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

                                   FORM 10-KSB

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

                         For the year ended May 31, 2002

                             Commission file number:
                                    333-68020

                            INTERNET RECREATION, INC.
                             -----------------------
        (Exact name of small business issuer as specified in its charter)

              Florida                                    65-0939305
         -----------------                           -------------------
    State or other jurisdiction of                     I.R.S. Employer
    incorporation or organization                     Identification No.

                                24 Locust Street
                             Quitman, Arkansas 72131
               ---------------------------------------------------
                     (Address of principal executive office)

                                 (501) 589-2362
                                 --------------
                 (Issuer's telephone number including area code)

                             All Correspondence to:
                          Brenda Lee Hamilton, Esquire
                         Hamilton, Lehrer & Dargan, P.A.
                          2 East Camino Real, Suite 202
                            Boca Raton, Florida 33432
                                 (561) 416-8956

          Securities registered pursuant to Section 12(g) of the Act:

    Title of each class          Name of each exchange on which registered
    -------------------          -----------------------------------------
          Common Stock                Over-the-Counter Bulletin Board

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.

        [X] Yes       [ ] No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not 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-K
or any amendment to this Form 10-K. [ ]

                                                                               1
<PAGE>


The  aggregate  market  value  of the  voting  and  non-voting  equity  held  by
non-affiliates  computed by reference  to the price at which  common  equity was
sold, or the average bid and asked price of such common  equity (i.e.,  does not
include directors,  executive officers or ten percent stockholders identified in
Item 11 hereof) of the issuer as of May 31, 2002 was approximately $0.

As of May 31, 2002,  there were 9,625,000  shares of our common stock issued and
outstanding.

  APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                             PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

Not Applicable
                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

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


















                                                                               2
<PAGE>

                       TABLE OF CONTENTS TO ANNUAL REPORT
                                 ON FORM 10-KSB
                             YEAR ENDED MAY 31, 2002

                                     PART I

Item 1.     Description of Business........................................... 4
Item 2.     Description of Property...........................................10
Item 3.     Legal Proceedings.................................................11
Item 4.     Submission of Matters to a Vote of Security Holders...............11

                                     PART II

Item 5.     Market for Common Equity and Related Stockholder Matters..........11
Item 6.     Management's Discussion and Analysis or Plan of Operation.........12
Item 7.     Financial Statements..............................................17
Item 8.     Changes in and Disagreements With Accountants on Accounting
            and Financial Disclosure..........................................26

                                    PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
            Compliance With Section 16(a) of the Exchange Act.................26
Item 10.    Executive Compensation............................................27
Item 11.    Security Ownership of Certain Beneficial Owners
            and Management....................................................28
Item 12.    Certain Relationships and Related Transactions....................28
Item 13.    Exhibits and Reports on Form 8-K..................................28

                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)


                                                                               3
<PAGE>

                                     PART I

Forward-Looking Statements:
This annual report on Form 10-KSB contains forward-looking statements.  Internet
Recreation, Inc. is referred to in this report as "we", "us" or "our." The words
or phrases  "would be," "will allow,"  "intends to," "will likely  result," "are
expected  to," "will  continue,"  "is  anticipated,"  "estimate,"  "project," or
similar  expressions  are  intended  to identify  "forward-looking  statements."
Actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of risks and  uncertainties,
including the  following:  (a) we may be unable to continue as a going  concern;
(b) because we are a development  stage company with a limited operating history
and a poor financial condition,  you will be unable to determine whether we will
ever become profitable; (c) we may experience a poor customer retention rate and
if we fail to institute  methods of retaining  first time users of our services,
our revenues will be adversely affected;  (d) because our management has limited
experience or background in our business, we may be unable to develop profitable
operations;  (e) because we have no full-time  employees and our  management now
devotes and may continue to devote  limited time to our  business,  we may never
become profitable;  and (f) we may not meet the National Association of Security
Dealers  exchange  listing  requirements  which will  likely be  implemented  on
January 1, 2003,  which may lead to increased  investment  risk and inability to
sell your  shares.  These  risks  are  discussed  in more  detail in our Plan of
Operations at page 12.

Statements  made in this  report  are as of the date of the  filing of this Form
10-KSB with the Securities and Exchange Commission and should not be relied upon
as of any subsequent date.  Unless  otherwise  required by applicable law, we do
not  undertake,  and we  specifically  disclaim  any  obligation,  to update any
forward-looking statements to reflect occurrences,  developments,  unanticipated
events or circumstances after the date of such statements.

Item 1. Description of Business
A. Organizational Background and History
We are a development  stage  company  which  operates a website that consists of
links  to  third  party  Internet  retailers.  These  retailers  offer  and sell
children's  products  from  which we are  entitled  to  receive  commissions  if
products are sold. We also are entitled to receive other financial  compensation
based on leads or  "clicks"  made from the  affiliate  marketers  as a result of
contact  with our  website.  We were  incorporated  in the State of  Florida  on
September 9, 1999 to sell children's products on the Internet. We are authorized
to issue  100,000,000  shares of common  stock,  of which  9,625,000  shares are
issued  and  outstanding.  We are  authorized  to issue  100,000,000  shares  of
preferred stock, of which no shares are issued and outstanding.

We have  never  been  the  subject  of a  bankruptcy,  receivership  or  similar
proceeding.

Our  principal  executive  offices  are  located at 24 Locust  Street,  Quitman,
Arkansas 72131. Our telephone number at this address is (501) 589-2362.

B. Business
BUSINESS DEVELOPMENT
We were incorporated in Florida for the purpose of selling  children's  products
on the  Internet.  We have  operated as a  development  stage  company since our
inception. We have devoted all of our efforts to:
     o    Formulating our business plan;
     o    Raising capital;
     o    Establishing and making improvements to our website;  and o Developing
          links to our third party retailer websites.

We began  implementing  our  business  plan in March 2001 that  consisted of the
above  activities.  We began actively  attempting to sell products through third
party Internet retailers of children's products in about July of 2001.

                                                                               4
<PAGE>

Our prior  president,  Cathy  Williamson,  resigned in March of 2002. Due to our
failure to generate any revenues and the  resignation of our  president,  we now
operate at the  address  of our sole  officer  and  director,  Kathleen  (Patty)
Hackler.

To date, we have been unsuccessful in generating any revenues or in implementing
all planned  aspects of our business  plan; as a result of this we may be unable
to meet expected BBX listing  requirements as detailed on page 16, we may in the
future seek merger or acquisition  candidates.  Any such merger or  acquisition,
however,  involves various risks to our future business operations and financial
condition,  including  the  following:  (a) we may fail to perform  adequate due
diligence  regarding  a company we acquire or merge with,  which may  negatively
affect  our  financial  conditions  and  operations;  (b) we may  be  unable  to
negotiate  acceptable terms of a merger or acquisition;  and (c) negotiating and
completing  a  merger  or  acquisition  as well as  integrating  the  merger  or
acquisition  into our operations will divert  management time and resources away
from our current operations and increase our existing costs.


We have never been the subject of any bankruptcy or receivership action. We have
had no material reclassification,  merger, consolidation, or purchase or sale of
a significant amount of assets outside the ordinary course of business.

PRINCIPAL PRODUCTS AND SERVICES
We operate a website at www.personalizedkidsstuff.com.  We market solely through
links that we have with third party Internet  retailers.  We do not manufacturer
or sell children's  products directly through our website.  Sales of merchandise
are  conducted  solely  through  the links that we have  established  with other
Internet retailers.

Through  our  agreements  with  Commission  Junction  and  LinkShare  we  became
"affiliate marketers"; in so doing we obtained a license to establish links with
retail merchants with which  Commission  Junction and LinkShare have established
agreements.  Commission  Junction and LinkShare operate  "Merchant  Programs" on
behalf of retail  merchants.  There are  thousands of companies who have similar
such  arrangements  with  Commission  Junction  and  LinkShare.  As an affiliate
marketer,  we must apply for acceptance to a Merchant  Program to earn financial
compensation  referred to as "payouts" through sales, leads, or clicks made from
an  affiliate  website.  When  Commission  Junction and  LinkShare  accepted our
participation  in a Merchant  Program,  we became an  affiliate  merchant and we
agreed  to  the  program  payout   specifications   of  each  retail   merchant.
Accordingly,  the amount of the payouts and the timing of the payouts pertaining
to sales,  links and clicks will differ from  merchant to merchant  according to
the  respective  agreement  that an  individual  merchant  has  with  Commission
Junction or LinkShare.  These Internet  retailers sell a variety of products and
represent a number of  wholesalers  or retailers of the products that they sell.
To date, we have had no revenues through our affiliate links.

OUR LINKS WITH INTERNET RETAILERS THROUGH COMMISSION JUNCTION:
BabyUniverse.com
This  Internet  retailer  offers a full range of infant care and baby  products,
including baby bedding,  clothes,  diapers,  and  strollers.  This retailer also
offers some free items with purchases as well as contests.

Babies Online.com
This  Internet  retailer  offers a full range of infant care and baby  products,
including strollers,  bassinets,  monitors,  cribs, diapers,  breast pumps, high
chairs and car seats.  In addition,  this  website  offers the  opportunity  for
parents to establish a web page in the name of their baby.

Guiding Light Video.com
This  Internet  retailer  offers the following  products with a  Christian-based
theme: software, games, videos with Bible stories, and sports stories.

Compozapuzzle.com
This Internet  retailer  offers a variety of jigsaw  puzzles in various  shapes,
forms and difficulty levels.


                                                                               5
<PAGE>

Funtapes.com
This Internet  retailer  offers  cassette tapes that are recorded with a child's
name throughout every song on the cassette tape.

Pinitas.com
This Internet retailer offers pinata products for children's parties with, among
other themes, Raggedy Ann, trucks, farm animals, jungle animals and holidays.

Jordan Marie.com
This  Internet  retailer  offers high quality baby clothes,  Christening  gowns,
layettes and monogramming.

Webclothes.com
This retailer offers baby and children's clothes from infant to size 18.

Fundraising Zone.com
This  Internet  retailer  acts as a  fundraiser  for any group that bases  their
fundraising on sales of candy, candles and cookie dough.

Care Packages.com
This retailer  offers care packages for birthdays,  get well, new baby and other
occasions.

Sullivan Boutique.com
This Internet  retailer offers videos,  CD-ROMs,  DVDs and books with children's
themes.

CatalogLink.com
This website  serves as a link to find  catalogues in the following  categories:
toys, baby items, collectibles, movies and clothes with children's themes.

Aaron's Baby Baskets.com
This  Internet  retailer  offers a wide range of gift  baskets  for a variety of
baby-related  occasions,  as  well as  flower  arrangements,  balloons,  stuffed
animals, and gifts for mothers, among other items.

BabySongs.com
This Internet retailer offers their own "Baby Songs" videos, as well as yoga
videos, bibs, and t-shirts.

Robeez.com
This Internet retailer offers leather shoes for babies and toddlers,  as well as
children's slippers, and a newsletter for parents.

Bluelight.com
This  Internet  retailer  offers a variety  of baby toys and  products,  such as
strollers  and cribs,  as well as  keepsakes  and baby  furniture,  among  other
products.

SanFranciscoMusicBoxCompany.com
This Internet retailer offers a variety of music boxes,  musical figurines,  and
musical  water  globes.  This retailer  offers  products for special  occasions,
holidays, and with popular tunes.

PublishersPipeline.com
This Internet retailer offers games, computer software, and electronics, as well
as instant rebates and new products weekly.

eBooks.com
This  Internet  retailer  offers over 50  categories of books to choose from, as
well as featured titles and best sellers.


                                                                               6
<PAGE>

A&E/The History Channel
This Internet retailer offers products from the A&E Television  Networks,  which
includes A&E,  Biography and The History  Channel.  The retailer offers DVDs and
books in categories such as Crime & Justice,  Entertainment  and History,  among
others.

Movieclubonline.com
This  Internet  retailer  offers DVDs and videos,  books,  magazines,  and movie
memorabilia.  You may also buy movie tickets  online,  rental  certificates  and
movie baskets.

Hollywoodmegastore.com
This Internet retailer offers movie souvenirs, including life-size standup
figurines, posters, award trophies, director's clapboards, and key chains, among
other products.

Babyage.com
This Internet  retailer  offers  products for nurseries,  travel,  bath and baby
care, and health and safety.  In addition,  this retailer offers a baby registry
and gift certificates.

Booksamillion.com
This  Internet  retailer  offers a wide range of books,  as well as audio books,
magazines,  e-books and Joe Muggs products. In addition,  this retailer offers a
Discount Card which enables you to save money on purchases made on its website.

Binkley-toys.com
This Internet retailer offers teddy bears made by mothers and  grandmothers.  In
addition,  this retailer offers puppets,  virtual gift cards, and customer plush
toys.

Ebay.com
This  website  gives the user the ability to purchase a wide variety of products
online, including baby toys, clothes, and furniture, among many other things.

iTradecards.com
This Internet  retailer provides users with the ability to trade different types
of cards  online.  In  addition,  it provides  members with the latest card show
information, a message board, and classified section.

OUR LINKS WITH INTERNET RETAILERS THROUGH LINKSHARE:
Personalize.com
This Internet retailer will personalize  products such as photo frames,  clothes
and toys.

Sensational Beginnings.com
This  Internet  retailer  offers toys and  educational  tools for children  that
emphasize childhood learning, such as Thomas the Tank Engine,  Madeline,  Looney
Tunes, Blues Clues, Star Wars, and Stuart Little.

The Baby Outlet.com
This Internet retailer offers strollers, toys, diapers, car seats, playpens, and
bedding products. In addition, this retailer offers a baby registry.

DisneyStore.com
This  Internet  retailer  offers many toys and dolls,  clothes and  accessories,
movies, music, art and collectibles, all with the Disney theme.

SmarterKids.com
This Internet retailer offers Harry Potter-themed books and games, and gives you
the ability to search by a specific age group or by education level.

OrientalTradingCompany.com
This Internet retailer offers a variety of crafts,  stationary,  jewelry, candy,
dolls, costumes, toys and novelties, among other products.


                                                                               7
<PAGE>

Kaptest.com
Kaplan offers test  preparation for various high school,  college,  and graduate
tests. This Internet retailer offers its products in the categories of business,
law, and pre-medicine, among others.

Myfreesoftware.com
This Internet  retailer  offers video compact disks on which you can view movies
on your DVD player, however, you can also view movies on CD-ROM-based computers.
This retailer also offers  software in the following  categories,  among others:
entertainment, education, reference, family.

GospelDirect.com
This Internet retailer offers videos, books, bibles and music.

T-shirts.com
This Internet  retailer  offers a variety of t-shirts  available in youth sizes,
including blank t-shirts,  printed t-shirts,  and the ability to design your own
t-shirt online.

Distribution Methods of our Services:
Distribution  of our  products  occurs  directly  through our third party linked
retailers.

Material Agreements:

COMMISSION JUNCTION AGREEMENT
We have an affiliate service agreement with Commission  Junction in which we are
entitled to earn financial  compensation through sales, leads and/or clicks made
from our website  through a link to another website  operated by a merchant.  We
receive  payout rates as determined by the individual  merchants.  The agreement
further provides that Commission Junction may terminate our agreement for, among
other things:  (a)  operation of an illegal  business  through our website;  (b)
displaying illegal content on our website; (c) operating a website that contains
or promotes misleading,  abusive, violent, bigoted or hate-oriented content; (d)
engaging in  unsolicited  commercial  advertising  emails;  or (e) breach of the
Commission Junction agreement.

LINK SHARE AGREEMENT
We have a membership  agreement  with  LinkShare  which  provides that we have a
personal,  nonexclusive  license to participate  in their program.  Through this
program we may earn financial  compensation  through sales,  leads and/or clicks
made from our website through a link to another website  operated by a merchant.
The agreement  provides that we receive payout rates as determined by individual
merchants.  The  agreement  further  provides  that  LinkShare  may terminate or
suspend  our access to all or part of its  service  for any  reason,  including,
without limitation, if we breach or assign the agreement.

KEYNETICS, INC.
We have an agreement with  Keynetics,  Inc. which provides its services  through
clickbank.com and clickbank.net.  Through this agreement, we have the ability to
earn sales  commissions  by linking  customers  to products  sold by  individual
merchants  affiliated  with  ClickBank.  The agreement  provides that we receive
payout rates as  determined  by  individual  merchants.  The  agreement  further
provides that Keynetics,  Inc. reserves the right to delay,  suspend,  or refuse
payment of any portion of our account balance at any time,  close our account at
any time, and modify our contract at any time.

QUINSTREET MEMBERSHIP AGREEMENT
We have a membership  agreement  with  QuinStreet,  Inc.  which provides us with
marketing  links to use on our website.  By clicking on a link,  visitors to our
website  will be  diverted  directly  to  product  sales  web  pages  served  by
QuinStreet. The agreement provides that QuinStreet will determine which sales or
leads  generated  through  merchants'  websites  originated  from  links  on our
website. For each such sale or lead,  QuinStreet will pay us the amounts due for
each  transaction as specified by individual  merchants.  The agreement  further
provides  that  QuinStreet,  Inc.  reserves  the  right to  terminate  the links
immediately  upon written notice and terminate our  participation in the program
for any of the following  reasons:  (a) if we breach any terms of the agreement;


                                                                               8
<PAGE>

(b) if our website promotes or exhibits  sexually explicit material or violence,
promotes discrimination based on race, sex, religion,  national origin, physical
disability,  sexual  orientation,  or age;  (c)  promotes  or engages in illegal
activities; misrepresents the products or services offered by QuinStreet; or (d)
if we use any manual,  technological,  or  promotional  methods to  artificially
inflate the numbers of leads generated.

Revenues/Products Breakdown:
We currently do not  manufacture,  develop or directly market any products.  Our
revenues  will  be  derived  solely  from  the  commissions  and  the  financial
compensation that we receive from our third party linked retailers.

Our Customers:
Since our inception,  we have had no customers.  Our potential customers consist
of the general public through our third party Internet linked retailers.

Our Billing Practices:
Billing for products  purchased  through our website is conducted solely through
our third party linked  retailers;  accordingly,  we do not  independently  bill
customers that purchase  products through these  retailers.  Our commissions and
other financial  compensation  are paid according to the individual terms of our
agreements with our third party linked retailers.

Geographic Markets:
The third party linked  retailers  offer and sell their products  throughout the
United States.

Marketing:
We plan to  advertise  in  local  and  written  publications  located  in  small
communities as detailed in our "Plan of Operations" below. In addition,  we plan
to list our website with various search engines located on the Internet  through
which we will attempt to create awareness of our website.

Competitive Business Conditions:
The children's  products  market is increasingly  competitive,  with hundreds of
Internet  competitors that have similar  businesses to us. In addition,  because
barriers to market entry are  relatively low and new  competitors  can establish
new sites at a  relatively  low cost  utilizing  a variety  of market  available
software,  we expect  competition  to  become  increasingly  intensified  in the
future.  Therefore,  competition is rapidly evolving and there are no assurances
that we can keep pace with such intense competition.

Some of our biggest  competitors are Baby Universe,  Baby Love and  Babies-R-Us.
These  companies  have longer  operating  histories,  greater name  recognition,
larger customer bases,  and greater  financial and technical  resources than us.
Accordingly,  these companies are able to conduct extensive  marketing campaigns
that we are financially unable to accomplish.  In addition,  these companies may
create more attractive  pricing to potential  marketers of children's  products.
Also while our competitors have an established brand name and reputation,  we do
not.  There can be no  assurance  that we will be able to compete in the sale of
our  products,  which  could  have a  materially  negative  impact  upon  market
awareness and acceptance of our website and our third party linked retailers.

Sources and Availability of Raw Materials:
We do not use raw materials in our business.  Any raw materials that are used in
the  manufacture of products sold through our third party retailers are arranged
through them or manufacturers or submanufacturers of their products.

Principle Suppliers:
Our suppliers consist solely of our third party linked retailers.


                                                                               9
<PAGE>

Dependence on Major Customers:
Currently  we have no  customers.  Because the  products  sold through our third
party linked retailers are sold to the general public, we do not expect that any
one customer will constitute more than ten percent (10%) of our revenues.

Patents, Trademarks and Licenses:
On  July  6,  2001,   we  applied   for   trademark   protection   on  our  name
personalizedkidsstuff.com  with the United States  Patent and Trademark  Office.
This trademark application is currently pending.

Regulatory Matters:
We are not aware of the need for any governmental approval of our products.

Effect of Existing Governmental Regulations:
We are not aware of any  governmental  regulations that will affect our business
plan. However, due to increasing usage of the Internet, laws and regulations may
be adopted  relating to the  Internet,  including  user  privacy,  pricing,  and
characteristics  and quality of products and services.  Furthermore,  the growth
and  development  of  Internet  commerce  may  prompt  more  stringent  consumer
protection laws which would impose  additional  burdens on companies  conducting
business over the Internet.  The adoption of any additional  laws or regulations
may decrease the growth of the  Internet,  which,  in turn,  could  decrease the
demand for Internet  services  and  increase  the cost of doing  business on the
Internet.  These factors may have an adverse effect on our business,  results of
operations and financial condition.

Cost of Compliance with Environmental Matters:
Our business does not involve the emission of hazardous  substances.  Because we
are not involved in  manufacturing  or delivery and distribution of the products
that are sold  through our third party  retailers,  we have no costs  associated
with environmental matters.

Research and Development:
During Fiscal Year 2002, we spent no funds on research and development.

Employees:
We currently  have one  part-time  employee,  our  President,  Kathleen  (Patty)
Hackler. We have no full-time employees.

None  of our  employees  are  represented  by a  labor  union  for  purposes  of
collective bargaining.  We consider our relations with our existing employees to
be satisfactory.

Reports to Security Holders:
We are subject to the informational  requirements of the Securities Exchange Act
of  1934.  Accordingly,   we  file  annual,  quarterly  and  other  reports  and
information with the Securities and Exchange  Commission.  You may read and copy
these  reports and other  information  we file at the  Securities  and  Exchange
Commission's public reference rooms in Washington, D.C., New York, New York, and
Chicago,  Illinois. Our filings are also available to the public from commercial
document   retrieval  services  and  the  Internet  website  maintained  by  the
Securities and Exchange Commission at www.sec.gov.

Item 2. Description of Property.
From our  inception  to March 22,  2002,  we operated  out of 100 square feet of
space located at 19489 Colorado Circle, Boca Raton,  Florida 33434, which is the
personal residence of our former president, Cathy Williamson. Ms. Williamson did
not charge us for use of this space.  Our former  president  did not conduct any
other  business  from this office.  The offices were  sufficient  to conduct our
operations.

From March 22, 2002 to present, we have operated out of 100 square feet of space
located at 24 Locust  Street,  Quitman,  Arkansas  72131,  which is the personal
residence of our current President,  Kathleen (Patty) Hackler.  Ms. Hackler does
not charge us for use of this space and she does not conduct any other  business
from this space. The offices are sufficient to conduct our operations.


                                                                              10
<PAGE>

We do not own any property or intend to have any  property in the future.  We do
not intend to renovate, improve or develop properties. We are not subject to any
competitive conditions for property and currently have no property to insure. We
have no policy with respect to  investments  in real estate or interests in real
estate and no policy  with  respect to  investments  in real  estate  mortgages.
Further,  we have no policy with  respect to  investments  in  securities  of or
interests in persons primarily engaged in real estate activities.

Item 3. Legal Proceedings.
We have not been served with any legal process providing us with legal notice of
any other  pending  proceedings.  We are not a  plaintiff  in any other  pending
action. We are not aware of any contemplated  legal proceeding by a governmental
authority in which we may be involved.

Item 4. Submission of Matters to a Vote of Security Holders.
None.

                                     PART II

Item 5. Market for Common  Equity and Related  Stockholder  Matters.  Our common
stock has been quoted on the Over-the-Counter Bulletin Board ("OTCBB") under the
symbol "IRNI" since March 28, 2002.  The high and low bid  information  for each
quarter,  if applicable,  for the last two fiscal years is presented  below. The
quotations  are  interdealer  prices  without  adjustment  for  retail  markups,
markdowns or commissions and do not necessarily  represent actual  transactions.
These prices may not necessarily be indicative of any reliable market value.

           Quarter                    High                             Low
      Fiscal Year Ended
      5/31/01
      First Quarter               Not Applicable.                Not Applicable.
      Second Quarter              Not Applicable.                Not Applicable.
      Third Quarter               Not Applicable.                Not Applicable.
      Fourth Quarter              Not Applicable.                Not Applicable.
      Fiscal Year Ended 5/31/02
      First Quarter               Not Applicable.                Not Applicable.
      Second Quarter              Not Applicable.                Not Applicable.
      Third Quarter               $   0                          $   0
      Fourth Quarter              $   0                          $   0

Holders:
As of May 31, 2002, we had 32 holders of record.

Issued and Outstanding Stock:
As of May 31,  2002,  there were  9,625,000  shares of common  stock  issued and
outstanding.  Each share of common stock entitles the holder to one vote on each
matter that may come before a meeting of the shareholders. We currently have one
class of common stock outstanding.

Options:
We have not issued any options since our inception.

Warrants:
We have not issued any warrants since our inception.

Dividends:
We have not declared any cash  dividends on our common stock since our inception
and do not anticipate  paying such dividends in the foreseeable  future. We plan
to retain  future  earnings,  if any,  for use in our business  operations.  Any
decisions  as to future  payment of  dividends  will depend on our  earnings and
financial  position  and such other  factors,  as the Board of  Directors  deems
relevant.


                                                                              11
<PAGE>

Recent Sales of Unregistered Securities:
On March  10,  1999,  we issued  9,000,000  shares  of our  common  stock to our
President,  Kathleen (Patty) Hackler,  for services  rendered in connection with
our corporate formation.

On March 10,  1999,  we issued  250,000  shares of our common stock to Hamilton,
Lehrer & Dargan P.A. in exchange for legal services rendered to us.

On January 12, 2001, we issued  250,000  shares of our common stock to Hamilton,
Lehrer & Dargan P.A. in exchange for legal services rendered to us.

On May 31, 2001, we issued  10,000 shares of our common stock to Barbara  Lawton
in return for bookkeeping services she rendered to us.

On May 31, 2001,  we issued  20,000  shares of our common stock to Howard Dargan
P.A. for legal services rendered to us.

On May 21,  2001,  we issued  50,000  shares of our  common  stock to our former
president,  Cathy  Williamson,  for services  rendered as our  president at that
time.

On August  10,  2001,  we issued  7,000  shares  of our  common  stock to Equity
Technology Group, Inc., a Florida corporation, for Edgar services.

On December 4, 2001, we issued 100,000  restricted shares of our common stock to
Kevin Steil for website development services.

On February 5, 2002,  we sold 8,000  restricted  shares of our common stock at a
price of $0.25 per share to a shareholder.

Between  April 26, 2001 and August 7, 2001,  we sold 30,000 shares of our common
stock to 24 investors at a price of $0.25 per share  raising  total  proceeds of
$7,500. None of these issuances involved underwriters, underwriting discounts or
commissions.

For all of the above sales and issuances, we relied upon Section 3(b) of the
Securities Act of 1933, as amended, and Rule 504 of Regulation D in offering
these shares. We believed these exemptions were available because:
     o    We are not a blank check company;
     o    Total sales did not exceed $1,000,000;
     o    We filed a Form D, Notice of Sales,  with the  Securities and Exchange
          Commission;
     o    Sales were not made by general solicitation or advertising;
     o    All certificates had restrictive legends; and
     o    Sales were made to investors who were either  accredited  investors or
          who represented  that they were  sophisticated  enough to evaluate the
          risks of the investment.

Item 6. Plan of Operations.

We can continue to satisfy our current cash  requirements for a period of twelve
months through obtaining loans from our president. We anticipate total estimated
capital expenditures of $10,000 over the next twelve months, as follows:
     o    $5,000 for advertising in infant and children's magazines;
     o    $350 for paying our server over the next twelve months; and
     o    $4,650 for working capital.

As of May 31,  2001,  we had only  $442.00  of cash;  however,  we will  need an
estimated $10,000 to accomplish our operational goals.  Accordingly,  we will be
unable to fund our expenses  through our existing  assets or cash.  Although our
president plans to loan us funds to conduct our operations, we have no agreement
with our  president to do so and our president is under no obligation to loan us
funds. Accordingly,  there are no assurances that we will receive loans from our
president.  Moreover,  there  are no  assurances  that our  president  will have


                                                                              12
<PAGE>

sufficient  funds to make these  loans.  In  addition,  we have no  compensation
agreements to our president in connection  with any loans she may provide to us.
If our  president  is unable  or  unwilling  to make  loans to us  necessary  to
implement our plan of  operations,  we will need  additional  financing  through
traditional bank financing or a debt or equity offering; however, because we are
a  development  stage  company  with no operating  history and a poor  financial
condition,  we may be  unsuccessful in obtaining such financing or the amount of
the financing  may be minimal and therefore  inadequate to implement our plan of
operations.  In addition,  if we only have nominal funds by which to conduct our
operations, we may have to curtail our plan of operations which would negatively
impact  development  of our brand name and  reputation.  We have no  alternative
operations.  In the event that we do not receive  financing or our  financing is
inadequate  or if  we  do  not  adequately  implement  an  alternative  plan  of
operations  that  enables  us to  conduct  operations  without  having  received
adequate  financing,  we may have to liquidate our business and undertake any or
all of the following actions:
     o    Sell or dispose of our assets, if any;
     o    Pay our liabilities in order of priority, if we have available cash to
          pay such liabilities;
     o    If any cash  remains  after we satisfy  amounts due to our  creditors,
          distribute any remaining cash to our  shareholders  in an amount equal
          to the net market value of our net assets;
     o    File a  Certificate  of  Dissolution  with  the  State of  Florida  to
          dissolve our corporation and close our business;
     o    Make  the  appropriate   filings  with  the  Securities  and  Exchange
          Commission  so that we will no longer be required to file periodic and
          other required  reports with the  Securities and Exchange  Commission,
          if, in fact, we are a reporting company at that time; and
     o    Make the appropriate filings with the National Association of Security
          Dealers to affect a delisting of our common  stock,  if, in fact,  our
          common stock is trading on the OTCBB at that time.

Based  upon our  current  assets,  however,  we will not  have  the  ability  to
distribute any cash to our shareholders.

If we have any  liabilities  that we are  unable to satisfy  and we qualify  for
protection  under  the  U.S.  Bankruptcy  Code,  we  may  voluntarily  file  for
reorganization  under Chapter 11 or  liquidation  under Chapter 7. Our creditors
may also file a Chapter 7 or Chapter 11  bankruptcy  action  against  us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy,  our creditors will
take priority over our  shareholders.  If we fail to file for  bankruptcy  under
Chapter 7 or Chapter 11 and we have  creditors,  such  creditors  may  institute
proceedings against us seeking forfeiture of our assets, if any.

We do not know and cannot  determine  which,  if any, of these actions we may be
forced to take.

If any of these foregoing events occur, you could lose your entire investment in
our shares.

OUR OPERATIONS FROM OUR INCEPTION TO MARCH 2002
We were  incorporated on September 9, 1999. We began our operations in May 2001.
Since our inception to March 2002, we have accomplished the following:

1. Raised  Capital - On February 5, 2002 we raised an additional  $2,000 for our
operations through the sale of private placement securities.
2. Changes in Website - From December 2001 through January 2002, our website was
redesigned and reformatted to create a more user-friendly environment by:
o    Making our website faster;
o    Creating more specific, self-explanatory product categories; and
o    Creating  a new  logo  and  navigational  layout.  Our new  website  became
     operational on February 1, 2002.
3. New Retailer  Links - During March 2002,  in order to offer our users greater
product and service  selection,  we added the following new retailer  links that
market: a) children and infant clothing; b) infant products such as diaper bags,
strollers, and cribs; c) children and infant toys and games; and d) books, music
and videos:

o    Oriental Trading Co.
o    MyFreeSoftware.com


                                                                              13
<PAGE>

o    T-Shirts.com
o    SmarterKids.com
o    Kaptest.com
o    A&E/The History Channel
o    MovieClubOnline.com
o    eBooks.com
o    San Francisco Music Box
o    Elibs.com
o    www.hollywoodmegastore.com
o    Aaron's Baby Baskets
o    BabySongs.com
o    Robeez.com
o    Webclothes.com
o    Bluelight.com
o    DisneyStore.com
o    PublishersPipeline.com
o    Booksamillion.com
o    BabyAge.com

The user is now able to link to various  retailer sites that retail a particular
type of merchandise. For instance, if a user wishes to click on "Clothing" under
the  general  category,  "Infants,"  he or she then  views a page that  contains
advertisements of and links to various retailers that retail infant clothing.

Our new  website  also  contains  a "print  function"  that  prints  substantive
information from linked retailer  websites,  while omitting images and pictures,
and an e-mail function  enabling users to  automatically  e-mail linked retailer
websites to other e-mail addresses. In addition, we added a "Review" subcategory
under each of the main  categories,  enabling us to post  reviews of  children's
products,  including children's books and videos.  Because videos and movies are
now  available,  we also  renamed the "Books and Music"  subcategory  under "All
Ages" to now read "Books, Music and Videos."

We also  added an  "advertiser"  management  system to  simplify  the  addition,
removal,  and use of links from different  sources.  To more easily  accommodate
increased  activity on our website we now use iiFramework  software developed by
Infranet Enterprise Software Solutions.  iiFramework gives us the ability to add
more servers to our website,  efficiently handle website traffic, and easily add
new  categories  and  product  offerings  when  needed.  We also  created  a new
professional  logo,  color  scheme,  and  navigational  layout to the website to
improve our brand awareness.

OUR FUTURE PLAN OF OPERATIONS.
We will attempt to accomplish  the following in our plan of operations  over the
next twelve months:

A. Update Website. Update our website to add new product categories and products
within existing  categories.  Because  management will add these  categories and
products,  we do not  anticipate  any cost  affiliated  with this  aspect of our
operations.

B. New  Retailer  Links.  During the  remainder  of 2002 we will  attempt to add
additional  retailer links.  Because  management will add these links, we do not
anticipate any cost affiliated with this aspect of our operations.

C.  New  Affiliate  Merchant  Programs.  We plan to add at least  one  affiliate
merchant program, which will not entail any additional cost.

D. Advertising. We intend to advertise in local and written publications located
in small communities.  These  advertisements  will cost between $25 and $500. We
expect to spend approximately $1,500 for these type advertisements.  If and only
if we have sufficient  revenues or financing from other sources,  we will obtain
half page advertisements in national  publications,  such as baby and children's


                                                                              14
<PAGE>

magazines.  We estimate that these  advertisements  will cost between $1,500 and
$10,000 depending upon the publication,  number of advertisements  and length of
advertisements.

We also plan to list our website  with  several  search  engines on the Internet
which will enable  people to find our website by searching  the Internet for key
words such as "baby products" or "children's  toys." There is no cost associated
with listing with search engines.

E.  Offering  Coupons or Incentives  on our Website.  We plan to negotiate  with
retailers to provide coupons and other  incentives to potential  purchasers.  We
originally  planned  to begin  such  negotiations  in March  2002;  however,  we
currently  do  not  anticipate  beginning  such  negotiations  before  at  least
September 2002. These coupons and incentives will be individually offered at our
site to purchase products from our linked retailers.  At the present time, we do
not anticipate any cost affiliated with this aspect of our operations.

Revenues.
To date, we have had no revenues.  We cannot determine whether our revenues will
ever be sufficient to produce a positive cash flow or result in net profits. You
should  carefully  consider the discussion  appearing below under "Liquidity and
Capital Resources." Our losses are expected to continue, principally as a result
of general and administrative expenses and advertising costs.

Liquidity and Capital Resources.
As of May 31, 2002,  we had limited cash capital  resources of only $442.  Other
than our existing working capital,  we do not have any other internal sources of
working capital.

Since inception,  our operating expenses have exceeded our revenues.  Because of
the continued  need for working  capital to fund our planned  growth and ongoing
operating  expenses,  we expect to continue to experience  significant  negative
operating cash flow for the  foreseeable  future.  Our existing  working capital
will not be  sufficient  to fund  the  continued  implementation  of our plan of
operations during the next 12 months and to meet our general operating expenses;
accordingly  we may require  loans from our  president  and or we may raise such
capital through the sale of equity or debt securities.

In addition, our business is subject to the following risks:
We may be unable to continue as a going concern.
Our  auditors,  Stark  Winter  Schenkein  & Co.,  LLP,  stated  in Note 4 to our
financial  statements for the Fiscal Year ended May 31, 2002,  that: (a) we have
experienced a loss from operations  during our development  stage as a result of
our investment  necessary to achieve our operating plan,  which is long range in
nature;  (b) for the period from  inception to May 31,  2002,  we incurred a net
loss of  $22,033;  (c) we have  no  significant  assets  or  revenue  generating
operations;  (d) our ability to continue as a going concern is  contingent  upon
our  ability  to  attain  profitable   operations  by  securing   financing  and
implementing  our  business  plan;  and (e) our  ability to  continue as a going
concern must be considered in light of the problems,  expenses and complications
frequently  encountered by entrance into established markets and the competitive
environment in which we operate.

Because we are a development  stage company with a limited operating history and
a poor financial condition, you will be unable to determine whether we will ever
become  profitable.  An  investor  cannot  determine  if  we  will  ever  become
profitable due to our limited operating history,  poor financial condition,  and
the  developmental  nature or our business.  Future losses are likely before our
operations will become  profitable,  if ever. We are a development stage company
with limited operations and no revenues through May 31, 2002. From our inception
to May 31, 2002, we had  continuously  increasing  losses and we anticipate  our
losses to accumulate for the foreseeable  future.  From our inception to May 31,
2002, we incurred operating losses of ($22,033.00). Our ability to continue as a
going concern is dependent on our ability to obtain financing for our operations
for which there are no assurances.

We may experience a poor customer  retention  rate;  accordingly,  if we fail to
institute  methods of retaining  first time users of our services,  our revenues
will be adversely effected.
Because our first time purchasers of products purchased at our linked sites will
discover that they can purchase products directly through our linked websites or
elsewhere,  rather than through our website,  they may never utilize our website


                                                                              15
<PAGE>

again. Accordingly, it is essential that we institute methods of retaining first
time users to our website;  however,  there are no assurances  that our plans to
advertise  in  children's  magazines  or  small  community  publications  or  to
establish  agreements with wholesalers of children's products will be successful
in  retaining  first time  users.  If we fail to  implement  effective  means of
retaining first time users, we will not become profitable.

Because our management has no relevant experience or background in our business,
we may be  unable  to  develop  profitable  operations.  Our  management  has no
experience in a retail or Internet-based  business.  We may be unable to compete
effectively  or  develop  profitable  operations  against  companies  that  have
management with retail or Internet experience.

Because we have no full-time  employees and our  management  now devotes and may
continue to devote limited time to our business, we may never become profitable.
We have no full-time employees. Our president, who is our only officer, director
and employee,  spends approximately 10 to 20 hours monthly on our business.  The
limited  amount of time  management  devotes to our business  activities  may be
inadequate to implement our plan of operations or become profitable.

We may not meet the National  Association of Security  Dealers  exchange listing
requirements  which  will be  implemented  on  January 1, 2003 which may lead to
increased  investment  risk and  inability  to sell your  shares.  The  National
Association  of Security  Dealers has  proposed to the  Securities  and Exchange
Commission that the  Over-the-Counter  Bulletin Board be phased out beginning on
January 1, 2003 and  eliminated  as of June 1, 2003, to be replaced with the BBX
Exchange. If this occurs, we may not meet the new exchange listing requirements,
including  the  requirement  to  have at  least  one  hundred  (100)  round  lot
shareholders and a float of 200,000 shares. We currently do not meet the listing
requirements  of the BBX  Exchange.  Should  we fail  to meet  the new  exchange
requirements, you may lose your entire investment.



                                                                              16
<PAGE>

Item 7. Financial Statements.

                          REPORT OFINDEPENDENT AUDITORS

Stockholders and Board of Directors
Internet Recreation, Inc.

We have audited the accompanying balance sheet of Internet  Recreation,  Inc. (A
Development  Stage  Company) as of May 31, 2002,  and the related  statements of
operations, stockholders' equity and cash flows for the year ended May 31, 2002.
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 audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  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 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,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Internet  Recreation,  Inc. (A
Development Stage Company) as of May 31, 2002, and results of its operations and
its cash flows for the year ended May 31, 2002,  in conformity  with  accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 4 to the
financial statements,  the Company has suffered a loss from operations and is in
the development stage. These factors raise substantial doubt about the Company's
ability to continue  as a going  concern.  Management's  plans in regard to this
matter are also discussed in Note 4. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Stark Winter Schenkein & Co., LLP

Denver, Colorado
August 2, 2002



                                                                              17
<PAGE>

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Internet Recreation, Inc.
(A Development Stage Enterprise)
Boca Raton, Florida

We  have  audited  the  accompanying   statements  of  operations,   changes  in
stockholders'  equity and cash flows for the five months and year then ended and
the period  from March 10,  1999  (Inception)  through  May 31, 2001 of Internet
Recreation, Inc., a development stage enterprise. 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  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the results of its operations and its cash flows for the
five months and year then ended and the period  from March 10, 1999  (Inception)
through  May  31,  2001  in  conformity  with  generally   accepted   accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 5 to the
financial  statements,  the Company has experienced a loss 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 in regard to
these  matters are also  described in Note 5. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.



                                               /s/ Durland & Company, CPAs, P.A.
                                               ---------------------------------
                                               Durland & Company, CPAs, P.A.
Palm Beach, Florida
July 26, 2001


                                                                              18
<PAGE>

                            INTERNET RECREATION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                  MAY 31, 2002

                                     ASSETS

CURRENT ASSETS
   Cash                                                            $        442
                                                                   ------------

OTHER ASSETS
   Web site                                                              20,833
                                                                   ------------
                                                                   $     21,275

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Total current liabilities                                    $       --
                                                                   ------------


STOCKHOLDERS' EQUITY
  Preferred stock, $.0001 par value, 100,000,000
   shares authorized, none issued and outstanding                          --
  Common stock, $.0001 par value, 100,000,000
   shares authorized, 9,625,000 shares
   issued and outstanding                                                   963
  Additional paid in capital                                             42,345
  (Deficit) accumulated during the development stage                    (22,033)
                                                                   ------------
                                                                         21,275

                                                                   $     21,275
                                                                   ============

             See the accompanying notes to the financial statements.


                                                                              19
<PAGE>
<TABLE>
<CAPTION>

                            INTERNET RECREATION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
    YEAR ENDED DECEMBER 31, 2000, FIVE MONTHS ENDED MAY 31, 2001, YEAR ENDED
   MAY 31, 2002 AND THE PERIOD FROM INCEPTION (MARCH 10, 1999) TO MAY 31, 2002



                                                       Year       Five Months         Year
                                                      Ended          Ended           Ended       Inception to
                                                  December 31,      May 31,         May 31,         May 31,
                                                       2000           2001            2002            2002
                                                  ------------   ------------    ------------    ------------
<S>                                               <C>            <C>             <C>             <C>

REVENUE
   Net sales                                      $       --     $       --      $       --      $       --
                                                  ------------   ------------    ------------    ------------

OPERATING COSTS AND EXPENSES
   General and administrative                             --            1,754          19,354          22,033
                                                  ------------   ------------    ------------    ------------

NET (LOSS)                                        $       --     $     (1,754)   $    (19,354)   $    (22,033)
                                                  ============   ============    ============    ============

PER SHARE INFORMATION (basic and fully diluted)

Weighted average common shares outstanding           9,250,000      9,520,400       9,618,482       9,410,503
                                                  ============   ============    ============    ============

(Loss) per share                                  $       --     $      (0.00)   $      (0.00)   $      (0.00)
                                                  ============   ============    ============    ============
</TABLE>

      See the accompanying notes to the financial statements.

                                                                              20
<PAGE>
<TABLE>
<CAPTION>

                            INTERNET RECREATION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF STOCKHOLDERS' EQUITY
             PERIOD FROM INCEPTION (MARCH 10, 1999) TO MAY 31, 2002


                                                                                   (Deficit)
                                                                                  Accumulated
                                            Common Stock             Additional    During the
                                      --------------------------      Paid in     Development
                                         Shares         Amount        Capital        Stage          Total
                                      -----------    -----------    -----------   -----------    -----------
<S>                                                  <C>            <C>           <C>            <C>

Balance at inception                         --      $      --      $      --     $      --      $      --

Common shares issued for services
  at inception at $.0001 per share      9,250,000            925           --            --              925
Net (loss) for the period                    --             --             --            (925)          (925)
                                      -----------    -----------    -----------   -----------    -----------
Balance December 31, 1999  and
 December 31, 2000                      9,250,000            925           --            (925)          --

Common shares issued for services
  at $.0001 per share                     330,000             33           --            --               33
Common shares issued for cash
  at $.25 per share                        22,000              2          5,498          --            5,500
Net (loss) for the period                    --             --             --          (1,754)        (1,754)
                                      -----------    -----------    -----------   -----------    -----------
Balance May 31, 2001                    9,602,000            960          5,498        (2,679)         3,779

Common shares issued for services
  at $.25 per share                         7,000              1          1,749          --            1,750
Common shares issued for cash
  at $.25 per share                        16,000              2          3,998          --            4,000
Common shares issued for web site
 at $.25 per share                        100,000             10         24,990          --           25,000
Return of common shares for no
 consideration by an officer             (100,000)           (10)            10          --
Contribution of services by officer          --             --            6,000          --            6,000
Cash contribution by an officer              --             --              100          --              100
Net (loss) for the year                      --             --             --         (19,354)       (19,354)
                                      -----------    -----------    -----------   -----------    -----------
Balance May 31, 2002                    9,625,000    $       963    $    42,345   $   (22,033)   $    21,275
                                      ===========    ===========    ===========   ===========    ===========
</TABLE>




             See the accompanying notes to the financial statements.

                                                                              21
<PAGE>
<TABLE>
<CAPTION>

                            INTERNET RECREATION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
    YEAR ENDED DECEMBER 31, 2000, FIVE MONTHS ENDED MAY 31, 2001, YEAR ENDED
   MAY 31, 2002 AND THE PERIOD FROM INCEPTION (MARCH 10, 1999) TO MAY 31, 2002

                                                      Year        Five Months         Year
                                                     Ended           Ended           Ended       Inception to
                                                  December 31,      May 31,         May 31,         May 31,
                                                       2000           2001            2002            2002
                                                  ------------   ------------    ------------    ------------
<S>                                               <C>            <C>             <C>             <C>

Cash flow from operations:
Net (loss)                                        $         --   $     (1,754)   $    (19,354)   $    (22,033)
Adjustments to reconcile net (loss) to net cash
 used in operating activities:
Amortization                                                --           --             4,167           4,167
Common shares issued for services                           --             33           3,750           4,708
Contribution of services to capital                         --           --             6,000           6,000
                                                  ------------   ------------    ------------    ------------
  Net cash (used in) operating activities                   --         (1,721)         (5,437)         (7,158)
                                                  ------------   ------------    ------------    ------------

Cash flows from investing activities:
  Net cash (used in) investing activities                   --           --              --              --
                                                  ------------   ------------    ------------    ------------

Cash flows from financing activities:
Common shares issued for cash                               --          5,500           2,000           7,500
Cash contribution by officer                                --           --               100             100
                                                  ------------   ------------    ------------    ------------
  Net cash provided by financing activities                 --          5,500           2,100           7,600
                                                  ------------   ------------    ------------    ------------

Increase (decrease) in cash                                 --          3,779          (3,337)            442

Cash -  beginning of period                                 --           --             3,779            --
                                                  ------------   ------------    ------------    ------------

Cash - end of period                              $         --   $      3,779    $        442    $        442
                                                  ============   ============    ============    ============


Supplemental Cash Flow Disclosures:
Cash paid for:
 Interest                                         $         --   $       --      $       --      $       --
                                                  ============   ============    ============    ============
 Income taxes                                     $         --   $       --      $       --      $       --
                                                  ============   ============    ============    ============

Non Cash Investing and Financing Activities:
 Issuance of common shares for web site           $         --   $       --      $     25,000    $     25,000
                                                  ============   ============    ============    ============
</TABLE>





             See the accompanying notes to the financial statements.

                                                                              22
<PAGE>

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Company  was  incorporated  on March 10,  1999 in the State of Florida.  The
Company is in the development  stage and its intent is to conduct  business as a
seller of children's  products on the internet.  The Company had chosen December
31, as a year end,  changed  its year end to May 31 during  June 2001 and had no
significant activity from inception to May 31, 2002.

Reclassifications

Certain items presented in the previous periods  financial  statements have been
reclassified to conform to current year presentation.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Financial Instruments

Fair value estimates  discussed herein are based upon certain market assumptions
and  pertinent  information  available to  management  as of May 31,  2002.  The
respective  carrying  value of certain  on-balance-sheet  financial  instruments
approximated their fair values.  These financial  instruments include cash. Fair
values  were  assumed  to  approximate   carrying  values  for  these  financial
instruments  because  they are short term in nature and their  carrying  amounts
approximate fair values.

Net Income (Loss) Per Common Share

The Company  calculates  net income (loss) per share as required by Statement of
Financial  Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings
(loss) per share is  calculated  by dividing  net income  (loss) by the weighted
average number of common shares  outstanding  for the period.  Diluted  earnings
(loss) per share is  calculated  by dividing  net income  (loss) by the weighted
average  number  of  common  shares  and  dilutive   common  stock   equivalents
outstanding.  During  periods in which the Company  incurs  losses  common stock
equivalents, if any, are not considered, as their effect would be anti dilutive.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

Segment Information

The Company  follows SFAS 131,  Disclosures  about Segments of an Enterprise and
Related Information."  Certain information is disclosed,  per SFAS 131, based on
the  way  management  organizes  financial   information  for  making  operating
decisions and assessing performance.  The Company currently operates in a single
segment and will  evaluate  additional  segment  disclosure  requirements  as it
expands its operations.


                                                                              23
<PAGE>

Income Taxes

The Company  follows SFAS 109  "Accounting  for Income  Taxes" for recording the
provision for income  taxes.  Deferred tax assets and  liabilities  are computed
based upon the difference  between the financial  statement and income tax basis
of assets and  liabilities  using the enacted  marginal tax rate applicable when
the related  asset or liability is expected to be realized or settled.  Deferred
income  tax  expenses  or  benefits  are  based on the  changes  in the asset or
liability  each period.  If available  evidence  suggests that it is more likely
than not  that  some  portion  or all of the  deferred  tax  assets  will not be
realized, a valuation allowance is required to reduce the deferred tax assets to
the amount that is more likely than not to be realized.  Future  changes in such
valuation  allowance are included in the provision for deferred  income taxes in
the period of change.

Web Site Development Costs

The Company's  web site will comprise  multiple  features and  offerings.  It is
anticipated  that the offerings will require future  development and refinement.
In connection  with the  development of its site, the Company may incur external
costs for hardware,  software,  and consulting services,  and internal costs for
payroll and related expenses of its technology  employees  directly  involved in
the  development.  All hardware costs will be  capitalized.  Purchased  software
costs  will be  capitalized  in  accordance  with  Statement  of  Position  98-1
"Accounting  for the  Costs of  Computer  Software  Developed  or  Obtained  for
Internal  Use".  All other costs will be reviewed for  determination  of whether
capitalization  or  expense  as  product  development  cost  is  appropriate  in
accordance  with  Statement of Position  98-1.  The  Company's web site is being
amortized  over  its  estimated  useful  life of 3 years  and is  stated  net of
accumulated amortization of $4,167.

Stock-Based Compensation

The Company  accounts for equity  instruments  issued to employees  for services
based on the fair value of the equity instruments issued and accounts for equity
instruments  issued  to other  than  employees  based  on the fair  value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.

The Company  accounts for stock based  compensation in accordance with SFAS 123,
"Accounting  for  Stock-Based  Compensation."  The  provisions of SFAS 123 allow
companies  to either  expense the  estimated  fair value of stock  options or to
continue  to follow the  intrinsic  value  method set forth in APB  Opinion  25,
"Accounting  for Stock Issued to Employees"  (APB 25) but disclose the pro forma
effects on net income  (loss) had the fair value of the options  been  expensed.
The Company has elected to continue to apply APB 25 in accounting  for its stock
option incentive plans.

Recent Pronouncements

In July 2001, the Financial  Accounting  Standards Board (FASB) issued SFAS 141,
Business Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
effective for all business combinations  completed after June 30, 2001. SFAS 142
is effective for the year beginning January 1, 2002;  however certain provisions
of that Statement apply to goodwill and other intangible assets acquired between
July 1, 2001,  and the effective  date of SFAS 142. The Company does not believe
the adoption of these  standards  will have a material  impact on its  financial
statements.

In July  2001,  the FASB  issued  SFAS  143,  Accounting  for  Asset  Retirement
Obligations.  This statement  addresses  financial  accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs.  This Statement  applies to all entities.  It
applies to legal obligations associated with the retirement of long-lived assets
that result from the acquisition,  construction, development and (or) the normal
operation of a long-lived asset, except for certain obligations of lessees. This
Statement  is  effective  for  financial  statements  issued  for  fiscal  years
beginning after June 15, 2002. The Company does not believe the adoption of this
standard will have a material impact on its financial statements.


                                                                              24
<PAGE>

In August  2001,  the FASB issued SFAS 144,  Accounting  for the  Impairment  or
Disposal of Long-Lived Assets. This statement addresses financial accounting and
reporting for the  impairment or disposal of  long-lived  assets and  supersedes
FASB Statement No. 121,  Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to Be Disposed Of. The  provisions  of the statement are
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001.  The Company is evaluating the impact of the adoption of this
standard  and has not yet  determined  the effect of adoption  on its  financial
position and results of operations.

In April 2002,  the FASB issued SFAS 145,  Rescission of FASB  Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.  SFAS
145 rescinds the  provisions of SFAS No. 4 that  requires  companies to classify
certain  gains and losses  from debt  extinguishments  as  extraordinary  items,
eliminates  the  provisions  of SFAS No. 44  regarding  transition  to the Motor
Carrier  Act of 1980 and amends the  provisions  of SFAS No. 13 to require  that
certain  lease  modifications  be treated as sale  leaseback  transactions.  The
provisions of SFAS 145 related to  classification  of debt  extinguishments  are
effective for fiscal years  beginning after May 15, 2002. The provisions of SFAS
145 related to lease modifications is effective for transactions occurring after
May 15, 2002.  Earlier  application is encouraged.  The Company does not believe
the adoption of these  standards  will have a material  impact on its  financial
statements.

Note 2. STOCKHOLDERS' EQUITY

At  inception,  the  Company  issued  9,000,000  shares of its common  stock for
services  provided to the Company to an officer and 250,000 shares of its common
stock for legal  services.  These  shares  have been valued at $.0001 per share,
which approximates the fair market value of the services provided.  Accordingly,
the Company has recorded a charge to operations of $925 during the period.

During  January and May 2001 the Company  issued  330,000 shares of common stock
for  services  valued at $.0001 per share,  which  approximates  the fair market
value of the shares  issued.  Accordingly,  the Company has recorded a charge to
operations of $33 during the period.

During  May 2001 the  Company  issued  22,000  shares of  common  stock for cash
aggregating $5,500.

During  August 2001 the Company  issued  8,000  shares of common  stock for cash
aggregating $2,000.

During August 2001 the Company  issued 7,000 shares of common stock for services
valued at $.25 per share, which approximates the fair market value of the shares
issued.  Accordingly,  the Company has recorded a charge to operations of $1,750
during the period.

During December 2001 the Company issued 100,000 shares of common stock valued at
$.25 per share,  which  approximates the fair market value of the shares issued,
in exchange for the  construction of its web site. In addition,  during December
2001 an officer of the Company  returned  100,000  shares of common stock to the
Company for no consideration.

During  February  2002 the Company  issued 8,000 shares of common stock for cash
aggregating $2,000.

During  the year  ended  May 31,  2002 an  officer  of the  Company  contributed
services valued at $6,000 and cash of $100 to the capital of the Company.

Note 3. INCOME TAXES

The Company  accounts  for income taxes under SFAS 109,  "Accounting  for Income
Taxes",  which  requires use of the  liability  method.  SFAS 109 provides  that
deferred  tax assets  and  liabilities  are  recorded  based on the  differences
between the tax bases of assets and liabilities  and their carrying  amounts for
financial reporting purposes, referred to as temporary differences. Deferred tax
assets  and  liabilities  at the end of each  period  are  determined  using the
currently  enacted tax rates  applied to taxable  income in the periods in which
the deferred tax assets and liabilities are expected to be settled or realized.


                                                                              25
<PAGE>

The provision for income taxes differs from the amount  computed by applying the
statutory  federal income tax rate to income before  provision for income taxes.
The sources and tax effects of the differences are as follows:

         Income tax provision at
          the federal statutory rate                      34 %
         Effect of operating losses                      (34)%
                                                    ----------
                                                          --
                                                    ==========

As of May 31,  2002,  the  Company  has a net  operating  loss  carryforward  of
approximately  $22,000.  This loss will be  available to offset  future  taxable
income.  If not used,  this  carryforward  will expire in 2022. The deferred tax
asset relating to the operating loss carryforward has been fully reserved at May
31, 2002.

Note 4. BASIS OF REPORTING

The Company's financial statements are presented on a going concern basis, which
contemplates  the  realization of assets and  satisfaction of liabilities in the
normal course of business.

The Company has experienced a loss from operations  during its development stage
as a result of its investment  necessary to achieve its operating plan, which is
long-range in nature. For the period from inception to May 31, 2002, the Company
incurred a net loss of $22,033.  In  addition,  the  Company has no  significant
assets or revenue generating operations.

The  Company's  ability to continue as a going  concern is  contingent  upon its
ability to attain profitable  operations by securing  financing and implementing
its business  plan. In addition,  the  Company's  ability to continue as a going
concern must be considered in light of the problems,  expenses and complications
frequently  encountered by entrance into established markets and the competitive
environment in which the Company operates.

The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.

Item  8.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
Financial  Disclosure.  Since inception,  we have not had any disagreements with
our accountants.

On March 18, 2002, we changed accountants from Durland & Company,  CPAs, P.A. to
Stark Winter Schenkein & Co., LLP. In connection with this change in accountants
we disclosed in our Form 8-K dated March 19, 2002 that:
(a) The financial  statements reported on by Durland & Company,  CPAs, P.A. were
not subject to an adverse or qualified opinion, or a disclaimer of opinion,  and
were not modified as to uncertainty, audit scope or accounting principles during
the past two fiscal years, and the interm period through March 18, 2002, except
that the  financial  statements  for the years ended  December 31, 2000 and 1999
contained going concern  qualifications;  (b) the decision to change accountants
was  approved  by the  Registrant's  Board  of  Directors;  (c)  there  were  no
disagreements related to accounting principles or practices, financial statement
disclosure,  or auditing scope or procedure during the past two fiscal years and
the interim  period  through  March 18, 2002;  (d) on March 18, 2002, we engaged
Stark Winter Schenkein & Co., LLP as our independent accountants; and (e) we did
not consult with Stark Winter Schenkein & Co., LLP regarding any matter prior to
its engagement.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
Each of our  directors  is  elected at the annual  meeting of  stockholders  and
serves until the next annual  meeting and until his or her  successor is elected


                                                                              26
<PAGE>
<TABLE>
<CAPTION>

and  qualified,  or until his or her earlier death,  resignation or removal.  No
compensation is currently paid to our sole officer or director for her services.

No Committees of the Board of Directors.
We do not currently have standing audit,  nominating and compensation committees
of our Board of Directors or committees performing similar functions.

Significant Employees.
There are no significant employees other than our president.

Family Relationships.
There are no family  relationships  among our  officers,  directors,  or persons
nominated for such positions.

Legal Proceedings.
None of our officers,  directors,  or persons  nominated for such  positions and
none of our  promoters  or  significant  employees  have been  involved in legal
proceedings that would be material to an evaluation of our management.

Compliance  with Section 16(a) of the  Securities  Exchange Act of 1934 requires
our directors  and executive  officers and persons who own more than ten percent
(10%)  of a  registered  class of our  equity  securities  to file  with the SEC
initial  reports of ownership  and reports of changes in ownership of our common
stock and our other equity securities.  Officers, directors and greater than ten
percent (10%)  shareholders  are required by SEC  regulations to furnish us with
copies of all  Section  16(a) forms they filed.  To our  knowledge,  none of our
officers,  directors of shareholders  were  delinquent in any necessary  filings
under Section 16(a).

The following table sets forth the names and ages of our directors and officers,
the principal offices and positions with us held by such persons.  Our executive
officers are elected annually by our Board of Directors. Our Directors serve one
year terms until their  successors  are elected.  The executive  officers  serve
terms of one year or until their death,  resignation  or removal by the Board of
Directors.


------------------- ------- ---------------------------------- -----------------
NAME                AGE     POSITION                           TERM
------------------- ------- ---------------------------------- -----------------
Kathleen (Patty)    33      President/Secretary/Chairman of    1 year
Hackler                     the Board
------------------- ------- ---------------------------------- -----------------

Item 10.  Executive Compensation.
The  following  table sets forth  certain  summary  information  concerning  the
compensation  that we have  paid to our  executive  officers  or which  has been
accrued for each of our last three completed fiscal years as of May 31, 2002.

                           SUMMARY COMPENSATION TABLE

                                                              Other             Restricted   Securities     LTIP      All Other
                                                              Annual            Stock        underlying    payouts  Compensation
Name and Principal Position        Year    Salary    Bonus    Compensation      award(s)     options/SARs    ($)         ($)
        (a)                         (b)     (c)       (d)        (e)              (f)            (g)         (h)         (i)
<S>                                <C>       <C>       <C>        <C>              <C>            <C>         <C>         <C>
Kathleen (Patty) Hackler -         2000      0         0          0                0              0           0           0
Director
                                   2001      0         0          0                0              0           0           0
                                   2002      0         0          0                0              0           0           0
Cathy Williamson - President/      2000      0         0          0                0              0           0           0
Secretary/Director*
                                   2001      0         0   50,000 shares           0              0           0           0
                                   2002      0         0          0                0              0           0           0
</TABLE>

*On  March  22,  2002,   Cathy   Williamson   resigned  from  her  positions  as
President/Secretary/Director.

                                                                              27
<PAGE>

Item 11. Security  Ownership of Certain  Beneficial  Owners and Management.  The
following tables set forth the ownership as of June 30, 2002 by:

     o    Each  shareholder  known  by us to own  beneficially  more  than  five
          percent (5%) of our common stock;
     o    Each executive officer;
     o    Each director or nominee to become a director; and
     o    All directors and executive officers as a group.

(i) BENEFICIAL OWNERS OF MORE THAN 5%:

Security Ownership of Certain Beneficial Owners:
--------------- ------------------------- --------------------- ----------------
Title Of Class  Name and Address of       Amount and Nature of  Percent of Class
                Beneficial Owner          Beneficial Owner
--------------- ------------------------- --------------------- ----------------
Common          Kathleen (Patty) Hackler  9,000,000             93.5%
                24 Locust Street          Direct
                Quitman, Arkansas 72131
--------------- ------------------------- --------------------- ----------------

(ii) DIRECTORS AND NOMINEES:

Security Ownership of Management:
--------------- ------------------------- --------------------- ----------------
Title Of Class  Name and Address          Amount and Nature of  Percent of Class
                                          Ownership
--------------- ------------------------- --------------------- ----------------
Common          Kathleen (Patty) Hackler  9,000,000             93.5%
                24 Locust Street          Direct
                Quitman, Arkansas 72131
--------------- ------------------------- --------------------- ----------------

This table is based upon  information  derived  from our stock  records.  Unless
otherwise  indicated in the footnotes to this table, we believe that each of the
shareholders  named in this table has sole or shared voting and investment power
with respect to the shares indicated as beneficially  owned. Except as otherwise
noted herein, we are not aware of any arrangements  which may result in a change
in our control.

Item 12. Certain Relationships and Related Transactions.
On March 10, 1999, we issued 9,000,000 shares of our common stock to our
director, Kathleen (Patty) Hackler, for services rendered in connection with our
corporate formation.

On May 21,  2001,  we issued  50,000  shares of our  common  stock to our former
president, Cathy Williamson, for services rendered as our president.

Other  than the  above  transactions,  we have  not  entered  into any  material
transactions  with any director,  executive  officer,  and nominee for director,
beneficial  owner of five  percent (5%) or more of our common  stock,  or family
member  of such  persons.  Also,  we have  not had  any  transactions  with  any
promoter. We are not a subsidiary of any company.

                                     PART IV

Item 13. Exhibits and Reports on Form 8-K.
(a)      Exhibits
------ --------------------------------------------------
3.1      Articles of Incorporation*
----- ---------------------------------------------------
3.2      Amendment to Articles of Incorporation*
----- ---------------------------------------------------


                                                                              28
<PAGE>
<TABLE>
<CAPTION>

3.3      Bylaws*
----- ---------------------------------------------------
5.       Opinion of Hamilton, Lehrer & Dargan, P.A.*
----- ---------------------------------------------------
10.1     Agreement with Cathy Williamson*
----- ---------------------------------------------------
10.2     Agreement with Commission Junction*
----- ---------------------------------------------------
10.3     Agreement with Link Share*
----- ---------------------------------------------------
10.4     Agreement with QuinStreet, Inc.**
----- ---------------------------------------------------
10.5     Agreement with Keynetics, Inc.**
----- ---------------------------------------------------
23.1     Consent of Durland & Company, CPA's, P.A.
----- ---------------------------------------------------
99.1     Certification  pursuant to 18 U.S.C. Section
         1350, as adopted  pursuant to Section 906 of
         the Sarbanes-Oxley Act of 2002.
----- ----------------------------------------------------
*Denotes  exhibits  previously  filed in our Form SB-2 on August 21, 2001,  File
number 333-68020, which is hereby incorporated by reference.
** Denotes  exhibits  previously  filed in our Form  SB-2/A on November 7, 2001,
File number 333-68020, which is hereby incorporated by reference.

(b)      Reports on Form 8-K
We filed a Form 8-K  report  on March  19,  2002  regarding  Item 4 of Form 8-K,
"Changes  in  Registrant's   Certifying  Account."   Specifically,   we  changed
accountants from Durland & Co., CPAs, P.A. to Stark Winter Schenkein & Co., LLP,
which is hereby incorporated by reference.

(c) Our Registration  Statement on Form SB-2 and all amendments thereto filed on
August 21, 2001 and amended on November 7, 2001, which is hereby incorporated by
reference.

                                   SIGNATURES

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


                            INTERNET RECREATION, INC.
                                  (Registrant)

Date: August 22, 2002              By:  /s/ Kathleen (Patty) Hackler,
                                       -----------------------------------------
                                       President (Principal  Executive Officer),
                                        Secretary,Chairman of the Board

                                   SIGNATURES

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


Signature                       Title                                     Date
------------------------------------------------------------------------------------------
<S>                             <C>                                       <C>
/s/ Kathleen (Patty) Hackler    President (Principal Executive Officer),  August  22, 2002
----------------------------    Secretary, Chairman of the Board
</TABLE>




                                                                              29