---

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 March 31, 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 May 14, 2009, there were 122,120,000 shares of common
stock, par value $0.001, outstanding.

---

1

|Freshwater Technologies, Inc.   
|--------------------------------
|(formerly HMI Technologies Inc.)
|(A Development Stage Company)   
|                                
|March 31, 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.   
|--------------------------------
|(formerly HMI Technologies Inc.)
|(A Development Stage Company)   
|Balance Sheets                  
|(expressed in U.S. dollars)     

|                                                                        |  | March 31,  |   |  | December 31, |  
|----------------------------------------------------------------------- |  | ---------- | - |  | ------------ | -
|                                                                        |  | 2009       |   |  | 2008         |  
|                                                                        |  | $          |   |  | $            |  
|ASSETS                                                                  |  |            |   |  |              |  
|Current Assets                                                          |  |            |   |  |              |  
|Cash                                                                    |  | 2,124      |   |  | 160          |  
|Receivables                                                             |  | 6,585      |   |  | 1,716        |  
|Inventory                                                               |  | 7,514      |   |  |             |  
|Total Current Assets                                                    |  | 16,223     |   |  | 1,876        |  
|Intangible Assets (Notes 2(k) and 4(d))                                 |  | 409,932    |   |  |             |  
|Total Assets                                                            |  | 426,155    |   |  | 1,876        |  
|                                                                        |  |            |   |  |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                          |  |            |   |  |              |  
|Current Liabilities                                                     |  |            |   |  |              |  
|Accounts payable                                                        |  | 21,054     |   |  | 21,054       |  
|Accrued liabilities                                                     |  | 34,657     |   |  | 17,537       |  
|Due to related
      parties (Note 3(b))                                |  | 223,108    |   |  | 167,957      |  
|Total Liabilities                                                       |  | 278,819    |   |  | 206,548      |  
|Commitments and Contingencies (Notes 1, 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: 122,120,000 shares
      (2008  112,120,000)   |  | 122,120    |   |  | 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)                              |  | 829,517    |   |  | 686,589      |  
|Class A Common Stock Issuable (Note 4(d))                               |  | 300,000    |   |  |             |  
|Deficit Accumulated During the Development Stage                        |  | (1,104,301 | ) |  | (1,003,381   | )
|Total Stockholders
      Equity (Deficit)                              |  | 147,336    |   |  | (204,672     | )
|Total Liabilities and Stockholders Equity (Deficit)                    |  | 426,155    |   |  | 1,876        |  

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

F-1

---

|Freshwater Technologies, Inc.   
|--------------------------------
|(formerly HMI Technologies Inc.)
|(A Development Stage Company)   
|Statements of Operations        
|(expressed in U.S. dollars)     

|                                       |  | Accumulated from       |   |  | Three Months |   |  | Three Months |  
|-------------------------------------- |  | ---------------------- | - |  | ------------ | - |  | ------------ | -
|                                       |  | January 21, 2005       |   |  | Ended        |   |  | Ended        |  
|                                       |  | (Date of Inception) to |   |  | March 31,    |   |  | March 31,    |  
|                                       |  | March 31, 2009         |   |  | 2009         |   |  | 2008         |  
|                                       |  | $                      |   |  | $            |   |  | $            |  
|                                       |  |                        |   |  |              |   |  |              |  
|                                       |  |                        |   |  |              |   |  |              |  
|Revenue                                |  | 461,929                |   |  | 130          |   |  | 1,426        |  
|Cost of Sales                          |  | 214,360                |   |  | 88           |   |  | 601          |  
|Gross Profit                           |  | 247,569                |   |  | 42           |   |  | 825          |  
|                                       |  |                        |   |  |              |   |  |              |  
|Expenses                               |  |                        |   |  |              |   |  |              |  
|Amortization of intangible assets      |  | 40,068                 |   |  | 40,068       |   |  |             |  
|Consulting (Note 3(a))                 |  | 220,000                |   |  | 9,000        |   |  | 9,000        |  
|General and administrative             |  | 118,176                |   |  | 4,941        |   |  | 1,196        |  
|Imputed interest (Note 3(b))           |  | 100,986                |   |  | 2,928        |   |  | 7,784        |  
|Marketing and sales (Note 3(a))        |  | 332,136                |   |  | 52,589       |   |  | 15,913       |  
|Professional fees (Note 3(c))          |  | 164,930                |   |  | 22,478       |   |  | 21,820       |  
|Bad debts
      expense (recovery)     |  | 377,574                |   |  | (31,042      | ) |  | (880         | )
|Total Expenses                         |  | 1,353,870              |   |  | 100,962      |   |  | 54,833       |  
|Net Loss From Operations               |  | (1,106,301             | ) |  | (100,920     | ) |  | (54,008      | )
|Other Income                           |  |                        |   |  |              |   |  |              |  
|Gain
      on settlement of debt       |  | 2,000                  |   |  |             |   |  |             |  
|Net Loss                               |  | (1,104,301             | ) |  | (100,920     | ) |  | (54,008      | )
|                                       |  |                        |   |  |              |   |  |              |  
|Net Loss Per Share  Basic and Diluted |  |                        |   |  |             |   |  |             |  
|                                       |  |                        |   |  |              |   |  |              |  
|Weighted Average Shares Outstanding    |  |                        |   |  | 109,795,000  |   |  | 100,800,000  |  

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

F-2

---

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

|                                                       |  | Three Months |   |  | Three Months |  
|------------------------------------------------------ |  | ------------ | - |  | ------------ | -
|                                                       |  | Ended        |   |  | Ended        |  
|                                                       |  | March 31,    |   |  | March 31     |  
|                                                       |  | 2009         |   |  | 2008         |  
|                                                       |  | $            |   |  | $            |  
|                                                       |  |              |   |  |              |  
|Operating Activities                                   |  |              |   |  |              |  
|Net loss                                               |  | (100,920     | ) |  | (54,008      | )
|Adjustments to reconcile net loss to net cash provided |  |              |   |  |              |  
|by operating activities:                               |  |              |   |  |              |  
|Amortization of intangible assets                      |  | 40,068       |   |  |             |  
|Donated costs                                          |  |             |   |  | 12,156       |  
|Imputed interest                                       |  | 2,928        |   |  | 7,784        |  
|Forgiveness of debt                                    |  |             |   |  |             |  
|Provision for inventory obsolescence                   |  |             |   |  |             |  
|Changes in operating assets and liabilities:           |  |              |   |  |              |  
|                                                       |  |              |   |  |              |  
|Accounts receivable                                    |  |             |   |  | 92           |  
|Other receivables                                      |  | (4,869       | ) |  |             |  
|Inventory                                              |  | (7,514       | ) |  |             |  
|Prepaid expenses                                       |  |             |   |  |             |  
|Accounts payable and accrued liabilities               |  | 17,120       |   |  | 3,488        |  
|Due to
      related parties                           |  | 18,000       |   |  | 18,000       |  
|Net Cash Provided (Used) By Operating Activities       |  | (35,187      | ) |  | (12,488      | )
|Financing Activities                                   |  |              |   |  |              |  
|                                                       |  |              |   |  |              |  
|Advances from related parties                          |  | 42,051       |   |  | 13,888       |  
|Repayments to related parties                          |  | (4,900       | ) |  | (1,000       | )
|Net Cash Provided
      (Used) By Financing Activities |  | 37,151       |   |  | 12,888       |  
|Increase (Decrease) in Cash                            |  | 1,964        |   |  | 400          |  
|Cash  Beginning
      of Period                       |  | 160          |   |  | 224          |  
|Cash  End of Period                                   |  | 2,124        |   |  | 624          |  
|                                                       |  |              |   |  |              |  
|Non-cash Investing and Financing Activities:           |  |              |   |  |              |  
|Issuance of shares of common stock for intangible      |  |              |   |  |              |  
|assets                                                 |  | 450,000      |   |  |             |  
|                                                       |  |              |   |  |              |  
|Supplemental Disclosures                               |  |              |   |  |              |  
|                                                       |  |              |   |  |              |  
|Interest paid                                          |  |             |   |  |             |  
|Income
      tax paid                                  |  |             |   |  |             |  

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

F-3

---

|Freshwater Technologies Inc.     
|---------------------------------
|(formerly HMI Technologies Inc.) 
|(A Development Stage Company)    
|Notes to the Financial Statements
|(expressed in U.S. dollars)      

|1. | Nature of Operations and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | 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 Statement of Financial Accounting Standard
        (SFAS) No.7, Accounting and Reporting by Development
        Stage Enterprises. 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 own 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 SFAS 141, 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 March
        31, 2009, the Company had an accumulated deficit of $1,104,301 and a working
        capital deficit of $262,596. 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) | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | These financial statements and related notes are presented
        in accordance with accounting principles generally accepted in the United
        States, and are expressed in US dollars. The Companys fiscal year-end
        is December 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | Interim Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | These interim unaudited financial statements have been
        prepared on the same basis as the annual financial statements and in the
        opinion of management reflect all adjustments, which include only normal
        recurring adjustments, necessary to present fairly the Company's financial
        position, results of operations, and cash flows for the periods shown.
        The results of operations for such periods are not necessarily indicative
        of the results expected for a full year or for any future period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The preparation of financial statements in conformity
        with U.S. 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, 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.

F-4

---

|Freshwater Technologies Inc.     
|---------------------------------
|(formerly HMI Technologies Inc.) 
|(A Development Stage Company)    
|Notes to the Financial Statements
|(expressed in U.S. dollars)      

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

| | d) | 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. As at March 31, 2009, the Company had no cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | e) | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Inventory consists of water activation products and
        water filters and is recorded at the lower of cost and net realizable
        value on a first-in, first-out basis. The 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | f) | Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | SFAS No. 130, Reporting Comprehensive Income,
        establishes standards for the reporting and display of comprehensive loss
        and its components in the financial statements. As at March 31, 2009,
        the Company has no items that represent comprehensive loss and, therefore,
        has not included a schedule of comprehensive loss in the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | g) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company has various financial instruments including
        cash, accounts receivable, receivables, accounts payable and amounts due
        to related parties. The fair values of these financial instruments were
        estimated to approximate their carrying values due to the immediate or
        relatively short maturity of these instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | h) | 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 SFAS No. 52 Foreign
        Currency Translation 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
        financials statements, entered into derivative instruments to offset the
        impact of foreign currency fluctuations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | i) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company recognizes revenue from the sale of drinking
        water products and water activation products in accordance with Securities
        and Exchange Commission Staff Accounting Bulletin No. 104 (SAB 104),
        Revenue Recognition in Financial Statements.The majority
        of the sales consist of water activation units in Costa Rica, Panama and
        Peru. Revenue consists of the sale 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 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.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | j) | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Effective January 1, 2006, the Company adopted the fair
        value recognition provisions of SFAS No. 123R Share Based Payments,
        using the modified retrospective transition method. The Company has not
        issued any stock options or share based payments since its inception.
        Accordingly, there was no effect on the Companys reported loss from
        operations, cash flows or loss per share as a result of adopting SFAS
        No 123R.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-5

---

|Freshwater Technologies Inc.     
|---------------------------------
|(formerly HMI Technologies Inc.) 
|(A Development Stage Company)    
|Notes to the Financial Statements
|(expressed in U.S. dollars)      

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

| | k) | 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 three month period ended
        March 31, 2009, the Company recorded $40,068 in amortization expense in
        relation to these assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | l) | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In May 2008, the Financial Accounting Standards Board
        (FASB) issued SFAS No. 163, Accounting for Financial
        Guarantee Insurance Contracts  An interpretation of FASB Statement
        No. 60. SFAS No. 163 requires that an insurance enterprise recognize
        a claim liability prior to an event of default when there is evidence
        that credit deterioration has occurred in an insured financial obligation.
        It also clarifies how Statement 60 applies to financial guarantee insurance
        contracts, including the recognition and measurement to be used to account
        for premium revenue and claim liabilities, and requires expanded disclosures
        about financial guarantee insurance contracts. It is effective for financial
        statements issued for fiscal years beginning after December 15, 2008,
        except for some disclosures about the insurance enterprises risk-management
        activities. SFAS No. 163 requires that disclosures about the risk-management
        activities of the insurance enterprise be effective for the first period
        beginning after issuance. Except for those disclosures, earlier application
        is not permitted. The adoption of this statement did not have a material
        effect on the Companys financial statements.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In May 2008, the FASB issued SFAS No. 162, The
        Hierarchy of Generally Accepted Accounting Principles. SFAS
        No. 162 identifies the sources of accounting principles and the framework
        for selecting the principles to be used in the preparation of financial
        statements of nongovernmental entities that are presented in conformity
        with generally accepted accounting principles in the United States. It
        is effective 60 days following the SECs approval of the Public Company
        Accounting Oversight Board amendments to AU Section 411, The
        Meaning of Present Fairly in Conformity With Generally Accepted Accounting
        Principles. The adoption of this statement did not have a material
        effect on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In March 2008, the Financial Accounting Standards Board
        (FASB) issued SFAS No. 161, Disclosures about Derivative
        Instruments and Hedging Activities  an amendment to FASB Statement
        No. 133. SFAS No. 161 is intended to improve financial standards
        for derivative instruments and hedging activities by requiring enhanced
        disclosures to enable investors to better understand their effects on
        an entity's financial position, financial performance, and cash flows.
        Entities are required to provide enhanced disclosures about: (a) how and
        why an entity uses derivative instruments; (b) how derivative instruments
        and related hedged items are accounted for under Statement 133 and its
        related interpretations; and (c) how derivative instruments and related
        hedged items affect an entitys financial position, financial performance,
        and cash flows. It is effective for financial statements issued for fiscal
        years beginning after November 15, 2008, with early adoption encouraged.
        The adoption of this statement did not have a material effect on the Companys
        financial statements.                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In December 2007, the FASB issued SFAS No. 160 Noncontrolling
        Interests in Consolidated Financial Statements-an amendment of ARB No.51SFAS No. 160 requires consolidated net income to be reported at amounts
        that include the amounts attributable to both the parent and the noncontrolling
        interest. It also requires disclosure, on the face of the consolidated
        statement of income, of the amounts of consolidated net income attributable
        to the parent and to the non controlling interest. SFAS No. 160 also requires
        that a parent recognize a gain or loss in net income when a subsidiary
        is deconsolidated. SAFAS No. 160 also requires expanded disclosures in
        the consolidated financial statements that clearly identify and distinguish
        between the interests of the parents owners and the interests of
        the noncontrolling owners of a subsidiary. SFAS No. 160 is effective for
        financial statements issued for fiscal years beginning after December
        15, 2008. The adoption of this statement did not have a material effect
        on the Companys financial statements.                                                                                                                                                                   

F-6

---

|Freshwater Technologies Inc.     
|---------------------------------
|(formerly HMI Technologies Inc.) 
|(A Development Stage Company)    
|Notes to the Financial Statements
|(expressed in U.S. dollars)      

|3. | Related Party Transactions
|-- | --------------------------

| | a) | The Company entered into consulting agreements with
        the President and CFO of the Company. Under these agreements, both the
        President and CFO receive $3,000 per month commencing June 1, 2006 and
        expiring December 31, 2008. For the three months ended March 31, 2009,
        the Company recorded $9,000 (March 31, 2008 - $9,000) of consulting expense
        and $9,000 (March 31, 2007 - $9,000) as marketing and sales expense. In
        December 2008, the Company agreed to extend the term of these agreements
        to December 31, 2009 at $3,000 per month for each agreement.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | b) | As at March 31, 2009, the Company was indebted to directors
        and officers of the Company for $223,108 (December 31, 2008 - $167,957)
        for financing of day-to-day operations. These amounts are non-interest
        bearing, unsecured, and have no specific terms for repayment. For the
        three months ended March 31, 2009, the Company recorded $2,928 (three
        months ended March 31, 2008 - $7,784) of imputed interest at 5.25% relating
        to these amounts owing.                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | c) | During the three months ended March 31, 2008, a shareholder
        of the Company paid $12,156 on behalf of the Company towards professional
        fees related to the Companys SB-2 Registration Statement. These
        costs have been donated to the Company and have been recorded as additional
        paid-in capital.                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | d) | On August 15, 2008, the Company entered into a debt
        settlement and subscription agreement with the President of the Company,
        whereby the Company agreed to issue 5,700,000 Class A common shares at
        a fair value of $0.05 per share in consideration of the settlement of
        $285,000 owing.                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | e) | On August 15, 2008, the Company entered into a debt
        settlement and subscription agreement with the CFO of the Company, whereby
        the Company agreed to issued 5,500,000 Class A common shares at a fair
        value of $0.05 per share in consideration of the settlement of $275,000
        owing.                                                                                                                                                                                                                                                                                                      

|4. | Common Stock
|-- | ------------

| | a) | On August 15, 2008, the Company entered into a debt
        settlement and subscription agreement with the President of the Company,
        whereby the Company agreed to issue 5,700,000 shares of Class A common
        stock at a fair value of $0.05 per share in consideration of the settlement
        of $285,000 owing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | b) | On August 15, 2008, the Company entered into a debt
        settlement and subscription agreement with the CFO of the Company, whereby
        the Company agreed to issue 5,500,000 shares of Class A common stock at
        a fair value of $0.05 per share in consideration of the settlement of
        $275,000 owing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | c) | On August 15, 2008, the Company entered into a debt
        settlement and subscription agreement, whereby the Company agreed to issue
        120,000 shares of Class A common stock at a fair value of $0.05 per share
        in consideration of the settlement of $6,000 owing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | d) | On January 25, 2009, the Company issued 10,000,000 restricted
        shares of Class A common stock under the agreement described in Note 6(c).
        The fair value of the restricted shares issued was estimated to be $150,000
        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
        20,000,000 restricted shares of Class A common stock. The fair value of
        these restricted shares was estimated to be $300,000 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 March 31, 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 as at March 31, 2009, less accumulated
        amortization of $40,068.

F-7

---

|Freshwater Technologies Inc.     
|---------------------------------
|(formerly HMI Technologies Inc.) 
|(A Development Stage Company)    
|Notes to the Financial Statements
|(expressed in U.S. dollars)      

|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 own 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 SFAS 141, Business Combinations.
        The acquisition has been accounted for as a continuation of the Freshwater
        Technologies business in accordance with EITF 98-3 Determining Whether
        a Nonmonetary Transaction Involves Receipt of Productive Assets or of
        a Business. 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 | )

|6. | Commitments
|-- | -----------

| | a) | On September 23, 2008, the Company entered
        into a Consulting Agreement with Rolando Choso Esquivel to act as Director,
        Latin American Sales and Marketing. The Company will pay $1,500 monthly
        for these consulting services and will reimburse out of pocket expenses
        incurred for Company business. The agreement is for a one year term which
        expires August 31, 2009, is renewable annually with both parties approval
        and can be terminated by the Company with two months notice and
        payment.                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b) | On October 9, 2008, the Company signed a Distribution
        Agreement with Watergeeks Laboratories Inc. (Watergeeks) pursuant
        to which the Company had agreed to issue 30,000,000 Class A common shares
        in order to obtain the exclusive, worldwide rights to distribute and sell
        the Watergeeks products. The closing of this agreement was conditional
        upon the Companys satisfaction following a due diligence review
        of Watergeeks and its corporate, legal and financial documents. The 30,000,000
        shares were held in escrow pursuant to the Distribution Agreement pending
        the outcome of due diligence. On February 13, 2009, the Company terminated
        the Distribution Agreement with Watergeeks due to an unsatisfactory due
        diligence review and cancelled and returned to treasury the 30,000,000
        common shares that were being held in escrow.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | c) | On January 25, 2009, the Company
        entered into an agreement with ELCE International Corp. (ELCE)
        under which it obtained the rights to distribute water products purchased
        from ELCE in certain countries domiciled in South and Central America.
        As consideration for these rights, the Company agreed to issue to Claudio
        Sgarbi, the President of ELCE, 10,000,000 restricted shares of common
        stock upon closing of the agreement (issued on January 25, 2009 
        see Note 4(d)) and an additional 5,000,000 shares issuable semi-annually
        for two years from closing for a total of 20,000,000 additional shares.
        Under the agreement, the Company will pay Claudio Sgarbi any out-of-pocket
        expenses plus consulting fees as follows:                                                                                                                     

$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 March 31, 2009, the
  purchase cost of minimum inventory quantities was estimated to be $881,000 in
  total.

F-8

---

|Freshwater Technologies Inc.     
|---------------------------------
|(formerly HMI Technologies Inc.) 
|(A Development Stage Company)    
|Notes to the Financial Statements
|(expressed in U.S. dollars)      

|6. | Commitments (continued)
|-- | -----------------------

| | d) | In February 2009, the Company entered into a Consulting
        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 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.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Economic Dependence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company relies solely upon R-Can Environmental Inc.
        (R-Can), as the sole supplier of their drinking water products,
        ELCE International Inc. (ELCE), as the sole supplier of their
        water activation products and Ozocan Corporation as sole supplier of ozone
        water treatment systems. R-Can and ELCE supplied the Company with 100%
        of the products that the Company offered and sold during the three months
        ended March 31, 2009 and March 31, 2008. R-Can, 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.

F-9

---

- 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 waste water, 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 eleven 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 3,000 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 two
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. Pursuant to the joint venture agreement, ELCE
International will supply its ELCE water activation units at manufacturers cost
to Freshwater and will participate with Freshwater to market and sell ELCE
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 ELCE 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, ELCE 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(formerlyR-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 three month period ended March 31, 2009 and March 31, 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 consolidated unaudited financial statements and the notes thereto
included elsewhere in this quarterly report. Our consolidated financial
statements are prepared in 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.

---

- 4 -

Results of Operations

Material Changes in Financial Condition

|                           |   | March 31, 2009 |  |   | December 31, 2008 | 
|-------------------------- | - | -------------- |  | - | ----------------- | 
|                           |   |                |  |   |                   | 
|Current Assets             | $ | 16,223         |  | $ | 1,876             | 
|Current Liabilities        |   | 278,819        |  |   | 206,548           | 
|Working Capital Deficiency | $ | 262,596        |  | $ | 204,672           | 

Total assets at March 31, 2009 were $426,155 as compared to
$1,876 at December 31, 2008.

$409,962 of this increase is attributable to
  Intangible Assets as described below:

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. The fair value of the restricted shares
issued was estimated to be $150,000 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 20,000,000 restricted shares of Class A common stock. The fair value of
these restricted shares was estimated to be $300,000 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 March 31, 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 March 31, 2009, less accumulated amortization of $40,068.

The remaining increase is due to an increase of $1,964 in cash,
an increase of $4,869 in other receivables and an increase of 7,514 in
inventory.

Liabilities at March 31, 2009 were $278,819 as compared to
$206,548 at December 31, 2008. The increase is due to an increase of $17,120 in
accrued liabilities and an increase of $55,151 due to our directors and
officers. The amounts due to our directors and officers total $223,108 and are
non-interest bearing, unsecured and have no specific terms for repayment.

Revenue

We generated revenues of $130 for the three month period ended
March 31, 2009, compared to revenues of $1,426 for the three month period ended
March 31, 2008. The cost of sales on the orders for the three month period ended
March 31, 2009 was $88, compared to cost of sales on the orders for the three
month period ended March 31, 2008 of $601.

This revenue was generated from sales of our drinking water
products.

Operating Costs and Expenses

The major components of our revenue and expenses for the three
month periods ended March 31, 2009 and March 31, 2008 and from date of inception
until March 31, 2009 are outlined in the table below:

---

- 5 -

|                                  |   |                    |   |   |                     |   |   | Accumulated from  |  
|--------------------------------- | - | ------------------ | - | - | ------------------- | - | - | ----------------- | -
|                                  |   | Three Months Ended |   |   | January 21, 2005    |  
|                                  |   | March 31           |   |   | (Date of Inception) |  
|                                  |   | 2009               |   |   | 2008                |   |   | to March 31, 2009 |  
|                                  |   |                    |   |   |                     |   |   |                   |  
|Revenue                           | $ | 130                |   | $ | 1,426               |   | $ | 461,929           |  
|Cost of Sales                     |   | 88                 |   |   | 601                 |   |   | 214,360           |  
|Gross Profit                      | $ | 42                 |   | $ | 825                 |   | $ | 247,569           |  
|                                  |   |                    |   |   |                     |   |   |                   |  
|Expenses                          |   |                    |   |   |                     |   |   |                   |  
|Amortization of intangible assets | $ | 40,068             |   | $ | -                   |   | $ | 40,068            |  
|Consulting                        |   | 9,000              |   |   | 9,000               |   |   | 220,000           |  
|General and administrative        |   | 4,941              |   |   | 1,196               |   |   | 118,176           |  
|Imputed interest                  |   | 2,928              |   |   | 7,784               |   |   | 100,986           |  
|Marketing and sales               |   | 52,589             |   |   | 15,913              |   |   | 332,136           |  
|Professional fees                 |   | 22,478             |   |   | 21,820              |   |   | 164,930           |  
|Bad debts expense (recovery)      |   | (31,042            | ) |   | (880                | ) |   | 377,574           |  
|Total Expenses                    | $ | 100,962            |   | $ | 54,833              |   | $ | 1,353,870         |  
|                                  |   |                    |   |   |                     |   |   |                   |  
|Net Loss From Operations          | $ | (100,920           | ) | $ | (54,008             | ) | $ | (1,,106,301       | )
|                                  |   |                    |   |   |                     |   |   |                   |  
|Other Income                      |   |                    |   |   |                     |   |   |                   |  
|Gain on settlement of debt        |   | -                  |   |   | -                   |   | $ | 2,000             |  
|Net Loss                          | $ | (100,920           | ) | $ | (54,008             | ) | $ | (1,104,301        | )

For the three months ended March 31, 2009, our operating
expenses totalled $100,962 as compared to $54,833 for the three months ended
March 31, 2008. Amortization of intangible assets representing costs incurred to
acquire product distribution rights under the joint venture agreement with ELCE
International Corp. amounted to $40,068 for the three months ended March 31,2009
compared with nil for the three months ended March 31,2008 as the agreement was
signed January 25, 2009. Professional fees amounted to $22,478 for the three
months ended March 31, 2009 as compared to $21,820 for the three months ended
March 31, 2008. Marketing and sales expenses and consultants costs were $61,589
for the three months ended March 31, 2009 as compared to $24,913 for the three
months ended March 31, 2008 with the increase being due to an increase in travel
expenses and fees for our Director of Latin America sales of $8,157, an increase
in fees and expenses for our Agent in Colombia of $3,400 and an increase in
costs relating to our Joint Venture Agreement with ELCE International Corp. of
$25,119. General and administrative expenses were $4,941 during the three months
ended March 31, 2009 as compared to $1,196 for the three months ended March 31,
2008. This increase is due to increased trust company costs and shareholder
communication costs. Imputed interest on directors loans was $2,928 for the
three months ended March 31, 2009 as compared to $7,784 for the three months
ended March 31, 2008. This decrease is 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 three
months ended March 31, 2009 we recovered $31,042 of sales previously written off
as compared to $880 for the three months ended March 31, 2008.

Liquidity and Capital Resources

Working Capital

|                           |   | March 31, 2009 |   | December 31, 2008
|-------------------------- | - | -------------- | - | -----------------
|Current Assets             | $ | 16,223         | $ | 1,876            
|Current Liabilities        |   | 278,819        |   | 206,548          
|Working Capital Deficiency | $ | 262,596        | $ | 204,672          

Cash Flows

|                                             |   | Three Months Ended March
      31, 2009 |   | Three Months Ended March
      31, 2008
|-------------------------------------------- | - | --------------------------------------- | - | ---------------------------------------
|Cash provided (used) in Operating Activities | $ | (35,187 )                               | $ | (12,488 )                              
|Cash used by Investing Activities            |   | -                                       |   | -                                      
|Cash provided (used) by Financing Activities |   | 37,151                                  |   | 12,888                                 
|Net Increase (Decrease) in Cash              | $ | 1,964                                   | $ | 400                                    

---

- 6 -

We had cash on hand of $2,124 and negative working capital of
$262,596 as of March 31, 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 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 $35,187 for the three months
ended March 31, 2009 and used cash of $12,488 for the three months ended March
31, 2008.

Financing Activities

Net cash provided by financing activities was $37,151 for the
three months ended March 31, 2009 and net cash provide by financing activities
was $12,888 for the three months ended March 31, 2008. These financing
activities were provided by two directors of our company.

Non-cash Investing and Financing Activities

In January 2009, we signed a Joint Venture Agreement with
ELCE International Corp. Under the Agreement we are 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.

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.

---

- 7 -

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.

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 U.S.
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. Our company regularly evaluates estimates and assumptions
related to provision for uncollectible sales, provision for inventory
obsolescence, donated expenses and deferred income tax asset valuation
allowances. Our 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 our company may differ materially and
adversely from our companys estimates. To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected.

---

- 8 -

Cash and Cash Equivalents

Our company considers all highly liquid instruments with
maturity of three months or less at the time of issuance to be cash equivalents.
As at March 31, 2009, we had no cash equivalents.

Inventory

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

Revenue Recognition

Our company recognizes revenue from the sale of drinking water
products and water activation products in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 104 (SAB 104), Revenue
Recognition in Financial Statements.The majority of the sales consist of
water activation units in Costa Rica, Panama and Peru. Revenue consists of the
sale 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 all costs from arrival point in the country to which the ELCE
products are shipped. Our company evaluates the collectibility of accounts
receivable based on a combination of factors. In cases where our company is
aware of circumstances that may impair a specific customers ability to meet its
financial obligations subsequent to the original sale, our company will record
an allowance against amounts due, and thereby reduce the net recognized
receivable to the amount our company reasonably believes will be collected. For
all other customers, our company recognizes allowances for doubtful accounts
based on the length of time the receivables are past due, the current business
environment and our companys historical experience.

Comprehensive Loss

SFAS No. 130, Reporting Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss and
its components in the financial statements. As at March 31, 2009, we have no
items that represent comprehensive loss and, therefore, have not included a
schedule of comprehensive loss in the financial statements.

Financial Instruments

Our company has various financial instruments including cash,
accounts receivable, other receivables, accounts payable and amounts due to
related parties. The fair values of these financial instruments were estimated
to approximate their carrying values due to the immediate or relatively short
maturity of these instruments.

Foreign Currency Translation

Our companys functional and reporting currency is the United
States dollar. Monetary assets and liabilities denominated in foreign currencies
are translated in accordance with SFAS No. 52 Foreign Currency
Translation 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. We have not, to the date of these financials statements, entered into
derivative instruments to offset the impact of foreign currency
fluctuations.

Stock-based Compensation

Effective January 1, 2006, our company adopted the fair value
recognition provisions of SFAS No. 123R Share Based Payments, using the
modified retrospective transition method. Our company has not issued any stock
options

---

- 9 -

or share based payments since its inception. Accordingly, there
was no effect on our companys reported loss from operations, cash flows or loss
per share as a result of adopting SFAS No 123R.

Recently Adopted Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board (FASB)
issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts
 An interpretation of FASB Statement No. 60. SFAS No. 163 requires that an
insurance enterprise recognize a claim liability prior to an event of default
when there is evidence that credit deterioration has occurred in an insured
financial obligation. It also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement to be
used to account for premium revenue and claim liabilities, and requires expanded
disclosures about financial guarantee insurance contracts. It is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
except for some disclosures about the insurance enterprises risk-management
activities. SFAS No. 163 requires that disclosures about the risk-management
activities of the insurance enterprise be effective for the first period
beginning after issuance. Except for those disclosures, earlier application is
not permitted. The adoption of this statement did not have a material effect on
the Companys financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted AccountingPrinciples. SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles in the United States. It is effective 60 days following the SECs
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles. The adoption of this statement did not have
a material effect on the Companys financial statements.

In March 2008, the Financial Accounting Standards Board
(FASB) issued SFAS No. 161, Disclosuresabout Derivative Instruments and
Hedging Activities  an amendment to FASB Statement No. 133. SFAS No. 161
is intended to improve financial standards for derivative instruments and
hedging activities by requiring enhanced disclosures to enable investors to
better understand their effects on an entity's financial position, financial
performance, and cash flows. Entities are required to provide enhanced
disclosures about: (a) how and why an entity uses derivative instruments; (b)
how derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations; and (c) how derivative
instruments and related hedged items affect an entitys financial position,
financial performance, and cash flows. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008, with early adoption
encouraged. The adoption of this statement did not have a material effect on the
Companys financial statements.

In December 2007, the FASB issued SFAS No. 160
Noncontrolling Interests in Consolidated Financial Statements-an amendment
of ARB No.51SFAS No. 160 requires consolidated net income to be reported
at amounts that include the amounts attributable to both the parent and the
noncontrolling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the non controlling interest. SFAS No. 160
also requires that a parent recognize a gain or loss in net income when a
subsidiary is deconsolidated. SAFAS No. 160 also requires expanded disclosures
in the consolidated financial statements that clearly identify and distinguish
between the interests of the parents owners and the interests of the
noncontrolling owners of a subsidiary. SFAS No. 160 is effective for financial
statements issued for fiscal years beginning after December 15, 2008. The
adoption of this statement did not have a material effect on the Companys
financial statements.

Risks and Uncertainties

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.

---

- 10 -

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.

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.

---

- 11 -

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 March 31, 2009, we have generated
$461,929 in revenue from the sale of our products. As at March 31, 2009, we had
cash of $2,124 and negative working capital of $262,596. 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.

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 March 31, 2009, we raised $409,411 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

---

- 12 -

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 March 31, 2009, we had total liabilities of $278,819,
$223,108 of which was due to related parties. Our liabilities are substantial
relative to our current assets, which were $16,223 as of March 31, 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.

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.

---

- 13 -

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
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 sales agent. 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.

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.

---

- 14 -

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 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 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 75% 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.

---

- 15 -

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 May14, 2009, there were 122,120,000
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 20,000,000 common shares over the
next two years. 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 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

---

- 16 -

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 March 31, 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.

There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended March 31, 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.

---

- 17 -

ITEM 1A. RISK FACTORS.

Not Applicable.

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

None.

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                                               
|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                                                                               
|31.1*     | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002 of Max Weissengruber 
|31.2*     | Certification
        of Chief Executive Officer and 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           

---

- 18 -

|(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                                                                               

---

- 19 -

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: | May 14, 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: | May 14, 2009                        

---