U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-KSB

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2001

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________

                       COMMISSION FILE NUMBER: 000-09358

                             3Si HOLDINGS, INC.
          (Exact name of registrant as specified in its charter)

            Wyoming                                               83-0245581
(State or jurisdiction of incorporation                      (I.R.S. Employer
          or organization)                                  Identification No.)

     6886 South Yosemite Street, Englewood, Colorado               80112
       (Address of Principal Executive Offices)                (Zip Code)

                Registrant's telephone number:  (303)749-0210

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value

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) been subject to such filing
requirements for the past 90 days.  Yes    X        No   .

Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K 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-KSB or any
amendment to this Form 10-KSB [  ].

The aggregate market value of the voting stock held by non-
affiliates of the Registrant as of October 1, 2001: common stock,
par value $0.001 per share -- $534,456.  As of October 1, 2001,
the Registrant had 41,873,998 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one):

Yes          No    X   .

                                 TABLE OF CONTENTS

PART I.
                                                                      PAGE

ITEM 1.  DESCRIPTION OF BUSINESS                                         3

ITEM 2.  DESCRIPTION OF PROPERTY                                        10

ITEM 3.  LEGAL PROCEEDINGS                                              10

ITEM 4.  SUBMISSION TO 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 OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS                  13

ITEM 7.  FINANCIAL STATEMENTS                                           19

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE                         19

PART III.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
         CONTROL PERSONS; COMPLIANCE WITH SECTION
         16(A) OF THE EXCHANGE ACT                                      20

ITEM 10.  EXECUTIVE COMPENSATION                                        22

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT                                                22

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                24

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                              24

SIGNATURES                                                              25

PART I.

ITEM 1.  DESCRIPTION OF BUSINESS.

Business Development.

The Registrant's principal executive offices are located at
6886 South Yosemite St., Englewood, Colorado 80112; the telephone
number is (303) 749-0210.  The Registrant is a Wyoming
corporation formed in 1979.  The Registrant is comprised of two entities:

KEWi.net, Inc., a Colorado corporation, with 69% owned by
the Registrant, which was formed to provide Internet-based
knowledge management, community portal and support
capabilities, commonly known as iSupport.

3Si, Inc., a Colorado corporation and wholly-owned
subsidiary serves as a master reseller and application
service provider for the Registrant's family of products.

Prior to June 1999, 3Si, Inc. (solution, system and service
integration) provided comprehensive computer hardware and
software solutions for over 19 years to clients throughout  the
continent.  3Si, Inc. was originally founded in 1978 as Kimbrough
Computer Sales. The Registrant was bought by its current majority
shareholders in 1993 and its efforts were focused on integration
services and product development.  In May 1997, the Registrant
merged with a publicly traded company.

In June 1998, 3Si, Inc. announced the first of an intended
family of Internet-based products designed to further integrate a
client's information technology systems through the Internet.
The first product, an Internet-based customer support and
knowledge management solution, is being  sold under the name
KEWi, an acronym for "knowledge and experience bringing you
wisdom over the Internet."  It currently shares network
facilities with 3Si, Inc. in Englewood, Colorado.

In its effort to focus on the iSupport market, the
Registrant sold its computer reseller division to PC Specialists
of San Diego, California in May 1999.

Business of the Registrant.

(a)  Company Overview.

Through its KEWi family of products, the Registrant and its
subsidiaries are in the unique position to enhance and expand the
way users create, manage and exchange information as they
participate and compete in the global marketplace.  The
Registrant's mission is to refine and provide the technology to
capture the knowledge base and experience of the user, empower
the user to deliver this information in a meaningful way through
the Internet to audiences, and do so whenever and wherever
needed, in a simple, streamlined process.  The KEWi family of
products is suited for any business organization, internal or
independent, that must communicate different messages to
different audiences expediently through the Internet.

(b)  Industry Background.

As more and more businesses compete using the Internet as a
tool, it becomes increasingly critical to retain existing
customers.  Businesses can be very selective in choosing software
solutions that are available from a growing number of companies
competing for the online customer support market.

With over 90 million people accessing the Internet today,
and estimates of an additional 1 million new Internet users per
month, clearly the Internet provides an ideal vehicle for
manufacturers and service providers.  Companies and organizations
of all sizes are looking to technology to provide business-rich
applications for their customers to access 24 hours a day, 7 days
a week.  The Internet has emerged as the premier method of delivery.

Explosive growth and countless new technologies have
characterized support applications in recent years.  Now, users
are in search of ways to maximize and streamline their online
experience.  The challenge resides in providing a robust
application that can meet the demands of many concurrent users
and can be distributed geographically around the world.

According to Boston-based AMR Research, Inc., a highly
respected industry trend-spotting source, Internet-based support
strategies ". . . are becoming the hub of many companies'
marketing strategies."  AMR predicts that the total Customer
Relations Management ("CRM") will jump to $16.8 billion by 2003
from $2.3 billion in 1998.

Datamonitor expects this market to grow from $150 million in
1998 to $2 billion by 2003.  While new technologies may reduce
the manpower costs, they often increase technical development
expenses.  Exceptional customer service is what time and again
makes the difference between loyal customers and abandoned
shopping carts and businesses are in search of new and more
efficient ways to offer that customer service.

Global dependence on the Internet has exploded in sufficient
volume for the type of applications needed to bring about a
natural, logical redefinition of business communication and
distribution.  By the year 2000, according to Forrester Research
Inc. (a leading independent research firm that analyzes the
future of technology change and its impact on businesses,
consumers and society) Internet-based call center solutions have
reduced labor costs by about 43% as compared to an estimated
labor cost increase of 3 percent without Internet-based solutions.

(1)  Organizational Infrastructure Support Market.

Information technology groups comprise the organizational
infrastructure support market.  Internal support issues range
from supporting desktop and shared hardware, third party software
applications, corporate information systems, corporate networks
and central data center functions.  Information technology
departments, regardless of size of audience or organization
served, are becoming overwhelmed by the proliferation of services
and personnel required to support internal infrastructures.
Rather than having to support more hardware and/or software, the
Information technology industry is seeking more efficient ways to
manage the information and data they are tasked to coordinate and
distribute to a variety of audiences (including associates,
vendors and customers).  They are seeking to place as much power
into the hands of the end user as possible.

(2)  Proprietary Product Support Market.

The proprietary product support market is characterized as
an end-user customer support function.  External support markets
include product support, installation/configuration support,
account information, and call center management.

Gartner Group, a world leader in providing business
technology research, consumer and market intelligence,
consulting, conferences and decision-making tools, estimates that
revenues from software applications, including sales management,
telesales, and customer service solutions, will grow from $900
million in 1997 to $4 billion in 2002 (an annual growth rate of
35 percent).  Proprietary software products provide a clear
value-add to computer hardware manufacturers, which has led to
the current trend of major tier-1 manufacturers aggressively
seeking value-added partners with industry specific products and services.

Looking specifically at the help-desk market, IDC, a global
leader in providing technology intelligence, industry analysis,
market data, and strategic and tactical guidance to the builders,
providers and users of information technology, has estimated that
this market will grow to approximately $2.5 billion in the year
2000 and $3.5 billion by the year 2002.

(3)  Person-to-Person Internet Support Market.

Frustrated by long wait times on phone support lines, users
in increasing numbers are migrating to a more convenient and
diverse form of help:  newsgroups.  Person-to-person "chat" and
unregulated Internet newsgroups define this market.  For almost
any topic imaginable, a user can ask questions and get
information from others registered in the newsgroup.  Newsgroups
are one of the most useful, information-rich parts of the
Internet.  They are also the most unpredictable and can be unreliable.

Unlike typical help desk environments where a user has
interaction with a single phone support person, a newsgroup
allows interactions with many people each with their own skill
set, expertise and perspective.  For that reason, some groups are
officially sponsored; others are not.  Microsoft has gone as far
as to certify and compensate some independent support engineers
to monitor and provide quality support to certain newsgroup forums.

(4)  The Paging Market.

More data is sent over the paging infrastructure than by all
other forms of mobile data communications combined.  Today, the
paging industry is making a move that will change the way the
public thinks about paging and impact the way people communicate
for years to come.  The advent of two-way paging technology will
open an entirely new arena for the development and expansion of
wireless messaging.  The term "paging" as it is used today will
practically become obsolete.

One out of every seven people will carry a wireless device
by the year 2000, which translates into nearly 70 million
subscribers.  Demand for word messaging is growing at twice the
rate of numeric paging.  Demand for wide-area coverage is growing
at twice the rate as local coverage.  Nearly 75 percent of United
States professionals now spend more than 20 percent of their time
away from the office.  There are more than 600 wireless messaging
companies operating in the United States, of which the top 30
companies constitute 95 percent of the business.

(c)  Strategy.

The KEWi family of products has been designed to provide
maximum distribution, ease of use, accessibility, immediate
response time, scalability, and a rapid development cycle.
Through the integration of the KEWi family of products and
services, a complete web presence can be created and deployed in
less time for less money and less manpower, and can offer more
functionality than can more traditional approaches.

The Registrant's strategy is to continue to expand the KEWi
family of products and includes the following key points:

Leverage technical expertise in software support over the
Internet. The Registrant has designed its products to
provide immediate access support to Internet-based customers
and to provide a self-help knowledge management solutions.

Expand product offering to a broader customer base.  By
partnering with companies to market the Registrant's
products to government agencies and companies with large
distribution channels, the Registrant intends to increase
the Registrant's penetration into the Internet-based support
market.  The agreements with Qwest Cyber.Solutions,
Mobilitylink, and SMI International are examples of this strategy.

Utilize network of two-way wireless messaging.  The
Registrant intends to integrate business applications with a
two-way paging system.

(d)  Products And Services.

Each product in the KEWi family can be sold independently,
distributed through an application service provider ("ASP")
model, or integrated with the others to provide a complete
Internet business strategy:

Knowledge Management

Customer Support (iSupport)

Wireless Device Management

Crack The Books

Comprehensive integration of these components results in a
capability labeled Internet Management for the Enterprise.

(1)  Knowledge Management.

The term "at the speed of business" has taken on a new
meaning in this world of instantaneous communication.  Those with
access to knowledge in real time have a distinct competitive
advantage.  KEWi's knowledge management capability captures
knowledge at the source of expertise allowing controlled
distribution and access by anyone, anywhere, and at anytime.
KEWi's search capability is a unique combination of natural
language, key words, proprietary algorithms, and techniques
allowing each customer to define their own language.

Each business uses a unique language to communicate with
customers and employees.  KEWi's Knowledge Management has the
ability to incorporate the unique language of each business to
provide fast, reliable information and answers to user requests.
KEWi thus becomes a system capable of providing information at
the speed of thought.

(2)  Customer Support.

The Internet has opened the door to a new dimension in
delivering customer support.  Customers today expect and demand
to have access to information, answers and support 24 hours a
day, 7 days a week.  KEWi integrates capabilities directly
targeted at meeting and, in many cases, exceeding these customer
expectations.  Unlike other customer support products on the
market, KEWi has been designed from the ground up to be delivered
over the Internet and through wireless devices.  The most
inefficient use of call centers resources is the "status call."
Requests for status information on the resolution of a previous
inquiry can be as high as 15 percent to 20 percent of the total
call volume.  KEWi has a call status feature allowing the
customer to access status information instantaneously from the Internet.

(3)  Wireless Paging Management.

With a two-way pager and KEWi's Wireless Paging Management,
an organization can easily and conveniently manage and track
critical pager communications, interfacing business applications
with a nationwide paging network.  Immediate benefits include:

Maximizing support personnel productivity

Confirmation that the page was received and when

Sending and managing pages through a browser interface

Allocation of support personnel dynamically

Interaction with business applications through a pager

Greater control of paging expenses

Wireless Paging Management allows a user's business
application(s) to interact electronically with a paging network.
The service includes two primary interfaces (a) a 3Si developed
generic application interface that allows communication between
the customer network and the 3Si service; and (b) a site-specific
interface that passes two-way paging data to the business
application.  The site-specific interface may be developed by 3Si
or other systems integrators as is deemed most appropriate.  Two-
way paging management allows users to increase customer
satisfaction and reduce overall support costs.

(4)  CrackThe BooksT.

CrackTheBooksT is a scheduling and support service for
schools and other similarly-run organizations.  It facilitates
and streamlines sharing of knowledge and support to students,
their families, and other user groups.  Some of the information
shared through CrackTheBooksT is homework, testing schedules,
sporting events, questions for teachers, daily cafeteria menus,
practice schedules and many other options.

(5)  Internet Management for the Enterprise.

Internet Management for the Enterprise comprehensively
integrates all the components in the KEWi family of support
products, providing the following capabilities:  search engine,
portal management, access control, content filtering, content
creation and management, press releases, news articles, product
and services information, sales tools, careers and job postings,
self-help knowledge, sales lead routing, customer support system,
and integration with business applications.

(e)  Sales And Marketing.

The KEWi suite of Internet-based customer support products
is based on three fundamental philosophies:

capturing the creation of knowledge at the source;

aggregating that knowledge; and

controlled and systematic distribution through the Internet
and wireless devices.

(1)  3Si Application Service Provider.

In this subscription-based environment, the customer is
billed monthly for access to the KEWi service.  All of the
software, hardware and networking systems are maintained from the
Registrant's data center.  This business model has the advantage
of minimal startup expense time and does not require any
expertise from the customer.  Currently over 500 customers access
KEWi products and services through the ASP business model.  These
users include SMI International, Evolving Systems, and Cable Labs.

(2)  Customer Installed.

KEWi software and hardware may also be implemented directly
on the customer's network.  The software is licensed to customers
and an annual maintenance fee is charged for software support and
updates.  The KEWi family of products can be deployed in both
Intranet and Internet environments.  Currently, Qwest
Cyber.Solutions uses KEWi technology as the infrastructure behind
their new corporate web site.  The United States Air Force has
selected KEWi as a problem and status tracking tool for the
support of satellites.

(3)  Rebranding and Distribution.

Rebranding of KEWi products and services will produce the
most dramatic impact on gaining market share.  This distribution
model is an ideal model for companies that would like to get into
the web services and knowledge delivery market quickly and
efficiently.  The "Powered by KEWi" branding will generate
recurring revenue for the Registrant through royalty licensing.

In August 1999, the Registrant partnered with SMI
International, a Colorado Springs-based management group
(formerly Space Mark Inc.), by signing a master reseller
agreement in the ordinary course of business.  The agreement
gives SMI exclusive rights to market KEWi.net products to all
local, state and federal government agencies in the United
States, including the State of Alaska, as well as all government
and commercial customers in Australia, New Zealand.

A joint marketing and warrant agreement between KEWi.net and
Qwest Cyber.Solutions   has been signed in the ordinary course of
business with the goal of developing a Qwest Cyber.Solutions
branded suite of KEWi-based products.

(4)  Wireless Paging Management.

Wireless paging management has the ability to generate
revenue by developing customer specific business application
interface, sale of the pager devices, reselling the paging
service, and service fees for access through the KEWi data center
to the wireless paging network.

(f)  Strategic Alliances.

KEWi.net is at a crossroads in company growth.  As the
Registrant identifies qualified individuals with the skills,
expertise and vision to expand the organization, it relies on
several significant partnerships to guide us along the way as the
Registrant transitions from utilizing outsourcing to building a
solid infrastructure.  At this time, KEWi's wireless product
interfaces with SkyTelr network.  The Registrant has also signed
a technology alliance agreement in the ordinary course of
business with Weblink Wirelessr to integrate business applications.

The Registrant's strategy is to continue to expand the
offering of the KEWi family of products to a broader customer
base.  By partnering with application service providers and other
distribution partners, the Registrant intends to increase its
penetration into the Internet-based software market.  The
agreements with Qwest Cyber.Solutions are an example of this strategy.

The addition of document management and portal management to
the family of KEWi products, along with the expansion of
capabilities in the knowledge management and request tracking
products, has increased the size of the potential market for KEWi
products and services.

(g)  Competition.

With the proliferation of Internet-based customer support
systems, the competition, at first glance, may look intimidating.
For the most part, these companies have done a terrific job of
raising money and creating a presence in the financial markets.
However, the products are focused primarily on a small segment of
the overall requirements.  Most of the Internet-based support
products require the purchase of new servers, related software
and integration services in order to deploy the system over the Internet.

The Registrant believes there are significant opportunities
for differentiation of the KEWi products and services due to its
focus on the entire enterprise:  knowledge management,
distribution and support requirements.  Competitors in this
market are:  Silknet, Ask Jeeves, Inc., Brightware, and Motive.

(h)  Employees.

As of June 30, 2001, the Registrant had seven employees, six
of whom are in the area of sales and marketing and software
development and customer service, and one of whom is in administration.

ITEM 2.  DESCRIPTION OF PROPERTY.

From May 1, 1999 to June 30, 2000, the Registrant was
provided a small amount of space at its Englewood, Colorado
location by the purchaser of its systems integration business.
Effective as of October 1, 2000, the Registrant has a month-to-
month lease for the continued use of this space.

In June 2000, 3Si acquired $27,123 of computer equipment
under a capital lease.  The equipment was placed in service July
2000.  Accumulated amortization as of June 30, 2001, and
amortization expense for the year then ended is $9,041.

ITEM 3.  LEGAL PROCEEDINGS.

Other than as set forth below, the Registrant is not a party
to any material pending legal proceedings and, to the best of its
knowledge, no such action by or against the Registrant has been threatened.

On February 28, 2001, the Registrant filed a complaint in
the District Court of the State of Colorado disputing the
$2,211,048 liability that was the basis for the common stock
issued to Storage Area Network.  This complaint alleges breach of
contract, fraudulent misrepresentation, fraudulent concealment,
diversion of corporate opportunity, theft, violation of
securities laws, and civil conspiracy.  The relief sought
includes, among other things, money damages and rescission of the
settlement agreement.  Management is unable to take any position
at this time as to the likely outcome of the matter.  For a
further discussion of this matter, see Management's Discussion
and Analysis of Financial Condition and Results of Operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information.

The Registrant's Shares are traded in the Over-the-Counter
Bulletin Board (symbol "TSIH"), having commenced trading on
January 2, 1987 (on September 16, 1998, the name of the
Registrant was changed from Tyrex Oil Company).  The range of
closing bid prices shown below is as reported by this market.
The quotations shown reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not necessarily represent
actual transactions.

Per Share Common Stock Prices by Quarter
For the Fiscal Year Ended June 30, 2001

                                                       High              Low

Quarter Ended September 30, 2000                       0.25              0.11
Quarter Ended December 31, 2000                        0.20              0.08
Quarter Ended March 31, 2001                           0.24              0.06
Quarter Ended June 30, 2001                            0.15              0.06

Per Share Common Stock Prices by Quarter
For the Fiscal Year Ended on June 30, 2000

                                                       High              Low

Quarter Ended September 30, 1999                       0.20              0.10
Quarter Ended December 31, 1999                        0.18              0.07
Quarter Ended March 31, 2000                           0.94              0.12
Quarter Ended June 30, 2000                            0.50              0.19

Holders of Common Equity.

As of October 1, 2001, there were approximately 1,700
shareholders of record of the Registrant's common stock.

Dividend Information.

The Registrant has not declared or paid a cash dividend to
stockholders since it was incorporated.  The Board of Directors
presently intends to retain any earnings to finance Registrant
operations and does not expect to authorize cash dividends in the
foreseeable future.  Any payment of cash dividends in the future
will depend upon the Registrant's earnings, capital requirements
and other factors.

Equity Securities Sold Without Registration.

The Registrant made the following issiance of unregistered
securities during the fiscal year ended June 30, 2001:

On June 1, 2001, the Registrant granted warrants to purchase
100,000 shares of the  Registrant's common stock at a price of
$.25 per share.  These warrants were issued to a consultant in
connection with the preparation of a financing package to seek
debt or equity capital.  These warrants became exercisable on
June 1, 2001, and are effective until June 1, 2006.  Consulting
expense of $3,482 was recognized during the year ended June 30,
2001, related to the warrants.

No commissions or fees were paid in connection with this
issuance.  This issuance was undertaken pursuant to the limited
offering exemption from registration under the Securities Act of
1933 as provided under Rule 506 of Regulation D by the fact that:

the issuance were made to a sophisticated investor as
defined in Rule 502;

the information specified in paragraph (b)2(ii)(B) and
paragraph (b)(2)(ii)(C) of this section was provided to each investor;

the Registrant gave each purchaser the opportunity to ask
questions and receive answers concerning the terms and
conditions of the offering and to obtain any additional
information which the Registrant possessed or could acquire
without unreasonable effort or expense that is necessary to
verify the accuracy of information furnished;

at a reasonable time prior to the issuance of securities,
the Registrant advised the purchaser of the limitations on
resale in the manner contained in paragraph Rule 502(d)2 of
this section;

neither the Registrant nor any person acting on its behalf
sold the securities by any form of general solicitation or
general advertising; and

the company exercised reasonable care to assure that the
purchaser of the securities is not an underwriter within the
meaning of Section 2(11) of the Securities Act of 1933 in
compliance with Rule 502(d).

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with
the financial statements of the Registrant and notes thereto
contained elsewhere in this report.

Financial Condition at June 30, 2001.

(a)  General.

As of June 30, 2001, the Registrant had positive working
capital of approximately $29,000, and had working capital
provided by operation of $138,000 for the year then ended.
Substantially all June 30, 2001, trade receivables are current.
All trade payables are also current as of June 30, 2001, with the
exception of one $25,000 vendor account that will be paid off
between August and October 2001.

(b)  Vendor Settlements.

A settlement was reached with a vendor, Storage Area Network
("SAN"), in March 2000 whereby SAN received 6,460,137 shares
("the SAN Shares") of the Registrant's common stock and the
liability was discharged.  The SAN shares are subject to
redemption at a predetermined price under the following terms.
All contingent proceeds received after August 2000, from the May
1999 sale of the systems integration business, will be used to
redeem the SAN shares.  In addition, the Registrant will use 50%
of any capital investment or loans, and 50% of net income,
realized after August 2000, to redeem SAN shares.  At the point
SAN has received redemption payments totaling $2,200,000, the
Registrant will have the right, but not the obligation, to
continue purchasing the SAN Shares.

The Registrant has received a contingent payment of $75,000
in September 2000 and has net earnings that must, under the terms
of the redemption agreement, be used to redeem SAN shares. This
redemption agreement is being contested, and consequently no
redemptions will be made until after the dispute is resolved.

On February 28, 2001, the Registrant filed a complaint in
the District Court of the State of Colorado disputing the
$2,211,048 liability that was the basis for the common stock
issued to SAN.  This complaint alleges breach of contract,
fraudulent misrepresentation, fraudulent concealment, diversion
of corporate opportunity, theft, violation of securities laws,
and civil conspiracy.  The relief sought includes, among other
things, money damages and rescission of the settlement agreement,
as discussed above.  Management is unable to take any position at
this time as to the likely outcome of the matter.

(c)  Contingent Sales Proceeds.

The agreement for the May 1999, sale of the systems
integration business provides for contingent payments to the
Registrant of 75% of the profits in excess of contract renewal
payments from the sold business for the first year (April 2000),
and 50% of the profits in excess of contract renewal payments for
the second and third years (April 2001 and 2002).

Contract renewal payments of $75,000 and $250,000 were
received in September 2000 and March 2000, respectively.  Profits
from the sold business have not exceeded contract renewal
payments through April 2001 according to the purchaser's
unaudited calculations, and the purchaser asserts that no
additional contingent payments are due to the Registrant at this
time.  the Registrant has sent the purchaser a notice of
objection to the April 2001 calculation of profits from the sold
business.  the Registrant believes that the profits from the sold
business may be significantly understated, and that the
Registrant may be entitled to contingent payments. Management is
unable to take any position at this time as to the likely outcome
of this matter.

The first $158,000 of additional contingent payments earned
by the Registrant will be retained by the buyer to pay for
compensated absences for former Registrant employees. This amount
is included under accrued liabilities in the June 30, 2001
balance sheet. Management does not intend to make payments on
this balance until the contingent payment issue is resolved.

(d)  Other Sources of Working Capital.

The Registrant is anticipating that the $50,000 escrow
account (held to register the common stock subject to redemption)
will be released in the near future when the Registrant has
fulfilled its obligation to prepare the registration statements.

(e)  Credit Facilities.

The Registrant currently has no line of credit facility in
place.  The provision in the SAN settlement agreement, requiring
that 50% of loan proceeds will be used to redeem the SAN shares,
may impact the the Registrant's ability to obtain additional
short-term financing. Management is seeking a $100,000 line of
credit collateralized by anticipated receivables from future web
site development projects.

Results of Operations.

(a)  Overview.

The Registrant's principal services provided during FY 2001
were web site development and paging system implementation using
the KEWi.net products, and the licensing of the KEWi.net
Internet-based customer support system.

The Registrant entered into an agreement to develop and
maintain a web site for Qwest Cyber.Solutions ("QCS").  Revenues
of $967,000 under this agreement were reported in FY 2001. The
web site development was completed in FY 2001. The Registrant
anticipates providing maintenance, data storage, and special
project work to QCS in FY 2002.

The Registrant entered into an agreement with SMI
International ("SMI"), the entity that owns the 26% minority
interest in KEWi, to maintain and operate the Internet-based
customer support system for the U.S. Air Force Operational Space
and Support Program. The annual fee under this agreement was
$130,000. This agreement has been renewed through October 2001,
and is anticipated to be renewed for SMI's fiscal year of
November 2001 to October 2002.

The Registrant also entered into an agreement to implement a
paging system for Storage Technology Corporation ("STK").
Revenues of $60,000 under this agreement were reported in FY
2001. Another $60,000 of revenues will be recognized in FY 2002
upon completion of the agreement.

The Registrant is bidding to provide web site development
and maintenance services for several major entities for FY 2002.
The Registrant's bid to develop a web-based portal for Lucent
Technologies during the second quarter of FY 2002 has been
accepted. Revenues are estimated to be $500,000 from this project.

(b)  Year Ended June 30, 2001 with Comparison to Year Ended June 30, 2000.

The Registrant reported net earnings for FY 2001 of $105,580
compared with a restated net loss of $2,516,794 for FY 2000.
Revenues increased by approximately $1,066,000 for FY 2001
compared to FY 2000. This primarily reflects the new agreements
with QCS, SMI, and STK.

Cost of revenues increased by approximately $270,000 for FY
2001 compared to FY 2000. Total cost of revenue for FY 2001
includes $197,000 of subcontract costs on the QCS agreement and
$220,000 of compensation costs and payroll taxes.

Selling and administrative expenses are comparable for FY
2001 and FY 2000.  A settlement loss of $2,028,952 was recorded
in FY 2000 equal to the difference between the $2,211,048
liability to Storage Area Network and the $4,240,000 value of the
shares issued to discharge the debt.

Interest expense decreased by approximately $179,000 for FY
2001 compared to FY 2000. Interest expense of $183,000 was
incurred and paid to SAN in FY 2000 prior to the settlement
agreement reached on the $2.2 million debt owed by the
Registrant.  The Registrant's only debt subject to interest at
June 30, 2001, is a $17,000 capital lease.

Contract renewal payments of $75,000 and $250,000 related to
the agreement for the May 1999, sale of the systems integration
business, were received in September 2000 and March 2000, and
have been reported as gain on disposal of the systems integration
segment.  No future contract renewal payments are provided for in
the May 1999 agreement.

Risk Factors.

The Registrant recognizes that with the trend toward
Internet-based software products, there is a short window of
opportunity where KEWi, a developed and available product, can
capture a market demanding Internet designed solutions.  The risk
of losing this advantage exists.  There is no assurance that the
Registrant will be able to capture and maintain enough market
share to compete successfully in the future.  The Registrant sees
the following risk factors associated with its business:

(a)  Product Development.

There can be no assurance that the company will generate
significant revenues in the future from its developed products;
and there can be no assurance that the company will operate at a
profitable level.  If the company is unable to obtain customers
and generate sufficient revenues so that it can profitably
operate, the company's business will not succeed.  In such event,
investors in the shares of common stock of the Registrant may
lose their entire investment.

As a result of the fixed nature of many of the Registrant's
expenses, the company may be unable to adjust spending in a
timely manner to compensate for any unexpected delays in the
marketing of the company's products or any capital raising or
revenue shortfall.  Any such delays or shortfalls will have an
immediate adverse impact on the company's business, operations
and financial condition.

(b)  Significant Working Capital Requirements.

The working capital requirements associated with the plan of
business of the Registrant will continue to be significant.  The
Registrant anticipates, based on currently proposed assumptions
relating to its operations (including with respect to costs and
expenditures and projected cash flow from operations), that it
can generate sufficient cash flow to continue its operations for
an indefinite period at the current level without requiring
additional financing.  However, the Registrant will need to raise
additional capital in the next 12 months, through debt or equity,
to implement fully implement its sales and marketing strategy and
grow.  In the event that the Registrant's plans change or its
assumptions change or prove to be inaccurate or if cash flow from
operations proves to be insufficient to fund operations (due to
unanticipated expenses, technical difficulties, problem or
otherwise), the Registrant would be required to seek additional
financing sooner than currently anticipated or may be required to
significantly curtail or cease its operations.

(c)  Control of the Registrant by Officers and Directors.

The Registrant's officers and directors beneficially own
approximately 64% of the outstanding shares of the Registrant's
common stock.  As a result, such persons, acting together, have
the ability to exercise significant influence over all matters
requiring stockholder approval.  Accordingly, it could be
difficult for the investors hereunder to effectuate control over
the affairs of the Registrant.  Therefore, it should be assumed
that the officers, directors, and principal common shareholders
who control the majority of voting rights will be able, by virtue
of their stock holdings, to control the affairs and policies of
the Registrant.

(d)  Product Distribution and Market Acceptance.

The Registrant has developed a subscription-based
distribution model for our proprietary products.  Although
subscription-based services are commonplace within the
information technology industry, this model represents a
significant deviation for the traditional knowledge management
and support center industry.  Existing support center call
management products are Windows-based applications licensed on a
per-user basis with an associated annual maintenance fee. A
subscription-based service offers many advantages over
traditional software distribution models.  This model has not yet
been proven within the target market.

(e)  Changing Technologies.

The Registrant's business is subject to changes in
technology and new service introductions.  Accordingly, the
Registrant's ability to compete will be depend upon its ability
to adapt to technological changes in the industry and to develop
services based on those changes to satisfy evolving client
requirements.  Technological changes may create new products or
services that are competitive with, superior to, or render
obsolete the services currently offered.

(f)  Acceptance and Effectiveness of Internet Electronic Commerce.

The Registrant's success in establishing an e-commerce
business web site will be dependent on consumer acceptance of e-
retailing and an increase in the use of the Internet for e-
commerce.  If the markets for e-commerce do not develop or
develop more slowly than the Registrant expects, its e-commerce
business may be harmed.  If Internet usage does not grow, the
Registrant may not be able to increase revenues from Internet
advertising and sponsorships which also may harm both the
Registrant's retail and e-commerce business. Internet use by
consumers is in an early stage of development, and market
acceptance of the Internet as a medium for content, advertising
and e-commerce is uncertain.  A number of factors may inhibit the
growth of Internet usage, including inadequate network
infrastructure, security concerns, inconsistent quality of
service, and limited availability of cost-effective, high-speed
access.  If these or any other factors cause use of the Internet
to slow or decline, the Registrant's results of operations could
be adversely affected.

(g)  Competition in Internet Commerce.

Increased competition from e-commerce could result in
reduced margins or loss of market share, any of which could harm
both the Registrant's retail and e-commerce businesses.
Competition is likely to increase significantly as new companies
enter the market and current competitors expand their services.
Many of the Registrant's present and potential competitors are
likely to enjoy substantial competitive advantages, including
larger numbers of users, more fully-developed e-commerce
opportunities, larger technical, production and editorial staffs,
and substantially greater financial, marketing, technical and
other resources.  If the Registrant does not compete effectively
or if it experiences any pricing pressures, reduced margins or
loss of market share resulting from increased competition, the
Registrant's business could be adversely affected.

(h)  Unreliability of Internet Infrastructure.

If the Internet continues to experience increased numbers of
users, frequency of use or increased bandwidth requirements, the
Internet infrastructure may not be able to support these
increased demands or perform reliably. The Internet has
experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure, and could face
additional outages and delays in the future.  These outages and
delays could reduce the level of Internet usage and traffic on
the Registrant website.  In addition, the Internet could lose its
viability due to delays in the development or adoption of new
standards and protocols to handle increased levels of activity.
If the Internet infrastructure is not adequately developed or
maintained, use of the Registrant website may be reduced.  Even
if the Internet infrastructure is adequately developed, and
maintained, the Registrant may incur substantial expenditures in
order to adapt its services and products to changing Internet
technologies.  Such additional expenses could severely harm the
Registrant's financial results.

(i)  Governmental Regulation of the Internet.

The Registrant is subject to the same federal, state and
local laws as other companies conducting business on the
Internet.  Today, there are relatively few laws specificlaly
directed towards online services.  However, due to the increasing
popularity and use of the Internet and online services, it is
possible that laws and regulations will be adopted with respect
to the Internet or online services.  These laws and regulations
could cover issues such as online contracts, user privacy,
freedom of expression, pricing, fraud, content and quality of
products and services, taxation, advertising, intellectual
property rights and informatino security.  Applicability to the
Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues,
taxation, libel, obscenity and personal privacy is uncertain.

Several states have proposed legislation that would limit
the uses of personal user information gathered online or require
online services to establish privacy policies.  The Federal Trade
Commission also has recently started a proceeding with one online
service regarding the manner in which personal information is
collected from users and provided to third parties.  Changes to
existing laws or the passage of new laws intended to address
these issues could directly affect the way the Registrant does
business or could create uncertainty in the marketplace.  This
could reduce demand for the Registrant's services or increase the
delivery costs, or could otherwise harm our business.  In
addition, goods to users worldwide, foreign jurisdictions may
claim that the Registrant is required to comply with their laws.
In some jurisdictions, the Registrant will be required to collect
value-added taxes on the Registrant's fees.  Our failure to
comply with foreign laws could subject it to penalties ranging
from fines to bans on the Registrant's ability to offer its services.

(j)  Shares Eligible For Future Sale.

All of the 26,012,081 shares of common stock which are
currently held, directly or indirectly, by management have been
issued in reliance on the private placement exemption under the
Securities Act of 1933.  Such shares will not be available for
sale in the open market without separate registration except in
reliance upon Rule 144 under the Securities Act of 1933.  In
general, under Rule 144 a person (or persons whose shares are
aggregated) who has beneficially owned shares acquired in a non-
public transaction for at least one year, including persons who
may be deemed affiliates of the Registrant (as that term is
defined under that rule) would be entitled to sell within any
three-month period a number of shares that does not exceed the
greater of 1% of the then outstanding shares of common stock, or
the average weekly reported trading volume during the four
calendar weeks preceding such sale, provided that certain current
public information is then available.  If a substantial number of
the shares owned by these shareholders were sold pursuant to Rule
144 or a registered offering, the market price of the common
stock could be adversely affected.

Forward Looking Statements.

The foregoing Management's Discussion and Analysis of
Financial Condition and Results of Operation contains "forward
looking statements" within the meaning of Rule 175 of the
Securities Act of 1933, as amended, and Rule 3b-6 of the
Securities Act of 1934, as amended, including statements
regarding, among other items, the Registrant's business
strategies, continued growth in the Registrant's markets,
projections, and anticipated trends in the Registrant's business
and the industry in which it operates.  The words "believe,"
"expect," "anticipate," "intends," "forecast," "project," and
similar expressions identify forward-looking statements.  These
forward-looking statements are based largely on the Registrant's
expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Registrant's
control.  The Registrant cautions that these statements are
further qualified by important factors that could cause actual
results to differ materially from those in the forward looking
statements, including, among others, the following: reduced or
lack of increase in demand for the Registrant's products,
competitive pricing pressures, changes in the market price of
ingredients used in the Registrant's products and the level of
expenses incurred in the Registrant's operations.  In light of
these risks and uncertainties, there can be no assurance that the
forward-looking information contained herein will in fact
transpire or prove to be accurate.  The Registrant disclaims any
intent or obligation to update "forward looking statements."

ITEM 7.  FINANCIAL STATEMENTS.

Financial statements as of and for the year ended June 30, 2001, and for the
year ended June 30, 2000 are presented in a separate section of this report
following Item 13.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

PART III.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Directors and Executive Officers.

The names, ages, and respective positions of the directors
and executive officers of the Registrant are set forth below;
there are no promoter and control persons of the Registrant.  The
Directors named below will serve until the next annual meeting of
the Registrant's stockholders or until their successors are duly
elected and have qualified.  Directors are elected for a one-year
term at the annual stockholders' meeting.  Officers will hold
their positions at the will of the Board of Directors, absent any
employment agreement, of which none currently exist or are
contemplated.  There are no arrangements, agreements or
understandings between non-management shareholders and management
under which non-management shareholders may directly or
indirectly participate in or influence the management of the
Registrant's affairs.  The Directors and Executive Officers of
the Registrant are not a party to any material pending legal
proceedings and, to the best of their knowledge, no such action
by or against them has been threatened.

(a)  Frank W. Backes, President/Director.

Mr. Backes, age 40, was appointed President and Chief
Executive Officer of the Registrant in June 1999.  Mr. Backes
previously served as Executive Vice President and Chief
Technologist of the Registrant since August 1993.  Prior to 1993,
he served as a computer industry analyst with Digital Equipment
Corporation.  Mr. Backes also serves as a Director of the Registrant.

(b)  Jerome K. Thorson, Chief Executive Officer/Director.

Mr. Thorson, age 54, joined the Registrant on May 1, 2001.
He has worked in the information technology industry for more
than 30 years.  Most recent, Mr. Thorson was self-employed as a
consultant, working with venture capitalists to create global
managed service companies.  From 1999 to 2000, he served as
president and chief operating officer of (i)Structure, a
technology company.  For the period of 1971 to 1999, Mr. Thorson
was employed by Electronic Data Systems Corporation, his last
position being that of a business unit president.

(c)  Frederick J. Slack, Executive Vice President/Director.

Mr. Slack, age 46, was appointed Executive Vice President in
June 1999 of KEWi.net and is responsible for sales and marketing.
From 1993 to June 1999, he served as President and Chief
Executive Officer of the Registrant.  Prior to joining the
Registrant in 1993, Mr. Slack served as project manager for
government customers at Digital Equipment Corporation.  Mr. Slack
also serves as a Director of the Registrant.

(d)  Felipe L. Valdez, Secretary/Director.

Felipe L. Valdez, 48, was appointed Secretary of the
Registrant in June 1999.  From August 1993 to June 1999, he
served as Chief Operating Officer of the Registrant.  Prior to
1993, Mr. Valdez spent 17 years as a manager with Digital
Equipment Corporation.  Mr. Valdez also serves as a Director of
the Registrant.

(e)  Tom N. Richardson, Director.

Mr. Richardson, age 51, has served as a Director of the
Registrant since July 1986.  Mr. Richardson has been an
independent oil operator since December 1997.  From March 1994 to
December 1997, he served as President and Chief Financial Officer
of Tyrex Oil Co.  Mr. Richardson joined Tyrex Oil Co. in 1980 as
Land Manager.

(f)  Doris K. Backus, Director.

Doris K. Backus, 47, has served as a Director of the
Registrant since December 1991.  She previously served as
Secretary of the Registrant and was employed by the company from
1983 to 1999.

Compliance with Section 16(a) of the Exchange Act.

Section 16(a) of the Securities Exchange Act of 1934
requires the Registrant's directors,  certain officers and
persons holding 10% or more of the Registrant's common stock to
file reports regarding their ownership and regarding their
acquisitions and dispositions of the Registrant's common stock
with the Securities and Exchange Commission.  Such persons are
required by SEC regulations to furnish the Registrant with copies
of all Section 16(a) forms they file.

Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished to the registrant under Rule 16a-3(d) during
fiscal 2000, Forms 5 with respect to fiscal 2000, and certain
written representations from executive officers and directors,
the Registrant is aware that Mr. Thorson inadvertently failed to
file a Form 3 upon becoming an officer and director of the
Registrant.  In addition, Messrs. Slack, Valdez, and Richardson
inadvertemtly failed to file Form 4's after the disposition of
certain shares of the Registrant (which will appear on the
Registrant's Form 5).  Finally, the Registrant inadvertently
failed to file a Form 5 after the 2001 fiscal year end.  These
reports are being prepared and will be filed shortly.  The
Registrant is unaware of any other required reports that were not
timely filed.

ITEM 10.  EXECUTIVE COMPENSATION.


                    Summary Compensation Table

                     Annual compensation              Long-term
                                                     compensation
                                           Awards          Payouts
                                    Other           Securi           All
                                    Annual          ties             other
Name and                            compen Restrict under            compen
Principal   Year   Salary   Bonus   sation  stock   lying   LTIP     sation
Position                                    award   options payouts
                                                    SARs
                     ($)     ($)     ($)     ($)     (#)       ($)     ($)

Frank W.    2001   $122,800   0       0       0       0         0       0
Backes,     2000   $114,800   0       0       0       0         0       0
President   1999   $110,000   0       0       0       0         0       0

Frederick   2001   $118,000   0       0       0       0         0       0
J. Slack,   2000   $110,000   0       0       0       0         0       0
Ex. Vice    1999   $110,000   0       0       0       0         0       0
President

Felipe L.   2001   $  2,700   0       0       0       0         0       0
Valdez,     2000   $  4,230   0       0       0       0         0       0
Secretary   1999   $ 91,667   0       0       0       0         0       0

(1)  Perquisites and other personal benefits or property did not,
in aggregate, exceed $50,000 or 10% of the total compensation.

(2)  There were no stock options granted to officers or directors
during the fiscal year ended June 30, 2001.

Mr. Thorson only joined the Registrant on May 1, 2001 and only
received $10,000 in compensation from that date to the end of the
fiscal year.  None of the other directors of the Registrant
received any compensation.

Other Compensation.

(a)  There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
Registrant in the event of retirement at normal retirement date
as there was no existing plan provided for or contributed to by
the Registrant.

(b)  No remuneration is proposed to be paid in the future
directly or indirectly by the Registrant to any officer or
director since there was no existing plan which provides for such
payment, including a stock option plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information regarding the
beneficial ownership of shares of the Registrant's common stock
as of October 1, 2001 (41,873,998 issued and outstanding) by (i)
all stockholders known to the Registrant to be beneficial owners
of more than 5% of the outstanding common stock; and (ii) all
officers and directors of the Registrant, individually and as a
group (each person has sole voting power and sole dispositive
power as to all of the shares shown as beneficially owned by them):

Title of        Name and Address               Amount of       Percent of
Class           of Beneficial Owner            Beneficial         Class
                                               Ownership(1)

Common Stock    Frederick J. Slack               8,677,444         20.72%
                6886 South Yosemite Street
                Englewood, Colorado 80112

Common Stock    Felipe L. Valdez                 8,620,545         20.59%
                6886 South Yosemite Street
                Englewood, Colorado 80112

Common Stock    Frank W. Backes                  8,477,777         20.25%
                6886 South Yosemite Street
                Englewood, Colorado 80112

Common Stock    Storage Area Network             6,460,137 (2)     15.43%
                10691 East Tomich Drive
                Franktown, Colorado 80116

Common Stock    Tom Richardson                     182,748          0.44%
                777 North Overland Trail #101
                Casper, Wyoming 82601

Common Stock    Doris K. Backus                     53,567          0.13%
                777 North Overland Trail, #101
                Casper, Wyoming 82601

Common Stock    Jerome K. Thorson
                6886 South Yosemite Street
                Englewood, Colorado 80112                0          0.00%

Common Stock    Shares of all directors and     26,012,081         62.12%
                executive officers as a group
                (6 persons)

(1)  None of these security holders has the right to acquire any
amount of the shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations.

(2)  The Registrant is not aware as to who are the principal
holders of this company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Other than as set forth below, during the past two years,
there have not been any transaction that have occurred between
the Registrant and its officers, directors, and five percent or
greater shareholders.

Loans payable to 3Si, Inc. from its Messrs. Backes, Slack,
and Valdez totaled $162,395 at June 30, 1999.  These loans are
collateralized by the Registrant's common stock, bear interest at
5.37% and are due July 1, 2004.  Since the only collateral for
these loans was the stock of the Registrant that was subject to
going concern considerations at June 1999, the $162,395 balance
was fully reserved and recorded as an expense during the year
ended June 30, 1999.  No interest income has been accrued since
June 30, 1999.  These amount owed are evidenced by three
promissory notes, all dated October 8, 2001.  The terms of these
transactions are no less favorable to the Registrant than the
terms it could obtain from disinterested third parties.

ITEM 13.  EXHIBITS, REPORTS ON FORM 8-K, AND INDEX TO FINANCIAL STATEMENTS.

Exhibits.

Exhibits included or incorporated by reference in this
document are set forth in the Exhibit Index.

Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter of
the fiscal year covered by this report.

Index to Financial Statements                                            Page

Independent Auditors' Report                                               26

Consolidated Balance Sheet as of June 30, 2001                             27

Consolidated Statements of Earnings for the years
ended June 30, 2001 and June 30, 2000                                      29

Consolidated Statement of Stockholders' Equity for the years
ended June 30, 2001 and June 30, 2000                                      30

Consolidated Statements of Cash Flows for the years
ended June 30, 2001 and June 30, 2000                                      31

Notes to Consolidated Financial Statements                                 33


                                     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.

                                           3Si Holdings, Inc.


Dated: October 12, 2001                    By: /s/ Frank W. Backes
                                           Frank W. Backes, 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 date indicated:

Signature                    Title                                    Date

/s/ Frank W. Backes          President/Director              October 12, 2001
Frank W. Backes

/s/ Jerome K. Thorson        Chief Executive                 October 12, 2001
Jerome K. Thorson            Officer/Director

/s/ Frederick J. Slack       Executive Vice                  October 12, 2001
Frederick J. Slack           President/Director

/s/  Felipe L. Valdez        Secretary/Treasurer             October 12, 2001
Felipe L. Valdez             (principal financial and
                             accounting officer)/Director

/s/  Tom Richardson          Director                        October 12, 2001
Tom Richardson

/s/  Doris K. Backus         Director                        October 12, 2001
Doris K. Backus

                            INDEPENDENT AUDITORS' REPORT

Board of Directors
3Si Holdings, Inc.

We have audited the accompanying consolidated balance
sheet of 3Si Holdings, Inc. as of June 30, 2001, and the related
consolidated statements of earnings, cash flows, and changes in
stockholders' (deficit) for the years ended June 30, 2001 and
2000.  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 of America.
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 presentations.  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 3Si Holdings, Inc. as of June 30, 2001, and the
results of its operations and its cash flows for the years ended
June 30, 2001 and 2000, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note B to the financial statements, the
sale of substantially all assets effective as of May 1, 1999, was
erroneously not previously reported as the discontinuation of a
business segment.  Accordingly, the 2000 financial statements
have been restated to correct the presentations.  There is no
effect on net loss or equity.

As discussed in Note H to the financial statements, the issuance
of 3Si Holdings, Inc. common stock on March 27, 2000, to settle a
vendor debt was previously reported at the amount of the
liability.  The value of the 3Si Holdings, Inc. common stock
issued has been restated to the bid price on the date of
issuance.  As discussed in Note I to the financial statements, no
value was assigned, in previously issued financial statements, to
rights granted in May 2000 to acquire 10% of the outstanding
common shares of the KEWi subsidiary.  The value of these rights
has been restated to reflect their value as being comparable to
the value of warrants to acquire stock in the parent company -
3Si Holdings, Inc.  The related net loss attributable to the
minority interest has also been restated.  The effect of these
restatements is to increase the net loss for the year ended June 30, 2000
by $2,072,052.

/s/ Balogh and Tjornehoj, LLP
Balogh and Tjornehoj, LLP
September 7, 2001
Denver, Colorado

                               3SI HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                                 JUNE 30, 2001

                                     ASSETS

CURRENT ASSETS
Cash and cash equivalents (Note B)                                $  198,476
Accounts receivable (Note D)                                          31,448
Other current assets                                                   9,478

Total current assets                                                 239,402

PROPERTY AND EQUIPMENT AT COST (NOTES B AND G)
Computer systems and software                                        117,981
Less accumulated depreciation and amortization                       (39,564)

Net equipment                                                         78,417

OTHER ASSETS
Escrow account (Note H)                                               51,497

Total other assets                                                    51,497

Total assets                                                      $  369,316

                         LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
Current portion of long-term debt (Note G)                        $    8,833
Accounts payable - trade                                              43,782
Accrued liabilities (Notes F and H)                                  157,708

Total current liabilities                                            210,323

NON-CURRENT LIABILITIES
Long-term debt (Note G)                                                8,640

COMMITMENTS AND CONTINGENCIES (NOTES G AND H)                              -

MINORITY INTEREST (NOTE I)                                            15,899

COMMON STOCK SUBJECT TO REDEMPTION (NOTES B AND H)
6,460,137 shares issued at June 30, 2001                           2,211,048

STOCKHOLDERS' (DEFICIT) (NOTE J)
Common stock - authorized 50,000,000
shares of $.01par value; 41,634,487 shares issued at
June 30, 2001                                                        378,370

Additional paid-in capital                                         3,256,174

Accumulated (deficit)                                             (5,672,954)

Treasury stock at cost - 6,220,626 shares                            (38,184)

Total stockholders' (deficit)                                     (2,076,594)

Total liabilities and stockholders' (deficit)                     $  369,316

           The accompanying notes are an integral part of these statements

                                    3Si HOLDINGS, INC.
                          CONSOLIDATED STATEMENTS OF EARNINGS

Year Ended June 30,                                      2001            2000

Consulting and other service revenue                 $ 1,197,886    $  131,708

Cost of revenues                                         469,595       198,876

Gross profit                                             728,291       (67,168)

Selling and administrative expenses                      689,074       684,900

Earnings (loss) from operations                           39,217      (752,068)

Other income (expense)
Miscellaneous income                                      24,516        33,665

Loss on settlement of debt (Note H)                            -    (2,028,952)

Interest expense (Note E)                                 (3,876)     (182,749)

Total other income (expense)                              20,640    (2,178,036)

Net earnings (loss) before minority interest              59,857    (2,930,104)

Minority interest (Note I)                               (29,277)      163,310

Net earnings (loss) before income taxes                   30,580    (2,766,794)

Income tax expense (Note L)                                    -             -

Net earnings (loss) from continuing operations            30,580    (2,766,794)

Discontinued operations (Note N)
Gain on disposal of systems integration segment
(no related tax benefit was recorded)                     75,000       250,000

Net discontinued operations                               75,000       250,000

Net earnings (loss )                                $    105,580   $(2,516,794)

Basic and diluted earnings (loss) per
common share (Note B)
Net earnings (loss) from continuing operations      $          -   $     (0.08)
Gain on disposal of systems integration segment                -          0.01
Net earnings (loss)                                 $          -   $     (0.07)

Weighted average shares outstanding                   35,317,795    34,876,682

           The accompanying notes are an integral part of these statements

                                     3Si HOLDINGS, INC.
                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)


<TABLE>
<CAPTION>
                                                                                                  Total
                              #                    Additional                  Treasury       Stockholders'
                           Common       Common      Paid-In      Accumulated     Stock          (Deficit)
                           Shares       Stock       Capital       (Deficit)                       Equity
<S>                      <C>          <C>          <C>          <C>            <C>            <C>
Balance June 30, 1999    40,084,156   $  400,842   $ 2,773,536   $(3,261,740)  $(1,857,353)   $(1,944,715)

Shares reacquired; 60,000
at $.186 per share                -            -             -             -       (11,169)       (11,169)

Shares reacquired;
110,000 at $.191 per share        -            -             -             -       (21,028)       (21,028)

Exercise of options at
$.10 per share              117,800        1,178        10,602             -             -         11,780
Common shares issued in
settlement of litigation,
net of 6,005,626 shares
from treasury               454,511         4,545      173,041                   1,851,366      2,028,952

Less common shares subject
to redemption            (4,252,015)      (42,520)      42,520                           -              -

Rights granted to acquire
stock in KEWi.net (Note I)                              62,500                                     62,500

Shares issued in settlement
of litigation (Note H)    1,100,000        11,000      143,688              -             -       154,688

Restated net loss for the
year ended June 30, 2000          -             -            -    (2,516,794)             -    (2,516,794)

Balance June 30, 2000    37,504,452       375,045    3,205,887    (5,778,534)       (38,184)   (2,235,786)

Shares issued for legal
services at $.156 per
share on October 4, 2000    216,199         2,162       31,565             -              -        33,727

Shares issued for legal
services at $.141 per
share on October 31, 2000   116,332         1,163       15,240             -              -        16,403

Warrants granted to
Consultant                       -              -        3,482             -              -         3,482

Net earnings for the year
ended June 30, 2001              -              -            -       105,580              -       105,580

Balance June 30, 2001   37,836,983        378,370    3,256,174    (5,672,954)       (38,184)   (2,076,594)


</TABLE>

See Note H related to 6,460,137 shares of common stock, subject to redemption,
which are presented separately from stockholders' deficit on the balance sheet.

         The accompanying notes are an integral part of these statements

                                 3Si HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended June 30,                                      2001         2000

Operating activities:
Net earnings (loss)                                  $  105,580   $(2,516,794)
Reconciling adjustments:
Depreciation and amortization                            24,347        39,717
(Recovery of) doubtful accounts                               -       (11,169)
Loss on settlement of debt                                    -     2,028,952
Rights granted to acquire stock in KEWi.net                   -        62,500
Stock issued for services                                50,130             -
Compensation upon grant of warrants                       3,482             -
Net (gain) on disposition of assets                     (75,000)     (223,417)
Earnings (loss) attributable to minority interest        29,277      (163,310)
Changes in operating assets and liabilities:
Accounts receivable                                      23,157       382,616
Other assets                                             (8,262)       59,784
Accounts payable and accrued liabilities               (122,689)   (1,039,718)
Total adjustments                                       (75,558)   (1,135,955)

Net cash provided by (used for) operating activities     30,022    (1,380,839)

Investing activities:
Proceeds on sale of assets (Note N)                      75,000       250,000
Purchase of equipment                                   (35,334)      (26,949)
Software development costs                                    -       (15,756)
Escrow account                                           (1,497)      (50,000)

Net cash provided by investing activities                38,169       157,295

Financing activities:
Payments on notes payable and capital lease              (7,413)       (1,803)
Proceeds from exercise of options (Note J)                    -        11,780
Purchase of treasury stock                                    -       (21,028)

Net cash (used for) financing activities                 (7,413)      (11,051)

Net change in cash and cash equivalents                  60,778    (1,234,595)

Cash and cash equivalents at beginning of period        137,698     1,372,293

Cash and cash equivalents at end of year                198,476       137,698
3Si HOLDINGS, INC.

Summary of noncash investing and financing activities:

The Company issued 1,100,000 shares of its common stock in
September 1999 to settle litigation with a leasing company (See Note H).

The Company issued 6,460,137 shares of its common stock subject to
redemption in March 2000 to settle a liability with a vendor (See Note H).

The Company granted rights to purchase 10% of the KEWi.net, Inc. common
stock in May 2000 in connection with a joint marketing agreement (See Note I).

The Company issued 332,531 shares of its common stock in October 2000
for legal services provided.

The Company reacquired 60,000 shares of its common stock in April 2000 to
satisfy an obligation from a former employee (See Note J).

The Company entered into a capital lease agreement in the year ended
June 30, 2000 (See Note G).

                                                         2001         2000

Interest paid                                       $     3,876     $ 182,749
Income tax paid                                               -             -

          The accompanying notes are an integral part of these statements

                               3Si HOLDINGS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION

3Si, Inc.

3Si, Inc. ("3Si") was incorporated in the State of Colorado in
1979.  3Si is a wholly owned subsidiary of 3Si Holdings, Inc., a
publicly traded company ("TSIH" or the "Company"), with a
controlling ownership in KEWi.net, Inc.  In May 1999, 3Si sold
its interest in its computer reseller, consulting, and government
sales divisions (See Note N) for the purpose of focusing its
efforts on the marketing, sales, and integration of KEWi.net
products.  3Si is an integration partner and master reseller for KEWi.net.

On May 28, 1997, TSIH (previously known as Tyrex Oil Company)
acquired 100% of the common stock of 3Si.  Under the terms of the
merger, 3Si is a wholly owned subsidiary of TSIH.  The merger has
been accounted for as a purchase of TSIH by 3Si, since the merger
resulted in 72% of the outstanding stock of TSIH being held by
the 3Si stockholders.

3Si focuses on the sales, marketing, integration and distribution
of KEWi.net products.  While KEWi.net focuses its efforts on the
development of Internet-based customer support products, 3Si
specializes in the business application of these products.

The Company's principal services provided during the years ended
June 30, 2001 and 2000, were web site development using the
KEWi.net products, and the licensing of the KEWi.net Internet-
based customer support system.  The Company's principal markets
are large corporations located in Colorado.

The corporate offices are located in Englewood, Colorado.

KEWi.net, Inc.

KEWi.net, Inc. ("KEWi") was incorporated in February 1999 as a
TSIH subsidiary in Colorado. TSIH owns 69% of the outstanding
common stock of KEWi as of June 30, 2001 and 2000.

Principles of Consolidation

The accounts of 3Si and KEWi are consolidated into the TSIH
financial statements.  All intercompany balances and transactions
have been eliminated.  A minority interest is presented in the
TSIH financial statements for the 31% interest of KEWi not owned
by TSIH (See Note I).

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Comparability of Financial Statements

Certain items from the June 30, 2000 financial statements have
been reclassified in order to make them comparable to the current
financial statements.  See Notes H and I for restatements made as
of June 30, 2000.

Business Segments

The Company operated in only one business segment as a systems
integrator until May 1999.  Subsequently, TSIH operated in only
one business segment related to its KEWi.net products.  Revenues
are all attributed to operations within the United States.  Long-
lived assets are all located within the United States.  See Note
C for information on major customers.

The sale of substantially all assets effective as of May 1, 1999,
is considered the discontinuation of a business segment (See Note
N).  The disclosures in the June 30, 2000, financial statements
have been revised to add the reporting of discontinued
operations.  There is no effect on net loss or equity related to
the correction of this error.

Use of Estimates

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

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents.

Depreciation and Amortization

Depreciation and amortization have been provided in amounts
sufficient to allocate the costs of depreciable assets to
operations over their estimated useful lives of five to seven
years using the straight-line method.  Equipment acquired under
capital leases is amortized on a straight-line basis over the
lease period.  Amortization of capitalized software development
costs has been provided over a period of two years.  Depreciation
and amortization expense is as follows:

                                Equipment       Software
                                and Capital    Development
Year ended                      Leases            Costs

6/30/2000                       $   7,717      $    32,000
6/30/2001                       $  24,347      $         -

Revenue Recognition

The Company's revenue recognition policies are in compliance with
all applicable accounting regulations, including American
Institute of Certified Public Accountants ("AICPA") Statements of
Position ("SOP") 97-2 and 98-4, "Software Revenue Recognition".
These statements provide criteria to be met in order for revenue
to be recognized.  The criteria applicable to web site
development include determinability of the amount of revenue,
measuring progress-to-completion, and probability of collection.
Revenues from other contract services are generally recognized
under the percentage-of-completion method, as measured by
achievement of the milestones specified in the agreements.

Maintenance and support revenues are recognized ratably over the
term of the related agreements.

The KEWi software is licensed to the users on a monthly
subscription basis.  License revenue is recognized monthly as the
service is provided.

Advertising Costs

Advertising costs are charged to operations as incurred.

Advertising expense is as follows:

Year ended

6/30/2000          $  1,000
6/30/2001          $    800

Earnings Per Share

The basic earnings (loss) per share ("EPS") is computed by
dividing income available to common stockholders by the weighted-
average number of common shares outstanding for the year.
Diluted EPS, if any, reflects the potential dilution that could
occur if dilutive securities (including common stock subject to
redemption) were exercised or converted into common stock that
then shared in the earnings.

Net loss per share for the year ended June 30, 2000, was computed
only on the basis of the 34,876,682 weighted average number of
common shares outstanding.  Common stock subject to redemption,
shares subject to warrants, and stock options would have had an
anti-dilutive effect.

The following data show the amounts used in computing earnings
per share and the weighted average number of shares of dilutive
potential common stock for the year ended June 30, 2001:

Weighted average number of common
shares used in basic EPS                                   37,525,917
Effect of dilutive securities:
Stock options                                                   2,166
Common stock subject to redemption                          4,252,015
Weighted average number of common
shares and dilutive potential
common stock used in diluted EPS                           41,780,098

Fair Value of Financial Instruments

Estimated fair values of the Company's financial instruments (all
of which are held for non-trading purposes) are as follows:

                                          2001
                                  Carrying     Fair
                                   Amount      Value

Cash and cash equivalents         $198,476     $198,476

Capital lease obligations          (17,473)     (17,473)

The fair value of debt is based on current rates at which the
Company could borrow funds with similar remaining maturities.
The carrying amounts approximate fair value.

Statements of Financial Accounting Standards ("SFAS") No. 133,
137, and 138, "Accounting for Derivative Instruments and Hedging
Activities" became effective during the year ended June 30, 2001.
These statements require that entities recognize all derivatives
as either assets or liabilities in the balance sheet and measure
those instruments at fair value provided certain conditions are
met.  The new standards have no effect on the financial
statements of TSIH.  The Company currently has no derivative
instruments, and does not expect to engage in hedging activities.

Computer Software Costs Developed For Sale to Customers

The Company capitalizes certain software development and
implementation costs.  Development and implementation costs are
expensed as research costs until the Company has determined that
the software has achieved technological feasibility, will result
in probable future economic benefits, and management has
committed to funding the project.  Thereafter, the costs to
develop the software are capitalized and amortized using the
straight-line method over the remaining estimated useful lives (See Note K).

In accordance with the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 86, "Computer Software to be
Sold, Leased or Otherwise Marketed", at each balance sheet date
the unamortized capitalized costs of a computer software product
are compared to the net realizable value of that product.  The
amount by which the unamortized capitalized costs of a computer
software product exceeds the net realizable value of that asset
is written off.

Common Stock Subject to Redemption

Common stock subject to redemption (See Note H) is presented
separately from stockholders' deficit since the Company does not
control the redemption. These securities are initially recorded
at their fair value. No accretion to the redemption amount is
recorded at the balance sheet date, since the date of future
redemptions is not determinable at this time. Future redemptions
for consideration that exceeds the carrying amount of the
security will be treated as a reduction of income applicable to
common stockholders.

Effect of New Accounting Pronouncements

Statements of Financial Accounting Standards ("SFAS") No. 141
"Business Combinations", No.142 "Goodwill and other Intangible
Assets," and No. 143 "Accounting for Asset Retirement
Obligations" will become effective after the year ended June 30,
2001. The new standards are expected to have no effect on the
financial statements of TSIH.

NOTE C - MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

Revenues (in thousands) from continuing operations are summarized
as follows:

                                            2001          2000

Major customer #1                          $   967        $    80
Major customer #2 (a related
party - See Note M)                            147              -
Major customer #3                               60             24
KEWi monthly subscription fees                  24             28

Net revenues                               $ 1,198        $   132

Financial instruments, which potentially subject the Company to
credit risk, consist primarily of cash, cash equivalents, and
trade receivables.  At June 30, 2001, the Company's bank balances
were approximately $48,000 in excess of the amount insured by the
Federal Deposit Insurance Corporation.

Generally, the Company does not require collateral or other
security to support customer receivables.  At June 30, 2001, one
customer owed approximately 95% of the trade receivables.

NOTE D - ACCOUNTS RECEIVABLE

The detail of accounts receivable is as follows:

                                                  2001

Trade receivables                              $  31,448
Allowance for doubtful accounts                       -
Net                                            $  31,448

NOTE E - SHORT-TERM BORROWING

The weighted average interest rate on vendor debt was 11.75% for the
year ended June 30, 2000.  This debt was settled in March 2000 (See Note H).

NOTE F - ACCRUED LIABILITIES

Accrued liabilities of $157,708 as of June 30, 2001, represents
compensated absences to former employees (See Note H).

NOTE G - COMMITMENTS

Leases

From May 1, 1999 to June 30, 2000, the Company was provided a
small amount of space at its Englewood, Colorado location by the
purchaser of its systems integration business.  Effective as of
October 1, 2000, TSIH has a month-to-month lease for the
continued use of this space.

                                      Rent
Year ended                           Expense

6/30/2000                            $14,000
6/30/2001                            $27,000

In June 2000, 3Si acquired $27,123 of computer equipment under a
capital lease.  The equipment was placed in service July 2000.
Accumulated amortization as of June 30, 2001, and amortization
expense for the year then ended is $9,041.

                                                     2001

Minimum capital lease payments of $901
per month through April 2003; net of
deferred interest $5,760 at June 30, 2000           $  17,473

Less current portion                                    8,833

Long-term debt                                      $   8,640

Long-term debt matures as follows:

Second year                                         $   8,640

Subsequent years                                            -

Long-term debt                                      $   8,640

Other Commitments

See Note I related to commitment for additional ownership
interest in KEWi and Note H related to common stock subject to
redemption.

NOTE H - CONTINGENCIES

Self-Insured Medical Program

3Si adopted a self-insured medical program for its employees and
their dependents in 1998.  The Company was liable for annual
medical expenses up to $35,000 for each individual.  The Plan was
discontinued upon the sale of substantially all assets of 3Si
(See Note A).  No significant future liability is anticipated for
claims incurred prior to the discontinuation of the plan.

Litigation - Leasing Company

During the year ended June 30, 1999, a leasing company filed suit
against 3Si to recover damages under a government lease
agreement.  A settlement was reached in September 1999.  3Si paid
the plaintiffs $75,000, and issued 1,100,000 shares of TSIH
restricted common stock to the plaintiffs on September 20, 1999.
The stock issued was valued at $154,688, the remaining amount of
debt. The $224,688 combined amount of settlement (which is net of
the $5,000 value of inventory recovered) was accrued as a loss at
June 30, 1999.  The $.14 per share value upon issuance of TSIH
restricted common stock approximates the bid price at that date.

Vendor Settlement/ Common Stock Subject to Redemption

A settlement was reached with a vendor in March 2000.  Storage
Area Network ("SAN"), was owed $2,211,048 at June 30, 1999. SAN
received 6,460,137 shares ("the SAN shares") of TSIH common stock
on March 27, 2000, and the liability to SAN was discharged.

The SAN shares issued were reported in previously issued
financial statements at $.342 per share.  This amount equaled the
reported liability, and reflected the bid price of the TSIH stock
during the negotiation process.  No gain or loss was previously
recorded on this settlement.  The bid price of TSIH stock
increased to $.656 on the date the SAN shares were issued.  Although this was
a temporary fluctuation in the bid price of TSIH stock, in accordance with
the Securities and Exchange Comission, the value of the SAN
shares has been restated to reflect the bid price upon issuance.  An additional
non-cash cost of between the $2,211,048 liability and the $4,240,000 value of
the SAN shares issued is reflected as a loss in the restated June 30, 2000,
statement of earnings.

A $50,000 escrow account was established by TSIH under the
settlement for TSIH to use to cover the expenses of registering
the SAN shares.

Interest expense of $182,749 for the year ended June 30, 2000,
was incurred and paid to SAN prior to the settlement.

Under the SAN settlement, the SAN shares will be subject to
redemption under the following terms.  All contingent proceeds
received after August 2000 from the May 1999 sale of the systems
integration business (See Contingent Sales Proceeds below) will
be used to redeem the SAN shares.  In addition, TSIH will use 50%
of any capital investment or loans, and 50% of subsequent net
income, to redeem SAN shares.  For redemption payments through
September 2000, the SAN shares shall be transferred back to TSIH
at $.35 per share.  For subsequent redemption payments, the SAN
shares shall be transferred back to TSIH at $.52 per share, or
the then current market price, whichever is higher.  At the point
SAN has received redemption payments totaling $2,211,048, TSIH
will have the right, not the obligation, to continue purchasing the SAN shares.
Common stock subject to redemption of $2,211,048 has been recorded on the
accompanying balance sheet (4,252,015 shares at $.52 per share).

TSIH has received a contingent payment of $75,000 in September
2000 and has net earnings that must, under the terms of the
redemption agreement, be used to redeem SAN shares. This
redemption agreement is being contested, and consequently no
redemptions will be made until after the dispute is resolved.

On February 28, 2001, TSIH filed a complaint in the District
Court of the State of Colorado disputing the $2,211,048 liability
that was the basis for the common stock issued to SAN.  This
complaint alleges breach of contract, fraudulent
misrepresentation, fraudulent concealment, diversion of corporate
opportunity, theft, violation of securities laws, and civil
conspiracy.  The relief sought includes, among other things,
money damages and rescission of the settlement agreement, and disgorgement
of the SAN shares discussed above.  Management is unable to take any position
at this time as to the likely outcome of the matter.

Contingent Sales Proceeds

In connection with the sale of its systems integration business
effective as of May 1, 1999, 3Si will also be able to earn up to
an additional $2,198,000 over a three-year period based upon the
contingencies set forth in the agreement.  The agreement provided
for additional contingent payments to 3Si of $325,000 when key
contracts were renewed.  Contract renewal payments of $75,000 and
$250,000 were received in September and March 2000, respectively,
and have been recorded as gain on disposal of systems integration
segment.

The asset purchase agreement also provided for contingent
payments to 3Si of 75% of the profits in excess of contract
renewal payments from the sold business for the first year (April
2000), and 50% of the profits in excess of contract renewal
payments for the second and third years (April 2001 and 2002).
Profits from the sold business have not exceeded contract renewal
payments through April 2001, according to the purchaser's
unaudited calculations, and the purchaser asserts that no
additional contingent payments are due to 3Si at this time.  3Si
has sent the purchaser a notice of objection to the April 2001
calculation of profits from the sold business.  3Si believes that
the profits from the sold business may be significantly
understated, and that 3Si may be entitled to contingent payments.
Management is unable to take any position at this time as to the
likely outcome of this matter.

The first $157,708 of additional contingent payments earned by
3Si will be retained by the buyer to pay for compensated absences
for former 3Si employees.  This amount represents a liability
that was not addressed in the purchase agreement, but the buyer
assumed and paid the liability to maintain positive employee
relations.  This amount is included under accrued liabilities in
the June 30, 2001 balance sheet.

NOTE I - MINORITY INTEREST

TSIH owns a 69% interest in KEWi.net, Inc. (See Note A)
summarized as follows:

                                                    2001          2000

Minority interest beginning of year                 $   (13,378) $  149,932
Earnings (loss) attributable to minority interest        29,277    (163,310)

Minority interest end of year                       $    15,899  $  (13,378)

KEWi raised $535,000 (net of expenses) through a private offering
for 26% of KEWi's common stock during the year ended June 30,
1999. KEWi also issued 5% of its common stock to an entity that
assisted in the private offering.  This additional 5% minority
interest in KEWi (valued at $103,000) is considered part of the
cost of the private offering, and no related operating expense is
recorded.

TSIH has agreed to give an additional 5% ownership interest in
KEWi to a consulting firm if KEWi sales and earnings in the years
ended March 2000, 2001 or 2002 meet certain goals.  No additional
ownership interest has been earned through June 30, 2001.  If
additional ownership interests in the KEWi subsidiary are
subsequently issued, they will be accounted for as an operating
expense and additional minority interest.

In connection with a joint marketing agreement effective May
2000, KEWi has granted the other party the irrevocable right for
ten years to acquire 211,212 common shares of KEWi stock (10% of
the current shares outstanding) at $1.89 per share.  No value had
been assigned to these rights in previously issued financial
statements.  The value of these rights has been restated to
reflect their value as being comparable to the value of warrants
to acquire stock in the parent company - TSIH.  Additional
marketing expense of $62,500 related to these rights is
reflected in the restated June 30, 2000 statement of earnings.  Additional
paid-in capital is also increased by $62,500 for this non-cash transaction.
There is no effect on equity.

NOTE J - STOCKHOLDERS' EQUITY (DEFICIT)

Treasury Stock

In December 1997 the Company reacquired 6,005,626 of its own
common shares at $.30 per share under a self-tender offer.  The
$.30 per share was in excess of bid price of $.23 to $.25 per
share in December 1997.  The tender offer was extended to the
stockholders who owned TSIH stock before the merger with 3Si (See
Note A).  The Company received no stated or unstated
consideration, rights or privileges in connection with the
reacquisition of its own shares.

In December 1999 the Company elected to reacquire 110,000 of its
own common shares at $.191 per share from a former employee.  In
April 2000 the Company reacquired 60,000 of its own common shares
at $.186 per share in satisfaction of an obligation from a former
employee.  The recorded acquisition cost of both treasury stock
purchases approximates the bid price of the Company's common
stock at the time of acquisition.

TSIH Stock Option Plan

On June 18, 1998, the TSIH stockholders approved the Company's
1998 Stock Option Plan (the "1998 Plan").  Under the terms of the
1998 Plan, the Company may grant options for employees and
directors of the Company to acquire up to 5,000,000 shares of
TSIH's common stock.  No options were granted prior to June 30,
1998.  The options vested over a period of four years except
1,345,000 shares granted during the year ended June 30, 1999,
which vested immediately upon grant to two officers of TSIH.

Upon the sale of substantially all assets of the Company (See
Note A), a) the exercise period for terminated employees became
one year from date of termination, and b) the options held by
terminated employees became 100% vested.

                                           # Shares       Exercise
                                         Under Option      Price*

End of period, June 30, 1999              1,262,500          .125
Granted                                   1,000,000          .128
Forfeited                                (1,045,700)         .131
Exercised                                  (117,800)         .100

End of period, June 30, 2000 and also
June 30, 2001 (all exercisable)           1,099,000      $   .126

Option price$  .10 - $  .156
* weighted average

The Company continues to account for employee stock-based
compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees".  Compensation cost for stock options, if
any, is measured as the excess of the quoted market price of the
Company's stock at the date of grant over the amount an employee
must pay to acquire the stock.  Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," established accounting and disclosure requirements
using a fair-value-based method of accounting for stock-based
employee compensation plans.  The Company has elected to remain
on its current method of accounting as described above, and has
adopted the disclosure requirements of SFAS No. 123.

Compensation cost charged to operations was $0 for each of the
years ended June 30, 2001 and 2000.

Had compensation cost been determined on the basis of fair value
pursuant to SFAS No. 123, net earnings (loss) would have changed
as follows due to the amortization of deferred compensation over
the vesting periods related to the options granted in the year
ended June 30, 2000:

                                                 2001      2000

As reported

Net earnings (loss) from continuing
Operations                                      $ 30,580   $(2,766,794)

Discontinued operations
Gain on disposal of systems
integration segment                               75,000       250,000

Net earnings (loss)                            $ 105,580   $(2,516,794)

Pro forma

Net (loss) from continuing operations          $    (647)  $(2,817,380)

Discontinued operations
Gain on disposal of systems
integration segment                               75,000       250,000

Net earnings (loss)                            $  74,353   $(2,567,380)

As reported and pro forma

Basic and diluted (loss) per share

                                                 2001      2000

Net earnings (loss) from
continuing operations                          $      -   $     (0.08)

Net discontinued operations                           -          0.01

Net (loss)                                     $      -   $     (0.07)

The weighted average fair value of options granted during the
year ended June 30, 2000, is $.125.

The fair value of each option granted is estimated on the date of
the grant or modification of the plan terms using the Black
Scholes model.  The following assumptions were made in estimating
fair value:

Assumption                                       2001      2000

Dividend yield                                    NA         0%
Risk-free interest rate                           NA         6%
Expected life                                     NA         3 years
Expected volatility                               NA       212.63%

On June 1, 2001, TSIH granted warrants to purchase 100,000 shares
of the Company's common stock at a price of $.25 per share.
These warrants were issued to a consultant in connection with the
preparation of a financing package to seek debt or equity
capital.  These warrants became exercisable on June 1, 2001, and
are effective until June 1, 2006.

The fair value of the warrants granted is estimated on the date
of the grant or modification of the plan terms using the Black
Scholes model.  The following assumptions were made in estimating
fair value:

                                       100,000
Assumption                             Warrants

Dividend yield                               0%
Risk-free interest rate                      6%
Expected life                           5 years
Expected volatility                     227.40%

Consulting expense of $3,482 was recognized during the year ended
June 30, 2001, related to the warrants.

NOTE K - RESEARCH AND DEVELOPMENT / SOFTWARE DEVELOPMENT COSTS

During the years ended June 30, 1999 and 1998, 3Si conducted
research and development on its automated help desk services
software product.  During the years ended June 30, 2000 and 1999,
KEWi also conducted research and development on a new paging
software system.  Costs capitalized during the years ended June
30, 2000 and 1999, represent development costs of the paging
system software from the point of technological feasibility (May
1999) to September 1999.

The original paging software system was subsequently deemed to be
inadequate and written off as a loss in the year ended June 30, 2000.

Software Development Costs

                                                 2001      2000

Beginning of year                                $     -   $  42,827
Costs capitalized                                      -      15,756
                                                       -      58,583

Paging system loss                                           (26,583)
                                                       -      32,000

Amortization (Note B)                                  -     (32,000)
End of year                                      $     -   $       -

Research Costs Expensed

Year Ended

6/30/2000             $19,000
6/30/2001              37,000

NOTE L - INCOME TAXES

The Company provides for income taxes under the provisions of
SFAS No. 109 "Accounting for Income Taxes".  SFAS No. 109
requires an asset and liability based approach in accounting for
income taxes.  Deferred income tax assets and liabilities are
recorded to reflect the tax consequences on future years of
temporary differences of revenue and expense items for financial
statement and income tax purposes.  Valuation allowances are
provided against deferred tax assets which are not likely to be realized.

KEWi is excluded from the filing of a consolidated income tax
return.  TSIH and KEWi used $13,000 and $98,000 respectively, of
their net operating loss carryforwards to offset current taxable
income.  Net operating loss carryforwards are available at June
30, 2001, expiring as follows:

                                              TSIH/3Si     KEWi

2012                                          $   98,000   $       -
2013                                             509,000           -
2019                                           1,886,000      12,000
2020                                             196,000     420,000
                                              $2,689,000   $ 432,000

The Company's deferred tax assets and liabilities are comprised
of the following:

                                                 2000        2001
Non-current:
Tax benefit of net operating loss carryforward  $1,130,000   $1,166,000
Deferral of tax deduction for goodwill             197,000      186,000
Other                                              120,000      120,000
                                                 1,447,000    1,472,000

Valuation allowance                             (1,447,000)  (1,472,000)
Net non-current                                          -            -
Net deferred tax assets                         $        -   $        -

The Company may not have sufficient taxable income in future
years to obtain the benefits of the net operating loss
carryforward and reversal of timing differences.  Valuation
allowances of $1,472,000 and $1,523,000 are provided at June 30,
2001 and 2000 respectively, for the benefits which the Company
may not be able to use.

The provision for income taxes consists of the following:

                                                 2001           2000

Current expense                                 $       -       $      -
Deferred expense (credit)                               -              -
Income tax expense (benefit)                    $       -       $      -

Reconciliation of income taxes to Federal statutory rates is as follows:

                                                 2001           2000

Income taxes (benefit) at statutory rates        $ 36,000      $(856,000)
Permanent tax differences                          12,000        705,000
State taxes and other                                   -        (13,000)
Valuation allowance                               (48,000)       164,000
Income tax expense (benefit)                     $      -      $       -

NOTE M - RELATED PARTY TRANSACTIONS

KEWi has entered into an agreement to maintain and operate the
Internet-based customer support system for the entity that owns
the 26% minority interest in KEWi. Total revenues generated from
this related party are $147,000 and $0 for the years ended June
30, 2001 and 2000, respectively.

Loans payable to TSIH from TSIH stockholders totaled $162,395 at
June 30, 1999.  These loans are collateralized by TSIH common
stock, bear interest at 5.37% and are due July 1, 2004.  Since
the only collateral for these loans was the stock of the Company
that was subject to going concern considerations at June 1999,
the $162,395 balance was fully reserved and recorded as an
expense during the year ended June 30, 1999.  No interest income
has been accrued since June 30, 1999.

NOTE N - DISCONTINUED OPERATIONS

In May 1999 the Company sold its systems integration business.
The assets of the systems integration business consisted of
substantially all assets of the Company as of that date.

Contingent sales proceeds of $75,000 and $250,000 were received
in September 2000 and March 2000, respectively (See Note H), and
have been recorded as gain on the disposal of the systems
integration segment.

                               EXHIBIT INDEX

Number                           Exhibit Description

2.1     Agreement and Plan of Reorganization between the
        Registrant, Kimbrough Computer Sales, Inc. d.b.a. 3Si,
        Inc., Fred Slack, Frank Backes and Larry Valdez, dated
        May 28, 1997 (incorporated by reference to Exhibit 10.1
        of the Form 8-K filed on June 9, 1997).

2.2     Transition Agreement between the Registrant, Kimbrough
        Computer Sales, Inc. d.b.a. 3Si, Inc., Fred Slack,
        Frank Backes and Larry Valdez, dated May 28, 1997
       (incorporated by reference to Exhibit 10.2 of the Form
        8-K filed on June 9, 1997).

3.1     Articles of Incorporation, and amendments thereto
       (incorporated by reference to Exhibit 3.1 of the filed
        Registration Statement on Form S-2).

3.2     Certificate of Amendment to Articles of Incorporation
       (incorporated by reference to Exhibit 3.2 of the Form
        10-KSB/A filed on December 19, 2000).

3.3     Bylaws, as amended (incorporated by reference to
        Exhibit 3.2 of the filed Registration Statement on Form S-2).

4.1     Warrant Agreement between the Registrant and One
        Capital Corporation, dated October 22, 1997
       (incorporated by reference to Exhibit 1 of the Form S-8
        filed on July 27, 1998).

4.2     1998 Omnibus Stock Option Plan, dated June 18, 1998
       (incorporated by reference to Exhibit 1 of the Form S-8
        filed on February 3, 2000).

4.3     2000 Non-Qualified Stock Plan, dated June 18, 2000
       (incorporated by reference to Exhibit 4 of the Form S-8
        filed on August 28, 2000).

4.4     Form of Common Stock Purchase Agreement between the
        Registrant and institutional investors (incorporated by
        reference to Exhibit 4.4 of the Form SB-2 filed on
        December 22, 2000).

10.1    Asset Purchase Agreement between the Registrant, 3Si,
        Inc., and PC Specialists, Inc., dated May 7, 1999
       (incorporated by reference to Exhibit 10.1 of the Form
        SB-2 filed on December 22, 2000).

10.2    Settlement Agreement between the Registrant and Storage
        Area Network, Inc., dated March 16, 2000 (incorporated
        by reference to Exhibit 99.1 of the Form 8-K filed on
        March 24, 2000).

10.3    License Agreement between KEWI.net, Inc. and Qwest
        Cyber.Solutions LLC, dated May 22, 2000 (incorporated
        by reference to Exhibit 10.2 of the Form 10-QSB filed
        on November 13, 2000).

10.4    Joint Marketing and Warrant Agreement between KEWi.net,
        Inc. and Qwest Cyber.Solutions LLC, dated May 22, 2000
       (incorporated by reference to Exhibit 10.3 of the Form
        10-QSB filed on November 13, 2000).

10.5    Production Agreement between KEWi.net, Inc., Qwest
        Cyber.Solutions LLC, and BVP Media, Inc., dated May 22,
        2000 (incorporated by reference to Exhibit 10.4 of the
        Form 10-QSB filed on November 13, 2000).

10.6    Promissory Note issued by the Registrant in favor of
        Frank Backes, dated October 8, 2001 (see below).

10.7    Promissory Note issued by the Registrant in favor of
        Fred Slack, dated October 8, 2001 (see below).

10.8    Promissory Note issued by the Registrant in favor of
        Felipe Valdezs, dated October 8, 2001 (see below).

21      Subsidiaries of the Registrant (incorporated by
        reference to Exhibit 21 of the Form 10-K filed on
        October 13, 1999).