FORM 10-KSB
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X] ANNUAL  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
    1934 For the fiscal year ended: February 28, 2002


                        Commission file number 000-30129

                              S.D.E. HOLDINGS 2, INC.
                               -------------------
                 (Name of small business issuer in its charter)

        Nevada                                      84-1529309
        --------                                    ----------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

                      7609 Ralston Road, Arvada, CO 80002
                    ----------------------------------------
                    (Address of principal executive offices)

                   Issuer's telephone number: (303) 422-8127
                                              --------------
Securities registered under Section 12(b) of the Exchange Act: None
                                                               -----

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
no par value

(Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period  that the issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days.

        Yes       No   X
           ----       ----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of issuer's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

State issuer's  revenues for its most recent fiscal year: $0

As of February 28, 2002,  no shares of the Company's  Common Stock,  no par
value per share, were held by non-affiliates. There was no active trading market
for the Company's Common Stock at February 28, 2002, and no quote was available.

The  number  of  shares  of Common  Stock of the  registrant  outstanding  as of
February 28, 2002, were 1,000,000. Documents incorporated by reference. None



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                                TABLE OF CONTENTS

PART I                                                                     PAGE

     Item 1.   Description of Business                                         1
     Item 2.   Description of Property                                         9
     Item 3.   Legal Proceedings                                               9
     Item 4.   Submission of Matters to a Vote of Security Holders             9


PART II

     Item 5.   Market for Common Equity and Related Stockholder Matters        9
     Item 6.   Management's Discussion and Analysis or Plan of Operation      12
     Item 7.   Financial Statements                                           16
     Item 8.   Changes in and Disagreements With Accountants on Accounting    16
               and Financial Disclosure


PART III

     Item 9.   Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act              16
     Item 10.  Executive Compensation                                         19
     Item 11.  Security Ownership of Certain Beneficial Owners and Management 19
     Item 12.  Certain Relationships and Related Transactions                 21
     Item 13.  Exhibits and Reports on Form 8-K                               21


SIGNATURES                                                                    22




<PAGE>


PART I

Item 1 - Description of Business

Background

     The Company was  incorporated  under the laws of the State of Nevada on
January 19, 2000, and is in the early  developmental and promotional  stages. To
date the  Company's  activities  have  been  organizational  ones,  directed  at
developing  its business plan and raising its initial  capital.  The Company was
formed  to seek  business  opportunities  and is  currently  a  "shell"  with no
business.  The Company  has no  commercial  operations  as of date  hereof.  The
Company has no full-time employees and owns no real estate.

General Business Plan

        The Company's purpose is to seek, investigate and, if such investigation
warrants,  acquire an  interest  in business  opportunities  presented  to it by
persons  or firms who or which  desire  to seek the  perceived  advantages  of a
corporation  which is registered under the Securities  Exchange Act of 1934 (the
oExchange  Acto).  The  Company  will not  restrict  its search to any  specific
business, industry or geographical location and the Company may participate in a

                                      -1-

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business  venture  of  virtually  any kind or  nature.  This  discussion  of the
proposed business is purposefully  general and is not meant to be restrictive of
the  Company's  virtually  unlimited  discretion  to search  for and enter  into
potential business opportunities.  Management anticipates that it may be able to
participate  in only one  potential  business  venture  because  the Company has
nominal assets and limited financial resources. See "Financial Statements." This
lack of diversification  should be considered a substantial risk to shareholders
of the Company because it will not permit the Company to offset potential losses
from one venture against gains from another.

        The Company may seek a business  opportunity  with  entities  which have
recently commenced  operations,  or which wish to utilize the public marketplace
in order to raise  additional  capital in order to expand  into new  products or
markets,  to develop a new product or service or for other  corporate  purposes.
The  Company may  acquire  assets and  establish  wholly-owned  subsidiaries  in
various businesses or acquire existing businesses as subsidiaries.

        The Company anticipates that the selection of a business  opportunity in
which to  participate  will be  complex  and  extremely  risky.  Due to  general
economic conditions,  rapid technological advances being made in some industries
and shortages of available capital,  management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation.  Such
perceived  benefits may include  facilitating  or  improving  the terms on which
additional  equity  financing may be sought,  providing  liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable  statutes) for all shareholders and other factors.
Potentially,  available  business  opportunities  may  occur  in many  different
industries and at various stages of development, all of which will make the task
of  comparative  investigation  and  analysis  of  such  business  opportunities
extremely difficult and complex.

        The Company  has,  and will  continue to have,  no capital with which to
provide the owners of business  opportunities with any significant cash or other
assets.  However,  management  believes  that the Company  will be able to offer
owners of  acquisition  candidates  the  opportunity  to  acquire a  controlling
ownership  interest in a publicly  registered company without incurring the cost
and time  required  to  conduct an initial  public  offering.  The owners of the
business  opportunities  will,  however,  incur significant legal and accounting
costs in connection  with the acquisition of a business  opportunity,  including
the costs of  preparing  Form 8-Ks,  10-Qs or  10-KSBs,  agreements  and related
reports and documents. The Exchange Act specifically requires that any merger or
acquisition candidate comply with all applicable reporting  requirements,  which
include  providing  audited  financial  statements  to be  included  within  the
numerous filings relevant to complying with the Exchange Act. Nevertheless,  the
officers and directors of the Company have not conducted market research and are
not aware of  statistical  data which would support the perceived  benefits of a
merger or acquisition transaction for the owners of a business opportunity.

        The analysis of new business  opportunities  will be  undertaken  by, or
under the  supervision  of, the officers and  directors of the Company,  none of
whom is a professional  business analyst.  Management  intends to concentrate on
identifying  preliminary prospective business opportunities which may be brought
to its attention  through  present  associations  of the Company's  officers and
directors, or by the Company's  shareholders.  In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial  and  managerial  resources;   working  capital  and  other  financial
requirements; history of operations, if any; prospects for the future; nature of
present and  expected  competition;  the quality and  experience  of  management
services which may be available and the depth of that management;  the potential
for further research, development or exploration;  specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed  activities
of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition or acceptance of products,  services or trades;
name identification;  and other relevant factors.  Officers and directors of the
Company will meet  personally  with management and key personnel of the business
opportunity as part of their investigation.  To the extent possible, the Company

                                      -2-

<PAGE>

intends to utilize  written reports and personal  investigation  to evaluate the
above factors.  The Company will not acquire or merge with any company for which
audited  financial  statements  cannot be obtained within a reasonable period of
time after closing of the proposed transaction.

        Management of the Company,  while not especially  experienced in matters
relating to the new business of the  Company,  shall rely upon their own efforts
and, to a much lesser  extent,  the efforts of the  Company's  shareholders,  in
accomplishing the business  purposes of the Company.  It is not anticipated that
any outside consultants or advisors,  other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business purposes
described herein. However, if the Company does retain such an outside consultant
or  advisor,  any cash fee  earned  by such  party  will  need to be paid by the
prospective merger/acquisition candidate, as the Company has no cash assets with
which to pay such  obligation.  There have been no contracts or agreements  with
any outside consultants and none are anticipated in the future.

        The Company will not restrict its search to any specific  kind of firms,
but may acquire a venture  which is in its  preliminary  or  development  stage,
which is  already  in  operation  or which is in  essentially  any  stage of its
corporate  life.  It is  impossible  to  predict  at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded or may
seek other perceived advantages which the Company may offer.

        It is  anticipated  that the Company will incur nominal  expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses,  present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company. However, the only opportunity which management has to have these
loans  repaid  will be  from a  prospective  merger  or  acquisition  candidate.
Management has agreed among  themselves  that the repayment of any loans made on
behalf of the Company will not impede,  or be made conditional in any manner, on
consummation of a proposed transaction.

Acquisition of Opportunities

        In implementing a structure for a particular business  acquisition,  the
Company  may become a party to a merger,  consolidation,  reorganization,  joint
venture or licensing  agreement with another  corporation or entity. It may also
acquire  stock or assets  of an  existing  business.  On the  consummation  of a
transaction,  it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition,  the Company's
directors may, as part of the terms of the acquisition  transaction,  resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell  their  stock in the  Company.  Any and all such sales will only be made in
compliance  with the  securities  laws of the United  States and any  applicable
state.

        It is anticipated that any securities issued in any such  reorganization
would be issued in reliance upon exemption from  registration  under  applicable
federal  and  state  securities  laws.  In  some  circumstances,  however,  as a
negotiated element of its transaction,  the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter.  If such registration  occurs, of which there can be
no assurance,  it will be  undertaken by the surviving  entity after the Company
has  successfully  consummated  a merger or  acquisition  and the  Company is no
longer considered a "shell" company. Until such time as this occurs, the Company

                                      -3-

<PAGE>

will not  attempt  to  register  any  additional  securities.  The  issuance  of
substantial  additional  securities  and their  potential  sale into any trading
market  which may  develop in the  Company's  securities  may have a  depressive
effect on the value of the Company's  securities in the future, if such a market
develops, of which there is no assurance.

        While the actual  terms of a  transaction  to which the Company may be a
party cannot be  predicted,  it may be expected that the parties to the business
transaction  will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free  treatment under the Code, it may be necessary for the owners of
the acquired  business to own 80% or more of the voting  stock of the  surviving
entity.  In such event,  the  shareholders of the Company would retain less than
20% of the issued and outstanding  shares of the surviving  entity,  which would
result in significant dilution in the equity of such shareholders.

        As part of the  Company's  investigation,  officers and directors of the
Company will meet personally  with  management and key personnel,  may visit and
inspect  material  facilities,  obtain  independent  analysis or verification of
certain information  provided,  check references of management and key personnel
and take other reasonable investigative measures, to the extent of the Company's
limited financial  resources and management  expertise.  The manner in which the
Company  participates  in an  opportunity  will  depend  on  the  nature  of the
opportunity,  the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative  negotiation  strength of the
Company and such other management.

     With respect to any merger or acquisition, negotiations with target company
management  are expected to focus on the  percentage of the Company which target
company  shareholders  would acquire in exchange for all of their share holdings
in the target company.  Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
substantially  lesser percentage ownership interest in the Company following any
merger or  acquisition.  The percentage  ownership may be subject to significant
reduction in the event the Company  acquires a target  company with  substantial
assets.  Any merger or  acquisition  effected  by the Company can be expected to
have a  significant  dilutive  effect on the  percentage  of shares  held by the
Company's then-shareholders. If required to so do under relevant law, management
of  the  Company  will  seek  shareholder  approval  of  a  proposed  merger  or
acquisition via a Proxy Statement. However, such approval would be assured where
management  supports such a business  transaction  because management  presently
controls  sufficient  shares of the Company to effectuate a positive vote on the
proposed  transaction.  Further, a prospective  transaction may be structured so
that  shareholder  approval  is not  required,  and  such a  transaction  may be
effectuated by the Board of Directors without shareholder approval.

        The  Company will participate  in a  business   opportunity  only  after
the negotiation and execution of appropriate  written  agreements.  Although the
terms of such  agreements  cannot be predicted,  generally such  agreements will
require  some  specific  representations  and  warranties  by all of the parties
thereto,  will  specify  certain  events of  default,  will  detail the terms of
closing and the conditions  which must be satisfied by each of the parties prior
to and after such closing,  will outline the manner of bearing costs,  including
costs associated with the Company's  attorneys and  accountants,  will set forth
remedies on default and will include miscellaneous other terms.


                                      -4-

<PAGE>


        As stated  hereinabove,  the Company  will not acquire or merge with any
entity which cannot provide  independent  audited financial  statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the  reporting  requirements  included in the Exchange Act.
Included in these  requirements is the  affirmative  duty of the Company to file
independent  audited  financial  statements  as part of its Form 8-K to be filed
with the Securities and Exchange  Commission  upon  consummation  of a merger or
acquisition,  as well as the Company's audited financial  statements included in
its annual  report on Form  10-KSB (or 10-K,  as  applicable).  If such  audited
financial  statements  are not available at closing,  or within time  parameters
necessary  to insure  the  Company's  compliance  with the  requirements  of the
Exchange Act, or if the audited financial  statements provided do not conform to
the  representations  made  by the  candidate  to be  acquired  in  the  closing
documents, the closing documents will provide that the proposed transaction will
be voidable, at the discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision providing for
the  acquisition  entity to reimburse the Company for all costs  associated with
the proposed transaction.

Competition

        The Company  will remain an  insignificant  participant  among the firms
which  engage  in the  acquisition  of  business  opportunities.  There are many
established  venture  capital and financial  concerns  which have  significantly
greater  financial and personnel  resources  and  technical  expertise  than the
Company. In view of the Company's combined extremely limited financial resources
and  limited  management  availability,  the  Company  will  continue to be at a
significant competitive disadvantage compared to the Company's competitors.

Employees

     The Company has no full time employees. The Company's president, has agreed
to allocate a portion of their time to the  activities  of the Company,  without
compensation.  These officers  anticipate  that the business plan of the Company
can be  implemented by their  devoting  approximately  20 hours per month to the
business  affairs of the Company  and,  consequently,  conflicts of interest may
arise with respect to the limited time commitment by such officers.  See Item 9,
"Directors,  Executive Officers,  Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act."

Investment Company Act of 1940

        The Company may  participate in a business or opportunity by purchasing,
trading or selling the  securities of such business.  However,  the Company does
not intend to engage  primarily in such  activities.  Specifically,  the Company
intends  to  conduct  its  activities  so as to  avoid  being  classified  as an
"investment  company" under the Investment  Company Act of 1940 (the "Investment
Act"),   and  therefore   avoid   application  of  the  costly  and  restrictive
registration  and other  provisions of the  Investment  Act and the  regulations
promulgated thereunder.

        Section  3(a)  of the  Investment  Act  provides  the  definition  of an
"investment  company"  which includes an entity that engages or holds itself out
as being engaged primarily in the business of investing,  reinvesting or trading
in  securities,  or that  engages  or  proposes  to  engage in the  business  of
investing,  reinvesting,  owning,  holding  or trading  "investment  securities"
(defined as all  securities  other than  government  securities,  securities  of
majority-owned  subsidiaries  and certain other  securities)  the value of which
exceeds 40% of the value of its total assets (excluding  government  securities,
cash or cash items).  The Company  intends to implement  its business  plan in a
manner  that  will  result  in the  availability  of  this  exception  from  the
definition of "investment company."  Consequently,  the Company's  participation
in a  business  or  opportunity  through  the  purchase  and sale of  investment
securities will be limited.  In order to avoid  classification  as an investment
company,  the Company will search for,  analyze and acquire or  participate in a
business  opportunity by use of a method that does not involve the  acquisition,
ownership or holding of investment securities.

                                      -5-

<PAGE>


        The  Company's  plan of  business  may  involve  changes in its capital
structure,  management,  control and business,  especially  if it  consummates a
reorganization  as  discussed  above.  Each of these areas is  regulated  by the
Investment  Act,  which  regulation  has the  purported  purpose  of  protecting
purchasers of investment company securities. Since the Company will not register
as an investment company,  its shareholders will not be afforded these purported
protections.

        The Company intends to vigorously resist classification as an investment
company and to take advantage of any exemptions or exceptions  from  application
of the  Investment  Act,  which  allows an entity a one-time  option  during any
three-year period to claim an exemption as a otransiento investment company. The
necessity of asserting  any such  resistance,  or making any claim of exemption,
could be time-consuming  and costly,  or even prohibitive,  given the Company's
limited resources.

Certain Risks

        The Company's  business is subject to numerous  risk factors,  including
the following:

     Minimal  Operating  History or Revenue and Minimal Assets.  The Company has
had minimal operating history and no revenues or earnings from operations in the
past two years.  The Company has no significant  assets or financial  resources.
The  Company  will,  in  all  likelihood,  sustain  operating  expenses  without
corresponding   revenues,   at  least  until  the  consummation  of  a  business
combination. This may result in the Company incurring a net operating loss which
will  increase   continuously  until  the  Company  can  consummate  a  business
combination with a profitable business  opportunity.  There is no assurance that
the Company can  identify  such a business  opportunity  and  consummate  such a
business combination.

        Speculative Nature of Company's Proposed Operations.  The success of the
Company's  proposed  plan of  operation  will  depend  to a great  extent on the
operations,  financial  condition  and  management  of the  identified  business
opportunity.  While  management  intends to seek  business  combination(s)  with
entities having established operating histories,  there can be no assurance that
the Company will be successful in locating candidates meeting such criteria.  In
the event the Company completes a business combination, of which there can be no
assurance,  the  success  of the  Company's  operations  may be  dependent  upon
management  of the  successor  firm or venture  partner firm and numerous  other
factors beyond the Company's control.

        Scarcity of and Competition for Business Opportunities and Combinations.
The  Company is and will  continue  to be an  insignificant  participant  in the
business of seeking mergers with,  joint ventures with and acquisitions of small
private and public  entities.  A large number of established  and  well-financed
entities,   including   venture  capital  firms,   are  active  in  mergers  and
acquisitions  of companies  which may be  desirable  target  candidates  for the
Company.   Nearly  all  such  entities  have  significantly   greater  financial
resources, technical expertise and managerial capabilities than the Company and,
consequently,  the Company will be at a competitive  disadvantage in identifying
possible  business   opportunities   and  successfully   completing  a  business
combination.  Moreover,  the  Company  will also  compete in  seeking  merger or
acquisition candidates with numerous other small public companies.

        No Agreement for Business Combination or Other Transaction; No Standards
for  Business  Combination.  The  Company  has  no  arrangement,   agreement  or
understanding  with respect to engaging in a merger with,  joint venture with or
acquisition  of, a private or public entity.  There can be no assurance that the
Company will be successful  in  identifying  and  evaluating  suitable  business
opportunities  or in  concluding  a  business  combination.  Management  has not
identified any particular  industry or specific  business within an industry for
evaluation by the Company.  There is no assurance  that the Company will be able
to negotiate a business  combination  on terms  favorable  to the  Company.  The
Company  has not  established  a  specific  length  of  operating  history  or a

                                       -6-

<PAGE>

specified level of earnings,  assets,  net worth or other criteria which it will
require a target  business  opportunity to have achieved,  and without which the
Company would not consider a business combination in any form with such business
opportunity. Accordingly, the Company may enter into a business combination with
a business opportunity having no significant operating history,  losses, limited
or no  potential  for  earnings,  limited  assets,  negative  net worth or other
negative characteristics.

        Continued Management Control; Limited Time Availability. While seeking a
business combination,  management  anticipates devoting up to 20 hours per month
to the business of the Company.  None of the Company's officers has entered into
a written employment agreement with the Company and none is expected to do so in
the foreseeable  future.  The Company has not obtained key man life insurance on
any  of  its  officers  or  directors.   Notwithstanding  the  combined  limited
experience  and time  commitment of  management,  loss of the services of any of
these individuals would adversely affect  development of the Company's  business
and its likelihood of continuing operations.  See Item 9, "Directors,  Executive
Officers,  Promoters and Control  Persons;  Compliance with Section 16(a) of the
Exchange Act."

        Conflicts of Interest - General.  Certain of the officers and  directors
of the Company are directors and/or principal  shareholders of other blank check
companies  and,  therefore,  could face  conflicts  of interest  with respect to
potential acquisitions.  In addition,  officers and directors of the Company may
in the future  participate in business ventures which could be deemed to compete
directly with the Company.  Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's officers or
directors  are  involved  in the  management  of any firm with which the Company
transacts  business.  The Company's Board of Directors has adopted a policy that
the Company will not seek a merger with, or acquisition  of, any entity in which
management  serve as officers  or  directors,  or in which they or their  family
members own or hold a  controlling  ownership  interest.  Although  the Board of
Directors  could  elect to change this  policy,  the Board of  Directors  has no
present  intention to do so. In  addition,  if the Company and other blank check
companies with which the Company's  officers and directors are  affiliated  both
desire to take advantage of a potential business opportunity,  then the Board of
Directors  has agreed that said  opportunity  should be  available  to each such
company in the order in which such companies registered or became current in the
filing of annual  reports under the Exchange Act  subsequent to January 1, 1997.
See Item 9,  "Directors,  Executive  Officers,  Promoters  and Control  Persons;
Compliance with Section 16(a) of the Exchange Act - Conflicts of Interest."

        Reporting  Requirements May Delay or Preclude  Acquisition.  Sections 13
and 15(d) of the  Exchange  Act  require  companies  subject  thereto to provide
certain   information  about  significant   acquisitions,   including  certified
financial statements for the company acquired, covering one, two or three years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target  entities  to prepare  such  statements  may
significantly  delay  or  essentially  preclude  consummation  of  an  otherwise
desirable acquisition by the Company.  Acquisition prospects that do not have or
are unable to obtain the required audited  statements may not be appropriate for
acquisition  so long  as the  reporting  requirements  of the  Exchange  Act are
applicable.

        Lack of Market  Research  or  Marketing  Organization.  The  Company has
neither  conducted,  nor have others  made  available  to it,  results of market
research indicating that market demand exists for the transactions  contemplated
by the  Company.  Moreover,  the  Company  does not  have,  and does not plan to
establish, a marketing organization.  Even in the event demand is identified for
a merger or acquisition  contemplated by the Company,  there is no assurance the
Company will be successful in completing any such business combination.

                                       -7-

<PAGE>


        Lack of  Diversification.  The Company's  proposed  operations,  even if
successful,  will in all likelihood result in the Company engaging in a business
combination with a business opportunity.  Consequently, the Company's activities
may be limited to those engaged in by the business  opportunity or opportunities
which the Company merges with or acquires.  The Company's inability to diversify
its  activities  into a number of areas may  subject  the  Company  to  economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.

        Regulation. Although the Company will be subject to regulation under the
Exchange Act,  management believes the Company will not be subject to regulation
under the  Investment  Company Act of 1940,  insofar as the Company  will not be
engaged in the business of investing or trading in securities.  In the event the
Company  engages in business  combinations  which result in the Company  holding
passive  investment  interests  in a number of  entities,  the Company  could be
subject to regulation  under the Investment  Company Act of 1940. In such event,
the Company would be required to register as an investment  company and could be
expected to incur significant registration and compliance costs. The Company has
obtained no formal  determination from the Securities and Exchange Commission as
to the  status of the  Company  under the  Investment  Company  Act of 1940 and,
consequently,  any  violation of such Act would  subject the Company to material
adverse consequences.

        Probable  Change in  Control  and  Management.  A  business  combination
involving  the issuance of the Company's  Common Stock will, in all  likelihood,
result in shareholders of a private company obtaining a controlling  interest in
the Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's Common Stock held by them,
or resign as members of the Board of  Directors of the  Company.  The  resulting
change in control of the Company  could result in removal of one or more present
officers  and  directors  of the Company  and a  corresponding  reduction  in or
elimination of their participation in the future affairs of the Company.

        Reduction of Percentage Share Ownership Following Business  Combination.
The  Company's  primary plan of  operation is based upon a business  combination
with a private  concern which,  in all  likelihood,  would result in the Company
issuing securities to shareholders of any such private company.  The issuance of
previously  authorized and unissued  shares of Common Stock of the Company would
result  in a  reduction  in the  percentage  of  shares  owned  by  present  and
prospective shareholders of the Company and may result in a change in control or
management of the Company.

        Taxation. Federal and state tax consequences will, in all likelihood, be
major  considerations  in any business  combination  the Company may  undertake.
Currently,  such  transactions  may be  structured  so as to result in  tax-free
treatment  to  both  companies,  pursuant  to  various  federal  and  state  tax
provisions.  The Company intends to structure any business  combination so as to
minimize  the  federal  and state tax  consequences  to both the Company and the
target entity; however, there can be no assurance that such business combination
will meet the statutory  requirements of a tax-free  reorganization  or that the
parties will obtain the intended tax-free  treatment upon a transfer of stock or
assets. A non-qualifying  reorganization  could result in the imposition of both
federal and state taxes which may have an adverse  effect on both parties to the
transaction.

                                      -8-

<PAGE>

        Requirement of Audited  Financial  Statements  May  Disqualify  Business
Opportunities.  Management of the Company  believes that any potential  business
opportunity  must  provide  audited  financial  statements  for review,  for the
protection of all parties to the business  combination.  One or more  attractive
business  opportunities  may  choose to forego  the  possibility  of a  business
combination  with the Company,  rather than incur the expenses  associated  with
preparing audited financial statements.

Item 2 - Description of Property
- ---------------------------------

        The  Company has no  properties  and at this time has no  agreements  to
acquire any  properties.  The Company  intends to attempt to acquire assets or a
business in exchange for its  securities  which assets or business is determined
to be desirable for its objectives.

     The Company's  mailing address is 7609 Ralston Road, Arvada CO, 80002 which
is the office of M.A. Littman, the Company's attorney.  This address is provided
to the Company on a rent free basis and it is anticipated  that this arrangement
will remain until such time as the Company successfully  consummates a merger or
acquisition.  Management  believes that this address  arrangement  will meet the
Company's needs for the foreseeable future. No office space is needed.

Item 3 - Legal Proceedings
- ---------------------------

        The Company is not a party to any legal proceedings, nor does management
believe that any such proceedings are contemplated.

Item 4 - Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------

     No  matters  were  submitted  by the  Company  to a vote  of the  Company's
shareholders through the solicitation of proxies or otherwise, during the fiscal
year covered by this report.

PART II

Item 5 - Market for Common Equity and Related Stockholder Matters
- ------------------------------------------------------------------

ITEM 5. MARKET FOR THE  REGISTRANT'S  COMMON STOCK AND RELATED  SECURITY  HOLDER
MATTERS

     (a) The  Registrant's  common stock is not in any market traded.  The table
below sets forth the high and low bid prices of the  Registrant's  common  stock
for the periods indicated.

Year Ended February 28, 2002
                                                   High Bid      Low Bid
                                                   --------      -------
          1st quarter                              No Quotes (Not Trading)
          2nd quarter
          3rd quarter
          4th quarter


Year Ended February 28, 2001:
                                                   High Bid      Low Bid
                                                   --------      -------
          1st quarter
          2nd quarter                              No Quotes (Not Trading)
          3rd quarter
          4th quarter

        The Company has not  declared or paid any cash  dividends  on its common
stock and does not anticipate paying dividends for the foreseeable future.

                                      -9-

<PAGE>


     (b) As of  February  28,  2002,  there  were 3  holders  of  record of the
Registrant's common stock.

     (c) The Registrant has neither  declared nor paid any cash dividends on its
common stock,  and it is not anticipated that any such dividend will be declared
or paid in the foreseeable future.

        Effective  August 11, 1993, the Securities and Exchange Commission  (the
"Commission")  adopted Rule 15g-9,  which established the definition of a "penny
stock," for purposes relevant to the Company,  as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions.  For any transaction involving a
penny  stock,  unless  exempt,  the rules  require:  (i) that a broker or dealer
approve a person's account for transactions in penny stocks;  and (ii) that the
broker  or  dealer  receive  from  the  investor  a  written  agreement  to  the
transaction,  setting  forth the  identity and quantity of the penny stock to be
purchased.  In order to approve a person's  account for  transactions  in penny
stocks,  the  broker  or  dealer  must  (i)  obtain  financial  information  and
investment  experience and objectives of the person;  and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient  knowledge and experience in financial matters to
be capable of evaluating the risks of transactions  in penny stocks.  The broker
or dealer  must also  deliver,  prior to any  transaction  in a penny  stock,  a
disclosure  schedule  prepared  by the  Commission  relating  to the penny stock
market,  which,  in highlight form, (i) sets forth the basis on which the broker
or dealer made the suitability determination; and (ii) states that the broker or
dealer  received a signed,  written  agreement  from the  investor  prior to the
transaction.  Disclosure  also has to be made  about the risks of  investing  in
penny  stock in both  public  offerings  and in  secondary  trading,  and  about
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.

                                      -10-

<PAGE>

        In order to be included  in NASDAQ's  SmallCap  Market,  a company  must
satisfy the requirements described below. A company must meet one or more of the
following three requirements:  (i) net tangible assets of $4 million ($2 million
for continued inclusion);  (ii) have a market capitalization of $50 million ($35
million for continued inclusion); or (iii) have net income (in the latest fiscal
year or two of the last three fiscal years) of $750,000  ($500,000 for continued
inclusion). In addition, a company must also satisfy the following requirements:
(i) 1 million shares in the public float (500,000 for continued inclusion); (ii)
$5  million  of market  value of the  public  float ($1  million  for  continued
inclusion);  (iii) a minimum bid price of $4 ($1 for continued inclusion);  (iv)
three  market  makers  (two  for  continued  inclusion);  (v)  300  (round  lot)
shareholders;  (vi) an operating history of one year or market capitalization of
$50 million; and (vii) certain corporate governance standards.

        Management  intends to strongly consider  undertaking a transaction with
any merger or acquisition  candidate which will allow the Company's  securities
to be  traded  without  the  aforesaid  limitations.  However,  there  can be no
assurance  that,  upon a  successful  merger or  acquisition,  the Company  will
qualify its securities for listing on NASDAQ or some other national exchange, or
be able to maintain  the  maintenance  criteria  necessary  to insure  continued
listing.  The failure of the Company to qualify  its  securities  or to meet the
relevant  maintenance criteria after such qualification in the future may result
in  the  discontinuance  of the  inclusion  of the  Company's  securities  on a
national exchange.  In such event, trading, if any, in the Company's securities
may then continue in the  non-NASDAQ  over-the-counter  market.  As a result,  a
shareholder  may find it more  difficult  to dispose  of, or to obtain  accurate
quotations as to the market value of, the Company's securities.

Holders

     There are 3 record holders of the Company's  Common Stock.  An aggregate of
1,000,000  shares of the issued and outstanding  shares of the Company's  Common
Stock are "restricted" securities.


                                      -11-

<PAGE>


Dividends

        The Company has not paid any  dividends to date,  and has no plans to do
so in the immediate future.


Item 6 - Management's Discussion and Analysis or Plan of Operation
- -------------------------------------------------------------------

Plan of Operation

        The  Company  intends to seek to  acquire  assets or shares of an entity
actively  engaged in business  which  generates  revenues,  in exchange  for its
securities.  The  Company  has no  particular  acquisitions  in mind and has not
entered into any negotiations  regarding such an acquisition.  As of the date of
this  report,  the  Company  has  no  plans,  arrangements,   understandings  or
commitments  with respect to any  potential  merger or  acquisition,  nor is the
Company  engaged in  negotiations  with respect to such  matter.  For a complete
description  of the Company's  plan of operation,  see Item 1,  "Description  of
Business."

        If required to so do under relevant law,  management of the Company will
seek  shareholder  approval  of a  proposed  merger or  acquisition  via a Proxy
Statement.  However,  such approval would be assured where  management  supports
such a business  transaction  because management  presently controls  sufficient
shares of the Company to effectuate a positive vote on the proposed transaction.
Further,  a  prospective  transaction  may be  structured  so  that  shareholder
approval is not required, and such a transaction may be effectuated by the Board
of Directors  without  shareholder  approval.  While any disclosure which may be
provided to  shareholders  may include  audited  financial  statements of such a
target entity, there is no assurance that such audited financial statements will
be available. The Board of Directors does intend to obtain certain assurances of
value of the target entity assets prior to consummating such a transaction, with
further  assurances  that an audited  statement would be provided within 60 days
after closing of such a transaction.  Closing  documents  relative  thereto will
include representations that the value of the assets conveyed to or otherwise so
transferred will not materially differ from the representations included in such
closing documents, or the transaction will be voidable.

 No operations  were  conducted  and no revenues  were  generated in the
fiscal year. The Company had no income in the year ended February 28, 2002. The
Company at year end had no capital, no cash, and no other assets. The Company at
year end was totally  illiquid and needed cash  infusions from  shareholders  to
provide capital, or loans from any sources.


                                      -12-

<PAGE>

Results of  Operations  for the Year Ended  February  28, 2002  Compared to Year
Ended February 28, 2001.

     The Company had no revenues or operations  in year ended  February 28, 2002
or 2001.  The Company  incurred  expenses of $651 in the year ended February 28,
2002  compared to $2,349 in  miscellaneous  expenses and  accounting in the year
ended February 28, 2001. The company had net loss in the year ended February 28,
2002 of ($651) compared to a net loss of ($2,349) in the year ended February 28,
2001. The loss per share was nominal in 2002 and in 2001.

     The losses should be expected to continue  until a profitable  business can
be achieved through merger,  acquisition,  or development, of which there can be
no assurance.


LIQUIDITY AND CAPITAL RESOURCES

     At year end,  the Company  had no  operating  capital  and is reliant  upon
advances from shareholders or loans  to pay any expenses  incurred.  The Company
had no commitments from any person for advances or loans.

  Going concern

     The Company has incurred  significant  losses from  operations for the year
ended February 28, 2002, and such losses are expected to continue.  In addition,
the company has a working  capital deficit of $2,220 for the year ended February
28, 2002. The foregoing raises  substantial doubt about the Company's ability to
continue as a going  concern.  Management's  plans  include  seeking  additional
capital and/or debt  financing or the possible sale of the Company.  There is no
guarantee that  additional  capital and/or debt financing will be available when
and to the extent required, or that if available, it will be on terms acceptable
to the  Company.  The  consolidated  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                                      -13-
<PAGE>

Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and No. 142, "Accounting for Goodwill and Other Intangibles"
("SFAS 141" and "SFAS 142", respectively). Under these new standards, all
acquisitions subsequent to June 30, 2001, must be accounted for under the
purchase method of accounting and goodwill is no longer amortized but is
reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets acquired in a business combination that
are not deemed to have an indefinite life will continue to be amortized over
their useful lives. With respect to goodwill and intangible assets acquired
prior to July 1, 2001, companies are required to adopt SFAS 142 in their fiscal
year beginning after December 15, 2001.

     In August 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). SFAS 143 establishes accounting standards for
recognition and measurement of a liability for the costs of asset retirement
obligations. Under SFAS 143, the costs of retiring an asset will be recorded as
a liability when the retirement obligation arises, and will be amortized to
expense over the life of the asset.

     In October 2001, FASB issued SFAS No. 144. "Accounting for the Impairment
or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
discontinued operations.

     The Company believes of these  pronouncements  will have no effect,  on the
consolidated  financial  position and results of  operations  as  reported.  The
Company has adopted each of these standards for the first quarter of fiscal year
2003 and thereafter.

Evaluation of Internal and Disclosure Controls
----------------------------------------------

     The  management  of the  company has  evaluated  the  effectiveness  of the
issuer's disclosure controls and procedures as of a date within 90 days prior to
the filing  date of the report  (evaluation  date) and have  concluded  that the
disclosure  controls and procedures are adequate and effective  based upon their
evaluation as of the evaluation date.

     There were no significant  changes in internal controls or in other factors
that could significantly  affect internal controls subsequent to the date of the
most recent evaluation of such,  including any corrective actions with regard to
significant deficiencies and material weaknesses.

                                      -14-

<PAGE>
NEED FOR ADDITIONAL FINANCING

         The Company does not have capital sufficient to meet the Company's cash
needs,   including  the  costs  of  compliance  with  the  continuing  reporting
requirements  of the  Securities  Exchange Act of 1934. The Company will have to
seek  loans or equity  placements  to cover  such cash  needs.  In the event the
Company is able to complete a business  combination during this period,  lack of
its  existing  capital  may  be a  sufficient  impediment  to  prevent  it  from
accomplishing  the  goal of  completing  a  business  combination.  There  is no
assurance,  however,  that without funds it will ultimately  allow registrant to
complete a business combination.  Once a business combination is completed,  the
Company's needs for additional  financing are likely to increase  substantially.
The  Company  will  need to raise  additional  funds  to  conduct  any  business
activities in the next twelve months.

         No commitments to provide additional funds have been made by management
or  other  stockholders.  Accordingly,  there  can  be  no  assurance  that  any
additional  funds  will be  available  to the  Company  to allow it to cover its
expenses as they may be incurred.

         Irrespective   of  whether  the  Company's  cash  assets  prove  to  be
inadequate to meet the Company's  operational  needs,  the Company might seek to
compensate providers of services by issuances of stock in lieu of cash.

         The Company has no plans for any research and  development  in the next
twelve  months.  The Company has no plans at this time for purchases or sales of
fixed assets which would occur in the next twelve months.

         The Company has no expectation or anticipation  of significant  changes
in number of  employees  in the next twelve  months,  however,  if it achieves a
business  acquisition,  it may acquire or add employees of an unknown  number in
the next twelve months.

         Management  hopes to seek a business which might be acquired,  at which
time there may be a necessity to seek and obtain  funding,  via loans or private
placements of stock to pay off debt and provide working capital.  Management has
no current plan to seek capital in the form of loans or stock private placements
at this time because it has no business  upon which to base any capital  raising
plan.



                                      -15-

<PAGE>


Item 7 - Financial Statements
- ------------------------------

        The  response to this item is  submitted  as a separate  section of this
report beginning on page F-1.

Item 8 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
- ------------------------------------------------------------------------------
Financial Disclosure
- ---------------------

     In  March,  2002,  the  Company  engaged  Michael  Johnson  & Co.,  Denver,
Colorado,  as its new  principal  independent  accountant to audit the Company's
financial statements.  The prior accountant was AJ Robbins, P.C.. There has been
no  disagreement  between  accountants  regarding the  application of accounting
principles  to any specific  completed  or  contemplated  transaction,  or as to
policies as to accounting.

     In  connection  with audits of two most recent fiscal years and any interim
period preceding resignation,  no disagreements exist with any former accountant
or any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure,  or auditing scope of procedure,  which disagreements if no resolved
to the  satisfaction  of the former  accountant  would  have  caused him to make
reference  in  connection   with  his  report  to  the  subject  matter  of  the
disagreement(s).

     The decision to change  accountants  was approved by the Board of Directors
as the registrant has no audit committee.

     The principal  accountants'  reports on the financial statements for any of
the past two years  contained no adverse  opinion or a disclaimer of opinion nor
was qualified as to uncertainty,  audit scope, or accounting  principles  except
for the "going concern" qualification.

PART III

Item  9  -  Directors,   Executive  Officers,  Promoters  and  Control  Persons;
- ------------------------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act
- --------------------------------------------------

        Set forth below is certain  information  concerning  the  directors  and
executive officers of the Company as of the date of filing this report.

            Name                         Age                      Position
            ----                         ---                      --------

        Scott Deitler                    46                      President
        Wesley F. Whiting                70                      Secretary


        Officers are  appointed by and serve at the  discretion  of the Board of
Directors.  Each  director  holds  office  until  the  next  annual  meeting  of
shareholders  or until a successor has been duly elected and qualified.  Each of
the Company's  officers and directors  devotes only such time as is available to
the  business  of the  Company.  There are no family  relationships  between any
directors or executive officers of the Company.

                                      -16-

<PAGE>
     Biographical Information

         Scott Deitler, age 48, President and director since 2001, received a
B.A. in Business and Conservation from the University of Colorado in 1978. From
1987 to 1995, he was President and a director of Colorado Coin Co. in Boulder,
Colorado. From 1993 to 1998, he was President of Ulta Travel, Inc., a travel
agency. He was President and Director of J.S.J. Capital Corp. (1999-2000),
J.S.J. Capital II, Inc. (1999-2000), J.S.J. Capital III, Inc. (1999-2000),
Investra Enterprises, Inc. (1999-2000), Advanced Ceiling Supplies, Inc. (1997-
2000), Marathon Marketing Corp. (1991-2000), S.D.E. Holdings 1 Inc. (2000),
S.D.E. Holdings 2, Inc. (2000 to date) and S.D.E. Holdings 3 Inc. (2000-2002).
He was Secretary and Director of Cross Check Corp. 1997-2000. All the above were
companies without specific business, but which were seeking an acquisition or
merger. Investra Enterprises, Inc. merged with Pathobiotek Diagnostics, Inc. in
March 2000 and Cross Check Corp. merged with HouseholdDirect.com, Inc. in March
2000. Mr. Deitler resigned as an officer of Cross Check Corp. and Investra
Enterprises, Inc. in March 2000.  S.D.E. Holdings 3 Inc. merged with Global
Assets and Services, Inc. in 2002, and he resigned as an officer and director.
He sold his interest in Advanced Ceiling Supplies, Inc. in 2000 and resigned as
an officer and director.  Mr. Deitler sold his interests in J.S.J.
Capital I, II, and III in 2000 and resigned as an officer and director of the
companies in 2000.  He sold his interest in S.D.E. Holdings 1, Inc. and resigned
as an officer and director in 2000.


         Wesley F. Whiting, Director, age 70. Mr. Whiting was President,
director, and secretary of Berge Exploration, Inc. (1978-88) and President, vice
president, and director of NELX, Inc. (1994-1998), and was vice president and
director of Intermountain Methane Corporation (1988-91), and President of
Westwind Production, Inc. (1997-1998). He was a director of Kimbell deCar
Corporation from 1998, until 2000 and he has been President and a director of
Dynadapt System, Inc. since 1998. He was a Director of Colorado Gold & Silver,
Inc. from 1999 to 2000. He was President and director of Business Exchange
Holding Corp. from 2000 to date and Acquisition Lending, Inc. (2000 to date). He
was director and Vice President of Utilitec, Inc, 1999 to 2001, and has been
Vice President and director of Agro Science, Inc. since. 2001.  He was President
and director of Premium Enterprises, Inc. From October 2002 to December 31,
2002.  He was appointed Director and Secretary of BSA SatelLINK, Inc. in 2002.


BIOGRAPHICAL INFORMATION


Compliance with Section 16(a) of the Exchange Act

        Section  16(a) of the  Securities  Exchange  Act of 1934 (the  "Exchange
Act") requires that the Company's  officers and  directors,  and persons who own
more than ten percent of a registered class of the Company's equity  securities,
file  reports of  ownership  and changes in ownership  with the  Securities  and
Exchange   Commission.   Officers,   directors  and  greater  than  ten  percent
stockholders  are required by regulation to furnish to the Company copies of all
Section 16(s) forms they file.

                                      -17-
<PAGE>

Conflicts of Interest

        Members of the  Company's  management  are  associated  with other firms
involved in a range of business  activities.  Consequently,  there are potential
inherent  conflicts of interest in their acting as officers and directors of the
Company.  Insofar as the officers and  directors  are engaged in other  business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.

        Certain of the officers and  directors of the Company are  directors and
principal  shareholders  in  other  blank  check  companies,  and  officers  and
directors  of the Company  may in the future  become  shareholders,  officers or
directors of other  companies which may be formed for the purpose of engaging in
business  activities  similar to those  conducted by the  Company.  Accordingly,
direct  conflicts  of  interest  may arise in the  future  with  respect to such
individuals  acting on behalf of the  Company or other  entities.  Conflicts  of
interest may arise with respect to opportunities  which come to the attention of
such  individuals in the  performance of their duties or otherwise.  The Company
does not  currently  have a right of first refusal  pertaining to  opportunities
that come to management's  attention insofar as such opportunities may relate to
the Company's proposed business operations.

        The  officers  and  directors  are,  so  long as they  are  officers  or
directors  of the Company,  subject to the  restriction  that all  opportunities
contemplated by the Company's plan of operation  which come to their  attention,
either  in the  performance  of their  duties or in any  other  manner,  will be
considered  opportunities  of,  and be made  available  to the  Company  and the
companies  that they are  affiliated  with on an equal  basis.  A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
If the Company and the  companies  with which the  officers  and  directors  are
affiliated  both desire to take advantage of an  opportunity,  then the Board of
Directors  has agreed that said  opportunity  should be  available  to each such
company in the order in which such companies registered or became current in the
filing of annual  reports under the Exchange Act  subsequent to January 1, 1997.
All directors may still  individually  take  advantage of  opportunities  if the
Company should decline to do so. Except as set forth above,  the Company has not
adopted any other conflict of interest policy with respect to such transactions.

        The  Company's  Board of Directors has adopted a policy that the Company
will not seek a merger with, or acquisition  of, any entity in which any officer
or director  serves as an officer or  director or in which they or their  family
members own or hold a  controlling  ownership  interest.  Although  the Board of
Directors  could  elect to change this  policy,  the Board of  Directors  has no
present intention to do so.

        There can be no assurance that  management will resolve all conflicts of
interest in favor of the Company.

                                      -18-

<PAGE>


Item 10 - Executive Compensation
- ---------------------------------

        None  of  the  Company's   officers   and/or   directors   receives  any
compensation for their  respective  services  rendered to the Company,  nor have
they received such compensation in the past. They all have agreed to act without
compensation  until authorized by the Board of Directors,  which is not expected
to occur  until  the  Company  has  generated  revenues  from  operations  after
consummation of a merger or  acquisition.  As of the date of filing this report,
the Company has no funds available to pay officers or directors.  Further,  none
of the  officers or  directors  is  accruing  any  compensation  pursuant to any
agreement with the Company.

        It is possible that, after the Company successfully consummates a merger
or acquisition with an unaffiliated  entity, that entity may desire to employ or
retain one or a number of members of the Company's  management  for the purposes
of  providing  services to the  surviving  entity,  or otherwise  provide  other
compensation to such persons.  However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be  a  consideration  in  the  Company's  decision  to  undertake  any  proposed
transaction.  Each member of management  has agreed to disclose to the Company's
Board of Directors any discussions  concerning possible  compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and  further,  to  abstain  from  voting on such  transaction.  Therefore,  as a
practical  matter,  if each  member of the  Company's  Board of  Directors  were
offered  compensation  in any form from any  prospective  merger or  acquisition
candidate, the proposed transaction would not be approved by the Company's Board
of Directors as a result of the inability of the Board to affirmatively  approve
such a transaction.

        It is possible  that  persons  associated  with  management  may refer a
prospective  merger or  acquisition  candidate to the Company.  In the event the
Company  consummates  a  transaction  with any entity  referred by associates of
management,  it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated  that this fee will be
either in the form of  restricted  Common Stock issued by the Company as part of
the  terms  of the  proposed  transaction,  or  will  be in  the  form  of  cash
consideration.  However,  if such  compensation  is in the  form of  cash,  such
payment will be tendered by the  acquisition  or merger  candidate,  because the
Company has insufficient cash available.  The amount of such finder's fee cannot
be  determined  as of the date of filing  this  report,  but is  expected  to be
comparable to  consideration  normally paid in like  transactions.  No member of
management  of the Company  will  receive any finders  fee,  either  directly or
indirectly,  as a result of their respective  efforts to implement the Company's
business plan outlined herein.

        No  retirement,  pension,  profit  sharing,  stock  option or  insurance
programs  or other  similar  programs  have been  adopted by the Company for the
benefit of its employees.

Item 11 - Security Ownership of Certain Beneficial Owners and Management
- -------------------------------------------------------------------------

     The following  table sets forth certain  information  regarding  beneficial
ownership  of the  Company's  Common  Stock as of December  31, 2001 by (i) each
person  who is known by the  Company  to own  beneficially  more  than 5% of the
Company's  outstanding  Common  Stock;  (ii)  each  of the  Company's  executive
officers and  directors;  and (iii) all  executive  officers and  directors as a
group.  Except  as  noted,  each  person  or  entity  has sole  voting  and sole
investment power with respect to the shares shown.

                                      -19-

<PAGE>

SHAREHOLDERS/                     NUMBER OF SHARES                    OWNERSHIP
BENEFICIAL OWNERS                                                     PERCENTAGE
- ------------------------------------------------------------------------------
Scott A. Deitler
President & Director              100,000                                 10%

Wesley F. Whiting
Secretary & Treasurer             0                                        0%

Susan J. Cornman                  500,000                                 50%

Lawrence Deitler                  400,000                                 40%


All directors and executive       100,000                                 10%
officers as a group (2 persons)

Each principal  shareholder has sole investment power and sole voting power over
the shares.


Item 12 - Certain Relationships and Related Transactions
- --------------------------------------------------------

        There were no related party transactions during final year ended
February 28, 2002.

                                      -20-

<PAGE>


Item 13 - Exhibits and Reports on Form 8-K
- -------------------------------------------

(a)      Exhibits

         SK# 99.14 Sarbanes Oxely Certification

(b)     Reports on Form 8-K

           None.
                                      -21-

<PAGE>


                                   Signatures

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


                                              S.D.E. HOLDINGS 2, INC.



Date:  January 21, 2003                         By: /s/Scott Deitler
                                                 -------------------------
                                                 Scott Deitler, President


        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


Date:  January 21, 2002                  By: /s/Scott Deitler
       --------------                  ----------------------------------------
                                       Scott Deitler, President and Director

Date:  January 21, 2003                  By:Wesley F. Whiting
       ---------------                 ----------------------------------------
                                       Wesley F. Whiting, Director


                                      -22-

<PAGE>



                            S. D. E. HOLDINGS 2, INC.

                          (A Development Stage Company)
                              FINANCIAL STATEMENTS
                   For Years Ended February 28, 2002 and 2001






<PAGE>

                           MICHAEL JOHNSON & CO., LLC
                          Certified Public Accountants
                        9175 East Kenyon Ave., Suite 100
                             Denver, Colorado 80237


Michael B. Johnson C.P.A.                             Telephone:  (303) 796-0099
Member:  A.I.C.P.A.                                         Fax:  (303) 796-0137
Colorado Society of C.P.A.s





                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
S.D.E. Holdings 2, Inc.
Boulder, CO

We have audited the accompanying balance sheets of S.D.E. Holdings 2, Inc., (a
development stage company), as of February 28, 2002 and 2001, and the related
statements of operations, stockholders' equity, and cash flows for the years
ended February 28, 2002 and 2001, and for the period from January 19, 2000
(inception) to February 28, 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits 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 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 financial position of S.D.E. Holdings 2, Inc., (a
development stage company) as of February 28, 2002 and 2001, and the results of
their operations and their cash flows for the year ended February 28, 2002 and
2001, and the period January 19, 2000 (inception) to February 28, 2002, in
conformity with accounting principles generally accepted in the United States.

The financial statements for the period ended February 29, 2000 and the period
January 19, 2000 (inception) to February 29, 2000, were audited by other
accountants, whose report dated March 10, 2000, expressed an unqualified opinion
on those statements. They have not performed any auditing procedures since that
date.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the Note 5 to the
financial statements the Company is in the development stage, and will require
funds from profitable operations, from borrowings, or from sale of equity
securities to execute its business plan. These factors raise substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments that might result from this uncertainty.

Michael Johnson & Co., LLC
Denver, Colorado
May 4, 2002

/s/Michael Johnson & Co., LLC

<PAGE>
<TABLE>
<CAPTION>


                            S.D.E. HOLDINGS 2, INC.
                         (A Development Stage Company)
                                 Balance Sheets


<S>                                                                             <C>               <C>             <C>


                                                                                    February 28,             February 29,
                                                                               2002             2001             2000
                                                                               ----             ----             ----

ASSETS;

Current Assets:
    Cash                                                                         $ -              $   651           $ 986
                                                                                --------          -------         -------
        Total Current Assets                                                       -                  651             986
                                                                                --------          -------         -------
TOTAL ASSETS                                                                     $ -              $   651           $ 986
                                                                                ========          ========        =======
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
    Accounts Payable - Related Party                                             $ 2,220          $ 2,220         $ 2,220
                                                                                --------          -------         -------
        Total Current Liabilities                                                  2,220            2,220           2,220
                                                                                --------          -------         -------
Stockholders' Deficit:
    Common stock, $.001 par value, 25,000,000 shares
        authorized, 1,000,000 shares issued and outstanding                        1,000            1,000           1,000
    Deficit accumulated during the
      development stage                                                           (3,220)          (2,569)         (2,234)
                                                                                --------          --------         -------
        Total Stockholders' Deficit                                               (2,220)          (1,569)         (1,234)
                                                                                --------          --------         -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $ -              $   651           $ 986
                                                                                ========          ========         =======
</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>
<TABLE>
<CAPTION>


                            S.D.E. HOLDINGS 2, INC.
                         (A Development Stage Company)
                            Statements of Operations
<S>                                              <C>                 <C>                    <C>               <C>



                                                                                                                January 19,
                                                                                              Period               2000
                                                           Year Ended                          Ended           (Inception) to
                                                            February 28,                    February 29,        February 28,
                                                      2002                2001                 2000                2002
                                                      ----                ----                 ----                ----

Revenue:
    Revenue                                            $ -                 $ -                  $-                 $ -
                                                 ---------           -----------            ------            --------
Total Income                                             -                   -                   -                   -
                                                 ---------           -----------            ------            --------
Operating Expenses
    General and Administrative                         651               2,349                 220               3,220
                                                 ---------           -----------            ------            --------
Total Expenses                                         651               2,349                 220               3,220
                                                 ---------           -----------            ------            --------
Net Loss                                            $ (651)           $ (2,349)             $ (220)           $ (3,220)
                                                 =========           ===========            ======            ========
Per Share Information:

Weighted average number
    of common shares outstanding                 1,000,000           1,000,000              83,333
                                                 ---------           -----------            ------
Net Gain (Loss) per common share                       *                   *                    *

* Less than $.01


</TABLE>
The accompanying notes are an integral part of these financial statements.


<PAGE>
<TABLE>
<CAPTION>


                            S.D.E. HOLDINGS 2, INC.
                         (A Devleopment Stage Company)
                         Stockholders' Equity (Deficit)
                               February 28, 2002

<S>                                                <C>                <C>                    <C>             <C>           <C>


                                                                                                          Deficit
                                                       COMMON STOCKS                 Additional        Accum. During         Total
                                                                                      Paid-In           Development    Stockholders'
                                               # of Shares          Amount            Capital              Stage            Equity
                                               -----------          ------            -------              -----            ------


Balance - January 19, 2000                                 -              $ -                $ -                  $ -         $ -

Issuance for cash 2/21/00                          1,000,000            1,000                  -                    -         1,000

Loss for Period                                            -                -                  -                 (220)         (220)
                                                   ---------          ----------             ---             --------      ---------
Balance -  February 29, 2000                       1,000,000            1,000                  -                 (220)          780
                                                   ---------          ----------             ---             --------      ---------
Loss for year                                              -                -                  -               (2,349)       (2,349)
                                                   ---------          ----------             ---             --------      ---------
Balance -  February 28, 2001                       1,000,000            1,000                  -               (2,569)       (1,569)
                                                   ---------          ----------             ---             --------      ---------
Loss for year                                              -                -                  -                 (651)         (651)
                                                   ---------          ----------             ---             --------      ---------
Balance -  February 28, 2002                       1,000,000          $ 1,000                $ -             $ (3,220)     $ (2,220)
                                                   =========          ==========             ===             ========      =========

</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>
<TABLE>
<CAPTION>


                            S.D.E. HOLDINGS 2, INC.
                         (A Development Stage Company)
                            Statements of Cash Flow

                                Indirect Method


<S>                                                                  <C>             <C>              <C>             <C>
                                                                                                                         January 19,
                                                                                                        Period              2000
                                                                     Year Ended                         Ended         (Inception) to
                                                                    February 28,                       February 29,     February 28,
                                                                      2002             2001              2000               2002
                                                                      ----             ----              ----               ----

Cash Flows from Operating Activities:

     Net Loss                                                        $ (651)         $ (2,349)        $ (220)         $(3,220)
      Increase in Accounts payable                                        -             2,014            206            2,220
                                                                     -----------     --------         ------          -------
Net Cash Used by Operating Activities                                  (651)             (335)           (14)          (1,000)
                                                                     -----------     --------         ------          -------
Cash Flows from Financing Activities:

Issuance of common stock                                                  -                -           1,000            1,000
                                                                     -----------     --------         ------          -------
Net Cash Provided by Financing Activities                                 -                -           1,000            1,000
                                                                     -----------     --------         ------          -------
Net Increase in Cash & Cash Equivalents                                (651)             (335)           986                -

Beginning Cash & Cash Equivalents                                       651               986              -                -
                                                                     -----------     --------         ------          --------
Ending Cash & Cash Equivalents                                         $ -              $ 651          $ 986              $ -
                                                                     ===========     ========         ======          ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid for Interest                                            $ -              $ -              $ -              $ -
                                                                     ===========     ========         ======          ========
     Cash paid for Income Taxes                                        $ -              $ -              $ -              $ -

                                                                     ===========     ========         ======          ========

</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>

                             S.D.E. HOLDINGS 2, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                February 28, 2002


Note 1 - Organization and Summary of Significant Accounting Policies:

Organization:

S.D.E.  Holdings 2, Inc. (the  "Company"),  (a development  stage company),  was
organized under the laws of the State of Nevada on January 19, 2000. The Company
is in the  development  stages  and was  organized  for the  purpose  of raising
capital. The fiscal year end is the last day of February.

Basis of Presentation - Development Stage Company:

The Company has not earned significant revenues from limited principal
operations. Accordingly, the Company" activities have been accounted for as
those of a "Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by
SFAS 7 are that the Company's financial statements be identified as those of a
development stage company, and that the statements of operations, stockholders'
equity (deficit) and cash flows disclose activity since the date of the
Company's inception.

Basis of Accounting:

The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States.

Cash and Cash Equivalents:

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

Use of Estimates:

The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Net Loss Per Share:

Net loss per share is based on the weighted average number of common shares and
common shares equivalents outstanding during the period.


<PAGE>



                             S.D.E. HOLDINGS 2, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                February 28, 2002



Note 1 - Organization and Summary of Significant Accounting Policies (Cont):


Other Comprehensive Income

The Company has no material components of other comprehensive income (loss), and
accordingly, net loss is equal to comprehensive loss in all periods.


Note 2 - Federal Income Taxes:

The Company has made no provision for income taxes because there have been no
operations to date causing income for financial statement or tax purposes.

The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS 109"). "Accounting for Income
Taxes", which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities.

Deferred tax assets
         Net operating loss carryforwards                     $      2,234
         Valuation allowance                                        (2,234)
                                                               --------------
         Net deferred tax assets                              $          0
                                                               ===============

At February 28, 2002, the Company had net operating loss carryforwards of
approximately $2,234 for federal income tax purposes. These carryforwards if not
utilized to offset taxable income will begin to expire in 2010.

Note 3 - Capital Stock Transactions:

The authorized capital stock of the Company is 25,000,000 shares of common stock
at $.001 par value. During the period ended February 28, 2002, the Company
issued no shares of common stock.




<PAGE>


                             S.D.E. HOLDINGS 2, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                February 28, 2002



Note 4 - Segment Information:

S.D.E. Holdings 2, Inc. operates primarily in a single operating segment, the
capital raising business.

Note 5 - Going Concern:

The financial statements of the Company have been presented on the basis that
they are a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has no
assets, generated no revenues and has an accumulated deficit at February 28,
2002 of $2,234.

The future success of the Company is likely dependent on its ability to attain
additional capital, or to find an acquisition to add value to its present
shareholders and ultimately, upon its ability to attain future profitable
operations. There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow from
operations. Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide the opportunity for the
Company to continue as a going concern.