and a joint venture agreement. We have also
formalized our relationship with VIQUA(formerly R-Can Environmental Inc.) and
Oxocan Corporation pursuant to non-exclusive distribution agreements. We also
offer a full line of accessories, replacement parts and services compatible with
all types of our water treatment systems.

General

The following is a discussion and analysis of our results of
operation for the nine month periods ended September 30, 2009 and September 30,
2008 and the year ended December 31, 2008, and the factors that could affect our
future financial condition. This discussion and analysis should be read in
conjunction with our unaudited financial statements and the notes thereto
included elsewhere in this quarterly report. Our financial statements are
prepared in

---

- 4 -

accordance with United States generally accepted accounting
principles. All references to dollar amounts in this section are in United
States dollars unless expressly stated otherwise.

Results of Operations

Material Changes in Financial Condition

September 30, 2009
    
    
      December 31, 2008Current Assets
    $
      87,856
    
    $
      1,876Current Liabilities
    
      102,093
    
    
      206,548Working Capital Deficiency
    $
      14,237
    
    $
      204,672


Total assets at September 30, 2009 were $384,980 as compared
to $1,876 at December 31, 2008.

$82,694 of the increase in our Total Assets is due to an
increase in inventory mainly representing two FW-12 Activation units that are
being evaluated in companies in Colombia.

$2,982 of the increase in our Total Assets is attributable to
an increase in accounts receivable.

$297,124 of the increase in our Total Assets is attributable to
Intangible Assets as described below:

Pursuant to the joint venture
agreement, on January 25, 2009, the Company issued 10,000,000 restricted shares
of Class A common stock under the joint venture agreement with ELCE
International Corp. and on July 25, 2009, the Company issued 5,000,000
restricted shares of Class A common stock under this agreement. The fair value
of the restricted shares issued was estimated to be $225,000 as determined on
the measurement date using quoted prices in an active market, less a 75%
discount to reflect the effect of the restriction. Under the agreement, the
Company is also obligated to issue a further 15,000,000 restricted shares of
Class A common stock. The fair value of these restricted shares was estimated to
be $225,000 as determined on the measurement date using quoted prices in an
active market, less a 75% discount to reflect the effect of the restriction. As
at September 30, 2009, the estimated fair value of these shares has been
presented as Class A common stock issuable on the balance sheet. The estimated
fair value of the 30,000,000 shares issued and to be issued under the agreement
of $450,000 has been recorded as intangible assets at September 30, 2009, less
accumulated amortization of $152,876.

Our Liabilities at September 30, 2009
were $102,093 as compared to $206,548 at December 31, 2008. The decrease is due
to the Company entering into a debt settlement and subscription agreement, on
August 20, 2009, whereby the Company agreed to issue 25,000,000 shares of Class
A common stock at a fair value of $0.015 per share in consideration of the debt
settlement of $375,000 offset by an increase of $39,342 in accrued liabilities
mainly regarding professional fees. The amounts due to our directors and
officers at September 30, 2009 total $24,160 and are non-interest bearing,
unsecured and have no specific terms for repayment.

Revenue

We generated revenues of $6,500 for the three month period
ended September 30, 2009 compared to $200 for the three month period ended
September 30, 2008 and $7,185 for the nine month period ended September 30, 2009
compared to $1,626 for the nine month period ended September 30, 2008. Revenues
for the three months ended September 30, 2009 of $6,500 and for the nine months
ended September 30, 2009 of $6,900 were for the rental of Activators and $285
were for the sale of water purification products. Revenues of $200 for the three
months ended September 30, 2008 and $1,626 for the nine months ended September
30, 2008 were for the sale of water purification products.

The cost of sales for the three month period ended September
30, 2009 was $nil, compared to $104 for the three month period ended September
30, 2008 while the cost of sales was $166 for the nine month period ended
September 30, 2009 compared to $705 for the nine month period ended September
30, 2008. There are no cost of sales recorded for the Activator rentals as these
Activators had been provided for or written off in previous years.

---

- 5 -

Operating Costs and Expenses

The major components of our revenue and expenses for the three
and nine month periods ended September 30, 2009 and 2008 are outlined in the
table below:

Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $
    
    
    $Revenue
    
    6,500
    
    
    200
    
    
    7,185
    
    
    1,626Cost of Sales
    
    
    
    
    104
    
    
    166
    
    
    705Gross Profit
    
    6,500
    
    
    96
    
    
    7,019
    
    
    921ExpensesAmortization of intangible
      assets
    
    56,712
    
    
    
    
    
    152,876
    
    
    Consulting
    
    9,000
    
    
    9,000
    
    
    27,000
    
    
    27,000General and
      administrative
    
    4,173
    
    
    3,130
    
    
    15,628
    
    
    7,220Imputed interest
    
    5,225
    
    
    1,475
    
    
    12,426
    
    
    17,641Marketing and
      sales
    
    49,004
    
    
    23,251
    
    
    150,007
    
    
    50,760Professional fees
    
    3,500
    
    
    11,610
    
    
    35,837
    
    
    40,005Bad debts
      expense (recovery)
    
    (1,400
    )
    
    (5,900
    )
    
    (40,338
    )
    
    (6,780
    )Commission Expense
    
    3,250
    
    
    
    
    
    3,450
    
    
    Total Expenses
    
    129,464
    
    
    42,566
    
    
    356,886
    
    
    135,846Net Loss From Operations
    
    (122,964
    )
    
    (42,470
    )
    
    (349,867
    )
    
    (134,925
    )


For the three months ended September 30, 2009, our operating
expenses totalled $129,464 as compared to $42,566 for the three months ended
September 30, 2008. Amortization of intangible assets representing costs
incurred to acquire product distribution rights under the joint venture
agreement with ELCE International Corp. amounted to $56,712 for the three months
ended September 30, 2009 compared with nil for the three months ended September
30, 2008 as the agreement was signed January 25, 2009. Professional fees
amounted to $3,500 for the three months ended September 30, 2009 as compared to
$11,610 for the three months ended September 30, 2008. Marketing and sales
expenses and consultants costs were $49,004 for the three months ended
September 30, 2009 as compared to $23,251 for the three months ended September
30, 2008 with the increase being due to an increase in travel expenses and fees
for our Director of Latin America sales of $6,630, an increase in fees and
expenses for our Agent in Colombia of $3,800, an increase in costs relating to
our Joint Venture Agreement with ELCE International Corp. of $26,240 offset by a
decrease in Central/South America travel of $10,917. Rental commissions paid to
our distributors for the rental of our Activators amounted to $3,250 for the
three months ending September 30, 2009 versus $nil for the three months ended
September 30, 2008 as our Activator rental program started in July 2009. General
and administrative expenses were $4,173 during the three months ended September
30, 2009 as compared to $3,130 for the three months ended September 30, 2008.
Imputed interest on directors loans was $5,225 for the three months ended
September 30, 2009 as compared to $1,475 for the three months ended September
30, 2008. This increase is due to the imputed interest being calculated on
higher amounts owing to Directors in 2009. For the

---

- 6 -

three months ended September 30, 2009 we recovered $1,400 of
sales previously written off as compared to $5,900 for the three months ended
September 30, 2008.

For the nine months ended September 30, 2009, our operating
expenses totalled $356,886 as compared to $135,846 for the nine months ended
September 30, 2008. Amortization of intangible assets representing costs
incurred to acquire product distribution rights under the joint venture
agreement with ELCE International Corp. amounted to $152,876 for the nine months
ended September 30, 2009 compared with nil for the nine months ended September
30, 2008 as the agreement was signed January 25, 2009. Professional fees
amounted to $35,837 for the nine months ended September 30, 2009 as compared to
$40,005 for the nine months ended September 30, 2008. Marketing and sales
expenses and consultants costs were $150,007 for the nine months ended
September 30, 2009 as compared to $50,760 for the nine months ended September
30, 2008 with the increase being due to an increase in travel expenses and fees
for our Director of Latin America sales of $22,647, an increase in fees and
expenses for our Agent in Colombia of $12,936, an increase in costs relating to
our Joint Venture Agreement with ELCE International Corp. of $70,831 and a
business/marketing development fee paid of $3,750 offset by a decrease in
Central/South American travel of $10,917. Rental commissions paid to our
distributors for the rental of our Activators amounted to $3,250 for the nine
months ending September 30, 2009 versus $nil for the nine months ended September
30, 2008 as our Activator rental program started in July 2009. General and
administrative expenses were $15,628 during the nine months ended September 30,
2009 as compared to $7,220 for the nine months ended September 30, 2008. This
increase is mainly due to costs of setting up banking in Colombia and Peru of
$3,500 and increased shareholder communication costs of $3,608. Imputed interest
on directors loans was $12,426 for the nine months ended September 30, 2009 as
compared to $17,641 for the nine months ended September 30, 2008. This decrease
is mainly due to the completion of a debt settlement and subscription agreement
in August 2008 whereby $560,000 of debt to directors was settled by the issuance
of 11,200,000 common shares of our company which reduced the imputed interest
charged on Directors loans. For the nine months ended September 30, 2009 we
recovered $40,338 of sales previously written off as compared to $6,780 for the
nine months ended September 30, 2008.

Liquidity and Capital Resources

Working Capital

September 30, 2009
    
    December 31, 2008Current Assets
    $
    87,856
    $
    1,876Current Liabilities
    
    102,093
    
    206,548Working Capital Deficiency
    $
    14,237
    $
    204,672


Cash Flows

Nine Months Ended September 30,
      2009
    
    Nine Months Ended September 30,
      2008Cash
      provided (used) in Operating Activities
    $
    (176,899)
    $
    (51,215)Cash
      used by Investing Activities
    
    -
    
    -Cash
      provided (used) by Financing Activities
    
    177,203
    
    56,187Net
      Increase (Decrease) in Cash
    $
    304
    $
    4,972


We had cash on hand of $464 and negative working capital of
$14,237 as of September 30, 2009 compared to cash on hand of $160 and negative
working capital of $204,672 for the year ended December 31, 2008. We anticipate
that we will require approximately $1,000,000 to $1,400,000 for operating
expenses, including professional, legal and accounting expenses associated with
our reporting requirements under the Exchange Act during the next twelve months.
Accordingly, we do not have enough money to carry out our business plan and we
will need to obtain additional financing in order to continue operating

There are no assurances that we will earn the funds required
for our continued operations. If we do not earn the required revenues, then we
will have to seek another source of financing, likely through the sale of more
shares of our common stock or borrowing money. There can be no assurance that
additional financing will be available to us when needed or, if available, that
it can be obtained on commercially reasonable terms. If we are not able to
obtain

---

- 7 -

the additional financing on a timely basis, we will not be able
to meet our other obligations as they become due and we will be forced to scale
down or perhaps even cease the operation of our business.

There is substantial doubt about our ability to continue as a
going concern as the continuation of our business is dependent upon a
combination of our ability to obtain further long-term financing, the successful
and sufficient market acceptance of any product offerings that we may introduce,
the continuing successful development of our product offerings, and, finally,
our ability to achieve a profitable level of operations. The issuance of
additional equity securities by us could result in a significant dilution in the
equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, would increase our liabilities and
future cash commitments.

Operating Activities

Operating activities used cash of $176,899 for the nine months
ended September 30, 2009 and used cash of $51,215 for the nine months ended
September 30, 2008.

Financing Activities

Net cash provided by financing activities was $177,203 for the
nine months ended September 30, 2009 and net cash provided by financing
activities was $56,187 for the nine months ended September 30, 2008. These
financing activities were provided by two directors of our Company.

Non-cash Investing and Financing Activities

In January 2009, the Company signed a Joint Venture Agreement
with ELCE International Corp. Under the Agreement the Company is to issue
30,000,000 common shares with an estimated fair value of $450,000 on the date of
the agreement for certain distribution rights.

In August 2009, the Company entered into a debt settlement and
subscription agreement, whereby the Company agreed to issue 25,000,000 shares of
Class A common stock at a fair value of $0.015 per share in consideration of the
settlement of $375,000 owing.

In August 2008, the Company entered into a debt settlement and
  subscription agreement, whereby the Company agreed to issue 11,320,000 shares
  of Class A common stock at a fair value of $0.050 per share in consideration
  of the settlement of $566,000 owing.

Going Concern

Due to the uncertainty of our ability to meet our current
operating and capital expenses, in their report on our audited annual financial
statements for the year ended December 31, 2008, our independent auditors
included an explanatory paragraph regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that led to this disclosure by our
independent auditors. There is substantial doubt about our ability to continue
as a going concern as the continuation and expansion of our business is
dependent upon obtaining further financing, successful and sufficient market
acceptance of our products, and, finally, achieving a profitable level of
operations. The issuance of additional equity securities by us could result in a
significant dilution in the equity interests of our current stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments.

Future Financings

Fundraising will be one of our primary objectives over the next
twelve months. The financial requirements of our company for the next twelve
months will depend on our ability to raise the money we require through credit
facilities and additional private placements of our equity securities or loans
from our directors. The issuance of additional equity securities by us may
result in a significant dilution in the equity interests of our current
shareholders.

---

- 8 -

There is no assurance that we will be able to obtain the funds
required for our continued operations or that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will not be able to meet our other obligations
as they become due and we will be forced to scale down or perhaps even cease our
operations. We do not currently have any plans to merge with another company,
and we have not entered into any agreements or understandings for any such
merger.

Our cash on hand and the revenue that we anticipate generating
going forward from our operations will not be sufficient to satisfy our cash
requirements for the next twelve month period. We expect to require from
$1,000,000 to $1,400,000. We intend to raise any such additional capital
primarily through the private placement of our securities and further borrowings
from our directors if this type of funding continues to be available. We also
intend to continue to seek additional funds from our directors to fund our day
to day operations until a private placement can be pursued but we have no
guarantee that our directors will continue to fund our day to day
operations.

Estimated Working Capital Expenditures During the Next Twelve
Month Period

We estimate our future expenditures for the next twelve months
as follows:

|Operating expenditures                 |   |                       | 
|-------------------------------------- | - | --------------------- | 
|Marketing                              | $ | 400,000 - 550,000     | 
|General and Administrative             | $ | 50,000 - 75,000       | 
|Legal and Accounting                   | $ | 50,000 - 75,000       | 
|Working capital                        | $ | 400,000 - 500,000     | 
|Repayment of Directors
      Advances | $ | 100,000 - 200,000     | 
|Total                                  | $ | 1,000,000 - 1,400,000 | 

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to stockholders.

Application of Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The Company regularly evaluates estimates and
assumptions related to provision for uncollectible sales, provision for
inventory obsolescence, valuation of distribution rights, donated expenses and
deferred income tax asset valuation allowances. The Company bases its estimates
and assumptions on current facts, historical experience and various other
factors that it believes to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the Company may
differ materially and adversely from the Companys estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with
maturity of three months or less at the time of issuance to be cash equivalents.

Inventory

Inventory consists of water activation products and water
filters and is recorded at the lower of cost and net

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- 9 -

realizable value on a first-in, first-out basis. Our company
establishes inventory reserves for estimated obsolete or unmarketable inventory
equal to the differences between the cost of inventory and the estimated
realizable value based upon assumptions about future and market conditions.
Shipping and handling costs are classified as a component of cost of sales in
the statement of operations.

Comprehensive Loss

ASC 220, Comprehensive Income establishes standards for
the reporting and display of comprehensive loss and its components in the
financial statements. As at September 30, 2009, the Company has no items that
represent comprehensive loss and, therefore, has not included a schedule of
comprehensive loss in the financial statements.

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and
Disclosures and ASC 825, Financial Instruments,an entity is required
to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value using a hierarchy based on the level of
independent, objective evidence surrounding the inputs used to measure fair
value. A financial instruments categorization within the fair value hierarchy
is based upon the lowest level of input that is significant to the fair value
measurement. The hierarchy prioritizes the inputs into three levels that may be
used to measure fair value:

Level 1

Level 1 applies to assets or
liabilities for which there are quoted prices in active markets for identical
assets or liabilities.

Level 2

Level 2 applies to assets or
liabilities for which there are inputs other than quoted prices that are
observable for the asset or liability such as quoted prices for similar assets
or liabilities in active markets; quoted prices for identical assets or
liabilities in markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant inputs are
observable or can be derived principally from, or corroborated by, observable
market data.

Level 3

Level 3 applies to assets or
liabilities for which there are unobservable inputs to the valuation methodology
that are significant to the measurement of the fair value of the assets or
liabilities.

The Companys financial instruments consist principally of
cash, receivables, accounts payable, and amounts due to related parties. The
fair value of the Companys cash equivalents, when applicable, is determined
based on Level 1 inputs, which consist of quoted prices in active markets for
identical assets. The Company estimates that the carrying values of all of its
other financial instruments approximate their fair values due to the immediate
or relatively short maturities of these instruments.

Foreign Currency Translation

The Companys functional and reporting currency is the United
States dollar. Monetary assets and liabilities denominated in foreign currencies
are translated in accordance with ASC 830, Foreign Currency Translation
Matters, using the exchange rate prevailing at the balance sheet date.
Gains and losses arising on translation or settlement of foreign currency
denominated transactions or balances are included in the determination of
income. Foreign currency transactions are primarily undertaken in Canadian
dollars. The Company has not, to the date of these financial statements, entered
into derivative instruments to offset the impact of foreign currency
fluctuations.

Revenue Recognition

The Company recognizes revenue from the sale or rental of
drinking water products and water activation products in accordance with ASC
605,Revenue Recognition.The majority of the revenues consist of water
activation units in Costa Rica, Panama and Peru. Revenue consists of the
sale/rental of drinking water products and water activation products and is
recognized only when the price is fixed or determinable, persuasive evidence of
an arrangement exists, the product is shipped, and collectibility is reasonably
assured. Our shipping terms are FOB shipping point. For UV products, the
customer pays all costs from the point of shipment, and for ELCE products, the
customer pays

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- 10 -

all costs from arrival point in the country to which the ELCE
products are shipped. The Company evaluates the collectibility of accounts
receivable based on a combination of factors. In cases where the Company is
aware of circumstances that may impair a specific customers ability to meet its
financial obligations subsequent to the original sale, the Company will record
an allowance against amounts due, and thereby reduce the net recognized
receivable to the amount the Company reasonably believes will be collected. For
all other customers, the Company recognizes allowances for doubtful accounts
based on the length of time the receivables are past due, the current business
environment and the Companys historical experience.

Stock-based Compensation

The Company accounts for share-based payments in accordance
with ASC 718, Compensation  Stock Based Compensation. All transactions
in which goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. The Company has not issued any stock
options since its inception.

Intangible Assets

Intangible assets represent costs incurred to acquire product
distribution rights under the agreement disclosed in Note 6(c). The useful life
of the product distribution rights acquired has been estimated by management to
be two years. Amortization is provided on a straight-line basis over the
estimated useful life. During the nine month period ended September 30, 2009,
the Company recorded $152,876 in amortization expense in relation to these
assets.

Earnings (Loss) Per Share

The Company computes earnings (loss) per share in accordance
with ASC 260, Earnings per Share. SFAS No. 128 requires presentation of
both basic and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net income (loss) available to
common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS, the average stock price for the period is used
in determining the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti dilutive. As at September 30, 2009, there are no
anti-dilutive financial instruments outstanding.

Income Taxes

The Company accounts for income taxes using the asset and
liability method in accordance with ASC 740, Income Taxes. The asset and
liability method provides that deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the financial reporting and tax bases of assets and liabilities, and for
operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using the currently enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company records a
valuation allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized.

Recently Accounting Pronouncements

In May 2009, FASB issued ASC 855-10, Subsequent Events 
Overall, which establishes general standards for the evaluation, recognition
and disclosure of events and transactions that occur after the balance sheet
date. Although there is new terminology, the standard is based on the same
principles as those that currently exist in the auditing standards. The
standard, which includes a new required disclosure of the date through which an
entity has evaluated subsequent events, is effective for interim or annual
periods ending after June 15, 2009. In accordance with ASC 855, Subsequent
Events, the Company evaluated subsequent events through November 10, 2009,
the date of issuance of the financial statements.

In June 2009, the FASB issued guidance now codified as FASB ASC
Topic 105, Generally Accepted Accounting Principles as the single source
of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not
change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all authoritative literature related to a
particular topic in one place. The

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- 11 -

adoption of ASC 105 did not have a material impact on the Companys
  financial statements, but did eliminate all references to pre-codification standards.

The Company has implemented all new accounting pronouncements
  that are in effect and that may impact its financial statements and does not
  believe that there are any other new accounting pronouncements that have been
  issued that might have a material impact on its financial position or results
  of operations.

Risk Factors

Much of the information included in this quarterly report
includes or is based upon estimates, projections or other forward looking
statements. Such forward looking statements include any projections and
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein.

Such estimates, projections or other forward looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward looking statements.

Risks Related to the Economy

The recent weakening of economic conditions around the world
could have harmful effects on our business. If these harmful effects cause us to
scale down our planned operations, then our share price will likely decrease. If
these harmful effects cause us to cease our operations, then our shareholders
will likely lose their entire investment in our company.

The recent weakening of economic conditions around the world
could have harmful effects on our business. Weakening economic conditions
generally lead to less money being spent on luxuries, which water treatment
products may be considered by many to be. If consumers spend less and do not
choose to spend their limited funds on our water treatment products, we will
earn less revenue than we currently plan on and we will not be able to achieve
profitable operations.

The recent economic problems will likely also have a negative
impact on the amount of money we may expect to raise through sales of our equity
securities. Many investors have recently seen large decreases in the value of
various investments due to declining share prices across many economic sectors.
Because of this and other market factors, if we choose to raise funds through
the sale of our equity securities, potential investors may be less likely to buy
our equity securities or we may be need to sell our equity securities at low
prices, resulting in fewer proceeds. This would make it difficult for us to
raise adequate amounts to fund our operations through the sale of our equity
securities.

If we are unable to fund our operations through revenues or the
sale of our equity securities, then we may choose to borrow money to pay for
some of our operations. A tightening of credit conditions has also been
experienced in the economy recently. Because of the recent credit crisis, it is
possible that we would not be able to borrow adequate amounts to fund our
operations on terms and at rates of interest we find acceptable and in the best
interests of our company.

If we cannot fund our planned operations from revenue, the sale
of our equity securities or through incurring debt on acceptable terms, then we
will likely have to scale down or cease our operations. If we scale down our
operations, our share price would likely decrease and if we cease our
operations, shareholders will likely lose their entire investment in our
company.

The recent weakening of economic conditions around the world
could have harmful effects on the operations of our customers and suppliers and
the confidence of end consumers, all of which could cause our operations to
suffer and our revenues to decrease.

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- 12 -

Some of our customers or suppliers could experience serious
cash flow problems due to the current economic situation. If our customers or
suppliers attempt to increase their prices, pass through increased costs, alter
payment terms or seek other relief, our business may suffer from decreased sales
to final consumers or increased costs to us. If any of our vendors or suppliers
go out of business, we may not be able to replace them with other companies of
the same quality and level of service. If the quality of our products and
promptness of delivery deteriorates as a result, our revenue will likely
decrease as retailers and consumers would be less likely to choose our products
out of those available to them.

We do not expect that the difficult economic conditions are
likely to improve significantly in the near future, and further deterioration of
the economy, and even consumer fear that the economy will deteriorate further,
could intensify the adverse effects of these difficult market conditions.

Risks Related to our Company

We have had minimal revenues from operations and if we are
not able to obtain further financing we may be forced to scale back or cease
operations or our business operations may fail.

To date, we have not generated significant income from our
operations and we have been dependent on sales of our equity securities and
advances from directors to meet the majority of our cash requirements. From the
date of inception on January 21, 2005 to September 30, 2009, we have generated
$468,984 in revenue from the sale of our products. As at September 30, 2009, we
had cash of $464 and negative working capital of $14,237. We expect to generate
a moderate positive cash flow from operations in the next twelve month period.
We estimate that we will require between $1,000,000 and $1,400,000 to carry out
our business plan for the next twelve month period. We will, in all likelihood,
continue to incur operating expenses without significant revenues until our
products gain significant popularity. Since we are still in the early stages of
operating our company and because of the lack of operating history, our
independent auditors report and Note 1 to the financial statements for the
years ended December 31, 2008 and December 31, 2007 state that these factors
raise substantial doubt regarding our companys ability to continue as a going
concern. Because we cannot anticipate when we will be able to generate
significant revenues from sales, we will need to raise additional funds to
develop our business plan, respond to competitive pressures, sign distribution
agreements with distributors and respond to unanticipated requirements or
expenses. If we are not able to generate significant revenues from the sale of
our products, we will not be able to maintain our operations or achieve a
profitable level of operations.

We will not be able to expand our operations beyond current
levels without generating significant revenues from our current operations or
obtaining further financing. We cannot assure that we will be able to generate
enough interest in our products to ever become profitable. If we are unable to
establish and generate material revenues, or obtain adequate future financing,
our business will fail and you may lose some or all of your investment in our
common stock.

We have only commenced our current business operations on
January 1, 2006 and we have a limited operating history. If we cannot
successfully manage the risks normally faced by start-up companies, we may not
achieve profitable operations and ultimately our business may fail.

We have a limited operating history. From the date of inception
on January 21, 2005 to the closing of the asset purchase agreement on January 1,
2006, our business operations consisted primarily seeking out prospective
entities with which to enter into a merger or business combination. Since
January 1, 2006, we have concentrated on our new business of selling drinking
water products and water activation products to distributors for resale in our
target markets of South America, Central America and the Caribbean. Our
prospects are subject to the risks and expenses encountered by start up
companies, such as uncertainties regarding our level of future revenues, our
inability to budget expenses and manage growth accordingly, and our inability to
access sources of financing when required and at rates favorable to us. Our
limited operating history and the highly competitive nature of the drinking
water and water activation industries make it difficult or impossible to predict
future results of our operations. We may not establish a distribution network
that will make us profitable, which may result in the loss of some or all of
your investment in our common stock.

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- 13 -

The fact that we have only generated limited revenues since
our inception raises substantial doubt about our ability to continue as a going
concern, as indicated in our independent auditors report in connection with our
audited financial statements.

We have generated limited revenues since our inception on
January 21, 2005. Since we are still in the early stages of operating our
company and because of the lack of operating history, our independent auditors
report includes an explanatory paragraph about our ability to continue as a
going concern. We will, in all likelihood, continue to incur operating expenses
without significant revenues until our products gain significant popularity.
From January 21, 2005 to September 30, 2009, we raised $549,463 through advances
provided by two of our directors. We estimate our average monthly operating
expenses to be approximately $30,000 per month. We will not be able to expand
our operations beyond current levels without generating significant revenues
from our current operations or obtaining further financing. Our primary source
of funds has been advances from two of our directors and officers. We cannot
assure that we will be able to generate enough interest in our products. If we
cannot attract a successful distribution network, we will not be able to
generate any significant revenues or income. In addition, if we are unable to
establish and generate material revenues, or obtain adequate future financing,
our business will fail and you may lose some or all of your investment in our
common stock. These circumstances raise substantial doubt about our ability to
continue as a going concern as described in an explanatory paragraph to our
independent auditors report on the financial statements for the years ended
December 31, 2008 and December 31, 2007.

Our substantial debt could adversely affect our financial
condition and prevent us from fulfilling our obligations to our creditors and
cause us to go out of business.

As of September 30, 2009, we had total liabilities of $102,093,
of which $24,160 was due to related parties. Our liabilities are in excess of
our current assets, which were $87,856 as of September 30, 2009, and could
adversely affect our financial condition and make it more difficult for us to
satisfy our obligations with respect to our creditors. If we are unable to pay
our debts as they come due, we will be insolvent and investors will lose all of
their investment in our company. Our substantial liabilities and lack of cash
could also have other negative effects, including:

- increase our vulnerability to adverse general economic conditions;
- require us to dedicate a substantial portion of our cash flow from
  operations to payments on our liabilities, thereby reducing the availability
  of our cash flow to fund working capital, investments, capital expenditures
  and other general corporate purposes;
- limit our ability to make required payments under our existing contractual
  commitments;
- limit our flexibility in planning for, or reacting to, changes in our
  business and the industry in which we operate; and,
- place us at a competitive disadvantage compared to our competitors that
  have fewer liabilities.

If we are unable to obtain financing in the amounts and on
terms and dates acceptable to us, we may not be able to expand or continue our
operations and development and so may be forced to scale back or cease
operations or discontinue our business.

We do not currently have any arrangements for financing and we
can provide no assurance to investors we will be able to find such financing
when such funding is required. Obtaining additional financing would be subject
to a number of factors, including investor acceptance of our product selection
and our business model. Furthermore, there is no assurance that we will not
incur further debt in the future, that we will have sufficient funds to repay
our future indebtedness, or that we will not default on our future debts,
thereby jeopardizing our business viability. Finally, we may not be able to
borrow or raise additional capital in the future to meet our needs or to
otherwise provide the capital necessary to maintain our operations, which might
result in the loss of some or all of your investment in our common stock.

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- 14 -

Our company anticipates that the funds that were raised from
private placements by way of subscription agreements and funds advanced from
directors will not be sufficient to satisfy our cash requirements for the next
twelve month period. Also, there is no assurance that actual cash requirements
will not exceed our estimates. We will need additional capital in the next month
in order to continue our business plan.

We depend almost exclusively on outside capital to pay for the
continued development of our business and the marketing of our products. Such
outside capital may include the sale of additional stock, shareholder and
director advances and/or commercial borrowing. There can be no assurance that
capital will continue to be available if necessary to meet these continuing
development costs or, if the capital is available, that it will be on terms
acceptable to us. The issuance of additional equity securities by us will result
in a significant dilution in the equity interests of our current stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments.

If we are unable to obtain additional capital in the next
month, then we will be unable to pursue our business plan and we will go out of
business. If this happens, investors will lose their entire investment in our
company.

Our company relies on three suppliers who supply our company
with all of our products and as a result, we could be adversely affected by
changes in the cost of the suppliers products, the financial condition of the
suppliers or by the deterioration or termination of our relationship with the
suppliers.

We sell drinking water treatment products and water activation
products. Our two suppliers of drinking water products, VIQUA(formerly R-Can
Environmental Inc.) of Guelph, Ontario, Canada, and Ozocan Corporation of
Toronto, Ontario, Canada supplied our company with all of our drinking water
treatment products that our company sold during the years ended December 31,
2008 and December 31, 2007. Similarly, our sole supplier of water activation
products, ELCE International Corp., is the manufacturer and distributor of our
FW water activation units. We order units from ELCE International which are then
shipped to our warehouse facility for reshipment or directly to countries where
our distributors are located. ELCE International supplied our company with all
of our water activation products that our company sold during the year ended
December 31, 2008 and December 31, 2007. Our three suppliers manufacture their
respective products and develop the technologies within such products. In
addition, these suppliers also supply similar products from other manufacturers.
As of May 2005, VIQUA(formerly R-Can Environmental Inc.) supplied our company
with products from some components from outside suppliers but all VIQUA products
are assembled and shipped from their Guelph, Ontario, Canada manufacturing
facility. A significant decline in our suppliers financial condition, a
material rise in the cost of their prices or a reduction in the number of
products currently available could adversely affect our results of operations.
In addition, if our existing relationship with VIQUA(formerly R-Can
Environmental Inc.), Ozocan Corporation or ELCE International Corp. deteriorates
or is terminated in the future, and we are not successful in establishing a
relationship with an alternative supplier at prices and products currently
offered by such suppliers, our results of operations could be adversely
affected.

All of our directors and officers are engaged in other
business activities and accordingly may not devote sufficient time to our
business affairs, which may affect our ability to conduct operations and
generate revenues.

Although all three of our directors and officers are involved
in other business activities, as a development stage company, we are able to
manage the current level of business with our three officers, our relationship
with eleven local distributors and the technical assistance of our three product
suppliers, VIQUA(formerly R-Can Environmental), Ozocan Corporation and ELCE
International as well as local accounting and technical support services, our
Latin American Director of Sales and our Southern Colombian and Peruvian sales
agents. At present, Max Weissengruber, our President and director, spends
approximately 30 hours per week, or 80%, of his business time on the management
of our company. D. Brian Robertson, our Chief Financial Officer, Vice-President
of Sales and director, spends approximately 35 hours per week, or 90%, of his
business time on the management of our company and Douglas R. Robertson, our
Secretary and director, spends approximately 4 hours per week, or 10 %, of his
business time on the management of our company. As a result of their other
business endeavors, Mr. Weissengruber, Mr. B. Robertson and Mr. D. Robertson may
not be able to devote sufficient time to our business affairs, which may
negatively affect our ability to conduct our ongoing operations and our ability
to generate revenues. In addition, the management of our company may be
periodically interrupted or delayed as a result of our directors and officers
other business interests.

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- 15 -

All of our assets and all of our directors and officers are
outside the United States, with the result that it may be difficult for
investors to enforce within the United States any judgments obtained against us
or any of our directors or officers.

All of our assets are located outside the United States and we
do not currently maintain a permanent place of business within the United
States. In addition, all of our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of such persons assets are located outside the United States. As a
result, it may be difficult for investors to enforce within the United States
any judgments obtained against us or our officers or directors, including
judgments predicated upon the civil liability provisions of the securities laws
of the United States or any state thereof. Consequently, you may be effectively
prevented from pursuing remedies under United States federal securities laws
against them.

Risks Relating to our Business

Changes to the current or future government regulation of
our products may add to our operating costs.

We may face unanticipated operating costs due to future
government regulation of drinking water standards. We believe that we are not
currently subject to direct regulation of our current and expected activities,
other than regulations generally applicable to businesses. However, the issue of
what constitutes pure drinking water as is currently defined leaves the claim of
purity open to a broad spectrum of water providers. Laws and regulations may be
introduced that affect drinking water standards and claims of purity or other
characteristics of water being sold to consumers. Complying with new regulations
could increase our operating costs. Furthermore, we may be subject to the laws
of various jurisdictions where we actually conduct business. Although we rely on
distributors who sell our products in our target markets, there is a risk that
we may be deemed to be actively selling in jurisdictions that may impose
regulations on the sale of our products. Under such circumstances, we could be
subject to fines or penalties that could have a material adverse impact on our
business and operations.

Sales and delivery of our products may be interrupted due to
international political situations, natural disasters or other causes.
Interruptions may cause us to lose customers and distributors and, accordingly,
may adversely affect our business and results of operations.

Most of our products are manufactured in Canada, Italy and
Japan. Our target market includes Central and South America, which are subject
to social, economic and political uncertainty. We are subject to the risk that
the sale, payment and delivery of our products may be interrupted as a result of
social, economic and political turmoil or by natural disasters such as
earthquakes and fires. Any such interruptions may cause us to lose customers and
distributors and, accordingly, may adversely affect our business and results of
operations.

Our industry is very competitive and we may not be able to
achieve long term success. If this happens, we will go out of business.

Our products compete with a number of established brands and
new products that target the same market as we do. We compete against major
manufacturers of both traditional and new water treatment methods and
technologies most with substantially greater marketing, cash, distribution,
production, technical and other resources than our company has at present. In
addition to competitors with comparable ultra violet technology, there are
large, well established water treatment companies offering proven technologies
such as chlorination, ozone, reverse osmosis and physical filtration methods. If
we are unable to produce, market and distribute our products as well as our
competitors or if customers do not find our products to be as good or better
than others on the market, then we may never develop a client base or sell
enough of our product to be profitable. If this happens, we will go out of
business.

Risks Related to our Securities

Because our directors and officers control a large
percentage of our common stock, such insiders have the ability to influence
matters affecting our shareholders and other shareholders will likely have no
effect on the decisions made by our company. This could result in our management
making decisions that are in the best interest of themselves

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- 16 -

and not in the best interest of shareholders. Shareholders
could lose some or all of the value of their investments in our common stock as
a result.

Our directors and officers, in the aggregate, beneficially own
approximately 58% of the issued and outstanding shares of our common stock. As a
result, they have the ability to influence matters affecting our shareholders,
including the election of our directors, the acquisition or disposition of our
assets, and the future issuance of our shares. Because our officers and
directors control such shares, investors may find it difficult to replace our
management if they disagree with the way our business is being operated. Because
the influence by these insiders could result in management making decisions that
are in the best interest of those insiders and not in the best interest of the
investors, you may lose some or all of the value of your investment in our
common stock.

Because we do not have sufficient insurance to cover our
business losses, we might have uninsured losses, increasing the possibility that
you may lose your investment.

We may incur uninsured liabilities and losses as a result of
the conduct of our business. We do not currently maintain any comprehensive
liability or property insurance. Even if we obtain such insurance in the future,
we may not carry sufficient insurance coverage to satisfy potential claims. We
do not carry any business interruption insurance. Should uninsured losses occur,
any purchasers of our common stock could lose their entire investment.

The market price of our common stock is likely to be highly
volatile. The market price of our common stock may also fluctuate significantly
in response to the following factors, most of which are beyond our
control:

- variations in our quarterly operating results;
- changes in securities analysts estimates of our financial performance;
- changes in general economic conditions and in the software industry;
- changes in market valuations of similar companies;
- announcements by us or our competitors of significant new products; and,
- the loss of key management.

The equity markets have, on occasion, experienced significant
price and volume fluctuations that have affected the market prices for many
companies securities and that have often been unrelated to the operating
performance of these companies. Any such fluctuations may adversely affect the
market price of our common stock, regardless of our actual operating
performance. As a result, stockholders may be unable to sell their shares, or
may be forced to sell them at a loss.

Because we can issue additional common shares, purchasers of
our common stock may incur immediate dilution and may experience further
dilution.

We are authorized to issue up to 400,000,000 common shares,
including 100,000,000 Series B common shares which have equal rights and
preferences as our common shares. As of November 13, 2009, there were
152,120,000 common shares issued and outstanding and no Series B common shares
issued and outstanding. In addition, under our Joint Venture Agreement with ELCE
International Corp. we have committed to issue 15,000,000 common shares over the
next eighteen months. Our board of directors has the authority to cause our
company to issue additional shares of common stock without the consent of any of
our shareholders. Consequently, our shareholders may experience more dilution in
their ownership of our company in the future.

Our stock is a penny stock. Trading of our stock may be
restricted by the Securities and Exchange Commissions penny stock regulations
which may limit a stockholders ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an

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exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the Securities and Exchange Commission which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customers
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customers confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules; the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

Financial Industry Regulatory Authority (FINRA) sales
practice requirements may also limit a stockholders ability to buy and sell our
stock.

In addition to the penny stock rules promulgated by the
Securities and Exchange Commission, FINRA rules require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customers financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock and have an adverse effect on
the market for our shares.

Item 3. Quantitative and Qualitative Disclosures about
Market Risk.

Not Applicable.

Item 4T. Controls and Procedures.

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms, and that such information
is accumulated and communicated to our management, including our president (who
is our principal executive officer) and our treasurer, chief financial officer,
vice-president of sales (who is our principal financial and accounting officer)
to allow for timely decisions regarding required disclosure. In designing and
evaluating our disclosure controls and procedures, our management recognizes
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and our management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

As of September 30, 2009, the end of the three month period
covered by this report, our management carried out an evaluation with the
participation of our principal executive officer and our principal financial
officer, of the effectiveness of our disclosure controls and procedures. Based
on the foregoing, our management concluded that our disclosure controls and
procedures were not effective as of the end of the period covered by this
quarterly report.

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There have been no changes in our internal controls over
financial reporting that occurred during the three months ended September 30,
2009 that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.

On August 20, 2009, we issued 25,000,000 shares to four
creditors in exchange for the settlement of $375,000 in debt owing by us to the
four creditors at a deemed price of $0.015 per share. In selling these shares of
our common stock we relied on the registration exemption provided by Regulation
S and/or Section 4(2), promulgated under the Securities Act of 1933, as amended.
The Form of Debt Settlement and Subscription Agreement used is attached to this
report as an exhibit.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

|Exhibit  | Description                                                                                                        
|-------- | -------------------------------------------------------------------------------------------------------------------
|Number   |                                                                                                                    
|         |                                                                                                                    
|3.1(1)   | Articles of Incorporation                                                                                          
|         |                                                                                                                    
|3.2 (1)  | By-laws                                                                                                            
|         |                                                                                                                    
|10.1 (1) | Supplier Agreement with ELCE
      International dated August 18, 2001                                             
|         |                                                                                                                    
|10.2 (1) | Distribution Agreement with
      Avila S.T.E.M., SA dated February 1, 2005                                        
|         |                                                                                                                    
|10.3 (1) | Supplier Agreement with R-Can
      Environmental Inc. dated May 20, 2005                                          
|         |                                                                                                                    
|10.4 (1) | Distribution Agreement with
      JEUFI International, SA dated June 22, 2005                                      
|         |                                                                                                                    
|10.5 (1) | Distribution Agreement with
      Freshwater Latin, S.A. dated September 1, 2005                                   
|         |                                                                                                                    
|10.6 (1) | Asset Sale Agreement dated
      January 1, 2006, among our company, Max Weissengruber and D. Brian
      Robertson
|         |                                                                                                                    
|10.7 (1) | Consulting Agreement dated
      January 1, 2006, between our company and D. Brian Robertson                       
|         |                                                                                                                    
|10.8 (1) | Agreement with Max
      Weissengruber, dated January 1, 2006.                                                     
|         |                                                                                                                    
|10.9 (2) | Distribution Agreement dated
      October 9, 2008 with Watergeeks Laboratories Inc., dated October 9, 2008        

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- 19 -

|Exhibit   | Description                                                                                                                                          
|--------- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|Number    |                                                                                                                                                      
|          |                                                                                                                                                      
|10.10 (2) | Extension Agreement dated December
      31, 2008 to Distribution Agreement with Watergeeks Laboratories Inc., dated
      October 9, 2008           
|          |                                                                                                                                                      
|10.11 (2) | Joint Venture Agreement with ELCE
      International Corp., dated January 25, 2009                                                                  
|          |                                                                                                                                                      
|10.12*    | Form
      of Debt Settlement Agreement                                                                                                              
|          |                                                                                                                                                      
|31.1*     | Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 of Max Weissengruber                  
|          |                                                                                                                                                      
|31.2*     | Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 of D. Brian Robertson                 
|          |                                                                                                                                                      
|32.1*     | Certification
      of Chief Executive Officer and Chief Financial Officer pursuant Section
      906 Certifications under Sarbanes-Oxley Act of 2002

|(1) | Filed as an exhibit to our Form
      SB-2 registration statement filed on February 12, 2007.
|--- | ---------------------------------------------------------------------------------------------
|(2) | Filed as an exhibit to our Form
      8-K filed on January 6, 2009.                          
|*   | Filed herewith                                                                               

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- 20 -

SIGNATURES

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

FRESHWATER TECHNOLOGIES, INC.

|By    | /s/ Max Weissengruber                     
|----- | ------------------------------------------
|      | Max Weissengruber                         
|      | President and Director                    
|      | (Principal
      Executive Officer)       
|      |                                           
|Date: | November 13, 2009                         
|      |                                           
|      |                                           
|By    | /s/ D. Brian Robertson                    
|      | D. Brian Robertson                        
|      | Treasurer, Chief Financial
      Officer  
|      | Vice-President of Sales and
      Director
|      | (Principal
      Accounting Officer       
|      | and Principal Financial Officer)          
|      |                                           
|Date: | November 13, 2009                         

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