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 DECEMBER 31, 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: 000-31909

                              SCHOOLWEB SYSTEMS, INC.
               (Exact name of registrant as specified in its charter)

              Nevada                                   88-0473897
(State or jurisdiction of incorporation             (I.R.S. Employer
          or organization)                         Identification No.)

#280-815 West Hastings Street, Vancouver, British Columbia        V6C 1B4
   (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number:   (604) 608-2540

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

Securities registered pursuant to Section 12(g) of the Act:   Common Stock,
                                                              $0.001 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 the 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 [X]

The Registrant had no revenues for the fiscal year ended on December 31, 2001.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of December 31, 2001: Common Stock, par value $0.00001 per share
-- $147. As of December 31, 2001, the Registrant had 14,733,000 shares of
common stock issued and outstanding.

<PAGE>
Page 2

TABLE OF CONTENTS

PART I                                                                      PAGE

ITEM 1.   BUSINESS                                                             3

ITEM 2.   PROPERTIES                                                           5

ITEM 3.   LEGAL PROCEEDINGS                                                    5

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                  6

PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS                                                  6

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS                                            7

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                          8

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

PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                   8

ITEM 10.  EXECUTIVE COMPENSATION                                               9

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT       9

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                       9

PART IV.

ITEM 13.   EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K   9

SIGNATURES

<PAGE>
Page 3

PART I.

ITEM 1.   BUSINESS.

                               HISTORY AND ORGANIZATION

   SchoolWeb Systems Inc. (the "Registrant"), was organized under the laws of
the State of Nevada on June 26, 2000 under the name North Pacific Capital Corp.
On June 26, 2000 the Registrant increased its authorized share capital from
20,000 shares with no par value to 100,000,000 shares with a par value of
$0.00001. On December 20, 2001 the Registrant received shareholder approval to
change its name from North Pacific Capital Corp. to its present name "SchoolWeb
Systems Inc.".

SchoolWeb Holdings Inc., the wholly owned subsidiary of the Registrant, was
incorporated in the State of Nevada on October 13, 2000 under the name of
Alternet Systems, Inc. On January 1, 2001 it entered into a software license
agreement (the "License Agreement") with Advanced Interactive Inc. and its
subsidiary, Advanced Interactive (Canada) Inc. (collectively, "AII"). On July
3, 2001 the company's name was changed to "SchoolWeb Holdings Inc.", its present
name.

On July 2, 2001, the Registrant entered into an agreement (the "Share Exchange
Agreement") to purchase all of the 12,343,000 outstanding shares of common stock
of SchoolWeb Holdings Inc. in exchange for 12,343,000 shares of common stock of
the Registrant, in a transaction in which the Registrant was the surviving
corporation. The 12,343,000 shares of common stock represented approximately
86% of the issued and outstanding shares of common stock as of September 30,
2001.

The Share Exchange Agreement was adopted by the unanimous consent of the Board
of Directors of the Registrant on July 2, 2001 and approved by the unanimous
consent (evidenced by their signatures on the Share Exchange Agreement) of the
stockholders of Registrant. The Share Exchange Agreement was amended on
September 10, 2001 by a settlement agreement (the "Settlement Agreement") such
that an additional 500,0000 shares of common stock of the Registrant were to be
issued (for a total of 12,843,000 shares of common stock). The 12,843,000
shares of common stock were issued ending on September 10, 2001.

Under the terms of the Share Exchange Agreement, AII, which had licenced
software to SchoolWeb under the terms of a software license agreement (the
"License Agreement") dated January 1, 2001 as amended June 29, 2001 and
September 10, 2001, acquired a total of 3,000,000 shares of common stock upon
closing of the Share Exchange Agreement.

Of the 3,000,000 shares of common stock issued to AII, 1,500,000 are held by
Advanced Interactive Inc. and 1,500,000 are held by its subsidiary, Advanced
Interactive Canada Inc. This represents approximately 20% of the issued and
outstanding shares of common stock.

As a result of the closing of the Share Exchange Agreement, Mr. Michael Dearden
and Mr. Griffin Jones, who were concurrently appointed as Directors, acquired
17.85% and 17.84% of the issued and outstanding shares of common stock
respectively.

A copy of the Share Exchange Agreement was filed as an exhibit to the report on
Form 8-K dated September 10, 2001 and is incorporated in its entirety herein. A
copy of the License Agreement dated January 1, 2001 and amendment dated June 29,
2001 and the Settlement Agreement dated September 10, 2001 are filed as exhibits
to the report on Form 8-K dated September 10, 2001 and are incorporated in their
entirety herein.

Michael Dearden, Greg Protti, Patrick Fitzsimmons, Brandon Douglas, Griffin
Jones and Karim Lakhani, the management of SchoolWeb Holdings Inc. were
appointed to the board of directors of the Registrant when the Registrant
purchased SchoolWeb Holdings Inc. Richard Silas resigned as director and
officer of the Registrant concurrently with the closing of the SchoolWeb
Holdings Inc. acquisition.

<PAGE>
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                           DESCRIPTION OF BUSINESS

The primary asset of SchoolWeb Holdings Inc. is the License Agreement between
SchoolWeb Holdings Inc. and AII.

In 1999, AII was awarded a $650,000 contract to provide a low cost,
distance-learning Internet access system for an initial pilot of 20 British
Columbia, Canada schools.  The contract was awarded to AII by the Government of
British Columbia (one of Canada's 10 provinces). In completing this contract,
AII developed the broadcast caching software systems known as "SchoolWeb" and
"OfficeServer" for caching Internet and multimedia files on caching servers
(the "Licensed Technology").

SchoolWeb Holdings Inc., which at the time was named Alternet Systems Inc.,
wished to acquire the rights to distribute, market, sell and license the
Licensed Technology in the United States and Canada.

The License Agreement grants SchoolWeb Holdings Inc., for a term of five (5)
years renewable at SchoolWeb's discretion for an additional five (5) years, the
exclusive right to distribute, market, sell and sub-license the Licensed
Technology in the US and Canada for educational related purposes and grants
SchoolWeb Holdings Inc., for a period of five (5) years renewable for an
additional five (5) years, the non-exclusive worldwide right to distribute,
market, sell and license the "OfficeServer" portion of the Licensed Technology.
Under the terms of the License Agreement, SchoolWeb Holdings Inc. must pay to
AII the sum of $10,000 per month in year one, $20,000 per month in year two and
increased payments in subsequent years. AII also receives a royalty of 40% on
net revenue realized from SchoolWeb Holding Inc.'s sales of the Licensed
Technology which, after the first three years of the License Agreement, is
subtracted from the amount of the specified monthly payment.

The SchoolWeb software is the first Internet access system developed
specifically for schools. The SchoolWeb system delivers up to ten times more
user capacity than a telecom line system of equivalent cost and provides
students with e-mail and website hosting capabilities.

Each basic SchoolWeb "system" or software / hardware package is comprised of the
SchoolWeb Librarian software, Linux Operating System, a network server,
redundant file system, software configuration, uninterruptible power supply,
satellite or cable port, SchoolWeb user license, 24 hour technical support
(provided by AII through the License Agreement), On-site installation and
training (provided by resellers and distributors), system maintenance and 5X9
on-site warranty.

SchoolWeb is presently installed in 34 schools in the United States (State of
Hawaii) and Canada (Province of British Columbia).

In British Columbia, where the first SchoolWeb systems were installed, 19
schools presently have the SchoolWeb system. The SchoolWeb systems were
installed on a 12 to 18 month test basis and results of this test have been
positive according to the British Columbia Ministry of Education in its
September 2001 newsletter.

Installation of test servers in Hawaii is presently being undertaken.

In the fall of 2001, Hewlett Packard (Canada) expressed an interest in acquiring
from the Registrant some or all of its rights under the License Agreement.
Subsequent to the fiscal year ended December 31, 2001 Hewlett Packard (Canada)
and AII entered into an agreement (the "Hewlett Packard Agreement") where
Hewlett Packard agrees to market and distribute the software which SchoolWeb
Holdings Inc. had licensed from AII under the License Agreement.

<PAGE>
Page 5

Because of the distribution capacity of Hewlett Packard (Canada), and the
relative lack of distribution and sales capacity of the Registrant, management
of the Registrant believed it to be in the Registrant's best interest to consent
to the Hewlett Packard Agreement. In exchange for Hewlett Packard (Canada)'s
agreement to market and distribute the Licensed Technology, the Registrant and
AII have agreed to use Hewlett Packard hardware whenever sales of the Licensed
Technology are made (provided that Hewlett Packard is able to provide the
hardware). The Registrant and AII have also agreed to give Hewlett Packard
Finance (a division of Hewlett Packard) the right of first refusal to provide
lease financing for sales of the Licensed Technology (by the Registrant or any
other party).

Hewlett Packard (Canada) has installed the SchoolWeb software on its caching
servers in a total of 15 test schools in Canada. These tests commenced in March
of 2002 and are anticipated to be completed by the fall of 2002 at the latest.

Because SchoolWeb is a new software technology, acceptance of the SchoolWeb
software (the Registrant believes) must be preceded by a test period of placing
the SchoolWeb software and servers in schools for as long as a year to build
comfort with the system and generate (after the test period has been completed)
orders and revenue. The Registrant has found, in dealing with potential
clients, that a new software system or company has to prove itself before a sale
can be made. Testing is the easiest way of accomplishing this (SchoolWeb
software does not, at this time, have the established reputation of software,
like Microsoft Word or Outlook Express (for example) which most potential
customers are aware of and know will meet their needs).

As the test periods are only now being completed in British Columbia and have
only begun in the United States and in the schools identified by Hewlett Packard
(Canada), it is anticipated that significant revenues will not be realized from
sales until the second quarter of 2002, if at all. There can be no guarantee
that the installation of SchoolWeb software will lead to sales and revenue.

SchoolWeb has applied for trademark rights in the United States and Canada for
the tradename "SchoolWeb". The initial application was filed in Canada on March
30, 2001 and it is expected that a response should be received within 18 months.
The trademark is expected to be registered on the supplemental register in the
United States as the United States trademark was applied for based on the
Canadian trademark application. Once a company has used a supplemental
register mark in the United States for five years, the company's mark is placed
on the full register. In the meantime, its rights in the United States are
protected.

No application has been made for the trademark rights for "OfficeWeb" in any
jurisdiction. It appears that "OfficeWeb" may conflict with an existing mark
in the United States and, for this reason, the Registrant is not aggressively
using that name at present.

The Registrant plans to package other products using the Licensed Technology and
has recently packaged what it is referring to as the "1nterlink" software
package, software using the SchoolWeb software but specifically packaged for and
directed at First Nations (indigenous or aboriginal) communities. No application
for trademark rights of the "1nterlink" name has been made in the United States
or Canada as of the date of this Form 10-KSB.

ITEM 2.   PROPERTIES

The Registrant has no properties and at this time has no agreements to acquire
any properties.

ITEM 3.   LEGAL PROCEEDINGS.

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.

<PAGE>
Page 6

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

Not Applicable.

PART II.

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

(a)   Market Information.

The Registrant's common stock is not currently traded on any stock market.

(b)   Holders of Common Equity.

As of December 31, 2001, there were 42 shareholders of record of the
Registrant's common stock.

(c)   Dividends.

The Registrant has not declared or paid cash dividends to stockholders. 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 on
the Registrant's earnings, capital requirements and other factors.

(d)   Equity Securities Sold Without Registration during the year ended
December 31, 2001.

At January 1, 2001 the Registrant had a total of 20,000 shares of common stock
issued and outstanding.

Between January 1, 2001 and September 10, 2001 the Registrant issued a total of
1,330,000 shares of common stock to a total of 4 directors and officers in
non-public transactions for a total of 1,350,000 shares of common stock issued
and outstanding.

On September 10, 2001, the Registrant completed the issuance of a total of
12,843,000 shares of common stock to purchase all of the issued and outstanding
shares of SchoolWeb Holdings Inc. as described in the Description of Business
above for a total of 14,193,000 shares of common stock issued and outstanding.

The Registrant issued a total 165,000 shares of common stock to 3 persons not
resident in the United States under the exemption from registration made
available by Regulation S for a total of 14,358,000 shares of common stock
issued and outstanding.

The Registrant has been engaged, since November 1, 2001 in an offering of equity
securities offered under exemptions available in Regulation D, rule 506.

The offering is comprised of equity units, and each unit is comprised of one
share of common stock and one share purchase warrant entitling the holder to
purchase an additional share of common stock for $0.50 for a period of two
years.

<PAGE>
Page 7

To December 31, 2001, the offering had resulted in the sale of a total of
375,000 units to a total of four persons. The sales were made under the
exemption from registration made available by Regulation D, rule 506. The units
were sold at $0.20 per unit. Subsequent to February 28, 2002 the units (if any
are sold) will be sold at $0.35 per unit. The exercise price of the share
purchase warrants will remain the same.

As a result of the sale of the 375,000 units under the exemption from
registration made available by Regulation D, rule 506, a total of 14,733,000
shares of common stock were issued and outstanding as of December 31, 2001.

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

(a)   Results of Operations

From incorporation on June 26, 2000, in the state of Nevada the Company until
the closing of the SchoolWeb Agreement, the Company had no significant business
operations. The Company was originally organized for the purpose of creating a
corporate vehicle to locate and acquire an operating business entity

On November 6, 2000 the Company completed a Form 10SB registration with the
United States Securities and Exchange Commission. As such the Company became
subject to the regulations governing reporting issuers in the United States
under the Securities Exchange Act of 1934.

With the closing of the SchoolWeb Agreement, the Company's results, on a
consolidated basis, reflected its own results consolidated with its subsidiary,
SchoolWeb Holdings Inc. For the remainder of this part, the term "Company"
refers to both the Company and its wholly owned subsidiary, SchoolWeb Holdings
Inc.

For the year ended December 31, 2001 the Company had a net loss of $(263,249) or
$0.02 per share. The Company was only incorporated on October 13, 2000 (and had
no active business at that time) the corresponding net loss and net loss per
share figures were negligible for the period of October 13, 2000 to December 31,
2000.

For the year ended December 31, 2001 the Company incurred general and
administrative expenses of $50,530; marketing expenses of $39,429; fees payable
under the License Agreement of $120,000; and $29,390 in professional fees. As
the Company was only incorporated on October 13, 2000 (and had no active
business at that time) the corresponding general and administrative expenses
were negligible for the period of October 13, 2000 to December 31, 2000.

(b)   Liquidity and Capital Resources

As at December 31, 2001 the Company had $5,669 cash in the bank and had prepaid
$3,758 in expenses.

The Company hopes to realize cash flow from the SchoolWeb software system in the
second quarter of 2002. Company anticipates that it will realize revenues as a
result of the Hewlett Packard Agreement but cannot, at this time, give any
reliable indication or prediction of the amount of the revenue.

It is likely that the Company will either entirely or partially dependant on
raising capital or receiving advances from related parties in order to meet the
continuing costs of marketing the Licensed Technology and, possibly, developing
products other than the SchoolWeb software system which are based on the
Licensed Technology (if available funds permit such development).

<PAGE>
Page 8

Audit Committee

As of the date of this Annual Report, the Company has not appointed members to
an audit committee and, therefore, the respective role of an audit committee has
been conducted by the board of directors of the Company. When established, the
audit committee's primary function will be to provide advice with respect to the
Company's financial matters and to assist the board of directors in fulfilling
its oversight responsibilities regarding finance, accounting, tax and legal
compliance. The audit committee's primary duties and responsibilities will be
to:

   (i)     serve as an independent and objective party to monitor the Company's
           financial reporting process and internal control system;
   (ii)    review and appraise the audit efforts of the Company's independent
           accountants;
   (iii)   evaluate the Company's quarterly financial performance as well as its
           compliance with laws and regulations;
   (iv)    oversee management's establishment and enforcement of financial
           policies and business practices; and
   (v)     provide an open avenue of communication among the independent
           accountants, management and the board of directors.

The board of directors has considered whether the regulatory provision of
non-audit services is compatible with maintaining the principal independent
accountant's independence.

Audit Fees

As of the date of this Annual Report, the Company has incurred approximately
$5,000 in fees during fiscal year ended December 31, 2001 to its principal
independent accountant for professional services rendered in connection with
preparation of the Company's audited financial statements. During fiscal year
ended December 31, 2001, the Company incurred approximately $3,000 in fees to
its principal independent accountant for all other non-audit services (including
reviews of the Company's quarterly financial statements).


ITEM 7.   FINANCIAL STATEMENTS.

Consolidated financial statements as of and for the year ended December 31, 2001
and 2000 are presented in a separate section of this report following Part IV.

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

Not Applicable.

PART III.

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

(a)   Officers and Directors.

The Registrant hereby elects to incorporate the information in its Definitive
Proxy Statement filed with the SEC's EDGAR system and dated April 12, 2002.

<PAGE>
Page 9

(b)   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. The Registrant is unaware that any required
reports were not timely filed.

ITEM 10.   EXECUTIVE COMPENSATION

The Registrant hereby elects to incorporate the information in its Definitive
Proxy Statement filed with the SEC's EDGAR system and dated April 12, 2002.

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

The Registrant hereby elects to incorporate the information in its Definitive
Proxy Statement filed with the SEC's EDGAR system and dated April 12, 2002.

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Registrant hereby elects to incorporate the information in its Definitive
Proxy Statement filed with the SEC's EDGAR system and dated April 12, 2002.

PART IV.

ITEM 13.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)   Index to Financial Statements and Schedules                           Page

Auditors' Report                                                               2

Consolidated Balance Sheets for the year ended December 31, 2001               3
Consolidated Statements of Operations for the year ended December 31, 2001     4

Consolidated Statements of Stockholders' Equity for the period
October 13, 2000 (inception) to December 31, 2001                              5
Consolidated Statements of Cash Flows for the year ended December 31, 2001     6

Notes to Consolidated Financial Statements                                     7


(b)   Reports on Form 8-K.
      The Registrant filed one Report on Form 8-K, dated September 10, 2001 and
      filed on EDGAR on December 20, 2001 concerning its acquisition of
      SchoolWeb Holdings Inc.

(c)   Exhibits included or incorporated by reference herein: none.



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                                 SCHOOLWEB SYSTEMS INC.

                        (Formerly North Pacific Capital Corp.)
                             (A Development Stage Company)

                           CONSOLIDATED FINANCIAL STATEMENTS

                              DECEMBER 31, 2001 AND 2000






CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>
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              LABONTE & CO.                       1205 - 1095 West Pender Street
---------------------------------------------
  C H A R T E R E D  A C C O U N T A N T S        Vancouver, BC Canada
---------------------------------------------
                                                  V6E 2M6
                                                  Telephone   (604) 682-2778
                                                  Facsimile   (604) 689-2778
                                                  Email  rjl@labonteco.com


                                AUDITORS' REPORT
--------------------------------------------------------------------------------


To the Board of Directors and Stockholders of Schoolweb Systems Inc. (formerly
North Pacific Capital Corp.)

We have audited the consolidated balance sheets of Schoolweb Systems Inc.
(formerly North Pacific Capital Corp.) (A Development Stage Company) as at
December 31, 2001 and 2000 and the consolidated statements of operations,
changes in stockholders' equity and cash flows for the year ended December 31,
2001, the period from October 16, 2000 (inception) to December 31, 2000 and
cumulatively, from October 16, 2000 (inception) to December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with Canadian and United States generally
accepted auditing standards. Those standards require that we plan and perform
an audit to obtain reasonable assurance whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2001
and 2000 and the results of its operations and its cash flows and the changes in
stockholders' equity for the year ended December 31, 2001, the period from
October 16, 2000 (inception) to December 31, 2000 and cumulatively, from October
16, 2000 (inception) to December 31, 2001in accordance with generally accepted
accounting principles in the United States.

                                                               /s/ LaBonte & Co.
                                                           CHARTERED ACCOUNTANTS
February 28, 2002
Vancouver, B.C.

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES REPORTING
DIFFERENCES
--------------------------------------------------------------------------------

In the United States, reporting standards for auditors' would require the
addition of an explanatory paragraph following the opinion paragraph when the
financial statements are affected by a significant uncertainty such as referred
to in Note 1 regarding the Company's ability to continue as a going concern.
Our report to the directors and stockholders dated February 28, 2002 is
expressed in accordance with Canadian reporting standards which do not permit a
reference to such uncertainties in the auditors' report when the uncertainties
are adequately disclosed in the financial statements.

                                                               /s/ LaBonte & Co.
                                                           CHARTERED ACCOUNTANTS
February 28, 2002
Vancouver, B.C.

<PAGE>
Page 3


                                 SCHOOLWEB SYSTEMS INC.
                        (Formerly North Pacific Capital Corp.)
                             (A Development Stage Company)

                              CONSOLIDATED BALANCE SHEETS

                                                      December        December
                                                      31, 2001        31, 2000
================================================================================
                                                                        (Note 1)

                                        ASSETS

CURRENT ASSETS
   Cash                                              $      5,669   $         3
   Prepaid expenses                                         3,758          -
-------------------------------------------------------------------------------
                                                            9,427          -

LICENSE RIGHTS (Note 4)                                    24,000          -
FIXED ASSETS, net of depreciation                           3,400          -
-------------------------------------------------------------------------------
                                                     $     36,827   $         3
================================================================================


                           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                  $     26,091   $      -
   Due to related parties (Note 6)                         33,486          -
-------------------------------------------------------------------------------
                                                           59,577          -
-------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES (Notes 1 and 4)

STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
  Capital stock (Note 5)
   Common stock, $0.00001 par value,
   100,000,000 shares authorized
    14,733,000 (2000 - 20,000) issued and outstanding         147             3
   Additional paid-in capital                             242,302          -
   Comprehensive loss                                      (1,950)         -
   Deficit accumulated during development stage          (263,249)         -
-------------------------------------------------------------------------------
                                                          (22,750)            3
-------------------------------------------------------------------------------
                                                     $     36,827   $         3
================================================================================



   The accompanying notes are an integral part of these consolidated financial
                                       statements

<PAGE>
Page 4

                                 SCHOOLWEB SYSTEMS INC.
                        (Formerly North Pacific Capital Corp.)
                             (A Development Stage Company)

                        CONSOLIDATED STATEMENT OF OPERATIONS


<TABLE>
<CAPTION>
                                                                         October 13,        October 13,
                                                   Year ended         2000 (inception)    2000 (inception)
                                                  December 31,         to December 31,     to December 31,
                                                      2001                  2000                2001
===========================================================================================================
                                                                                               (Note 1)
<S>                                               <C>                 <C>                 <C>
EXPENSES
   Depreciation and amortization                  $      6,600        $       -           $      6,600
   Consulting                                           17,300                -                 17,300
   License fees                                        120,000                -                120,000
   Office and general                                   50,530                -                 50,530
   Marketing                                            39,429                -                 39,429
   Professional fees                                    29,390                -                 29,390
-----------------------------------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD                           $   (263,249)       $       -           $   (263,249)
===========================================================================================================

BASIC NET LOSS PER SHARE                          $      (0.02)       $       -
==================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING          12,566,069          12,343,000
==================================================================================
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                       statements

<PAGE>
Page 5

                                 SCHOOLWEB SYSTEMS INC.
                        (Formerly North Pacific Capital Corp.)
                             (A Development Stage Company)

                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
        FOR THE PERIOD FROM OCTOBER 13, 2000 (INCEPTION) TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                            Deficit         Other
                                                                                          Accumulated       compre-
                                                                            Additional      During          hensive
                                                 Number of                    paid-in     Development       income
                                                   shares        Amount       capital        Stage          (loss)        Total
================================================================================================================================
<S>                                             <C>           <C>          <C>          <C>            <C>            <C>
Issuance of common stock for cash at
 $.001 per share - October 16, 2000                   3,000   $        3   $     -      $     -        $     -        $        3
--------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                            3,000            3         -            -              -                 3

Issuance of common stock for cash at
 $.007 per share - May 24, 2001                   5,500,000        5,500       33,000         -              -            38,500

Issuance of common stock for cash at
 $.01 per share - June 4, 2001                    4,010,000        4,010       36,090         -              -            40,100

Issuance of common stock for cash at
 $.15 per share - June 8, 2001                      330,000          330       49,170         -              -            49,500

Issuance of common stock for license
 agreement at $.01 per share - June
 29, 2001 (Note 4)                                2,500,000        2,500       22,500         -              -            25,000
--------------------------------------------------------------------------------------------------------------------------------

Schoolweb Holdings Inc. balance before
 reverse acquisition                             12,343,000       12,343      140,760         -              -           153,103

Schoolweb Systems Inc. balance before
 reverse acquisition (Note 5)                     1,350,000           14           19       (7,937)          -            (7,904)

Issued to effect reverse acquisition             12,343,000          123         (123)        -              -              -

Reverse acquisition recapitalization
 adjustment                                     (12,343,000)     (12,343)       4,406        7,937           -              -
--------------------------------------------------------------------------------------------------------------------------------

Schoolweb Systems Inc. balance after
 reverse acquisition                             13,693,000          137      145,062         -              -           145,199

Issuance of common stock for license
 agreement at $.01 per share - September
 10, 2001                                           500,000            5        4,995         -              -             5,000

Issuance of common stock for cash at
 $.10 per share - September 11, 2001                100,000            1        9,999         -              -            10,000

Issuance of common stock for cash at
 $.10 per share - November 5, 2001                   50,000            1        4,999         -              -             5,000

Issuance of common stock for cash at
 $.15 per share - November 8, 2001                   15,000         -           2,250         -              -             2,250

Issuance of common stock for cash at
 $.20 per share - November 24, 2001                 375,000            3       74,997         -              -            75,000

Foreign exchange translation adjustment                -            -            -            -            (1,950)        (1,950)

Net loss for the year ended December
 31, 2001                                              -            -            -        (263,249)          -          (263,249)
--------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001                       14,733,000   $      147   $  242,302   $ (263,249)    $   (1,950)    $  (22,750)
================================================================================================================================
</TABLE>

Note:   The statement of Stockholders' Equity has been restated to reflect the
        reverse acquisition of Schoolweb Holdings Inc. Refer to Notes 1 and 3.

   The accompanying notes are an integral part of these consolidated financial
                                       statements

<PAGE>
Page 6

                                 SCHOOLWEB SYSTEMS INC.
                        (Formerly North Pacific Capital Corp.)
                             (A Development Stage Company)

                        CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                         October 13,        October 13,
                                                   Year ended         2000 (inception)    2000 (inception)
                                                  December 31,         to December 31,     to December 31,
                                                      2001                  2000                2001
===========================================================================================================
                                                                                               (Note 1)
<S>                                               <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss for the period                        $   (263,249)       $       -           $   (263,249)
   Adjusted for item not involving cash:
    Depreciation and amortization                        6,600                -                  6,600
    Changes in prepaid expenses                         (3,758)               -                 (3,758)
    Changes in accounts payable                         21,951                -                 21,951
-----------------------------------------------------------------------------------------------------------

  NET CASH FLOWS USED IN OPERATING ACTIVITIES         (238,456)               -               (238,456)
-----------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Advances from related parties                        29,648                -                 29,648
   Proceeds on sale of common stock                    220,350                   3             220,353
-----------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM FINANCING ACTIVITIES               249,998                   3             250,001
-----------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of capital assets                        (4,000)               -                 (4,000)
   Cash acquired on reverse acquisition of
     SchoolWeb (Note 3)                                     74                -                     74
-----------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM INVESTING ACTIVITIES                (3,926)               -                 (3,926)
-----------------------------------------------------------------------------------------------------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                 (1,950)               -                 (1,950)
-----------------------------------------------------------------------------------------------------------

INCREASE IN CASH                                         5,666                   3               5,669

CASH, BEGINNING OF PERIOD                                    3                -                   -
-----------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD                               $      5,669        $          3        $      5,669
===========================================================================================================
</TABLE>


OTHER NON-CASH TRANSACTION:
During 2001 the Company issued a total of 3,000,000 common shares for a license
agreement at $.01 per share. (Note 4)


   The accompanying notes are an integral part of these consolidated financial
                                       statements

<PAGE>
Page 7

                                 SCHOOLWEB SYSTEMS INC.

                        (Formerly North Pacific Capital Corp.)
                             (A Development Stage Company)

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              DECEMBER 31, 2001 AND 2000
================================================================================


NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
-------------------------------------------------------------------------------

The Company was incorporated on June 26, 2000 in the State of Nevada as North
Pacific Capital Corp. and was organized for the purpose of creating a corporate
vehicle to locate and acquire an operating business. On December 19, 2001 the
Company changed its name to Schoolweb Systems Inc. ("SW Systems" or the
"Company"). On November 6, 2000, the Company filed a Form 10SB registration
with the United States Securities and Exchange Commission and as a result is
subject to the regulations governing reporting issuers in the United States.

By agreement dated July 2, 2001 and completed September 10, 2001, SW Systems
issued 12,343,000 shares of restricted common stock to the shareholders of
Schoolweb Holdings Inc. ("SW Holdings"), a development stage company
incorporated October 13, 2000 in the State of Nevada, in exchange for all of the
issued and outstanding shares of SW Holdings.

   The acquisition resulted in the former shareholders of SW Holdings
acquiring 90.1% of the outstanding shares of the Company and has been accounted
for as a reverse merger with SW Holdings being treated as the accounting parent
and SW Systems, the legal parent, being treated as the accounting subsidiary.
Accordingly, the consolidated results of operations of the Company include those
of SW Holdings for all periods shown and those of the SW Systems since the date
of the reverse acquisition. The results of SW Holdings are from its inception,
October 13, 2000 and include the results of its wholly-owned subsidiary,
SchoolWeb Systems (Canada) Ltd. a company incorporated April 17, 2001 in the
Province of British Columbia. The comparative balance sheet as at December 31,
2000 and the comparative results of operation and changes in financial position
for the periods ended December 31, 2000 are those of SW Holdings. Refer to Note
3.

SW Holdings, through a License Agreement dated January 1, 2001, will distribute,
market, sell and license in the United States and Canada, certain proprietary
software and hardware systems technology known as "SchoolWeb" used for caching
Internet and multimedia files on special servers (refer to Note 4).

The consolidated financial statements have been prepared on the basis of a going
concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has incurred losses
since inception and further losses are anticipated before the Company reaches a
commercial stage raising substantial doubt as to the Company's ability to
continue as a going concern. The Company's continued operations are dependent
on the successful implementation of its business plan, its ability to obtain
additional financing as needed, and ultimately to attain profitable operations.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, SW Holdings and Schoolweb Systems (Canada) Ltd.
which have been accounted for as a reverse acquisition. All significant
intercompany transactions and account balances have been eliminated.

Use of Estimates and Assumptions
Preparation of the Company's financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

Cash and Cash Equivalents
The Company considers all liquid investments, with an original maturity of three
months or less when purchased, to be cash equivalents.


<PAGE>
Page 8

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
================================================================================


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
--------------------------------------------------------------------------------

License Rights
The Company amortizes the cost of acquiring license rights on a straight-line
basis over the term of the license.

Fixed Assets
Fixed assets are recorded at cost and depreciated on a declining balance basis
at a rate of 30% per annum.

Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation", foreign denominated monetary assets and liabilities are translated
to their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Revenue and expenses are translated at
average rates of exchange during the year. Related translation adjustments are
reported as a separate component of stockholders' equity, whereas gains or
losses resulting from foreign currency transactions are included in results of
operations.

Fair Value of Financial Instruments
In accordance with the requirements of SFAS No. 107, the Company has determined
the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities approximate
carrying value due to the short-term maturity of the instruments.

Stock-Based Compensation
The Company accounts for stock-based compensation in respect to stock options
granted to employees and officers using the intrinsic value based method in
accordance with APB 25. Stock options granted to non-employees are accounted for
using the fair value method in accordance with SFAS No. 123. In addition, with
respect to stock options granted to employees, the Company provides pro-forma
information as required by SFAS No. 123 showing the results of applying the fair
value method using the Black-Scholes option pricing model.

The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with SFAS No. 123
and the conclusions reached by the Emerging Issues Task Force in Issue No.
96-18. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by EITF 96-18.

The Company has also adopted the provisions of the Financial Accounting
Standards Board Interpretation No.44, Accounting for Certain Transactions
Involving Stock Compensation - An Interpretation of APB Opinion No. 25 ("FIN
44"), which provides guidance as to certain applications of APB 25. FIN 44 is
generally effective July 1, 2000 with the exception of certain events occurring
after December 15, 1998.

Income taxes
The Company follows the liability method of accounting for income taxes. Under
this method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Future tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the date of enactment or
substantive enactment. As at December 31, 2001 the Company had net operating
loss carryforwards; however, due to the uncertainty of realization the Company
has provided a full valuation allowance for the deferred tax assets resulting
from these loss carryforwards.


<PAGE>
Page 9

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
================================================================================


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
--------------------------------------------------------------------------------

Net Loss per Common Share
Basic earnings per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive earnings per share reflects the potential
dilution of securities that could share in the earnings of the Company. Because
the Company does not have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.

Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), which requires that
goodwill not be amortized. SFAS requires that the Company review goodwill at
least annually to determine if an impairment has occurred and if so that
goodwill should be reduced accordingly. The Company has determined that the
implementation of this standard will not have any impact on its financial
statements.


NOTE 3 - ACQUISITION OF SW HOLDINGS
--------------------------------------------------------------------------------

By agreement dated July 2, 2001 and completed September 10, 2001, SW Systems
acquired 100 % of the issued and outstanding shares of SW Holdings in exchange
for 12,343,000 shares of restricted common stock of SW Systems. At the time of
this transaction, the former shareholders of SW Holdings acquired 90.1% of the
13,693,000 total issued and outstanding shares of SW Systems.

This acquisition has been accounted for as a recapitalization using accounting
principles applicable to reverse acquisitions with SW Holdings being treated as
the accounting parent (acquirer) and SW Systems being treated as the accounting
subsidiary (acquiree). The value assigned to the capital stock of consolidated
SW Systems on acquisition of SW Holdings is equal to the book value of the
capital stock of SW Holdings plus the book value of the net assets of SW Systems
as at the date of the acquisition.

The book value of SW System's capital stock subsequent to the acquisition is
calculated and allocated as follows:


                 SW Holdings capital stock                  $   153,103
                 SW Systems net assets (liabilities)             (7,904)
                                                            -----------
                                                            $   145,199
                                                            ===========

                 Capital stock                              $       137
                 Additional paid-in capital                     145,062
                                                            -----------
                                                            $   145,199
                                                            ===========

These consolidated financial statements include the results of operations of SW
Holdings since October 13, 2000 (inception) and the results of operations of SW
Systems since the date of the reverse acquisition on September 10, 2001. SW
Systems had no material assets, liabilities or operations for the period from
July 1, 2001 to September 10, 2001.

For the period from October 13, 2000 (inception) to September 10, 2001 the
weighted average number of common shares outstanding is deemed to be 12,343,000
being the number of shares issued by SW Systems in connection with the
acquisition of SW Holdings.


<PAGE>
Page 10

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
================================================================================

NOTE 4 - LICENSE AGREEMENT
--------------------------------------------------------------------------------

By agreement dated January 1, 2001, SW Holdings entered into an agreement with
Advanced Interactive Inc. ("AII") and Advanced Interactive (Canada) Inc. ("AIC")
whereby SW Holdings acquired exclusive and non-exclusive rights and licenses to
commercialise, distribute and market SW Holdings related licensed technology,
products and services in the United States and Canada for a period of five
years. SW Holdings must pay royalties equal to 40% of net revenue received plus
$10,000 per month in the first year, $20,000 per month in year two, and
increasing by $8,000 per month in each of the subsequent years to a maximum of
$84,000 per month. After year three, the monthly payment is reduced by the
amount of royalties otherwise payable. In addition SW Holdings issued 2,500,000
shares on June 29, 2001 valued at $.01 per share or $25,000.

Effective September 10, 2001 SW Holdings, AII and AIC amended the original
agreement such that AI and AIC would receive an additional 500,000 shares valued
at $5,000 which SW Systems issued on September 10, 2001.


NOTE 5 - CAPITAL STOCK
--------------------------

To December 31, 2001, the Company has not granted any stock options and has not
recorded any stock-based compensation.

SW System's capital stock transactions prior to reverse acquisition are as
follows:

<TABLE>
<CAPTION>
                                                                                      Deficit
                                                                                   Accumulated
                                                                      Additional      During
                                             Number of                  paid-in    Development
                                               Shares         Amount    capital        Stage       Total
----------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>        <C>         <C>            <C>
Issuance of common stock for cash at
 $.001 per share - June 26, 2000                 3,000     $    -     $      3    $    -         $     3

Issuance of common stock for cash at
 $.001 per share - September 13, 2000           17,000             1        16         -              17

Net loss for the period June 26, 2000
 (inception) to December 31, 2000                 -             -         -          (4,280)      (4,280)
----------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                      20,000             1        19       (4,280)      (4,260)

Issuance of common stock for cash at
 $.00001 per share - May 17, 2001            1,000,000            10      -            -              10

Issuance of common stock for cash at
 $.001 per share - May 18, 2001                230,000             2      -            -               2

Issuance of common stock for cash at
 $.001 per share - June 1, 2001                100,000             1      -            -               1

Loss from January 1, 2001 to date
 of reverse take-over                             -             -         -          (3,657)      (3,657)
----------------------------------------------------------------------------------------------------------
SW Systems balance before reverse
 acquisition                                 1,350,000            14       346       (7,937)      (7,904)
==========================================================================================================
</TABLE>


<PAGE>
Page 11

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
================================================================================


NOTE 6 - RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

Certain directors have provided cash loans totalling $16,186 at December 31,
2001. Amounts due from related parties are non-interest bearing and have no
specific terms of repayment.

A director of SW Holdings received $32,607 in marketing fees. The Company also
incurred $17,300 in consulting fees to two other directors

A company controlled by a shareholder of the Company received $3,000 in
professional fees.


NOTE 7 - INCOME TAXES
--------------------------------------------------------------------------------

The Company and its subsidiaries have tax losses which may be available to
reduce future year's taxable income, that result in deferred tax assets.
Management believes that the realization of the benefits from these deferred tax
assets appears uncertain due to the Company's limited operating history and
losses to date. Accordingly a full, deferred tax asset valuation allowance has
been provided and no deferred tax asset benefit has been recorded.


NOTE 8 - SUBSEQUENT EVENT
--------------------------------------------------------------------------------

Subsequent to December 31, 2001 the Company received $55,000 towards private
placement subscriptions.

<PAGE>


                                     SIGNATURES

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

               SCHOOLWEB SYSTEMS INC.

Dated April 17, 2002                By: /s/ Griffin Jones
                                        Griffin Jones, Director and Secretary

Pursuant to the requirements of the Securities Act of 1933, this annual report
has been signed by the persons in the capacities and on the date indicated:

Signature                               Title                    Date

/s/ Michael Dearden                  President/                  April 17, 2002
Michael Dearden                      Director

/s/ Patrick Fitzsimmons              Director/                   April 17, 2002
Patrick Fitzsimmons                  Vice-President

<PAGE>