Pegasus Wireless Corp · 10KSB · For 12/31/02

Filed On 5/14/03, 12:14pm ET   ·   Accession Number 1180343-3-56   ·   SEC File 0-32567

Annual Report — Small Business   —   Form 10-KSB
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Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Blues for 2000 Filed Late                             46±   199K 
 2: EX-3        Articles of Incorporation/Organization or By-Laws      2±    11K 
 3: EX-10       Material Contract -- stockplan                        16±    64K 
 4: EX-99.1     CEO Certification                                      1      5K 
 5: EX-99.2     CFO Certification                                      1      5K 

10KSB   —   Blues for 2000 Filed Late
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         SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

 FORM 10-KSB

(Mark One)                                                                      
[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE       
SECURITIES EXCHANGE ACT OF 1934                     

For the fiscal year ended December 31, 2002         

OR

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

       For the transition period from ________________ to _________________.

Commission file number: 000-32567                             

BLUE INDUSTRIES INC.          
(Name of small business issuer in its charter)          

 NEVADA                             52-2273215
     (State or other jurisdiction     (I.R.S. Employer Identification No.)
of incorporation or organization)                                     

9 Rue des Alpes                                   
Geneva 1204 Switzerland                        N/A        
(Address of principal executive offices)            (Zip Code)              

Issuer's telephone number                  (011) 33 4 50 66 98 61               

                          Securities     registered under Section 12(g) of the
                                        Exchange Act COMMON STOCK, PAR VALUE
          $0.001

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

State issuer's revenues for its most recent fiscal year: $1,373,468.            

State the aggregate market value of the 2,449,681 shares of common stock held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of a         
specified date within the past 60 days. (See definition of affiliate in Rule    
12b-2 of the Exchange Act.) was $1,531,051 at the close of business on May 1,   
2003.                                                                           

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 4,783,202 Shares of Common Stock at  
the close of business on May 1, 2003.                                           

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

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PART I

FORWARD-LOOKING STATEMENTS                                                      

This annual report contains forward-looking statements as that term is defined  
in the Private Securities Litigation Reform Act of 1995. These statements relate
to future events or our future financial performance. In some cases, you can    
identify forward-looking statements by terminology such as "may", "will",       
"should", "expects", "plans", "anticipates", "believes", "estimates",           
"predicts", "potential" or "continue" or the negative of these terms or other   
comparable terminology. These statements are only predictions and involve known 
and unknown risks, uncertainties and other factors, including the risks in the  
sections entitled Description of Business and Management's Discussion and       
Analysis or Plan of Operation, that may cause our actual results, levels of     
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.                                               

Although we believe that the expectations reflected in the forward-looking      
statements are reasonable, we cannot guarantee future results, levels of        
activity, performance or achievements. Except as required by applicable law,    
including the securities laws of the United States, we do not intend to update  
any of the forward-looking statements to conform these statements to actual     
results.                                                                        

ITEM 1.       DESCRIPTION OF BUSINESS.                                          

HISTORY OF OUR COMPANY                                                          

Our company was incorporated in Nevada on April 5, 2000. Our original name was  
Burrard Technologies, Inc., and our original business purpose was to develop and
commercialize an on-line Internet domain name registration service that would   
allow users to complete domain registrations for Chinese websites using Chinese 
characters. On May 24, 2000, we purchased the right to develop and commercialize
a software product known as "International Reg," together with the associated   
www.internationalreg.com website, from Pan Ocean Consulting Ltd. for $32,000. We
subsequently filed a Form SB-2 registration statement under the Securities Act  
of 1933 to register the resale of our outstanding stock by selling stockholders.
In April 2001, we filed a Form 8-A registration under the Securities Exchange   
Act of 1934. We have been a reporting company since that date.                  

Our efforts to commercialize the International Reg software were not successful 
and in the summer of 2001, we decided to begin consider alternative financing   
and business opportunities. In October 2001, we implemented a 3 for 1 stock     
split that increased our outstanding capital stock from 5,729,000 shares to     
17,187,000 shares.                                                              

On December 4, 2002, we agreed to acquire 100% of the outstanding stock of      
Technocall SA, a Swiss corporation, pursuant to a share purchase agreement      
between our company, Technocall SA ("Technocall") and Technocall's stockholders 
Advanced Technologies Development Co. Ltd. ("ATD"), Rocasoprane Ltd. and Axiom  
S.A. (collectively, the "Technocall Shareholders"). On the date of the          
agreement, we were essentially inactive; and we had net liabilities of $62,068  
and an accumulated deficit of $117,468 from our prior business operations.      

Under the terms of the share purchase agreement:                                

o        Our company agreed to acquire all of the issued and outstanding stock  
 of Technocall in exchange for 7,600,000 shares of common stock;

o        Our former president and our former secretary and treasurer agreed to  
   surrender an aggregate of 7,125,000 shares of common stock to our
company for cancellation; and                                 

o        The former members of our board of directors agreed to appoint a       
  successor board selected by the Technocall Stockholders and then
resign.                                                       

We closed the Technocall acquisition on December 18, 2001. We received          
certificates for a total of 7,125,000 shares from our former officers, which    
were promptly cancelled, and concurrently issued certificates for 7,600,000     
shares of our common stock to the Technocall Shareholders as follows:           

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Technocall Shareholder                        Number of Shares        
Advanced Technologies Development Co. Ltd.    3,800,000 Shares        
Rocasoprane Ltd.                              2,538,400 Shares        
Axiom S.A.                                    1,261,600 Shares        

In connection with the Technocall acquisition, our former board of directors    
appointed a successor board selected by the Technocall Shareholders and then    
resigned. There were no disagreements between our company and our former        
directors on any matter relating to our operations, policies or practices. Upon 
completion of the Technocall acquisition we had 17,662,000 shares of common     
stock issued and outstanding; and the Technocall Shareholders owned 43% of our  
outstanding common stock and controlled of our board of directors. Accordingly, 
the Technocall acquisition resulted in a change in control. The persons who     
became directors of our company in connection with the Technocall acquisition   
are identified in the following table:                                          

Name                   Age                Position                    
Fernand LeLoroux        63                Director and President      
Cyril Heitzler          33                Director and Secretary      

We changed our name to Blue Industries, Inc. on April 2, 2002; and on October   
28, 2002, we implemented a 1 for 20 reverse stock split. Unless otherwise noted,
balance of this report gives retroactive effect the reverse stock split.        

HISTORY OF TECHNOCALL                                                           

Technocall was incorporated in Switzerland on March 11, 1992, but was           
essentially inactive until September 29, 2001 when it purchased certain         
intellectual property, parts and supplies, machinery and equipment and computer 
software for the design, manufacturing, management and operation of             
small-throughput water treatment systems. From September through December 2001, 
Technocall's principal business activities focused on the further development of
the acquired properties and the initiation of marketing activities for          
small-throughput water treatment systems.                                       

Agreements with ATD and Cartis, Inc. Technocall purchased its intellectual      
properties, parts and supplies, machinery and equipment and computer software,  
together with an electronic smart card management system for small-throughput   
water treatment systems, from ATD. Concurrently, Technocall entered into an     
exclusive distribution and supply agreement with Cartis Inc., an affiliate of   
ATD. Cartis is a public company that withdrew its securities from registration  
under the Exchange Act in January of 2002 and presently trades through          
quotations in the NQB Pink Sheets.                                              

Technocall issued a subordinated note payable to ATD in the amount of $4,288,500
as consideration for the purchase of the software, designs, technical know-how, 
equipment, components and supplies. The ATD note was unsecured, non-interest    
bearing, subordinated against future indebtedness of Technocall and had no      
specific terms for repayment. Since ATD was a significant stockholder of        
Technocall on the date of the transaction, we valued the purchased assets at    
$423,937, their historical cost to ATD. The difference between the face amount  
of the ATD note and the carrying value of the purchased assets was recorded in  
our financial statements for the year ended December 31, 2001 as a $3,864,563   
distribution of equity. ATD subsequently agreed to forgive $31,070 of principal 
in recognition of certain expenses incurred by Technocall. This forgiveness of  
indebtedness was recorded as a reduction in the distribution of equity in our   
financial statements for the year ended December 31, 2001. In April 2002, ATD   
agreed to forgive the balance of the note. This forgiveness of indebtedness was 
recorded as a reduction to the distribution of equity and additional paid-in    
capital in our financial statements for the year ended December 31, 2002.       

Under the terms of the Cartis Agreement, Technocall was granted the exclusive   
worldwide right to distribute certain consumable filtration products            
manufactured by Cartis that were designed for use small-throughput water        
treatment systems. The exclusivity of the rights granted by Cartis was dependent
on Technocall's ability to meet certain agreed sales targets at six-month,      
12-month and 18-month intervals. If the agreed upon sales targets were not      
achieved, Cartis would be free to terminate the exclusivity provisions of the   
contract, but would not have the right to terminate the contract. In exchange   
for the distribution rights granted by Cartis, Technocall granted Cartis a      
non-exclusive right to purchase electronic smart card management systems from   
Technocall for use in certain small-throughput water treatment systems          
manufactured by Cartis. The Cartis Agreement provides for a three-year term     
ending on September 28, 2004 that is subject to automatic renewal for three     
years if no notice of cancellation is sent during the six months preceding the  
termination date.                                                               

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BUSINESS OF OUR COMPANY                                                         

Introduction                                                                    

We develop, manufacture and sell small-throughput water treatment systems and   
associated consumable products that provide reliable supplies of safe drinking  
water to end users at an installed cost of less than fifty cents per gallon of  
daily capacity. Our products give end-users a cost effective means of filtering,
treating, disinfecting and conserving water without the use of chlorine and     
other chemicals. The primary target markets for our products are residential,   
industrial, municipal and agricultural users in less developed countries and    
other areas that do not have ready access to reliable supplies of safe clean    
water for human consumption and other purposes.                                 

The flexibility of our water treatment technologies has facilitated the         
development of a series of small-throughput water treatment systems for human   
consumption, agriculture, aquaculture and industrial use. Our products are also 
useful in the treatment of wastewater. Depending on configuration, our products 
can process between 3,600 and 288,000 liters of water per day. We have          
negotiated distribution agreements with customers in China, Thailand, Cambodia, 
Africa and Middle East. We are also conducting field demonstrations in a number 
of developing countries. Our goal is to provide enabling technologies and       
products to satisfy the growing global demand for safe, clean water in domestic,
industrial, and agricultural applications.                                      

Our business plan calls for licensing standardized designs for small-throughput 
water treatment systems, providing technical consulting services to our         
customers, and selling the components and consumables that are required for the 
operation and maintenance of water treatment systems based on our designs. We   
believe the principal purchasers of our products will be:                       

o Businesses that have special water treatment requirements for industry,       
agriculture and aquaculture;                                                    

o        Remote towns and villages in less developed countries where the        
    availability of clean water for human consumption is a significant
problem; and                                                  

o Individuals who are not adequately served by safe drinking water systems.     

We commenced limited sales of demonstration systems in the first quarter of     
2002.                                                                           

Development of our business                                                     

Our business plan has undergone a radical transformation since the closing of   
the Technocall acquisition. Our original plan was to integrate technologies     
purchased from ATD; consumables purchased from Cartis and other technologies    
developed by third parties into integrated small-throughput water treatment     
systems. Over the last 16 months we have encountered numerous economic and      
technical problems that delayed the implementation of our plan. The principal   
problems we encountered include:                                                

o        A series of agreements with Eaudegam SA relating to our license of     
certain patented technologies for the initial clarification of
wastewater and other highly contaminated water supplies;      

o        A series of negotiations with potential customers in China, Thailand,  
   Cambodia, Africa and Middle East that accentuated the cost issues
inherent in our original business plan;                       

o        A series of increasingly hostile business and technical disputes with  
        ATD, Cartis and Mr. Herve Gallion, a principal stockholder and control
person of both companies; and                                 

o        A burglary at our Pringy facility in mid-March that precipitated an    
April 8, 2003 bankruptcy filing by our French subsidiary Blue 
Industries SAS.                                               

The following paragraphs separately discuss the foregoing problems and our      
responses to those problems.                                                    

Eaudegam license. We first licensed the Eaudegam technology in February of 2002,
and we subsequently agreed to issue 450,000 shares of our common stock in       
exchange for a significant reduction in our future royalty payments. We         
ultimately concluded that the Eaudegam technology was unsuitable for our needs  
and that comparable or superior clarification technologies were available from  
others at a significantly lower cost. Accordingly, we terminated the Eaudegam   
license and the associated agreement to issue stock in exchange for reduced     
royalties in April of 2002. We did not make any material payments or issue any  
stock to Eaudegam in connection with either the creation or the termination of  
the license.                                                                    

Customer negotiations. In negotiations with our distributors in China, Thailand,
Cambodia, Africa and Middle East, it became apparent that our original plan to  
manufacture small-throughput water treatment systems in France and then ship    
finished products to developing countries was flawed, primarily because of high 
French labor costs. In effect, our distributors concluded that our products     
could not be competitive in developing countries unless they were assembled in  
the destination country using local labor and imported components. In response  
to these concerns, we have modified our original business plan. Under our       
modified plan, we intend to act primarily as a licensor of proprietary designs, 
a provider of engineering and consulting services and a supplier of specialized 
consumables. Most of our non-technical manufacturing and assembly functions will
be outsourced to local contractors in the developing countries where our        
products will be used.                                                          

ATD and Cartis disputes. Our business and technical disputes with Cartis        
initially focused on over-invoicing for short-weight deliveries and quality     
control issues. These disputes were complicated by the fact that our product    
performance testing was considerably less favorable than the test results       
claimed by Cartis in its promotional materials and patents. In the summer of    
2002, our investigations revealed that Herve Gallion, the president of Cartis,  
was a convicted felon who was sentenced in 1987 to a four-year prison term for  
fraud. In combination, these developments left us with considerable doubt       
respecting the reliability of Mr. Gallion and the ability of Cartis to deliver  
filtration products that conformed to contract specifications. We ultimately    
concluded that we could not rely on Cartis to deliver a consistent product in   
sufficient volume to satisfy our projected needs. After careful consideration of
available options, we elected to develop a line of proprietary filtration       
products and terminate our relationship with Cartis.                            

Pringy burglary. In March 2003, we suffered a burglary at our Pringy facility   
that appears to be directly related to our disputes with ATD and Cartis. We     
leased our facility in September 2002, after an affiliate of Cartis, cancelled  
its lease on the premises. Unknown to us, Mr. Herve Gallion, the principal      
stockholder and president of Cartis and ATD unlawfully kept copies of the keys  
when the lease was terminated. When we discovered the burglary, we also found a 
letter addressed to our company and signed by Mr. Gallion who advised us that   
since the relationship between Cartis and our company had terminated, we had no 
right to continued possession of the products and inventory we purchased from   
Cartis. Therefore, Mr. Gallion apparently believed he had a right to            
surreptitiously enter our Pringy facility over the weekend and remove our       
property without our permission.                                                

We have reported the burglary to the French police who are treating the entry   
and burglary as a criminal matter. The French police have cautioned, however,   
that they may be unable to find Mr. Gallion, who is a resident of Mauritius;    
determine whether our property is still in France; and commence appropriate     
legal action to prosecute Mr. Gallion and compel the restitution of our         
property. There are no assurances that the French police will ever find Mr.     
Gallion within their jurisdiction, that our property will ever be found, or that
our property will have been stored under conditions that would permit the       
eventual resale to customers in the ordinary course of business.                

We have submitted a claim to GAN Assurance SA, our insurance carrier. Since Mr. 
Gallion retained copies of the keys to our Pringy facility when the earlier     
lease was terminated, GAN Assurance has taken a preliminary position that the   
theft loss may be excluded under the terms of our policy. Negotiations with GAN 
Assurance are continuing and it may be necessary to institute a civil action in 
the French courts.                                                              

Bankruptcy of Blue Industries SAS. After the French police advised us that they 
could not find Mr. Gallion or our property; and GAN Assurance took a the        
position that the theft loss may be excluded under the terms of our insurance   
policy, our board of directors determined that the best way to protect the      
interests of our company and our stockholders would be to file a bankruptcy     
petition under French law for the liquidation of Blue Industries SAS, our       
principal operating subsidiary. This petition for the bankruptcy liquidation of 
Blue Industries SAS was filed with Tribunal de Commerce in Annecy, France on    
April 8, 2003 (Case No. 3290). For a more detailed discussion of this bankruptcy
proceeding and its impact of on our business, property and prospects, see Items 
3 and 6.                                                                        

WATER TREATMENT                                                                 

The purification of water for human consumption, or for use in industry,        
agriculture and aquaculture, is generally a three-stage process.                

Clarification. In the first stage, contaminated water is clarified to remove    
suspended organic and inorganic particles and other contaminants. If the source 
is relatively clean, simple cartridge or sand filters can do an adequate job.   
However, if suspended organic and inorganic particles or other contaminants are 
a significant problem, more sophisticated methods may be required. A wide       
variety of clarification technologies and products are available in the public  
domain. Other clarification technologies can be licensed from third parties who 
hold patents or other intellectual property rights with respect to such         
technologies. We believe simple cartridge or sand filters will be able to       
provide adequate clarification for the bulk of our potential customers.         

Ultra filtration. In the second stage, clarified water is further filtered to   
remove microscopic particles. A wide variety of effective ultra filtration      
technologies are available in the public domain. Other ultra filtration         
technologies can be licensed from third parties who hold patents or other       
intellectual property rights. We believe off-the-shelf ultra filtration products
will be able to provide adequate purification for the bulk of our potential     
customers.                                                                      

Disinfection. In the third stage, filtered water is further treated to kill any 
amoebic, bacterial and viral pathogens that after the clarification and ultra   
filtration stages. While a variety of physical and chemical disinfection        
technologies are available in the public domain, and other disinfection         
technologies can be licensed from third parties who hold patents or other       
intellectual property rights, we prefer an off-the-shelf in-line disinfection   
system that uses ultraviolet light to kill residual amoebic, bacterial and viral
pathogens.                                                                      

OUR PROPRIETARY PRODUCTS                                                        

Our proprietary products complement and increase the utility of the             
off-the-shelf water purification technologies, and fall into two primary        
classes:                                                                        

o        Purification and Conservation products that use our proprietary Blue   
     Powder to eliminate organic and inorganic contaminants and conserve
treated water during storage; and                             

o        Electronic Process Management systems that monitor overall system      
performance and provide visual and audible warnings if regular
maintenance or unscheduled repairs are necessary.             

All other components for water treatment systems that rely on our proprietary   
Blue Powder are off-the-shelf items that are manufactured by a variety of       
suppliers and generally available in the market.                                

Purification and Conservation. Our small throughput water treatment systems rely
on a proprietary activated charcoal filtration powder, which we refer to as     
"Blue Powder" to:                                                               

o        Remove pesticides, metals, benzene, chlorine and organic compounds,    
that give water a bad taste or smell; and                     

o Prevent the growth of pathogenic organisms during storage.                    

To manufacture our Blue Powder, we process activated carbon and certain         
proprietary additives in a magnetic-plasma furnace under high-vacuum conditions.
The resulting filtration media has the filtration and purification              
characteristics of activated carbon, together with certain bacteriostatic       
characteristics that inhibit the growth of pathogenic organisms during storage. 
Since the activated carbon and the additives are bonded to each other in a      
stable molecular structure, there is no contamination of the processed water    
stream.                                                                         

Our Blue Powder is packaged and sold in a variety of forms ranging from         
disposable cartridges that can purify up to 150 liters of water per hour to our 
A-3000 reactor vessel that can purify up to 3,000 liters of water per hour.     
Supplies for our cartridge-based systems and our user-serviceable A-3000 reactor
vessels are maintained in inventory as stock items and sent to users as needed. 
Filtration cartridges are typically sent to consumers as installation-ready     
finished goods and the Blue Powder for our A-3000 reactor vessels is typically  
sent to consumers in bulk.                                                      

Electronic Process Management. We use a proprietary, robust and scaleable       
electronic process management system to control our small-throughput water      
treatment systems. The core of our electronic process management system is an   
"e-BIS" electronic card that:                                                   

o        Can be configured work with a variety of electrical power sources, is  
       highly tolerant of power surges, voltage fluctuations and other power
        supply inconsistencies and is supported by an internal battery backup;

o        Provides a simple and reliable interface for network connections and   
       our system management software which can be easily configured to meet
       the requirements of a particular installation and updated as improved
system management protocols are developed;                    

o        Provides real-time digital clock and analog monitoring interfaces;     

o        Provides interfaces for filtration and disinfection subsystems,        
security and process management;                              

o        Provides interfaces for physical flow control subsystems;              

o        Provides safety overrides that shut down the entire system in the      
event of a critical component failure;                        
and                                                           

o        Incorporates a 5-button keypad, an easily readable LCD display and     
bi-color alarm systems;                                       

OUR STANDARDIZED SYSTEMS                                                        

We have designed and built production prototypes of a variety of                
small-throughput water treatment systems that have the capacity to process      
between 3,600 and 288,000 liters of water per hour from a variety of sources. We
intend to engage in limited manufacturing for testing, prototyping and product  
demonstration purposes, and believe our current facilities will be adequate for 
our anticipated needs. When a potential customer decides to implement our       
technology in a given region, we believe the customer will, in most cases, enter
into a license agreement with us that permits the customer to establish a local 
facility to manufacture water treatment systems based on our designs and        
requires the customer to use our consulting services and purchase certain       
consumables from us. The following paragraphs summarize the capabilities and    
intended uses of our standardized systems.                                      

P-Kitchen. Our P-Kitchen is designed for use in single-family homes where safe  
water supplies are available, but organic and inorganic impurities leave the    
water a bad taste, smell or appearance. Our P-Kitchen is mounted under the sink 
and processes up to 3,600 litres of water per day through a three-stage process 
that combines a standardized filtration cartridge, an ultra filtration membrane 
and a cartridge of our Blue Powder filtration medium. Our P-Kitchen is a compact
and easily maintained water filtration system that allows the consumer to choose
between three-stage water treatment for human consumption, and simplified       
two-stage water treatment for cleaning and other purposes.                      

P-300. Our P-300 is designed for use in single-family homes where water supplies
are available, but potential microbial contamination and other organic and      
inorganic impurities raise significant health and safety issues. Our P-300 is   
mounted at the main water inlet and processes up to 7,200 litres of water per   
day through a three-stage process that combines a standardized filtration       
cartridge, an ultraviolet disinfection system and a standardized cartridge of   
our Blue Powder filtration medium. Our P-300 systems are compact, easily        
maintained and controlled by our electronic process management units that       
continuously monitor system performance and provide visual and audible warnings 
if regular system maintenance or unscheduled repairs are necessary.             

P-3000. Our P-3000 is designed for use in multi-family apartment buildings and  
small communities where water supplies are available, but microbial contaminants
and other organic and inorganic impurities raise significant health and safety  
issues. Our P-3000 is mounted at the main water inlet and processes up to 72,000
litres of water per day through a three-stage process that combines a           
high-capacity sand filtration system, an ultraviolet disinfection system and a  
high-capacity A-3000 Blue Powder reactor. Our P-3000 systems are compact, easily
maintained and controlled by our electronic process management units that       
continuously monitor system performance and provide visual and audible warnings 
if regular system maintenance or unscheduled repairs are necessary.             

P-6000. Our P-6000 is designed for use in small communities and industrial      
applications where water supplies are available, but microbial contaminants     
raise significant health and safety issues. Our P-6000 is mounted at the main   
water inlet and processes up to 144,000 litres of water per day through a       
two-stage process that combines an ultraviolet disinfection system and two      
high-capacity A-3000 Blue Powder reactors. Our P-6000 systems are compact,      
easily maintained and controlled by our electronic process management units that
continuously monitor system performance and provide visual and audible warnings 
if regular system maintenance or unscheduled repairs are necessary.             

P-12000. Our P-12000 is designed for use in larger communities and industrial   
applications where water supplies are available, but microbial contaminants     
raise significant health and safety issues. Our P-12000 is mounted at the main  
water inlet and processes up to 288,000 litres of water per day through a       
two-stage process that combines an ultraviolet disinfection system and four     
high-capacity A-3000 Blue Powder reactors. Our P-12000 systems are compact,     
easily maintained and controlled by our electronic process management units that
continuously monitor system performance and provide visual and audible warnings 
if regular system maintenance or unscheduled repairs are necessary.             

HW-4. Our HW-4 system is designed for use in aquaculture, principally shrimp    
farming. The HW-4 system uses a combination of sand filtration, ultraviolet     
disinfection and high-capacity A-3000 Blue Powder reactors to control water     
borne pathogens and protect aquaculture operations from a variety of diseases   
like "white spot," "red head" and "yellow head." Our HW-4 system is a reliable  
alternative to chemical products and avoids many of the risks associated with   
indiscriminate use of antibiotics.                                              

MANUFACTURING                                                                   

In the past, the essential components for our water treatment systems were      
manufactured under sub-contracts with manufacturers and final assembly and      
system integration was performed at our facility in Pringy, France. In the      
future, we will retain control over the engineering and design of our systems   
and perform limited beta testing and production prototype manufacturing         
in-house. When the design, testing and prototyping functions are complete, we   
believe our customers will elect to establish their own production facilities   
and independently contract with the manufacturers of essential subsystems and   
components. During the commercial production phase, our company will primarily  
be responsible for supplying system designs and engineering assistance, and     
providing the necessary electronic process management systems, our Blue Powder  
filtration media and other necessary consumables.                               

A third party contractor manufactures our Blue Powder filtration media for us.  
We provide the contractor with raw materials that have been tested for quality  
control and the manufacturer uses its equipment to mix, process and package our 
finished products. Our staff oversees the manufacturing process, insures that   
the manufacturer strictly adheres to our processing procedures and protocols,   
and insures that our finished products meet our rigid quality control standards.
We believe our current manufacturing arrangements will be suitable for our      
anticipated needs and believe similar arrangements can be negotiated with other 
manufacturers if our current manufacturer is unwilling or unable to continue a  
manufacturing relationship on terms that are acceptable to our company.         

MARKETING                                                                       

We have identified three principal markets for our small throughput water       
treatment systems:                                                              

Residential use. The availability of adequate supplies of potable water for     
residential use is a worldwide concern. Currently, only one-third of the world's
population is supplied with reliable potable water. We believe that the supply  
of water treatment systems to developing countries is a large potential market  
because of the amount of funding available from governmental and                
non-governmental sources. The installation and maintenance of traditional water 
treatment systems in remote areas is typically difficult because the population 
often widely dispersed and far from economic centers. In addition, there is     
typically a lack of infrastructure and adequately trained maintenance           
technicians. We have designed our small throughput water treatment systems to   
function well in remote locations with minimal maintenance. We believe that our 
small throughput water treatment systems satisfy all applicable government      
regulations.                                                                    

Industrial use. The availability of adequate supplies of potable water for      
industry is a worldwide concern. We believe that the supply of scalable water   
treatment systems to industrial users in less developed countries is a large    
potential market. The installation and maintenance of traditional industrial    
water treatment systems in remote areas is often difficult because of the       
technical skills required for the safe operation of chemical based water        
purification systems. We have designed our industrial water treatment products  
to function well in remote locations with minimal maintenance, monitoring and   
technical support staff.                                                        

Agriculture and Aquaculture. Water quality is a critical issue in the fields of 
agriculture and aquaculture because production is wholly dependent on water     
quality. In hydroponics, our technologies have demonstrated the ability to      
eliminate microscopic pathogens while permitting the reuse of nutritive         
solutions. Similar results have been obtained in aquaculture operations,        
particularly shrimp farms, where disease control without the indiscriminate use 
of antibiotics is a critical issue. Tests have also demonstrated that the       
incorporation of our technology into irrigation systems can help increase       
production while minimizing the risks of water borne microscopic pathogens.     

ORDER BACKLOG                                                                   

We have entered into a number of sales contracts and memorandums of             
understanding with current and potential customers, including:                  

o    In December of 2001, our Chinese  distributor  ordered $15,000,000 of water
     purification  equipment for sale tot the China  Ministry of Health.  In the
     first quarter of 2002, we sold approximately  $358,000 of equipment that we
     manufactured  at our Pringy facility to this  distributor.  After extensive
     evaluation  of  the  price  and  performance  of  our  French  manufactured
     products,  our Chinese distributor concluded that our products would not be
     competitive  unless they were  manufactured  in China using local labor and
     imported components. In November 2002 renegotiated the terms of our Chinese
     contract  to provide  that our Chinese  distributor  will  manufacture  the
     required  systems in China using  consumables  purchased  from our company.
     Production  from the new  facility  owned  by our  Chinese  distributor  is
     scheduled  to  begin  in  May  2003.  Under  the  amended  agreements,  our
     anticipated  revenue  from the sale our Blue Powder  will be  approximately
$1.5 million for the year ended December 31, 2003.                    

o    In December of 2001,  we signed a  memorandum  of  understanding  in with a
     distributor in Thailand for water  purification  systems valued at $850,000
     that we originally  intended to manufacture at our Pringy  facility.  After
     extensive   evaluation  of  the  price  and   performance   of  our  French
     manufactured  products,  our Thai  distributor  concluded that our products
     would not be competitive  unless they were  manufactured  in Thailand using
     local labor and imported  components.  We have  recently  renegotiated  the
     terms of our contract to provide that our Thai distributor will manufacture
     the  required  systems in Thailand  using  consumables  purchased  from our
     company.  The contract with our Thai  distributor  has an initial term of 2
     years and provides  for minimum  purchase  requirements  of $650,000 in the
first year and $3 million in the second year.                         

COMPETITION                                                                     

We compete with other manufacturers of small-throughput water treatment systems 
that use technologies that are similar to ours. A wide variety of clarification,
ultra filtration and disinfection technologies are incorporated in products     
manufactured by others that are frequently available as off-the-shelf items.    
Similarly, a wide variety of activated carbon filtration products are available 
to treat processed water. The primary advantage of our proprietary Blue Powder  
is the superior conservation performance that arises from our use of a          
combination of activated carbon and other additives to remove impurities and    
enhance the REDOX potential of the treated water.                               

Other potential competitors, including Cartis, claim proprietary methods for    
manufacturing activated carbon filtration products that remove impurities and   
enhance the storage characteristics of treated water. We believe our Blue Powder
produces superior results, but there is no assurance that our potential         
customers:                                                                      

o Will find our filtration systems superior to more complex chemical-based water
purification systems;                                                           

o Will find our technology superior to similar technologies used by Cartis or   
other competitors; or                                                           

o Will find that the advantages of our products justify a higher price than     
simpler activated carbon systems;                                           

Our plan is to compete on the basis that our water treatment systems provide    
excellent water treatment without the use of chlorine or other chemicals and are
better suited to the needs of remote villages, farms and industrial             
installations. Our success in the marketplace will depend on our ability to     
convince customers that our water treatment systems offer significant           
performance and price advantages.                                               

GOVERNMENT REGULATION                                                           

The distribution and use of our small throughput water treatment systems will be
regulated by a variety of government agencies. The amount and nature of the     
applicable regulations will vary from jurisdiction to jurisdiction, and will    
primarily apply to our distributors who must ensure that the quality of water   
produced using our products meets applicable standards. Therefore, our ability  
to sell our products in a particular country will depend on our ability to      
demonstrate that our products satisfy applicable regulatory requirements. A     
failure to demonstrate that our products meet applicable government regulations 
could make it impossible to sell our products in a particular country.          

EMPLOYEES                                                                       

In connection with the bankruptcy of Blue Industries SAS described in Item 3    
below, all employees of our French subsidiary were terminated. We currently have
one part-time and two full-time employees, all of whom are executive officers of
our company.                                                                    

RESEARCH AND DEVELOPMENT                                                        

In the year ended December 31, 2002, we spent $450,000 on research and          
development activities.                                                         

ITEM 2.       DESCRIPTION OF PROPERTY                                           

We do not own any real property. As a result of the bankruptcy of Blue          
Industries SAS, we have temporarily relocated our principal executive offices to
9 Rue des Alpes, Geneva 1204 Switzerland.                                       

ITEM 3.       LEGAL PROCEEDINGS.                                                

On April 6, 2003, we filed a bankruptcy petition under French law for the       
liquidation of Blue Industries SAS, our principal operating subsidiary, with    
Tribunal de Commerce, Annecy, France (Case No. 3290). In connection with the    
filing of this petition, Jean Blanchard, a court appointed liquidator, assumed  
control over substantially all of the operating assets and liabilities of Blue  
Industries SAS.                                                                 

If the French police are able to locate the property that was stolen in the     
burglary of our Pringy facility and compel the prompt return of such property,  
we may be able to dismiss the bankruptcy case. But we will only be able to take 
such action if the property has been stored under conditions that would permit  
the eventual resale to customers in the ordinary course of business. Likewise,  
we may be able to dismiss the bankruptcy case if we can negotiate an acceptable 
agreement with our insurance carrier with respect to the theft loss. Since there
is no assurance that the police will be able to find the stolen property or that
our insurance carrier will decide to honor the theft loss claim, there is no    
assurance that any amounts the liquidator ultimately recovers will be sufficient
to permit the dismissal of the bankruptcy petition for Blue Industries SAS.     
Therefore, we expect the theft and the associated bankruptcy action to have a   
material adverse impact on our business, properties and prospects.              

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

    On September 18, 2002, a the holders of a majority of our common stock
acted by written consent to:                                                    

o             Amend our Articles of Incorporation to implement a 1 for 20       
             reverse split and make it more difficult for stock speculators to
       engage naked shorting and other manipulative practices; and

o Adopt an Incentive Stock Plan (the "Plan") for our employees.                 

   These actions by stockholder consent were described in a Schedule 14C
Information Statement that was mailed to our stockholders on September 18, 2002,
and became effective on October 28, 2002. Our definitive Schedule 14C           
Information Statement is incorporated herein by reference.                      

 PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.         

Market price data                                                               

Our shares have been quoted on the OTC Bulletin Board since the fourth quarter  
of 2001. Our trading symbol was changed to BLII in October 2002 when we         
implemented a 1 share for 20 reverse split. Previously, our trading symbols were
BLUI and BTCS. The following table provides information on the high and the low 
prices for our shares for each quarter since the inception of trading. All price
data has been restated to reflect the 1 share for 20 reverse split we           
implemented in October 2002.                                                    

Fiscal 2001                                   High               Low  
4th Quarter                               $46.00            $41.00

Fiscal 2002                                   High               Low  
1st Quarter                               $53.00            $18.40
2nd Quarter                               $10.20             $2.80
3rd Quarter                                $8.20             $0.60
4th Quarter                                $1.47             $0.20

Changes in securities                                                           

The board of directors believes that the sharp declines in the market price of  
our common stock cannot be explained by normal trading activity. On September   
18, 2002, we had 33,120,920 shares of common stock issued and outstanding. Of   
this total, 23,433,920 shares were issued in reliance on exemptions from the    
registration requirements of the Securities Act and were "restricted            
securities." The certificates for the remaining 9,687,000 shares did not bear   
restrictive legends. A total of 7,518,900 unrestricted shares were registered in
the name of Cede & Co., the "street name" for the Depository Trust Company. The 
remaining unrestricted shares were registered in the names of individual        
stockholders. The following table summarizes the reported historical trading    
during the first three quarters of 2002, without adjustment for the 1 share for 
20 reverse split we implemented in October 2002.                                

 Period             High              Low               Volume
1st Quarter 2002     $2.65             $0.92             2,969,700
2nd Quarter 2002     $0.51             $0.14             7,429,000
3rd Quarter 2002     $0.41             $0.03            16,711,900

While the trading activity does not constitute proof that manipulative          
activities have occurred, the board of directors has reason to believe that one 
or more speculators has deliberately manipulated the market for our common      
stock. In response, we amended our Articles of Incorporation to implement a 1   
share for 20 reverse split, and prohibit the registration of our shares in the  
name of the Depository Trust Company or any other securities clearinghouse that 
provides book entry transaction settlement services for member banks and        
broker/dealers. At the date of this report, all transfers of our securities must
be made in "certificate only" or "custody only" form.                           

Holders of Common Stock                                                         

On April 15, 2003, we had approximately 400 stockholders of record and an       
indeterminate number of beneficial owners who hold shares in brokerage and other
custodial accounts.                                                             

Dividends                                                                       

There are no restrictions in our Articles of Incorporation or bylaws that       
restrict us from declaring dividends. The Nevada Revised Statutes, however,     
prohibit us from declaring dividends where, after giving effect to the          
distribution:                                                                   

o    We would  not be able to pay our  debts  as they  become  due in the  usual
course of business; or                                                

o    Our total assets would be less than the sum of our total liabilities,  plus
     the amount that would be needed to satisfy the rights of  shareholders  who
have preferential rights superior to those receiving the distribution.

We have never paid any cash dividends on our capital stock and do not anticipate
paying cash dividends in the foreseeable future. Our current policy is to retain
any earnings in order to finance the expansion of our operations. Our board of  
directors will determine future declaration and payment of dividends, if any, in
light of the then-current conditions they deem relevant and in accordance with  
the Nevada Revised Statutes.                                                    

Recent sales of unregistered securities                                         

During the fourth quarter of 2002, we sold 235,670 shares of our post-reverse   
split common stock in private placement transactions at a price of $2 per share 
for gross proceeds of $471,340. These securities were sold to a total of 42     
non-US persons in reliance on the exemption from registration set forth in      
Securities and Exchange Commission Regulation S. Each sale was an offshore      
transaction. Each purchaser certified that he or she: (a) is not a U.S. person; 
(b) will not resell the purchased securities unless the resale is made in       
accordance with the provisions of Regulation S, pursuant to registration under  
the Act, or pursuant to an available exemption from registration; (c) will not  
engage in hedging transactions with regard to our securities; and (d)           
understands that we will refuse to register any transfer of the securities that 
is not in compliance with the requirements of applicable law. Each purchaser    
also confirmed his or her intention to acquire our securities for investment    
only and not with a view toward distribution. Each investor was given adequate  
access to sufficient information about our company to make an informed          
investment decision. All certificates issued to non-US persons bear an          
appropriate restrictive legend.                                                 

In December 2002, we issued 2,095,000 shares of our post-reverse split common   
stock to 19 employees, consultants and advisors in compensatory transactions.   
Four of the employees, consultants and advisors who received shares in          
compensatory transactions are citizens or residents of the United States. The   
other 15 employees, consultants and advisors are non-US persons.                

We conducted the distribution to U.S. persons in reliance on the exemption from 
registration set forth in Section 4(2) of the Act. Each purchaser was an        
accredited investor who had a long-standing employment or consulting            
relationship with our company. Each purchaser represented his intention to      
acquire the securities for investment only and not with a view toward           
distribution. Each purchaser was given adequate access to sufficient information
about our company to make an informed investment decision. We did not engage in 
general solicitation with respect to the distribution. All certificates issued  
to US persons bear an appropriate restrictive legend.                           

We conducted the distribution to non-US persons in reliance on the exemption    
from registration set forth in Securities and Exchange Commission Regulation S. 
Each sale was an offshore transaction. Each purchaser certified that he or she: 
(a) is not a U.S. person; (b) will not resell the purchased securities unless   
the resale is made in accordance with the provisions of Regulation S, pursuant  
to registration under the Act, or pursuant to an available exemption from       
registration; (c) will not engage in hedging transactions with regard to our    
securities; and (d) understands that we will refuse to register any transfer of 
the securities that is not in compliance with the requirements of applicable    
law. Each purchaser also confirmed his or her intention to acquire our          
securities for investment only and not with a view toward distribution. Each    
investor was given adequate access to sufficient information about our company  
to make an informed investment decision. All certificates issued to non-US      
persons bear an appropriate restrictive legend.                                 

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

On December 18, 2001, we acquired 100% of the capital stock of Technocall in a  
business combination transaction that was accounted for as a reverse acquisition
because the Technocall shareholders controlled 43% of our common stock upon     
closing of the transaction and controlled our board of directors. Under reverse 
acquisition accounting, the acquisition is treated as a recapitalization of     
Technocall and the financial position and results of operations of the combined 
companies are based on the historical financial statements of Technocall. As a  
result, our financial statements for all periods presented reflect the business 
and operations of Technocall.                                                   

We had no revenue during the year ended December 31, 2001. While we generated   
$1,373,468 in revenue during the year ended December 31, 2002, our revenue was  
sporadic and the implementation of our business plan was impeded by numerous    
economic and technical problems that are discussed Item 1 of this report.       

Due to our history of operating losses, the theft of substantial property from  
our Pringy facility, our decision to file a bankruptcy petition on behalf of our
principal operating subsidiary and the other uncertainties discussed in this    
report, there is substantial uncertainty over our ability to continue           
functioning as a going concern. The short-term plan of operations discussed     
below is subject to numerous contingencies and uncertainties and we can offer no
assurance that our company or our business will survive.                        

Bankruptcy of Blue Industries SAS. As described in Items 1 and 3 of this report,
we filed a bankruptcy petition under French law for the liquidation of Blue     
Industries SAS, our French subsidiary, on April 8, 2003. At December 31, 2002   
and at the date of the bankruptcy filing, the bulk of our consolidated assets   
and liabilities were assets and liabilities of Blue Industries SAS. The         
following summary pro forma balance sheet has been derived from our consolidated
financial statements and gives retroactive effect to the bankruptcy as if the   
filing had occurred on December 31, 2002.                                       

                                                        [Enlarge/Download Table]


ASSETS                                                  As reported        Adjustments       As adjusted   
                                                      ----------------  ----------------- -----------------
                                                                                                           
Cash and equivalents                                      $    63,600                          $    63,600 
Accounts receivable (net)                                                                                  
                                                              441,401                              441,401 
Inventory                                                                                                  
                                                             -------------                                 
                                                              687,019           (294,000)          393,019 
                                                              --------                             ------- 
     Total current assets                                                                                  
                                                             1,192,020                              898,020

                                                                                                         - 
Property and equipment (net)                                                                               
                                                              282,375           (56,000)           226,375 

Other assets (net)                                             52,914            (47,000)            5,914 
           Total Assets                                   $  1,527,309                         $  1,130,309

LIABILITIES                                             As reported        Adjustments       As adjusted   
                                                      ----------------  ----------------- -----------------

Total current liabilities                                $  1,680,716        $  (306,000)     $  1,986,716 
          Total Liabilities                              $  1,680,716                         $  1,680,716 

STOCKHOLDERS' EQUITY (DEFICIT)                                                                             
Common stock                                                                                               
                                                                  399                                  399 
Additional paid-in capital                                                                                 
                                                            6,381,397                            6,381,397 
Accumulated comprehensive earnings and deficit            (6,535,203)           (91,000)       (6,626,203) 
     Total stockholders' (deficiency)                    $  (153,407)                         $  (244,407) 
          Total Liabilities and Stockholders' Equity     $  1,527,309                         $  1,436,309 
                                                         =============                        ============ 
(Deficiency)                                                                                               


LIQUIDITY AND FINANCIAL CONDITION                                               

We had $63,600 in cash at December 31, 2002, as compared to $18,280 at December 
31, 2001. At December 31, 2002, our working capital deficit was $488,696, as    
compared to $4,030,508 at December 31, 2001. Since our working capital deficit  
at December 31, 2001 was attributable to a $4,255,660 note payable to ATD that  
was subsequently forgiven, our effective working capital declined by $713,848   
during the year ended December 31, 2002.                                        

Our year-end working capital deficit was exacerbated by the burglary at our     
Pringy facility, which resulted in the loss of $294,000 in inventory and        
$103,000 in plant and equipment. As described elsewhere in this report, our     
board of directors ultimately concluded that the only reasonable response to the
insurmountable working capital deficit arising from the theft loss was to       
commence a bankruptcy proceeding for our French subsidiary Blue Industries SAS. 

The bankruptcy petition we filed on behalf of Blue Industries SAS resulted in   
the surrender of $397,000 in operating assets to the liquidator and the         
discharge of $306,000 in operating liabilities. Overall, the Blue Industries SAS
bankruptcy improved our working position by approximately $12,000 and reduced   
our stockholders' equity by approximately $91,000. We do not believe our company
is likely to be contingently liable for the accumulated operating liabilities of
Blue Industries SAS.                                                            

In April 2003, we agreed to sell 1,500,000 shares of our common stock in a      
private placement transaction that provides for a purchase price of $0.40 per   
share, or $600,000 in the aggregate. We received an initial installment of      
$300,000 on April 30, 2003 and expect to receive the $300,000 balance within 30 
days.                                                                           

After giving effect to the Pringy burglary, the bankruptcy of Blue Industries   
SAS and the subsequent private placement transaction, we have approximately     
$41,000 in cash and inventory at the date of this report and we expect to       
receive an additional $300,000 over the next 30 days. We believe our available  
financial resources should be sufficient to support our planned activities for  
at lest six months from the date of this report.                                

RESULTS OF OPERATIONS                                                           

We realized $293,329 in gross profit from product sales and consulting services 
in the year ended December 31, 2002. After giving effect to:                    

o        $523,750 in non-cash compensation expense arising the issuance of      
  2,095,000 shares of common stock to employees and consultants in
December 2002;                                                

o        $1,960,999 in other general and administrative expenses;               

o        $464,094 in salaries;                                                  

o        $34,227 in depreciation and amortization; and                          

o        $92,226 in other expenses                                              

We incurred a net loss of ($2,799,797), or ($0.81) per share, for the year ended
December 31, 2002. Our net cash used by operating activities during the year    
ended December 31, 2002 was $1,877,312.                                         

We have significantly reduced our staff and operating overhead as a result of   
the bankruptcy of Blue Industries SAS. Therefore we do not believe that our     
results of operations for the year ended December 31, 2002 are a reliable       
indicator of our future operating results. If we are able to successfully       
implement the plan of operations described below we can expect increased        
revenues and decreased costs during the current fiscal year. But we are         
presently unable to predict the magnitude of the revenue increases or the       
overall amount of the anticipated cost savings.                                 

GOING CONCERN QUALIFICATION                                                     

As at December 31, 2002, we had accumulated losses of ($2,874,534) and a working
capital deficit of ($488,696). These problems were exacerbated by the subsequent
burglary at our Pringy facility and the bankruptcy of Blue Industries SAS. While
our recent private placement will alleviate the going concern issues, it will   
not eliminate them. Accordingly, the independent auditors' report on our        
financial statements for the year ended December 31, 2002 contains a fourth     
explanatory paragraph that our financial statements have been prepared assuming 
that our company will continue as a going concern and that the problems         
discussed above raise substantial doubt about our ability to continue as a going
concern.                                                                        

PLAN OF OPERATIONS                                                              

We are likely to incur operating losses for the foreseeable future. We have     
approximately $41,000 in cash and inventory at the date of this report and      
expect to receive an additional $300,000 within 30 days. We believe these cash  
resources will be adequate to provide for our operating expenses for a period of
at least six months from the date of this Report. Thereafter, we will need      
additional capital to pay our operating expenses and finance our planned        
expansion.                                                                      

Over the next six months, we intend to finance our business operations from the 
proceeds of our recent private placement. We believe we will be able to         
supplement our available cash resources with anticipated revenue from the sale  
of Blue Powder to distributors in Thailand and China. Revenues from product     
sales will be contingent on our ability to manufacture sufficient quantities of 
Blue Powder to satisfy our customers' requirements. There is no assurance that  
our expected product sales will result in revenues that will exceed our expected
operating costs.                                                                

If revenues from product sales do not materialize or are less than presently    
anticipated, we will require additional funds to finance our day-to-day         
operations. Moreover, the recent restructuring of agreements with our principal 
distributors and the bankruptcy of Blue Industries SAS and the make it difficult
to estimate what our long-term capital requirements will be. We are likely to   
need capital to pay our day-to-day operating costs, finance additions to our    
inventories and pay for the expansion of our sales and marketing activities. We 
may also need additional capital to finance the acquisition of complementary    
assets, technologies and businesses. We intend to pursue additional financing as
opportunities arise.                                                            

Our ability to obtain additional financing in the future will be subject to a   
variety of uncertainties. The inability to raise additional funds on terms      
favorable to us, or at all, would have a material adverse effect on our         
business, financial condition and results of operations. If we are unable to    
obtain additional capital when required, we will be forced to scale back our    
planned expenditures, which would adversely affect our growth prospects.        

We have the authority to issue 50,000,000 shares of Common Stock and 10,000,000 
shares of a blank check preferred stock without a vote of the stockholders. We  
had 4,783,202 shares of Common Stock issued and outstanding on the date of this 
Report and expect to issue 750,000 additional shares upon completion of our     
recent private placement. Our Board has the authority to issue all or any part  
of our authorized and unissued capital stock to raise additional capital or     
finance acquisitions. The Board also has the authority to fix the rights,       
privileges and preferences of the holders of Preferred Stock, which may be      
superior to the rights of holders of the Common Stock. We expect to seek        
additional equity capital in the future and we may attempt to acquire other     
companies or operating assets as we develop our business and implement our      
growth strategy. Any future issuances of common or preferred stock will dilute  
the ownership interest of our current shareholders and may dilute the book value
of our outstanding securities.                                                  

Due to our limited operating history, our business model and our growth strategy
are unproven. We cannot be certain that our business model and our growth       
strategy will be successful or that we will be able to compete effectively,     
achieve market acceptance or otherwise address the risks associated with our    
existing and proposed business activities.                                      

ITEM 7.       FINANCIAL STATEMENTS.                                             

The following consolidated financial statements for the year ended December 31, 
2002 are included in this Annual Report on Form 10-KSB:                         

Report of Durland & Company on our consolidated financial                       
statements for the year ended December 31, 2002.................F-1   

Report of BDO Dunwoody on our consolidated financial statements                 
for the year ended December 31, 2001............................F-2   

Consolidated Balance Sheets at December 31, 2002 and 2001............F-3        

Consolidated Statements of Operations and Comprehensive                         
Income (Loss) for the years ended December 31, 2002 and 2001....F-4   

Consolidated Statements of Stockholders' Equity (Deficiency) for                
the years ended December 31, 2002 and 2001......................F-5   

Consolidated Statements of Cash Flows for the years ended                       
December 31, 2002 and 2001......................................F-6   

Notes to Consolidated Financial Statements...........................F-7        

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F-6                                                                             

INDEPENDENT AUDITORS' REPORT                                                    

The Board of Directors and Stockholders                                         
Blue Industries, Inc.                                                           
Pringy, France                                                                  

We have audited the accompanying consolidated balance sheets of Blue Industries,
Inc., (the "Company") as of December 31, 2002 and the related consolidated      
statements of operations and comprehensive income (loss), stockholders' equity  
(deficiency) and cash flows for the year ended December 31, 2002. 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 generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the consolidated financial statements are    
free of material misstatement. An audit includes examining, on a test basis,    
evidence supporting the amounts and disclosures in the consolidated financial   
statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of the Company as of   
December 31, 2002 and the results of their operations and their cash flows for  
the year ended December 31, 2002, in conformity with accounting principles      
generally accepted in the United States.                                        

The accompanying consolidated financial statements have been prepared assuming  
that the Company will continue as a going concern. As discussed in Note 4 to the
consolidated financial statements, the Company has experienced net losses since 
inception. The Company's financial position and operating results raise         
substantial doubt about its ability to continue as a going concern. Management's
plans with regard to these matters are also described in Note 4. The            
consolidated financial statements do not include any adjustments that might     
result from the outcome of this uncertainty.                                    

Durland & Company, CPAs, P.A.                                                   

Palm Beach, Florida                                                             
March 19, 2003                                                                  

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INDEPENDENT AUDITORS' REPORT                                                    

To the Directors and Stockholders of Blue Industries Inc.                       
(formerly Burrard Technologies, Inc.)                                           

We  have  audited  the  Consolidated  Balance  Sheets  of Blue  Industries  Inc.
(formerly  Burrard  Technologies,  Inc.,  a  development  stage  company)  as at
December 31, 2001 and the  Consolidated  Statements  of  Operations,  Changes in
Capital  Deficit  and  Cash  Flows  for the year  then  ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.                                                                     

We conducted our audit 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 audit provides a reasonable basis for our     
opinion.                                                                        

In our opinion, these consolidated financial statements present fairly, in all  
material respects, the financial position of Blue Industries Inc. (formerly     
Burrard Technologies, Inc.) as at December 31, 2001 and the related Consolidated
Statements of Operations, Changes in Capital Deficit and Cash Flows for the year
then ended in conformity with United States generally accepted accounting       
principles.                                                                     

The accompanying financial statements have been prepared assuming the Company   
will continue as a going concern. As discussed in Note 4 to the consolidated    
financial statements, at December 31, 2001, the Company did not recognize any   
revenue. This raises substantial doubt about is ability to continue as a going  
concern. Management's plans in regard to these matters are described in Note 4. 
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.                                                

/S/ BDO DUNWOODY LLP                                                            

Chartered Accountants                                                           

Vancouver, Canada                                                               
March 11, 2002                                                                  

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Blue Industries, Inc.                                                           
Consolidated Balance Sheets                                                   
December 31,                                                                    

                                                        [Enlarge/Download Table]


                                                                                    2002                2001        
                                                                              ------------------ -------------------
                                   ASSETS                                                                           
CURRENT ASSETS                                                                                                      
                                                                                                                    
  Cash and equivalents                                                                  $63,600             $18,280 
  Accounts receivable (net of allowance of $30,063 and $0)                              338,088                   0 
  Accounts receivable - related parties                                                 103,313                   0 
   Inventory                                                                            687,019             334,462 
                                                                              ------------------ -------------------
          Total current assets                                                        1,192,020             352,742 
                                                                              ------------------ -------------------

PROPERTY AND EQUIPMENT                                                                                              
  Software                                                                               13,405              13,405 
  Computers and equipment                                                               306,906              76,070 

        Less: accumulated depreciation                                                 (37,936)                   0 
                                                                              ------------------ -------------------

          Net property and equipment                                                    282,375              89,475 
                                                                              ------------------ -------------------

OTHER ASSETS                                                                                                        
  Deposits and other assets                                                              49,073               2,409 
  Patent                                                                                  3,969                   0 

        Less:  accumulated amortization                                                   (128)                   0 
                                                                              ------------------ -------------------

          Net other assets                                                               52,914               2,409 
                                                                              ------------------ -------------------
Total Assets                                                                         $1,527,309            $444,626 
                                                                              ------------------ -------------------

             LIABILITIES AND STOCKHOLDERS' EQUITY ( DEFICIENCY)                                                     
CURRENT LIABILITIES                                                                                                 
   Accounts payable                                                                    $707,170             $73,823 
   Accrued Expenses                                                                                                 
       Payroll and taxes                                                                155,155                   0 
       VAT tax payable                                                                  105,274                   0 
   Due to a former officer                                                               66,088              56,176 
   Short-term debt                                                                      647,029           4,255,660 
                                                                              ------------------ -------------------

          Total current liabilities                                                   1,680,716           4,385,659 
                                                                              ------------------ -------------------

Total Liabilities                                                                     1,680,716           4,385,659 
                                                                              ------------------ -------------------

STOCKHOLDERS' EQUITY (DEFICIENCY)                                                                                   
   Preferred stock, $0.0001 and N/A par value, authorized 10,000,000 and N/A                                        
shares;                                                                                       0                   - 
     none issued and outstanding                                                                                    
   Common stock, $0.0001 and $0.001 par value, authorized 50,000,000 and                                            
     25,000,000 shares; 3,985,332 and 17,662,000 issued and outstanding                     399              17,662 
shares                                                                                                              
   Additional paid-in capital                                                         2,715,147         (3,853,343) 
   Accumulated comprehensive income (loss)                                                5,581               3,411 
   Deficit                                                                          (2,874,534)           (108,763) 
                                                                              --------------------------------------

          Total stockholders' equity (deficiency)                                     (153,407)         (3,941,033) 
                                                                              ------------------ -------------------
Total Liabilities and Stockholders' Equity (Deficiency)                              $1,527,309            $444,626 
                                                                              ------------------ -------------------

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Blue Industries, Inc.                                                           
Consolidated Statements of Operations and Comprehensive Income (Loss)           
Year Ended December 31,                                                         

                                                        [Enlarge/Download Table]


                                                            2002               2001      
                                                      ------------------  ---------------
                                                                                         
REVENUES                                                     $1,373,468               $0 
                                                      ------------------  ---------------

COST OF SALES                                                 1,080,139                0 
                                                      ------------------  ---------------

          Gross margin                                          293,329                0 
                                                      ------------------  ---------------

OPERATING EXPENSES                                                                       
    Salaries                                                    464,094                0 
    Depreciation and amortization                                34,227                0 
    General and administrative                                2,484,749           77,693 
    Research and development                                          0                0 
                                                      ------------------  ---------------

          Total operating expenses                            2,983,070           77,693 
                                                      ------------------  ---------------

 Operating Loss                                             (2,689,741)         (77,693) 

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

OTHER INCOME (EXPENSE):                                                                  
    Interest income                                                   1                0 
    Interest expense                                           (42,347)                0 
    Foreign currency transaction gain (loss)                   (23,130)                0 
    Reserve for bad debt                                       (26,750)                0 
                                                      ------------------  ---------------

          Total other income (expense)                         (92,226)                0 
                                                      ------------------  ---------------

Net loss                                                    (2,781,967)         (77,693) 

Other comprehensive income (loss):                                                       
    Foreign currency translation gain (loss)                      2,170            3,411 
                                                      ------------------  ---------------

Comprehensive loss                                         $(2,779,797)        $(74,282) 
                                                      ------------------  ---------------

Net loss per common share                                   $    (0.81)      $    (0.01) 
                                                      ------------------  ---------------

Weighted average number of common shares outstanding          3,434,230       17,662,000 
                                                      ------------------  ---------------


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Blue Industries, Inc.                                                           
Consolidated Statements of Stockholders' Equity (Deficiency)                    

                                                        [Enlarge/Download Table]

                                                                                                  Accum.                     Total 
                                                                       Add'l.                                                      
Stock Comp. Retained Stockholders'                                                                                                 
                                       Number of    Common      Paid-in     Subscriptions   Income     Earnings        Equity      
                                         Shares      Stock      Capital      Receivable     (Loss)    (Deficit)     (Deficiency)   
                                      ----------------------- ------------- -------------- --------- ------------- --------------- 
BEGINNING BALANCE,                                                                                                                 
                                                                                                                                   
January 1, 2001                              1,000   $59,880            $0      $(29,940)        $0     $(31,070)        $(1,130)  

Year ended December 31, 2001:                                                                                                      
   Recapitalization                      7,599,000  (52,280)        52,280              0         0             0               0  
   Stock subscription received                   0         0             0         29,940         0             0          29,940  
   Distribution of assets at                                                                                                       
   acquisition                                   0         0   (3,864,563)              0         0             0     (3,864,563)  
   Settlement of debt                            0         0        31,070              0         0             0          31,070  
   Reverse acquisition                  10,062,000    10,062      (72,130)              0         0        16,196        (45,872)  
   Other comprehensive income (loss)             0         0             0              0     3,411             0           3,411  
   Net loss                                      0         0             0              0         0      (77,693)        (77,693)  
                                      ----------------------- ------------- -------------- --------- ------------- --------------- 

BALANCE, December 31, 2001              17,662,000    17,662   (3,853,343)              0     3,411      (92,567)     (3,924,837)  

Year ended December 31, 2002:                                                                                                      
   Shares issued for cash                5,701,431     5,701     1,281,528              0         0             0       1,287,229  
   Note forgiveness                              0         0     3,864,563              0         0             0       3,864,563  
   Shares issued for inventory           9,757,489     9,758       397,355              0         0             0         407,113  

   1 for 20 reverse split             (31,464,874)  (31,465)        31,465              0         0             0               0  
   Amended par value                             0   (1,490)         1,490              0         0             0               0  
   Shares issued for services            2,095,000       210       523,540              0         0             0         523,750  
   Shares issued for cash                  234,286        23       468,549              0         0             0         468,572  
   Other comprehensive income (loss)             0         0             0              0     2,170             0           2,170  
   Net loss                                      0         0             0              0         0   (2,781,967)     (2,781,967)  
                                      ----------------------- ------------- -------------- --------- ------------- --------------- 

ENDING BALANCE, December 31, 2002        3,985,332      $399    $2,715,147             $0    $5,581  $(2,874,534)      $(153,407)  
                                      ----------------------- ------------- -------------- --------- ------------- --------------- 


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Blue Industries, Inc.                                                           
Consolidated Statements of Cash Flows                                           
Year Ended December 31,                                                         

                                                        [Enlarge/Download Table]

                                                                                  2002             2001      
                                                                             ----------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                        

                                                                                                             
Net loss                                                                        $(2,781,967)       $(77,693) 
Adjustments to reconcile net loss to net cash used by operating activities:                                  
     Depreciation and amortization                                                    34,227               0 
     Common stock issued for services                                                523,750               0 
     Foreign exchange transaction gain (loss)                                         23,130               0 
     Reserve for bad debt                                                             26,750               0 
Changes in operating assets and liabilities:                                                                 
     (Increase) decrease in accounts receivable                                    (327,572)               0 
     (Increase) decrease in inventory                                              (222,914)               0 
     (Increase) decrease in deposits and other assets                               (44,308)               0 
     Increase (decrease) in accounts payable                                         650,464               0 
     Increase (decrease) in VAT tax payable                                           93,673          64,282 
     Increase (decrease) in salaries and payroll and taxes                           147,455               0 
                                                                             ----------------  --------------

Net cash  provided (used) by operating activities                                (1,877,312)        (13,411) 
                                                                             ----------------  --------------

CASH FLOW FROM INVESTING ACTIVITIES:                                                                         
     Purchase of property and equipment                                            (203,165)               0 
     Cash acquired in acquisition                                                          0           1,751 
     Increase expenditure application patent                                         (3,772)               0 
                                                                             ----------------  --------------

Net cash provided (used) by investing activities                                   (206,937)           1,751 
                                                                             ----------------  --------------

CASH FLOW FROM FINANCING ACTIVITIES:                                                                         
     Receipt of subscription receivable                                                    0          29,940 
     Related party advances                                                         (91,925)               0 
     Proceeds of  long term debt - related party                                     575,709               0 
     Issuance of common stock for cash                                             1,755,801               0 
                                                                             ----------------  --------------

Net cash provided by financing activities                                          2,239,585          29,940 
                                                                             ----------------  --------------

Effect of exchange rates on cash                                                   (110,016)               0 
                                                                             ----------------  --------------

Net increase (decrease) in cash and equivalents                                       45,320          18,280 

CASH and equivalents, beginning of period                                             18,280               0 
                                                                             ----------------  --------------

CASH and equivalents, end of period                                                  $63,600         $18,280 
                                                                             ----------------  --------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                            
Interest paid in cash                                                                     $0              $0 
                                                                             ----------------  --------------

Non-Cash Financing Activities:                                                                               
  Forgiveness of debt                                                             $4,257,430         $31,070 
                                                                             ----------------  --------------
  Promissory note issued for acquisition of assets                                        $0      $4,288,500 
                                                                             ----------------  --------------

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Blue Industries, Inc.                                                           
Notes to Consolidated Financial Statements                                      

(1) Summary of Significant Accounting Principles                                
         Blue Industries, Inc., (the "Company"), was incorporated under the laws
of the State of Nevada on April 5, 2000 as Burrard Technologies, Inc.           
("Burrard") and was involved in software development. During 2001, the Company  
discontinued the software development and became inactive until December 18,    
2001, when it acquired all the issued and outstanding shares of Technocall S.A. 
("Technocall"), a Swiss company.                                                

         Technocall SA, a proprietary micro-calculator and electronic management
     system that regulates and controls the water treatment process, had
       been inactive until September 2001, at which time it acquired all the
     assets comprising the Blue Industries water treatment process to be
      marketed to governmental and non-governmental organizations in Asia,
         Africa and the Middle East. This process enables the Company to develop
   water treatment apparatuses that achieve results in the fields of
 wastewater treatment, farm produce industry water treatment and
drinking water potabilization.                                

         On April 2, 2002, the Company changed its legal name to Blue Industries
Inc.                                                                            

  The following summarize the Company's significant accounting and
reporting policies and practices:                                               

         a) Use of estimates In preparing the consolidated financial statements,
      management is required to make estimates and assumptions that affect
      the reported amounts of assets and liabilities as of the date of the
      statements of financial condition, and revenues and expenses for the
     year then ended. Actual results may differ significantly from those
estimates.                                                    

   b) Significant acquisition In September 2001, Technocall acquired
      substantially all of the assets comprising the Blue Industries water
 and treatment process from a then third party in exchange for a
     subordinated note payable in the amount of $4,288,500. The debt was
        subordinated against future indebtedness of the Company, is unsecured,
        non-interest bearing, with no specific terms of repayment. At the date
of acquisition, the assets held a carrying value of $423,937. 
  Subsequent to the acquisition, the stockholder agreed to forgive
       $31,070 of the note payable, which was recorded as a reduction in the
distribution of capital.                                      

  On December 18, 2001, the Company acquired all of the issued and
     outstanding shares of Technocall in exchange for 7.6 million common
      shares of the Company's common stock, in a reverse merger, which was
        accounted for as a reorganization of Technocall. Blue Industries, Inc.
         accounted for the reverse merger as an issuance of stock to be recorded
as ($45,872).                                                 

      c) Principles of consolidation The consolidated financial statements
    include the accounts of Blue Industries, Inc. and its wholly owned
 subsidiaries. Inter-company balances and transactions have been
eliminated.                                                   

         d) Net loss per common share Basic net loss per weighted average common
    share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period.        

      e) Property and equipment All property and equipment are recorded at
   cost and depreciated over their estimated useful lives, using the
      straight-line method. Upon sale or retirement, the costs and related
         accumulated depreciation are eliminated from their respective accounts,
and the resulting gain or loss is included in the results of  
       operations. Repairs and maintenance charges which do not increase the
   useful lives of the assets are charged to operations as incurred.
      Depreciation expense was $34,099 and $0 for the years ended December
31, 2002 and 2001, respectively.                              

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Blue Industries, Inc.                                                           
Notes to Consolidated Financial Statements                                      

(1) Summary of Significant Accounting Principles (Continued)                    
   f) Cash and equivalents The company considers investments with an
initial maturity of three months or less as cash equivalents. 

g) Patents Patents are recorded at cost and are amortized on a
   straight-line basis over five years, commencing in the period the
        patents are put into service. No residual value is expected at the end
        of the patents' useful lives. Amortization expense was $128 and $0 for
the years ended December 31, 2002 and 2001, respectively.     

h) Revenue recognition In 2002, the Company entered into sales
contracts with companies in China and Thailand to supply units
       containing the Blue water treatment process having contract values of
15 million Euros, (approximately $15,350,000), and $850,000,  
       respectively. Revenue earned on these contracts are recognized as the
      units are shipped and all aspects of performance insofar as delivery
       and installation are complete, the price is fixed or determinable and
         the collection is probable. The Company considers all arrangements with
      payment terms extending beyond 12 months and other arrangements with
payment terms longer than normal not to be considered fixed or
     determinable. If collectibility is not considered probable, revenue
        will be recognized when the revenue is collected. Product returns will
   be reserved in accordance with SFAS No. 48. Until the Company can
       establish a history of returns, recognition of revenue is deferred on
   sales to distributors having right of return privileges until the
        return period expires. Once a reliable return history is created, such
returns will be estimated using historical return rates.      

      In the future, the Company expects to offer software arrangements to
        its customers whereby the software license would include the rights to
   related products, such as upgrades and technical support. In such
arrangements, the Company will allocate the total cost of the 
       arrangement among each deliverable based upon the relative fair value
  of each of the deliverables, determined based on vendor-specific
objective evidence of fair value.                             

   Cost of revenue will include shipping and related delivery costs.

       On February 1, 2002, the Company also entered into a joint venture of
     which the Company holds a 46% interest. Upon formation of the joint
     venture, the Company licensed the joint venture the water treatment
       technology for territories in the Middle East, North Africa and Iran.
         The co-venturer contributed cash and other working capital to the joint
     venture. As consideration for contributing the license, the Company
   will receive from the joint venture a fee of $1,000,000 and a 10%
royalty on sales of water treatment units.                    

     i) Foreign currency transaction and translation gains (losses) As a
 Swiss company operating in Switzerland, Technocall's functional
        currency is the Swiss franc. Assets and liabilities of Technocall have
      been translated at the exchange rate in effect at the year end date,
        while revenue and expenses are translated at the average exchange rate
  for the period. Gains or losses on translation are deferred as a
separate component of capital.                                

As a French company operating in France, Blue Industries SAS's
 functional currency is the Euro. Assets and liabilities of Blue
       Industries SAS have been translated at the exchange rate in effect at
     the year end date, while revenue and expenses are translated at the
      average exchange rate for the period. Gains or losses on translation
are deferred as a separate component of capital.              

    The functional currency of Blue Industries, Inc. on a consolidated
   basis is the Euro, and the Company's reporting currency is the US
     Dollar. The Company translated the income statement items using the
        average exchange rate for the period and balance sheet items using the
 end of period exchange rate, except for equity items, which are
translated at historical rates, in accordance with SFAS 52.   

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Blue Industries, Inc.                                                           
Notes to Consolidated Financial Statements                                      

(1) Summary of Significant Accounting Principles (Continued)                    

 j) Research & development Research and development expenses are
expensed in the period incurred.                                                

k) Software development costs In accordance with SFAS No. 86, 
      "Accounting for the Cost of Computer Software to be Sold, Leased, or
     Otherwise Marketed", development costs incurred in the research and
     development of new software products are expensed as incurred until
   technological feasibility in the form of a working model has been
established.                                                  

      To December 31, 2001, no amounts were capitalized in connection with
 software development for the Company's water treatment process.

     l) VAT tax receivable/payable In Switzerland and France, as in many
        other countries, the government charges a Value Added Tax, (VAT), that
    is similar in nature to sales tax in the US. There are three major
         differences. First is that VAT is charged at each point of sale. Second
      is that there are no exemptions from the collection of VAT. Finally,
        each company files a VAT return with the government monthly reflecting
       the gross VAT collected and VAT paid. If the VAT paid is greater than
         the amount collected, the Company receives a refund from the government
approximately three to five months later.                     

m) Comprehensive income The Company has adopted SFAS No. 130, 
   "Reporting Comprehensive Income", which establishes standards for
   reporting and display of comprehensive income, its components and
         accumulated balances. The Company is disclosing this information on its
  Statement of Changes in Capital Deficit. Comprehensive income is
   comprised of net income (loss) and all changes to capital deficit
       except those resulting from investments by owners and distribution to
owners.                                                       

(2)      Stockholders' Equity The Company has authorized 50,000,000 shares of   
     $0.0001 par value common stock and 10,000,000 shares of $0.0001 par
         value preferred stock. Rights and privileges of the preferred stock are
   to be determined by the Board of Directors prior to issuance. The
    Company had 3,985,332 and 17,662,000 shares of common stock and no
       shares of preferred stock issued and outstanding at December 31, 2002
and 2001, respectively.                                       

    In March 2002, the Company's stockholders approved a change to the
      Company's authorized share capital to increase the authorized common
       stock to 50,000,000 shares at a par value of $0.001 per share, and to
      authorize the creation of 100,000,000 shares of preferred stock at a
  par value of $0.001 per share. In March 2002, the Company issued
       534,765 shares of common stock in connection with a private placement
   for gross proceeds of $957,229, the majority of which was used to
purchase inventory.                                           

         Immediately prior to the acquisition of Technocall, two stockholders of
    the Company surrendered 7,125,000 common shares to the Company for
        cancellation. No consideration was paid on redemption of these shares.
       The fair value of the note payable to a former Technocall stockholder
    was not practicable to determine. On April 2, 2002, the noteholder
       agreed to forgive the balance owing, which is recorded as a reduction
to the distribution of capital and additional paid-in capital.

         In early 2002, the Company issued 5,701,431 shares of restricted common
       stock for $1,287,229 in cash. With the forgiveness of the acquisition
promissory note, the Company reversed the $3,864,563 charge to
         additional paid-in capital. In early 2002, the Company issued 9,757,489
       shares of restricted common stock in exchange for inventory valued at
        $407,113, as delivered. In October 2002, the Company completed a 1 for
    20 reverse split of the then issued and outstanding common shares,
        resulting in the retirement of 31,464,874 shares. In October 2002, the
       Company amended the Articles of Incorporation to change the par value
of the common stock                                           

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Blue Industries, Inc.                                                           
Notes to Consolidated Financial Statements                                      

(2)      Stockholders' Equity (Continued) from $0.001 to $0.0001 per share. In  
 the fourth quarter 2002, the Company issued 2,095,000 shares of
        restricted stock in exchange for services valued at $523,750, or $0.25
per share. This stock was issued to certain management and key
        consultants. The valuation was determined by the Board of Directors as
      a discount to the then market price of $0.40 per share. This was the
         only means by which the Company could retain these individuals in order
      for the Company to continue to grow. In the fourth quarter 2002, the
 Company issued 234,286 shares in exchange for $468,572 in cash.

(3)      Income Taxes The Company follows the provisions of Statement of        
         Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes", which requires the Company to recognize deferred tax  
    liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company's consolidated
       financial statements or tax returns using the liability method. Under
       this method, deferred tax liabilities and assets are determined based
       on the temporary differences between the financial statement carrying
         amounts and tax bases on assets and liabilities using enacted tax rates
 in effect in the years in which the differences are expected to
reverse.                                                      

      The amount recorded as deferred tax asset, cumulative as of December
31, 2002 and 2001 is approximately $2,611,200 and $24,800,    
       respectively, which represents the amount of tax benefits of the loss
       carry-forwards. The Company has established a valuation allowance for
       this deferred tax asset of $2,611,200 and $24,800, as the Company has
no history of profitable operations.                          

      The significant components net deferred tax asset as of December 31,
2002 and 2001 are:                                                              

                          2002              2001
                          ---------------     ------------
Net operating losses                     $6,528,100          $79,900            
Valuation allowance                     (6,528,100)         (79,900)            
                          ---------------     ------------
Net deferred tax asset                           $0               $0            
                          ---------------     ------------

   Deferred income tax assets and the related valuation allowance of
      Burrard totaled $55,100 at the date of recapitalization. The Company
   evaluates its valuation allowance requirements based on projected
       future operations. When circumstances change resulting in a change in
        management's judgment regarding recoverability of deferred tax assets,
     the impact of the change on the valuation allowance is reflected in
current income.                                               

        Provision for income taxes differs from the amount estimated using the
Federal US statutory income tax rate as follows:              
                  2002              2001
                     ---------------- ------------------
Federal statutory rate              $(2,611,200)          $(26,400)             
Foreign taxation effect                        0              1,600             
Increase in valuation allowance        2,611,200             24,800             
                     ---------------- ------------------
                                  0                 $0
                     ---------------- ------------------

        At December 31, 2002, the Company had estimated loss carry-forwards of
       approximately $15,000 to reduce future Swiss taxable income, expiring
   in 2008, and approximately $6,528,000 to reduce future US taxable
income, expiring in 2022, 2021 and 2020.                      

(4)      Going Concern These financial statements have been prepared in         
        accordance with United States generally accepted accounting principles
      applicable to a going concern, which contemplates the realization of
   assets and the satisfaction of liabilities and commitments in the
normal course of business.                                    

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Blue Industries, Inc.                                                           
Notes to Consolidated Financial Statements                                      

(4)      Going Concern (Continued) The conditions raising substantial doubt     
    about the Company's ability to continue as a going concern are the
      $6,541,000 accumulated deficit, negative working capital balance and
        the theft of assets, principally inventory, in March 2003. The Company
        has been negotiating a potential large investment which, if completed,
 will alleviate the going concern doubt. The Company's financial
         statements do not include any adjustments related to the recoverability
 and classification of recorded asset amounts or the amounts and
        classification of liabilities that may be necessary should the Company
be unable to continue as a going concern.                     

(5) Related Party Transactions                                                  
       a) Long-term debt Amounts due to a former director and officer of the
Company are unsecured, non-interest bearing and due on demand.

(6)      Commitments and Contingencies The Company entered into various lease   
   agreements for premises requiring aggregate monthly minimum lease
   payments of $7,960 for a period of three years. The leases may be
 cancelled at the Company's option with 90 days' written notice.

      On February 6, 2002, the Company completed an agreement to acquire a
   manufacturing and marketing license for a wastewater purification
     device. The license covers various countries in the Middle East and
   North Africa and expires in February 2012, subject to renewal. In
       consideration for the license, the licensor was entitled to a royalty
     equal to 10% of sales of water purification devices by the Company,
         subject to a minimum royalty payment of $1,500,000 in each quarter, for
     a minimum annual royalty of $6,000,000. The Company was granted the
         option to redeem the royalties with one single payment corresponding to
      two annual royalty payments, provided this payment was made by March
 30, 2002. The Company entered into a further agreement with the
        licensor whereby it agreed to issue 9,000,000 restricted shares of its
    common stock to the licensor in consideration for the reduction of
   royalties payable on sales of products incorporating the licensed
         patent, pursuant to the patent license contract with the licensor. This
     agreement was subsequently cancelled. The Company did not issue the
        9,000,000 shares to the licensor, and the royalty remains as a royalty
       of 10% of sales. The licensor has offered to waive the minimum annual
      royalty under the patent license contract in exchange for making the
license rights non-exclusive.                                 

     The Company's success in relation to its water treatment process if
   dependent upon the good working relationship it can maintain with
         certain key suppliers whose products are integral to the performance of
the water treatment system.                                   

(7) Subsequent Events                                                           
        a) Inventory In March 2003, the Company's facilities in Pringy, France
   were broken into and virtually all of the Company's inventory was
stolen. This theft was reported to the local police, who are  
        investigating. This theft was apparently perpetrated by the individual
     who controlled the company that received 9,757,489 shares of common
    stock of the Company in exchange for inventory in early 2002. This
        individual left behind a signed letter stating that he had perpetrated
the theft.                                                    

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16                                                                              

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

BDO Dunwoody LLP of Vancouver, Canada, audited the financial statements of      
Burrard Technologies, Inc. for the years ended December 31, 2000 and 2001; and  
BDO Visura of Geneva, Switzerland audited the financial statements of Technocall
SA for the year ended December 31, 2001. BDO Dunwoody and BDO Visura are both   
member firms of BDO International.                                              

On October 23, 2002, our Board of Directors voted to dismiss BDO Dunwoody LLP   
and retain BDO Visura to serve as our independent auditor for the fiscal year   
ended December 31, 2002.                                                        

During the fiscal years December 31, 2000 and 2001, and the subsequent interim  
periods preceding the date of this report there were no reportable disagreements
between us and BDO Dunwoody LLP on any matter of accounting principles or       
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to the satisfaction of BDO Dunwoody LLP, would have caused them 
to make reference to the subject matter of the disagreement or disagreements in 
their reports on the financial statements for such years.                       

The report of BDO Dunwoody, LLP dated March 11, 2002 (except as to Note 7(d),   
April 2, 2002) on our financial statements for the years ended December 31, 2000
and 2001 did not contain an adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles,  
except for a fourth explanatory paragraph that the financial statements had been
prepared assuming that our company would continue as a going concern and that   
our lack of operating revenue during the year ended December 31, 2001 raised    
substantial doubt about our ability to continue as a going concern.             

On March 18, 2003, our Board of Directors voted to dismiss BDO Visura retain    
Durland & Company, CPAs, PA, to serve as our independent auditor for the fiscal 
year ended December 31, 2002.                                                   

BDO Visura has not yet audited our financial statements for any fiscal periods. 
In connection with BDO Visura's reviews of our interim financial statements     
through March 11, 2003, there were no reportable disagreements with BDO Visura  
on any matter of accounting principles or practices, financial statement        
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of BDO Visura, would have caused BDO Visura to make a       
reference thereto for such interim periods in its reports.                      

Prior to the engagement of Durland & Company, CPAs, PA, we did not consult with 
Durland & Company regarding (i) the application of accounting principles to a   
specific transaction; (ii) the type of audit opinion that might be rendered on  
our financial statements or (iii) any other matter that was either the subject  
of a disagreement with our former auditors or an otherwise reportable event.    

PART III                                                                        

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

      Our Company's directors and executive officers are identified in the
following table:                                                                

Name                     Age            Positions                         
 Patrick Gouverneur        52  President, Chief Executive Officer and Director
Cyril Heitzler            34  Treasurer, Secretary and Director             
Valerie Thierstein        34  Chief Financial Officer                       
Philippe Notton           48  Director                                      

     At the date of this Report, our Messrs. Gouverneur and Heitzler are the
only full-time employees of our Company. We have entered into a contract with   
Ms. Valerie Thierstein who has agreed to work on a part-time basis as our chief 
financial officer until June 30, 2003. Biographical information on our officers 
and directors is set forth below.                                               

Patrick Gouverneur has served as our president and as a member of our board of  
directors since October 18, 2002. Before joining our company, Mr. Gouverneur was
employed for 6 years as the president of CIF International Corp., a Florida real
estate management firm. Mr. Gouverneur is a graduate of the Lycee Ste Barbe and 
the European Business School, both in Paris, France.                            

Cyril  Heitzler  has  served as our  secretary/treasurer  and as a member of our
board of directors  since  December 2001.  From 1998 through  December 2001, Mr.
Heitzler served as the industrial director of Cartis Group Inc. Previously,  Mr.
Heitzler  was  employed  for three  years as the  technical  director  of Cartis
International Ltd. where he was involved in the design and pre-industrialization
of water treatment systems. From 1995 to 1999, Mr. Heitzler was also employed as
technical  director of Tedeco Ltd., a company involved in the design of domestic
water  treatment  systems.  Mr. Heitzler is a graduate of University of Lyon and
holds the French equivalent of bachelor's degree in production engineering.     

Valerie  Thierstein  has served as our chief  financial  officer since  December
2001. From 2000 through December 2001, Ms.  Thierstein  served as the controller
for CEFCA, the manufacturing  affiliate Cartis Inc.  Previously,  Ms. Thierstein
was employed for 3 years as the chief accountant for Cartis, Inc. Ms. Thierstein
is a  graduate  of  Annecy  University  and holds the  French  equivalent  of an
associate's degree in accounting.                                               
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES                

We have no compensation committee, no audit committee, and no nominating        
committee. Decisions concerning nominees for Director and executive officer     
compensation for fiscal 2002 were made by the full Board of Directors.          

The Board of Directors held regular meetings and took action by unanimous       
written consent on 8 occasions during the fiscal year ended December 31, 2002,  
in which all members of the board of directors took part.                       

Our Directors are elected annually and hold office until the next annual meeting
of our stockholders or until their successors are elected and qualified.        
Officers are elected annually and serve at the discretion of the Board of       
Directors. There is no family relationship between any of our directors and     
executive officers. Board vacancies are filled by a majority vote of the Board. 

SECTION 16(a) BENEFICIAL OWNERSHIP AND REPORTING COMPLIANCE                     

Section 16(a) of the Exchange Act requires our officers, directors, and persons 
who beneficially own more than ten percent of our equity securities, to file    
reports of ownership and changes in ownership with the Securities and Exchange  
Commission and provide copies of those reports to our company. Based solely on  
our review of the copies of the reports provided to us, we believe that all of  
our officers, directors and principal stockholders failed to comply on a timely 
basis with the requirements of Section 16(a) during the year ended December 31, 
2002. The following schedule identifies each person who was required to file one
or more reports pursuant to Section 16(a) of the Exchange Act and failed to file
the required report. For purposes of the table, all transactions prior to       
October 28, 2002 have been restated to give pro forma effect to a 1 for 20      
reverse split that was effected on that date.                                   

                                                        [Enlarge/Download Table]


Advanced Technologies                                                                                     
Development Ltd. (1)                 Shares           Required      Reportable      Report       Report   
   (10% Stockholder)            Purchased (Sold)       Report       Event Date     Due Date    Filing Date

                                                                                                          
     Initial Statement               190,000           Form 3       17-Dec-2001   27-Dec-2001   Not filed 
     Change in Ownership              25,000           Form 4       03-Jan-2002   10-Feb-2002   Not filed 
     Change in Ownership             487,875           Form 4       30-May-2002   10-Jun-2002   Not filed 
     Change in Ownership            (487,875)          Form 4       30-May-2002   10-Jun-2002   Not filed 
     Change in Ownership            (140,123)          Form 4       21-Jun-2002   10-Jul-2002   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

(1) Includes shares registered in the names of Advanced Technologies Development                          
Ltd. and Herve Gallion.                                                                                   

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Cyril Heitzler (2)                   Shares           Required      Reportable      Report       Report   
   (Officer and Director)           Purchased          Report       Event Date     Due Date    Filing Date
     Initial Statement               126,920           Form 3       30-May-2002   10-Jun-2002   Not filed 
     Change in Ownership             155,000           Form 3       19-Dec-2002   10-Jan-2003   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

(2) Includes shares registered in the name of Westward Ltd.                                               

Philippe Notton                      Shares           Required      Reportable      Report       Report   
   (Director)                       Purchased          Report       Event Date     Due Date    Filing Date
     Initial Statement                 5,000           Form 3                                   Not filed 
     Change in Ownership             150,000           Form 4       19-Dec-2002   10-Jan-2003   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

Fernand Leloroux (3)                 Shares           Required      Reportable      Report       Report   
   (Former Officer)                 Purchased          Report       Event Date     Due Date    Filing Date
     Initial Statement                63,080           Form 3       17-Dec-2001   27-Dec-2001   Not filed 
     Change in Ownership             126,920           Form 4       30-May-2002   10-Jun-2002   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

(3) Includes shares registered in the names of Isher Ltd. and Axiom Ltd.                                  

Rocasoprane Ltd. (4)                 Shares           Required      Reportable      Report       Report   
   (10% Stockholder)                Purchased          Report       Event Date     Due Date    Filing Date
     Initial Statement               126,920           Form 3       17-Dec-2001   27-Dec-2001   Not filed 
     Change in Ownership                               Form 3                                   Not filed 
     Change in Ownership             250,000           Form 3       19-Dec-2002   10-Jan-2003   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

(4) Includes shares registered in the names of Rocasoprane Ltd. and Christophe                            
Giovannetti.                                                                                              

Mohammed Al Yamani (5)               Shares           Required      Reportable      Report       Report   
   (10% Stockholder)                Purchased          Report       Event Date     Due Date    Filing Date
     Stock Acquisition               126,920           Form 3       30-May-2002   10-Jun-2002   Not filed 
     Stock Acquisition               125,000           Form 3       30-Aug-2002   10-Sep-2002   Not filed 
     Stock Acquisition               250,000           Form 3       19-Dec-2002   10-Jan-2003   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

(5) Includes shares registered in the names of Mohammed Al Yamani and Famoya                              
Holdings BV.                                                                                              

Bernard Bouverot                     Shares           Required      Reportable      Report       Report   
   (Former Officer)                 Purchased          Report       Event Date     Due Date    Filing Date
     Initial Statement                25,000           Form 4       30-May-2002   10-Jun-2002   Not filed 
     Change in Ownership              95,000           Form 4       19-Dec-2002   10-Jan-2003   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 

Patrick Gouverneur                   Shares           Required      Reportable      Report       Report   
   (Officer and Director)           Purchased          Report       Event Date     Due Date    Filing Date
     Initial Statement                80,000           Form 3       19-Dec-2002   10-Jan-2003   Not filed 
     Annual Statement                                  Form 5                     15-Feb-2003   Not filed 


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ITEM 10.      EXECUTIVE COMPENSATION.                                           

The following table sets forth certain information as to the Company's highest  
paid executive officers and directors for the fiscal years ended December 31,   
2002 and 2001. No other compensation was paid to any such officer or directors  
other than the compensation set forth below.                                    

                                                        [Enlarge/Download Table]


                                                                                       Long Term Compensation                  
                                                                                  ----------------------------------           
                                                                                  ----------------------------------           
                                                 Annual Compensation                      Awards          Payouts              
                                    --------------------------------------------------------------------------------           
             Name                                                        Other                                                 
             and                                                         Annual    Restricted                       All Other  
          Principal                                                     Compen-      Stock     Options/     LTIP     Compen-   
           Position            Year   Salary            Bonus          sation (1)    Awards      SARs     Payouts    sation    
-------------------------------------------------------------------------------------------------------------------------------
Patrick Gouverneur                                                                                                             
Chief Executive Officer                                                                                                        
                                                                                                                               
(effective October 15, 2002)    2002    $25,000                     $0          $0          $0          0        $0   $160,000 

Cyril Heitzler                  2002    $75,000                     $0          $0          $0          0        $0   $310,000 
Secretary/treasurer             2001         $0                     $0          $0          $0          0        $0         $0 

Philippe Notton                 2002         $0                     $0          $0          $0          0        $0   $300,000 
Director                                                                                                                    $0 

Bernard Bouverot                2002    $60,000                     $0          $0          $0          0        $0   $190,000 
Secretary/treasurer             2001         $0                     $0          $0          $0          0        $0         $0 

Fernand Leloroux                2002    $96,250                     $0          $0          $0          0        $0         $0 
Chief Executive Officer         2001         $0                     $0          $0          $0          0        $0         $0 


In December 2002, we issued 480,000 shares of common stock to our officers and  
directors as compensation for services. All such shares have been valued at $.25
per share for financial reporting purposes and for purposes of the foregoing    
table.                                                                          

STOCK OPTION GRANTS                                                             

We did not grant stock options to any executive officers during the fiscal years
ended December 31, 2002 or 2001.                                                

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES                           

No stock options were exercised by executive officers during the fiscal years   
ended December 31, 2002 or 2001.                                                

OUTSTANDING STOCK OPTIONS                                                       

No stock options were outstanding at December 31, 2002 or 2001.                 

COMPENSATION ARRANGEMENTS                                                       

We pay Mr. Patrick Gouverneur, our chief executive officer, a salary of $120,000
per annum. We do not have a written employment agreement with Mr. Gouverneur and
we do not pay any additional compensation to Mr. Gouverneur                     
for his services as a member of our board of directors.                         

We pay Mr.  Cyril  Heitzler,  our  secretary/treasurer,  a salary of $75,000 per
annum. We do not have a written employment agreement with Mr. Heitzler and we do
not pay any additional compensation to Mr. Heitzler for his services as a member
of our board of directors.                                                      
ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.   

We have 4,783,202 shares of common stock outstanding on the date of this Report 
and we will have 5,533,202 shares of common stock outstanding upon completion of
our recent private placement. There are no outstanding securities, contracts or 
other instruments that obligate our company to issue shares of common stock in  
the future. The following table presents certain information regarding the      
beneficial ownership of our common stock by (i) each person known to own more   
than 5% of such securities, (ii) each of our directors, and (iii) all directors 
and officers as a group. Unless otherwise noted, we believe that each of        
identified stockholders has sole investment and voting power with regard to the 
securities listed opposite his name.                                            

Name of          Number of                  Percent       
Beneficial Owner      hares Owned               of Class            
Olex Financial Ltd. (1)      1,500,000 (2)              27.1% (2)               
Famoya Holdings BV (3)         501,920                  10.5%                   
Rocasoprane Ltd. (4)           409,861                   8.6%                   
Patrick Gouverneur (5)          80,000                   1.7%                   
Philippe Notton (5)            155,000                   3.2%                   
Cyril Heitzler (5)             281,920                   5.9%                   
Bernard Bouverot (5)           120,000                   2.5%                   
All officers & directors                                                        
as a group (4 persons)        636,920                  13.3%                  

(1)  Road Town, Tortola BVI.                                                    
(2)  Includes 750,000 outstanding shares and 750,000 shares issuable upon       
completion of our recent private placement.                           
(3)  c/o Multinvest Overseas SA, Nevis, St Kitts & Nevis (4) Calle 55 El        
    Cangrejo, Panama City, Republic of Panama (5) 9 Rue des Alpes, Geneva 1204
Switzerland                                                           

Except as otherwise noted, it is believed by us that all persons have full      
voting and investment power with respect to the shares indicated. Under the     
rules of the Securities and Exchange Commission, a person (or group of persons) 
is deemed to be a "beneficial owner" of a security if he or she, directly or    
indirectly, has or shares the power to vote or to direct the voting of such     
security, or the power to dispose of or to direct the disposition of such       
security. Accordingly, more than one person may be deemed to be a beneficial    
owner of the same security. A person is also deemed to be a beneficial owner of 
any security, which that person has the right to acquire within 60 days, such as
options or warrants to purchase our common stock.                               

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                   

Except as described below, none of the following persons has any direct or      
indirect material interest in any transaction to which our company was a party  
during the past two years, or any current or proposed transaction to which our  
company will be a party:                                                        

o   Any director or officer;                                                    

o   Any proposed nominee for election as a director;                            

o   Any person who beneficially owns, directly or indirectly, shares more       
than 5% of our voting equity securities, or other securities that are   
or may be convertible into more than 5% of our voting equity            
securities; or                                                          

o   Any relative or spouse of any of the foregoing persons, or any relative     
of such spouse, who shares the same principal residence as person or    
who is a director or officer of any parent or subsidiary.               

Payments to former affiliates                                                   

Prior to the acquisition of Technocall, we paid $1,000 per month to Mr. William 
Robertson, our former president as consideration for certain office space that  
was used in our business operations. This arrangement was terminated upon our   
acquisition of Technocall.                                                      

Acquisition of Technocall                                                       

We issued 380,000 shares of common stock to the Technocall shareholders on      
closing of the acquisition of Technocall on December 18, 2001 as follows:       

  Advanced Technologies Development Co. Ltd.            190,000 Shares
  Rocasoprane Ltd.                                      126,920 Shares
  Axiom S.A.                                             63,080 Shares

Mr. Fernand Leloroux, our former president, and Cyril Heitzler, our             
secretary/treasurer, both served as officers and directors of Technocall prior  
to the Technocall acquisition. On the closing date, Mr. Leloroux was an officer,
director and principal stockholder of Axiom S.A. Similarly; Mr. Heitzler was an 
officer, director and principal stockholder of Advanced Technologies Development
Co. Ltd. on the closing date                                                    

ATD Note                                                                        

Technocall purchased certain intellectual property, parts and supplies,         
machinery and equipment and computer software, together with an electronic smart
card management system for small-throughput water treatment systems, from ATD.  
In connection with this purchase, Technocall issued a subordinated note payable 
to ATD in the amount of $4,288,500. The ATD note was unsecured, non-interest    
bearing, subordinated against future indebtedness of Technocall and had no      
specific terms for repayment. Since ATD was a significant stockholder of        
Technocall on the date of the transaction, we valued the purchased assets at    
$423,937, their historical cost to ATD. The difference between the face amount  
of the ATD note and the carrying value of the purchased assets was recorded in  
our financial statements for the year ended December 31, 2001 as a $3,864,563   
distribution of equity. ATD subsequently agreed to forgive $31,070 of principal 
in recognition of certain expenses incurred by Technocall. The forgiveness was  
recorded as a reduction in the distribution of equity in our financial          
statements for the year ended December 31, 2001. In April 2002, ATD agreed to   
forgive the balance of the note. Accordingly, neither our company nor Technocall
are liable for the repayment of the ATD note. The forgiveness of indebtedness   
was recorded as a reduction to the distribution of equity and additional paid-in
capital in our financial statements for the year ended December 31, 2002.       
Former Management                                                               

Purchase of supplies from ATD                                                   

In February 2002, we ordered $1,175,670 in supplies from ATD. In May 2002, our  
company, ATD and certain of ATD's creditors negotiated a triangular agreement   
where we issued 487,875 shares of common stock to creditors of ATD in full      
payment of the amount due under the February purchase order. Three of our       
directors were creditors of ATD who participated in the foregoing transaction   
and received shares of our common stock in connection therewith. The number of  
shares received by persons who were officers, directors or principal            
stockholders of our company on the date of this report is summarized below:     

Fernand Leloroux, a former officer and director    126,920 shares 
Cyril Heitzler, an officer and director            126,920 shares 
Famoya Holdings BV, a principal stockholder        126,920 shares 
Bernard Bouverot, a former director                 25,000 shares 
                                           -------
  Total                                           405,760 shares
                                           =======

Resale of shares by ATD in violation of Section 16                              

We have been advised that on June 21, 2002, ATD completed a reorganization where
it exchanged approximately 140,123 shares of our common stock for certain shares
of Cartis, Inc. that were owned by others. In connection with this transaction, 
ATD distributed shares of our common stock to approximately 180 persons. Given  
the complexity of the exchange transaction effected by ATD and the fact that the
transaction was closed 6 months and 4 days after our acquisition of Technocall, 
we believe there is a significant likelihood that the transaction violated      
Section 16 of the Exchange Act and that any short-swing profits realized by ATD 
would be recoverable by our company if we had sufficient resources to fully     
investigate transaction and bring a suit for the disgorgement of those profits. 
In light of the recent bankruptcy of Blue Industries SAS, our very limited      
financial resources and the complexity of obtaining jurisdiction over Cartis, a 
Florida corporation, ATD, a Gibraltar corporation, and Mr. Herve Gallion, a     
Mauritius resident who is the principal stockholder of both Cartis and ATD, we  
have no present ability to institute a Section 16 action and we may be unable to
do so before the 2-year statute of limitations specified in Section 16 expires. 

Stockholder's loan                                                              

On June 25, 2002, Famoya Holdings BV agreed to loan our company up to $600,000  
under a five-month loan facility. On the transaction date, Famoya holdings owned
approximately 9.1% of our common stock. The interest associated with the loan   
facility is calculated at the rate of 2% per month on the outstanding principal 
balance. Three-quarters of the interest is payable in cash and one-quarter of   
the interest is payable in shares of our common stock at an agreed price of $2  
per share. Principal and interest on the loan facility were payable in full on  
November 30, 2002 and the Famoya loan is presently in default. While Famoya has 
the right to convert the unpaid loan balance and all accrued interest into      
shares of our common stock at a price of $2 per share, the conversion price is  
significantly greater than the market price of our shares. Accordingly, Famoya  
is not expected to exercise its conversion rights.                              

Stock sales to related parties                                                  

In August 2002, we sold 125,000 shares of our restricted common stock to Dr.    
Mohammed Al Yamani, the principal stockholder of Famoya Holdings BV, for        
$230,000 in cash, a price that represented a substantial premium to the         
prevailing market price of our unrestricted shares on the transaction date. As a
result of this transaction, Dr. Yamani became a principal stockholder of our    
company.                                                                        

In September 2002, we sold 83,334 shares of our restricted common stock to      
Rocasoprane Ltd for $50,000 in cash, a price that represented a 40% discount    
from the prevailing market price of our unrestricted shares on the transaction  
date. Rocasoprane Ltd. was a former principal stockholder of Technocall and     
became a principal stockholder of our company as a result of this transaction.  

Compensatory stock issuances                                                    

In December 2002, our board of directors issued 2,095,000 shares of our         
restricted common stock to 19 individuals in compensatory transactions that were
valued at $.25 per share for financial reporting purposes. Of this total,       
980,000 shares were issued to individuals who were officers, directors or       
principal stockholders of our company on the date of this report. The following 
table summarizes the stock issuances to those affiliates:                       

Dr. Mohammed Al Yamani, a principal stockholder    250,000 shares 
Christophe Giovannetti, a principal stockholder    250,000 shares 
Cyril Heitzler, an officer and director            155,000 shares 
Philippe Notton, a director                        150,000 shares 
Bernard Bouverot, a former director                 95,000 shares 
Patrick Gouverneur, an officer and director         80,000 shares 
                                           -------
  Total                                           980,000 shares
                                           =======

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

(a)      EXHIBITS                                                               

  3.1   Certificate of Amendment to the Articles of Incorporation of
Blue Industries, Inc.                               

10.1   Blue Industries, Inc. Incentive Stock Plan dated           
September 18, 2002..................................

 99.1   Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.....          
 99.2   Certification of Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002.....................
(b)      REPORTS ON FORM 8-K                                                    

On October 29, 2002, we filed a Current Report on Form 8-K to report the        
dismissal of BDO Dunwoody described in Item 8 to this report.                   

ITEM 14.      CONTROLS AND PROCEDURES                                           

      As of May 1, 2003, an evaluation was completed under the supervision and
with the participation of the Company's management, including the Company's     
President and Chief Financial Officer, of the effectiveness of the design and   
operation of the Company's disclosure controls and procedures. Based on that    
evaluation, the Company's management including the President and Chief Financial
Officer, concluded that the Company's disclosure controls and procedures were   
effective as of May 1, 2003. There have been no significant changes to the      
Company's internal controls or other factors that could significantly affect    
internal controls subsequent to May 1, 2003.                                    

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf  
by the undersigned, thereunto duly authorized.                                  

Date May 8, 2003       BLUE INDUSTRIES, INC.                                    

    By              /s/ Patrick Gouverneur
                     ---------------------------------------------------
                      Patrick Gouverneur, Chief Executive Officer and Director

    By              /s/ Valerie Thierstein
                     ---------------------------------------------------
         Valerie Thierstein, Chief Financial Officer

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CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I Patrick Gouverneur, Chief Executive Officer of Blue Industries, Inc. certify  
that:                                                                         

1.       I have reviewed this annual report on Form 10-KSB of Blue Industries,  
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
we 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 function):                          

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 or not 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.                         

/s/ Patrick Gouverneur                                    
Patrick Gouverneur, Chief Executive Officer                                     
May 8, 2003                                                                     

10KSB
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CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I Valerie Thierstein, Chief Financial Officer of Blue Industries, Inc. certify  
that:                                                                         

1.       I have reviewed this annual report on Form 10-KSB of Blue Industries,  
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
we 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 function):                          

d)       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                                        

e)       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 or not 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.                         

/s/ Valerie Thierstein                                    
Valerie Thierstein, Chief Financial Officer                                     
May 8, 2003                                                                     

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10KSB Filing		Date		First		Last			Other Filings
		3/11/92		3
		4/5/00		2		11
		5/24/00		2
		12/31/00		16
		9/29/01		3
		12/18/01		2		18			8-K, 8-K/A
		12/31/01		3		18			10KSB, NT 10-K
		2/1/02		12
		2/6/02		15
		3/11/02		6		16
		3/30/02		15
		4/2/02		3		16
		6/21/02		18
		6/25/02		18
		9/18/02		4		19
		10/15/02		18
		10/18/02		16
		10/23/02		16
		10/28/02		3		16
		10/29/02		19					8-K
		11/30/02		18
		12/4/02		2
For The Period Ended		12/31/02		1		18			10KSB/A, NT 10-K
		3/11/03		16
		3/18/03		16					8-K
		3/19/03		5
		4/6/03		4					8-K
		4/8/03		4
		4/15/03		4
		4/30/03		4					8-K
		5/1/03		1		19
		5/8/03		19		21
Filed On / Filed As Of		5/14/03
		6/30/03		16					10QSB
		12/31/03		4					10KSB
		9/28/04		3
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