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

                                   FORM 10K-SB
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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

                     FOR THE PERIOD ENDED DECEMBER 31, 2000

                        COMMISSION FILE NUMBER 000-32001

                              BW ACQUISITION, INC.
                 (Name of Small Business Issuer in its Charter)

    Nevada                                              94-3377540
    (State or other jurisdiction of                     (I.R.S. Employer
    Incorporation or organization)                      Identification No.)

    1000 G Street, 2nd Floor
    Sacramento, California                              95814
    (Address of Principal Executive Office)             (Zip Code)

                                 (916) 321-4427
                           (Issuer's Telephone Number)

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

             Securities registered under Section 12(g) of the Act:
                         Common Stock, $0.001 Par Value
                                (Title of Class)

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  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 the Form 10-KSB. [ ]

State  issuer's  revenues for its most recent fiscal year: $ 0.00. The aggregate
market value of the voting and non-voting common equity held by  non-affiliates,
based upon the average bid and asked price of such common equity as of March 30,
2001, [in the past 60 days], was approximately $ 0.00.

As of March 30, 2001,  there were 2,000,000  shares of common stock,  $0.001 par
value, outstanding.

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

<PAGE>

                                TABLE OF CONTENTS

PART I

Item 1   Description of Business                                               3
Item 2   Description of Property                                               6
Item 3   Legal Proceeding                                                      7
Item 4   Submission of Matters to a Vote of Security Holders                   7

PART II

Item 5   Market for Common Equity and Other Shareholder Matters                7
Item 6   Management's Discussion and Analysis or Plan of Operation             7
Item 7   Financial Statements                                                 10
Item 8   Changes In and Disagreements With Accountants                        11

PART III

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

SIGNATURES                                                                    14

FINANCIAL STATEMENTS--INDEPENDENT AUDITOR'S REPORT

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

     BW Acquisition, Inc. (the "Company") was incorporated under the laws of the
State of Nevada on October  12,  2000.  The  Company was formed to engage in any
lawful  corporate  undertaking,   including,  without  limitation,  mergers  and
acquisitions  with companies  selected by the management of the Company for such
business opportunities.  The Company will attempt to locate and negotiate with a
business entity for the combination of that target company with the Company. The
combination will normally take the form of a merger,  stock-for-stock  exchange,
or stock-for-assets  exchange. In most instances the target company will wish to
structure  the business  combination  to be within the  definition of a tax-free
reorganization  under Section 351 or Section 368 of the Internal Revenue Code of
1986, as amended. No assurances can be given that the Company will be successful
in locating or negotiating with any target company.

     In analyzing prospective business opportunities,  management of the Company
may consider such matters as: the available technical,  financial and managerial
resources;  working  capital  and  other  financial  requirements;   history  of
operations,  if any;  prospects  for the future;  nature of present and expected
competition;  the quality and  experience  of management  services  which may be
available and the depth of that management;  the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be  anticipated to impact the proposed  activities of the Company;  the
potential  for growth or  expansion;  the  potential  for profit;  the perceived
public  recognition  or  acceptance  of  products,  services,  or  trades;  name
identification;  and  other  relevant  factors.  The  Company  has  been  in the
developmental  stage since  inception  and has no  operations to date other than
issuing shares to its original shareholder.

     The  Company  has been formed to provide a method for a foreign or domestic
private  company  to  become  a  reporting  ("public")  company  with a class of
registered securities.  The Company may use one or more consultants to assist in
the process of locating a target  company.  As of December 31, 2000, the Company
has no  relationships  with  any such  consultants,  and the  management  of the
Company has not  recommended a particular  consultant to be hired by the Company
for such purposes.  If the Company decides to use one or more consultants,  such
consultants  will be selected at the discretion of the management of the Company
taking  into  account  such  criteria  as  experience  in the  area of  locating
companies  as  targets  for  mergers,   and  past  record  of  success  in  such
transactions.

     As of December 31,  2000,  neither  William F.  Webster (as sole  director,
officer and  shareholder of the Company) nor any of his affiliates or associates
have had any preliminary  contact or discussions  with, and there are no present
plans,  proposals or arrangements or understandings with, any representatives of
any business or company  regarding the  possibility  of an acquisition or merger
transaction  as  described  herein.   Furthermore,   there  are  no  preliminary
agreements or understandings  between the Company and any of its affiliates,  or
any lending  institution,  with respect to any loan  agreements.  The  Company's
management  has no plans to seek debt  financing  in carrying  out its  business
plan.

RISK FACTORS

     The Company's  business is subject to numerous risk factors.  The principal
risk factors are set forth below.

<PAGE>

     THE COMPANY HAS NO OPERATING HISTORY NOR REVENUE,  AND MINIMAL ASSETS,  AND
OPERATES AT A LOSS. The Company has had no operating history nor any revenues or
earnings from  operations.  The Company has no  significant  assets or financial
resources.  The Company will, in all likelihood,  continue to sustain  operating
expenses without  corresponding  revenues,  at least until the consummation of a
business combination. See PART F/S "FINANCIAL STATEMENTS". There is no assurance
that the Company will ever be profitable.

     THE COMPANY HAS ONLY ONE  DIRECTOR AND OFFICER.  The  Company's  president,
secretary,  and chief financial  officer is William F. Webster,  who is also its
sole director and shareholder.  Because management  consists of only one person,
the Company does not benefit from multiple  judgments  that a greater  number of
directors or officers would provide, and the Company will rely completely on the
judgment of its one officer and director when  selecting a target  company.  Mr.
Webster  anticipates  devoting  only a  limited  amount of time per month to the
business of the Company and does not  anticipate  commencing  any services until
after the effective  date of the  registration  statement.  Mr.  Webster has not
entered  into a written  employment  agreement  with the  Company  and he is not
expected to do so. The Company has not  obtained  key man life  insurance on Mr.
Webster.  The  loss  of the  services  of Mr.  Webster  would  adversely  affect
development  of  the  Company's   business  and  its  likelihood  of  continuing
operations.

     CONFLICTS  OF  INTEREST.  Mr.  Webster,  the  Company's  sole  officer  and
director,  participates  in other business  ventures which may compete  directly
with  the  Company.   Additional  conflicts  of  interest  and  non-arms  length
transactions may also arise in the future.  The terms of a business  combination
may  include  such terms as Mr.  Webster  remaining a director or officer of the
Company.  The terms of a business  combination may provide for a payment by cash
or otherwise to Mr.  Webster for the  purchase or  retirement  of all or part of
their common stock of the Company by a target  company or for services  rendered
incident to or following a business  combination.  Mr.  Webster  would  directly
benefit  from such  employment  or payment.  Such  benefits  may  influence  Mr.
Webster's  choice of a target  company.  The  Articles of  Incorporation  of the
Company provide that the Company may indemnify  officers and/or directors of the
Company  (of  which  there is  currently  only one) for  liabilities,  which can
include liabilities arising under the securities laws. Therefore,  assets of the
Company  could be used or attached to satisfy  any  liabilities  subject to such
indemnification.

     THE PROPOSED OPERATIONS OF THE COMPANY ARE SPECULATIVE.  The success of the
Company's  proposed  plan of  operation  will  depend  to a great  extent on the
operations, financial condition and management of the identified target company.
While business combinations with entities having established operating histories
are preferred,  there can be no assurance that the Company will be successful in
locating candidates meeting such criteria. The decision to enter into a business
combination   will  likely  be  made  without  detailed   feasibility   studies,
independent  analysis,  market  surveys or  similar  information  which,  if the
Company had more funds  available  to it, would be  desirable.  In the event the
Company  completes  a  business  combination,   the  success  of  the  Company's
operations  will be dependent upon management of the target company and numerous
other  factors  beyond the  Company's  control.  There is no assurance  that the
Company can identify a target company and consummate a business combination.

     PURCHASE OF PENNY  STOCKS CAN BE RISKY.  In the event that a public  market
develops for the Company's  securities  following a business  combination,  such
securities may be classified as a penny stock  depending upon their market price
and the manner in which they are traded. The Securities and Exchange  Commission
has adopted  Rule15g-9 which  establishes the definition of a "penny stock," for
purposes relevant to the Company, as any equity security that has a market price
of less than  $5.00 per share or with an  exercise  price of less than $5.00 per
share whose securities are admitted to quotation but

<PAGE>

do not  trade  on the  Nasdaq  Small  Cap  Market  or on a  national  securities
exchange.  For any transaction involving a penny stock, unless exempt, the rules
require  delivery by the broker of a document to investors  stating the risks of
investment in penny stocks,  the possible lack of liquidity,  commissions  to be
paid,   current  quotation  and  investors'  rights  and  remedies,   a  special
suitability  inquiry,  regular reporting to the investor and other requirements.
Prices for penny stocks are often not  available  and investors are often unable
to sell such stock.  Thus an investor may lose his  investment  in a penny stock
and consequently should be cautious of any purchase of penny stocks.

     THERE IS A SCARCITY OF, AND COMPETITION  FOR,  BUSINESS  OPPORTUNITIES  AND
COMBINATIONS.  The  Company  is,  and  will  continue  to be,  an  insignificant
participant  in the  business of seeking  mergers  with,  and  acquisitions  of,
business  entities.  A large number of established and  well-financed  entities,
including  venture  capital  firms,  are active in mergers and  acquisitions  of
companies which may be merger or acquisition  target candidates for the Company.
Nearly  all  such  entities  have  significantly  greater  financial  resources,
technical   expertise  and  managerial   capabilities   than  the  Company  and,
consequently,  the Company will be at a competitive  disadvantage in identifying
possible  business   opportunities   and  successfully   completing  a  business
combination.  Moreover,  the Company will also compete with numerous other small
public companies in seeking merger or acquisition candidates.

     THERE  IS  NO  AGREEMENT  FOR  A  BUSINESS   COMBINATION   AND  NO  MINIMUM
REQUIREMENTS  FOR A BUSINESS  COMBINATION.  As of December 31, 2000, the Company
has no current arrangement,  agreement or understanding with respect to engaging
in a business combination with a specific entity. There can be no assurance that
the Company will be successful in identifying and evaluating  suitable  business
opportunities or in concluding a business combination. No particular industry or
specific business within an industry has been selected for a target company. The
Company  has not  established  a  specific  length  of  operating  history  or a
specified level of earnings,  assets,  net worth or other criteria which it will
require a target  company to have  achieved,  or without which the Company would
not consider a business combination with such business entity. Accordingly,  the
Company may enter into a business  combination  with a business entity having no
significant  operating  history,  losses,  limited or no potential for immediate
earnings,  limited assets, negative net worth or other negative characteristics.
There is no  assurance  that the  Company  will be able to  negotiate a business
combination on terms favorable to the Company.

     REPORTING  REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.  Pursuant to the
requirements of Section 13 of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Company is required to provide certain  information about significant
acquisitions  including  audited  financial  statements of the acquired company.
These audited  financial  statements must be furnished  within 75 days following
the  effective  date of a  business  combination.  Obtaining  audited  financial
statements are the economic responsibility of the target company. The additional
time and costs  that may be  incurred  by some  potential  target  companies  to
prepare  such  financial  statements  may  significantly  delay  or  essentially
preclude  consummation  of an otherwise  desirable  acquisition  by the Company.
Acquisition  prospects  that do not have or are  unable to obtain  the  required
audited  statements  may  not be  appropriate  for  acquisition  so  long as the
reporting  requirements  of the Exchange Act are applicable.  Notwithstanding  a
target company's  agreement to obtain audited  financial  statements  within the
required time frame, such audited financials may not be available to the Company
at the  time of  effecting  a  business  combination.  In  cases  where  audited
financials  are  unavailable,  the  Company  will  have to rely  upon  unaudited
information  that has not been  verified  by  outside  auditors  in  making  its
decision  to  engage  in a  transaction  with the  business  entity.  This  risk
increases the prospect that a business  combination  with such a business entity
might prove to be an unfavorable one for the Company.

<PAGE>

     LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION.  The Company has neither
conducted, nor have others made available to it, market research indicating that
demand  exists for the  transactions  contemplated  by the Company.  Even in the
event demand exists for a transaction of the type  contemplated  by the Company,
there is no assurance  the Company will be  successful  in  completing  any such
business combination.

     REGULATION UNDER  INVESTMENT  COMPANY ACT. In the event the Company engages
in business  combinations which result in the Company holding passive investment
interests in a number of entities,  the Company  could be subject to  regulation
under the Investment Company Act of 1940. Passive investment interests,  as used
in the Investment  Company Act,  essentially  means investments held by entities
which do not provide  management or  consulting  services or are not involved in
the business  whose  securities  are held.  In such event,  the Company would be
required  to register  as an  investment  company and could be expected to incur
significant  registration  and  compliance  costs.  The Company has  obtained no
formal  determination  from the  Securities  and Exchange  Commission  as to the
status of the Company under the Investment Company Act of 1940. Any violation of
such Act could subject the Company to material adverse consequences.

     PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination involving
the issuance of the Company's  common stock will, in all  likelihood,  result in
shareholders  of a  target  company  obtaining  a  controlling  interest  in the
Company. As a condition of any such business combination  agreement,  William F.
Webster,  the sole shareholder of the Company, may agree to sell or transfer all
or a portion of his  Company's  common stock to provide the target  company with
all or majority  control.  The  resulting  change in control of the Company will
likely result in removal of the present  officer and director of the Company and
a corresponding  reduction in or elimination of his  participation in the future
affairs of the Company.

     POSSIBLE DILUTION OF VALUE OF SHARES UPON BUSINESS COMBINATION.  A business
combination  normally  will  involve  the  issuance of a  significant  number of
additional  shares.  Depending  upon the value of the  assets  acquired  in such
business  combination,  the per share value of the  Company's  common  stock may
increase or decrease, perhaps significantly.

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

ITEM 2. DESCRIPTION OF PROPERTY

     The Company has no properties and at this time has no agreements to acquire
any properties. The Company currently uses the offices of William F. Webster, an
officer and director of the Company, located in Sacramento,  California,  as its
principal  place of business.  The Company uses these  offices at no cost to the
Company.  Mr. Webster has agreed to continue this arrangement  until the Company
completes a business combination.

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

     None.

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

     None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no public trading market for the Company's  common stock.  Holders
of common stock are entitled to receive such dividends as may be declared by the
company's board of directors. no dividends on the common stock have been paid by
the company,  nor does the Company anticipate that dividends will be paid in the
foreseeable future.

     During the period  covered by this report the  Company has sold  securities
which were not registered, as follows:

                                                 Number
Date                    Name                     of Shares         Consideration
----                    ----                     ---------         -------------

October 23, 2000        William F. Webster       1,000,000         $2,500 cash

     With  respect to the sale made to William F.  Webster,  the Company  relied
upon  Sections 4(2) (for  non-public  offerings)  and 3(a)(11)  (for  intrastate
offerings) of the Securities Act of 1933, as amended. Mr. Webster is the founder
and sole  officer and director of the Company.  Mr.  Webster is a  sophisticated
investor  and had access to the kind of  information  about the  Company  that a
registration  statement would disclose.  The securities were offered,  the offer
was accepted, and the sale was consummated all within the State of California.

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

PLAN OF OPERATION

     The Company's  purpose is to seek,  investigate and, if such  investigation
warrants,  combine with a business  entity which  desires to seek the  perceived
advantages of a corporation which has a class of securities registered under the
Exchange Act. The Company will not restrict its search to any specific business,
industry,  or  geographical  location,  and the  Company  may  participate  in a
business venture of virtually any kind or nature. Management anticipates that it
will be able to participate in only one potential  business  venture because the
Company  has  nominal  assets and  limited  financial  resources.  See PART F/S,
"FINANCIAL  STATEMENTS."  This lack of  diversification  should be  considered a
substantial risk to the shareholders of the Company (of which there is currently
only one) because it will not permit the Company to offset potential losses from
one venture against gains from another.

<PAGE>

     The  Company  may seek a  business  opportunity  with  entities  which have
recently commenced  operations,  or which wish to utilize the public marketplace
in order to raise  additional  capital in order to expand  into new  products or
markets,  to develop a new product or service,  or for other corporate purposes.
The Company anticipates that its search for a target company with which to merge
will  be  conducted  by  using  the  services  of  companies   and   individuals
specializing  in the offer and sale of public shells as finders for a target for
the Company.  The Company has begun  discussions with several such companies and
individuals,   but  no  formal  relationships  have  been  established,  and  no
agreements  with such  companies and  individuals  have been entered  into.  The
Company  anticipates  contacting several such companies and one such individual,
and may pay  finders  fees of up to 10% of the price paid by the target  company
for a controlling interest in the Company. The Company anticipates that any such
finder's fees will be paid in cash,  although the Company  reserves the right to
pay such finder's fees by the issuance of its securities.

     The Company  anticipates  that the selection of a business  opportunity  in
which to participate  will be complex and extremely risky.  Management  believes
(but has not conducted any research to confirm) that there are business entities
seeking  the  perceived  benefits  of a reporting  corporation.  Such  perceived
benefits may include  facilitating  or improving  the terms on which  additional
equity financing may be sought,  providing liquidity for incentive stock options
or  similar  benefits  to  key  employees,  increasing  the  opportunity  to use
securities for  acquisitions,  providing  liquidity for  shareholders  and other
factors.  Business  opportunities may be available in many different  industries
and at  various  stages  of  development,  all of  which  will  make the task of
comparative  investigation and analysis of such business opportunities difficult
and complex.

     The  Company  has,  and will  continue  to have,  no capital  with which to
provide the owners of business entities with any cash or other assets.  What the
Company  anticipates  it will  provide  to  owners  of  acquisition  candidates,
however,  is a controlling  ownership  interest in a reporting  company  without
incurring  the cost and time  required  to conduct an initial  public  offering.
Management  has not conducted  market  research and is not aware of  statistical
data to support the perceived benefits of a business  combination for the owners
of a target company.

     The analysis of new business  opportunities will be undertaken by, or under
the  supervision  of, the officer  and  director  of the  Company,  who is not a
professional business analyst. In analyzing prospective business  opportunities,
management may consider such matters as: the available technical,  financial and
managerial resources; working capital and other financial requirements;  history
of operations,  if any; prospects for the future; nature of present and expected
competition;  the quality and  experience  of management  services  which may be
available and the depth of that management;  the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be  anticipated to impact the proposed  activities of the Company;  the
potential  for growth or  expansion;  the  potential  for profit;  the perceived
public  recognition  or  acceptance  of  products,  services,  or  trades;  name
identification;  and other  relevant  factors.  This  discussion of the proposed
criteria is not meant to be  restrictive  of the Company's  virtually  unlimited
discretion to search for and enter into potential business opportunities.

     The Company is subject to all of the reporting requirements included in the
Exchange Act. Included in these  requirements is the duty of the Company to file
audited  financial  statements  as part of, or within 60 days  following the due
date for filing of, its Current Report on Form 8-K which is required to be filed
with the  Securities  and  Exchange  Commission  within  15 days  following  the
completion of a business  combination.  The Company  intends to acquire or merge
with a company for which audited financial statements are available or for which
it believes audited financial statements can be obtained within the

<PAGE>

required  period of time. The Company may reserve the right in the documents for
the  business  combination  to void the  transaction  if the  audited  financial
statements  are not timely  available  or if the  audited  financial  statements
provided do not conform to the representations made by the target company.

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

     Following a business combination, the Company may benefit from the services
of others in regard to accounting,  legal services,  underwritings and corporate
public relations. If requested by a target company, management may recommend one
or more underwriters, financial advisors, accountants, public relations firms or
other consultants to provide such services.

     A potential  target  company may have an  agreement  with a  consultant  or
advisor  providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target company may be presented to the
Company only on the  condition  that the services of a consultant  or advisor be
continued after a merger or acquisition.  Such preexisting  agreements of target
companies  for the  continuation  of the  services  of  attorneys,  accountants,
advisors or consultants could be a factor in the selection of a target company.

TERMS OF A BUSINESS COMBINATION

     In  implementing  a structure for a particular  business  acquisition,  the
Company  may become a party to a merger,  consolidation,  reorganization,  joint
venture,  or licensing  agreement  with another  corporation  or entity.  On the
consummation  of a  transaction,  it is likely that the present  management  and
shareholder  of the  Company  will no longer be in  control of the  Company.  In
addition,  it is likely that the Company's officer and director will, as part of
the terms of the business combination, resign and be replaced by one or more new
officers and directors.  It is not anticipated  that the payment of compensation
to, or continued  employment  of, Mr.  Webster (the  Company's sole director and
officer) will be a selection criterion for a target company.

     It  is  anticipated  that  any  securities  issued  in  any  such  business
combination would be issued in reliance upon exemption from  registration  under
applicable federal and state securities laws. In some circumstances, however, as
a negotiated  element of its transaction,  the Company may agree to register all
or a part of such securities immediately after the transaction is consummated or
at  specified  times  thereafter.  If  such  registration  occurs,  it  will  be
undertaken  by the  surviving  entity  after the  Company  has  entered  into an
agreement for a business  combination or has consummated a business  combination
and the Company is no longer  considered a blank check company.  The issuance of
additional securities and their potential sale into any trading market which may
develop  in the  Company's  securities  may  depress  the  market  value  of the
Company's securities in the future if such a market develops,  of which there is
no assurance.

     While the terms of a business  transaction  to which the  Company  may be a
party  cannot be  predicted,  it is expected  that the  parties to the  business
transaction  will desire to avoid the  creation  of a taxable  event and thereby
will attempt to structure the  acquisition  in a tax-free  reorganization  under
Sections 351 or 368 of the Internal Revenue Code of 1986, as amended.

<PAGE>

     With respect to negotiations with a target company,  management  expects to
focus on the percentage of the Company which target company  shareholders  would
acquire in exchange for their  shareholdings  in the target  company.  Depending
upon,  among other things,  the target  company's  assets and  liabilities,  the
Company's  shareholder  will  in  all  likelihood  hold a  substantially  lesser
percentage   ownership   interest  in  the  Company   following  any  merger  or
acquisition. The percentage of ownership may be subject to significant reduction
in the event the Company acquires a target company with substantial  assets. Any
merger  or  acquisition  effected  by the  Company  can be  expected  to  have a
significant  dilutive  effect on the  percentage of shares held by the Company's
shareholders (of which there is currently only one) at such time.

     The  Company  will  participate  in a business  combination  only after the
negotiation and execution of appropriate agreements.  Although the terms of such
agreements  cannot be predicted,  generally such agreements will require certain
representations  and  warranties of the parties  thereto,  will specify  certain
events of default,  will detail the terms of closing  and the  conditions  which
must be  satisfied  by the  parties  prior to and after  such  closing  and will
include miscellaneous other terms.

     The  Company  will pay its own  expenses  in  regard  to its  search  for a
suitable target company,  but these are expected to be minimal. Mr. Webster, the
sole  officer and  director of the  Company,  will  provide his  services to the
Company without  compensation until a business combination is found. The Company
will not borrow any funds to make any payments to the Company's management,  its
affiliates or associates.  In the event that the Company's  expenses  exceed its
resources, the Company may seek alternative sources of funds or services, either
through loans or through the issuance of its securities.

     It is not expected  that Mr.  Webster will receive any sort of finder's fee
or other acquisition related  compensation other than the purchase price for any
shares sold by Mr.  Webster to the target  company as part of an  acquisition of
the Company by the target company.

     The Board of Directors has passed a resolution which contains a policy that
the Company  will not seek a business  combination  with any entity in which the
Company's officer, director, shareholder or any affiliate or associate serves as
an  officer  or  director  or holds any  ownership  interest.  As  drafted,  the
resolution  does not  provide for  circumstances  under which this policy may be
changed.

COMPETITION

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

ITEM 7. FINANCIAL STATEMENTS

     The audited financial statements for the Company are attached at the end of
this Form 10-KSB, following the Signatures.

<PAGE>

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

     The Company has one director and one officer as follows:

Name                   Age    Positions and Offices Held
----                   ---    --------------------------
William F. Webster     41     President, Secretary, Chief Financial Officer, and
                              Director

     Mr.  Webster  has served as a director  of the  Company  since its  initial
meeting on October 23,  2000,  and will serve on the board until the next annual
meeting of the  shareholders  of the  Company or until a  successor  is elected.
There are no agreements or understandings for the officer and director to resign
at the request of another person,  and the  above-named  officer and director is
not acting on behalf of, nor will act at the direction of, any other person.

     Set  forth  below is the  name of the  sole  director  and  officer  of the
Company,  the  period  during  which he has  served  as such,  and his  business
experience during at least the last five years:

     William F.  Webster,  president,  secretary,  chief  financial  officer and
director. Mr. Webster is a sole practitioner attorney in Sacramento, California.
A graduate of the  University  of  California at Santa Barbara (B. A., 1981) and
the University of California,  Hastings College of the Law (J. D., 1989),  where
he was an  associate  editor  of the  Hastings  Law  Journal,  Mr.  Webster  has
represented  privately  held  businesses and publicly held  corporations  in the
areas of securities and corporate finance, mergers and acquisitions,  and entity
formation and reorganization. He has been an associate at several law firms, and
has been a sole practitioner  since November of 1996. Mr. Webster is a member of
the State Bar of California,  the Partnerships and Limited  Liability  Companies
Committee of the State Bar Business Law Section,  and the Sacramento  County Bar
Association Business Law Section.

     William F. Webster,  the Company's  sole officer and director,  anticipates
that he will be involved with the formation of other blank check companies,  and
involved  in  creating  additional  companies  similar to this one.  The initial
business  purpose  of each of these  companies  will be to engage in a  business
combination  with  an  unidentified  company  or  companies  and  each  will  be
classified as a blank check company until completion of a business combination.

     It is anticipated that target companies will be located for the Company and
other  identical  blank check  companies in  chronological  order of the date of
formation of such blank check companies or, in the case of blank check companies
formed on the same date, alphabetically.  However, certain blank check companies
may differ  from the  Company in certain  items such as place of  incorporation,
number  of  shares  and  shareholders,  working  capital,  types  of  authorized
securities,  preference  of a certain  blank check company name by management of
the target company,  or other items. It may be that a target company may be more
suitable  for or may  prefer a certain  blank  check  company  formed  after the
Company. In such

<PAGE>

case, a business  combination might be negotiated on behalf of the more suitable
or preferred blank check company regardless of date of formation.

CONFLICTS OF INTEREST

     William F.  Webster,  the Company's  sole officer and director,  expects to
organize other  companies of a similar nature and with a similar  purpose as the
Company.  Consequently,  there are potential  inherent  conflicts of interest in
acting as an officer and  director of the Company.  In addition,  insofar as Mr.
Webster is engaged in other business activities, he may devote only a portion of
their time to the Company's affairs.

     A conflict  may arise in the event that  another  blank check  company with
which Mr.  Webster is affiliated  also actively  seeks a target  company.  It is
anticipated  that  target  companies  will be located  for the Company and other
blank check  companies in  chronological  order of the date of formation of such
blank check  companies  or, in the case of blank check  companies  formed on the
same date, alphabetically.  However, other blank check companies may differ from
the Company in certain  items such as place of  incorporation,  number of shares
and  shareholders,  working capital,  types of authorized  securities,  or other
items.  It may be that a target company may be more suitable for or may prefer a
certain blank check company  formed after the Company.  In such case, a business
combination  might be  negotiated  on behalf of the more  suitable or  preferred
blank check  company  regardless of date of formation.  However,  Mr.  Webster's
beneficial  and economic  interest in all blank check  companies with which they
are currently involved will be identical.

     Mr. Webster is the principal of another company, Webster Law Firm. As such,
demands may be placed on the time of Mr.  Webster  which will  detract  from the
amount of time he is able to devote  to the  Company.  Mr.  Webster  intends  to
devote as much time to the  activities  of the  Company  as  required.  However,
should such a conflict  arise,  there is no assurance that Mr. Webster would not
attend to other matters  prior to those of the Company.  Mr.  Webster  estimates
that the business plan of the Company can be  implemented  in theory by devoting
approximately  10 to 25 hours per month over the  course of  several  months but
such figure cannot be stated with precision.

     The terms of a business  combination  may include such terms as Mr. Webster
remaining  as a  director  or  officer of the  Company,  and/or  the  continuing
securities  or other legal work of the Company  being handled by the law firm of
which Mr.  Webster  is a  principal.  The terms of a  business  combination  may
provide for a payment by cash or  otherwise  to Mr.  Webster for the purchase or
retirement of all or part of its common stock of the Company by a target company
or for services  rendered incident to or following a business  combination.  Mr.
Webster would directly  benefit from such  employment or payment.  Such benefits
may influence Mr. Webster's choice of a target company.

     The  Company  will not enter into a business  combination,  or acquire  any
assets of any kind for its securities, in which management of the Company or any
affiliates or associates have any interest, direct or indirect.

     There are no binding  guidelines  or  procedures  for  resolving  potential
conflicts of interest. Failure by management to resolve conflicts of interest in
favor of the Company could result in liability of management to the Company.

<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

     Section  16(a)  of  the  Exchange  Act  requires  the  Company's  officers,
directors  and persons who  beneficially  own more ten percent of the  Company's
common  stock to file  reports  of  securities  ownership  and  changes  in such
ownership  with the  Securities  and  Exchange  Commission,  and to furnish  the
Company with copies of such reports.  The Company is aware that Mr. Webster,  an
officer and director of the Company,  did not file in a timely  fashion a Form 3
upon the effectiveness of the Company's Form 10-SB.

ITEM 10. EXECUTIVE COMPENSATION.

     The Company's  sole officer and director does not receive any  compensation
for his services rendered to the Company,  has not received such compensation in
the past,  and is not accruing any  compensation  pursuant to any agreement with
the Company. However, Mr. Webster, the sole officer and director of the Company,
anticipates  receiving benefits as a shareholder of the Company.  No retirement,
pension,  profit  sharing,  stock option or insurance  programs or other similar
programs have been adopted by the Company for the benefit of its employees.

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

     The  following  table sets forth each person  known by the  Company,  as of
March  30,  2001,  to be the  beneficial  owner of five  percent  or more of the
Company's  Common Stock, the sole director  individually,  and all directors and
officers of the Company (of which there is only one) as a group.

                                           Amount of
Name and Address                           Beneficial          Percentage
of Beneficial Owner                        Ownership           of Class
-------------------                        ---------           --------

William F. Webster                         2,000,000           100%
1000 G Street, 2nd Floor
Sacramento, California 95814

All Executive Officers and                 2,000,000           100%
Directors as a Group (1 Person)

     The Company  currently  has no non-voting  securities  or other  securities
outstanding.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

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

(a)  EXHIBITS.  The following documents are filed herewith or have been included
as exhibits to previous filings with the Commission and are incorporated  herein
by this reference.

<PAGE>

Exhibit No.    Description
-----------    -----------

3.1*           Articles of Incorporation
3.2*           Bylaws
27.1*          Financial Data Schedule

*Incorporated  by  reference  to the  Company's  Registration  Statement on Form
10-SB, as amended,  originally  filed with the Commission under the Exchange Act
on November 21, 2000.

(b)  REPORTS ON FORM 8-K.  No  reports on Form 8-K were filed  during the period
     covered by this report.

                                   SIGNATURES

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

                                        BW ACQUISITION, INC.,
                                        A Nevada Corporation

                                        By:_____________/S/___________________
                                            William F. Webster, President, Chief
                                            Financial Officer, and Sole Director

                                        Date: March 30, 2001

<PAGE>

                              BW ACQUISITION, INC.

                        (A DEVELOPMENT STAGE ENTERPRISE)

                          AUDITED FINANCIAL STATEMENTS

                             AS OF DECEMBER 31, 2000

                                       AND

                      FOR THE PERIOD FROM OCTOBER 12, 2000

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000

<PAGE>

                              BW ACQUISITION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          AUDITED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2000
                    AND FOR THE PERIOD FROM OCTOBER 12, 2000
                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

INDEPENDENT AUDITOR'S REPORT                                                1

BALANCE SHEET AS OF DECEMBER 31, 2000                                       2

STATEMENT OF OPERATIONS
  FOR THE PERIOD FROM OCTOBER 12, 2000
  (FROM INCEPTION) THROUGH DECEMBER 31, 2000                                3

STATEMENT OF CASH FLOWS
  FOR THE PERIOD FROM OCTOBER 12, 2000
  (FROM INCEPTION) THROUGH DECEMBER 31, 2000                                4

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
  FOR THE PERIOD FROM OCTOBER 12, 2000
  (FROM INCEPTION) THROUGH DECEMBER 31, 2000                                5

NOTES TO FINANCIAL STATEMENTS
  FOR THE PERIOD FROM OCTOBER 12, 2000
  (FROM INCEPTION) THROUGH DECEMBER 31, 2000                               6-8

                                      -i-
<PAGE>

                                LARRY LEGEL, CPA

                            Practice Concentrating in
                             Taxation and Securities

                       5100 N. Federal Highway, Suite 409
                            Ft. Lauderdale, FL 33308
                              (954) 493-8900 Office
                             Fax to: (954) 493-8300
                           e-mail: LarryLegel@aol.com

                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

Stockholder
BW Acquisition, Inc.
1000 G Street, 2nd Floor
Sacramento, CA  95814

I have  audited  the  accompanying  balance  sheet of BW  ACQUISITION,  INC.  (A
DEVELOPMENT  STAGE  ENTERPRISE)  as  of  December  31,  2000,  and  the  related
statements of operations,  changes in stockholder's  equity,  and cash flows for
the period from  October 12, 2000 (from  inception)  through  December 31, 2000.
These financial  statements are the responsibility of the Company's  management.
My responsibility  is to express an opinion on these financial  statements based
on my audits.

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

In my opinion,  the financial  statements  referred to above present fairly, the
financial  position of BW  Acquisition,  Inc. as of December 31,  2000,  and the
results  of its  operations  and its cash  flows  from  October  12,  2000 (from
inception)  through  December 31, 2000, in conformity  with  generally  accepted
accounting principles.

Larry Legel
Certified Public Accountant

March 20, 2001
Ft Lauderdale, FL

                                       -1-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                                  BALANCE SHEET
                                  -------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                             AS OF DECEMBER 31, 2000
                             -----------------------

ASSETS
------

CURRENT ASSETS
   Cash in Bank                                                         $ 1,026
                                                                        -------
TOTAL CURRENT ASSETS                                                      1,026
                                                                        -------
FURNITURE & FIXTURES                                                        -0-
                                                                        -------
OTHER ASSETS

TOTAL ASSETS                                                            $ 1,026
                                                                        =======

LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES                                                     $   -0-
                                                                        -------
TOTAL LIABILITIES                                                           -0-
                                                                        =======

STOCKHOLDER'S EQUITY
Paid in capital                                                           1,500
Common stock, $0.001 par value,
  25,000,000 shares authorized;
  1,000,000 shares issued and outstanding                                 1,000
Retained Earnings (Deficit) accumulated
  during development stage                                               (1,474)
                                                                       --------
     TOTAL STOCKHOLDER'S EQUITY                                           1,026
                                                                        -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                              $ 1,026
                                                                        =======


              The accompanying notes are an integral part of these
                              financial statements

                                       -2-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                             STATEMENT OF OPERATIONS
                             -----------------------

                      FOR THE PERIOD FROM OCTOBER 12, 2000
                      ------------------------------------

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000
                   ------------------------------------------

INCOME
------

Income                                                                  $     0
                                                                        -------
TOTAL INCOME                                                            $     0
                                                                        -------

EXPENSES
--------

   Bank Charges                                                         $    24
   Professional Services                                                  1,450
                                                                        -------
TOTAL EXPENSES                                                          $ 1,474
                                                                        -------
NET INCOME (LOSS)                                                       $(1,474)
                                                                        =======

NET INCOME (LOSS) PER SHARE                                             $ (0.01)
                                                                        -------

Weighted average number of
Common shares outstanding                                             1,000,000
                                                                      ---------

              The accompanying notes are an integral part of these
                              financial statements

                                       -3-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                             STATEMENT OF CASH FLOWS
                             -----------------------

                      FOR THE PERIOD FROM OCTOBER 12, 2000
                      ------------------------------------

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000
                   ------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Cash disbursed for operating activities                                1,474
                                                                         ------
   Net cash flow provided by (used in)
      operating activities                                               (1,474)
                                                                         ------
CASH FLOWS FROM INVESTING ACTIVITIES:                                       -0-

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of stock                                        1,000
   Proceeds from paid in capital                                          1,500
                                                                         ------
   Net cash flow provided by financing
     activities                                                           2,500
                                                                         ------
NET INCREASE IN CASH                                                      1,026
                                                                         ------
BEGINNING OF PERIOD
   Cash and cash equivalents                                                -0-
                                                                         ------
END OF PERIOD
   Cash and cash equivalents                                             $1,026
                                                                         ------

              The accompanying notes are an integral part of these
                              financial statements

                                       -4-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                  STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
                  --------------------------------------------

                      FOR THE PERIOD FROM OCTOBER 12, 2000
                      ------------------------------------

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000
                   ------------------------------------------

                        COMMON STOCK
                        ------------
                        NO PAR VALUE
                        ------------
                        NO. OF                    PAID IN    RETAINED
                        SHARES         AMOUNT     CAPITAL    EARNINGS     TOTAL
                        ------         ------     -------    --------     -----
October 12, 2000
   initial issuance
   of shares            1,000,000      $1,000     $1,500                 $2,500

Net profit (loss)
   for period ended
   December 31, 2000                                          (1,474)    (1,474)
                        ---------      ------     ------     --------   --------

STOCKHOLDER'S EQUITY
December 31, 2000       1,000,000      $1,000     $1,500     $(1,474)   $(1,026)
                        =========      ======     ======     ========   ========

                The accompany notes are an integral part of these
                              financial statements

                                       -5-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                      FOR THE PERIOD FROM OCTOBER 12, 2000
                      ------------------------------------

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000
                   ------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

BW Acquisition,  Inc. was incorporated  under the laws of the State of Nevada on
October 12, 2000.  Since its inception,  the Company has been in the development
stage and has conducted no business.  The Company's only activities to date have
been the initial issuance of common stock and organizational efforts.

At the organization of the Company,  25,000,000 $0.001 par value,  common shares
were authorized and 1,000,000 shares have been issued.

The company adopted the provisions of the Financial  Accounting  Standards Board
Statement Number 95 "Statement of Cash Flow".

CASH AND CASH  EQUIVALENTS  - Cash and cash  equivalents  consist of cash,  bank
deposits and temporary cash  investments with a maturity of three months or less
when purchased.

OTHER SECURITIES - Other securities  consist of marketable  securities stated at
cost which approximates market.

INVENTORIES  -  Inventories  are  stated at lower of cost or  market,  with cost
generally determined on a first-in, first-out basis.

                                       -6-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                      FOR THE PERIOD FROM OCTOBER 12, 2000
                      ------------------------------------

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000
                   ------------------------------------------

OTHER ASSETS - Other assets include  goodwill,  patents,  other  intangibles and
other  noncurrent  assets.  Goodwill is generally  amortized on a  straight-line
basis over 10 years.  Other items are  amortized on a  straight-line  basis over
their estimated economic lives.

USE OF ESTIMATES - the  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions   that  effect  certain   reported   amounts  and  disclosures.
Accordingly, actual results could differ from those estimates.

DEPRECIATION  -  Depreciation  of  property,  plant and  equipment  is generally
computed  on a  straight-line  basis over the  estimated  useful  lives of these
assets.  Furniture and equipment are recorded at cost and depreciated  over five
to seven years.

FAIR VALUE OF FINANCIAL STATEMENTS - The Company's financial instruments consist
principally of cash, cash equivalents, accounts receivable and notes receivable,
accounts payable,  accrued expenses,  and notes payable. The carrying amounts of
such financial  instruments as reflected in the balance sheets approximate their
estimated  fair value as of December 31, 2000.  The estimated  fair value is not
necessarily  indicative  of the amounts the Company  could  realize in a current
market exchange or of future earnings or cash flows.

                                      -7-
<PAGE>

                              BW ACQUISITION, INC.
                              --------------------

                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                      FOR THE PERIOD FROM OCTOBER 12, 2000
                      ------------------------------------

                   (FROM INCEPTION) THROUGH DECEMBER 31, 2000
                   ------------------------------------------

REVENUE  RECOGNITION  - Revenue from product sales is recognized at the time the
sale is made on an accrual basis.

INCOME TAXES AND OTHER  MATTERS - The  year-end of the Company is December  31st
for both book and tax purposes. There is no deferred tax.

RELATED  PARTY  TRANSACTIONS  - The  Company's  sole  shareholder  is  also  the
President, Chief Financial Officer and Secretary, and its sole director.

The Company currently uses the offices of its shareholder,  officer and director
as its principal place of business at no cost to the Company.

                                       -8-