Forward Looking Statements

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

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

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

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

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

Corporate History

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

Current Business

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

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

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

Our water activation products are designed to improve the operating efficiency of commercial and industrial boilers and refrigeration systems without the use of chemicals. Our water activation products are supplied to our company by ELCE International Corp., the worldwide distributor of ELCE products invented by Nihon Jisui Co. Ltd. of Japan. We order units from ELCE International Corp. which are then shipped against customer orders or shipped directly to one of our eleven local distributors located in Argentina, Chile, Colombia, Costa Rica, Panama and Peru. ELCE water activation treatment systems remove rust, scale and corrosion within heating and cooling systems. The water activation units, which range in water flow capacity from 11 liters per minute to over 3,000 liters per minute, change water properties physically without removing or adding chemical impurities, ions or minerals.

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

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

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

General

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

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

Results of Operations

Material Changes in Financial Condition

                             June 30, 2009     December 31, 2008

Current Assets             $        83,520   $             1,876
Current Liabilities                411,730               206,548
Working Capital Deficiency $       328,210   $           204,672

Total assets at June 30, 2009 were $437,356 as compared to $1,876 at December 31, 2008.

$81,844 of this increase is due to an increase in inventory mainly representing two FW-12 Activation units that are being evaluated in companies in Colombia.

$353,836 of this increase is attributable to Intangible Assets as described below:

On January 25, 2009, the Company issued 10,000,000 restricted shares of Class A common stock under the joint venture agreement with ELCE International Corp. The fair value of the restricted shares issued was estimated to be $150,000 as determined on the measurement date using quoted prices in an active market, less a 75% discount to reflect the effect of the restriction. Under the agreement, the Company is also obligated to issue a further 20,000,000 restricted shares of Class A common stock. The fair value of these restricted shares was estimated to be $300,000 as determined on the measurement date using quoted prices in an active market, less a 75% discount to reflect the effect of the restriction. As at June 30, 2009, the estimated fair value of these shares has been presented as Class A common stock issuable on the balance sheet. The estimated fair value of the 30,000,000 shares issued and to be issued under the agreement of $450,000 has been recorded as intangible assets at June 30, 2009, less accumulated amortization of $96,164.

Liabilities at June 30, 2009 were $411,730 as compared to $206,548 at December 31, 2008. The increase is due to an increase of $29,511 in accrued liabilities mainly regarding professional fees and an increase of $175,631 due to our directors and officers. The amounts due to our directors and officers total $343,588 and are non-interest bearing, unsecured and have no specific terms for repayment.

Revenue

We generated revenues of $555 for the three month period ended June 30, 2009 compared to $nil for the three month period ended June 30, 2008 and $685 for the six month period ended June 30, 2009 compared to $1,426 for the six month period ended June 30, 2008. The cost of sales for the three month period ended June 30, 2009 was $79, compared to $nil for the three month period ended June 30, 2008 while the cost of sales was $166 for the six month period ended June 30, 2009 compared to $601 for the six month period ended June 30, 2008 .

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

Operating Costs and Expenses

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

                              Three Months     Three Months      Six Months     Six Months
                                 Ended             Ended           Ended          Ended
                                June 30,         June 30,         June 30,       June 30,
                                  2009             2008             2009           2008
                                   $                 $               $              $


Revenue                                555                 -            685          1,426

Cost of Sales                           79                 -            166            601

Gross Profit                           476                 -            519            825

Expenses
   Amortization of                  56,096                 -         96,164              -
intangible assets

   Consulting                        9,000             9,000         18,000         18,000
   General and                       6,714             2,895         11,655          4,091
administrative
   Imputed interest                  4,273             8,381          7,201         16,165
   Marketing and sales              48,413            11,596        101,003         27,509
   Professional fees                 9,860             6,575         32,337         28,395
   Bad debts expense                (7,896 )               -        (38,938 )         (880 )
(recovery)

Total Expenses                     126,460            38,447        227,422         93,280

Net Loss From Operations          (125,984 )         (38,447 )     (226,903 )      (92,455 )

For the three months ended June 30, 2009, our operating expenses totalled $126,460 as compared to $38,447 for the three months ended June 30, 2008. Amortization of intangible assets representing costs incurred to acquire product distribution rights under the joint venture agreement with ELCE International Corp. amounted to $56,096 for the three months ended June 30, 2009 compared with nil for the three months ended June 30, 2008 as the agreement was signed January 25, 2009. Professional fees amounted to $9,860 for the three months ended June 30, 2009 as compared to $6,575 for the three months ended June 30, 2008. Marketing and sales expenses and consultants' costs were $48,413 for the three months ended June 30, 2009 as compared to $11,596 for the three months ended June 30, 2008 with the increase being due to an increase in travel expenses and fees for our Director of Latin America sales of $7,860, an increase in fees and expenses for our Agent in Colombia of $5,736, an increase in costs relating to our Joint Venture Agreement with ELCE International Corp. of $20,999 and an increase in Central/South America travel of $2,222. General and administrative expenses were $6,714 during the three months ended June 30, 2009 as compared to $2,895 for the three months ended June 30, 2008. This increase is due to increased trust company fees and increased shareholder communication costs. Imputed interest on directors' loans was $4,273 for the three months ended June 30, 2009 as compared to $8,381 for the three months ended June 30, 2008. This decrease is mainly due to the completion of a debt settlement and subscription agreement in August 2008 whereby $560,000 of debt to directors was settled by the issuance of 11,200,000 common shares of our company which reduced the imputed interest charged on Directors' loans. For the three months ended June 30, 2009 we recovered $7,896 of sales previously written off as compared to $nil for the three months ended June 30, 2008.

For the six months ended June 30, 2009, our operating expenses totalled $227,422 as compared to $93,280 for the six months ended June 30, 2008. Amortization of intangible assets representing costs incurred to acquire product distribution rights under the joint venture agreement with ELCE International Corp. amounted to $96,164 for the six months ended June 30, 2009 compared with nil for the six months ended June 30, 2008 as the agreement was signed January 25, 2009. Professional fees amounted to $32,337 for the six months ended June 30, 2009 as compared to $28,395 for the six months ended June 30, 2008. Marketing and sales expenses and consultants' costs were $101,003 for the six months ended June 30, 2009 as compared to $27,509 for the six months ended June 30, 2008 with the increase being due to an increase in travel expenses and fees for our Director of Latin America sales of $16,017, an increase in fees and expenses for our Agent in Colombia of $9,136, an increase in costs relating to our Joint Venture Agreement with ELCE International Corp. of $44,591 and a business promotion fee paid of $3,750. General and administrative expenses were $11,655 during the six months ended June 30, 2009 as compared to $4,091 for the six months ended June 30, 2008. This increase is mainly due to costs of setting up banking in Colombia and Peru of $3,500 and increased shareholder communication costs of $2,728. Imputed interest on directors' loans was $7,201 for the six months ended June 30, 2009 as compared to $16,165 for the six months ended June 30, 2008. This decrease is mainly due to the completion of a debt settlement and subscription agreement in August 2008 whereby $560,000 of debt to directors was settled by the issuance of 11,200,000 common shares of our company which reduced the imputed interest charged on Directors' loans. For the six months ended June 30, 2009 we recovered $38,938 of sales previously written off as compared to $880 for the six months ended June 30, 2008.

Liquidity and Capital Resources

Working Capital

                              June 30, 2009    December 31, 2008
Current Assets             $      83,520    $        1,876
Current Liabilities              411,730            206,548
Working Capital Deficiency $     328,210    $       204,672


Cash Flows

                                                Six Months Ended    Six Months Ended
                                                 June 30, 2009       June 30, 2008
Cash provided (used) in Operating Activities $      (139,510)    $      (33,364)
Cash used by Investing Activities                      -                   -
Cash provided (used) by Financing Activities        139,631              33,580
Net Increase (Decrease) in Cash              $        121        $        216

We had cash on hand of $281 and negative working capital of $328,210 as of June 30, 2009 compared to cash on hand of $160 and negative working capital of $204,672 for the year ended December 31, 2008. We anticipate that we will require approximately $1,000,000 to $1,400,000 for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months. Accordingly, we do not have enough money to carry out our business plan and we will need to obtain additional financing in order to continue operating

There are no assurances that we will earn the funds required for our continued operations. If we do not earn the required revenues, then we will have to seek another source of financing, likely through the sale of more shares of our common stock or borrowing money. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.

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

Operating Activities

Operating activities used cash of $139,510 for the six months ended June 30, 2009 and used cash of $33,364 for the six months ended June 30, 2008.

Financing Activities

Net cash provided by financing activities was $139,631 for the six months ended June 30, 2009 and net cash provided by financing activities was $33,580 for the six months ended June 30, 2008. These financing activities were provided by two directors of our Company.

Non-cash Investing and Financing Activities

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

Going Concern

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

Future Financings

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

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

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

   Estimated Working Capital Expenditures During the Next Twelve Month Period

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

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

Off-Balance Sheet Arrangements

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

Application of Critical Accounting Policies

Use of Estimates

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

Cash and Cash Equivalents

Our company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at June 30, 2009, we had no cash equivalents.

Inventory

Inventory consists of water activation products and water filters and is recorded at the lower of cost and net realizable value on a first-in, first-out basis. Our company establishes inventory reserves for estimated obsolete or . . .