UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934
        For the quarterly period ended September 30, 2001

[]   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 0-27145


                           1st NET TECHNOLOGIES, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


           Colorado                                      33-0756798
------------------------------              ------------------------------------
(State or jurisdiction of                   (I.R.S. Employer Identification No.)
incorporation or organization)


                             1869 W. Littleton Blvd.
                               Littleton, CO 80120
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (303) 738-8994
                           --------------------------
                           (Issuer's telephone number)

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

As of November 13, 2001 there were 6,945,892 shares of the  Registrant's  common
stock outstanding.

                                        1
<PAGE>



FORM 10-QSB
3RD QUARTER
                                                                   INDEX

PART I - FINANCIAL INFORMATION
                                                                            Page
                                                                            ----

Item 1.  Financial Statements

Condensed consolidated balance sheet - September 30, 2001 (Unaudited) .......  3

Condensed consolidated statements of operations - Three and
     nine months ended September 30, 2001 (Unaudited) and
     2000 (Unaudited) .......................................................  4
Condensed consolidated statements of cash flows - Nine months ended
     September 30, 2001 (Unaudited) and 2000 (Unaudited) ....................  5

Notes to condensed consolidated financial statements (Unaudited) ............  6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings .................................................. 11
Item 2.  Changes In Securities .............................................. 12
Item 3.  Defaults Upon Senior Securities .................................... 12
Item 4.  Submission of Matters To A Vote of Security Holders ................ 12
Item 5.  Other Information .................................................. 12
Item 6.  Exhibits and Reports on Form 8-K ................................... 12

Signatures .................................................................. 13

                                        2
<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                   1st NET TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                              September 30, 2001

      ASSETS

Current assets:
    Cash ................................................   $       866
    Accounts receivable, net ............................         7,355
    Marketable securities ...............................         9,966
                                                            -----------

    Total current assets ................................        18,187

Note receivable .........................................       470,952

Property and equipment, net .............................        18,734

Other assets ............................................         8,099
                                                            -----------

                                                            $   515,972
                                                            ===========

                    LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable and accrued liabilities ............   $   500,282
    Notes payable .......................................        19,500
    Notes payable and indebtness to related parties .....        93,406
    Capital lease obligations ...........................       148,495
    Accrued personnel costs .............................       113,814
    Deferred revenues ...................................        11,250
    Income taxes payable ................................         3,200
                                                            -----------

    Total current liabilities ...........................       889,947

Commitments and contingencies ...........................          --

Stockholders' deficit:
    Preferred stock .....................................          --
    Common stock ........................................         6,946
    Common stock warrants ...............................       175,797
    Additional paid in capital ..........................     5,406,167
    Accumulated deficit .................................    (5,778,915)
    Accumulated other comprehensive income ..............      (183,970)
                                                            -----------

    Total stockholders' deficit .........................      (373,975)
                                                            -----------

                                                            $   515,972
                                                            ===========

See accompanying notes to unaudited condensed consolidated financial statements

                                        3
<PAGE>

<TABLE>
       1st NET TECHNOLOGIES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       (UNAUDITED)
<CAPTION>

                                                              For the Three Months Ended    For the Nine Months Ended
                                                                     September 30,                 September 30,
                                                              --------------------------    --------------------------
                                                                 2001           2000           2001           2000
                                                              -----------    -----------    -----------    -----------
                                                                              *Restated                     *Restated

<S>                                                           <C>            <C>            <C>            <C>
Revenues:
    Technology consulting, user fees and marketing services   $    17,284    $    64,886    $    54,320    $   218,229


Expenses:
    Selling, general and administrative expenses ..........       137,252      1,413,782        372,503      3,975,893
    Stock-based compensation ..............................          --             --            6,775           --
                                                              -----------    -----------    -----------    -----------

Loss from operations ......................................      (119,968)    (1,348,896)      (324,958)    (3,757,664)

Other income and expense:
    Realized/unrealized gain on investments, net ..........        55,495         54,285         49,515      1,209,107
    Interest and dividend income ..........................         1,518         24,566          1,648         48,533
    Gain on sale of assets ................................          --          100,000           --          835,359
    Unrealized loss on investments held ...................          --             --          (64,961)       (40,000)
    Impairment loss .......................................       (73,420)          --         (867,572)          --
    Interest expense ......................................        (3,037)       (11,217)       (21,819)       (64,536)
                                                              -----------    -----------    -----------    -----------

Loss before provision for income taxes ....................      (139,412)    (1,181,262)    (1,228,147)    (1,769,201)

Provision for income taxes ................................          --             --             --           (5,902)
                                                              -----------    -----------    -----------    -----------

Net loss ..................................................   $  (139,412)   $(1,181,262)   $(1,228,147)   $(1,775,103)
                                                              ===========    ===========    ===========    ===========


Basic and diluted loss per share ..........................   $     (0.02)   $     (0.20)   $     (0.18)   $     (0.30)
                                                              ===========    ===========    ===========    ===========

Weighted average common shares outstanding:
    Basic and diluted .....................................     6,945,892      6,010,069      6,807,817      5,987,545
                                                              ===========    ===========    ===========    ===========
</TABLE>


*Restated due to CTG investment (see Note 1)

See accompanying notes to unaudited condensed consolidated financial statements

                                        4
<PAGE>

<TABLE>
                   1st NET TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>


                                                                                  For the Nine Months Ended
                                                                                        September 30,
                                                                                   ----------------------
                                                                                      2001         2000
                                                                                   ---------    ---------
                                                                                                *Restated

<S>                                                                                <C>          <C>
Net cash flows used in operating activities ....................................   $(747,666)   $ 382,039

Investing activities
     Additions to property and equipment .......................................     (24,250)     (51,180)
     Proceeds from payment of notes receivable .................................     100,000       85,000
     Sale of CTG common stock owned ............................................      25,000         --
                                                                                   ---------    ---------

Net cash flows provided by investing activities ................................     100,750       33,820

Financing activities
     Repayments of capital lease obligations ...................................     (12,362)     (55,240)
     Proceeds from notes payable ...............................................      35,000         --
     Repayments of notes payable ...............................................     (22,750)    (316,172)
     Net proceeds from issuance of common stock ................................      94,506         --
                                                                                   ---------    ---------

Net cash flows provided by (used in) financing activities ......................      94,394     (371,412)
                                                                                   ---------    ---------

Change in cash .................................................................    (552,522)      44,447

Cash at beginning of period ....................................................     553,388       12,873
                                                                                   ---------    ---------

Cash at end of period ..........................................................   $     866    $  57,320
                                                                                   =========    =========

Supplemental  disclosures of cash flow information:  Cash paid during the period
     for:
       Interest ................................................................   $   2,100    $  51,082
                                                                                   =========    =========
       Income taxes ............................................................   $    --      $    --
                                                                                   =========    =========
</TABLE>

*Restated due to CTG investment (see Note 1)


See accompanying notes to unaudited condensed consolidated financial statements

                                        5
<PAGE>

                    1ST NET TECHNOLOGIES, INC. AND SUBSIDIARY
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Note 1:  Basis of presentation

         The  financial  statements  presented  herein have been prepared by the
         Company in accordance with the accounting policies in its annual 10-KSB
         report dated December 31, 2000 and should be read in  conjunction  with
         the notes thereto.

         The accompanying  condensed  consolidated  financial statements include
         the  accounts  of the  Company  and its wholly  owned  subsidiary,  SSP
         Management Corporation ("SSP").  Intercompany  transactions and balance
         were eliminated in consolidation.

         Prior to the  quarter  to which  this  quarterly  report  relates,  the
         Company  accounted for its investment in Children's  Technology  Group,
         Inc.  ("CTG") in accordance  with  Accounting  Principle  Board ("APB")
         Opinion  No. 16.  Under this  method,  the Company  consolidated  CTG's
         financial  statements  with its own. As of June 30,  2001,  the Company
         began  accounting  for its  investment  in CTG at cost due to change in
         control  in CTG (see  Note 2).  In  accordance  with  APB No.  20,  the
         financial  statements have been restated to show financial  information
         for the new reporting entity for all periods presented.

         In the  opinion of  management,  all  adjustments  (consisting  only of
         normal  recurring  adjustments)  which are  necessary to provide a fair
         presentation of operating results for the interim period presented have
         been made.  The  results of  operations  for the three and nine  months
         ended September 30, 2001 are not necessarily  indicative of the results
         to be expected for the year.

         The  accompanying  financial  statements  have been prepared on a going
         concern basis,  which  contemplates  the  realization of assets and the
         satisfaction of liabilities in the normal course of business.  As shown
         in the accompanying financial statements, the Company has a net capital
         deficit at September 30, 2001 and a loss of $5,778,915 since inception.

         The financial statements do not include any adjustments relating to the
         recoverability   and   classification  of  liabilities  that  might  be
         necessary  should the Company be unable to continue as a going concern.
         Realization  of a portion of the Company's  assets in the  accompanying
         condensed  consolidated  financial  statements  is  dependent  upon the
         continued  operation of the Company.  In order to continue  operations,
         the Company must raise additional funds by incurring new debt,  raising
         new equity, or liquidating  investment  securities held. These factors,
         among others,  may indicate that the Company will be unable to continue
         as a going concern.  Management  believes the actions  presently  being
         taken and current revenues being generated will provide the opportunity
         for the Company to continue as a going concern.

         Interim financial data presented herein are unaudited.

Note 2:  Related party transactions

         On  February 16, 2001,  APJW,  Inc., an affiliate  company,  loaned the
         Company  $25,000 in exchange for a promissory note. The promissory note
         carries  an  interest  rate of one  percent  per  month and  matures on
         demand.  The Company  repaid  $15,000 of the  note on June 6, 2001. The
         sole  shareholder  of APJW,  Inc.  is  the  Company's  Chief  Executive
         Officer. 6
<PAGE>



         On April 20, 2001, the affiliate  company loaned the Company $10,000 in
         exchange for a promissory note. The promissory note carries an interest
         rate of one percent per month and matures on demand.

         The Company  paid $1,500 of  interest  expense on the two notes on June
         6, 2001.

         During the quarter ended June 30, 2001, CTG issued additional shares of
         its common stock to the public  resulting in a change in the  Company's
         ownership.  Additionally,  the Company  returned  775,000 shares of CTG
         stock in  exchange  for $25,000  and  800,000  shares of the  Company's
         common stock, owned by CTG and CTG's officer, on June 30, 2001. Because
         of  the  change  in  CTG's  ownership,  the  Company  no  longer  has a
         controlling interest in CTG. In addition, the Company no longer has any
         influence  over the affairs of CTG.  Accordingly,  as of June 30, 2001,
         the Company began  accounting for its ownership of 3,195,114  shares of
         CTG's  common  stock at cost.  The  investment  in CTG common stock was
         written  down to  $-0-,  resulting  in a loss of  $794,152  during  the
         quarter ended June 30, 2001.

Note 3:  Property and equipment

         During the three months ended September 30, 2001, the Company exchanged
         the majority of its property and  equipment to a third party vendor for
         accrued  rent  expense in the amount of $60,000.  As of  September  30,
         2001,  the  property  and  equipment  owned by the Company  consists of
         computer equipment in the amount of $30,656 and associated  accumulated
         depreciation in the amount of $11,922.

Note 4:  Common stock

         Warrants

         On January 10, 2001, the Company granted  warrants to purchase  525,000
         shares of common  stock at $3.00 per share to four  related  parties as
         follows:

               Related Party                        Warrants
               Entrepreneur Investments, LLC        300,000
               Jeffery M. Chatfield                  25,000
               Gregory D. Writer, Jr.               100,000
               Clifford J. Smith                    100,000
                                                   ---------
                                                    525,000
                                                   =========

         These warrants were issued in satisfaction of a stock option  agreement
         with each of the  respective  parties,  which was  agreed to in January
         1999;  however,  executed copies of the stock option agreement were not
         subsequently  delivered to the parties. The stock option agreement with
         each of the parties was  rescinded  in exchange for the  warrants.  The
         warrants vested as of the grant date and expire on January 10, 2004.

         On June 30, 2001,  the Company issued 25,000 shares of its common stock
         in exchange for the rescission of warrants  granted to purchase 100,000
         shares of the Company's common stock.

                                        7

<PAGE>


Following is a schedule of changes in the Company's outstanding warrants for the
nine months ended September 30, 2001:

                                              Warrants
Balance, January 1, 2001                       275,572
  Granted                                      525,000
  Exercised                                          -
  Cancelled                                   (100,000)
                                             ----------
Balance, September 30, 2001                    700,572
                                             ==========

         Stock-based compensation

         The Company  recorded  stock-based  compensation  totaling $525 for the
         525,000 warrants granted on January 10, 2001. The Company has accounted
         for the  warrants  under the fair value method in  accordance  with the
         Statement of Financial Accounting Standard No. 123.

         Common stock

         On February  21, 2001,  the Company  sold 100,000  shares of its common
         stock to an unrelated third party for $25,000 ($.25/share).

         On  March 12, 2001,  the Company sold 20,000 shares of its common stock
         to an unrelated third party for $5,000 ($.25/share).

         On March 19, 2001,  the Company sold 40,000  shares of its common stock
         to an unrelated third party for $10,000 ($.25/share).

         On March 31, 2001, the Company issued 25,000 shares of its common stock
         to an employee in accordance with the terms of an employment agreement.
         The  fair  value  of the  common  stock  on the  transaction  date  was
         determined  as $.25 per share  based on  contemporaneous  stock  sales.
         Stock-based  compensation of $6,250 was recognized in the  accompanying
         condensed  consolidated  financial statements for the nine months ended
         September 30, 2001.

         On April 5, 2001, the Company sold 60,000 shares of its common stock to
         an unrelated third party for $15,000 ($.25/share).

         On April 10, 2001,  the Company sold 20,000  shares of its common stock
         to an unrelated third party for $5,000 ($.25/share).

         On April 16, 2001,  the Company sold 20,000  shares of its common stock
         to an unrelated third party for $5,000 ($.25/share).

         On April 26, 2001,  the Company sold 40,000  shares of its common stock
         to an unrelated third party for $10,000 ($.25/share).

         On May 8, 2001,  the Company sold 20,000  shares of its common stock to
         an unrelated third party for $5,000 ($.25/share).

         On May 22, 2001,  the Company sold 20,000 shares of its common stock to
         an unrelated third party for $5,000 ($.25/share).

         On June 28,  2001,  entered  into an  agreement  with CTG  whereby  the
         Company agreed to:

          1.   Sell 250,000 shares of CTG common stock back to CTG for $25,000;
          2.   Exchange  525,000 of CTG common  stock (held by the  Company) for
               525,000  shares of the  Company's  common stock (held by CTG); 3.
               Return to treasury  175,000 shares of the Company's  common stock
               held by the Chief Executive Officer of CTG.

         The share exchange and the return to treasury  transaction has not been
         consummated as of the quarter ended September 30, 2001.

         Following  is a schedule  of changes in  shareholders'  deficit for the
         nine months ended September 30, 2001:

<TABLE>
<CAPTION>

                                                                                                            Accum.
                                          Common stock           Common      Additional                      Comp.
                                      ---------------------      Stock       Paid-in       Accumulated      Income/
                                       Shares      Par Value    Warrants      Capital        Deficit         (Loss)       Total
                                      ---------     -------     --------     ----------    -----------     ---------   ----------
<S>              <C>                  <C>           <C>         <C>          <C>           <C>              <C>           <C>
Balance, January 1, 2001              6,555,892     $ 6,556     $275,272     $8,422,179    $(8,705,764)     $ 11,285      $ 9,528
Warrants issued in satisfaction
  of stock option agreement                   -           -          525              -              -             -          525
Shares sold to unrelated third
  parties at $.25 per share             340,000         340            -         84,660              -             -       85,000
Shares issued in exchange for
  services in accordance with
  employment agreement                   25,000          25            -          6,225              -             -        6,250
Shares issued in exchange for
  rescission of warrants                 25,000          25     (100,000)        99,975              -             -            -
Removal of CTG balances
  from previously consolidated
  figures                                     -           -            -     (3,206,872)     4,154,996             -      948,124
Comprehensive loss:
  Net loss                                    -           -            -              -     (1,228,147)            -   (1,228,147)
  Unrealized loss on investments
    held for sale, net of realized
    gains and losses                          -           -            -              -              -      (195,255)    (195,255)
                                      ---------     -------     --------     ----------    -----------     ---------   ----------
      Balance, September 30, 2001     6,945,892     $ 6,946     $175,797     $5,406,167    $(5,778,915)    $(183,970)   $(373,975)
                                      =========     =======     ========     ==========    ===========     =========   ==========
</TABLE>

Note 6:  Income taxes

The  Company  records  its  income  taxes  in  accordance  with  SFAS  No.  109,
"Accounting for Income Taxes".  The Company incurred net operating losses during
the nine months ended  September  30,  2001,  resulting in a deferred tax asset,
which was fully allowed for;  therefore,  the net benefit and expense  result in
$-0- income taxes.

                                        9
<PAGE>


ITEM II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following  discussion  should be read in conjunction  with the  consolidated
financial  statements and notes thereto. In addition to historical  information,
this Quarterly  Report on Form 10-QSB contains  forward-looking  statements that
involve  risks and  uncertainties  that  could  cause  actual  results to differ
materially.  Factors that might cause or contribute to such differences include,
but are not limited to,  those  discussed  in the  section  entitled  "Risks and
Uncertainties."  You  should  carefully  review  the  risks  described  in other
documents we file from time to time with the Securities and Exchange Commission.
When  used  in this  report,  the  words  "expects,"  "anticipates,"  "intends,"
"plans,"  "believes,"  "seeks," "targets,"  "estimates," and similar expressions
are generally intended to identify  forward-looking  statements.  You should not
place undue reliance on these forward-looking statements, which speak only as of
the date of this Quarterly Report on Form 10-QSB.  We undertake no obligation to
publicly  release any  revisions to the  forward-looking  statements  or reflect
events or circumstances after the date of this document.

OVERVIEW

1st Net  Technologies,  Inc. (the  "Company") has primarily been in the Internet
commerce and services  business since its inception in 1997. During three months
ended  September 30, 2001, the Company's  Board of Directors  decided to suspend
its existing  California  operations and move the Company's  headquarter back to
Colorado,  its  state of  incorporation.  With  the  closing  of its  California
operations, the Company maintains no business operations.

Additionally,   the  Company   has   retained   the   services  of  a  Corporate
Reorganization  Specialist  in order to  determine  the best course of action to
provide  the  Company  with  opportunities  to  remain  as a going  concern.  No
definitive  decision  has been made with  regard to the course of action.  It is
anticipated,  however,  that the  Company may need to seek  protection  from its
creditors  through  a Chapter  11  reorganization  filing  at some  point in the
future.

Our historical financial  information contained in this Quarterly Report on Form
10-QSB is that of 1st Net  Technologies,  Inc. and its subsidiary  corporations,
SSP Management Corp. and is presented on a consolidated  basis, where necessary.
The prior year  comparative  information  has been  restated  due to a change of
accounting method for the Company's investment in CTG.

RESULTS OF  OPERATIONS - NINE MONTHS ENDED  SEPTEMBER  30, 2001 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 2000

Revenues

The  Company's  revenues  from  technology  consulting,  user fees and marketing
services  during the nine months ended  September 30, 2001 declined  $163,909 to
$54,320,  or 75% from the same  period  during the prior  year.  The  decline in
revenues was a result of poor economic conditions in the Internet sector as well
as the Company's inability to generate new customer interest.

Operating gain/loss

Operating  expenses  during the nine months ended  September 20, 2001  decreased
$3,596,615 to $379,278,  or 90%,  compared to the same period in 2000. Loss from
operations  decreased  $3,432,706 to  ($324,958),  or 91% during the nine months
ended  September  30,  2001  compared  to the same  period in 2000.  Significant
reductions  in the levels of expenses  for both SSP and 1st Net were a result of
the elimination of expenses related to certain assets that were sold in 2000 and
an on-going downsizing of the Company's operations.

                                       10
<PAGE>


Other income and expense

The Company  incurred a net loss from other income and expenses  during the nine
months ended September 30, 2001 in the amount of ($903,189) due to write-down of
investment in CTG, asset impairment of its property and equipment and unrealized
holding losses on its marketable securities holdings.  During the same period in
2000, the Company  recorded gains in the amount of $1,988,463 from gains on sale
of various investments and assets. The Company recognizes gains from the sale of
certain assets in 2000 as the proceeds are received on the notes receivable from
the respective  buyers.  The Company has chosen to recognize the gain on sale of
the  newsletter(s)  in  accordance  with  the  installment  method  due  to  the
uncertainties involved with the receipt of future payments from the buyer(s).

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001 the Company had $18,187 in total  current  assets and a
working capital deficit of ($871,760).

At  September  30,  2001,  the  Company  had cash on hand in the amount of $866,
compared to $553,388 as of December 31,  2000.  The Company used its cash to pay
normal operating expenses and accrued liabilities.

In the past,  our greatest need for cash was payment of salaries and benefits to
our employees and fees to our outside consultants. Because the entire California
operations have been  terminated,  the Company does not expect  significant cash
need for  personnel  cost and other  operating  expenses  during the next twelve
months. Through September 30, 2001, we expended significant effort and committed
substantial resources toward our continued development of the EnvoyMail product.
Management  has now made the  decision  to  discontinue  the  marketing  of this
product line due in large part on our inability to generate revenues  sufficient
to sustain those operations.

1st Net and its  wholly  owned  subsidiary  SSP  continue  to  maintain  several
holdings of restricted and marketable  securities.  However, it is impossible to
ascertain the actual value that will be eventually  realized by the Company when
these  securities are sold. The Company may be able to sell its holdings  during
the next twelve months to sustain limited operations.

RISKS AND UNCERTAINTIES

The risks and uncertainties  described below are those that we currently deem to
be material and that we believe are specific to our Company. You should consider
an investment in our stock in light of the risks, uncertainties and difficulties
currently being encountered by the Company.

Currently, the Company is operating as a holding company, with certain interests
and holdings in other outside operating entities and companies.  The Company has
no operations  at this time.  In the future,  the Company may seek to acquire or
develop  business units,  which can sustain the Company as an on-going  business
concern.  There  can be no  assurance  that  any  such  acquisition(s)  will  be
available or the Company will be able to complete such acquisition.  Our ability
to obtain, acquire or develop such operations will have a material effect on our
financial condition in the future.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We continue our litigation against Millennium Financial Publishing, LLC ("MFP").
Please  refer to Form  10-QSB for the quarter  ended June 30, 2001 for  detailed
information.

The Company is currently a party to three (3) creditor  lawsuits  filed  against
us. The first suit was filed by Bowne of Los Angeles,  California  in the amount
of  $61,235.25.  The  second  suit was filed by  Integrant,  Inc.  of San Diego,
California  in the  amount  of  $81,349.00.  The  third  suit was  filed by L.A.

                                       11
<PAGE>


Commercial Group, Inc. in the amount of $2,665.71. All three suits were filed in
San Diego  County,  California.  The Company has recorded  the above  litigation
liabilities in its financial statements.

There is one (1)  California  Labor Board  claim filed  against the Company by a
former employee. The claim is pending as of September 30, 2001.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

No changes in securities  occurred  during the three months ended  September 30,
2001.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

No events occurred during the three months ended September 30, 2001.

ITEM 4. OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security  holders during the three months
ended September 30, 2001.

ITEM 5. OTHER INFORMATION

During the three months ended  September 30, 2001, Mr. Scott Baker resigned from
the Board of Directors of the Company and was replaced,  via unanimous  vote, by
Mr.  Daniel Nye on  September  26,  2001.  Mr.  Nye is neither an Officer  nor a
controlling shareholder of the Company. Mr. Nye holds a Promissory Note from the
Company in the amount of $50,000.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits              None
(b)      Reports on Form 8K    None


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<PAGE>



SIGNATURE

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

                                       1st NET TECHNOLOGIES, INC.



Dated: November 13, 2001               By: /s/ James H. Watson, Jr.
                                           -------------------------------
                                             James H. Watson, Jr.
                                       Its:  Principal Executive Officer and
                                             Principal Accounting Officer of the
                                             Registrant


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