Description Of Business

Pursuant to an agreement dated February 2, 2004 and completed on February 29, 2004, we acquired 100% of the issued and outstanding shares of Power Grow System Ltd., a private British Columbia company. Pursuant to this agreement, Power Grow System Ltd. became our wholly owned subsidiary. In consideration of the transfer of all of the outstanding shares of Power Grow System Ltd., we issued a total of 3,000,000 shares of our common stock to the Power Grow shareholders of which 1,500,000 were issued to Mr. Bleuler and 1,500,000 to Mr. Brusatore. In connection with the agreement, Mr. Bleuler was appointed to our Board of Directors. Both Mr. Bleuler and Mr. Brusatore remained as directors of our subsidiary. We also agreed to lend, without any fixed terms of repayment, the sum of $6,000 to Power Grow System Ltd. in order to cover the costs associated with obligations incurred relating to the closing of the agreement. We commenced merged operation with our wholly owned subsidiary on February 29, 2004.

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The acquisition price for the shares of Power Grow System Ltd. was determined during negotiations between Mr. Bleuler and Mr. Brusatore on Power Grow's behalf, and Robert Hoegler, our president, on our behalf. At the time of negotiations, there was no relationship between us, our directors and officers and Power Grow System Ltd. and its principals. No third parties were involved in the combination and no finder's fees, consulting remuneration or other compensation was paid in connection with the transaction.

Power Grow System Ltd. was incorporated pursuant to the laws of British Columbia on August 20, 2001 for the purpose of designing, manufacturing and marketing sophisticated hydroponics plant growing equipment to be marketed in Canada and the United States to nurseries, garden centers, specialized hydroponics equipment shops, gardeners and home hobbyists who wish to grow their own fresh fruits, flowers, herbs and vegetables, year round, faster than conventional gardening, organically and free of outdoor pollutants, pests and weeds. Since its formation in August 2001, Power Grow has been successfully manufacturing and marketing three individual models of the hydroponics plant growing equipment. Power Grow presently manufactures and markets an average of 13 hydroponics plant growing equipment units (7 dual-600 systems, 3 Single-600 Flower, 3 Single-600 System) on a monthly basis. Every month, an average of three units are sold in the Vancouver metropolitan area and ten in the United States.

We presently manufacture and market three individual, self contained hydroponics plant growing equipment models: the Single-600 Flower, the Single-600 System and the Dual-600 system. All three systems can plug into a regular voltage wall socket and are made from white powder-coated aluminum foil to avoid erosion and allow for a maximum light reflection. The main components of each individual hydroponics equipment unit (cabinet) consists of: (a) a high pressure sodium lamp which generates heat and light for the contained plant growing chamber, complete with a tempered glass shield that controls the amount of heat and light delivered to the plants, (b) a water reservoir, mounted underneath the equipment, which holds water mixed with necessary nutrients to be fed to the growing plants, (c) water pump which delivers the water with the added nutrients to the growing plant through a series of water lines and is located inside the water reservoir, (d) ventilation system, mounted on the hood of the equipment, composed of at least two six-inch fans, connected to a thermostat that regulates temperature inside the chamber at desirable levels and intervals and (e) electrical power unit, complete with digital timers, which provides electrical power to the whole equipment. It can be preset to allow the water pump to deliver water with added nutrients to the growing plants at predetermined quantities and intervals. The cabinet shell, holding the hydroponics components, is laser cut to dimensions from aluminum foil, machined in the desired shapes and powder-coated in white paint for optimal light reflection. All the necessary components, readily available from various electrical and mechanical parts distributors, are mounted on the cabinet shell in our manufacturing warehouse using basic assembly and manufacturing processes.

Fruits, vegetables, flowers or herbs are placed in a series of 3.5 inch gardening pots located on the shelves of the system's growing chamber. High porous rocks (hydroponics medium) are placed in the pots inside the growing chamber to act as structural support for the plants' roots in the hydroponics systems. These mediums are made of high porous rocks for high retention of air and water necessary for healthy plant growth. Excessive water in the rocks is drained back, for full recycling, in the water reservoir mounted under the hydroponics unit. The elimination of waste-water and the absence of any pesticide and insecticides in the controlled hydroponics equipment results in a friendly product desirable to environmentally conscious end users.

Single-600 Flower : The single-600 Flower is a hydroponics equipment unit specifically designed for vegetation and flowering, or growing plants to maturity after they have been started and rooted from seed outside the unit. The unit is a single shelf cabinet that stands four feet high, two feet wide and 2.5 feet deep. It is very light in weight and can be lifted and moved easily. It has the capacity to hold twelve 3.5 inch pots in which plants can grow from root to maturity. A 600 watt high pressure sodium lamp is mounted inside the growing chamber. This lamp emanates needed light and heat, which are required for plant growth. A tempered glass lens mounted in front of the lamp controls the amount of light directed to the growing plant inside the chamber. Likewise, the temperature inside the chamber, ideally three degrees Celsius above room temperature, is controlled by a two six-inch fan airflow system mounted on the hood of the equipment which, through a thermostat, regulates temperatures at desirable levels by removing excessive volumes of hot air from inside the chamber.

Single-600 System : The single-600 System is a turnkey perpetual system containing three chambers, standing seven feet tall, two feet wide and 2.5 feet deep. A "turnkey perpetual system" allows the end user to produce the complete genetic plant cycle from clipping to rooted plant to mature plant ready for harvest without the need for any additional equipment. The first chamber

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located on the bottom of the unit holds up to three mature plants. Clippings can be taken from the mature plant and moved into the second cloning (rooting) chamber where the plants can root. The light needed for this step is reflected up into the cloning (rooting) chamber, creating an environment that accelerates plants to root rapidly. Once rooted, the plants are moved into the top flowering chamber to grow the fruit or vegetable to mature plant form ready for harvest. The flowering chamber is the hydroponic chamber that can hold twelve 3.5" pots to maturity under a 600 watt high pressure sodium bulb. To control light and temperature levels, a tempered glass lens and a three six-inch fan airflow system keeps the temperature inside the machine three degrees warmer than ambient temperature around the machine.

Dual-600 system : The Dual 600 hydroponics equipment unit produces the highest growth rates and yields. It stands 48 inches wide 72 inches high and 34 inches deep and can be plugged into a regular wall electrical socket and has a very low power consumption of about $22 per month. It comes complete with two 600 watt high pressure sodium lamps creating 200,000 lumens of foot-candle power, a nine fan airflow ventilation system and a tempered glass lens mounted below the lamps to control temperature and light levels inside the chamber. This equipment has the capacity to grow 24 rooted plants to maturity for harvest.

Upon receipt of a client's purchase order, we purchase all the electrical and mechanical parts required to manufacture the specific hydroponics equipment from various suppliers located in the Vancouver metropolitan area. All electrical components used in the manufacturing of the equipment are approved for use by the Canadian Standards Association (CSA), a government agency that regulates the standards of electrical equipment and accessories sold to the general public in Canada, and by Underwriters Laboratories (UL), a government agency that regulates the same standards in the USA. The parts are gathered and assembled into hydroponics plant growing equipment in our Coquitlam, British Columbia manufacturing plant, which covers 4,200 square feet of office, manufacturing and warehousing space, under the supervision of Nick Brusatore, who is in charge of the systems' designing, engineering and manufacturing. Once assembled, the hydroponics equipment is tested for defects and functionality, flat packed in a cardboard box and shipped to the client via courier within fifteen days of the purchase order. Instructions for the assembly, which require only the effort of inserting some screws into the aluminum panels that will shape the cabinet, are provided for the benefit of the end user. All parts and components needed to manufacture the equipment are readily available from various local suppliers. Our primary suppliers are Allie's Wholesale for pumps, pots, drip lines and connectors; D.G. McClaughlin for cam locks; Cam-Am Castors for castors; Stollco Industries for aluminum, bending and laser cutting; Photon Powder Coating for powder coating; Form-It Plastics for plastic reservoirs and trays; Custom Gaskets for weather stripping and spacers; Great Little Box for custom boxes; and Torbram Electric Supply for all of our electrical supply needs. All of these suppliers are based in the Greater Vancouver area.

The systems require very little attention and labor, making it a simple and efficient controlled growing environment. The users, with very little gardening experience, can produce their own fruit, vegetables, flowers and herbs at home in a shorter growing cycle than traditional gardening.

The parts required to manufacture the hydroponics equipment are supplied to us, on an as needed basis, by a number of suppliers located in the Vancouver area. We believe that if we were to lose any of the sources of the supplies, a number of other firms in our area would be available to replace these suppliers at competitive prices. We do not presently have alternate arrangements with any other suppliers. Therefore, if we lose one of our present parts suppliers, our operation may be temporarily disrupted. In such event, the manufacturing and delivery of one or more hydroponics equipment could be delayed for up to two weeks. In addition, our cost of parts may increase slightly, but we do not believe that such increase would be material.

At the time of the acquisition, our subsidiary manufactured and sold an average of thirteen hydroponics plant growing units per month. Of these units sold, ten are typically sold in the United States and three are sold in the Vancouver area. We engage established international courier firms to deliver our hydroponics equipment units outside of the Vancouver area. There are no formal arrangements with these courier firms for the delivery of our hydroponics equipment to our clients and these firms provide their services to us at competitive rates. The units sold in the Vancouver area are being picked up at our Coquitlam warehouse by the clients or delivered to them by us.

We generate revenues from selling our three hydroponics equipment models to nurseries, garden centers, specialized hydroponics equipment shops and some home hobbyists who wish to grow their own fresh fruits, flowers, herbs and vegetables year round in a manner that is faster than conventional gardening as well as organic and free of outdoor pollutants, pests and weeds. We receive $2,195 for each sale of one of our Single 600 Flower System, $2,995 for each sale of a Single-600 System and $3,995 for each sale of a Dual-600 System. We anticipate selling an average of nine hydroponics plant

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growing units every month for the next 12 months and earning average gross monthly revenue of $27,000. Our sales for the three-month period ended May 31, 2004 totaled $78,695. The cost of sales during the period was $53,150, resulting in gross profit of $25,545. This was further offset by our administrative expenses of $74,229, resulting in a net loss of $48,773 after taking a $89 foreign exchange loss into account.

The term "hydroponics" is derived from the Latin words "hydro" and "pomos" meaning "water working". It is the technology of growing plants in a controlled environment in nutrient solutions (water with the added fertilizers) with or without the need of mediums (soil, sand, peat moss) to provide mechanical support for the growing plants roots. Liquid Hydroponics has no mediums for supporting plant roots. Roots are suspended in air in a controlled environment and necessary nutrients for growth are fed to the plants' roots through water mist.

Aggregate Hydroponics has solid mediums (fibers or porous rocks for high retention of air and water), which act as structural support for plant roots. In this case, necessary nutrients are delivered directly to the plant roots in water flowing through the medium. All of the hydroponics systems that we sell are aggregate systems.

In hydroponics systems, plants can be grown closer together than in open fields, increasing yields and number of crops. They are grown in controlled environments eliminating outdoor pollutants, weeds and pests. In soil, plants have to break down the dirt to get needed nutrients for growth and waste a lot of energy developing long roots in search of needed nutrients. In hydroponics systems, the required nutrients are added to water, which are automatically delivered directly to the growing plants roots at required intervals. Energy normally lost developing long roots is redirected to growing more plant volume. Lamps and ventilation systems inside the hydroponics growing chambers maintain the light and temperature to ideal and constant levels creating conditions whereby hydroponics plants will grow faster, bigger and healthier than those in soil. Unlike outdoor conditions where crops will grow only once a year, hydroponics technology will allow vegetation crops to be produced economically a number of times every year. Hydroponics technology eliminates the use of harmful chemicals such as pesticides, herbicides, insecticides and fumigants, which are employed in open field cultivation. Hydroponics cultivation popularity is due to the ability to grow healthier, more nutritious quality produce than soil-grown varieties in clean and controlled environment free of harmful chemicals. It has also become a necessity in industrialized countries of the world where available fertile soil is diminishing as land space is used for building new industries, housing and highways and both in cold and arid areas of the world where either fertile soil or water are non-existent or in short supply.

Hydroponics has become the most widespread method of growing fruits, flowers, herbs and vegetables in commercial quantities in many countries of the world in large greenhouses and in self contained units without the utilization of soil. In traditional gardening, plants get root support, nutrients, water, and oxygen from the soil. In hydroponics systems, water with the added essential nutrients that normally would be available in a very fertile soil is infused to the plant in a controlled environment and quantities. Plants, like all living things, have certain requirements that need to be met for them to grow and thrive. These include water, nutrients, light, air, and structural support for the roots. Hydroponics culture requires only basic agriculture skills. Production takes place inside enclosures designed to control air and root temperatures, light, water, plant nutrition and adverse climate. The controlled environment also eliminates outdoor pollutants, pests and weeds that are present in soil. This is called Controlled Environment Agriculture or CEA. Hydroponics systems drastically reduce the amount of time needed to produce good plants, crops and fruit, allowing quicker turnaround to market. Countries with lack of arable land and water such as Iran, Mexico, Australia and certain Middle East nations are employing and researching the technology extensively. Likewise, systems are being used and researched in U.S. nuclear submarines, Russian space stations, various offshore drilling rigs, and by NASA in outer space to provide astronauts with fresh fruit and vegetables. ("History of Hydroponics" by Gary V. Deutschman Sr.)

The commercial hydroponics industry, largely greenhouse based, is centered in the affluent countries of the world such as the Netherlands, Spain, Canada, Japan, the United Kingdom, the USA, Italy, New Zealand and Australia. A 2001 study, " HYDROPONICS as an Agriculture Production System," conducted by Hassal & Associates Pty Ltd. for the Rural Industries Research & Development Corporation of Australia reports that these affluent countries account for over 19,000 hectares of the world wide (estimated to be 25,000 hectares) commercial hydroponics production area. Tomatoes, cucumbers, lettuce, peppers, herbs and flowers are the most important crops grown. In the same year, the total global value was estimated at $6 to $8 billion. The United States and Canada have a combined 2,400 hectares of hydroponics greenhouse crop production. This is small in comparison to that of the Netherlands, which has in excess of 10,000 acres. Canada has the third largest commercial hydroponics industry, and is currently expanding at 25% per annum farm gate value. Over 40% of greenhouses

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in Canada and the USA employ hydroponics in their food production and this figure is rising annually. Their produce is sold in most supermarket stores throughout North America and Europe to consumers seeking natural, pesticide-free vegetation. According to the same study, hydroponics is the most popular method of growing vegetables in glasshouses in Canada, and in 1998, greenhouse vegetation production accounted for almost 25% of total vegetable production.

The hydroponics retail industry developed as a result of the commercial hydroponics industry growth and the consumers' preference for fresh, organically grown, and natural foods. The hydroponics retail market ranges from small independent retailers to well-established chain stores that manufacture, distribute and retail hydroponics equipment and supplies. Consumers can buy a number of parts and hydroponics supplies (lamps, water pumps, irrigation systems, cabinets, pots, fertilizers, root mediums, plastic sheets, glass, etc.) to build their own do-it-yourself hydroponics plant growing equipment. Hydroponics parts and supplies are available from a myriad of retail outlets in Canada and the USA: hardware stores, nurseries, garden equipment suppliers, plumbers' suppliers, greenhouses suppliers, lighting outlets, indoor plant suppliers, hydroponics parts suppliers, etc. For those consumers and hobbyists who may not have the time and knowledge to build their own hydroponics equipment from parts, they can purchase self-contained, ready to operated units. These units can be purchased from a number of retailers (hydroponics shops, gardening shops and nurseries) and directly from hydroponics plant growing equipment manufacturers and distributors. As a result of consumer trends toward fresh, organically grown and environmentally friendly food products, there is confidence that this industry will continue to grow and thrive.

The typical purchasers of our hydroponics plant growing equipment are nurseries and gardening shops. We also sell our hydroponics plant growing equipment to specialized hydroponics retail outlets, which in turn retail to the consumers along with a variety of hydroponics parts and supplies. One equipment distributor and six retail businesses, all of which are located in the United States, account for approximately 60% of all of our sales. Five of these customers each account for about 10% of our business, with the other two accounting for about 5% each. Other smaller retailers in Canada and the United States account for an additional 25% of our business.

Gardeners and home hobbyists who purchase directly from us or from retail outlets account for the remaining 15% of the purchases of our hydroponics equipment. They purchase our equipment to grow year round fresh fruits, vegetables, flowers and herbs for their own personal consumption or, in case of gardeners, for resale to groceries and produce retailers. A poll conducted by Ipso-Reid on behalf of City Farmer, Canada's Office of Urban Agriculture, found that 40% of people living in Greater Toronto and 44% of people living in Greater Vancouver, a total of approximately 2.5 million people, live in households that produce some of their own food. City Farmer also conducted its own survey in 2000 and found that 91 out of 100 people polled considered themselves urban (living in a city). Of this number, 79 stated that they grow some of their vegetables and herbs.. According to Gary V. Deutschman Sr. in "History of Hydroponics", there are over 1,000,000 household hydroponics soilless culture units operating in the USA for the production of food alone. Inner suburban professionals, singles and couples living in apartments and tinkerers of all age groups with little space, time, patience, and in some cases without a suited climate for traditional gardening, have made hydroponics their method of choice to grow their own fresh, organic and healthy vegetation. Researchers, educators and students conducting controlled experiments in schools, colleges and universities can be included in our hydroponics equipment retail market. The average purchaser of our hydroponics plant growing equipment pays an average of $3,061 for one of our hydroponics units.

Future Development

At present we sell our Single 600 Flower for $2,195, Single-600 System for $2,995 and Dual-600 System for $3,995 We anticipate selling an average of 13 hydroponics plant growing units every month for the next 12 months and earning average gross revenues of $39,800 every month over the same period. There were no revenues received from inception on December 23, 2003 to February 29, 2004, the date of closing of the acquisition agreement whereby we purchased a 100% interest in Power Grow System Ltd.

From the date of the acquisition of our subsidiary on February 29, 2004 through April 30, 2004, we have generated $80,356 in gross revenues and, during this period, sold twenty eight hydroponics equipment units in the United States and seven in the Vancouver area. Our net revenue from operation for the month of March and April 2004 was $2,679. During the month of March and April 2004, we incurred an additional $2,400 in professional and accounting fees in conjunction with the preparation of this registration statement. As a result, our net gain for the period from March 1 to April 30, 2004 was $279.

In order to become profitable, we must expand our operations by increasing our production and distribution in the United States and Vancouver area to an average of 20 hydroponics plant growing equipment units every month and generate gross

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revenues from operation of approximately $61,200 every month. We must also complete the development of a new, self contained and compact hydroponics plant growing equipment model, presently under development, to be called the F400 that will be ready for manufacturing and marketing in October 2004. The development of the new F400 was as a result of existing retailers' feedback and interest in a new compact hydroponics plant growing equipment model that offers similar benefits as our Single 600 Flower but will be 30% smaller with a 400watt sodium bulb and the capacity of holding four plants to maturity. We must also secure additional retail outlets and end users to purchase our hydroponics plant growing equipment units in order to achieve the projected $61,200 per month gross revenue level to be profitable. Initially, along with the marketing of our websites, we will rely on our directors and officers to contact additional retail outlets regarding the possibility of purchasing and marketing our hydroponics units. As our operations expand and we generate significant revenue, we intend to hire sales personnel for the purpose of securing additional sales. At present we have no plans to expand the production and distribution of our products outside of United States and Canada. Depending on our success in implementing our plan of operation in the existing area of production and distribution, we would evaluate the possibility of expansion, into Europe, the Middle East and Asia,.