UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

               QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
                          PERIOD ENDED AUGUST 31, 2001

                         Commission File Number 0-26673

                            FORESTINDUSTRY.COM, INC.
             (Exact name of Registrant as specified in its charter)


         DELAWARE                                     98-0207081
         --------                                     ----------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

         10-2480 KENWORTH ROAD                           V9T 3Y3
       NANAIMO, BRITISH COLUMBIA                        (Zip Code)
       -------------------------
(Address of Principal Executive Offices)


Registrant's telephone number including area code: (250) 758-0665



Indicate by check mark whether the issuer (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 issuer was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days:

               YES    X             NO


Common stock,  $.0001 par value,  1,621,058  issued and outstanding as of August
31, 2001.

<PAGE>2

                                      INDEX

PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements (Unaudited) ....................................3
ITEM 2.  Management's Discussion and Analysis ...............................13


PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings...................................................15

ITEM 2.  Changes in Securities...............................................15

ITEM 3.  Defaults upon Senior Securities.....................................15

ITEM 4.  Submission of Matters to a Vote of Security Holders.................15

ITEM 5.  Other Information...................................................16

ITEM 6.  Exhibits and Reports on Form 8-K....................................16

<PAGE>3

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                            forestindustry.com, Inc.
                                 and Subsidiary

                      Condensed Consolidated Balance Sheet
                                   (unaudited)

                                                               (in U.S. Dollars)

                                                                 August 31, 2001
                                                                 ---------------
ASSETS

Current:
  Cash and cash equivalents                                         $    45,264
  Accounts receivable (Net allowance for doubtful
    accounts - $12,447)                                                  45,353
  Work in process                                                         7,317
  Prepaid expenses and deposits                                             300

Total current assets                                                     98,234
Property and equipment (Note 3)                                          85,027
                                                                    -----------
                                                                    $   183,261
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current:
  Accounts payable and accrued liabilities                          $   175,575
  Unearned revenues                                                      41,651
  Loans payable                                                          61,622
                                                                    -----------
Total current liabilities                                           $   278,848
                                                                    -----------

Stockholders' deficit:
  Share capital (Note 4)
  Common stock - $0.0001 par value
    30,000,000 authorized; issued and outstanding:
    1,621,058 (May 31, 2001 - 1,521,058)                                    162
  Preferred stock - $0.0001 par value
    5,000,000 authorized; issued and outstanding - Nil                        -
  Additional paid in capital                                          1,231,784
  Cumulative translation adjustment                                      32,565
  Deficit                                                            (1,360,098)
                                                                    -----------
Total stockholders' deficit                                             (95,587)
                                                                    -----------
                                                                    $   183,261
                                                                    ===========
Commitments (Note 6)

<PAGE>3

                     forestindustry.com, Inc. and Subsidiary

                 Condensed Consolidated Statements of Operations
                                   (unaudited)
               For the Three Months Ended August 31, 2001 and 2000


                                                   (in U.S. Dollars)
                                                2001               2000
                                            -----------        -----------

REVENUE
   Sales                                    $    92,868        $   122,518
                                            -----------        -----------
EXPENSES
   Depreciation                                  20,274             11,828
   Consulting fees                               38,497             21,134
   General and administrative                    51,472            514,277
   Professional fees                             14,156             52,382
                                            -----------        -----------
                                                124,399            599,621
                                            -----------        -----------
NET LOSS FOR THE PERIOD                          31,531            477,103

Deficit, beginning of period                  1,328,567            586,646
                                            -----------        -----------
DEFICIT, END OF PERIOD                      $ 1,360,098        $ 1,063,749
                                            ===========        ===========
BASIC AND DILUTED LOSS PER SHARE                ($ 0.02)            ($0.35)
                                            -----------        -----------
WEIGHTED AVERAGE NUMBER OF SHARES             1,521,058          1,339,826
                                            ===========        ===========

<PAGE>5

                     forestindustry.com, Inc. and Subsidiary

                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)
               For the Three Months Ended August 31, 2001 and 2000


                                                           (in U.S. Dollars)

                                                        2001              2000
                                                     ---------         ---------
OPERATING ACTIVITIES:
  Net loss for the period                             (31,531)         (477,103)
  Adjustments to reconcile net loss to
   net cash used in operating activities -
     Depreciation                                      24,962            11,828
     Shares issued for service rendered                     -           212,500
  Changes in operating assets and liabilities -
     Accounts receivable                                7,573           (23,654)
     Work in Progress                                   1,220                 -
     Prepaid expenses and deposits                       (159)            2,002
     Due from related parties                               -              (201)
     Accounts payable and accrued liabilities         (38,721)           62,845
     Unearned revenues                                (11,773)           (3,904)
                                                      -------          --------
Cash flows (used in) operating activities             (48,429)         (215,687)
                                                      -------          --------
INVESTING ACTIVITY:
   Sale (Acquisition) of capital assets                 4,520           (16,095)
                                                      -------          --------
FINANCING ACTIVITIES:
   Promissory notes                                    61,622                 -
   Net proceeds from issuance of preferred stock            -           200,000
                                                      -------          --------
Cash flows provided by financing activities            61,622           200,000
                                                      -------          --------
Net decrease in cash and cash equivalents              17,713           (31,782)

Cash and cash equivalents, beginning of period         27,551           196,963
                                                      -------          --------
Cash and cash equivalents, end of period               45,264           165,181
                                                      =======          ========

<PAGE>6

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS

forestindustry.com,  Inc. (the "Company") was incorporated in Delaware,  U.S.A.,
on December 18, 1997 under the name of Autoeye  Inc. On February  25, 2000,  the
Company changed its name to forestindustry.com, Inc. Prior to its acquisition of
The Forest  Industry  Online  Inc.  ("Forest")  (note  2(a)),  the  Company  was
inactive.

The  Company's  current  business  activities  include  designing  web sites and
operating and maintaining a computer internet web site for companies  associated
with the forest and wood product industries.

These  consolidated  financial  statements have been prepared on a going concern
basis in accordance with United States generally accepted accounting principles.
The going  concern  basis of  presentation  assumes the Company will continue in
operation for the foreseeable  future and will be able to realize its assets and
discharge  its  liabilities  and  commitments  in the normal course of business.
Certain  conditions,  discussed below,  currently exist which raise  substantial
doubt upon the validity of this  assumption.  The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

To August 31,  2001,  the Company has not been  profitable  and has  experienced
negative cash flows from  operations.  Operations have been financed through the
issuance of stocks and other external financing. The Company's future operations
are dependent upon continued external funding,  its ability to increase revenues
and reduce  expenses,  and the success of its proposed  development of an online
business exchange auction website for the forest and wood industries.  There are
no assurances that the above conditions will occur.


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a)   Reverse Takeover and Basis of Presentation

On January 31,  2000,  the Company  acquired  all of the issued and  outstanding
shares of Forest by issuing to Forest's stockholders  1,000,000 shares of common
stock and control of the Company.  The acquisition  was a reverse  takeover with
Forest being the deemed accounting  acquiror for financial  statement  purposes.
The  acquisition  has been  accounted for as a capital  transaction  effectively
representing   an  issue  of   stocks   by   Forest   for  the  net   assets  of
forestindustry.com, Inc.

The Company's  historical  financial  statements reflect the financial position,
results  of  operations   and  cash  flows  of  Forest  from  the  date  of  its
incorporation  on January 09,  1997,  under the laws of the  Province of British
Columbia, Canada. The historical stockholders' equity gives effect to the shares
issued  to  the   stockholders   of  Forest.   The  results  of   operations  of
forestindustry.com, Inc. are included only from the date of acquisition, January
31, 2000.

<PAGE>7

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

b)   Basis of Consolidation

These consolidated  financial statements include the accounts of the Company and
its  wholly-owned  subsidiary,  The Forest  Industry Online Inc. All significant
intercompany  balances and transactions have been eliminated in the consolidated
financial statements.

c)   Work in Process

Work  in  process  is  recorded  at  the  lower  of  cost,  determined  using  a
percentage-of-completion  method based on the contract price, and net realizable
value.

d)   Property and Equipment and Depreciation

Property  and  equipment  are  recorded  at cost and are  depreciated  using the
straight-line  method over their estimated useful lives ranging from five to ten
years, or their lease terms.

e)   Cash and Equivalents

The  Company  considers  all  short-term  investments  with a  maturity  date at
purchase of three months or less to be cash equivalents.

f)   Revenue Recognition and Unearned Revenues

Revenues on  advertising  fees and hosting  revenues  are recorded on the billed
basis.  Customers are invoiced on a quarterly  basis in advance for  advertising
and hosting spaces.  Unearned  revenues relate to the period of the billing that
has not yet transpired and therefore not earned.

Revenues   on  fixed   contract   website   designs   are   recognized   on  the
percentage-of-completion method of accounting.

g)   Use of Estimates

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

h)   Net Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted average number of
common stock outstanding during the periods.  Diluted loss per share is computed
using the weighted  average  number of common and  potentially  dilutive  common
stock  outstanding  during the period.  As the Company has losses in the periods
presented, basic and diluted loss per share are the same.

<PAGE>8

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 2 - Significant Accounting Policies (continued)

i)      Stock-Based Compensation

The Company accounts for its stock-based  compensation arrangement in accordance
with provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees",   and  related  interpretations.   As  such,
compensation  expense  under  fixed plans would be recorded on the date of grant
only if the fair value of the underlying stock at the date of grant exceeded the
exercise price. The Company recognizes  compensation  expense for stock options,
common stock and other equity  instruments  issued to non-employees for services
received based upon the fair value of the services or equity instruments issued,
whichever is more reliably  determined.  This  information  is presented in note
5(c).

Statement of Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for
Stock  Based  Compensation",  requires  entities  that  continue  to  apply  the
provision of APB Opinion No. 25 for  transactions  with employees to provide pro
forma net income and pro forma earnings per share disclosures for employee stock
option  grants made in 1995 and future years as if the  fair-value-based  method
defined in SFAS No. 123 had been applied to these transactions.

j)      Income Taxes

The Company  follows the asset and  liability  method of  accounting  for income
taxes. Under this method,  current taxes are recognized for the estimated income
taxes payable for the current period.

Deferred income taxes are provided based on the estimated  future tax effects of
temporary differences between financial statement carrying amounts of assets and
liabilities and their  respective tax bases as well as the benefit of losses and
tax credits available to be carried forward to future years for tax purposes.

Deferred tax assets and  liabilities  are measured  using enacted tax rates that
are  expected to apply to taxable  income in the years in which those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in operations in
the period that includes the substantive  enactment date. A valuation  allowance
is recorded  for  deferred  tax assets when it is more likely than not that such
deferred tax assets will not be realized.

k)      Foreign Currency Translation

The  functional  currency of the Company is the United States dollar and for its
Canadian subsidiary the Canadian dollar.  Transactions in foreign currencies are
translated  to United States  dollars at the rates in effect on the  transaction
date.  Exchange  gains or losses arising on translation or settlement of foreign
currency denominated  monetary items are included in the consolidated  statement
of operations.

<PAGE>9

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 2 - Significant Accounting Policies (continued)

l)   Impairment of Long-Lived Assets

The  recoverability of the excess of cost over fair value of net assets acquired
is  evaluated  by an analysis of operating  results and  consideration  of other
significant  events or  changes  in the  business  environment.  If the  Company
believes an impairment exists, the carrying amount of these assets is reduced to
fair  value as  defined  in SFAS No.  121,  "Accounting  for the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to be Disposed of."

NOTE 3 - PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                 Accumulated            Net Book Value
                                        Cost    Depreciation  August 31, 2001   August 31, 2000
                                           $               $                $                 $
                              -------------     ------------  ---------------   ---------------
<S>                          <C>              <C>            <C>                <C>
Computer Equipment                  126,818          63,840           62,978             86,559
Furniture and Fixtures               33,362          16,787           16,575             29,573
Software                             19,464          17,740            1,724              3,692
Leasehold Improvements                6,432           2,683            3,750              6,140
                              -------------     -----------   --------------    ---------------
                                    186,077         101,049           85,027            125,613
                              =============     ===========   ==============    ===============

</TABLE>

NOTE 4 - STOCKHOLDERS' EQUITY

a)   Preferred Stock

On January 31, 2000, the Company  issued through a private  placement 750 shares
of  Series  "A"  convertible  preferred  stock at a price of $1,000  per  share.
Holders of Series "A" preferred stocks were entitled to a distribution of $1,000
per share  prior to any  distribution  to the  holders of the  Company's  common
stocks in the event of any liquidation or dissolution of the Company.

The Series "A"  preferred  stock was  convertible,  at the option of the holder,
into common  stock at 75% of the last ten day  average  closing bid price of the
Company  subject to a maximum  conversion rate of 500 shares of common stock for
one  share of  preferred  stock and a  minimum  conversion  rate of 25 shares of
common  stock for one share of  preferred  stock.  In  addition,  all series "A"
preferred stock was deemed to convert into common stock on or before January 31,
2001, the first anniversary date.

On May 10, 2000,  the Company  issued  24,922  shares of its common stock on the
conversion of 375 shares of Series "A" convertible preferred stock.

On June 12, 2000, and January 31, 2001, the Company issued, respectively, 21,714
and 87,698 shares of its common stock on the conversion of 175 and 200 shares of
Series "A" convertible preferred stock.

<PAGE>10

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 4 - Stockholders' Equity (continued)

On August 01, 2000, the Company issued through a private placement 200 shares of
Series "B" convertible  preferred stock at a price of $1,000 per share.  Holders
of Series "B"  preferred  stocks were entitled to a  distribution  of $1,000 per
share prior to any distribution to the holders of the Company's common stocks in
the event of any liquidation or dissolution of the Company.

The Series "B"  preferred  stock was  convertible,  at the option of the holder,
into common  stock at 70% of the last five day average  closing bid price of the
Company  subject to a maximum  conversion rate of 500 shares of common stock for
one  share of  preferred  stock and a  minimum  conversion  rate of 25 shares of
common stock for one share of preferred stock.

On March 13, 2001,  the Company issued 100,000 shares of its common stock on the
conversion of the 200 shares of Series "B" convertible preferred stock.

b)   Stock Options

In February  2000,  the Company  adopted a fixed stock option plan that provides
for the  issuance of  incentive  and  non-qualified  stock  options to officers,
directors,  employees  and  non-employees  to acquire up to 25,000 shares of the
Company's  common  stock.  The plan was  amended  in June 2000 to  increase  the
allowable number of stock options to be issued under this plan to 50,000 shares.
The Board of Directors  determines the terms of the options  granted,  including
the number of options granted, the exercise price and the vesting schedule.  The
exercise price for qualified  incentive stock options is not to be less than the
fair  market  value of the  underlying  stock at the date of grant,  and to have
terms no longer than ten years from the date of grant. There was no stock option
plan prior to February 2000.

Issued to Employees

On February 29, 2000, the Company  granted  options to purchase a total of 2,900
shares of the Company's  common stock at a price of $4.00 per share to employees
of the  Company.  The options vest on or after  February  29,  2001,  and expire
between  February  and April 2005.  During year 2001,  1,200 stock  options were
forfeited as employees left the Company.

On June 11,  2000,  the  Company  granted  options to  purchase a total of 5,400
shares of the Company's  common stock at a price of $2.00 per share to employees
of the  Company.  The options  vest on or after June 11, 2001 and expire on June
11, 2005. During year 2001, 4,200 stock options were forfeited as employees left
the Company.

On December 18, 2000, the Company  granted  options to purchase a total of 4,500
shares of the Company's  common stock at a price of $0.60 per share to employees
of the  Company.  The  options  vest on or after  January 31, 2001 and expire on
December  15,  2005.  During year 2001,  500 stock  options  were  forfeited  as
employees left the Company.

As  discussed  in Note 2(i),  the Company  continues to account for its employee
stock-based  awards using the intrinsic  value method in accordance with APB No.
25, "Accounting for Stock Issued to

<PAGE>11

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 4 - Stockholders' Equity (continued)

b)  Stock Options (continued)

Issued to Employees (continued)

Employees",  and  its  related  interpretations.  Accordingly,  no  compensation
expense has been  recognized  in the  financial  statements  for employee  stock
arrangements,  because the fair value of common stock at the measurement date is
not greater than the option exercise price.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been  determined  as if the Company had  accounted for its
employee stock options under the fair value method of that  statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:  risk-free
interest rate of 6.0%;  dividend yield of 0%; volatility factors of the expected
market price of the Company's stock of 519%; and an expected life of the options
of 2.5 years.  Accordingly,  compensation  expense  using the fair value  method
would have been $3,161, amortized over their respective vesting period.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

The Statement's pro forma information from the options is as follows:

<TABLE>
<CAPTION>

                                                              Three Months          Three Months
                                                                     Ended                 Ended
                                                           August 31, 2001       August 31, 2000
                                                                         $                     $
                                                           ---------------       ---------------
<S>                                                        <C>                  <C>
Net (loss) as reported                                             (31,531)             (477,103)
Compensation expense from stock options under
SFAS No. 123                                                        (3,161)              (32,578)
                                                           ---------------       ---------------
Pro forma net (loss)                                               (34,692)             (509,681)
                                                           ===============       ===============
Pro forma (loss) per common share,
  Basic and Diluted                                                  (0.02)                (0.38)
                                                           ===============       ===============
</TABLE>

<PAGE>12

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001



NOTE 4  - STOCKHOLDERS' EQUITY (CONTINUED)

b)  Stock Options (continued)

Issued to Non-Employees

On May 26, 2000, the Company granted options to purchase a total of 4,000 shares
of the Company's  common stock at a price of $2.00 per share to non-employees of
the Company.  The options vest on May 01, 2001 and expire on May 01, 2005. Stock
options  issued  to  non-employees  are  accounted  for in  accordance  with the
provisions of SFAS No. 123, "Accounting for Stock Based Compensation", using the
fair value method.  Accordingly,  compensation  expense  relating to these stock
options in the amount of $17,253 was  recorded  in year 2000 as  deferred  stock
compensation to be amortized over their respective vesting period.

During year 2001,  $17,253 was charged as compensation  expense in the statement
of operations.

Additional Stock Option Plan Information

A summary status of the Company's fixed stock option plan and changes during the
period ended August 31, 2001 are as follows:

                                                                       Weighted
                                                   Number of            Average
                                                      Shares     Exercise Price
                                                                              $
                                                   ---------     --------------
Outstanding, August 01, 1999                               -                  -
     Granted                                           7,300               2.90
     Forfeited                                          (400)              4.00
                                                   ---------     --------------
Outstanding, May 31, 2000                              6,900               2.84

 Granted                                               9,900               1.36
 Forfeited                                            (5,900)              2.29
                                                   ---------     --------------
Outstanding, August 31, 2001                          10,900               1.80
                                                   =========     ==============
Options exercisable at end of August 31, 2001         10,900               1.80
                                                   =========     ==============
<PAGE>13

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 4 - Stockholders' Equity (continued)

b)  Stock Options (continued)

Additional Stock Option Plan Information (continued)

The following  table  summarizes  information  about the  Company's  fixed stock
options outstanding at August 31, 2001:


                                         Options Outstanding
                                         -------------------
                            Number           Weighted           Weighted
Range of               Outstanding            Average            Average
Exercise Prices                 at          Remaining           Exercise
$                       August 31,        Contractual              Price
                              2001               Life                  $
                                           (in years)

4.00 - 4.00                  1,700                  4               4.00
2.00 - 2.00                  5,200                  4               2.00
0.60 - 0.60                  4,000                  4               0.60
                       -----------        -----------         ----------
                            10,900                  4               1.80
                       ===========        ===========         ==========

The options outstanding at August 31, 2001 will expire between February and
December 2005.

c)   Stock-Based Compensation

In January  2000,  the Company  issued 3,750 shares of common stock to a company
controlled by the Company's former  president in exchange for services  relating
to the  acquisition  of Forest.  The fair value of these  services was estimated
based upon the estimated  fair value of the shares at $2.50 per share or $9,375.
The costs  were  deducted  from the  additional  paid-in  capital  from the said
acquisition.

In February 2000, the Company recorded non-cash  compensation expense of $87,500
relating to the issuance of 35,000 shares of common stock to certain consultants
to the Company. The fair value of the shares was estimated at $2.50 per share at
the time of the transaction.

In June 2000, the Company recorded non - cash  compensation  expense of $160,000
relating to the issuance of 20,000  shares of common stock for  advertising  and
marketing  services.  The fair value of the shares  was  estimated  at $8.00 per
share at the time of the transaction.

As  discussed  in Note 2(i),  the Company  recognizes  compensation  expense for
equity  instruments issued to non-employees for services received based upon the
fair value of the  services  or equity  instruments  issued,  whichever  is more
reliably determined.

<PAGE>14

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 4 - Stockholders' Equity (continued)

d)   Retirement of Common Stocks

By way of a stock  retirement  agreement  dated May 11, 2000,  and for a nominal
amount of $1.00, a former principal  shareholder of the Company returned 259,724
shares of common stock to the Company for cancellation.  The shareholder  agreed
that in order for the Company to attract  future  financing,  the Company should
reduce its issued and outstanding  share capital of its common stock through the
surrender and retirement of these shares.

In January  2001,  a consultant  returned  5,000 shares of common stock upon his
resignation  from the Company.  The Company  recorded a non - cash  compensation
recovery of $12,500 being the value of the shares at the time they were issued.

e)   Stock Split

The Company  consolidated  its share capital on June 01, 2001, by way of a share
consolidation  on the  basis of one new  common  stock  for each ten old  common
stocks.  All share and per share  information have been adjusted for all periods
presented to reflect the reverse stock split.

f)   Stock Option Split

The Company consolidated its existing stock option plan on June 01, 2001, by way
of a reverse  stock  option  split on the basis of one new stock option for each
ten old stock options.  All stock option  information have been adjusted for all
periods  presented to reflect the reverse stock option split. The exercise price
was not changed with the stock option consolidation.

Note 5 - INCOME TAXES

Deferred tax assets and liabilities

                                           August 31,
                                                 2001
                                                    $

Deferred tax assets:
  Operating loss carryforward                 490,000
Book depreciation in excess of tax
  depreciation                                 19,000
                                            ---------
Total deferred tax assets before
  valuation allowance                         509,000
Valuation allowance                          (509,000)
                                            ---------
Net deferred tax assets                             -
                                            =========

<PAGE>15

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001



Note 5 - INCOME TAXES (continued)

Deferred tax assets and liabilities (continued)

Management  believes  that it is more  likely  than not that it will not  create
sufficient  taxable income  sufficient to realize its deferred tax assets. It is
reasonably  possible these  estimates  could change due to future income and the
timing and manner of the reversal of deferred tax liabilities.

The Company has no income tax expense due to its operating losses.

The Company has Canadian  operating loss  carryforwards  for Canadian income tax
purposes at May 31, 2001,  of  approximately  $845,000 (CDN  $1,300,000).  These
operating losses begin to expire in fiscal year 2004.

Note 6 - Commitments

a)   The Company has entered into an  employment  contract with the President of
     the Company for management and administrative services for an annual salary
     of $45,000 (CDN $70,000).  The  employment  contract term is to January 31,
     2003.  The Company  may  terminate  the  agreement  on ninety days  written
     notice.

b)   The  Company  has  entered   into  an   agreement   to  lease  an  internet
     telecommunication  line to December 31, 2002.  The monthly lease payment is
     $959.

c)   The  Company  has  entered  into  three  consulting  agreements  with three
     consultants  to provide  management,  administration,  sales and production
     services  for total  monthly  fees of  $7,368.  The  contract  terms are to
     February 01, 2003.  The Company may terminate each agreement on thirty days
     written notice.

d)   In  July  2001,  the  Company,  Teaco  Properties,  the  Company's  largest
     shareholder,  Sean  Curran and Joe  Nemeth  entered  into a stock  purchase
     agreement.   Under  the  terms  of  the  stock  purchase  agreement,  Teaco
     Properties  sold 900,000  shares in the aggregate of the  Company's  common
     stock that it owned to each  Messrs.  Curran  and  Nemeth for the  purchase
     price of $10.  Marc White and Dave  McNaught are the  beneficial  owners of
     Teaco  Properties Ltd. Prior to the  transaction,  Teaco  Properties  owned
     1,000,000 shares in the aggregate.  As a result of this  transaction  Teaco
     Properties  currently  owns 100,000 (6%),  Curran owns 600,000,  and Nemeth
     owns  300,000,  which  represents  approximately  38.4%  and  19.2%  of the
     outstanding  shares.  In  connection  with the  stock  purchase  agreement,
     Messrs.  Curran  and  Nemeth  were  appointed  to the  Company's  Board  of
     Directors.

     In addition,  as an  inducement  to the sale,  the Company  granted each to
     Messrs.  White and McNaught two year  warrants to purchase  110,000  shares
     (220,000 shares in the aggregate) of common stock.

e)   On July 13,  2001,  the  Company  entered  into a loan  agreement  with two
     individuals (the "lenders"), who were thereafter appointed directors of the
     Company.  Pursuant to the terms of the loan  agreement,  the  lenders  have
     agreed to lend to the  Company  an amount up to a maximum of  $65,000.  The

<PAGE>16

                     forestindustry.com, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
                   For the Three Months Ended August 31, 2001


Note 6 - Commitments (continued)

     loan,  secured  by a  general  security  agreement  over the  assets of the
     Company,  bears  interest rate at 10% per annum and is repayable in full by
     December 31, 2001.

     The Company received  amounts  totalling  $41,000  (CDN$63,000) to July 27,
     2001.

f)   In August 2001, the Company entered into a Debt  Settlement  Agreement with
     one  of  our  Creditors.   The  agreement  settles  approximately  $100,402
     (CDN$155,710)  in debt  through the payment in cash of 48,360  (CDN$75,000)
     and the issuance of 100,000  shares of our common stock in full  settlement
     of the debt.

Note 7 - RELATED PARTY TRANSACTION

                                                                  Three Months
                                                                         Ended
                                                               August 31, 2001
                                                                             $

Wages paid to the President of the Company for
management, administration and supervision services                     11,284

Note 8 - Financial Instruments

Financial  instruments include cash and equivalents,  accounts  receivable,  and
accounts payable and accrued  liabilities and loans payable.  The estimated fair
value of such financial instruments approximates their carrying value.

<PAGE>17

Item 2.    Management's Discussion and Analysis

This discussion, other than the historical financial information, may consist of
forward-looking  statements  that  involve  risks and  uncertainties,  including
quarterly and yearly  fluctuations  in results,  the timely  availability of new
communication products, the impact of competitive products and services, and the
other  risks  and   uncertainties,   including  those  relating  to  the  recent
acquisition of a new line of business  described  below.  These  forward-looking
statements  speak  only as of the date  hereof  and  should  not be given  undue
reliance. Actual results may vary significantly from those projected.

The  Company was formed on  December  18,  1997,  under the name  Autoeye,  Inc.
Autoeye Inc., was formed to acquire Autoeye Inc., an Alberta  corporation,  that
developed and proposed to manufacture  its existing  design for a  multi-vehicle
surveillance  system to  monitor  large  vehicle  lots such as car  dealerships,
fleets and storage lots.  The proposed  acquisition  of Autoeye Inc., an Alberta
corporation,  was terminated in February 1998. Thereafter Autoeye's business was
to  evaluate  businesses  for  possible  acquisition.  On January 31,  2000,  we
acquired 100% of The Forest Industry Online, Inc. Following the transaction, the
shareholders of The Forest Industry  Online,  Inc. owned a majority of Autoeye's
outstanding  shares  of  common  stock.  Accordingly,  for  financial  reporting
purposes the  transaction  was accounted for as a reverse  acquisition  with The
Forest Industry Online, Inc. considered the accounting acquirer. (See Notes 2(a)
and 3 to the May 31, 2000,  consolidated  financial  statements).  As such,  The
Forest Industry Online,  Inc.'s historical financial statements are now reported
as the Company's financial statements. On February 25, 2000, the Company changed
its name from Autoeye, Inc. to forestindustry.com, Inc. Prior to the acquisition
of The Forest Industry  Online,  Inc., the Company had not generated any revenue
and had not commenced any operations other than initial corporate  formation and
capitalization.

Overview

The Company is an  internet  service  provider  to the forest and wood  products
industry. The Company's website includes information and advertising relating to
forest and logging; wood processing and logs; and lumber and wood products.  The
Company is expanding its sales and marketing  efforts through the  establishment
of an agency  program  and call  center.  The  Company  intends to  establish  a
business-to-business  exchange to support the  purchase  and sale of wood,  wood
products  and wood  related  services.  The  Company  also  plans  on  designing
web-based training and compliance programs and establishing a market information
service. The Company's strategy is to become an internet leader in supporting an
e-focused marketplace for the highly fragmented global forest industry.

For the Three Months ended August 31, 2001 and August 31, 2000

Revenues. Revenues decreased by 24% to $92,868 for the three months ended August
31, 2001 as compared to sales of $122,518  for the three months ended August 31,
2000.  Sales  decreased  due to higher drop offs to our  subscription  based web
services and fewer new customers for our web design services.  In addition,  our
sales staff  decreased  substantially  during 2001 due to layoffs.  The customer
base  decreased  to  approximately  433  customers  and  431  associate  members
(non-paying) by August 31, 2001 as compared to approximately 1,100 at August 31,
2000. $76,197 or 82% of revenues were derived from website advertising while the
remaining  $17,213 or 18% of  revenues  were  derived  from web site  design and
custom  applications.  In contrast,  63% of revenues,  or $76,704,  in the three
months  ended August 31, 2000 were  derived  from  website  advertising  and the
balance, $45,814 or 37% were derived from web site design.

Expenses. Total expenses for the three months ended August 31, 2001 decreased to
$124,399 as compared to $599,621  for the  comparative  period  ended August 31,
2000.  Selling,  general and  administrative  expenses  represented  the largest
portion of  expenses  in 2000 at  $514,277,  compared  to $51,472  for the three
months  ended  August 31,  2001.  This  decrease in general  and  administrative
expenses reflects a decrease in employees,  reduced office space and decrease in

<PAGE>18

general operating costs in 2001. The Company also entered into a debt settlement
agreement  with one creditor for the  settlement of $52,042 debt in exchange for
shares in the capital stock of the company. Consulting fees were $38,497 for the
period  ended  August 31, 2001  compared to $21,134 for the three  months  ended
August 31, 2000. The Company's  consulting fees increased due to the addition of
three consultants in February 2001. Professional fees decreased from $52,382 for
2000 to $14,156 for the comparative  period ending August 31, 2001. The decrease
in  professional  fees is due to the  decline in public  reporting  requirements
during this period.  Professional  fees for the three months  ending  August 31,
2001 are primarily  related to the preparation of audited  financial  statements
for the year ending May 31, 2001 and general legal counsel.

Net and  Comprehensive  Loss. The Company recorded a net loss of $31,531 for the
three months  ended  August 31, 2001  compared to a net loss of $599,621 for the
three months ended August 31, 2000. The decrease in losses for the period ending
August 31, 2001 is due to the significant reduction in operating, administrative
and professional  expenses during this period.  The Company has reduced expenses
to match monthly revenues, thereby reducing net losses.

Liquidity and Capital Resources

The Company is in a growth  stage in which  expenses are expected to increase as
the Company  implements its business  plan. The Company has not been  profitable
and has experienced  negative cash flows from  operations.  Due to the fact that
the Company has not generated  sufficient cash flow to fund all of its operating
costs, the Company has relied heavily on outside sources of capital.  During the
year ended May 31, 2000,  the Company  raised  $750,000  through the sale of its
Series A Convertible  Preferred Stock.  During the year ending May 31, 2001, the
Company raised $200,000  through the sale of its Series B Convertible  Preferred
Stock.  During the three months  ended August 31, 2001,  the Company also raised
$61,622  through loans payable in the form of  promissory  notes.  The Company's
future operations are dependent upon continued  external funding from additional
capital  investments or borrowed funds.  The Company's  future success will also
depend on its ability to increase  revenues and to reduce expenses and establish
its online business exchange auction website for the forest and wood industries.
There can be no assurance  that the Company  will be able to raise  capital from
these  outside  sources in  sufficient  amounts to fund the  Company's  business
operations or to successfully expand its online business.  The failure to secure
adequate  outside  funding or  establish  the forest and wood  industry  auction
website would have an adverse affect on the Company's operating results.

The Company did not have any investment  activity  during the three months ended
August 31, 2001, but disposed of property and equipment  totalling  $4,520.  The
Company  expects capital  expenditures  will increase and  expenditures  will be
necessary for the purchase of additional computer equipment.

To date,  the Company has not  invested in  derivative  securities  or any other
financial  instruments  that  involve a high level of  complexity  or risk.  The
Company expects, that in the future, cash in excess of current requirements will
continue  to be invested in high  credit  quality,  interest-bearing  securities
until utilized in business operations.

As of August 31, 2001, the Company had negative working capital of approximately
$180,614. The Company anticipates obtaining the additional capital which it will
require  through  revenues from operations and through a combination of debt and
equity  financing.  The Company will also consider  joint  ventures or strategic
alliances to develop  future  programs.  There is no assurance  that the Company
will be able to obtain capital it will need or that the estimates of its capital
requirements will prove to be accurate.

During the three months ended August 31, 2001, we hired one additional  employee
and two new sales  agents.  We plan on building our  operations  and  increasing
revenues  through  the  hiring  of  additional  sales  staff,  customer  service
representatives and telephone sales people during the fourth quarter 2001.

<PAGE>19

Factors Affecting Future Operating Results

The Company is still in the early stages of developing its website and marketing
its internet services.  Consequently,  it has only a limited history of revenues
and business track record.

The Company  expects its  expenses  will  increase  during the  remainder of the
fiscal year as a result of increased marketing expenses and the expansion of its
online services.  The Company's  ability to successfully  operate and expand its
website and market its services will depend on, among other things:

     o    the continued  improvement  of its internet  technology to support the
          forest and wood industry;
     o    the development and expansion of its internet services;
     o    the success of its new agency program and call center;
     o    the expansion of its subscriber base; and
     o    the  establishment  of its  website as an  effective  advertising  and
          business medium for the forest and wood industry.

The success of the Company's web-based business will depend on several factors
including the following:

     o    whether e-commerce will be suitable for the wood and forest industries
     o    internet  users  could  use  "filter"  software  programs  that  limit
          exposure to internet advertising
     o    the absence of long-term  contracts or  agreements  with the Company's
          customers and, as a result, no assurance of ongoing revenues
     o    the need to  obtain  and  install  the  necessary  internet  operating
          programs to implement  the  Company's  proposed  Lumber and  Equipment
          Exchange service
     o    possible  government  regulation or taxation may adversely  affect the
          user of electronic commerce

The Company's  business depends on the efficient and uninterrupted  operation of
its computer and communications hardware systems as well as adequate supplies of
bandwidth.  Any system interruptions that cause its website to be unavailable or
to perform poorly for users may reduce the  attractiveness  to  advertisers  and
could adversely affect the Company's  business and operating  results.  Although
the Company has back-up  facilities for its computer  systems,  it relies on one
provider for its  telecommunication  lines.  If the telecom  provider  failed to
provide service to the Company's systems, it would be unable to maintain website
availability. Interruptions could result from natural disasters as well as power
loss, telecommunications failure and similar events.

The  success  of the  Company  will also  depend on its  ability  to  respond to
technological  advances and emerging industry  standards in a cost-effective and
timely  manner.  The Company may not have the technical or financial  ability to
respond to these technical challenges.

Until revenues are sufficient to support the Company's business,  it will depend
to a significant  extent on outside  capital to pay for the  development  of its
internet based business. Such outside capital may include the sale of additional
stock and/or commercial  borrowing.  There can be no assurance that capital will
be available if necessary to the Company to meet these  operational costs or, if
the capital is available,  it will be on terms  acceptable  to the Company.  The
issuance  of  additional  equity  securities  by the Company  would  result in a
further dilution in the equity interests of the current stockholders.  Obtaining
commercial  loans,  assuming  those loans would be available,  will increase the
Company's  liabilities and future cash  commitments.  As of August 31, 2001, the
Company  did not have any  commitments  from any  source to  provide  additional
capital.

<PAGE>20

                                     PART II

                                Other Information

Items 1, 3 and 4

None.

Item 2.  Changes in Securities and Use of Proceeds

In August 2001, the Company entered into a Debt Settlement Agreement with one of
our creditors.  The agreement settles  approximately  $102,769  (Cdn$155,710) in
debt  through the payment in cash of $49,500  (Cdn$75,000)  and the  issuance of
100,000  shares of our common stock in full  settlement of the debt.  The Common
Stock issued to the creditor was exempt from registration pursuant to Regulation
S. All shares of the common stock were acquired for investment purposes only and
without a view to  distribution.  The  creditor  was fully  informed and advised
about matters concerning the Company, including its business,  financial affairs
and other matters.  The  certificate  evidencing the common stock bears a legend
stating that they may not be offered, sold or transferred other than pursuant to
an  effective  registration  statement  under  the  Securities  Act of 1933,  or
pursuant to an applicable exemption from registration.

Item 5.    Other Information

On  July  6,  2001,  the  Company,  Teaco  Properties,   the  Company's  largest
shareholder, Sean Curran and Joe Nemeth entered into a stock purchase agreement.
Under the terms of the stock purchase  agreement,  Teaco Properties sold 900,000
shares in the aggregate of the  Company's  common stock that it owned to Messrs.
Curran and Nemeth.  Marc White and Dave  McNaught are the  beneficial  owners of
Teaco Properties Ltd. Prior to the transaction, Teaco Properties owned 1,000,000
shares  in the  aggregate.  As a result  of this  transaction  Teaco  Properties
currently owns 100,000,  and Curran owns 600,000 and Nemeth owns 300,000,  which
represents approximately 38.4% and 19.2%, of the outstanding shares.

For the purchase of the shares,  Messrs. Curran and Nemeth paid Teaco Properties
the sum of $10.  Further,  as a condition of the sale, Mr. Curran undertook that
he would use his best efforts to obtain third party financing for the Company in
an  amount  not  less  than US  $250,000,  and  that the  Company  would  settle
outstanding  debt in the  amount of Cdn  $155,710  with a third  party  creditor
through the issuance of Company shares.

As an inducement to the sale, the Company granted  warrants to purchase  220,000
shares of common stock to Teaco  Properties.  The warrants are exercisable for a
period of 2 years beginning June 25, 2001. The exercise price will be calculated
by obtaining the twenty (20) day average Market Price  (hereinafter  defined) of
the  shares  of  common  stock  preceding  a date  determined  by the  Board  of
Directors.  In no event will the Market  Price be below $0.20 per share.  Market
Price shall be the average  closing  price of the shares of common stock on such
date, as reported by the National  Association of Securities  Dealers  Automated
Quotation   System   ("NASDAQ"),   or  the   average   closing   price   in  the
over-the-counter  market  if other  than  NASDAQ.  The Board of  Directors  will
determine  the date for which the exercise  price will be  determined  within 90
days of the date of grant.

Finally,  in  connection  with the stock  purchase  agreement,  Messr Curran and
Nemeth  were  appointed  to the  Company's  Board  of  Directors.  Mr.  Perraton
continues to serve as president and a director of the Company.

<PAGE>21

Item 6.    Reports on Form 8-K

Reports on Form 8-K for the three months ended August 31, 2001

1.   On July 17,  2001,  the Company  filed a Form 8-K to report an Item 1 event
     relating to a change in control and included exhibits pursuant to Item 7.


                                   SIGNATURES


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


                                    forestindustry.com, Inc.



Date:   October 12, 2001            /S/JOE PERRATON
                                    ----------------------------
                                    Joe Perraton, President
                                    (Principal Financial and Accounting Officer)