`SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934
         For the fiscal year ended July 31, 2002

[  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                        COMMISSION FILE NUMBER 333-86031

           ENVIRONMENTAL STRATEGIES & TECHNOLOGIES INTERNATIONAL INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

            FLORIDA                                  98-0198225
   -------------------------------               -------------------
   (State or Other Jurisdiction of                (I.R.S. Employer
    Incorporation or Organization)               Identification No.)


                          244 W. 54th Street Suite 500
                            New York, New York 10019
               --------------------------------------------------
               (Address of Principal Executive Offices)(Zip Code)

                                 (212) 586-7660
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Securities Exchange Act of
1934:
         None.

Securities registered under Section 12(g) of the Securities Exchange Act of
1934:
         None.

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

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.                                                            [X]

State registrant's revenues for the year ended July 31, 2002:  $0.00

STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT COMPUTED BY REFERENCE TO THE CLOSING BID PRICE OF ITS COMMON
STOCK AS REPORTED BY THE OTC BULLETIN BOARD ON NOVEMBER 11,2002 ($.015):
$574,965
                      APPLICABLE ONLY TO CORPORATE ISSUERS

THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, PAR VALUE
$.001 PER SHARE (THE "COMMON STOCK") AS OF NOVEMBER 11,2002, WAS 38,331,018.

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

                     DOCUMENTS INCORPORATED BY REFERENCE
         None.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995


                                       1



         THIS ANNUAL REPORT FORM 10-KSB CONTAINS "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS,
OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS FORM 10-KSB, ARE FORWARD-LOOKING STATEMENTS. IN ADDITION,
WHEN USED IN THIS DOCUMENT THE WORDS "ANTICIPATE," "ESTIMATE," "INTENDS,"
"PROJECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS,
UNCERTAINTIES AND ASSUMPTIONS. SHOULD ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR
PROJECTED. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS WE INCLUDE IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT ASSURE YOU THAT THESE
EXPECTATIONS WILL PROVE TO BE CORRECT.

                                     PART 1

ITEM 1. DESCRIPTION OF BUSINESS

     We are a Florida corporation that is in the business of purchasing
environmental and financial based businesses. Our corporate objective is to
acquire existing corporation focused in the environmental and financial field.
The Corporation's operating business will be conducted through its subsidiaries.
The Corporation has closed down its operating subsidiaries focused on the
Internet and has refocus it business into the environmental and financial field.

     We have entered into an agreement to acquire Engineering Acquisition, of
New York City New York.

     Engineering Acquisitions is  in  the business of providing profession
consulting for M&A, Private Equity and Financial Advisory services to mid market
companies. We believe the demand for these services will increase in the next
several years as an increasing number of middle market companies that were
financed during the boom market over the past decade will begin exploring
liquidity options. The owners of these firms will require an ever-increasing
degree of sophistication and expertise in the areas of acquisitions,
divestitures, private equity financing, succession planning, debt financing,
ESOPs and other strategies. There are thousands of suppliers of these services
ranging from sole practitioners to Fortune 500 firms. However, these suppliers
vary dramatically in competence, skills and experience. The industry is highly
fragmented with no single firm or group of firms holding any market dominance or
even a significant market share.

     Large independent  suppliers of these services  are able to effectively
compete with both the large national companies and the small independents since
they bring a collective of personal networks and expertise that is focused and
unique. Although unique in their specialties and networks these business provide
a menu of standardized services, documents and analyses that are delivered in a
similar fashion. Some of these services require resources that can be
effectively and efficiently consolidated, streamlined, and to some extent
automated. Many of these services are rote, structured and programmable and can
be augmented by technology to improve the quality and cost efficiency.
Conversely, the need to produce and deliver these services can limit the
independent's ability to compete with the large nationals and effectively limit
the transaction size and volume that they can practically handle.

     The application of the Engineering Acquisitions business model results in a
technology augmented large independent supplier of M&A and banking services that
will be able to capture a significant portion of the transaction-related
financial services market. The Company has been able to capture a significant
portion of these middle market properties in the last six months by establishing
relationships with over 1,300 small business brokers. In only six months the
combined total sales of these sell-side properties is nearly $2 billion. The
company's next focus on aggregation of sell-side inventory


COMPETITION FOR ENGINEERING ACQUISITION

     The market for the consulting business is new, rapidly evolving  and
intensely competitive. Competition will likely increase in the future. Barriers
to entry are relatively low, and current and new competitors can launch at a
relatively low cost. There are over 2,500 independent M&A Consulting
Organizations practicing in the United States today. About half of these are
sole practitioners. Nearly all of these firms rely on superior expertise in
certain specific target markets to serve as service discriminators. In addition,
they utilize their strong local network as additional drivers of their business.
When competing with larger middle market firms they are at a disadvantage due to
shortcomings in resources, name recognition, and their limited network.


                                       2




     There are several consulting firms that perform services similar to
Engineering Acquisitions. We believe that the primary advantage of Engineering
Acquisitions is Engineering Acquisitions intends to create one of the nation's
largest independent consulting firms, with the following operating objectives:
1. Optimizing Deal Flow - by gathering prospective acquisition targets from our
established network of over 1,300 cooperating brokers and intermediaries and
through national branding, name recognition, and unique, very attractive
financial incentives and terms of service. 2. Exploiting Economies of Scale -
centralizing and automating the structured, programmable services to lower the
costs of delivering these sell-side services and producing a consistent product.
EngAcq plans to establish a significantly improved, proprietary technical
methodology for matching sell-side inventory with buy-side acquisition criteria,
and 3. Delivering Consistent High Quality Service - Through the establishment of
efficient, reproducible processes, which are supported and enhanced by
technology for the purpose of delivering good services to sell-side clients and
delivering customized, qualified acquisition prospects to our buy-side network.
Engineering Acquisition's management has a track record of applying such
principals to services businesses with extraordinary success in the past.

     Engineering Acquisitions, Inc plans to establish one of the largest and the
most unique networks specifically established for the purpose of bringing lower
middle market buyers and sellers together. We have over 1,300 cooperating
brokers and intermediaries throughout the world but mainly in the continental
USA. In addition, we have a network of 5,500 middle market buyers comprised of
private equity groups, venture capital firms, merchant bankers, mezzanine funds,
and corporate buyers as well as over 200 Registered Buyers who have enrolled for
our services and provided us with specifically defined acquisition criteria and
who receive a "first look" a new sell side inventory as it arrives.

     We do not post our sell-side inventory on publicly  available websites or
accessible databases. There are numerous sites such as WWW.BIZBUYSELL.COM,
WWW.MERGERNETWORK.COM, and WWW.WEBMERGERS.COM that consolidate sell side
inventory. However, very few of these companies represent middle market
companies. The reason is confidentiality. Companies will revenues under $5
million can be effective masked and confidentiality protected. A Dry Cleaning
Establishment with $2 million in revenues in New York City can be one of 500
that probably exist in that city, but a competitor and quickly determine who a
$50 button manufacturer in Indianapolis is. The technology must be applied
differently when trying to match up buyers and sellers of middle market
properties.

     Engineering Acquisitions has 1. Defined, and captured data with regard to
the specific acquisition criteria for a significant portion of the US middle
market buyers, and has 2. consolidated a large segment of the middle market
inventory from the Company's own listing, referrals from professional partners
and network of independent representatives, and it 1,300+ cooperating brokers
and intermediaries, and 3. created a technology to efficiently match buyer
criteria and sell-side inventory.

     Engineering Acquisitions was founded in  recognition of the  ability to
better serve the mid market through the standardization of rote activities and
by establishing efficiencies through their consolidation. EngAcq's will
centralize its suite of services to its production branches, which include
marketing, branding, analytics, technology support, and administrative support.
This is similar to what management did in its previous engineering business
which was the long term leader of the industry in operating margin. We realize
that M&A consulting is a relationship-driven business. We provide all of the
services to support the revenue-producing entities. Market dominance is built
upon creating an organization which controls most inventory and can efficiently
deliver high quality, precisely matched products to address its client's needs.
A national organization can expand the networks of the individual market experts
and present to clients and prospects a national organization with a solid core
in general transaction knowledge augmented by technology and accentuated by a
broad skill matrix spanning dozens of verticals.

Geographical Opportunities
EngAcq anticipates opening 9 locations over the next 24 months. In addition to
New York these locations are Los Angeles, Atlanta, Dallas, Phoenix, Houston, Las
Vegas, Chicago, Washington, D.C. and San Francisco. These metropolitan areas are
expected to experience the highest absolute rates of growth over the next five
years and are expected to concurrently demonstrate the largest absolute number
of transactions.


                                       3
Cumaltive
                                                                                        PCT of   PCT of
                                                                                        Total     Total
                                        Population    Population   PCT     Projected   National  National  Population
                                           1990          1999     Growth      2009      Growth    Growth    Change

Los Angeles-Riverside-Orange County, CA
CMSA                                     14,531,529  16,036,587   10.4%   17,697,5271   10.2%    10.2%   1,660,940

Atlanta, GA MSA                           2,959,500   3,857,097   30.3%     5,026,929    2.9%    13.1%   1,169,832

Dallas-Fort Worth, TX CMSA                4,037,282   4,909,523   21.6%     5,970,209    3.4%    16.6%   1,060,686

Phoenix-Mesa, AZ MSA.                     2,238,498   3,013,696   34.6%     4,057,347    2.3%    18.9%   1,043,651

Houston-Galveston-Brazoria, TX CMSA       3,731,014   4,493,741   20.4%     5,412,391    3.1%    22.0%     918,650

Las Vegas, NV-AZ MSA                        852,646   1,381,086   62.0%     2,237,035    1.3%    23.3%     855,949

Chicago-Gary-Kenosha, IL-IN-WI CMSA       8,239,820   8,885,919    7.8%     9,582,680    5.5%    28.8%     696,761

Washington-Baltimore, DC-MD-VA-WV CMSA    6,726,395   7,359,044    9.4%     8,051,197    4.6%    33.5%     692,153

San Francisco-Oakland-San Jose, CA CMSA   6,277,523   6,873,645    9.5%     7,526,376    4.3%    37.8%     652,731
New York-Northern N.J.-L.I.,

NY-NJ-CT-PA CMSA                         19,566,968  20,196,649    3.2%    20,846,5941   2.0%    49.8%     649,945


Market Size And Activity
The total disclosed transaction value of all middle market transactions
completed in 2001 was $704 billion, which was down from $1.28 trillion in 2000.
In total transactions closed, there were 10952 transactions closed in 2001 and
8,423 transaction completed in 2001. There were 9,192 deals completed in 1999
with a total transaction value of $1.43 billion. During this time, no M&A
advisory firm achieved more than a 2% market share.

Many markets continue to demonstrate strong consolidation activity. The table
below is through April 4, 2002


  Rank        Classification                        Deals     Value ($mm)(1)
--------- --------------------------------------- ---------- -------------
   1        Communications                            68        $10,562.7
--------- --------------------------------------- ---------- -------------
   2        Brokerage, Invst. & Mgmt. Consult.       117         $8,829.0
--------- --------------------------------------- ---------- -------------
   3        Miscellaneous Services                   230         $8,189.9
--------- --------------------------------------- ---------- -------------
   4        Automotive Products & Accessory           11         $6,092.0
--------- --------------------------------------- ---------- -------------
   5        Computer Software, Supplies & Svcs.      382         $4,816.7
--------- --------------------------------------- ---------- -------------
   6        Oil & Gas                                 25         $4,386.8
--------- --------------------------------------- ---------- -------------
   7        Banking & Finance                         74         $4,026.6
--------- --------------------------------------- ---------- -------------
   8        Drugs, Medical Supplies & Eqpt            65         $3,570.1
--------- --------------------------------------- ---------- -------------
   9        Retail                                    57         $3,064.6
--------- --------------------------------------- ---------- -------------
  10        Electric,Gas,Water & Sanitary Svcs.       28         $2,748.4
--------- --------------------------------------- ---------- -------------


The marketing challenge for those firms providing services to the mid market
segment is and has been, how to effectively gain market share and deliver
consistently high service levels to a large, fragmented yet difficult to
identify market segment. We believe that this can be accomplished through:

        o   Networked production facilities to pool skills and resources

        o   Marketing efforts that are focused on specific "high-transaction"
            industries in "high-transaction" markets.

        o   Attaining a critical mass to allow a consolidated sales and
            technical production support staff

        o   Establish, implement, and maintain strict financial operating
            parameters for production offices to maintain profitability


                                       4
Fragmentation
The financial advisory services industry that targets the middle market is
highly fragmented, with hundreds of M&A specialists competing with thousands of
law firms, bankers, financial planners and attorneys. No single company or
organization can claim any degree of market dominance or can even be considered
to possess a large share of the market. In the middle market the largest market
share owned by any one entity is less than 2% and the top 27 advisory firms
represented less than 19% of the market.

Below is a ranking of the largest firms active within the middle market:


                         U.S. Announced Advisor Rankings
                         Transactions Under $100 Million
                               1999 Calendar Year


   Rank                 Advisor                     Number of Deals   Market Share  Value ($ millions)

     1            Donaldson, Lufkin & Jenrette             65            1.8             3,742.5
 ---------------- ---------------------------------- -------------- -------------- ------------------
     2            Broadview                                42            1.2             1,803.0
 ---------------- ---------------------------------- -------------- -------------- ------------------
     3            Houlihan Lokey Howard & Zukin            40            1.1             3,159.4
 ---------------- ---------------------------------- -------------- -------------- ------------------
     3            Salomon Smith Barney                     40            1.1             2,288.7
 ---------------- ---------------------------------- -------------- -------------- ------------------
     5            Banc of America Securities LLC           33            0.9             1,355.5
 ---------------- ---------------------------------- -------------- -------------- ------------------
     6            US Bancorp                               30            0.9             1,252.6
 ---------------- ---------------------------------- -------------- -------------- ------------------
     7            Lehman Brothers JP Morgan & Co. Inc.     29            0.8             1,745.9
 ---------------- ---------------------------------- -------------- -------------- ------------------
     8            Tucker Anthony Cleary Gull               28            0.8               893.8
 ---------------- ---------------------------------- -------------- -------------- ------------------
     8            Morgan Stanley Dean Witter               28            0.8             3,602.5
 ---------------- ---------------------------------- -------------- -------------- ------------------
     10           CIBC World Markets                       27            0.8             1,303.9
 ---------------- ---------------------------------- -------------- -------------- ------------------
     10           Key Corp./McDonald Investments           27            0.8             1,249.5
 ---------------- ---------------------------------- -------------- -------------- ------------------
     10           Chase Manhattan Corp.                    27            0.8             1,423.5
 ---------------- ---------------------------------- -------------- -------------- ------------------
     13           Deutsche Bank AG                         23            0.7             1,114.7
 ---------------- ---------------------------------- -------------- -------------- ------------------
     14           Credit Suisse First Boston               22            0.6             1,216.9
 ---------------- ---------------------------------- -------------- -------------- ------------------
     15           Goldman Sachs & Co.                      20            0.6             3,189.4
 ---------------- ---------------------------------- -------------- -------------- ------------------
     15           ING Barings                              20            0.6               885.7
 ---------------- ---------------------------------- -------------- -------------- ------------------
     15           Bear Sterns                              20            0.6             3,214.4
 ---------------- ---------------------------------- -------------- -------------- ------------------
     18           KPMG                                     18                0.5            342.3
 ---------------- ---------------------------------- -------------- -------------- ------------------
     18           Alliant Partners                         18                0.5            377.9
 ---------------- ---------------------------------- -------------- -------------- ------------------
     20           Keefe, Bruyette & Woods                  17                0.5            570.2
 ---------------- ---------------------------------- -------------- -------------- ------------------
     21           Merrill Lynch & Co Inc.                  15                0.4            956.3
 ---------------- ---------------------------------- -------------- -------------- ------------------
     21           Fleet Boston Corp                        15                0.4            768.5
 ---------------- ---------------------------------- -------------- -------------- ------------------
     21           Warburg Dillon Read                      15                0.4            629.4
 ---------------- ---------------------------------- -------------- -------------- ------------------
     24           PricewaterhouseCoopers                   14                0.4            426.8
 ---------------- ---------------------------------- -------------- -------------- ------------------
     25           PaineWebber                              12                0.3            813.9
 ---------------- ---------------------------------- -------------- -------------- ------------------
     25           Hovde Financial, Inc.                    12                0.3            581.4
 ---------------- ---------------------------------- -------------- -------------- ------------------
     25           Prudential Securities, Inc.              12                0.3            553.9
 ---------------- ---------------------------------- -------------- -------------- ------------------

Note:    Values are the aggregate value of the deals in 1999.

Source:  Securities Data Company 1/5/00



                                       5





Note that fragmentation is neither simply a phenomenon of the middle market nor
a single year occurrence.  Of total deals with announced values in 2001, the
statistics remain similar for the market as a whole:


                         U.S. Announced Advisor Rankings
                                  Transactions
                               2001 Calendar Year

 ---------------- ---------------------------------- -------------- -------------- ------------------
   Rank                 Advisor                     Number of Deals** Market Share  Enterprise
                                                                                    Value ($
                                                                                    millions)*
 ---------------- ---------------------------------- -------------- -------------- ------------------
     1            Credit Suisse First Boston               198               2.4%         323,993
 ---------------- ---------------------------------- -------------- -------------- ------------------
     2            Goldman Sachs & Co.                      151               1.8%         452,622
 ---------------- ---------------------------------- -------------- -------------- ------------------
     3            Morgan Stanley & Co.                     124               1.5%         314,667
 ---------------- ---------------------------------- -------------- -------------- ------------------
     4            Houlihan Lokey Howard & Zukin            119               1.4%          12,659
 ---------------- ---------------------------------- -------------- -------------- ------------------
     5            Schroder Solomon Smith Barney            114               1.4%         178,180
 ---------------- ---------------------------------- -------------- -------------- ------------------
     6            Merrill Lynch & Co.                      101               1.2%         336,285
 ---------------- ---------------------------------- -------------- -------------- ------------------
     7            JP Morgan Chase & Co.                    100               1.2%         241,164
 ---------------- ---------------------------------- -------------- -------------- ------------------
     8            Lehman Brothers                           93               1.1%         103,671
 ---------------- ---------------------------------- -------------- -------------- ------------------
     9            UBS Warburg AG                            82               1.0%          87,360
 ---------------- ---------------------------------- -------------- -------------- ------------------
     10           Banc of America Securities LLC            64               0.8%          30,521
 ---------------- ---------------------------------- -------------- -------------- ------------------
     11           Deutsche Bank Alex. Brown                 60               0.7%         121,092
 ---------------- ---------------------------------- -------------- -------------- ------------------
     12           Bear Stearns & Co.                        59               0.7%          66,923
 ---------------- ---------------------------------- -------------- -------------- ------------------
     13           CIBC World Markets                        49               0.6%          26,755
 ---------------- ---------------------------------- -------------- -------------- ------------------
     14           U.S. Bancorp Piper Jaffray                49               0.6%           6,602
 ---------------- ---------------------------------- -------------- -------------- ------------------
     15           Robertson Stephens                        48               0.6%           8,906
 ---------------- ---------------------------------- -------------- -------------- ------------------
     16           Andersen                                  40               0.5%           5,054
 ---------------- ---------------------------------- -------------- -------------- ------------------
     17           Dresdner Kleinwort Wasserstein            38               0.5%          26,701
 ---------------- ---------------------------------- -------------- -------------- ------------------
     18           Keefe Bruyette & Woods                    37               0.4%          10,637
 ---------------- ---------------------------------- -------------- -------------- ------------------
     19           McDonald Investments, Inc.                35               0.4%           1,987
 ---------------- ---------------------------------- -------------- -------------- ------------------
     20           Lazard                                    29               0.4%          79,639
 ---------------- ---------------------------------- -------------- -------------- ------------------
     21           RCB Financial Group                       29               0.4%           7,601
 ---------------- ---------------------------------- -------------- -------------- ------------------
     22           Broadview International                   29               0.4%           2,246
 ---------------- ---------------------------------- -------------- -------------- ------------------
     23           SunTrust Robinson Humphrey                28               0.3%           2,597
 ---------------- ---------------------------------- -------------- -------------- ------------------
     24           William Blair & Co.                       27               0.3%           4,839
 ---------------- ---------------------------------- -------------- -------------- ------------------
     25           SG Cowen Securities Corp.                 25               0.3%           4,610
 ---------------- ---------------------------------- -------------- -------------- ------------------
Source: Mergerstat, 01/02

*  Enterprise Value is the combined value of all deals for which a price was
   announced
** Total Deals includes deals that reported a deal value as well as those that
   did not.


The Engacq Business Model

The EngAcq business model is to create a large, efficient national consulting
firm, with available sell-side inventory in excess of any other consulting firm,
and which specializes in transaction services across and broad array of targeted
verticals and geography. It will utilize its established and growing network of
cooperating brokers and intermediaries to consolidated sell-side inventory, and
will expand its network of registered buyer to add efficiency to this side of
the middle market. It will expand its own listings of sell-side products by
enlarging its network of EngAcq plans to create 10 production offices in
metropolitan areas in which the greatest number of transactions are expected to
occur over the next five years. EngAcq plans to create a centralized support
operation, enhanced by technology, and a team of sales professionals worldwide
to support deal flow and transaction related services.

The independents have the benefits of their unique market segment, industry
focus, small, but well-developed networks and contacts, recognition within their
geography and cost effectiveness. EngAcq plans to be able to maintain these
benefits but will augment its production offices with large inventories and
technology to match inventories with the requirements of its registered buyers,
access to databases, research services, streamlined analysis and administrative
support, sophisticated IT, professional sales and marketing and administrative
and operational support to successfully compete for and transact business on a
national basis. These support functions are some of the advantages of the
international competitors.


                                       6




In addition, the internationals have the advantage of name recognition and
excellent strategic market position as a result of their professional marketing
capabilities and transaction history. They are also able to instill and maintain
in prospects and clients the perception of high quality service capability
initially because of high quality marketing material and sales related activity.
EngAcq plans to create and distribute similar professional marketing material
and augment its sales efforts with professional, experienced marketing
professionals to create and develop the EngAcq branded suite of products.
However, this branding will be focused in certain, very specific,
high-transaction, geographical regions and industries for efficiency.

Engineering Acquisitions will price its services below the competition. This
will be part of our promotion to both buy and sell side clients. Our sell side
services will be offered at a flat 2% and buy side services will be price on a
sliding scale ranging from $50,000 to $150,000. Competitors typically charge, on
the sell side, 8% of the first million, 6% of the second million, 4% of the
third million, 2% of the fourth million and 1% thereafter. This concept is being
successfully implemented in the real estate brokerage business by YHD Foxton.
This is a high margin business and the combination of high transaction volume
and production efficiency will allow the company to maintain industry or above
industry operating margins.

To round out the creation of a large independent financial services firm with
the advantages of the international competition we will create a technology
supported, structured, process oriented, technology supported suite of service
offerings that readily and easily provide the support that most independents are
lacking and which is a distinct advantage of the Nationals. We will provide the
infrastructure behind a national organization. This resultant company will give
the client all of the benefits of dealing with an independent and with the name
recognition, branding, and perception of high-quality of the Internationals. In
addition, unlike the Internationals, EngAcq will be positioned as M&A
specialists rather than a conglomerate of financial services.

The management of EngAcq created this business model after struggling as
independent providers with the very same issues that this business plan
addresses. As experienced independent mid market professionals who have worked
on both the buy side and the sell side. We understand what it takes to compete
with limited resources and have determined how to overcome these obstacles and
to create an organization that offers the competitive advantages of both
competitive entities. In addition, we have operated middle market businesses and
grown organizations of value and returned triple digit ROI'S to our investors.
We understand how to create systems, automate processes, and to utilize
technology which actually adds efficiency to an organization. We are well versed
in operating consulting organizations of service professionals and have created
novel efficiencies which allowed personnel utilization to exceed industry
averages by more than 15% and operating margins to consistently be the highest
in the industry.

The Independent Representative Program

The Independent Representative's Program engages active sales professionals
across the country to pursue M&A consulting and banking business for Trade. The
promotion of Trade's services to the Representative's clients can be done
without disrupting or interfering with the Representative's normal sales
activities. There is no sales process. Trade provides its services only to
business owners who have already decided to sell their businesses. An important
fact is that EngAcq never attempts to convince a business owner that she or he
should sell their business, that is their decision. Likewise, we do not advise
business owners that they should implement a business expansion agenda involving
strategic acquisitions. We can advise on the state of the particular market and
transaction structure. We can advise business owner of what they can expect to
receive in consideration for their business and what the possible transaction
parameters may be. The business owner alone decides whether she or he is a buyer
or a seller or neither. However, once such a decision is made, we can supply
information on valuation and price positioning. We can guide the business owner
every step of the way through the process. We can advise on how to recast
financial statements and how buyers should evaluate a business. We do not
provide advice on whether or not an owner should sell his or her business.
Therefore, if "sales" is defined as persuading a customer that they need our
services, then this is not a sales process at all. If a business owner has
decided on an exit strategy through divestiture of the business, he or she has
defined the need for our services. Our job is to inform the seller or the buyer
of how we can accelerate and streamline the process and guide the owner through
it. With that point made, the Independent Representatives Program engages active
sales professionals, financial advisors, attorneys, or a myriad of other
professionals who have frequent and consistent contacts with high numbers of
various business owners. Ideally, these professionals are in a position to have
a need to know some of the intimate details of the prospect's business and have
close and longstanding relationships with the business owners.

We will be very selective with regard to the number and types of Representative
that we allow into this program. There are presently two on board and we are
speaking with an additional four. In as much as, the economic downturn has
resulted in the displacement of numerous highly qualified financial and sales
professionals. We believe that a good source of Independent Representatives, in
additional to working sales professionals are these ranks of the recently
unemployed. We anticipate that in two years we will have 10 strategically
located Independent Representatives. We supply them with training, marketing
material, and hold biweekly conference calls to update them on the activities
within the company, and they are compensated with 5% to 15% of the total
transaction fee, when one of their deals closes.


                                       7
The Professional Partners Program

The Professional Partners Program consists of larger Financial Advisory Services
competitors, who are positioned to refer leads to EngAcq for opportunities that
they traditionally will not service. We currently have relations with several
large, national investment banking firms and numerous smaller banking firms,
private equity groups, legal firms, accounting firms, merchant banking firms,
and commercial banks. As with the Independent Representative Program, the
contacts within these Professional Partners are compensated for referrals of
prospects, which become clients and achieve closing. The advantages to the
Professional Partners is that Key in the professional partner arrangement is
access to the deals that the larger competitors do not find financially viable
and/or do not have the middle market expertise to successfully execute. These
most often include the mid market transactions for which EngAcq have the
qualifications and specific expertise.

The Professional Partner Network targets include:

        o   Third millennium Management
        o   Tripoint Capital Partners
        o   UBS Paine Webber
        o   McDermott, Will, and Emory
        o   Grant Thornton
        o   Ladenburg Thalmann


                           Other Partnering Prospects

     --------------------------------------- -----------------------------------
        National Accounting Firms Large         Management Consultants
        Commercial Banks                        Acquisition Lenders
        Accountants/Tax Attorneys Investment    Valuation Firms
        Banks                                   Financial Planners
        Law Firms                               Business Brokers
        LBO Firms                               Finders
     --------------------------------------- -----------------------------------



Marketing Plan Highlights

Engineering Acquisitions plans to market its services through the efforts of the
regional personnel at the branch offices and targeted efforts from the corporate
entity in New York. A focused effort will be implemented to target both buyers
and sellers. Solicitations to Seller will be through targeted email and direct
mail of materials to middle market businesses in the aforementioned metropolitan
areas and in carefully selected target industries. Solicitations for buyers will
be the same group as the Sellers but will also include private equity groups,
venture capital firms, individual investors as well as strategic buyers in
specific industries internationally.

Pricing

Attractive pricing is one of the most important aspects of capturing sell-side
market share. EngAcq's 2% commission up to $20 million in total invested capital
is unique in the industry. 50% of middle market transactions proceed without a
sell-side intermediary. The main reason for this is that many sellers do not
perceive the value-added nature of the intermediary, especially at the lower end
of the lower middle market. On a $3 million transaction, a typical fee for
sell-side representation may be $180,000 to $240,000. The seller does not
anticipate that the intermediary can bring that much value to the transaction.
This, despite the fact that transactions involving a sell-side intermediary are
20% higher than those without, and that without a sell-side intermediary
confidentiality will likely be compromised, and numerous other reasons that
clearly indicate that failure to engage competent representation is pennywise
and pound-foolish. Nevertheless, on a $3 million transaction, EngAcq's fees
would be $60,000, and the Company believes that this, coupled with the
non-exclusivity of the engagement and the parallel payment concept will persuade
a significant number of this universe of sellers to reconsider engaging an
intermediary.

Branding

Most National competitors have enormous budgets for their across the board
services and to develop their national brand. However since they offer such a
broadly diverse service menu, most business owners are still unaware that they
are engaged in middle market M&A. Most independents do not have the financial
resources, which would permit them to establish a national branding and rather
focus on developing name recognition within their chose vertical. In both cases
there results in little national name recognition of middle market consulting
firms specializing in M&A consulting. EngAcq's objective is to focus on middle
market buyers and selling within the ten selected US markets and to develop the
name as the ultimate specialists in mid market M&A.



                                       8
Targeted Marketing

Most national M&A consulting services providers do a great deal of targeted
marketing, mainly through direct mail. EngAcq will also utilize direct email,
our on-line buyer's registry, and other technical resources to provide an
effective targeted marketing plan which when augmented by the national branding
and other marketing strategies will result in established EngAcq as a prime
resource in M&A value added consulting. The email marketing campaign has been
very effective in soliciting Buyers. To date, such efforts have yielded
excellent results. Emails have been sent to potential buyers briefly telling
them of EngAcq's services and directing them to the Buyer's Registry on our
website. We have experienced a 5% response rate thus far from these types of
email campaigns.

Targeted industrial marketing refers to an initiative within certain industries
in which we will develop broad specialties and compile industry statistics based
first on public data and expanding to include private companies. This data will
be valuable to operators in that industry who can utilize the data as benchmarks

Technology Advantage

The management of EngAcq comes from a high tech background and we intend to
utilize technology to produce a competitive advantage through effectively mining
data from our website and enabling the more efficient production of work
products and deliverables. In addition, we expect that marketing efficiency will
be enhanced through the use of shared client databases, on line skills and
experience matrices, and buyer and seller profiles. All frequently used forms,
contracts, agreements, worksheets, offering memoranda, report templates and
financial analysis tools will be available on line and many routine deliverables
will be generated in an automated format. We will also have the ability for a
sales personnel to generate their own targeted emailings and direct mailings to
specific client lists and databases. All branches will be connected via a
virtual private network and a web based contact management system.

GOVERNMENT REGULATION

     We are  subject, both  directly  and indirectly,  to various laws  and
governmental regulations relating to our business. We believe we are currently
in compliance with such laws and that they will not have a material impact on
our operations. Moreover, there are currently few laws or regulations directly
applicable to access to or commerce on the Internet. However, due to the
increasing popularity and use of the Internet, we expect that laws and
regulations will be adopted. The enactment of any such laws or regulations in
the future may slow the growth of the Internet, which could in turn decrease the
demand for our services and increase our cost of doing business or otherwise
have an adverse effect on our business, results of operations and financial
condition.

CORPORATE HISTORY

     Phon-Net.com, Inc. is a corporation organized under the laws of the State
of Florida on January 16, 1997, under the name XGA Golf International, Inc. XGA
Golf was formed for the purpose of acquiring three companies engaged in various
aspects of the golf and golf-travel industries. However, these acquisitions were
not completed. In June 1998, XGA Golf changed its name to Agrosol, Inc. From
June 1998 until October 1998, XGA Golf could be considered a shell company
seeking to acquire an operating business. Its officers and directors during this
period were Lana Bea Turner, Eric Redd and Steven Dadson. Its principal
shareholders at the time were Eric Redd, John Canavan, Dorothy A. Cleveland and
Richard Dibona.

     Piedmont Technologies, Inc. was organized under the laws of British
Columbia on March 18, 1996. Phon-Net Corp. was organized under the laws of the
State of Nevada on August 28, 1998. Effective October 5, 1998, Piedmont was
reorganized to change its domicile from British Columbia to Nevada. The
reorganization was effected by Phon-Net Corp.'s acquisition of all of the
outstanding shares of Piedmont and its subsidiaries, The National-For-Sale Phone
Company and VNETT Enterprises Inc. At the time of the reorganization, Phon-Net
Corp. owned certain intellectual property developed by Brian Collins and
incorporated in various interactive voice and text products. At the time of the
reorganization, Piedmont, through its subsidiaries, had a Canadian operating
license for the technology that was owned by Phon-Net Corp. At that time, Brian
Collins was also an officer and directors of Piedmont, and owned approximately
20% of Piedmont common stock. Following this transaction, Piedmont became a
wholly-owned subsidiary of Phon-Net Corp. and National and VNETT remain
wholly-owned subsidiaries of Piedmont.


                                       9



     On October 5, 1998, Agrosol, Inc. exchanged 11,410,000 shares of its common
stock, at an ascribed value of nil, for all of the outstanding shares of
Phon-Net Corp., and changed its name to Phon-Net Corporation. The assets we
acquired from Phon-Net Corp. at the time of the share exchange consisted of
ownership of the rights to our Phon-Net Direct Connect and Phon-Net Search
Engine, as well as the rights and assets of Piedmont including the operations of
National.

     In January 1999, we changed our name to Phon-Net.com, Inc. On April 15,
1999, we increased the number of shares of common stock we are authorized to
issue to 80,000,000.

     Currently, all ownership rights to our Direct Connect and Search Engine
products are owned by Phon-Net.com, Inc. Piedmont's operations are limited to
performing beta-testing of our products. National operates an interactive real
estate and professional listing service which, through an "800" telephone
number, allows users to access real estate listings, as well as providers of
related services such as real estate attorneys, surveyors and title companies.
National's operations are not currently material to our business or financial
condition. VNETT owns the rights to a search engine concept that enables users
to locate and reserve video tapes from retail video rental locations. VNETT is
not currently engaged in active operations.

     IN September 2001, management of Phon-net was change from Brian Collins to
Todd Violette.

     Under Mr. Violette's direction, the company focus was changed for an
internet company into a company looking for acquisition in the environmental
field.

EMPLOYEES

     We currently employ two people, two is full-time employee, in the following
capacities of executive officers. EngAcq currently employees three people.

ITEM 2. DESCRIPTION OF PROPERTIES

     We are currently operating from 244 W. 54th Suite 500, New York, New York
10019 and 620- 1207 11th Ave SW, Calgary Alberta T3C 0M5

ITEM 3. LEGAL PROCEEDINGS

     NONE



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

     None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS


     Our shares of common stock are traded on the OTC Electronic Bulletin Board
under the symbol "ESTT". From October 24, 2000 to November 12, 2002 the
Company's Stock has been trading on the OTC Bulletin Board market. From May 24,
2000 until October 24, 2000 our shares were traded over-the-counter, in the pink
sheets. The reported high and low bid prices for the common stock are shown
below for the period from October 1, 1998  through September 30, 2002. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not represent actual transactions.

Period                                     High        Low
------                                    ------      -----
October 1, 1998 - December 31, 1998      $.37375      $.0625
January 1, 1999 - March 31, 1999         $  1.50      $  .12
April 1, 1999 - June 30, 1999            $   .69      $  .19
July 1, 1999 - September 30, 1999        $   .41      $  .19
October 1, 1999 - December 31, 1999      $   .81      $  .07
January 1, 2000 - March 31, 2000         $  8.47      $  .73
April 1, 2000 - June 30, 2000            $  2.44      $  .55
July 1, 2000 - September 30, 2000        $  1.90      $  .50
October 1, 2000- December 31, 2000       $ 0.625      $0.105
January 1, 2001- March 31, 2001          $0.1875      $ 0.04
April 1, 2001- June 30, 2001             $  0.45      $ 0.06
July 1, 2001- September 30, 2001         $  0.12      $ 0.05
October 1, 2001- December 31, 2001       $  0.03      $0.075
January 1, 2002- March 31, 2002          $  0.05      $ 0.30
April 1, 2002- June 30, 2002             $  0.65      $ 0.18
July 1, 2002- September 30, 2002         $ 0.035      $ 0.15


                                       10



     Our common stock is owned of record by approximately 203 holders.  We have
never paid cash dividends on our common stock. We intend to keep future
earnings, if any, to finance the expansion of our business, and we do not
anticipate that any cash dividends will be paid in the foreseeable future. Our
future payment of dividends will depend on our earnings, capital requirements,
expansion plans, financial condition and other relevant factors.

     The market for securities of companies that participate in emerging markets
historically has been more volatile than the market for stocks in general. The
price of our common stock may be subject to wide fluctuations in response to the
following and other factors:

         o   quarter-to-quarter variations in our operating results;
         o   our announcement of material events that affect our business;
         o   price fluctuations in sympathy to others engaged in our industry;
             and
         o   the effects of coverage of our business or our management by the
             press.

     If we do not have a substantial market for our shares, a significant number
of shares being sold could greatly affect the market and cause a decline in the
price of our common stock. Moreover, historic market prices may not be
indicative of the prices at which our shares can be bought or sold.

     The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Depending on
market fluctuations, our common stock could be considered to be a "penny stock".
A penny stock is subject to rules that impose additional sales practice
requirements on broker/dealers who sell these securities to persons other than
established customers and accredited investors. For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of these securities. In addition he must receive the purchaser's
written consent to the transaction prior to the purchase. He must also provide
certain written disclosures to the purchaser. Consequently, the "penny stock"
rules may restrict the ability of broker/dealers to sell our securities, and may
negatively affect the ability of holders of shares of our common stock to resell
them.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL
CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. EXCEPT FOR THE HISTORICAL
INFORMATION CONTAINED HEREIN, THE DISCUSSION CONTAINED IN THIS REPORT CONTAINS
"FORWARD-LOOKING STATEMENTS" THAT INVOLVE RISK AND UNCERTAINTIES. THESE
STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD" OR "ANTICIPATES" OR THE NEGATIVE
THEREOF OR SIMILAR EXPRESSIONS OR BY DISCUSSIONS OF STRATEGY. THE CAUTIONARY
STATEMENTS MADE IN THIS REPORT SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS REPORT. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THIS REPORT.

Result of Operations

During the twelve month period ended July 31, 2002, we had revenues of Nil
compared to $1,720 in the same period in 2001. We incurred general and
administrative expenses of $522,269 for the year ended July 31, 2002 and
$228,089 for the year ended July 31, 2001. Net Loss in the year ended July 31,
2002 was ($1,164,460) or ($.04) per share compared to net loss of ($1,504,749)
or ($..08) per share in the same period 2001. We recognize revenues as they are
earned, not necessarily as they are collected. Direct costs such as hardware and
software purchases for resale and subcontracting fees are classified as cost of
goods sold. General and administrative expenses include salaries, accounting,
advertising, contract labor, bank charges, entertainment, equipment rental,
insurance, legal, supplies, pay roll taxes, postage, professional fees,
telephone and travel.


                                       11
Liquidity and Capital Resources.

The audited financial statements for the year ended July 31, 2002 indicated that
there is substantial doubt respecting our ability to continue as a going
concern. The qualification was due to our need to generate positive cash flow
from operations or obtain additional financing. During the year ended July 31,
2002, we were unable to generate positive cash flow. No assurance can be given
that we will ever to achieve positive cash flows or obtain additional financing
for operations. We have incurred losses since the inception of our business. We
expect to continue to incur losses until we increase our revenues while reducing
costs of good sold and general and administrative expenses. We have been
dependent on additional funding from lenders and investors to conduct
operations. At July 31, 2002 we had a retained deficit of ($14,235,363) compared
to retained deficits of ($13,070,903) at and July 31, 2001, respectively. As of
July 31, 2002, we had total current assets of nil and total current liabilities
of $521,344.. We currently have no material commitments for capital
expenditures. We will continue to evaluate possible acquisitions or investments
in businesses, products and technologies that are complimentary to ours. These
may require the use of cash which would require us to seek financing. We believe
that existing cash, investments and loans available under our present credit
facilities will only be sufficient for the next 1 to 2 months. However, we may
sell additional equity or debt securities or seek additional credit facilities
to fund acquisition-related or other business costs. Sales of additional equity
or convertible debt securities would result in additional dilution to our
stockholders. We may also need to raise additional funds in order to support
more rapid expansion, develop new or enhanced services or products, respond to
competitive pressures, or take advantage of unanticipated opportunities. Our
future liquidity and capital requirements will depend upon numerous factors,
including the success of our service offerings and competing technological and
market developments.

Refer to the Auditors Repot and Notes to financial statements for further
explanation of the results of operations.


ITEM 7. FINANCIAL STATEMENTS


          Environmental Strategies and Technologies International Inc.
                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)


                        CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)




                                       12



INDEPENDENT AUDITORS' REPORT




To the Shareholders
Environmental Strategies and Technologies International Inc.
(Formerly Phon-net.com Inc.)
(A development stage company)


We have audited the consolidated balance sheets of Environmental Strategies and
Technologies International Inc. (formerly Phon-net.com, Inc.) (a development
stage company) as at July 31, 2002 and 2001, and the consolidated statements of
operations, cash flows, and stockholders' equity for the years ended July 31,
2002, 2001, and 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at July 31, 2002 and
2001 and the results of its operations and its cash flows for the years ended
July 31, 2002, 2001, and 2000 in accordance with United States generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses and net cash
outflows from operations since inception. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also discussed in Note 1. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



Vancouver, Canada                                            "Morgan & Company"

November 29, 2002                                          Chartered Accountants`

`13
Environmental Strategies
                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)


CONSOLIDATED BALANCE SHEETS
                            (Stated in U.S. Dollars)

--------------------------------------------------------------------------------
                                                              JULY 31
                                                       2002             2001
--------------------------------------------------------------------------------
ASSETS

Current
     Cash                                           $     -           $     27
     Current assets of discontinued operations            -             17,793
                                                    ----------------------------
                                                          -             17,820
Intangibles (Note 3)                                      -            298,835
Long Term Assets Of Discontinued Operations               -             51,941
                                                    ----------------------------

                                                    $     -           $368,596
================================================================================

LIABILITIES
Current
     Accounts payable and accrued liabilities
        (Note 6)                                    $ 266,095         $ 80,708
     Due to related parties                           255,249               -
     Current liabilities of discontinued operations        -           386,150
                                                    ----------------------------
                                                      521,344          466,858
                                                    ----------------------------

STOCKHOLDERS' DEFICIENCYM

Capital Stock (Note 4)
     Authorized:
         400,000,000 common shares, par value
         $0.001 12,000,000 Class B common shares,
         par value $0.00 20,000,000 preferred
         shares, par value $0.001

     Issued and outstanding
          37,581,018 common shares at July 31, 2002
          and 22,117,618 common shares at July 31,
          2001 12,000,000 Class B common shares at
          July 31, 2002 and Nil Class B common
          shares at July 31, 2001                   1,171,420        1,155,957

     Additional paid-in capital                    12,921,214       11,857,757

                                                  (14,235,363)     (13,070,903)
Deficit
                                                     (378,615)         (41,073)
Other
                                                    ----------------------------
                                                     (521,344)         (98,262)
                                                    ----------------------------

                                                    $      -          $368,596
================================================================================

Approved by the Board of Directors:

-----------------------------------          -----------------------------------


                                       14
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS
                            (Stated in U.S. Dollars)



                                                                                       INCEPTION
                                                                                        MARCH 19
                                                                                        1996 TO
                                                   YEARS ENDED JULY 31                  JULY 31
                                                    2002          2001      2000         2002
---------------------------------------------------------------------------------------------------

 Revenue                                           $   -         $ 1,720    $ 4,604     $  27,854
                                                    -----------------------------------------------

Expenses
     Advertising and promotion                    282,883        291,316    173,469     1,230,478
     Amortization of intangibles                  298,835        326,000    326,000       978,000
     Amortization of convertible note discount         -              -     471,525       787,382
     Bank charges and interest                         30            166     23,704        26,887
     Contract cancellation                             -          80,500    762,000       842,500
     Office and sundry                                812          6,342      8,795        19,387
     Professional fees                            183,467        220,246    119,094       585,590
     Rent and utilities                             9,210             -          -          9,210
     Software support                                  -              -     121,000       132,000
     Telephone                                      3,803             -         948         4,751
     Transfer agent and filing fees                 8,597         11,296     18,858        45,251
     Travel                                         3,923         21,369      8,400        34,492
     Salaries and benefits                        495,924        189,082  1,882,799     7,140,305
                                                    -----------------------------------------------
                                                1,287,484      1,146,317  3,916,592    11,836,233
                                                    -----------------------------------------------

Loss From Continuing Operations                 1,287,484      1,144,597  3,911,988    11,808,379
                                                    -----------------------------------------------

Gain On Disposition Of Subsidiaries              (199,459)            -          -       (199,459)

Loss On Discontinued Operations                    76,435        360,152    628,854     2,231,933
                                                    -----------------------------------------------

Net (Gain) Loss On Discontinued Operations       (123,024)       360,152    628,854     2,032,474
                                                    -----------------------------------------------

Loss For The Year                              $1,164,460     $1,504,749 $4,540,842   $13,840,853
===================================================================================================

Loss Per Share                                      $0.04          $0.08      $0.29
===================================================================================================

Weighted Average Number Of Shares Outstanding  27,991,654     18,916,078  5,508,120
===================================================================================================


                                       15
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Stated in U.S. Dollars)


                                                                                    INCEPTION
                                                                                    MARCH 19
                                                                                     1996 TO
                                              YEARS ENDED JULY 31                    JULY 31
                                              2002            2001       2000         2002
--------------------------------------------------------------------   --------    -----------


Cash Flows From Operating Activities
     From Continuing Operations          $(1,287,484)   $(1,144,597)  $(3,911,988)  $(11,808,379)
                                         --------------------------------------------------------


Adjustments To Reconcile Loss From Continuing
   Operations To Net Cash Used By
     Operating Activities
     Stock issued for other than cash        558,685        429,200     2,579,079      8,811,821
     Amortization                            298,835        326,000       326,000        978,000
     Change in accounts payable and
     accrued liabilities                     174,565         98,805         2,171        266,095
     Change in due to related parties        255,249             -             -         255,249
                                         --------------------------------------------------------
Total Adjustments                          1,287,334        854,005     2,907,250     10,311,165
                                         --------------------------------------------------------

Net Cash Used In Operating Activities
     From Continuing  Operations                (150)      (290,592)   (1,004,738)    (1,497,214)
                                         --------------------------------------------------------
Cash Flows From Financing Activities
     From Continuing Operations

     Common stock issued                          -          85,000       635,000       1,985,723

     Stock issue costs                            -              -             -         (157,920)

     Convertible notes issued                     -              -        600,250       1,337,250
                                          --------------------------------------------------------

Net Cash From Financing Activities From
     Continuing Operations                        -          85,000     1,235,250       3,165,053
                                          --------------------------------------------------------


Net Cash Used In Discontinued Operations        (123)        60,146      (265,566)     (1,667,839)
                                         --------------------------------------------------------

Net Increase (Decrease) In Cash                  (27)      (145,446)      (35,054)             -

Cash, Beginning Of Year                           27        145,473       180,527              -
                                         --------------------------------------------------------

Cash, End Of Year                              $  -         $    27      $145,473       $      -
=================================================================================================


SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:

July 31, 2002

The Company issued 15,463,400 common shares at a fair value of $1,078,920 for
consulting services and salary compensation, of which $184,000 was allocated to
discontinued operations.

July 31, 2001

The Company issued 1,320,000 common shares at a fair value of $180,500 for
termination of an investor relations contract and an employment contract.

The Company issued 595,500 common shares at a fair value of $273,700 for
consulting services and salary compensation.


                                       16
Environmental Strategies and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            (Stated in U.S. Dollars)


                              CLASS B STOCK
                                 NUMBER      NUMBER                   ADDITIONAL
                                   OF          OF       COMMON STOCK   PAID-IN                ACCUMULATED
                                 SHARES      SHARES        AMOUNT      CAPITAL       OTHER      DEFICIT       TOTAL
                               -----------  ----------  -----------  ------------  ---------  ------------  ----------

Balance, July 31, 1998           -         7,455,676    $  415,099    $     -      $  2,975   $ (401,069)   $   17,005

Issuance of common stock         -         1,966,324       618,259          -            -            -        618,259
Translation adjustment           -                -             -           -           987           -            987
Loss for the year                -                -             -           -            -      (588,085)     (588,085)
                               ---------------------------------------------------------------------------------------

Balance, July 31, 1999           -         9,422,000     1,033,358          -         3,962     (989,154)       48,166

Issuance of common stock         -           578,000        77,365          -            -            -         77,365
                               ---------------------------------------------------------------------------------------
                                 -        10,000,000     1,110,723          -         3,962     (989,154)      125,531
Consolidation of stock on
   1 for 2 basis                 -        (5,000,000)           -           -            -            -             -
                               ---------------------------------------------------------------------------------------
                                 -         5,000,000     1,110,723          -         3,962     (989,154)      125,531
Adjustment to number of shares
   issued and outstanding as a
   result of the reverse
   take-over transaction
     Piedmont Technologies Inc.  -        (5,000,000)           -           -            -           -              -
     Phon-net Corp.              -         7,000,000            -           -            -           -              -
                               ---------------------------------------------------------------------------------------
                                           7,000,000            -           -            -           -         125,531
Ascribed value of the shares
   issued in connection with
   the acquisition of Piedmont
   Technologies Inc.             -         5,000,000         5,000       2,000           -           -           7,000
                               ---------------------------------------------------------------------------------------
                                 -        12,000,000     1,115,723       2,000        3,962    (989,154)       132,531
Adjustment to number of
   shares issued and
   outstanding as a result
   of the reverse take-over
   transaction Phon-net Corp.    -       (12,000,000)           -           -            -           -              -
   Phon-net.com, Inc.            -           730,000            -           -            -           -              -
                               ---------------------------------------------------------------------------------------
                                 -           730,000     1,115,723       2,000        3,962    (989,154)       132,531
                               ---------------------------------------------------------------------------------------



                                       17
Environmental Strategies and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            (Stated in U.S. Dollars)



                              CLASS B STOCK
                                 NUMBER      NUMBER                   ADDITIONAL
                                   OF          OF       COMMON STOCK   PAID-IN                ACCUMULATED
                                 SHARES      SHARES        AMOUNT      CAPITAL       OTHER      DEFICIT       TOTAL
                               -----------  ----------  -----------  ------------  ---------  ------------  ----------

Balances carried forward         -           730,000    $1,115,723    $  2,000      $ 3,962   $(989,154)     $ 132,531

Ascribed value of the shares
   issued in connection with
   the acquisition of Phon-net
   Corp.                         -         2,282,000            -           -            -           -              -
                               ---------------------------------------------------------------------------------------
                                 -         3,012,000     1,115,723       2,000        3,962    (989,154)       132,531
Issuance of common stock
     For cash                    -            92,000           460     154,540           -           -         155,000
     For services                -           343,000         1,715     480,285           -           -         482,000
     For technology              -           528,649         2,643     975,357           -           -         978,000
     For compensation expense    -         2,617,000        13,085   4,470,915           -           -       4,484,000
     On conversion of promissory
        notes                    -           541,486         2,707   1,050,150           -           -       1,052,857
     For deferred compensation
        expense                  -            71,352           357     131,643     (132,000)         -              -
Stock issue costs                -                -             -     (212,920)          -           -        (212,920)
Amortization of deferred
   compensation                  -                -             -           -        11,000          -          11,000
Translation adjustment           -                -             -           -        (2,949)         -          (2,949)
Loss for the year                -                -             -           -            -   (6,036,158)    (6,036,158)
Issuance of common stock
     For compensation expense    -           640,000         3,200   1,660,800           -           -       1,664,000
     For services                -            71,400           357     129,268           -           -         129,625
     For contract cancellation   -            40,000           200     761,800           -           -         762,000
     For conversion of
        promissory notes         -           356,422         1,782     621,922           -           -         623,704
     Options exercised           -           317,500         1,588     633,412           -           -         635,000
Discount on convertible notes    -                -             -      471,525           -           -         471,525
Amortization of deferred
   compensation                  -                -             -           -       121,000          -         121,000
Loss for the year                -                -             -           -            -   (4,540,842)    (4,540,842)
Translation adjustment           -                -             -           -       (15,540)         -         (15,540)
                               ---------------------------------------------------------------------------------------
Balance, July 31, 2000           -         8,630,809     1,143,817  11,330,697      (14,527)(11,566,154)       893,833
                               ---------------------------------------------------------------------------------------


                                       18
Environmental Strategies and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            (Stated in U.S. Dollars)



                              CLASS B STOCK
                                 NUMBER      NUMBER                   ADDITIONAL
                                   OF          OF       COMMON STOCK   PAID-IN                ACCUMULATED
                                 SHARES      SHARES       AMOUNT       CAPITAL       OTHER      DEFICIT       TOTAL
                               -----------  ----------  -----------  ------------  ---------  ------------  ----------

Balances carried forward         -         8,630,809    $1,143,817 $11,330,697     $(14,527)$(11,566,154)    $ 893,833

Issuance of common stock
     For compensation expenses   -         1,217,500         6,088     135,912           -            -        142,000
     For services                -           315,500         1,577     205,123           -            -        206,700
     For contract cancellations  -            70,000           350      80,150           -            -         80,500
     Options exercised           -         1,112,500         5,563   1,279,437           -            -      1,285,000
     Cancelled on redemption     -          (600,000)       (3,000) (1,197,000)          -            -     (1,200,000)
     For deferred compensation
        expense                  -           312,500         1,562      23,438      (25,000)          -             -
Loss for the year                -                -             -           -            -   (1,504,749)    (1,504,749)
Translation adjustment           -                -             -           -        (1,546)          -         (1,546)
                               ---------------------------------------------------------------------------------------

Balance, July 31, 2001           -        11,058,809     1,155,957  11,857,757      (41,073)(13,070,903)       (98,262)

Issuance of common stock
     For services                -         2,206,700         2,207     215,463           -           -         217,670
     For compensation expense    -         1,750,000         1,750     225,750           -           -         227,500
Split of stock on 2 for 1 basis  -        15,015,509    (1,129,883)  1,129,883           -           -              -
Issuance of Class B stock     12,000,000          -             -           -            -           -              -
Issuance of common stock
     For compensation expense    -         3,000,000         3,000     313,250           -           -         316,250
     For services                -         4,550,000         4,550     312,950           -           -         317,500
Amortization of deferred
   compensation                  -                -             -           -      (332,500)         -        (332,500)
Subscriptions receivable         -                -             -           -       (21,115)         -         (21,115)
Loss for the year                -                -             -           -            -   (1,164,460)    (1,164,460)
Translation adjustment           -                -             -           -        16,073          -          16,073
                               ---------------------------------------------------------------------------------------
Balance, July 31, 2002        12,000,000  37,581,018    $   37,581  $14,055,053   $(378,615) $(14,235,363)   $(521,344)
                               =======================================================================================



                                       19
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



1.   GOING CONCERN

Since inception, the Company has suffered recurring losses and net cash outflows
from operations. Since its inception, the Company has funded operations through
common stock issuances and related party loans in order to meet its strategic
objectives. Management believes that sufficient funding will be available to
meet its business objectives, including anticipated cash needs for working
capital, and is currently evaluating several financing options. However, there
can be no assurance that the Company will be able to obtain sufficient funds to
continue the development of and, if successful, to commence business operations.
As a result of the foregoing, there exists substantial doubt about the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


2.   SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States. Because a precise
determination of many assets and liabilities is dependent upon future events,
the preparation of financial statements for a period necessarily involves the
use of estimates which have been made using careful judgement.

The financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:

     a)  Consolidation
         These financial statements include the accounts of the Company and its
         wholly-owned subsidiaries, Phon-net Corp., (incorporated in Nevada,
         U.S.A.), Piedmont Technologies Inc., The National For Sale Phone
         Company Inc., and V NETT Enterprises Inc., all incorporated in Canada.

         Effective July 31, 2002, the Company disposed of its Canadian
         subsidiaries. The results of operations of these subsidiaries up to
         July 31, 2002 are classified as discontinued operations.


                                       20
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



     b)  Revenue Recognition

         The Company's revenue arises from contracts entered into to facilitate
         beta-testing of its various products and is recognized over the term of
         the contract. The Company's revenues through July 31, 2000 were
         generated from contracts relating to its interactive real estate and
         professional listing service which was the initial product under
         development, as well as the search engine product. No revenue has been
         generated to July 31, 2000 from the Direct Connect product. Once
         revenue is generated by the Direct Connect or Search Engine products,
         the revenue allocated to post contract support will be recognized
         rateably over the term of the support and revenue allocated  to service
         elements will be recognized as the services are performed.

     c)  Intangibles

         Intangibles are recorded at cost and amortized as follows:

                Technology costs       3 years straight line basis

         Management reviews technology costs for impairment whenever events or
         changes in circumstances indicate that the carrying amounts may not be
         recoverable.

     d)  Capitalized Costs

         Costs for developing computer software will be capitalized when
         technological feasibility has been established for the computer
         software product. Capitalization of computer software costs will be
         discontinued when the product is available for general release to
         customers and such costs are amortized on a product-by-product basis
         over the estimated lives of the products. At each balance sheet date,
         the unamortized capitalized costs of a computer software product shall
         be compared to the net realizable value of that product. The amount by
         which the unamortized capitalized costs of a computer software product
         exceed the net realizable value of that asset shall be written off. To
         date, the Company has not capitalized any costs related to the
         development of computer software.

         Purchased computer software, which includes programs used for company
         management and software development are capitalized and amortized as
         disclosed in the capital assets significant accounting policy note.

     e)  Income Taxes

         The Company has adopted Statement of Financial Accounting Standards No.
         109 -  "Accounting for Income Taxes" (SFAS 109). This standard requires
         the use of an asset and liability approach for financial accounting and
         reporting on income taxes. If it is more likely than not that some
         portion of all of a deferred tax asset will not be  realized,  a
         valuation allowance is recognized.


                                       21
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



     f)  Foreign Currency Translation

         The Company's subsidiaries' operations are located in Canada, and its
         functional currency is the Canadian dollar. The financial statements of
         the subsidiary have been translated using the current method whereby
         the assets and liabilities are translated at the year end exchange
         rate, capital accounts at the historical exchange rate, and revenues
         and expenses at the average exchange rate for the period. Adjustments
         arising from the translation of the Company's subsidiary's financial
         statements are included as a separate component of shareholders'
         equity.

     g)  Financial Instruments

         The Company's financial instruments consist of cash, accounts
         receivable, accounts payable, notes payable, and amounts due to and
         from related parties.

         Unless otherwise noted, it is management's opinion that this Company is
         not exposed to significant interest or credit risks arising from these
         financial instruments. The fair value of these financial instruments
         approximate their carrying values, unless otherwise noted.

     h)  Loss Per Share

         The loss per share is calculated using the weighted average number of
         common shares outstanding during the year. Fully diluted loss per share
         is not presented, as the impact of the exercise of options is anti-
         dilutive.

     i)  Deferred Compensation

         Deferred compensation arising from the issue of capital stock is shown
         as a reduction of stockholders' equity.

         Amortization of the deferred amount is provided for over the term of
         the contract for which the services are provided.


                                       22

Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)




3.   INTANGIBLES

                                                  2002              2001
                                            ----------------- -----------------

    Technology, at cost                     $     978,000     $     978,000
    Less:  Accumulated amortization              (978,000)         (679,165)
                                            ----------------- -----------------

                                            $          -      $     298,835
                                            ================= =================


4.   CAPITAL STOCK

     a)   On September 13, 2001, the Company issued 12,000,000 Class B common
          shares to a director pursuant to an employment agreement.

     b)   On August 20, 2001, the Company issued 513,400 common shares at a fair
          value of $25,670 for consulting fees.

     c)   On October 12, 2001, the Company issued  2,100,000  common shares at a
          fair value of $75,000 for consulting  fees and investor relation
          services.

     d)   On November 21, 2002, the Company issued 5,300,000 common shares, of
          which 1,800,000 common shares were issued for professional fees,
          marketing and employment services at a fair value of $117,000, and
          $29,250 for services to be rendered. As at July 31, 2002, $87,750 has
          been charged to operations, and $29,250 to deferred compensation.
          3,500,000 common shares to a director pursuant to an employment
          contract at a fair value of $227,500, of which $130,000 is for
          services to be performed. As at July 31, 2002, $97,500 has been
          charged to operations and deferred compensation.

     e)   Effective December 13, 2001, the Company increased its authorized
          capital to 400,000,000 shares of common stock having a par value of
          $0.001, 20,000,000 shares of preferred stock having a par value of
          $0.001, and 12,000,000 shares of Class B common shares having a par
          value of $0.00, each Class B common share having super voting rights.

          As at December 13, 2001, all issued and outstanding common stock have
          been split on a 2 new:1 old basis.


                                       23
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)


4.   CAPITAL STOCK (Continued)

     f)   On March 28, 2002, the Company changed its name to Environmental
          Strategies and Technologies International Inc.

     g)   On April 16, 2002, the Company issued 250,000 common shares, pursuant
          to an employment contract, at a fair value of $37,500.

     h)   On June 11, 2002, the Company issued 3,600,000 common shares, of which
          2,500,000 common shares were issued for professional fees, at a fair
          value of $200,000, $184,000 of which was allocated to loss from
          discontinued operations, and 1,100,000 common shares were issued to
          directors and officers for services rendered at a fair value of
          $88,000.

     i)   On July 3, 2002, the Company issued 3,700,000 common shares, of which
          3,200,000 common shares were issued to directors pursuant to
          employment contracts, at a fair value of $192,000, of which $182,000
          is for services to be performed, and 500,000 common shares were issued
          for the termination of a consulting agreement at a fair value of
          $116,250.

     j)   As at July 31, 2002, the following stock options were outstanding:

                              OUTSTANDING OPTIONS                       EXERCISABLE OPTIONS
                 -----------------------------------------------    -----------------------------
                                   AVERAGE
                                  REMAINING          AVERAGE                          AVERAGE
   EXERCISE                      CONTRACTUAL        EXERCISE                         EXERCISE
     PRICE         NUMBER            LIFE             PRICE            NUMBER          PRICE
---------------- ------------ ------------------- --------------    -------------- --------------

$      1.80          80,000        5 years        $   1.80              80,000     $   1.80


          A summary of the changes in stock options for the years ended July 31,
          2002 and 2001 is presented below:

                                                           WEIGHTED
                                             NUMBER        AVERAGE
                                               OF          EXERCISE
                                             SHARES         PRICE
                                          ------------- ---------------

        Balance, July 31, 2000               489,600      $  2.00

        Granted                              200,000         2.00
        Cancelled                             (9,600)        3.44
        Exercised                           (600,000)        2.00
                                          ------------- ---------------

        Balance, July 31, 2001 and 2002       80,000      $  1.80
                                          ============= ===============


                                       24
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



No options were granted in 2002. The weighted-average grant-date fair value of
options granted in 2001 is $1.80. The fair value of the options is estimated
using the Black-Scholes options pricing model with the following assumptions:
Dividend yield, Nil percent for all years; expected volatility of 205%; risk
free interest rate of 5.25%; and expected life ranging from three to five years.

The Company has elected not to adopt the fair value method of accounting for
employee stock compensation plans as prescribed by Statement of Financial
Accounting Standards (SFAS) No. 123 issued by the Financial Accounting Standards
Board. Instead, as permitted by SFAS No. 123, the Company has elected to
continue to apply the intrinsic value method of accounting prescribed by
Accounting Principles Board Opinion No. 24. If the fair value method of
accounting under SFAS No. 123 had been followed, net income and earnings per
share of the Company would have been reduced by amortization of the grant-date
fair value of the options over the vesting period.

The pro forma net loss and earnings per share for 2002, 2001 and 2000 as if the
fair value method had been used is as follows:

                                                             2002                  2001                  2000
                                                       ------------------    ------------------    ------------------

        Loss from continuing operations                $     1,287,484       $     1,144,597       $      3,911,988
        Loss per share from continuing operations
                                                       $          0.05       $          0.06       $           0.25

        Loss (Gain) from discontinued operations
                                                       $      (123,024)      $       360,152       $        628,854
        Loss (Gain) per share from discontinued
          operations                                   $         (0.01)      $          0.02       $           0.04

        Net loss                                       $     1,164,460       $     1,504,749       $      4,540,842
        Net loss per share                             $          0.04       $          0.08       $           0.29

Under the Stock Option Plan the Company may grant non-qualifying stock options
at an exercise price of not less than 75% of fair market value at the date the
option is granted. Compensation expense will be recognized at the date of grant
of any non-qualifying options at the difference between the fair market value
and the exercise price. No non-qualifying stock options are granted as at July
31, 2002.

5.   RELATED PARTY TRANSACTIONS

     a)  During the year ended July 31, 2002, the Company entered into
         employment agreements with two directors. Under the terms of the
         agreements, the Company will pay each employee a base salary of $80,000
         in the first year, increasing to $100,000 in the third year.


                                       25
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



In addition, the Company will issue, to the employees,  250,000 common shares on
a quarterly basis for three years and a bonus of 1,000,000 common shares to be
issued if the employees are still employed at the end of the agreement.


During the year ended July 31, 2002, directors' compensation totalled $451,750
(2001 - $187,500; 2000 - $1,830,000).


     b)  During the year ended July 31, 2002, the Company issued 500,000 shares
         at a value of $116,250 to a company controlled by a director for
         settlement of payments due under an advisory agreement. On June 25,
         2002, the agreement was cancelled.


6.   COMMITMENT TO ISSUE SHARES

The Company has entered into an agreement to settle accounts payable totaling
$197,000 by the issue of 2,100,000 common shares.


7.   DISCONTINUED OPERATIONS

Summarized information for the discontinued operations is as follows:

                                                       2002          2001
                                                    ----------- -------------

    Cash                                            $    -      $      123
    Accounts receivable                                  -          16,714
    Prepaid expenses                                     -             956
                                                    ----------- -------------

    Current assets of discontinued operations            -          17,793
                                                    ----------- -------------

    Capital assets                                       -          51,941
                                                    ----------- -------------

    Long term assets of discontinued operations          -          51,941
                                                    ----------- -------------

    Accounts payable                                     -         156,650
    Notes payable                                        -          34,965
    Due to related parties                               -         194,535
                                                    ----------- -------------

    Current liabilities of discontinued operations       -         386,150
                                                   ----------- -------------


                                       26
Environmental Strategies

                       and Technologies International Inc.

                          (Formerly Phon-net.com Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                             JULY 31, 2002 AND 2001
                            (Stated in U.S. Dollars)



8.   SUBSEQUENT EVENTS

     a)  On October 9, 2002, the Company entered into a stock purchase agreement
         to acquire 100% of the issued and outstanding shares of a company for
         consideration of the issuance of 500,000 shares of Class A convertible
         preferred stock, and cash payments totaling $150,000 by December 24,
         2002. The shares are to be converted over a period of three years.
         Subsequent to the year end, $50,000 was paid on behalf of the Company
         by two companies controlled by directors. On October 31, 2002, the
         Company agreed to issue 3,000,000 common shares and 5,000,000 warrants
         at a price of $0.01 exercisable for a period of eighteen months.

     b)  On October 9, 2002, the Company entered into an employment agreement in
         connection with the acquisition noted above. Under the terms of the
         agreement, the Company will pay the employee a base salary of $150,000
         per year the first year, and no less than $250,000 thereafter.

     c)  Pursuant to the agreements referred to in Note 5(b), the Company issued
         750,000 common shares. 250,000 common shares were issued at a price of
         $0.05, and 500,000 common shares were issued at a price of $0.03.

     d)  Subsequent to July 31, 2002, the Company entered into an employment
         agreement in connection with the agreement referred to in Note 8(a).
         Under the terms of the employment agreement, the Company will pay the
         employee a salary of $150,000 per year through December 31, 2002,
         $200,000 per year in 2003, and $250,000 per year through October 8,
         2005.

     e)  Pursuant to the agreements referred to in Note 5(b), the Company issued
         750,000 common shares.  250,000 common shares were issued at a fair
         value of $0.05, and 500,000 common shares were issued at a fair value
         of $0.03.


                                       27
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.


                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS

     The following table includes the names, positions held and ages of our
executive officers and directors. All directors serve for one year and until
their successors are elected and qualify. Officers are elected by the Board and
their terms of office are, except as otherwise stated in employment contracts,
at the discretion of the Board.

        Name                 Age       Position

        Sameer Hirji         43      President, Chief Executive Officer
        Nicholas Malino      52      Director
        Todd Violette        33      Director


Mr. Sameer Hirji, President, Chief Executive Officer

Sameer Hirji comes from a background as a corporate attorney with 15 years
experience in private practice. Mr. Hirji is founder of Magellan Merchant
Capital Inc., a private corporate finance and investment banking firm based in
Calgary, Canada. Mr. Hirji serves as financial advisor and agent for clients
seeking assistance in investment banking, corporate finance, mergers and
acquisitions and international cross-border transactions. Mr. Hirji has a
Bachelors of Law degree from the University of Manitoba.

Mr. Nicholas J. Malino

Mr. Malino spent 8 years with Corning, Inc. mainly being involved in M&A
activities of its Laboratory Sciences Division. Subsequent to that he spent six
years as President and CEO of ATC Group Services, Inc. a $160 million publicly
traded (Nasdaq:NMS) engineering services company based in New York City. Under
his leadership ATC grew at a CAGR of nearly 200% and returned some of the
highest operating margins in the business. Mr. Malino and staff grew the New
York City based company from $10 million in revenues to $160 million in six
years through a combination of acquisitions and internal growth. The company
became the 40 largest provider of environmental engineering services in the US
and the largest in its niche. It had 73 offices in the US, Japan and Germany and
over 2,000 employees, with 400 professional level staff members. The company
produced the highest operating margins compared to its public comps for twelve
straight quarters, while it was experiencing its high growth phase. Mr. Malino
introduced many innovations into this business including the use of flex
staffing to increase utilization rates, incorporating IT product enhancements to
ATC's engineering services mix, and adding insurance products as adjuncts to the
engineering services offerings, a process that is quite commonplace today. He
led a follow-on offering, a private placement of debt, and a leveraged buy out
which privatized the company. He left ATC in November of 1998 and co-founded a
high-tech company - Streamedia Communications, Inc. Streamedia became a publicly
traded company on December 27, 1999, making it the last IPO of the millennium.
Streamedia was one of the few Internet companies that survived the downturn of
the Internet economy and was sold to Hollywood On Air Networks. Mr. Malino has
raised over $250 million in various debt and equity offerings and has been
directly involved in mergers and acquisitions both on the buy and sell side of
public and private properties with total revenues of over half a billion
dollars. He also has experience in MBO's, IPO's, leveraged buyouts, and public
and private placements of debt and equity. Mr. Malino has a Master's Degree in
Biology and an MBA in Finance from the University of Bridgeport

Mr. Todd Violette, Director

Mr Violette is employed as a Director. Mr. Violette was employed by Cormax
Business Solutions Inc. as the President from February 2000 to October 2002. Mr.
Violette was the President of Centurion Financial Communication from 1997 to
2000. Centurion was a consulting firm, advising company on methods for public
communication. Prior to work for Centurion Mr. Violette was a Stock Broker with
West America Securities Inc. and M.A. Gillespie Securities starting 1996. Mr.
Violette

     DIRECTOR COMPENSATION. We have not adopted a formal policy with respect to
the compensation of directors. However, we do not currently compensate our
directors for their services as such.

     BOARD COMMITTEES. We do not as yet have an audit committee or a
compensation committee. We may organize these committees in the future.

     EMPLOYMENT AGREEMENTS. Effective September 13, 2001 we have entered into an
employment contract with Todd Violette to serve as our Chief Operating Officer
for a period of five years. Mr. Violette has been hired to restructure and
recruit new management to the company over the next year. Mr. Violette's
employment shall pay $80,000 dollars over the next year and 2,000,000 shares.
Mr. Violette's employment entitles him to six million Class B shares which have
a 10-1 voting rights with no cash value.

     Effective March 13, 2002 we have entered into an employment contract with
Sameer Hirji to serve as an officer to the Corporation for a period of five
years. Mr. Hirji is now currently the President of the Company and is
responsible for the Corporate Development and execution of the Business Plan.
Mr. Hirji's employment shall pay him $80,000 over the next year and two million
shares.

     Effective October 13, 2002 we have enter into an employment contract with
Nicholas Malino to serves as CEO of Engineering Acquisition. Mr. Malino's
employment shall pay him $150,000 per year with a raise each year for the next
three years.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

     We are not subject to Section 16(a) of the Securities Exchange Act of 1934,
and, therefore, our directors and executive officers, and persons who own more
than ten percent of our common stock are not required to file with the
Securities and Exchange Commission reports disclosing their initial ownership
and changes in their ownership of our common stock.


                                       28
ITEM 10.  EXECUTIVE COMPENSATION



The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal year ended July 31, 2002.

                           Summary Compensation Table
                                                                                              All
Name                                                 Restricted     Securities               Other
And                                   Other Annual    Stock         Underlying     LTIP    Compensation
Principle            Salary   Bonus   Compensation    Award(s)     Options/SARs   Payouts
Position     Year      ($)      ($)      ($)            ($)            (#)          ($)       ($)
-------------------------------------------------------------------------------------------------------
Todd A
Violette
Director     2002    80,000     USD                   2,000,000
-------------------------------------------------------------------------------------------------------
Sameer
Hirji
CEO          2002    80,000     USD                   1,000,000
-------------------------------------------------------------------------------------------------------
Nick Malino
CEO EngAcq   2002   150,000     USD
================================================================================

Todd Violette received Twelve Million Shares of Class B Common with No Cash
Value but Voting right of 10 votes per share.


     INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN On June7, 2002, the board of
directors and shareholders adopted our stock option plan. Accordingly, we have
reserved 30,000,000 shares of common stock for issuance upon exercise of options
granted from time to time under the 2002 stock option plan. The 2002 stock
option plan is intended to assist us in securing and retaining key employees,
directors and consultants by allowing them to participate in our ownership and
growth through the grant of incentive and non-qualified options.

     Under the stock option plan we may grant incentive stock options only to
key employees and employee directors, or we may grant non-qualified options to
our employees, officers, directors and consultants. The 1999 stock option plan
is currently administered by our board of directors.

     Subject to the provisions of each of the stock option plans, the board will
determine who shall receive options, the number of shares of common stock that
may be purchased under the options, the time and manner of exercise of options
and exercise prices. The term of options granted under the stock option plan may
not exceed ten years or five years for an inventive stock option granted to an
optionee owning more than 10% of our voting stock. The exercise price for
incentive stock options will be equal to or greater than 100% of the fair market
value of the shares of the common stock at the time granted. However, the
incentive stock options granted to a 10% holder of our voting stock are
exercisable at a price equal to or greater than 110% of the fair market value of
the common stock on the date of the grant. The exercise price for non-qualified
options will be set by the board, in its discretion, but in no event shall the
exercise price be less than 75% of the fair market value of the shares of common
stock on the date of grant. The exercise price may be payable in cash or, with
the approval of the board, by delivery of shares or by a combination of cash and
shares. Shares of common stock received upon exercise of options will be subject
to restrictions on sale or transfer. As of July 31, 2001, A total of 1,600,000
shares of common stock have been reserved for issuance under the Stock Option.


                                       29
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

     As authorized by the Florida Business Corporation Law, our articles of
incorporation provides that none of our directors shall be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability for:

         o   any breach of the director's duty of loyalty to our company or its
             shareholders;
         o   acts or omissions not in good faith or which involve intentional
             misconduct or a knowing violation of law;
         o   unlawful payments of dividends or unlawful stock redemptions or
             repurchases; or
         o   any transaction from which the director derived an improper
             personal benefit.

     This provision limits our rights and the rights of our shareholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.

     Our articles of incorporation further provides for the indemnification of
any and all persons who serve as our director, officer, employee or agent to the
fullest extent permitted under Florida law.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the SEC, this indemnification is against public policy as expressed in the
securities laws, and is, therefore unenforceable.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information known to us, as of October 31,
2002, relating to the beneficial ownership of shares of common stock by: each
person who is known by us to be the beneficial owner of more than five percent
of the outstanding shares of common stock; each director; each executive
officer; and all executive officers and directors as a group.

     Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of Environmental Strategies & Technologies
International Inc. 244 W. 54th Street Suite 500 New York, New York 10019.

     We believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as being owned
by them.

     Under securities laws, a person is considered to be the beneficial owner of
securities owned by him and that can be acquired by him within 60 days from the
date of this Report, including upon the exercise of options, warrants or
convertible securities. We determine a beneficial owner's percentage ownership
by assuming that options, warrants or convertible securities that are held by
him, but not those held by any other person, and which are exercisable within 60
days of the date of this Report, have been exercised or converted.



                                       30



 Name and Address of         Amount and Nature of        Percentage
 Beneficial Owner            Beneficial Ownership         of Class
 ------------------         --------------------         ----------

  Todd Violette                124,000,000  (1)(2)          50%
  Nick Malino                   90,000,000  (3)             36%

  Executive Officers and
  Directors (as a group of 2)  214,000,000


     (1)   120,000,000 votes from the Class B share issued from the Employment
           Contract
     (2)   2,000,000 Violette will receive for his employment.
     (3)   Malino is the beneficial owner of 1,000, 000 share of convertible
           preferred. The maximum conversion into common shares is 90,000,000
           share

TEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In April 1999, in connection with our acquisition of the outstanding shares
of Phon-Net Corp. and as consideration for the satisfaction of certain product
development goals provided for as part of our share exchange with Phon-Net
Corp., we issued 8,085,000 additional shares to Brian Collins, our President and
CEO.

     During the years ended July 31, 2000 and 1999, we paid compensation to
Brian Collins, our President and Chief Executive Officer, aggregating $1,830,800
and $4,662,716, respectively. The amount paid during 2000 includes our issuance
to Mr. Collins of 3,200,000 shares of our common stock, in consideration for
which Mr. Collins relinquished all stock appreciation rights previously granted
to him. The amount paid during 1999 includes the issuance of 5,000,000 shares as
an inducement to enter into an employment agreement and 8,085,000 shares for
accomplishing certain development goals. Further information concerning
compensation paid to Mr. Collins is set forth above under "Item 10. Executive
Compensation".

     During the fiscal year ended July 31, 2000, we loaned an aggregate  of
$183,900 to Brian Collins, $171,400 of which remains outstanding. The loan is to
be repaid in equal monthly installments of $13,200, comprised of principal and
interest at the rate of 8% per annum. Any unpaid balance of the loan becomes due
and payable on March 31, 2001.

     We have not entered into any other material transactions with our officers,
directors or affiliates except for employment arrangements, which are described
elsewhere in this Report. While we have not adopted any corporate policies for
entering into transactions with affiliated parties,

         o   we are subject to Section 617.0832 of the Florida Business
             Corporation Law which requires that transactions between Phon-Net
             and one or more of its directors be approved by disinterested
             directors, be approved by Phon-Net's shareholders or be fair to
             Phon-Net; however,

         o   we are not subject to Section 617.0901 of the Florida Business
             Corporation Law which places additional limitations and
             restrictions on certain business transactions with affiliated
             parties.

     During the fiscal year ended July 31, 2001 the company paid $187,500 total
director for salary. The amount paid includes $100,000 paid by the issuance of
stock of 1,250,000 share at a price of $.08 per share.

     In September of 2001 the Company entered into a Market Channel Agreement
with Cormax Business Solution Inc, the Sole Director of Phon-Net is Todd
Violette the CEO of Cormax Business Solutions Inc. This agreement has sents been
cancelled.


                                       31
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

     A.  EXHIBITS:

         Exhibit
         Number                     Description

         2            Agreement of Share Exchange between XGA Golf International,
                      Inc. and Phon-Net Corp.(1)

         3.1(a)       Articles of Incorporation of XGA Golf International,
                      Inc.(1)

         3.1(b)       Articles of Amendment changing name to Agrosol, Inc.(1)

         3.1(c)       Articles of Amendment changing name to Phon-Net
                      Corporation(1)

         3.1(d)       Articles of Amendment changing name to Phon-Net.com,
                      Inc.(1)

         3.1(e)       Articles of Amendment increasing authorized capital(1)

         3.2          Bylaws(1)

         10.1         Stock Option Plan(1)

         10.2         Employment Agreement with Brian Collins(1)

         10.3         Office Lease for 750 Pender Street(1)

         10.4         Agreement, as amended, with Quad-Linq Software, Inc.(1)

         10.5         Employment Agreement with Solan Young(1)

         10.6         License Agreement with Transcontinental Group(1)

         10.7         Agreement with Wazzu Corporation(1)

         10.8         Agreements with Brian Collins re: SARs(1)

         10.9         License Agreement with Brocker Technology Group (NZ)
                      Ltd.(Australia)(1)

         10.10        License Agreement with Brocker Technology Group (NZ)
                      Ltd.(New Zealand)(1)

         10.11        License Distribution Agreement with Volt Information
                      Sciences, Inc.(1)

         10.12        Form of 8% Convertible Promissory Note, including Form of
                      Common Stock Purchase Warrant(1)

         10.13        Amendment to License Agreement with Transcontinental
                      Group(1)

         10.14        Agreements with Alliance Corporate Services(1)

         10.15        Agreements with AMYX Corporation(1)

         10.16        Letter of clarification with Roger L. Betterton and
                      Christopher E. Georgelin(1)

         10.17        Termination Agreement with Volt Information Sciences,
                      Inc.(1)

         23(i)        Consent of Morgan & Company(2)

         21           Subsidiaries of Registrant(1)

         27           Financial Data Schedule(2)
-------------------------
(1)      Incorporated by reference to exhibits with the corresponding number
         filed with our registration statement on Form SB-2 (File No.
         333-86031).
(2)      Filed herewith.


                                       32



     B.  REPORTS ON FORM 8-K:

     A report on Form 8-K was filed on October 17, 2002, July 29, 2002, July 17,
2002, July 10, 2002 and March 13, 2002  with the United States Securities and
Exchange Commission.



                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in Calgary, Alberta on December 9, 2002

                    Environmental Strategies and Technologies International Inc.


                                  By: /s/ Todd Violette
                                    ---------------------------------------
                                          Todd Violette
                                          Director


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


                              CERTIFICATION


I, Todd Violette, certify that:


1. I have reviewed this annual report on Form 10-K of Environmental Strategies
and Technologies International Inc;


2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;


3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


        a) designed such disclosure controls and procedures to ensure that
           material information relating to the registrant, including its
           consolidated subsidiaries, is made known to us by others within those
           entities, particularly during the period in which this annual report
           is being prepared;


        b) evaluated the effectiveness of the registrant's disclosure controls
           and procedures as of a date within 90 days prior to the filing date
           of this annual report (the "Evaluation Date"); and


        c) presented in this annual report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent functions):


        a) all significant deficiencies in the design or operation of internal
           controls which could adversely affect the registrant's ability to
           record, process, summarize and report financial data and have
           identified for the registrant's auditors any material weaknesses in
           internal controls; and


        b) any fraud, whether or not material, that involves management or other
           employees who have a significant role in the registrant's internal
           controls; and


6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: December 10, 2002                     By: /s/ Todd Violette
                                                  -----------------
                                                    Todd Violette, COO
                                                    (on behalf of the Board of Directors)`