UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 20-F
     (Mark One)
        [_]      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

                                               OR

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

                 For the fiscal year ended June 30, 2002

                                       OR

        [_]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

Commission file number                                     0-25860
--------------------------------------------------------------------------------
                        Data Fortress Systems Group Ltd.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                            British Columbia, Canada
--------------------------------------------------------------------------------
                 (Jurisdiction of incorporation or organization)

           Suite LM - 1281 West Georgia Street, Vancouver, BC V6E 3J5
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

      Title of each Class              Name of each exchange on which registered
             None
----------------------------------     -----------------------------------------

Securities registered or to be registered pursuant to Section 12(g) of the Act:

                         Common Shares without par value
--------------------------------------------------------------------------------
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:
                                 Not Applicable
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital of common stock as of:
                                                                   June 30, 2002
                                                        17,311,328 Common Shares
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

         Yes  [X]                   No [_]

Indicate by check mark which financial statement item the registrant has elected
to follow.

        Item 17   [X]               Item 18 [_]
<PAGE>
                                TABLE OF CONTENTS
                                                                            Page
ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS..............1

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE............................2

ITEM 3.    KEY INFORMATION....................................................2

         A.       Selected Financial Information..............................2
         B.       Capitalization and Indebtness...............................4
         C.       Reasons for the offer and use of proceeds...................4
         D.       Risk Factors................................................4
ITEM  4.   INFORMATION ON THE COMPANY.........................................7

         A.       History and Development of the Company......................7
         B.       Business Overview...........................................8
         C.       Organizational Structure...................................12
         D.       Property, Plants and Equipment.............................14
ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS......................14

         A.       Operating Results..........................................14
         B.       Liquidity and Capital Resources............................15
         C.       Research and Development, Patents and Licenses.............16
         D.       Trend Information..........................................17
ITEM 6.    DIRECTORS AND SENIOR MANAGEMENT...................................17

         A.       Directors and Senior Management............................17
         B.       Compensation...............................................21
         C.       Board Practices............................................23
         D.       Employees..................................................23
         E.       Share Ownership............................................23
ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...................26

         A.       Major Shareholders.........................................26
         B.       Related Party Transactions.................................27
         C.       Interests of experts and counsel...........................27
ITEM 8.    FINANCIAL INFORMATION.............................................27

         A.       Consolidated Statements and Other Financial Information....27
         B.       Significant Changes........................................43
ITEM 9.    THE OFFER AND LISTING DETAILS.....................................44

         A.       Offer and Listing Details..................................44
         B.       Plan of Distribution.......................................47
         C.       Markets....................................................47
         D.       SELLING SHAREHOLDER........................................47
<PAGE>
         E.       Dilution...................................................47
         F.       Expenses of the Issue......................................47
ITEM 10. ADDITIONAL INFORMATION..............................................47

         A.       Share Capital..............................................47
         B.       Memorandum and Articles of Association.....................48
         C.       Material Contracts.........................................49
         D.       Exchange Controls..........................................50
         E.       Taxation...................................................52
         F.       Dividends and Paying Agents................................60
         G.       Statements by Experts......................................60
         H.       Documents on Display.......................................60
         I.       Subsidiary Information.....................................60
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK...........61

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES..............61

PART II......................................................................61

ITEM 13. DEFAULTS, DIVIDENDS, ARREARAGES AND DELINQUENCIES...................61

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
         AND USE OF PROCEEDS.................................................61

ITEM 15. RESERVED............................................................61

ITEM 16. RESERVED............................................................61

PART III.....................................................................61

ITEM 17. SELECTED FINANCIAL DATA FIRST QUARTER 2001..........................61

ITEM 18. FINANCIAL STATEMENTS................................................75

ITEM 19. EXHIBITS............................................................75
<PAGE>
ITEM 1.           IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

(A) All of the directors of the Company are elected annually by the shareholders
and hold office until the next annual general meeting of shareholders or until
their successors are duly elected and qualified, unless they sooner resign or
cease to be directors in accordance with the Company's Articles and the Company
Act, British Columbia. The Company's last annual regular general meeting was
held on April 19, 2002. The Company's executive officers are appointed by and
serve at the pleasure of the Board of Directors.

The following table sets forth information concerning each of the directors and
executive officers of the Company as of December 28, 2002:

                               Position(s) Held           Served as a Director/
Name                Age        with the Company              Officer Since
--------------------------------------------------------------------------------
Rick Thomas         46     President, CEO and Director      March 15, 2002
Gordon A. Samson    44     CFO and Director                 July 26, 2001
Michael Chong       38     COO and Director                 April 19, 2002
CK Chong            67     Director                         April 19, 2002
Bruce McConnachie   50     Independent Director             June 14, 2002
Bill Kaleta         54     Independent Director             June 3, 2002

Members of the Board of Directors are elected by the holders of the Company's
common shares to represent the interests of all shareholders. The Board of
Directors meets periodically to review significant developments affecting the
Company and to act on matters requiring Board approval. Although the Board of
Directors delegates many matters to others, it reserves certain powers and
functions to itself. The only standing committee of the Board of Directors of
the Company is the Audit Committee. The Audit Committee of the Company's Board
of Directors currently consists Gordon A. Samson, Bruce McConnachie and Bill
Kaleta. This committee is directed to review the scope, cost and results of the
independent audit of the Company's books and records, the results of the annual
audit with management and the adequacy of the Company's accounting, financial
and operating controls; to recommend annually to the Board of Directors the
selection of the independent auditors; to consider proposals made by the
Company's independent auditors for consulting work; and to report to the Board
of Directors, when so requested, on any accounting or financial matters. None of
the Company's directors or executive officers are parties to any arrangement or
understanding with any other person pursuant to which said individual was
elected as a director or officer of the Company.

No director or executive officer of the Company has any family relationship with
any other officer or director of the Company other than CK Chong and Michael
Chong (Father and Son, respectively).

(B.) Advisors - The information for this Item is not required to be provided for
Annual Reports on Form 20 - F filed under the Securities Exchange Act of 1934.

(C.) Auditors - The company's auditors are: Bedford, Curry & Co. located at 801
- 1281 West Georgia Street, Vancouver, B.C. V6E 3J7.

                                      -1-
<PAGE>
ITEM 2.           OFFER STATISTICS AND EXPECTED TIMETABLE

The information for this Item is not required to be provided for Annual Reports
on Form 20 - F filed under the Securities Exchange Act of 1934.


ITEM 3.           KEY INFORMATION

A.       Selected Financial Information

Selected Financial Information - Canadian GAAP
-----------------------------------------------------------------------------
Years Ended June 30,                                2002 $            2001 $
-----------------------------------------------------------------------------
Sales                                               25,426           976,100
-----------------------------------------------------------------------------
Other Income                                             -           116,107
-----------------------------------------------------------------------------
Net Income (loss)                                   50,613       (9,174,951)
-----------------------------------------------------------------------------
Loss per Common share, Basic & Fully Diluted          0.00            (1.75)
-----------------------------------------------------------------------------
Dividends declared per share
-----------------------------------------------------------------------------
Total Assets                                       106,122           188,538
-----------------------------------------------------------------------------
Net Assets                                        (15,652)       (1,219,403)
-----------------------------------------------------------------------------
Capital Stock, Common Shares                    33,741,464        32,590,326
-----------------------------------------------------------------------------
Number of Common Shares                         17,311,328         5,445,851
-----------------------------------------------------------------------------

Selected Financial Information - US GAAP
-----------------------------------------------------------------------------
Years Ended June 30, 2001                           2002 $            2001 $
-----------------------------------------------------------------------------
Sales                                               25,426           976,100
-----------------------------------------------------------------------------
Other Income                                             -           116,107
-----------------------------------------------------------------------------
Net Income (loss)                                   50,613       (8,266,580)
-----------------------------------------------------------------------------
Loss per Common share, Basic & Fully Diluted        (0.00)            (1.58)
-----------------------------------------------------------------------------
                                      -2-
<PAGE>
Dividends declared per share                           Nil               Nil
-----------------------------------------------------------------------------
Total Assets                                       106,122           188,538
-----------------------------------------------------------------------------
Net Assets                                        (15,652)       (1,219,403)
-----------------------------------------------------------------------------
Capital Stock, Common Shares                    33,741,464        32,079,648
-----------------------------------------------------------------------------
Number of Common Shares                         17,311,328         5,445,851
-----------------------------------------------------------------------------
CURRENCY AND EXCHANGE RATES

The accounts of the Registrant are maintained in Canadian dollars. In this
Annual Report, all currency references are expressed in Canadian dollars unless
otherwise indicated. The following table sets forth the exchange rates for one
U.S. dollar expresses in terms of Canadian dollars for the six months after the
date of this Annual Report, the previous four calendar years and the twelve
month periods ending June 30, 2001 and 2000.
<TABLE>
<CAPTION>
                                             U.S. Dollars Per Canadian Dollar
                                                       Month, 2002
                         ----------------------------------------------------------------------------------
                         November       October         September    August         July             June
                         ----------------------------------------------------------------------------------
<S>                      <C>            <C>             <C>          <C>            <C>              <C>
High for the period      1.5748         1.5810          1.5789       1.5724         1.5512           1.5349
Low for the period       1.5686         1.5739          1.5712       1.5632         1.5407           1.5276

                                                      U.S. Dollars Per Canadian Dollar
                         ----------------------------------------------------------------------------------
                         Fiscal Year    Fiscal Year   Fiscal Year           Fiscal Year Ended December 31
                         Ended June 30  Ended June 30 Ended June 30 -------------------------------------
                           2002            2001         2000          1999           1998             1997
                         ----------------------------------------------------------------------------------
End of period            1.531685       1.5125        1.4787         1.4420         1.5285           1.4288
High for the period      1.600284       1.5825        1.5175         1.5475         1.5845           1.4399
Low for the period       1.530367       1.4677        1.4378         1.4420         1.4095           1.3393
Average for the period   1.565477       1.5226        1.4762         1.4891         1.4861           1.3863
</TABLE>
The following table sets out the range of high and low exchange rates for one
Canadian dollar ("$C") expressed in terms of one United States dollars ("$US").

Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York. Unless otherwise indicated, in this registration
statement on Form 20-F (the "Registration Statement" or "Form 20-F") all
references herein are to Canadian dollars.

                                      -3-
<PAGE>
B.       Capitalization and Indebtness

The information for this Item is not required to be provided for Annual Reports
on Form 20 - F filed under the Securities Exchange Act of 1934.

C.       Reasons for the offer and use of proceeds

The information for this Item is not required to be provided for Annual Reports
on Form 20 - F filed under the Securities Exchange Act of 1934.

D.       Risk Factors

The securities of the Company are highly speculative. A prospective investor or
other person reviewing the Company should not consider an investment unless the
investor is capable of sustaining an economic loss of the entire investment.
Certain risks are associated with the Company's business including the
following:

Requirements for and Uncertainty of Access to Additional Capital

The Company believes that working capital deficits can be funded from operations
however the Company may need further funding in the future to achieve its
business objectives. There is no assurance that any additional financing will be
obtained.

Should the Company elect to satisfy its cash commitments through the issuance of
securities, by way of either private placement or public offering, there can be
no assurance that the Company's efforts to raise such funding will be
successful, or achieved on terms favorable to the Company or its existing
shareholders.

Operating Losses

For the six months ended June 30, 2000, the fiscal year ended June 30, 2001, and
the fiscal year ended June 30, 2002 the company had an operating earnings/(loss)
of approximately, ($C1,810,783), ($C9,174,951 - including write downs), and
$C50,613, including a gain on settlement of debts, respectively. The Company
completed a reverse merger ("RTO") with Data Fortress Technologies (2002) Inc.
("Data Fortress 2002") as at August 30, 2002 and changed the corporate name from
iaNett International Systems Ltd. To Data Fortress Systems Group Ltd., ("DFG" or
the "Company"). The Company anticipates that cash flow from merged operations
will cover operating costs and reduce working capital deficits over time.
However, the Company will continue to incur significant operating expenses in
the future, including significant costs of revenues and selling, general and
administrative and amortization expenses. As a result, the Company may not have
enough money to grow its business in the future. The Company cannot assure that
it will achieve profitability or be capable of sustaining profitable operations.

                                      -4-
<PAGE>
Requirements for and Uncertainty of Access to Additional Capital

Insufficient financing during the early stages of DFG's business will slow down
its ability to build the necessary infrastructure and personnel required to
enable growth. Future business operations will depend on DFG's ability to obtain
additional financing through debt financing and/or equity financing. There can
be no assurance that DFG will be able to obtain necessary additional financing
and the failure of DFG to obtain such financing on a timely basis, or on terms
favorable to DFG, could result in its inability to continue to operate the
business. If available, future equity financings may result in substantial
dilution to shareholders of DFG. Investors also cannot expect to receive any
dividends on shares of DFG in the foreseeable future.

Dependence on Accounts Receivable

Although current accounts receivables are presently due and payable, they may
not be immediately collectible. If sufficient of these accounts receivable are
not collected in a timely fashion, the Company could find itself without enough
cash to operate as a going concern.

Competition

DFG is competing with large well-established players that have substantially
more funds available to them. Should these players find a way to match DFG's
speed, technology and focus on smaller interior markets, DFG would be placed in
a difficult competitive position.

DFG's future success will depend upon its abilities to market and generate sales
of its services and products, expand its market areas and its corporate
infrastructure commensurate with any increase in sales, and attract, hire and
retain skilled executives and employees. Any failure by DFG to achieve these
objectives could result in a failure to gain a customer base or cause a loss of
customers and have a material adverse effect on DFG's prospective results of
operations. There can be no assurance that DFG will be able to market or sell
its products or to manage any future growth.

Dependence on Key Personnel

The Company is heavily dependent upon the expertise of certain of its key
officers, and contractors and the loss of one or more of these individuals could
have a material adverse effect on the Company. The Company does not maintain
key-person insurance policies on any of its executive officers.

Strain on Managerial and Financial Resources from Growth

DFG expects that, if its expansion efforts are successful, it will experience a
period of growth that could place a strain on its resources. If DFG's management
is unable to manage growth effectively, operations could be adversely affected.
DFG believes it has put appropriate structures in place to deal with future
growth, including management information systems and internal and external
communication systems. However, there can be no assurance that DFG will be able
to achieve its growth as planned, increase its work force or implement any new
systems required to manage its anticipated growth and any failure to do so could
have a material adverse effect on DFG's business, results of operations and
financial condition.
                                      -5-
<PAGE>
Need to Develop and Maintain Positive Brand Name Awareness

The Company believes that establishing and maintaining its brand name is
essential to expanding its Internet business and attracting new customers. It
also believes that the importance of brand name recognition will increase in the
future because of the growing number of Internet companies that will need to
differentiate themselves. Promotion and enhancement of the Company's brand names
will depend largely on the Company's ability to provide consistently
high-quality products and services. If the Company is unable to provide
high-quality products and services, the value of its brand names may suffer.

Security Risks

Consumer concerns about the security of transmissions of confidential
information over public telecommunications facilities is a significant barrier
to electronic commerce and communications on the Internet. Many factors may
cause compromises or breaches of the security systems, which the Company's
businesses or other Internet sites use to protect proprietary information,
including advances in computer and software functionality or new discoveries in
the field of cryptography. A compromise of security on the Internet would have a
negative effect on the use of the Internet for businesses. Security breaches of
the Company's activities or the activities of their customers and sponsors
involving the storage and transmission of proprietary information, such as
credit card numbers, may expose the Company's businesses to a risk of loss or
litigation and possible liability. The Company cannot assure that its security
measures will prevent security breaches.

Economic Factors

The business of the Company is vulnerable to increases in the costs of labor,
technology and other business expenses, which may adversely affect the Company's
profit margins. There is no assurance that the Company will be successful in
passing price increases to customers to maintain the Company's profit margins.
The Company's business may be affected by other factors beyond its control, such
as economic recessions.

Currency Translation

Some of the Company's equipment purchases for re-sale will be carried out in
United States and Canadian dollars. As a result, the Company will be faced with
currency fluctuations. The Company does not currently engage in currency
hedging; however, the Company may do so in the future.

Governmental Regulations

Because of the Internet's popularity and increasing use, new laws and
regulations may be adopted. These laws and regulations may cover issues such as
privacy, pricing, taxation and content. The enactment of any additional laws or
regulations may impede the growth of the Internet and the Internet-related
business of the Company's divisions and properties and could place additional
financial burdens on its businesses.
                                      -6-
<PAGE>
Need to Develop and Maintain Positive Brand Name Awareness

The Company believes that establishing and maintaining its brand name is
essential to expanding its technology business and attracting new customers. It
also believes that the importance of brand name recognition will increase in the
future because of the growing number of companies that will need to
differentiate themselves. Promotion and enhancement of the Company's brand names
will depend largely on the Company's ability to provide consistently
high-quality products and services. If the Company is unable to provide
high-quality products and services, the value of its brand names may suffer.

Conflicts of Interest

Certain of the directors and officers of the Company are also directors,
officers, contractors and/or employees of other companies engaged in various
related businesses. To the extent that such other companies may participate in
ventures in which the Company may participate, the directors of the Company may
have a conflict of interest in negotiating and concluding terms respecting the
extent of such participation. In the event that such a conflict of interest
arises at a meeting of the directors of the Company, a director who has such a
conflict will abstain from voting for or against the approval of such
participation or such terms. In appropriate cases, the Company will establish a
special committee of independent directors to review a matter in which several
directors or management may have a conflict. In accordance with the laws of the
Province of British Columbia, the directors of the Company are required to act
honestly, in good faith and in the best interests of the Company. Other than as
indicated, the Company has no other procedures or mechanisms to deal with
conflicts of interest.

The Company Does Not Intend to Declare Dividends

The Company has never declared or paid any cash dividends on its capital stock.
Management intends to retain any future earnings for funding growth and,
therefore, does not expect to pay any dividends in the foreseeable future.


ITEM  4.          INFORMATION ON THE COMPANY
A.       History and Development of the Company

Data Fortress Systems Group Ltd. ("DFG" or the "Company") was incorporated
pursuant to the laws of British Columbia, Canada, on May 13, 1985 as "Bear Lake
Resources Ltd." with an authorized capital of 10,000,000 shares without par
value. On April 17, 1990 the Company changed its name to "Consolidated Bear Lake
Resources Ltd.", concurrently consolidated its issued and authorized capital on
a three "old" shares for one "new" share basis, and increased its authorized
capital to 25,000,000 shares without par value. On November 16, 1990, the
Company changed its name to "Advance Tire Systems Inc.". On December 16, 1992,
the Company increased its authorized capital from 25,000,000 shares without par
value to 100,000,000 common shares without par value. On November 17, 1993 the
Company changed its name to "ATS Wheel Inc.", concurrently consolidated its
authorized and issued capital on a five old shares for one new share basis, and
increased its authorized capital to 100,000,000 Common shares without par value.
On October 17, 1996 the Company altered its authorized capital by creating
20,000,000 Preferred shares with a par value of $C0.001 per share. On July 20,
1998 the Company changed its name to "JSS Resources Inc." On July 26, 1999, the
Company changed its name to "WSi Interactive Corporation". By special resolution
dated, March 19, 2001 the Company changed its name to iaNett International
Systems
                                      -7-
<PAGE>
Ltd., concurrently consolidated its issued and authorized capital on a
ten "old" shares for one "new" share basis, and increased its authorized capital
to 100,000,000 Common shares without par value and 20,000,000 Preferred shares
with a par value of $C0.01. On April 19, 2002 at the Company's Annual and
Special General Meeting ("AGM") the Company received shareholder approval for
the proposed reverse merger with Data Fortress Technologies (2002) Inc.

By a share exchange agreement dated March 31, 2002 flowing from the Agreement in
Principle dated November 21, 2002 the Company agreed to acquire 100% of Data
Fortress 2002. Data Fortress 2002 is the holding company for the wholly owned
subsidiaries, Data Fortress Technologies Ltd., Pacific Ram Distributors Ltd.,
and Connect West Networks Ltd.. The Company agreed to issue 30,000,000 common
shares, which are subject to a Surplus Security Escrow Agreement that is
provisioned for the release of these shares over the next six years. A change of
name to Data Fortress Systems Group Ltd. ("DFG") was effected on September 3,
2002 and regulatory approval for the RTO was received August 30, 2002.

The head office of the Company is located at Suite LM, 1281 West Georgia Street,
Vancouver British Columbia V6E 3J5 and the telephone number is (604) 484-6693.
The address for service and registered and records office of the Company is
located at Suite 1200, 999 West Hastings Street, Vancouver, British Columbia,
V6C 2W2.

B.       Business Overview

The companies collectively provide wholesale manufacturing of equipment ranging
from PC's to high-end Servers, data center equipment, high-speed networking,
data warehousing, data security, metropolitan area networks, Internet
connectivity, data storage services, co-location and managed services.

Since 1991, DFTG has operated a computer manufacturing and systems integration
facility under the brand name "Logic Computers" and is located in Richmond,
B.C., Canada. This location continues to offer access to the markets of the Far
East, Europe and North America, where the Company's clients operate. The
facilities are held under a three-year lease with Bee Keok Chong, the spouse of
CK Chong, a director of the Company, at $1,600.00 per month plus applicable
property taxes.

In January 2001, the Company became one of the first companies of its kind in
the Vancouver market to operate a collocation data center and managed server
storage facility to provide its customers with a secure environment.

In October 2001, the Company completed the installation of a redundant
3.2-kilometer fiber optic cable ring within the downtown core of Vancouver. This
fiber optic ring connects DFG's data centre to the Internet backbone at Harbour
Centre.

As of November 15, 2002, the Company had fifteen (15) employees and contracts
for services are entered into as required on a full-time or part-time basis.

Data Fortress Technologies Ltd. ("Data Fortress") was founded in January of 2001
to provide customers with a secure environment and access to a fiber optic
network. Data Fortress is one of the first companies of its kind in the
Vancouver market to operate a co-location and managed server data center and
storage facility.
                                      -8-
<PAGE>
In October 2001, Data Fortress completed the installation of a redundant
3.2-kilometer fiber optic cable ring within the downtown core of Vancouver. This
fiber optic ring connects the Data Fortress data centre to the Internet backbone
at Harbour Centre.

Pacific Ram Distribution Corp. ("Pacific Ram") was established in April of 1991
to become a computer manufacturer and systems integrator using the brand name
"Logic Computers". The Company's operations are located in Richmond, British
Columbia, Canada. Pacific Ram produces a full line of the latest Personal
Computers and Business Workstations, as well as Servers to meet the ever-growing
needs of its customers. The Company has suppliers including Panasonic, U.S.
Robotics, Yamaha, Pioneer, Toshiba, Memorex, Epson, Hewlett-Packard, Fujitsu,
Palm, Acer, Borderware and Canon, just to name a few.

Over the past 11 years, Pacific Ram has successfully strengthened these
strategic relationships with its suppliers. This has enabled the Company to
provide its clients with service and commitment. As the computer industry
expands, the growth of Pacific Rim and European markets gives Canadian companies
a larger role as computer manufacturers and system integrators. Pacific Ram has
successfully established itself in both of these arenas with strong strategic
partnerships and client service.

Connect West Networks Inc. ("Connect West") was established in May 2001 to
respond to a `Request for Proposals' from Simon Fraser University. In its
response, Connect West presented the University with a unique and innovative
solution, which incorporated many of its strategic partners. A full agreement
was executed on July 4, 2002, the full network was built and running on
schedule, on budget, by September 1, 2002. Connect West has now moved out of the
construction phase and into the management phase providing superior customer
service including on-site tech support and management.

Since its launch in January 2001, Data Fortress as a wholly owned subsidiary of
Data Fortress 2002 has been successful in attracting a wide range of customers
to its facility:

1.       Application Service Providers (ASPs)
2.       Web Hosting Companies
3.       Software Developers
4.       Movie Production Companies - streaming video
5.       Web-based entertainment providers

To date, the Company has achieved a number of important milestones and
objectives including:

1.       Completed Fibre Ring including lighting of first four strands on
         diverse routes.

2.       Completed transition of placing BIG PIPE as the primary Internet
         provider with Group Telecom as the secondary provider.

3.       Installed (3) Different VOIP companies into DFTG facilities, making it
         the largest provider of services in the British Columbia market.

4.       Completed the first stage of the fully managed services for Skinny
         Scrip including three on ramps to the fibre ring.

5.       Implemented the first and second fully managed outsource infrastructure
         contracts.

6.       Re-organized sales team and management to increase their effectiveness
         while reducing the over-all cost of sales.

                                      -9-
<PAGE>
Data Fortress occupies 3,600 square feet in the basement of 1281 West Georgia
Street with 1,200 square feet currently dedicated to collocation with a capacity
of 48 rack spaces. The existing collocation space can be scaled to 2,800 square
feet and 116 rack spaces and can also be expanded to other buildings using a LAN
extension technology. The current location was identified as ideal for a
collocation facility for the following reasons:

1.       the relatively cool temperatures below ground level

2.       the building maintains a high level of security, requiring card access
         after hours

3.       there are only 2 points of entry to Data Fortress' suite

4.       the concrete walls are 8" thick (location used to be the TD Bank's
         document vault)

Data Fortress infrastructure offers several peering connections to the Internet
backbone and is directly connected to broadband communications service providers
Group Telecom and Big Pipe Inc. (a Shaw Subsidiary). These networks are fully
redundant (meaning bi-directional data flow capabilities even if the fiber line
is broken), running Border Gateway Protocol (BGP4) and utilizing Extreme
Networks equipment. The Company also provides:

1.       A separate electrical circuit for the data center
2.       Fully redundant fiber optic broadband connectivity
3.       Secure space for servers and other network equipment
4.       Seismic Zone 4 rated and mounted racks
5.       Clean, redundant Liebert uninterruptible power supply (UPS)
6.       Raised floors for clean, efficient air flow and cable management
7.       State-of-the-art climate controlled environment
8.       Fire suppression, alarm, and video monitoring systems
9.       Network operations centre to monitor networks and equipment
10.      Network support services - managed networks

Revenues are generated from a number of diverse areas:

o        Offline post-production
o        Hi-speed connectivity
o        Collocation
o        Internal managed services
o        External managed services
o        Hardware sales and services

Managed Services

DFG is one of a few Canadian companies providing data storage and collocation as
a service. This service allows customers to connect their computer systems, or
plug in, to the DFG network to store and access their data in much the same way
they obtain and use electricity or a telephone service. Managed storage services
include storage and management of customers' primary data, tape back-up of data
for archival and restoration purposes, and real time copies of customer data at
remote sites. DFG also assesses, designs and implements customers' data storage
environments, addressing customers' primary data needs as well as disaster
recovery and business continuity plans. Customers include organizations that
require large and rapidly growing volumes of data storage capacity and include
established enterprises and
                                      -10-
<PAGE>
Internet-based businesses in a wide range of industries, such as application
service providers ("ASP"), communications, media, retail, wholesale
distribution, health and education.

To deliver managed storage services, a dedicated fiber optic network that
connects the data center or storage point of presence, has been laid within the
downtown core of Vancouver. This fiber optic ring connects DFG's data centre to
the Internet backbone at Harbour Centre.

DFG through a subsidiary has entered into an agreement with TeraSpan Networks
Inc. ("TeraSpan"), who has installed a 24 strand, fully redundant ring of
"Surface Inlaid Fiber" exclusively for the Company. TeraSpan were selected as
the vendor because they offered the fastest, most economical fiber deployment
technology and techniques available. The fiber is laid approximately six inches
under ground by creating a thin cut in the sidewalks and roadways in the
downtown area. This deployment method is fast1, economical, and provides a fiber
optic data network with a useful life of 20 to 30 years.

The TeraSpan Agreement obligates TeraSpan to provide all design, implementation,
labour, equipment and city access agreements necessary to install the complete
fiber ring. They also provide a 24/7 Service and Licensing Agreement to cover
all maintenance and service on the fiber ring, including a 4-hour response time
to service issues and a 96-hour window to restore redundancy. The costs of
building this ring employing the TeraSpan method was approximately half the cost
of traditional methods and are significantly lower than all competing bids which
were in excess of $300,000.

Ownership of the fiber ring remains with TeraSpan, however DFG holds a 20 year
Irrevocable Right of Use ("IRU"). The only on-going requirement for the fiber
ring is maintenance. In the event that TeraSpan were no longer in business,
other vendors could be used. Maintenance is in the form of repairs to any line
damage. Because the ring is fully redundant, a break in the line does not
interrupt the flow of data. Data can be transferred in both directions in a
redundant ring allowing the data to simply flow in the opposite direction
through the ring until the break is repaired.

The fiber used is crush resistant, loose tube micro cable, designed specifically
for surface inlaid fiber deployment. This deployment method is a new,
patent-pending technique that eliminates the need to excavate streets. The cost
savings under TeraSpan's deployment technique is substantial and allows a fiber
network to be established in a fraction of the time previously required.

Collocation Services

Any business that depends on technology and server based systems is a potential
collocation customer for DFG. From the simplest single server application to
multi-site with high bandwidth requirement, DFG can provide a variety of
solutions to meet the client's specific needs.

Collocation is the renting of data facility space for the purpose of housing
server/telecommunications equipment and accessing bandwidth connections to the
Internet or a private data network. The customer "collocates" its servers along
with other customers in an environment in which they can take advantage of the
provider's secured floor space and access to high network bandwidth. The
collocation facility provides racking space, power and network connectivity
(referred to as Power, Ping and POP) to servers that are provided by the
customers.
____________________
1  Estimated time required to complete installation of the fiber loop is
   approximately 2 weeks from the start date

                                      -11-

<PAGE>
DNSMedia.com, was providing Hollywoodbroadcasting.com, Inc. ("HBC") during the
year 2000 with web design and consulting services for broadcasting on the
Internet for HBC's live streaming video broadcasts ("streaming") on the World
Wide Web.

HBC intended to provide live, interactive daily programming to the Internet from
its studios in Hollywood, California. HBC intended to take advantage of the
Internet by producing and developing fully interactive original content shows
that are solely for the Internet, combining live interaction with the on-line
audience, the host, and information.

DNSMedia.com was also providing the Los Angeles Film School (the "LA Film
School") with web design and consulting services for broadcasting on the
Internet.

DNSMedia.com wound down operations in 2000 as a consequence of declining
revenues in the "streaming broadcast sector".

StockSecrets.com is owned and operated by a private British Columbia
corporation, Stock Secrets Enterprises Ltd., which in turn is a wholly owned
subsidiary of the Company.

StockSecrets.com was a financial website in design stages during 2000 with plans
of targeting both investors and those interested in financial markets, small cap
companies and trends that affect financial investments. The site was designed to
offer daily content, real-time stock quotations and links to other related
sites. A beta version of the website was launched in September 2000. Revenue for
StockSecrets was projected to be derived from the sale of opt-in email campaigns
to public companies throughout North America, in addition to the sale of audio,
text and video streaming corporate profiles and banner advertising.

StockSecrets.com also wound down operations in 2000 as a consequence of the lack
of revenues in the Internet sector.

iaNett Internet Technologies Ltd., is a software development operation,
specializing in search engine technology. ITT, has developed and is in the
process of marketing a scalable Internet searching technology (the "Search
Engine") that permits full Internet search engine integration into websites. The
Search Engine is designed to offer a highly expandable solution to Internet
growth patterns by scaling to meet content requirements and user demand without
sacrificing functionality or speed. The software can be easily and usefully
adopted by any website. This wholly owned subsidiary continues to operate and
market Internet related services.

C.       Organizational Structure

Subsidiaries of DFG

DFG has four wholly-owned subsidiaries previously described:

(1)      DNSMedia.com, Inc., a company incorporated under the laws of the State
         of Nevada on February 25, 2000 and was qualified to transact intrastate
         business in the State of California on July 12, 2000;

                                      -12-
<PAGE>
(2)      Stock Secrets Enterprises Ltd., a company incorporated under the laws
         of the Province of British Columbia on March 15, 2000.

(3)      iaNett Internet Technologies Ltd. ("IIT"), a company incorporated under
         the laws of the Province of British Columbia on February 21, 2000.
         Pursuant to an acquisition agreement dated January 22, 2001 the Company
         increased the ownership position to a controlling (54%) interest in
         ITT. 320,000 shares were issued to the Vendors of IIT on March 21,
         2001. The same agreement provided an option to acquire the remaining
         interest (46%). The Company then entered into an Amendatory Agreement
         dated July 24, 2001, whereby the number of remaining shares to be
         issued to the Vendors of ITT was amended to 368,000 shares to provide
         for the post-consolidated number of common shares in the capital of the
         Company. The remaining minority interest was acquired on September 7,
         2001.

(4)      Data Fortress Technologies (2002) Inc. ("DFTG"), a holding company
         incorporated under the laws of the Province of British Columbia on
         March 1, 2002. A share exchange agreement was also executed this date
         whereby DFTG acquired all the issued shares of three other companies
         and organized them as wholly owned subsidiaries. The three subsidiaries
         are;

                          i.        Data Fortress Technologies Ltd.
                          ii.       Pacific Ram Distribution Ltd.
                          iii.      Connect West Networks Ltd.

DNSMedia.com Inc. and Stock Secrets Enterprises Ltd., web site portals created
by the Company were negatively affected by the technology market correction. The
Company has abandoned the operations, assets and liabilities of DNSMedia.com
Inc., and Stock Secrets Enterprises Ltd., assets have been redeployed within
ITT, or written off.

Unless the context otherwise requires, references herein to the "Company" or
"DFG" include these four wholly owned subsidiaries.

                                      -13-
<PAGE>
                          Data Fortress Group Limited
                  (formerly iaNett International Systems ltd.)
                                      |
                                      |
                                      |
             ______________________________________________________________
             |                     |                  |                   |
Data Fortress Technologies    DNSMedia.com*    StockSecrets.com*     iaNett.com
     Group (2002) Inc.
             |
             |
            ___________________________________________________________
           |               |                   |
      Connect West    Data Fortress       Pacific Ram
     Networks Ltd.    Technology Ltd.    Distributors Ltd.

*Management anticipates these companies will be wound up in due course.

D.       Property, Plants and Equipment

The Data Fortress Group rents from a related party a manufacturing facility
located at 135-12830 Clark Place, Richmond, British Columbia and also rents a
collocation facility located at LM-1281 Georgia Street, Vancouver, British
Columbia.

ITEM 5.           OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis should be read in conjunction with the
audited consolidated financial statements of the Corporation for the year ended
June 30, 2001 and the year ended June 30, 2000, as well as the interim financial
reports for the periods ended September 30, 2002 and September 30, 2001.

A.       Operating Results

During the period ended September 30, 2002, the Company concluded the reverse
merger transaction with Data Fortress (2002) and consequently accumulated an
operating loss of ($327,124) (2001: $49,306) including non-cash transactions
from share issuance at a deemed value of $190,836 for a finder's fee, the
sponsorship fee and accrued interest on a debenture settled with shares. The
business combination has been accounted for using the purchase method of
accounting and accordingly the results of operations of Data Fortress
Technologies (2002) Inc. ("Data Fortress 2002") are included in the consolidated
financial statements from the date of acquisition August 30, 2002 to the period
ended September 30, 2002.

Although the operating loss increased significantly from the same period
September 30, 2001 quarter, it is a reflection of the cumulative expenses of the
legal parent for the entire quarter ended September 30, 2002, and the expenses
of the consolidated legal subsidiary from the date of acquisition (August 30,
2002) to the quarter ended September 30, 2002. Operating costs while
significantly increased from the same period ending September 30, 2001 are
reflective of the consolidated results of operations of Data Fortress 2002. The
operating costs also include $190,836 of non-cash expenses for the quarter
reflecting the final related expenses to the reverse merger with Data Fortress
2002.
                                      -14-
<PAGE>
General and administrative costs for the quarter ended September 30, 2002 were
$338,359. These costs as stated reflect an increase over the previous quarter as
a result of the August 30, 2002 acquisition approval date of Data Fortress 2002
and the consolidation of those costs of operations for the 30 day period ending
September 30, 2002. Prior to the acquisition of Data Fortress 2002 and as
reported in the Management Information Circular dated for the April 19, 2002
Special and Annual General Meeting General and Administrative costs were
anticipated to be approximately $120,000 per month. This was predicated on
certain levels of business being achieved beyond what was already being
maintained. It was apparent during the summer months of 2002 that targets were
not going to be fully achieved and the acquired company, Data Fortress (2002)
thru its subsidiaries took steps to streamline operations by laying-off
non-essential staff in August and restricting travel and other sundry expenses
including consolidating administrative offices with operating offices in the
data center. In doing so, the company Data Fortress 2002 for the month of
September had General and administrative costs of approximately $63,000. A
material difference from the estimate contained in the Management Information
Circular of $120,000. However, the results for the month of September of Data
Fortress 2002 did bring the companies of Data Fortress (2002) to within $13,000
of breakeven.

New business continues to be booked and management expects that operations will
be profitable again in the short term. Total General and Administrative costs of
$327,000 comprised of $63,000 for the Data Fortress 2002 entity for the thirty
days of September, 191,000 of non-cash expenses and $73,000 for Data Fortress
Systems Group Ltd. (formerly iaNett International Systems Ltd.) for the entire
quarter. Data Fortress Systems Group Ltd. General and Administrative costs for
the quarter also included approximately $30,000 of legal costs related to
completion of the RTO. Management considers this a non-recurring expense and
expects overhead to be approximately $20,000 per month.

On a consolidated basis this is a shortfall of approximately $33,000 for the
month ($13,000 + $20,000). Management believes with new business being booked
this will turn in the coming months to positive cash flow and reduce the current
working capital deficiency over time.

B.       Liquidity and Capital Resources

During the period ended June 30, 2002, the Company had an operating loss of
($569,511) compared to an operating loss of ($5,075,420) before including
extraordinary items. During the period ended June 30, 2002 there was a $717,824
gain on settlement of debt and net investment write offs of ($97,700) which
resulted in a final net earnings position of $50,613. The gain on settlement of
debt is a result of the Company issuing shares at a deemed value of $0.18 per
common share, the last traded price prior to the July 4, 2001 announcement of
the formal proposal and the recording of the common share issuance at the market
value of $0.11 as at the date of issuance. Additionally, $136,618.23 in cash
payments were made to certain creditors to settle an aggregate of $459,067.40 of
outstanding debt, also resulting in a gain on debt.

Cash reserves increased marginally during the year. Two private placements were
completed for proceeds of $240,000 and $243,800. Additionally $110,000 was
received in warrants exercised and 9,000 in options exercised. During the period
the primary use of cash was to fund operations, settle debt, fund working
capital, and purchase new capital items.

                                      -15-
<PAGE>
The Company's working capital position has increased since June 30, 2001 from a
deficiency of ($1,348,814 - 2001) due to finalization of the debt settlement and
the closing of two private placements. The Company's working capital position as
at June 30, 2002 is ($65,064).

C.       Research and Development, Patents and Licenses

No research, or development was undertaken for the fiscal year end June 30,
2002. The following five initiatives were written off in the fiscal year ended
June 30,m 2001, with an additional $150,443 in other development costs have
incurred $1,039,407 in development costs since inception. While over time one or
more of these projects may create value for the company, management, decided to
write off the development costs as at June 30, 2001 with the expectation that it
is unlikely that commercialization will be achieved in any of the projects in
the near term.

YourWineStore.com

iaNett owns 100% of the YourWineStore.com website. This was designed and
developed as a free informational website that would bring together the world's
wine enthusiasts and wine related businesses, it was expected to be the most
comprehensive listing of wineries available online. Any wine related site would
have been able to co-brand their site with YourWineStore.com. Wineries would
have had the opportunity to become winery of the month. Descriptive profiles,
written by some of the world's foremost wine experts, were planned to be hosted
on the website. Development costs of $152,341 have been written off.

TargetPacks

TargetPacks is a permission-based Internet marketing division of the Company
that offers direct marketing expertise specifically in the Internet arena.
TargetPacks provides opt-in email marketing programs for advertisers, either in
conjunction with other advertisers in interest-specific "packs," or as a solo
program. Consumers may also take advantage of the TargetPacks.com website by
subscribing to a topic-specific newsletter mailing list. Customers can rent
opt-in lists, advertise in newsletters, and/or have TargetPacks manage and rent
their proprietary lists. The major asset of this division will be the
accumulation of proprietary opt-in names. Development costs of $161,086 have
been written off.

TargetPacks acquired a license for list management software at a cost of US
$120,000 that serves as an added-value feature to opt-in email campaigns. This
software package integrates a relational database into an advanced e-mail list
server that will allow TargetPacks to create customized e-mail marketing
campaigns.

HealthCreator.com

Healthcreator.com is a database driven health and wellness web site developed by
the Company. It is an integrated assessment system that uncovers the health and
fitness goals of subscribers and provides them with a daily health regime
personalized to their lifestyle. The site was developed to a point where it
required an additional $2 million in funding to commercialize. The funding to
place into operation was not located and the web site asset was never placed
into the market. Development costs of $188,431 have been written off.

                                      -16-
<PAGE>
Shellco.com

In addition to providing marketing, website development and hosting services,
the Company did establish an Internet business development division. The Company
focused on start-up or early-stage companies where significant value could be
added to the investment through the Company's experience in providing complete
Internet business development and marketing solutions.

This former division of the Company operated under the website "Shellco.com"
which provided resources for private companies interested in going public and/or
seeking business acquisitions. The website was also, a marketing tool for the
Company's Internet business development segment. Development costs of $61,529
have been written off. StockSecrets.com

StockSecrets.com was a non operating financial website owned by the Company
targeting both investors and those interested in financial markets, small cap
companies and trends that affect financial investments. The site was designed to
offer daily content, real-time stock quotations and links to other related
sites. A beta version of the website was launched in September 2000. Development
costs of $325,577 have been written off.

D.       Trend Information

Other than as disclosed elsewhere in this Annual Report, there is no information
required to be disclosed under this item.

ITEM 6.           DIRECTORS AND SENIOR MANAGEMENT
<TABLE>
<CAPTION>
A.       Directors and Senior Management
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                        Number of common
Name, municipality of residence,         Principal occupation during the last       Date of             shares beneficially
and office held                          five years                                 appointment as      owned, directly or
                                                                                    Director            indirectly, or over
                                                                                                        which control or
                                                                                                        direction is
                                                                                                        exercised
-----------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                        <C>               <C>
Rick Thomas                              Senior Executive, Big Pipe Inc. ("Shaw
North Vancouver, BC                      Communication Company") from January                           4,450,0003
Chief Executive Officer and Director     2001 to present; Vice President Computer   March 15, 2002
                                         Pro Inc. from 1995 to 2001; President
                                         and CEO of the Company from March 2002
                                         to present;

                                      -17-
<PAGE>
-----------------------------------------------------------------------------------------------------------------------------
Michael Chong                            President, CEO and founder of Pacific      April 19, 2002      8,623,6674
Vancouver, BC                            Ram Distributors Ltd. and Data Fortress
Chief Operating Officer and Director     Technologies Ltd., from 1991 to present
-----------------------------------------------------------------------------------------------------------------------------
Gordon A. Samson                         Financial Officer, Revenue Canada, 1984    July 26, 2001       125,000(1)
Vancouver, BC                            to 1988, Bank Manager 1988 to 1996,
Chief Financial Officer and Director     Global Securities 1997 to 1999, Contract
                                         CFO projects 1999 to present
-----------------------------------------------------------------------------------------------------------------------------
C.K. Chong                               Controller and Director of Pacific Ram     April 19, 2002      15,319,0675
Vancouver, BC                            Distributors ltd., from 1992 to present.
Director
-----------------------------------------------------------------------------------------------------------------------------
Bruce McConnachie                        A founding director of Global Securities
Delta, B.C.                              Corp., ("Global") a full serviced          June 12, 2002               NIL
Director                                 regionally based brokerage firm with
                                         offices across Western Canada.
-----------------------------------------------------------------------------------------------------------------------------
Bill Kaleta                              Professional Security System Analyst,
Vancouver, B.C.                          Researcher, Instructor, and Developer      June 3, 3003                NIL
Director
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)      these shares are held directly

(2)      these shares are held indirectly

(3)      4,300,000 shares are held in escrow  (6 years)

(4)      8,566,667 shares are held in escrow (6 years)

(5)      8,566,667 shares are held in escrow (6 years) + 6,652,400 shares are
         held in 3 year pooling agreement

Unless otherwise stated each of the above persons has served continually as a
director since the date he first became a director. The directors of the Company
are elected annually and hold office until the next Annual General Meeting of
the shareholders, unless a person ceases to be a director before the date of the
Annual General Meeting.

The following is brief biographical information on each of the officers and
directors listed above:
                                      -18-
<PAGE>
Rick Thomas on March 15, 2002, Mr. Thomas was appointed as Director and
President/CEO ("CEO") of iaNett International Systems Ltd and devotes 100% of
his time to the Company. Mr. Thomas has more than 25 years experience managing a
variety of companies, combining strong skills in financial analysis and
management tiered strategies.

Mr. Thomas received his Bachelor of Science degree from the University of
California at Berkley in 1978 and completed his Masters in Business
Administration with Honours (Dean's List) from the University of Arizona in
1980. He has extensive education and training in other related fields of study
including, MCSE - Microsoft and MPS/MSP - Microsoft.

Mr. Thomas has worked as a Tier One level consultant with IBM, Intuit and
Microsoft. Mr. Thomas remains a member in good standing of the ASOPC, (American
Society of Professional Consultants). Mr. Thomas devotes approximately 100% of
his time to the Company.

Mr. Thomas most current post was as a Senior Executive with Big Pipe Inc, (A
Shaw Company), which owns operates and manages the largest IP fiber optic
communications system in Canada. At BigPipe Inc., Mr. Thomas was responsible for
strategic planning, sales and marketing and implementation of Big Pipe into the
Western Market place.

Mr. Rick Thomas has a management contract with the Company in his position of
CEO for six thousand dollars ($6,000.00) per month. Incentive stock options to
purchase Common Shares of the Company have been granted for 250,000 common
shares at $0.14.

Gordon A. Samson - on July 26, 2001, Mr. Samson was appointed as Director and
Chief Financial Officer ("CFO") of iaNett International Systems Ltd. Mr. Samson
devotes approximately 60% of his time to the Company.

Mr. Samson began his financial career in 1985 with Revenue Canada, now Canada
Customs Revenue Agency ("CCRA") as a financial officer, obtaining his Certified
General Accountant, ("CGA") designation in 1991. Mr. Samson also enjoys a number
of years as a Senior Banker with a major Canadian institution and as an
Accounting Manager with a regional, full service brokerage house. Prior to
joining the team at the Company, Gordon was a Chief Financial Officer ("CFO")
consultant to public companies both on the TSX Venture Exchange ("TSX") and the
OTC BB both on his own and with Moore Consulting Services Inc. ("MCSI"), where
he also engaged with broker sponsors for due diligence assignments in publicly
traded companies.

Mr. Samson has a background in technology firms and is also a director and
officer of CYOP Systems International Inc. a company listed on the OTC BB,
trading under the symbol CYOI.

Mr. Gordon Samson has a management contract with the Company in his position of
CFO for five thousand dollars ($5,000.00) per month. Incentive stock options to
purchase Common Shares of the Company have been granted for 100,000 common
shares at $0.10 and 100,000 common shares at $0.20.

Michael Chong - on April 19, 2002, Mr. Chong was appointed as Director and Chief
Operating Officer ("COO"). Mr. Chong devotes 100% of his time to the Company.
Michael Chong graduated from Simon Fraser University in 1987 with a Bachelor of
Business Administration, majoring in finance and marketing. Since graduation, he
has built his career within the computer technology industry beginning with
retail
                                      -19-
<PAGE>
computer sales while still in school and then joining PAL Systems Ltd. as a
wholesale Sales Rep in 1989. The following year, Mr. Chong joined Micro Supply
Canada Ltd. as Vice President of Sales and Marketing. In 1991, Mr. Chong
established his own company with the founding of Pacific Ram Distribution Corp.,
a wholesale computer distributorship. Pacific Ram has grown from two employees
to 14 and had annual sales of $6.5 million Canadian.

Mr. Michael Chong is an employee of the Company in his position of COO for two
thousand, eight hundred dollars ($2,800.00) per month. No incentive stock
options to purchase Common Shares of the Company have been granted.

CK Chong - on April 19, 2002, Mr. CK Chong was appointed as Director. CK Chong
brings over 45 years of operations and logistics experience to the Board of
Directors, beginning with a position in the Government Printing Department of
Malaysia (1956-1968) and the Ministry of Defense (1968-1972). In 1972, he
co-founded Lian Wah Stationery & Papers Ltd., employing his expertise in
printing and distribution to build a successful company. In 1978, he sold his
interest in Lian Wah and immigrated with his family to Canada. From 1979 to
1992, Mr. Chong worked with Innovations Incorporated, a seasonal gift
distributor. In 1992, Mr. Chong joined Pacific Ram Distribution Corp., a
wholesale computer distributorship founded by his son, Michael. Mr. CK Chong
devotes 50% of his time to the Company.

Mr. CK Chong is an employee of the Company with a salary of two thousand five
hundred dollars ($2,500.00) per month. No incentive stock options to purchase
Common Shares of the Company have been granted.

Bruce McConnachie - on June 3, 2002, Mr. McConnachie was appointed as Director.
Mr. Bruce McConnachie, is a Certified General Accountant (FCGA), a Certified
Financial Planner (CFP), and was made a "fellow" by CGA Canada. His service to
the Accounting Association includes serving as President of the CGA Association
of British Columbia in 1993. Bruce is also a founding director of Global
Securities Corp., ("Global") a full serviced regionally based brokerage firm
with offices across Western Canada.

Mr. McConnachie is an independent director and a member of the audit committee.
Mr. McConnachie receives no compensation for his services and was awarded 50,000
incentive stock options to purchase Common Shares of the Company at $0.10.

Bill Kaleta - on June 3, 2002, Mr. Kaleta was appointed as director. Mr. Bill
Kaleta is a professional Security System Analyst, Researcher, Instructor, and
Developer with over 16 active years in the information technology industry. He
has designed and programmed award winning software and has had his software
reviewed and written about in such publications as PCWorld and PC Magazine,
along with a host of on-line technical publications. Since moving to the West
Coast, he has spent over ten years in a myriad of programming shops throughout
the Northwest, where he has been a program manager, head programmer, and
instructor in the C and C++ languages. Previously Bill was director, CIO and
lead programmer with CYPOST an NASD OTC BB company.

Mr. Kaleta is also an independent director and a member of the audit committee.
Mr. Kaleta receives no compensation for his services and was awarded 50,000
incentive stock options to purchase Common Shares of the Company at $0.10.

                                      -20-
<PAGE>
No director and/or executive officer of the Company has been the subject of any
order, judgment, or decree of any governmental agency or administrator or of any
court of competent jurisdiction, revoking or suspending for cause any license,
permit or other authority of such person or of any corporation of which he is a
director and/or executive officer, to engage in the securities business or in
the sale of a particular security or temporarily or permanently restraining or
enjoining any such person or any corporation of which he is an officer or
director from engaging in or continuing any conduct, practice, or employment in
connection with the purchase or sale of securities, or convicting such person of
any felony or misdemeanor involving a security or any aspect of the securities
business or of theft or of any felony.

There are no arrangements or understandings among any of the directors regarding
their election as director.

B.       Compensation

The Company does not compensate its directors for their services as directors
although directors are eligible to receive incentive stock options to purchase
common shares granted from time to time. Details of stock options granted to the
directors and senior officers are shown below. Directors are entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in
connection with attendance at meetings of the Board of Directors. The Board of
Directors makes separate remuneration to any director undertaking services on
behalf of the Company other than services ordinarily required of a director.
Other than indicated below, no director received any compensation for his
services as a director, including any committee participation or special
assignments.

The following table sets forth details of the compensation paid during the
fiscal year ended June 30, 2002, 2001 and 2000, the six months ended June 30,
1999 and for the fiscal year ended December 31, 1998, to the Chief Executive
Officer (CEO) of the Company and the four highest paid executive officers of the
Company, other than the CEO, whose individual total compensation for the
financial year exceeds $100,000, if any (collectively "the Named Executive
Officers") including any individual who would have qualified as a Named
Executive Officer but for the fact that individual was not serving as such an
Officer at the end of the financial year::

                                      -21-
<PAGE>
<TABLE>
<CAPTION>
                           Summary Compensation Table
----------------------------------------------------------------------------------------------------------------------------
                                         Annual Compensation               Long Term Compensation
                                         --------------------------------- ------------------------- ----------
                                                                           Awards                    Pay-outs
                                                                           ------------------------- ----------
                                                                                        Restricted
                                                               Other       Securities   Shares or               All
                                                               Annual      Under        Restricted              Other
Name and                                                       Compen-     Options      Share        LTIP       Compen-
Principal                                Salary     Bonus      sation      granted      Units        Payouts    sation
Position                      Year       ($)        ($)        ($)         (#)          ($)          ($)               ($)
============================================================================================================================
<S>                            <C>       <C>        <C>        <C>         <C>          <C>          <C>        <C>
Rick Thomas (7)               2002(5)    72,000     Nil        Nil         250,000      Nil          Nil        Nil
President, CEO and Director   2001(4)    N/A
                              2000(3)    N/A
                              1999(2)    N/A
                              1998(1)    N/A
----------------------------------------------------------------------------------------------------------------------------
Gordon A. Samson (6)  CFO     2002(5)    60,000     Nil        Nil         200,000      Nil          Nil        Nil
and Director                  2001(4)    N/A
                              2000(3)    N/A
                              1999(2)    N/A
                              1998(1)    N/A
----------------------------------------------------------------------------------------------------------------------------
Michael Chong (8)             2002(5)    33,600     Nil        Nil         Nil          Nil          Nil        Nil
COO, Director and Secretary   2001(4)    N/A
                              2000(3)    N/A
                              1999(2)    N/A
                              1998(1)    N/A

----------------------------------------------------------------------------------------------------------------------------
CK Chong (9)                  2002(5)    30,000     Nil        Nil         Nil          Nil          Nil        Nil
Director                      2001(4)    N/A
                              2000(3)    N/A
                              1999(2)    N/A
                              1998(1)    N/A
----------------------------------------------------------------------------------------------------------------------------
Bruce McConnachie(10)         2002(5)    N/A        Nil        Nil         Nil          Nil          Nil        Nil
Director                      2001(4)    N/A
                              2000(3)    N/A
                              1999(2)    N/A
                              1998(1)    N/A
----------------------------------------------------------------------------------------------------------------------------
Bill Kaleta(11)               2002(5)    N/A        Nil        Nil         Nil          Nil          Nil        Nil
Director                      2001(4)    N/A
                              2000(3)    N/A
                              1999(2)    N/A
                              1998(1)    N/A
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)      Fiscal years ended December 31. The Company changed its financial year
         end from December 31 to June 30 effective June 30, 1999

(2)      Six month period ended June 30, 1999; transition to June 30 financial
         year end

(3)      Fiscal year ended June 30, 2000.

                                      -22-
<PAGE>
(4)      Fiscal year ended June 30, 2001.

(5)      Fiscal year ended June 30, 2002.

(6)      Gordon A. Samson was appointed Chief Financial Officer on July 26, 2001
         (interim President and CEO, November 21, 2001 - March 15, 2002).

(7)      Rick Thomas appointed President and CEO March 15, 2002.

(8)      Michael Chong was appointed Director on April 19, 2002

(9)      CK Chong was appointed Director on April 19, 2002.

(10)     Bruce McConnachie was appointed Director on June ,2002.

(11)     Bill Kaleta was appointed Director on June , 2002.


C.       Board Practices

The Company has no executive committee but is required to have an audit
committee that is comprised of three directors, namely, Gordon A. Samson, Bruce
McConnachie and Bill Kaleta. The Company does not have a compensation committee.

D.       Employees

There is fifteen (15) staff which is considered close to a realistic level based
on current activity. In the future, where appropriate, growth will be managed by
subcontracting services until an ongoing permanent need is established, at which
time additional employees will be hired. This will efficiently manage the
Company's forecasted operations and contain the associated overhead costs.

Defined Benefit of Actuarial Plan Disclosure

No pension plan or retirement benefit plans have been instituted by the Company
and none are proposed at this time.

Termination of Employment, Changes in Responsibility and Employment Contracts

The Company and its subsidiaries do not have any compensatory plans or
arrangements in respect of compensation received or that may be received by any
Named Executive Officer in the event of (a) a change of control of the Company
or any subsidiary or (b) the resignation, retirement or other termination of
employment of the Named Executive Officer or (c) a change in responsibilities
for the Named Executive Officer following a change of control where the amount
involved (including all periodic payments or installments) exceeds $C100,000.

E.       Share Ownership

Incentive stock options are granted at the discretion of the directors to
insiders of the Company pursuant to an incentive stock option plan (the "1999
Plan") dated May 18, 1999, as amended June 25, 1999 (the "1999 Plan") which
amendment was approved by the shareholders at an Annual General Meeting held on
June 29, 1999. The Company implemented a new Plan dated July 14, 2000 (the "2000
Plan"), as the number of options available under the 1999 Plan was limited.
Therefore, the Company had two option plans in existence, as there were still
options available under the 1999 Plan. At the 2002 Meeting,

                                      -23-
<PAGE>
Shareholders (April 19, 2002) approved, without amendment, an amendment to the
Company's 1999 and 2000 Plan to increase the maximum number of common shares
reserved by the Company for issuance and which may be purchased upon the
exercise of all options under the Plan to 3,274,266 (equal to 20% of the Issued
and Outstanding Share Capital of the Company as at April 19, 2002. However, in
accordance with CDNX Policy 4.4, this maximum number may be revised from time to
time provided that approval is obtained from the Company's shareholders and the
CDNX.

All incentive stock options issued are subject to a vesting period, whereby 25%
of the number of options issued may be exercised on the date of grant, and a
further 25% at intervals of 6, 12 and 18 months from the date of grant.

The Company may grant stock options to its directors, senior officers and
employees or to employees of a company providing management services to the
Company or to consultants engaged by the Company in consideration of them
providing their services to the Company. The number of shares subject to each
option is determined by the Company's Board of Directors within the guidelines
established by such regulatory authority. The options enable such persons to
purchase shares of the Company at a price fixed pursuant to the rules of such
regulatory body. The option agreements provide that, subject to the vesting
schedule, the option can only be exercised by the optionee and only so long as
the optionee shall continue in the capacity as a director, senior officer or
employee of the Company or within a period of not more than 30 days after
ceasing to be a director, officer or employee or, if the optionee dies, within
one year from the date of the optionee's death. The options are exercisable by
the optionee giving the Company notice and payment of the exercise price for the
number of shares to be acquired.

Specific disinterested shareholder approval is required to any plan where
options may exceed 5% of the issued shares to any one individual during a fiscal
year, or where the overall number of options to be issued during a fiscal year,
including outstanding stock options issued prior to the implementation of a
Plan, exceed 20%. During 2002, no individual grants were made exceeding 5% of
the Company's issued and outstanding shares, nor did the overall number of
options granted during 2000 exceed 20% of the Company's issued and outstanding
shares.

The Company granted a total of 789,250 stock options under the Plan during
fiscal 2001, and an aggregate of 1,325,000 incentive stock options are currently
outstanding. All current outstanding stock options that are under the Plan are
as follows:
                                      -24-
<PAGE>
                               Options Outstanding

Name of Optionee   No. of option       Exercise          Expiry Date
                   Shares              Price(1)
--------------------------------------------------------------------------
Gordon Samson            100,000        $0.20           Jan. 4, 2007
--------------------------------------------------------------------------
Gordon Samson            100,000        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Theo Sanidas             190,000        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Theo Sanidas              55,000        $0.10           Nov 23, 2005
--------------------------------------------------------------------------
Rick Thomas              250,000        $0.14           March 15, 2007
--------------------------------------------------------------------------
Bruce McConnachie         50,000        $0.10           August 14, 2007
--------------------------------------------------------------------------
Bill Kaleta               50,000        $0.10           August 14, 2007
--------------------------------------------------------------------------
Marty Anstey              24,000        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Marty Anstey               1,000        $0.10           Sept 5, 2005
--------------------------------------------------------------------------
Marty Anstey               5,000        $0.10           Nov 23, 2005
--------------------------------------------------------------------------
Shone Anstey              50,000        $0.20           Jan. 4, 2007
--------------------------------------------------------------------------
Shone Anstey              94,000        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Shone Anstey               1,000        $0.10           Sept 5, 2005
--------------------------------------------------------------------------
Shone Anstey               5,000        $0.10           Nov 23, 2005
--------------------------------------------------------------------------
Richard Cushing           50,000        $0.20           Jan. 4, 2007
--------------------------------------------------------------------------
Richard Cushing           24,000        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Richard Cushing            1,000        $0.10           July 12, 2004
--------------------------------------------------------------------------
Richard Cushing            5,000        $0.10           Dec 21, 2004
--------------------------------------------------------------------------
Richard Cushing            5,000        $0.10           Nov 23, 2005
--------------------------------------------------------------------------
Ron Goyette               28,500        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Ron Goyette                1,500        $0.10           Dec 21, 2004
--------------------------------------------------------------------------
Ron Goyette                5,000        $0.10           Nov 23, 2005
--------------------------------------------------------------------------
Tina Miller                8,750        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Tina Miller                1,250        $0.10           Nov 8, 2004
--------------------------------------------------------------------------
Kathy Stahr               15,000        $0.10           Oct. 5, 2006
--------------------------------------------------------------------------
Kathy Stahr                5,000        $0.10           Nov 23, 2005
--------------------------------------------------------------------------
_____________________
1        By approval letter dated October 19, 2001 the CDNX approved the
         re-pricing of the exercise price of all options that expire prior to
         October 2, 2006 to $0.10. The exercise price on these options ranged
         from $0.15 to $0.70.
                                      -25-
<PAGE>
Jim Romano               100,000        $0.20           Jan 4, 2007
--------------------------------------------------------------------------
Scott Young              100,000        $0.20           Jan. 4, 2007
--------------------------------------------------------------------------
Total                  1,325,000
--------------------------------------------------------------------------

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.       Major Shareholders

As far as is known to the Company, the Company is not directly or indirectly
controlled by another corporation, foreign government, or natural person. The
Company is not aware of any shareholders holding, as at the year end June 30,
2002, 5% or more of the outstanding Shares other than as at September 30, 2002
and completion of the reverse merger ("RTO") the following shareholders, hold
more than 5% or more of the outstanding Shares.

-----------------------------------------------------------------------------
Name of Shareholder         Common Shares held        % of Outstanding shares
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
CK Chong                    15,319,0671               26.33%
Michael Chong                 8,623,6672              14.82%
Rick Thomas                   4,450,0003                7.65%
Andy Chong                    3,033,3334                5.21%
Jordan Krushen                5,533,3335                9.51%
-----------------------------------------------------------------------------

1        8,566,667 are under a six year escrow agreement between the transfer
         agent ("Computershare") and CK Chong. Releases are every six months per
         TSX Venture Exchange ("TSX") policy, surplus rules. A further 6,665,240
         common shares are escrowed between the transfer agent (Computershare)
         and CK Chong under a voluntary pooling agreement with releases every
         six months.

2        8,566,667 are under a six year escrow agreement between the transfer
         agent ("Computershare") and Michael Chong. Releases are every six
         months per TSX Venture Exchange ("TSX") policy, surplus rules.

3        4,300,000 are under a six year escrow agreement between the transfer
         agent ("Computershare") and Rick Thomas. Releases are every six months
         per TSX Venture Exchange ("TSX") policy, surplus rules.

4        3,033,333 are under a six year escrow agreement between the transfer
         agent ("Computershare") and Andy Chong. Releases are every six months
         per TSX Venture Exchange ("TSX") policy, surplus rules.

5        5,533,333 are under a six year escrow agreement between the transfer
         agent ("Computershare") and Jordan Krushen. Releases are every six
         months per TSX Venture Exchange ("TSX") policy, surplus rules. Jordan
         Krushen resigned from the Company November 7,2002. Mr. Krushen has
         voluntarily surrendered these escrow shares other than the first
         release with the remainder to be canceled or allocated to the Directors
         at the discretion of the Board of Directors.

                                      -26-
<PAGE>
As of September 30, 2002, the directors and senior officers of the Company
beneficially own, directly or indirectly, or have control or direction over an
aggregate of 37,084,400 common shares of the Company representing approximately
63.75% of the issued and outstanding shares of the Company. (total number of
issued common shares as at September 30, 2002 is 58,171,528). In addition, the
directors and senior officers of the Company, as a group, hold incentive stock
options for the purchase of an aggregate of 200,000 additional shares in the
capital of the Company, which options are exercisable at $0.10 per share,
250,000 additional shares in the capital of the Company, which options are
exercisable at $0.14 per share, and, 100,000 additional shares in the capital of
the Company, which options are exercisable at $0.20 per share.

B.       Related Party Transactions

The Company entered into the following related party transactions with
individuals or companies that were controlled by directors or by officers.

1.       Management Agreement with Rick Thomas for six thousand dollars per
         month for CEO services.

2.       Management Agreement with Gordon Samson for five thousand per month for
         CFO services.

3.       Lease Agreement for premises with Bee Kok Chong (spouse of a director)
         for Pacific Ram Distributors ltd. at $1,600 per month.

C.       Interests of experts and counsel

The information for this Item is not required to be provided for Annual Reports
on Form 20 - F filed under the Securities Exchange Act of 1934.


ITEM 8.           FINANCIAL INFORMATION

A.       Consolidated Statements and Other Financial Information


                 CONSOLIDATED FINANCIAL STATEMENTS

                 DATA FORTRESS SYSTEMS GROUP LTD.
                 (FORMERLY IANETT INTERNATIONAL SYSTEMS LTD.)

                 VANCOUVER, BRITISH COLUMBIA, CANADA

                 JUNE 30, 2002 AND 2001

                                      -27-
<PAGE>
                           1. AUDITORS' REPORT

                           2. CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT

                           2. CONSOLIDATED BALANCE SHEETS

                           4. CONSOLIDATED STATEMENTS OF CASH FLOWS

                           5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      -28-
<PAGE>
                               BEDFORD CURRY & CO.
                              CHARTERED ACCOUNTANTS
                                                         MICHAEL J. BEDFORD INC.

                                AUDITORS' REPORT

To the Shareholders of Data Fortress Systems Group Ltd.

We have audited the consolidated balance sheets of Data Fortress Systems Group
Ltd. as at June 30, 2002 and 2001 and the consolidated statements of earnings
and deficit and cash flows for the years then ended. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at June 30, 2002 and
2001 and the results of its operations and its cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles. As
required by the British Columbia Company Act, we report that, in our opinion,
these principles have been applied on a consistent basis.



Vancouver, British Columbia, Canada                          BEDFORD CURRY & CO.
November 4, 2002                                           CHARTERED ACCOUNTANTS
                                      -29-
<PAGE>
Data Fortress Systems Group Ltd.
CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
Years ended  June 30, 2002 and 2001
                                                  2002             2001
------------------------------------------------------------------------
REVENUE

Sales                                    $       25,426          976,100
Other income                                         -           116,107
------------------------------------------------------------------------
                                                 25,426        1,092,207

EXPENSES

General and administrative                      515,930        2,892,195
Bad debts                                        49,920        1,093,288
Amortization of capital assets                   16,438          856,355
Direct costs                                     12,649        1,325,789
------------------------------------------------------------------------
                                                594,937        6,167,627
------------------------------------------------------------------------
Net loss before other items                    (569,511)      (5,075,420)

OTHER ITEMS

Gain on settlement of accounts payable          717,824                -
Write-off of investments [Note 4]               (97,700)      (1,349,532)
Loss on disposition of capital assets                 -       (1,514,592)
Write-off of deferred development costs               -       (1,039,407)
Write-off of loans receivable                         -         (196,000)
------------------------------------------------------------------------
NET EARNINGS (LOSS)                               50,613      (9,174,951)

Deficit, beginning of year                  (33,809,729)     (24,634,778)
------------------------------------------------------------------------
DEFICIT, end of year                     $  (33,759,116)     (33,809,729)
========================================================================
EARNINGS (LOSS) PER SHARE - BASIC        $         0.00            (1.75)
========================================================================
WEIGHTED AVERAGE NUMBER OF ISSUED SHARES      11,241590        5,242,829
========================================================================
                                      -30-
<PAGE>
Data Fortress Systems Group Ltd.
CONSOLIDATED BALANCE SHEETS
June 30, 2002 and 2001
                                                      2002             2001
-----------------------------------------------------------------------------
ASSETS

Current
    Cash                                      $        8,012            3,024
    Accounts receivable                                7,064           52,131
    Loans receivable                                  40,350                -
    Prepaid expenses                                   1,284            3,972
-----------------------------------------------------------------------------
                                                      56,710           59,127
-----------------------------------------------------------------------------
Capital assets [Note 3]                               44,412           24,411
Investments [Note 4]                                   5,000          105,000
-----------------------------------------------------------------------------
                                              $      106,122          188,538
=============================================================================

LIABILITIES

Current
    Accounts payable and accrued expenses     $      109,774          743,726
    Loan [Note 5]                                         -           490,174
    Due to shareholder [Note 6]                       12,000          174,041
-----------------------------------------------------------------------------
                                                     121,774        1,407,941

SHAREHOLDERS' DEFICIENCY

Share capital [Note 7]                            33,741,464       32,590,326
Share subscriptions                                    2,000                -
Deficit                                          (33,759,116)     (33,809,729)
-----------------------------------------------------------------------------
                                                     (15,652)      (1,219,403)
-----------------------------------------------------------------------------
                                              $      106,122          188,538
=============================================================================

APPROVED ON BEHALF OF THE BOARD:


"GORDON SAMSON"                                               "RICK THOMAS"
Director                                                      Director

                                      -31-
<PAGE>
Data Fortress Systems Group Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended  June 30, 2002 and 2001
                                                       2002             2001
-------------------------------------------------------------------------------
OPERATIONS

Net loss                                           $    50,613       (9,174,951)
Add (deduct) items not involving cash
    Write-off of investments                            97,700        1,349,532
    Amortization of capital assets                      16,438          856,355
    Bad debts                                           49,920        1,093,288
    Loss on disposition of capital assets                   -         1,514,592
    Write-off of deferred development costs                 -         1,039,407
    Write-off of loans receivable                           -           196,000
    Gain on settlement of accounts payable            (717,824)               -
-------------------------------------------------------------------------------
                                                      (503,153)      (3,125,777)
Net changes in non-cash working capital items:
    Decrease (increase) in accounts receivable          (4,853)       1,219,519
    Decrease in prepaid expenses and deposits            2,688          194,101
    Decrease in accounts payable                       (32,005)        (605,620)
-------------------------------------------------------------------------------
                                                      (537,323)      (2,317,777)
FINANCING
Issuance of share capital                              602,800          200,472
Increase in amounts due to shareholder                  12,000          174,041
Increase in share subscriptions                          2,000                -
Increase in loan                                            -           500,000
-------------------------------------------------------------------------------
                                                       616,800          874,513
INVESTING
Proceeds on disposition of investments                   2,300           70,917
Decrease (increase) in loans receivable                (40,350)         154,000
Purchase of capital assets                             (36,439)        (279,960)
Proceeds from sale of capital assets                        -           336,850
Purchase of investments                                     -           (18,175)
Increase in deferred development costs                      -          (131,036)
-------------------------------------------------------------------------------
                                                       (74,489)         132,596
-------------------------------------------------------------------------------
Increase (decrease) in cash                              4,988       (1,310,668)

Cash and cash equivalents, beginning of year             3,024        1,313,692
-------------------------------------------------------------------------------
CASH, end of year                                  $     8,012            3,024
===============================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
During the year the Company issued 5,469,477 common shares to settle outstanding
debts of $984,506.
                                      -32-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended  June 30, 2002 and 2001

1.  NATURE OF OPERATIONS  AND GOING CONCERN

Data Fortress Systems Group Ltd., incorporated in British Columbia, Canada, has
shares listed on the TSX Venture Exchange, OTC Bulletin Board in the United
States and on the third segment of the Frankfurt Stock Exchange. On September 3,
2002 the Company changed its name from Ianett International Systems Ltd. to Data
Fortress Systems Group Ltd.

The Company was formerly engaged in the business of providing integrated
marketing, web services, business development services and data warehousing
services to both internet and traditional businesses.

By a share exchange agreement dated March 1, 2002 the Company agreed to acquire
100% of Data Fortress Technologies Group (2002) Inc. ("Data Fortress 2002"). The
Company will issue 30,000,000 common shares, which are subject to a Surplus
Security Escrow Agreement, as consideration for Data Fortress 2002 shares. The
Surplus Security Escrow Agreement allows the release of the shares on a time
released basis over the next six years. Data Fortress 2002 owns all the issued
and outstanding shares of Data Fortress Technologies Ltd., Connect West Networks
Ltd. and Pacific Ram Distribution Corp. These companies provide collocation and
managed server hosting services, wholesale computer equipment sales, networking
services and the operation of a redundant 3.2 kilometer fiber optic ring in
downtown Vancouver. The transaction was approved by the shareholders on April
19, 2002, shares were issued and regulatory approval was obtained on August 30,
2002. The transaction will have an effective date of August 30, 2002. As the
shares issued will result in the recipients obtaining voting control of the
Company, the acquisition will be accounted for as a reverse take-over in
accordance with Canadian Generally Accepted Accounting Principles.

In connection with the exchange agreement there was a finders fee of 1,500,000
common shares. The shares are subject to a Voluntary Pooling Agreement which
stipulates that 33.3% of the shares will be released upon completion of the
transaction, 33.3% after eight months and the remaining 33.4% after twelve
months.

At June 30, 2002 the Company had a working capital deficiency of $65,064 (2001:
$1,348,814) and incurred an operating loss of $(50,613) (2001:$9,174,951) for
the years then ended. The Company's ability to discharge liabilities in the
normal course of its business is dependent upon future profitable operations
and/or obtaining additional debt or equity financing.

These financial statements do not give effect to any adjustments which would be
necessary should the Company be unable to continue as a going concern and
therefore be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts different from those
reflected in the accompanying financial statements.


2.  SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation and basis of accounting - The consolidated financial
statements include the accounts of the Company and its wholly owned subsidiaries
as follows:
                       D.N.S. Media.com Inc.
                       Stock Secrets Enterprises Ltd.
                       IaNett.com Internet Technologies Ltd.

                                      -33-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Years ended  June 30, 2002 and 2001

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

On September 7, 2001 the Company issued 368,000 shares to acquire the remaining
45.5% of IaNett.com Internet Technologies Ltd. The transaction was accounted for
using the purchase method of accounting and management has determined the cost
by using the fair value of the Ianett.com assets and liabilities as of September
7, 2001, which is considered to be nominal.

The Company's consolidated financial statements are prepared in accordance with
generally accepted accounting principles in Canada.

Revenue recognition - Revenue predominantly results from service-related
activities. Services can be on a time and materials basis or a fixed fee basis.
For fixed fee contracts, revenue is recognized on a percentage of completion
basis. For contracts that are on a time and materials basis, revenue is
recognized as the services are performed. Provisions for estimated losses on
contracts, if any, are recorded when identifiable.

Cash and cash equivalents - The Company considers deposits in bank and
short-term investments with original maturities of three months or less to be
cash equivalents.

Capital assets - Capital assets are recorded at cost less accumulated
amortization. Amortization is provided over the estimated useful lives of the
assets using the following basis and annual rates:

Asset                     Basis                      Rate
--------------------------------------------------------------------------------
Computer software         Straight-line              33% - 100%
Computer hardware         Straight-line              33%
Office equipment,
  furniture and fixtures  Declining balance          20% - 30%
Automotive                Declining balance          30%
Leasehold improvements    Straight-line              Over the term of the lease
                                                     and one renewal period.
One half of the above rates are used in the year of acquisition.

Investments - The Company makes investments in technology businesses. Such
investments, where the Company does not exert significant influence, have been
accounted for under the cost method whereby the investments are carried at cost.
When, in the opinion of management, the cost of an investment is permanently
impaired, the investment is written down to recognize the loss. Where the
Company does exert significant influence, investments are accounted for under
the equity method. Where the Company's initial investment is more than 20% but
where plans are in place for the investee to issue additional securities that
will dilute the ownership investment below 20%, such investments are accounted
for using the cost method.

Foreign currency translation and transactions - The Company's consolidated
financial statements are expressed in Canadian dollars. Monetary assets and
liabilities denominated in foreign currencies are translated into Canadian
dollars at the prevailing rates of exchange at the balance sheet date.
Non-monetary assets and liabilities are translated at historic exchange rates.
Revenues and expenses are translated into Canadian dollars at the rates of
exchange in effect at the related transaction dates. Exchange gains and losses
arising from translation of foreign currency items are included in the
determination of net income.
                                      -34-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Years ended  June 30, 2002 and 2001

2.  SIGNIFICANT ACCOUNTING POLICIES  (continued)

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

Stock-based compensation - The Company has a stock-based compensation plan,
which is described in note 7. No compensation expense is recognized for this
plan when stock or stock options are issued to employees. Any consideration paid
by employees in exercise of stock options or purchase of stock is credited to
share capital.

Earnings per share - Effective July 1, 2001, the Company retroactively adopted
the new accounting recommendations made by the Canadian Institute of Chartered
Accounts for presentation and disclosure of basic and diluted earnings per
share. The Company has adopted the "treasury stock method" in computing earnings
per share. The retroactive impact of adopting the new recommendations had no
significant impact on the Company's basic and diluted earnings per share.

Basic earnings per common share are calculated on the net earnings using the
weighted average number of shares outstanding during the fiscal period.

For the year ended June 30, 2002, the existence of stock options and warrants
affects the calculation of loss per share on a fully diluted basis. As the
effect of this dilution is to reduce the reported loss per share, fully diluted
loss per share information has not been shown.

Income taxes - Future income taxes relate to the expected future tax
consequences of differences between the carrying amount of balance sheet items
and their corresponding tax values. Future income tax assets, if any, are
recognized only to the extent that, in the opinion of management, it is more
likely than not that future income tax assets will be realized. Future income
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates at the date of enactment or substantive enactment.

                                      -35-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
Years ended  June 30, 2002 and 2001

3.  CAPITAL ASSETS
-------------------------------------------------------------------------------
                                         Accumulated         Net Book Value
                            Cost         Depreciation     2002             2001
-------------------------------------------------------------------------------
Computer hardware         $ 62,433           26,427     36,006                -
Office equipment,
  furniture and fixtures    14,154            5,748      8,406           10,611
Computer software               -                 -         -            13,800
-------------------------------------------------------------------------------
                          $ 76,587           32,175     44,412           24,411
4.  INVESTMENTS
                                             2002             2001
--------------------------------------------------------------------
Other                                $        5,000            5,000
Alphastream Wireless Inc.                        -           100,000
--------------------------------------------------------------------
                                     $        5,000          105,000
====================================================================

Alphastream Wireless Inc. - On May 8, 2000 the Company acquired a 40% (66
shares) interest in Ariel Wireless Technologies, Inc. ("Ariel") for a cash
payment of $100,000. Ariel is in the wireless communications hardware and
software business. On August 21, 2000 Ariel changed its name to Alphastream
Wireless Inc.

During the year management wrote-off its investment in Ariel to reflect the
negative equity market conditions which have prevailed for technology companies.

5.  LOAN

The Company entered into a loan agreement with 614531 B.C. Ltd. to borrow
$500,000 on October 31, 2000, as amended on December 8, 2000. The loan is
secured by a General Security Agreement which provides for a first charge on the
assets of the Company. The loan bears interest at 4% plus the Bank of Montreal
prime rate and was due February 1, 2001. A condition of the loan was that any
proceeds from sale of Company's assets were to be applied to the outstanding
loan amount. On February 1, 2001 a penalty of $50,000 was applied. The penalty
was paid by the transfer to the lender of equipment having a fair market value
of $50,000.

During the year the outstanding loan balance was settled by issuance of
2,733,270 common shares.


6.  DUE TO SHAREHOLDER

Amounts due to shareholder are non-interest bearing with no formal terms of
repayment.
                                      -36-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
Years ended  June 30, 2002 and 2001

7.  SHARE CAPITAL

The Company has authorized share capital of 100,000,000 common shares without
par value and 20,000,000 preferred shares with a par value of $0.001 per share.
The issued share capital consists of common shares as follows:
<TABLE>
<CAPTION>
                                                              2002                               2001
                                                    Number          Amount             Number             Amount
------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>                   <C>           <C>
Balance, beginning of year                           5,445,851   $   32,590,326        50,642,178    $  32,079,648
Shares issued for cash:
    Stock options                                       90,000            9,000           384,767          100,472
    Warrants                                         1,100,000          110,000           250,000          100,000
    Private placement                                4,838,000          483,800                -                 -
Shares issued for other consideration:
    For debt                                         5,469,477          548,338         2,974,061          297,406
    Shares issued for subsidiary                       368,000                -           320,000           12,800
------------------------------------------------------------------------------------------------------------------
                                                    17,311,328       33,741,464        54,571,006       32,590,326

Consolidation 10:1                                          -                 -         5,445,851                -
------------------------------------------------------------------------------------------------------------------
Balance, end of year                                17,311,328   $   33,741,464         5,445,851    $  32,590,326
==================================================================================================================
</TABLE>
Escrow Shares - There are 300,000 (2001: 300,000) shares held in escrow subject
to release only with regulatory approval.

Share subscriptions - During the year the Company received $2,000 towards future
financing.

Warrants - The Company has stock purchase warrants outstanding as follows:
<TABLE>
<CAPTION>
               Outstanding                                          Outstanding
Exercise        June 30,                            Expired            June,
  Price           2001             Issued          Exercised           2002                   Expiry date
---------------------------------------------------------------------------------------------------------
<S>               <C>             <C>            <C>                 <C>               <C>
  *$0.10                -         2,400,000      (1,100,000)         1,300,000         September 18, 2002
   $0.12                -         2,438,000                -         2,438,000           October 18, 2003
   $9.10          178,100                -         (178,100)                -                June 2, 2002
---------------------------------------------------------------------------------------------------------
                  178,100         4,838,000      (1,278,100)         3,738,000
=========================================================================================================
</TABLE>
* The 1,300,000 warrants expired on September 18, 2002.

                                      -37-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
Years ended  June 30, 2002 and 2001

7.  SHARE CAPITAL (continued)

Stock Option Plans - The Company has established stock option plans for
employees, directors and consultants, reserving a total of 1,200,000 shares.
Under the plans, the exercise price of each option equals the market price of
the Company's stock on the last business day prior to the date of the grant. An
option's maximum term is five years from the date of the grant. Options granted
vest at various dates ranging from the date of grant to the end of the
eighteenth month from the date of grant.

A summary of the change in the Company's stock options plan for the year ended
June 30, 2002 and 2001 is presented below.
                                         2002                     2001
                                 -------------------   ------------------------
                                            Weighted                  Weighted
                                            Average                   Average
                                            Exercise                  Exercise
                                Options     Price        Options      Price
-------------------------------------------------------------------------------
Outstanding, beginning of year   210,750  $   0.10      3,709,269     $ 0.47
  Granted                      1,539,250      0.14      5,000,000       0.10
  Exercised                     (90,000)      0.10      (384,767)       0.26
  Cancelled or expired         (435,000)      0.10    (8,113,752)       0.10
-------------------------------------------------------------------------------
Outstanding, end of year       1,225,000   $  0.15        210,750    $  0.10
===============================================================================

The following table summarizes the information about stock options outstanding
and exercisable at June 30, 2002:

Price               Number                Expiry date
-----------------------------------------------------
$0.10                1,000               July 12,2004
$0.10                1,250           November 8, 2004
$0.10                6,500          December 21, 2004
$0.10               22,000         September 14, 2005
$0.10               90,000          November 15, 2005
$0.10              354,250            October 5, 2006
$0.20              500,000            January 4, 2007
$0.14              250,000             March 21, 2007
-----------------------------------------------------
                 1,225,000
=====================================================
                                      -38-
<PAGE>
Data Fortress Systems Group Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
Years ended  June 30, 2002 and 2001
8.  RELATED PARTY TRANSACTIONS

The Company entered into the following related party transactions with
individuals or companies that were controlled by directors or by officers of the
Company.

a)       Management fees of $93,500 (2001 - $133,000) were paid to directors of
         the Company;

b)       Amounts due to shareholder of $12,000 (2001 - $174,041) as described in
         Note 6.

c)       Loans receivable include $35,000 due from Data Fortress Technologies
         Ltd. The amount was repaid on July 17, 2002.

9.  INCOME TAXES

The company has non-capital losses for income tax purposes which may, subject to
certain restrictions, be available to offset future taxable income or taxes
payable. No benefit in respect of the future application of these losses has
been recognized in the financial statements.


10.  FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash, accounts receivable, loans
receivable, investments, accounts payable and accrued expenses and amounts due
to shareholder.

It is management's opinion that the Company is not exposed to significant
interest, currency or credits risks on its financial instruments.

The fair values of cash, accounts receivable, investments, accounts payable and
accrued expenses, amounts due to shareholder approximate their carrying amounts
due to their relative short terms of maturity.


11.  SUBSEQUENT EVENTS

Options - On August 14, 2002 the Company granted 100,000 stock options at a
price of $0.10 per share. The options expire on August 14, 2007.

Shares for debt - On August 30, 2002 regulatory authorities accepted for filing
the Company's proposal to issue 9,160,200 shares to settle outstanding debt of
$916,076 of Data Fortress Technologies Group (2002) Inc. as referred to in Note
1. Certain shares are subject to a Voluntary Pooling Agreement whereby the
shares will be released over a 36-month period.

                                      -39-
<PAGE>
The following table sets forth selected financial data regarding the Company's
consolidated operating results and financial position. The data has been derived
from the Company's consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in Canada ("Canadian
GAAP") and reconciled with accounting principles generally accepted in the
United States ("US GAAP"). See "Management's Discussion and Analysis of
Financial Condition and Results of Operation." The following selected financial
data is qualified in its entirety by, and should be read in conjunction with,
the consolidated financial statements and notes thereto included elsewhere in
this Annual report. The selected financial data is expressed in Canadian dollars
(in accordance with Canadian GAAP and US GAAP). Prior to July 1, 1994, the
Company's fiscal year ended June 30. From July 1, 1994 through December 31,
1998, the Company's fiscal year ended December 31. In 1999 the Company's fiscal
year end changed to June 30. Accordingly, six months of financial data are
presented June 30, 1999.
<TABLE>
<CAPTION>
In Canadian $             Fiscal year     Fiscal year      Fiscal year   Six months          Fiscal year Ended December 31
                         Ended June 30   Ended June 30    Ended June 30  ended June 30 ------------------------------------------
                              2002           2001             2000          1999          1998            1997           1996
---------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>               <C>            <C>            <C>             <C>            <C>
Revenue                      25,426    $ 1,092,207       $ 6,007,375    $        --    $       --      $   267,381    $   643,503

Net Gain (Loss)
  Canadian GAAP             (50,613)(3) (9,174,951)       (1,810,783)      (110,920)      437,726(1)    (2,027,798)    (9,585,501)
  US GAAP                    50,613     (8,266,580)       (2,719,154)      (110,920)      437,726       (2,027,798)    (9,983,275)
Net Gain (Loss) per
Share
  Canadian GAAP                0.00          (1.75)(2)         (0.05)         (0.00)          .02            (0.13)         (0.63)
  US GAAP                      0.00          (1.58)            (0.08)         (0.00)          .02            (0.13)         (0.65)

---------------------------------------------------------------------------------------------------------------------------------

In Canadian $                                     At June 30                                       At December 31
                        --------------------------------------------------------       ------------------------------------------
                              2002           2001             2000          1999          1998            1997           1996
---------------------------------------------------------------------------------------------------------------------------------
Working Capital
(Deficiency)            $   (65,064)   $(1,348,814)      $ 2,561,529    $ 1,734,536    $    4,111      $(4,563,665)   $(3,540,208)
---------------------------------------------------------------------------------------------------------------------------------
Total Assets
  Canadian GAAP             106,122        188,538         9,160,200      2,270,898        17,626           92,904      2,777,309
  US GAAP                   106,122        188,538         8,251,829      2,270,898        17,626           92,904      2,777,309
Total Liabilities                                          1,715,330        318,776        13,515        4,656,569      5,554,807
Shareholders' Equity
(Deficiency)
  Canadian GAAP             (15,652)    (1,219,403)        7,444,870      1,952,122         4,111       (4,563,665)    (2,777,498)
  US GAAP                   (15,652)    (1,219,403)        6,536,499      1,952,122         4,111       (4,563,665)    (3,175,272)
Long-term Obligations            --             --            50,156         60,835            --               --             --
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                      -40-
<PAGE>
(1)      The Company had a gain on the settlement of debt of $C705,364 and a
         gain on the sale of subsidiaries in the amount of $C186,374.

(2)      Income(loss) per share reflects the one-new share for ten-old share
         consolidation. Prior periods have not been restated to reflect this
         consolidation.

(3)      The Company had a $717,824 gain on settlement of debt and net
         investment write offs of ($97,700) which resulted in a final net
         earnings position of $50,613.

Reference is made to page 3 of this Report for a summary of the exchange rates
between the U.S. and Canadian dollar for the past five years.

To date, the Company has not made any dividend payments.

B.       Significant Changes

On November 21, 2001 the Company entered into an "Agreement in Principle" to
acquire 100 per cent of the issued and outstanding shares of Data Fortress
Technologies Ltd., Pacific Ram Distribution Ltd., and Connect West Networks
Ltd., collectively ("The Data Fortress Group").

The Data Fortress Group is a related mix of companies, all incorporated under
the laws of British Columbia. The companies in this group have been in business
for over 10 years. Data Fortress Group is made up of three companies, Data
Fortress Technologies Ltd., Pacific Ram Distribution Ltd., and Connect West
Networks Ltd. The companies collectively provide data storage services through
manufacturing and equipment sales ranging from PC's to high-end servers and data
center equipment, high-speed networking, data warehousing, data security,
metropolitan area networks, Internet connectivity, co-location and managed
services. Emphasis has been placed on disaster recovery systems for both
corporate and government clients.

By a share exchange agreement dated March 31, 2002 the Company agreed to acquire
100% of Data Fortress Technologies Group (2002) Inc. ("Data Fortress 2002"). The
Company will issue 30,000,000 common shares, which are subject to a Surplus
Security Escrow Agreement, as consideration for Data Fortress 2002 shares. The
Surplus Security Escrow Agreement, allows the release of shares on a
time-released basis over the next six years. Data Fortress 2002 owns all the
issued and outstanding shares of Data Fortress Technologies Ltd., Connect West
Networks Ltd. and Pacific Ram Distribution Corp. These companies provide
collocation and managed server hosting services, wholesale computer equipment
sales, networking services and the operation of a redundant 3.2-kilometer fiber
optic ring in downtown Vancouver. The transaction was approved by the
shareholders on April 19, 2002, shares were issued and regulatory approval was
obtained on August 30, 2002. The transaction had an effective date of August 30,
2002. The shares resulted in the recipients obtaining voting control of the
Company, and the acquisition accounted for as a reverse take-over in accordance
with Canadian Generally Accepted Accounting Principles.

In connection with the exchange agreement there was a finders fee of 1,500,000
common shares. The shares are subject to a Voluntary Pooling Agreement, which
stipulates that 33.3% of the shares will be released upon completion of the
transactions, 33.3% after eight months and the remaining 33.4% after twelve
months.
                                      -41-
<PAGE>
Under the terms of the Agreement in Principle, a deemed value of CDN$3,000,000
has been established by the parties for the Data Fortress Group. The Company
proposes to issue shares in the capital of the Company at a deemed price of
$0.10 per common share and will be subject to escrow agreements. The completion
of the transaction is subject to a number of conditions including but not
limited to Exchange ("CDNX") acceptance, as well as, the Company receiving a
majority of the minority shareholders approval.

ITEM 9.           THE OFFER AND LISTING DETAILS

A.       Offer and Listing Details

Stock price History

The Common Shares are listed for trading in Canada on the CDNX under the symbol
"DFG" and are quoted for trading in the United States of America on the OTC
bulletin Board under the trading symbol "DFGRF". The following tables represent
the high and low market prices: (a) annually, for the five most recent full
financial years; (b) quarterly, for the two most recent full financial years and
any subsequent period; and (c) monthly, for the most recent six months on the
CDNX:

  The Canadian Venture Exchange (formerly the "Vancouver Stock Exchange")
--------------------------------------------------------------------------
    Year                      High ($C)                  Low ($C)
--------------------------------------------------------------------------
    2002                        0.33                       0.03
--------------------------------------------------------------------------
    2001                        1.20                       0.06
--------------------- -------------------------- -------------------------
    2000                        82.50                      0.70
--------------------------------------------------------------------------
    1999                        10.80                      0.50
--------------------------------------------------------------------------
    1998                        2.00                       0.30
--------------------------------------------------------------------------
                  The OTC Bulletin Board (United States of America)
--------------------------------------------------------------------------
    Year                     High ($US)                 Low ($US)
--------------------------------------------------------------------------
    2002                        0.19                       0.02
--------------------------------------------------------------------------
    2001                        0.90                       0.04
--------------------------------------------------------------------------
    2000                       58.125                      0.35
--------------------------------------------------------------------------
    1999                        7.70                       0.34
--------------------------------------------------------------------------
    1998                        0.575                      0.50
--------------------------------------------------------------------------
                                      -42-
<PAGE>
     The Canadian Venture Exchange (formerly the "Vancouver Stock Exchange")
--------------------------------------------------------------------------
              Quarter                    High ($C)                  Low ($C)
--------------------------------------------------------------------------
    March 2002                             $0.33                     $0.13
--------------------------------------------------------------------------
    December 2001                          $0.25                     $0.06
--------------------------------------------------------------------------
    September 2001                         $0.18                     $0.06
--------------------------------------------------------------------------
    June 2001                              $0.50                     $0.18
--------------------------------------------------------------------------
    March 2001                             $1.20                     $0.30
--------------------------------------------------------------------------
    December 2000                          $7.50                      $.70
--------------------------------------------------------------------------
    September 2000                        $12.50                     $5.10
--------------------------------------------------------------------------
    June 2000                             $44.80                     $7.20
--------------------------------------------------------------------------
    March 2000                            $82.50                     $7.50
--------------------------------------------------------------------------
           The OTC Bulletin Board (United States of America)
--------------------------------------------------------------------------
              Quarter                   High ($US)                 Low ($US)
--------------------------------------------------------------------------
    March 2002                             $0.19                     $0.08
--------------------------------------------------------------------------
    December 2001                         $0.125                     $0.05
--------------------------------------------------------------------------
--------------------------------------------------------------------------
    June 2001                              $0.40                     $0.14
--------------------------------------------------------------------------
    March 2001                             $0.90                     $0.20
--------------------------------------------------------------------------
    December 2000                          $3.90                     $0.35
--------------------------------------------------------------------------
    September 2000                         $7.70                     $3.20
--------------------------------------------------------------------------
    June 2000                             $31.20                     $4.50
--------------------------------------------------------------------------
    March 2000                            $58.12                     $5.31
--------------------------------------------------------------------------
    The Canadian Venture Exchange (formerly the "Vancouver Stock Exchange")
--------------------------------------------------------------------------
               Month                     High ($C)                  Low ($C)
--------------------------------------------------------------------------
    September 2002                         $0.13                     $0.06
--------------------------------------------------------------------------
    August 2002                            $0.10                     $0.05
--------------------------------------------------------------------------
    July 2002                              $0.10                     $0.06
--------------------------------------------------------------------------
    June 2002                              $0.11                     $0.08
--------------------------------------------------------------------------
    May 2002                               $0.13                     $0.10
--------------------------------------------------------------------------
    April 2002                             $0.16                     $0.10
--------------------------------------------------------------------------
    March 2002                             $0.33                     $0.13
--------------------------------------------------------------------------
    The OTC Bulletin Board (United States of America)
--------------------------------------------------------------------------
               Month                    High ($US)                 Low ($US)
----------------------------------------------------------------------------
    September 2002                         $0.05                     $0.035
----------------------------------------------------------------------------
    August 2002                           $0.055                     $0.04
----------------------------------------------------------------------------
    July 2002                             $0.055                     $0.042
----------------------------------------------------------------------------
    June 2002                             $0.065                     $0.055
----------------------------------------------------------------------------
    May 2002                               $0.09                     $0.06
----------------------------------------------------------------------------
    April 2002                             $0.11                     $0.06
----------------------------------------------------------------------------
    March 2002                             $0.13                     $0.08
----------------------------------------------------------------------------

Escrow Shares

There are 30,000,000 common shares (the "Surplus Shares"), which were issued at
a deemed price of $C0.10 per share to Mr. CK Chong, Mr. Michael Chong, Mr. Andy
Chong, Mr. Rick Thomas and Mr. Jordan Krushen. These shares are subject to a
surplus share escrow agreement dated August 30, 2002 (the "Escrow Agreement"),
between the Company, the above parties, and the Company's registrar and transfer
agent, Montreal Trust Company of Canada (now called "Computershare Investor
Services Inc." and referred to as "Computershare"). Pursuant to the Escrow
Agreement, the Surplus Shares will be held in escrow by Computershare and
certain escrow restrictions are applicable to such shares. These restrictions
may be summarized as follows:

                                      -43-
<PAGE>
a.       surplus escrow shares may be voted by the holder but cannot be traded
         without prior regulatory approval;

b.       The shares are earned out of escrow on the basis of time with a release
         every six-months for six years.

The Company's Shares are issued in registered form. Based on the records of
Computershare Investor Services Inc., the Company's registrar and transfer
agent, at October 24, 2001, there were 35 holders of record of the Company's
shares with United States addresses who collectively held 66,323 common shares,
or approximately 0.49% of the 13,683,328 issued and outstanding Shares (as of
October 24, 2001). The Company's records indicate that, as at the same date,
there were no holders of record of stock options or warrants with United States
addresses. Based on the mailing requests received from the various depositories
based in the United States for the Company's Annual General Meeting held on
November 20, 2000, the Company estimates that there are approximately 9,000
beneficial holders who appear to be resident in or have U.S. mailing addresses.
As noted above, the Company is not in a position to confirm ownership by these
parties.

B.       Plan of Distribution

Not applicable

C.       Markets

The Common Shares are listed for trading in Canada on the CDNX under the symbol
"DFG" and are quoted for trading in the United States of America on the OTC
bulletin Board under the trading symbol "DFGRF". None of the Company's other
outstanding securities are listed or quoted for trading.

D.       SELLING SHAREHOLDER

Not applicable

E.       Dilution

Not applicable

F.       Expenses of the Issue

Not applicable

                                      -44-
<PAGE>
ITEM 10. ADDITIONAL INFORMATION

A.       Share Capital

The information for this Item is not required to be provided for Annual Reports
on Form 20-F filed under the Securities Exchange Act of 1934.

B.       Memorandum and Articles of Association

The Company is amalgamated under the Company Act (British Columbia) (the
"Company Act"). Its incorporation number is 292404.

The Company's articles provide that a director shall not vote in respect of any
contract or transaction in which the director is interested but such director
shall be counted in quorum present at the meeting at which such vote is taken.
This voting provision shall not apply to:

1.       any such contract or transaction relating to a loan to the Company,
         which a director or a specified corporation or a specified firm in
         which he has an interest has guaranteed or joined n guaranteeing the
         repayment of the loan or any part of the loan;

2.       any contract or transaction made or to be made with, or for the benefit
         of a holding corporation or subsidiary corporation of which a director
         is a director;

3.       any contract by a director to subscribe for or underwrite shares or
         debentures to be issued by the Company or a subsidiary of the Company,
         or any contract, arrangement or transaction in which a director is,
         directly or indirectly, interested if all the other directors are also,
         directly or indirectly, interested in the contract, arrangement or
         transaction;

4.       determine the remuneration for the directors;

5.       purchasing and maintaining insurance to cover against liability
         incurred by them as directors; or

6.       the indemnification of any director of the Company.

With respect to borrowing powers, the Company's articles provide that the
directors may, on behalf of the Company:

1.       borrow money in such manner and amount, on such security from such
         sources and upon such terms and conditions as they think fit,

2.       issue bonds, debentures or other debt obligations either outright or as
         security for any liability or obligation of the Company or any other
         person, and

3.       mortgage, charge, whether by way of specific or floating charge, or
         give other security on the undertaking, or on the whole or any part of
         the property and assets, of the Company (both present and future).

                                      -45-
<PAGE>
The borrowing powers may be amended by a resolution amending the Company's
articles passed by the shareholders, the votes not less than 75% of the Shares
entitled to vote and voting at the meeting at which the resolution is presented.

The Company's directors are not subject to a mandatory retirement provision and
are not required to hold any Shares as a condition of holding office.

The holders of Shares are entitled to vote at all meetings of shareholders of
the Company, to receive dividends if and when declared by the directors, and
subject to the rights of the holders of any shares ranking in priority to or on
parity with the Shares, to receive the remaining property and assets of the
Company in the event of liquidation, dissolution or winding up of the Company.
The Shares have no pre-emptive, redemption, purchase or conversion rights. There
are no sinking fund provisions in relation to the Shares and they are not liable
to further calls or to assessment by the Company. The Company Act (British
Columbia) provides that the rights and provisions attached to any class of
shares may not be modified, amended or varied unless consented to by special
resolution passed by a majority of not less than three-quarters of the votes
cast in person or by proxy by holders of shares of that class.

The Company has not declared or paid dividends on its outstanding Shares since
its inception and does not anticipate that it will do so in the foreseeable
future. The declaration of dividends is within the discretion of the Company's
board of directors. The Company is limited in its ability to pay dividends on
its Shares by limitations under British Columbia law relating to the sufficiency
of profits from which dividends may be paid.

Except to the extent described elsewhere in this Annual Report, there are no
limitations on the rights to own securities of the Company.

C.       Material Contracts

The Company in response to Simon Fraser University's ("SFU's") request for
proposals entitled "Student Residence (Internet) Project" (the "RFP") bid and
was awarded on June 4, 2002 the seven-year contract for build-out of a network
and to provide network services to student residences.

NETWORK AVAILABILITY:

(a)      Connect West shall use its best efforts to maintain "always on" 100%
         availability of the Services (24 hours/day, 365 days/year) at the
         following bandwidth levels:

         (i)      Downstream bandwidth (per student drop/interconnection):
                  10Mbps expandable to 100 Mbps;

         (ii)     Upstream bandwidth (per student drop/interconnection): 10 Mbps
                  Expandable o 100 Mbps; and

         (iii)    Minimum bandwidth of backbone connection via internet: 25Mbps.
                  Maximum bandwidth of backbone connection to internet: 1 Gbps
                  expandable to multiple GIG.

SERVICE AND MAINTENANCE:

(a)      Call Centre Help Desk/Technical Support for SFU and students accessing
         the Services (24 hours/day, 365 days/year)

(b)      If Connect West determines Services are unavailable (i.e. route is
         unavailable to transmit and/or receive data), Connect West will contact
         SFU within 10 minutes, via an agreed upon method.

(c)      Connect West should correct any unavailability of the Services as
         follows:

         (i)      when the failure of a particular component of the Equipment
                  results in, or a particular SFU circuit is otherwise unable to
                  transmit data ("Network Downtime"), Connect West shall begin
                  the repair of the component or circuit at issue within one
                  hour of the commencement of the Network Downtime; and

The sum of $26.99 less financing charges incurred by SFU for the purchase and
installation of the Equipment based on an annual financing rate of 6.5%, for 7
years, multiplied by 1,095 connections.

Escrow Agreement

Refer to the subsection entitled "Escrow Shares" under Item 9.A. - Offer and
Listing Details, page 25 for a summary of the escrow agreement.
                                      -46-
<PAGE>
Services Agreement

Each member of senior management has entered into a services agreement with the
Company. Refer to Item 6.B - Compensation, page 17 concerning remuneration paid
under such services agreements.

Stock Option Agreements

Directors, officers, management, dependent contractors, consultants and
employees of the Company are eligible to receive stock options. Refer to the
subsection entitled "Shares Under Option" under Item 6.E - Share Ownership, page
19 for a summary of all outstanding stock options as at October 5, 2001.

D.       Exchange Controls

Canada has no system of exchange controls. There are no exchange restrictions on
borrowing from foreign countries nor on the remittance of dividends, interest,
royalties and similar payments, management fees, loan repayments, settlement of
trade debts, or the repatriation of capital. However, any dividends remitted to
U.S. Holders, as defined below, will be subject to withholding tax. See "Item 7
- Taxation".

There are no limitations under the laws of Canada or British Columbia or in the
Memorandum and Articles of the Company on the rights of non-Canadians to hold or
vote the shares of the Company. Under the provisions of the Investment Canada
Act (the "ICA"), as amended by the Canada-United States Free Trade
Implementation Act (Canada) (the "Act"), and the Canada-United States Free Trade
Agreement, review and approval of the transaction by the Investment Canada
Agency ("Investment Canada"), the federal agency created by the ICA, are
required where a U.S. person directly acquires control of a Canadian business
with assets of more than $C184 million (1999). The term "control" is defined as
any one or more non-Canadian persons acquiring all or substantially all of the
assets used in the Canadian business, or the acquisition of the voting shares of
a Canadian corporation carrying on the Canadian business or the acquisition of
the voting interest of an entity controlling or carrying on the Canadian
business. The acquisition of the majority of the outstanding shares is deemed to
be an "acquisition of control" of a corporation unless it can be established
that the purchaser will not, in fact, control the Canadian corporation.

Subject to the comments contained in the following paragraph regarding WTO
investors (as defined below), investments requiring notification and review are
all direct acquisitions of Canadian businesses with assets of $C5,000,000 or
more; all indirect acquisitions of Canadian businesses with assets between
$C5,000,000 and $C50,000,000 which represent more than 50% of the value of the
total international transaction. (Indirect acquisition means the acquisition of
the voting rights of an entity controlling the Canadian corporation.) In
addition, specific acquisitions or new businesses in designated types of
business activities related to Canada's cultural heritage or national identity,
which would normally only be notifiable, could be reviewed if the Government of
Canada considers it in the public interest to do so.

                                      -47-
<PAGE>
The Act was amended with the implementation of the agreement establishing the
World Trade Organization ("WTO") to provide for special review thresholds for
"WTO investors", as defined in the Act. "WTO investor" generally means (i) an
individual, other than a Canadian, who is a national of a WTO member (such as,
for example, the United States), or who has the right of permanent residence in
relation to that WTO member, (ii) governments of WTO members, and (iii) entities
that are not Canadian controlled, but which are WTO investor controlled, as
determined by rules specified in the Act. The special review thresholds for WTO
investors do not apply, and the general rules described above do apply, to the
acquisition of control of certain types of businesses specified in the Act,
including a business that is a "cultural business". If the WTO Investor rules
apply, an investment in the shares of the Issuer by or from a WTO investor be
reviewable only if it is an investment to acquire control of the Issuer and the
value of the assets of the Issuer is equal to or greater than a specified amount
(the "WTO Review Threshold"). The WTO Review Threshold is adjusted annually by a
formula relating to increases in the nominal gross domestic product of Canada.
The 1999 WTO Review Threshold is $C184,000,000 (in 1999).

If any non-Canadian, whether or not a WTO investor, acquires control of the
Issuer by the acquisition of shares, but the transaction is not reviewable is
described above, the non-Canadian is required to notify the Canadian government
and to provide certain basic information relating to the investment. A
non-Canadian, whether or not a WTO investor, is also required to provide a
notice to the government on the establishment of a new Canadian business. If the
business of the Issuer is then a prescribed type of business activity relating
to Canada's cultural heritage or national identity, and if the Canadian
government considers it to be in the public interest to do so, then the Canadian
government may give a notice in writing within 21 days requiring the investment
be reviewed.

For non-Canadians (other than WTO investors), an indirect acquisition of
control, by the acquisition of voting interests of an entity that directly or
indirectly controls the Issuer, is reviewable if the value of the assets of the
Issuer is then $C50,000,000 or more. If the WTO investor rules apply, then this
requirement does not apply to a WTO investor, or to a person acquiring the
entity from a WTO investor. Special rules specified in the Act apply if the
value of the assets of the Issuer is more than 50% of the value of the entity so
acquired. By these special rules, if the non-Canadian (whether or not a WTO
investor) is acquiring control of an entity that directly or indirectly controls
the Issuer, and the value of the assets of the Issuer and all other entities
carrying on business in Canada, calculated in the manner provided in the Act and
the regulations under the Act, is more than 50% of the value, calculated in the
manner provided in the Act and the regulations under the Act, of the assets of
all entities, the control of which is acquired, directly or indirectly, in the
transaction of which the acquisition of control of the Issuer forms a part, then
the thresholds for a direct acquisition of control as discussed above will
apply. That is, a WTO Review threshold of $C184,000,000 (in 1999) for a WTO
investor or a threshold of $C5,000,000 for a non-Canadian other than a WTO
investor. If the value exceeds that level, then the transaction must be reviewed
in the same manner as a direct acquisition of control by the purchase of shares
of the Issuer.

If an investment is reviewable, an application for review in the form prescribed
by regulations is normally required to be filed with the agency established by
the Act (the "Agency") prior to the investment taking place and the investment
may not be consummated until the review has been completed. There are, however,
certain exceptions. Applications concerning indirect acquisition may be filed up
to 30 days after the investment is consummated and applications concerning
reviewable investments in culture-sensitive

                                      -48-
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sectors are required upon receipt of a notice for review. There is, moreover,
provision for the Minister (a person designated as such under the Act) to permit
an investment to be consummated prior to completion of review, if he is
satisfied that delay would cause undue hardship to the acquiror or jeopardize
the operation of the Canadian business that is being acquired. The Agency will
submit the application to the Minister, together with any other information or
written undertakings given by the acquiror and any representation submitted to
the Agency by a province that is likely to be significantly affected by the
investment.

The Minister will then determine whether the investment is likely to be of net
benefit to Canada, taking into account the information provided and having
regard for other factors where they are relevant. Some of the factors to be
considered are the effect of the investment on the level and nature of economic
activity in Canada, including the effect on employment, on resource processing,
on the utilization of parts, components and services produced in Canada, and on
exports from Canada.

Additional factors of assessment include (i) the degree and significance of
participation by Canadians in the Canadian business and in any industry in
Canada of which it forms a part; (ii) the effect of the investment on
productivity, industrial efficiency, technological development, product
innovation and product variety in Canada; (iii) the effect of the investment on
competition within any industry or industries in Canada; (iv) the compatibility
of the investment with national industrial, economic and cultural policies
taking into consideration industrial, economic and cultural objectives
enunciated by the government or legislature of any province likely to be
significantly affected by the investment; and (v) the contribution of the
investment to Canada's ability to compete in world markets.

To insure prompt review and decision, the Act sets certain time limits for the
Agency and the Minister. Within 45 days after a completed application has been
received, the Minister must notify the acquiror that (a) he is satisfied that
the investment is likely to be of net benefit to Canada, or (b) he is unable to
complete his review, in which case he shall have 30 additional days to complete
his review (unless the acquiror agrees to a longer period), or (c) he is not
satisfied that the investment is likely to be of net benefit to Canada.

Where the Minister has advised the acquiror that he is not satisfied that the
investment is likely to be of net benefit to Canada, the acquiror has the right
to make representations and submit undertakings within 30 days of the date of
the notice (or any further period that is agreed upon between the acquiror and
the Minister). On the expiration of the 30-day period (or the agreed extension),
the Minister must quickly notify the acquiror (a) that he is now satisfied that
the investment is likely to be of net benefit to Canada or (b) confirming that
he is not satisfied that the investment is likely to be of net benefit to
Canada. In the latter case, the acquiror may not proceed with the investment or,
if the investment has already been consummated, must relinquish control of the
Canadian business. The Act authorizes the Minister to give written opinions,
binding the Minister, on the application of the Act or regulations to the
persons seeking the opinions to the Agency or a designated official. The Act
also authorizes the Minister to issue guidelines and interpretations with
respect to the application and administration of any provision of the Act or the
regulations.

The Act provides for civil penalties for non-compliance with any provision
except breach of confidentiality or provision of false information, for which
there are criminal penalties.
                                      -49-
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E.       Taxation

United States Federal Income Tax Consequences

The following is a general discussion of the material United States federal
income tax consequences, under current law, generally applicable to a U.S.
Holder (as hereinafter defined) of common shares of the Company. This discussion
does not address consequences peculiar to persons subject to special provisions
of federal income tax law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local or foreign tax consequences. (see "Certain Canadian Federal Income
Tax Consequences").

The following discussion is based upon the sections of the Internal Revenue Code
of 1986, as amended (the "Code"), Treasury Regulations, published Internal
Revenue Service ("IRS") rulings, published administrative positions of the IRS
and court decisions that are currently applicable, any or all of which could be
materially and adversely changed, possibly on a retroactive basis, at any time.
This discussion does not consider the potential effects, both adverse and
beneficial, of any recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time. This discussion is for
general information only and it is not intended to be, nor should it be
construed to be, legal or tax advice to any holder or prospective holder of
common shares of the Company and no opinion or representation with respect to
the United States federal income tax consequences to any such holder or
prospective holder is made. Accordingly, holders and prospective holders of
common shares of the Company should consult their own tax advisors about the
federal, state, local, and foreign tax consequences of purchasing, owning and
disposing of common shares of the Company.

U.S. Holders

As used herein, a "U.S. Holder" means a holder of common shares of the Company
who is a citizen or individual resident of the United States, a corporation or
partnership created or organized in or under the laws of the State thereof or
the District of Columbia, or an estate whose income is taxable in the United
States irrespective of source, or a trust if a United States court can exercise
primary supervision over the trust's administration and one or more United
States persons are authorized to control all substantial decisions of the trust.
This summary does not address the tax consequences to, and U.S. Holder does not
include, persons subject to specific provisions of federal income tax law, such
as tax-exempt organizations, qualified retirement plans, individual retirement
accounts and other tax-deferred accounts, financial institutions, insurance
companies, real estate investment trusts, regulated investment companies,
broker-dealers, nonresident alien individuals, persons or entities that have a
"functional currency" other than the U.S. dollar, shareholders who hold common
shares as part of a straddle, hedging or a conversion transaction, and
shareholders who acquired their common shares through the exercise of employee
stock options or otherwise as compensation for services. This summary is limited
to U.S. Holders who own common shares as capital assets. This summary does not
address the consequences to a person or entity holding an interest in a
shareholder or the consequences to a person of the ownership, exercise or
disposition of any options, warrants or other rights to acquire common shares.

Distribution on Common Shares of the Company

U.S. Holders receiving dividend distributions (including constructive dividends)
with respect to common shares of the Company are required to include in gross
income for United States federal income tax purposes the gross amount of such
distributions equal to the U.S. dollar value of such dividends on the date of

                                      -50-
<PAGE>
receipt (based on the exchange rate on such date) to the extent that the Company
has current or accumulated earnings and profits, as determined under U.S.
federal income tax principles, without reduction for any Canadian income tax
withheld from such distributions. Such Canadian tax withheld may be credited,
subject to certain limitations, against the U.S. Holder's federal income tax
liability or, alternatively, may be deducted in computing the U.S. Holder's
federal taxable income by those who itemize deductions. (See more detailed
discussion at "Foreign Tax Credit" below). To the extent that distributions
exceed current or accumulated earnings and profits of the Company, they will be
treated first as a return of capital up to the U.S. Holder's adjusted basis in
the common shares and thereafter as gain from the sale or exchange of the common
shares. Preferential tax rates for long-term capital gains are applicable to a
U.S. Holder which is an individual, estate or trust. There are currently no
preferential tax rates for long-term capital gains for a U.S. Holder which is a
corporation. The deductibility of capital losses is subject to limitations.

In the case of foreign currency received as a dividend that is not converted by
the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have
a tax basis in the foreign currency equal to its U.S. dollar value on the date
of receipt. Generally any gain or loss recognized upon a subsequent sale or
other disposition of the foreign currency, including the exchange for U.S.
dollars, will be ordinary income or loss. However, an individual whose realized
gain does not exceed $200 will not recognize that gain, to the extent that there
are no expenses associated with the transaction that meet the requirements for
deductibility as a trade or business expense (other than travel expenses in
connection with a business trip) or as an expense for the production of income.

Dividends paid on the common shares of the Company will not generally be
eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A U.S. Holder which is a
corporation may, under certain circumstances, be entitled to a 70% deduction of
the United States source portion of dividends received from the Company (unless
the Company qualifies as a "foreign personal holding company" or a "passive
foreign investment company," as defined below) if such U.S. Holder owns shares
representing at least 10% of the voting power and value of the Company. The
availability of this deduction is subject to several complex limitations which
are beyond the scope of this discussion.

Under current Treasury Regulations, dividends paid on the Company's common
shares, if any, generally will not be subject to information reporting and
generally will not be subject to U.S. backup withholding tax. However, dividends
paid, and the proceeds of a sale of Company's common shares, in the U.S. through
a U.S. or U.S. related paying agent (including a broker) will be subject to U.S.
information reporting requirements and may also be subject to the 31% U.S.
backup withholding tax, unless the paying agent is furnished with a duly
completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a refund or a credit against the U.S.
Holder's U.S. federal income tax liability, provided the required information is
furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of common shares of the Company may be entitled,
at the option of the U.S. Holder, to either receive a deduction or a tax credit
for such foreign tax paid or withheld. Generally, it will be more advantageous
to claim a credit because a credit reduces United States federal income taxes on
a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's
income subject to tax. This election is made on a year-by-year basis and applies
to all foreign taxes paid by (or withheld from) the U.S. Holder

                                      -51-
<PAGE>
during that year. There are significant and complex limitations which apply to
the credit, among which is the general limitation that the credit cannot exceed
the proportionate share of the U.S. Holder's United States income tax liability
that the U.S. Holder's foreign sources income bears to his or its worldwide
taxable income. In the determination of the application of this limitation, the
various items of income and deduction must be classified into foreign and
domestic sources. Complex rules govern this classification process. In addition,
this limitation is calculated separately with respect to specific classes of
income such as "passive income," "high withholding tax interest," "financial
services income," "shipping income," and certain other classifications of
income. Dividends distributed by the Company will generally constitute "passive
income" or, in the case of certain U.S. Holders, "financial services income" for
these purposes. The availability of the foreign tax credit and the application
of the limitations on the credit are fact specific, and U.S. Holders of common
shares of the Company should consult their own tax advisors regarding their
individual circumstances.

Disposition of Common Shares of the Company

A U.S. Holder will recognize gain or loss upon the sale of common shares of the
Company equal to the difference, if any, between (i) the amount of cash plus the
fair market value of any property received, and (ii) the shareholder's tax basis
in the common shares of the Company. Preferential tax rates apply to long-term
capital gains of U.S. Holders who are individuals, estates or trusts. This gain
or loss will be capital gain or loss if the common shares are a capital asset in
the hands of the U.S. Holder, which will be long-term capital gain or loss if
the common shares of the Company are held for more than one year. Deductions for
net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted. For U.S. Holders that are corporations
(other than corporations subject to Subchapter S of the Code), any unused net
capital loss may be carried back three years and carried forward five years from
the loss year to be offset against capital gains until such net capital loss is
thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this discussion may not
describe the United States federal income tax consequences resulting from the
holding and disposition of common shares:

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total combined voting
power or the total value of the Company's outstanding shares is owned, directly
or indirectly, by five or fewer individuals who are citizens or residents of the
United States and 60% or more of the Company's gross income for such year was
derived from certain passive sources (e.g., from dividends received from its
subsidiaries), the Company may be treated as a "foreign personal holding
company." In that event, U.S. Holders that hold common shares would be required
to include in gross income for such year their allocable portions of such
passive income to the extent the Company does not actually distribute such
income.

Foreign Investment Company

If 50% or more of the combined voting power or total value of the Company's
outstanding shares are held, directly or indirectly, by citizens or residents of
the United States, United States domestic partnerships or corporations, or
estates or trusts other than foreign estates or trusts (as defined by the Code
Section 7701(a)(31)), and the Company is found to be engaged primarily in the
business of investing, reinvesting, or
                                      -52-
<PAGE>
trading in securities, commodities, or any interest therein, it is possible that
the Company may be treated as a "foreign investment company" as defined in
Section 1246 of the Code, causing all or part of any gain realized by a U.S.
Holder selling or exchanging common shares to be treated as ordinary income
rather than capital gain.

Passive Foreign Investment Company

United States income federal tax law provides rules governing "passive foreign
investment companies" ("PFICs") which can have significant tax effects on U.S.
Holders of certain foreign corporations. These rules do not apply to non-U.S.
Holders. Section 1297 of the Code defines a PFIC as a corporation that is not
formed in the United States and, for any taxable year, either (i) 75% or more of
its gross income is "passive income", which includes interest, dividends and
certain rents and royalties or (ii) the average percentage, by fair market value
(or, if the Company is a controlled foreign corporation or makes an election,
adjusted tax basis) of its assets that produce or are held for the production of
"passive income" is 50% or more. The Company believes that it may have qualified
as a PFIC for the fiscal year ended December 31, 1998 and may qualify as a PFIC
in subsequent years. There can be no assurance that the Company's determination
concerning its PFIC status will not be challenged or that it will be able to
satisfy record keeping requirements which will be imposed on a Qualifying
Electing Fund ("QEF"). Each U.S. Holder of the Company is urged to consult a tax
advisor with respect to how the PFIC rules affect their tax situation.

A U.S. Holder who holds stock in a foreign corporation during any year in which
such corporation qualifies as a PFIC is subject to United States federal income
taxation under one of two alternative tax regimes at the election of each such
U.S. Holder. The following is a discussion of such two alternative tax regimes
applied to such U.S. Holders of the Company. In addition, special rules apply if
a foreign corporation qualifies as both a PFIC and a "controlled foreign
corporation" (as defined below) and a U.S. Holder owns, directly or indirectly,
ten percent (10%) or more of the total combined voting power of classes of
shares of such foreign corporation (see more detailed discussion at "Controlled
Foreign Corporation" below).

A U.S. Holder who elects in a timely manner to treat the Company as a QEF (an
"Electing U.S. Holder") will be subject, under Section 1293 of the Code, to
current federal income tax for any taxable year in which the Company qualifies
as a PFIC on his pro rata share of the Company's (i) "net capital gain" (the
excess of net long-term capital gain over net short-term capital loss), which
will be taxed as long-term capital gain to the Electing U.S. Holder and (ii)
"ordinary earnings" (the excess of earnings and profits over net capital gain),
which will be taxed as ordinary income to the Electing U.S. Holder, in each
case, for the shareholder's taxable year in which (or with which) the Company's
taxable year ends, regardless of whether such amounts are actually distributed.

The effective QEF election also allows the Electing U.S. Holder to (i) generally
treat any gain realized on the disposition of his Company common shares (or
deemed to be realized on the pledge of his shares) as capital gain; (ii) treat
his share of the Company's net capital gain, if any, as long-term capital gain
instead of ordinary income; and (iii) either avoid interest charges resulting
from PFIC status altogether, or make an annual election, subject to certain
limitations, to defer payment of current taxes on his share of the Company's
annual realized net capital gain and ordinary earnings subject, however, to an
interest charge. If the Electing U.S. Holder is not a corporation, such an
interest charge would be treated as "personal interest" that is not deductible.

                                      -53-
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The procedure a U.S. Holder must comply with in making an effective QEF election
will depend on whether the year of the election is the first year in the U.S.
Holder's holding period in which the Company is a PFIC. If the U.S. Holder makes
a QEF election in such first year, i.e., a timely QEF election, then the U.S.
Holder may make the QEF election by simply filing the appropriate documents at
the time the U.S. Holder files his tax return for such first year. If, however,
the Company qualified as a PFIC in a prior year, then in addition to filing
documents, the U.S. Holder must elect to recognize (i) under the rules of
Section 1291 of the Code (discussed below), any gain that he would otherwise
recognize if the U.S. Holder sold his stock on the qualification date or (ii) if
the Company is a controlled foreign corporation, the U.S. Holder's pro rata
share of the Company's post-1986 earnings and profits as of the qualification
date. The qualification date is the first day of the Company's first tax year in
which the Company qualified as a "qualified electing fund" with respect to such
U.S. Holder. The elections to recognize such gain or earnings and profits can
only be made if such U.S. Holder's holding period for the common shares of the
Company includes the qualification date. By electing to recognize such gain or
earnings and profits, the U.S. Holder will be deemed to have made a timely QEF
election. U.S. Holders are urged to consult a tax advisor regarding the
availability of and procedure for electing to recognize gain or earnings and
profits under the foregoing rules. In addition, special rules apply if a foreign
corporation qualifies as both a PFIC and a "controlled foreign corporation" (as
defined below) and a U.S. Holder owns, directly or indirectly, ten percent (10%)
or more of the total combined voting power of classes of shares of such foreign
corporation (See more detailed discussion at "Controlled Foreign Corporation"
below).

If the Company no longer qualifies as a PFIC in a subsequent year, a timely QEF
election will remain in effect, although not applicable, during those years that
the Company is not a PFIC. Therefore, if the Company requalifies as a PFIC, the
QEF election previously made is still valid, and the U.S. Holder is required to
satisfy the requirements of that election. Furthermore, a QEF election remains
in effect with respect to a U.S. Holder, although dormant, after a U.S. Holder
disposes of its entire interest in the Company. Upon the U.S. Holder's
reacquisition of an interest in the Company, the QEF election will apply to the
newly acquired stock of the Company.

Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S.
Holders who hold (actually or constructively) marketable stock of a foreign
corporation that qualifies as a PFIC, may annually elect to mark such stock to
the market (a "mark-to-market election"). If such an election is made, such U.S.
Holder will not be subject to the special taxation rules of Section 1291
described below for the taxable year for which the mark-to-market election is
made. A U.S. Holder who makes such an election will include in income for the
taxable year for which the election was made in an amount equal to the excess,
if any, of the fair market value of the common shares of the Company as of the
close of such tax year over such U.S. Holder's adjusted basis in such common
shares. In addition, the U.S. Holder is allowed a deduction for the lesser of
(i) the excess, if any, of such U.S. Holder's adjusted tax basis in the common
shares over the fair market value of such shares as of the close of the tax
year, or (ii) the excess, if any, of (A) the mark-to-market gains for the common
shares in the Company included by such U.S. Holder for prior tax years,
including any amount which would have been included for any prior tax year but
for Section 1291 interest on tax deferral rules discussed below with respect to
Non-Electing U.S. Holders, over (B) the mark-to-market losses for shares that
were allowed as deductions for prior tax years. U.S. Holder's adjusted tax basis
in the common shares of the Company will be adjusted to reflect the amount
included or deducted as a result of a mark-to-market election. A mark-to-market
election applies to the taxable year for which made and all subsequent taxable
years unless the stock no longer constitutes marketable stock or the IRS
consents to the revocation of such election. No assurances can be given,
however, that common shares of the Company constitute marketable stock such that
the mark-to-market election will be available. Because the Internal Revenue
Service has not established procedures for making a mark-to-market election,
U.S. Holders should consult their tax advisor regarding the availability and
manner of making such an election.
                                      -54-
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If a U.S. Holder does not make a timely QEF election during a year or a timely
mark-to-market election for the year in which it holds (or is deemed to have
held) the shares in question and the Company is a PFIC (a "Non-electing U.S.
Holder"), then special taxation rules under Section 1291 of the Code will apply
to (i) gains realized on the disposition (or deemed to be realized by reasons of
a pledge) of his Company common shares and (ii) certain "excess distributions",
as specifically defined, by the Company.

A Non-electing U.S. Holder generally would be required to pro rate all gains
realized on the disposition of his Company common shares and all excess
distributions on his Company common shares over the entire holding period for
the Company. All gains or excess distributions allocated to prior years of the
U.S. Holder (other than years prior to the first taxable year of the Company
during such U.S. Holder's holding period and beginning after January 1, 1987 for
which it was a PFIC) would be taxed at the highest tax rate for each such prior
year applicable to ordinary income. The Non-electing U.S. Holder also would be
liable for interest on the foregoing tax liability for each such prior year
calculated as if such liability had been due with respect to each such prior
year. A Non-electing U.S. Holder that is not a corporation must treat this
interest charge as "personal interest" which, as discussed above, is wholly
nondeductible. The balance of the gain of the excess distribution will be
treated as ordinary income in the year of the disposition or distribution, and
no interest charge will be incurred with respect to such balance.

If the Company is a PFIC for any taxable year during which a Non-electing U.S.
Holder holds Company common shares, then the Company will continue to be treated
as a PFIC with respect to such Company common shares, even if it is no longer
definitionally a PFIC. A Non-electing U.S. Holder may terminate this deemed PFIC
status by electing to recognize a gain (which will be taxed under the rules
discussed above for Non-electing U.S. Holders) as if such Company common shares
had been sold on the last day of the last taxable year for which it was a PFIC.

Under Section 1291(f) of the Code, the IRS has issued proposed regulations that,
subject to certain exceptions, would treat as taxable certain transfers of PFIC
stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such
as gifts, exchanges pursuant to corporate reorganizations, and transfers at
death. Generally, in such cases the basis of the Company common shares in the
hands of the transferee and the basis of any property received in the exchange
for those common shares would be increased by the amount of gain recognized. An
Electing U.S. Holder would not be taxed on certain transfers of PFIC stock, such
as gifts, exchanges pursuant to corporate reorganizations, and transfers at
death. The transferee's basis in this case will depend on the manner of the
transfer. In a transfer at death, for example, the transferee's basis is equal
to (i) the fair market value of the Electing U.S. Holder's common shares, less
(ii) the excess of the fair market value of the Electing U.S. Holder's common
shares reduced by the U.S. Holder's adjusted basis in these common shares at
death. The specific tax effect to the U.S. Holder and the transferee may vary
based on the manner in which the common shares are transferred. Each U.S. Holder
of the Company is urged to consult a tax advisor with respect to how the PFIC
rules affect their tax situation.

Certain special, generally adverse, rules will apply with respect to Company
common shares while the Company is a PFIC whether or not it is treated as a QEF.
For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses PFIC
stock as security for a loan (including a margin loan) will, except as may be
provided in regulations, be treated as having made a taxable disposition of such
shares.
                                      -55-
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Controlled Foreign Corporation

If more than 50% of the voting power of all classes of shares or the total value
of the shares of the Company is owned, directly or indirectly, by citizens or
residents of the United States, United States domestic partnerships and
corporations or estates or trusts other than foreign estates or trusts, each of
whom owns 10% or more of the total combined voting power of all classes of
shares of the Company ("United States shareholder"), the Company could be
treated as a "controlled foreign corporation" under Subpart F of the Code. This
classification would effect many complex results one of which is the inclusion
of certain income of a CFC which is subject to current U.S. tax. The United
States generally taxes a United States shareholder of a CFC currently on their
pro rata shares of the Subpart F income of the CFC. Such U.S. shareholders are
generally treated as having received a current distribution out of the CFC's
Subpart F income and are also subject to current U.S. tax on their pro rata
shares of the CFC's earnings invested in U.S. property. The foreign tax credit
described above may reduce the U.S. tax on these amounts. In addition, under
Section 1248 of the Code, gain from the sale or exchange of shares by a U.S.
Holder of common shares of the Company who is or was a United States shareholder
at any time during the five-year period ending with the sale or exchange is
treated as ordinary income to the extent of earnings and profits of the Company
attributable to the shares sold or exchanged. If a foreign corporation is both a
PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC
with respect to United States shareholders of the CFC. This rule generally will
be effective for taxable years of United States shareholders beginning after
December 31, 1997 and for taxable years of foreign corporations ending with or
within such taxable years of United States shareholders. Special rules apply to
United States shareholders who are subject to the special taxation rules under
Section 1291 discussed above with respect to a PFIC. Because of the complexity
of Subpart F, and because it is not clear that Subpart F would apply to U.S.
Holders of common shares of the Company, a more detailed review of these rules
is outside of the scope of this discussion.

Canadian Federal Income Tax Considerations

The summary below is restricted to the case of a holder (a "Holder") of one or
more common shares who for the purposes of the Income Tax Act (Canada) (the
"Act") is a non-resident of Canada, holds his common shares as capital property
and deals at arm's length with the Company.

Dividends

A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to
25%, or such lower rate as may be available under an applicable tax treaty, of
the gross amount of any dividend paid or deemed to be paid on this common
shares. Under the 1995 Protocol amending the Canada-U.S. Income Tax Convention
(1980) (the "Treaty") the rate of Part XIII Tax applicable to a dividend on
common shares paid to a Holder who is a resident of the United States. The
Company will be required to withhold the applicable amount of Part XIII Tax from
each dividend so paid and remit the withheld amount directly to the Receiver
General for Canada for the account of the Holder, which is 15% reduced to 5% if
the shareholder is owning at least 10% of the outstanding common shares of the
Company.

Disposition of Common Shares

A Holder who disposes of a common share, including by deemed disposition on
death, will not be subject to Canadian tax on any capital gain (or capital loss)
thereby realized unless the common share constituted "taxable Canadian property"
as defined by the Act. A capital gain occurs when proceeds from the

                                      -56-
<PAGE>
disposition of a share of other capital property exceeds the original cost. A
capital loss occurs when the proceeds from the disposition of a share are less
than the original cost. Under the Act, capital gain is effectively taxed at a
lower rate as only 75% of the gain is effectively included in the Holder's
taxable income.

Generally, a common share will not constitute taxable Canadian property of a
Holder unless he held the common shares as capital property used by him carrying
on a business (other than an insurance business) in Canada, or he or persons
with whom he did not deal at arm's length alone or together held or held options
to acquire, at any time within the five years preceding the disposition, 25% or
more of the shares of any class of the capital stock of the Company. The
disposition of a common share that constitutes "taxable Canadian property" of a
Holder could also result in a capital loss which can be used to reduce taxable
income to the extent that such Holder can offset it against a capital gain. A
capital loss cannot be used to reduce all taxable income (only that portion of
taxable income derived from a capital gain).

A Holder who is a resident of the United States and realizes a capital gain on
disposition of a common share that was taxable Canadian property will
nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax
thereon unless (a) more than 50% of the value of the common share is derived
from, or forms an interest in, Canadian real estate, including Canadian mineral
resource properties, (b) the common share formed part of the business property
of a permanent establishment that the Holder has or had in Canada within the 12
months preceding disposition, or (c) the Holder (i) was a resident of Canada at
any time within the ten years immediately, and for a total of 120 months during
the 20 years, preceding the disposition, and (ii) owned the common share when he
ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on
disposition of a common share must include three quarters of the capital gain
(taxable capital gain) in computing his taxable income earned in Canada. This
Holder may, subject to certain limitations, deduct three quarters of any capital
loss (allowable capital loss) arising on disposition of taxable Canadian
property from taxable capital gains realized in the year of disposition in
respect to taxable Canadian property and, to the extent not so deductible, from
such taxable capital gains of any of the three preceding years or any subsequent
year.

F.       Dividends and Paying Agents

The information for this Item is not required to be provided for Annual Reports
on Form 20-F filed under the
Securities Exchange Act of 1934.
G.       Statements by Experts

The information for this Item is not required to be provided for Annual Reports
on Form 20-F filed under the Securities Exchange Act of 1934.

H.       Documents on Display

Documents are available for inspection Monday through Friday, 9:30 to 4:30 p.m.
(Pacific Time) at the offices of the Company's legal counsel, Fraser & Co.,
Barristers & Solicitors, located at 1200 - 999 West Hastings Street, Vancouver,
B.C. V6C 2W2, Canada, Telephone (604) 669-5244.

I.       Subsidiary Information

Information regarding the Company's subsidiary is disclosed in Item 4.C. and
elsewhere in this Annual Report.

                                      -57-
<PAGE>
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK

The information for this Item is not material or required to be provided for
Annual Reports for Small business issuers on Form 20 - F filed under the
Securities Exchange Act of 1934.


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

The information for this Item is not required to be provided for Annual Reports
on Form 20 - F filed under the Securities Exchange Act of 1934.

                                     PART 11

ITEM 13.  DEFAULTS, DIVIDENDS, ARREARAGES AND DELINQUENCIES

Not applicable

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

Not applicable

ITEM 15. RESERVED

ITEM 16. RESERVED

                                      -58-
<PAGE>
                                    PART III

ITEM 17. SELECTED FINANCIAL DATA FIRST QUARTER 2001

<PAGE>
DATA FORTRESS SYSTEMS GROUP LTD.
(Formerly iaNett International Systems Ltd.)
Quarterly Report to September 30, 2002 & June 30, 2002
SCHEDULE A: FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS
(Prepared by Management - Unaudited)
DATA FORTRESS SYSTEMS GROUP LTD.
(Formerly iaNett International Systems Ltd.)
Quarterly Report to September 30, 2002 & June 30, 2002
SCHEDULE A: FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS
(Prepared by Management - Unaudited)
                                     September         June
                                        2002           2002
---------------------------------------------------------------
ASSETS
Current Assets
   Cash                            $        --    $      8,012
   Accounts receivable                 431,248           7,064
   Inventory                           302,286              --
   Loans Receivable                    135,880          40,350
   Prepaids                              3,625           1,284
---------------------------------------------------------------
                                       873,039          56,710
Capital assets                         491,811          44,412
Investments                              1,953           5,000
---------------------------------------------------------------
                                   $ 1,366,803    $    106,122
---------------------------------------------------------------
LIABILITIES AND EQUITY
Current Liabilities
   Accounts payable and accrued    $   622,207    $    109,774
   Bank Overdraft                       65,765              --
   Current portion of obligation
     under capital lease                83,335              --
---------------------------------------------------------------
                                       771,307         109,774
Capital Lease Obligation               100,725              --
Shareholders loan                       45,004          12,000
---------------------------------------------------------------
                                       917,036         121,774
---------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital                        1,142,207      33,741,464
Share subscriptions                         --           2,000
Deficit                               (692,440)    (33,759,116)
---------------------------------------------------------------
                                       449,767         (15,652)
---------------------------------------------------------------
                                   $ 1,366,803    $    106,122
---------------------------------------------------------------
                                      -59-
<PAGE>
DATA FORTRESS SYSTEMS GROUP LTD.
(Formerly iaNett International Systems Ltd.)
Quarterly Report to September 30, 2002
SCHEDULE A: FINANCIAL INFORMATION (Continued)

CONSOLIDATED STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
(Prepared by Management - Unaudited)
                                                     September     September
                                                       2002          2001
-----------------------------------------------------------------------------
REVENUE                                          $    296,923    $      1,825

EXPENSES
Direct Costs                                          253,860              --
General and administrative                            338,359          44,380
Amortization of capital assets                         11,828           6,751
-----------------------------------------------------------------------------
                                                      604,047          51,131
-----------------------------------------------------------------------------
NET LOSS FROM OPERATIONS                             (307,124)        (49,306)
-----------------------------------------------------------------------------
OTHER
    Write-down of loans                               (20,000)             --
-----------------------------------------------------------------------------
NET LOSS                                             (327,124)        (49,306)

Deficit, beginning of period                         (365,316)    (33,809,729)
-----------------------------------------------------------------------------
DEFICIT, end of period                           $   (692,440)   $(33,859,035)
=============================================================================
LOSS PER SHARE                                   $      (0.01)   $      (0.00)
-----------------------------------------------------------------------------
  WEIGHTED AVERAGE NUMBER OF SHARES ISSUED         25,317,944      11,241,590
-----------------------------------------------------------------------------

                                      -60-
<PAGE>
DATA FORTRESS SYSTEMS GROUP LTD.
(Formerly iaNett International Systems Ltd.)
Quarterly Report to September 30, 2002
SCHEDULE A: FINANCIAL INFORMATION (Continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Prepared by Management - Unaudited)
DATA FORTRESS SYSTEMS GROUP LTD.
(Formerly iaNett International Systems Ltd.)
Quarterly Report to September 30, 2002
SCHEDULE A: FINANCIAL INFORMATION (Continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Prepared by Management - Unaudited)
                                                         September    September
                                                           2002         2001
--------------------------------------------------------------------------------
OPERATIONS
Net Income (Loss)                                       $(327,124)   $(49,306)
Add (deduct) items not involving cash
   Write-off of Loan                                        6,751
   Amortization of capital assets                           4,417          --
-----------------------------------------------------------------------------
                                                         (322,707)    (42,555)
Net change in non-cash working capital items:
   Decrease (increase) in accounts receivable               1,475     (22,851)
   Decrease (increase) in prepaids                             --         794
   Decrease (Increase) in inventory                            --          --
   Increase (decrease) in accounts payable                (10,412)     39,396
-----------------------------------------------------------------------------
                                                         (331,644)    (25,216)
FINANCING
   Share subscription                                      (2,000)         --
   Issuance of Share Capital                                   --      20,000
   Increase (decrease) in amounts due to Shareholders     (12,000)         --
   Increase in lease obligations                               --          --
-----------------------------------------------------------------------------
                                                          (14,000)     20,000
INVESTING
   Net assets acquired from RTO                           303,819          --
   Proceeds on disposition of investments                   3,047          --
   Decrease (increase) in loans receivable                (35,000)         --
   Purchase of capital assets                                  --          --
   Proceeds on disposition of capital assets                   --       1,830
-----------------------------------------------------------------------------
                                                          271,866       1,830
-----------------------------------------------------------------------------
Increase (decrease) in bank overdraft                     (73,777)     (3,386)
Cash and cash equivalents, beginning of period              8,012       3,024
-----------------------------------------------------------------------------
BANK OVERDRAFT, end of period                           $ (65,765)   $   (362)
=============================================================================

SUPPLEMENTAL CASH FLOW INFORMATION

During the quarter the Company issued 30,000,000 common shares pursuant to the
RTO share exchange agreement.

During the quarter the Company issued 9,160,200 common shares to settle
outstanding debts of $916,076.

During the quarter the Company issued 1,500,000 common shares as a finders fee
and 200,000 common shares as the remaining sponsor fees in connection with the
RTO.
                                      -61-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarter ended September 30, 2002 and 2001

1. BUSINESS COMBINATION
--------------------------------------------------------------------------------
The 30,000,000 common shares issued pursuant to the exchange agreement were
deemed to have a value of $3,000,000. However the Company was inactive with a
thin market for its shares, making it inappropriate to use the estimated market
value of the shares. These accounting statements are issued under the name of
Data Fortress Systems Group Ltd. (formerly iaNett International Systems Ltd.)
but are a continuation of the financial statements of the accounting acquirer,
Data Fortress Technologies (2002) Inc., the legal subsidiary and not the legal
parent. Therefore the cost of the acquisition ($43,919) has been determined by
using the fair value of the Data Fortress Systems Group Ltd. Common shares.

The business combination has been accounted for using the purchase method of
accounting and accordingly the results of operations of Data Fortress
Technologies (2002) Inc. are included in the consolidated financial statements
from the date of acquisition August 30, 2002. The purchase price was allocated
to the fair value of the net liabilities acquired as follows:
--------------------------------------------------------------------------------
Consideration - issuance of 30,000,000 common shares              $    (43, 919)
--------------------------------------------------------------------------------
Net assets acquired
         Working capital, net                                     $     (90,284)
         Investments                                                      1,953
         Equipment                                                       44,412
--------------------------------------------------------------------------------
Net liabilities                                                   $     (43,919)
--------------------------------------------------------------------------------
Net  deficiency  attributed  to  the  30,000,000  common  shares  $     (43,919)
issued in connection with the reverse takeover
--------------------------------------------------------------------------------

2. NATURE OF OPERATIONS AND GOING CONCERN
--------------------------------------------------------------------------------
Data Fortress Systems Group Inc., incorporated in British Columbia, Canada, has
shares listed on the TSX Venture Exchange, OTC Bulletin Board in the United
States and on the third segment of the Frankfurt Stock Exchange. On September 3,
2002, the company changed its name from Ianett International Systems Ltd. To
Data Fortress Systems Group Ltd.

                                      -62-
<PAGE>

DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

The Company was formerly engaged in the business of providing integrated
marketing web services, business development services and data warehousing
services to both internet and traditional businesses.

By a share exchange agreement dated March 31, 2002 the Company agreed to acquire
100% of Data Fortress Technologies Group (2002) Inc. ("Data Fortress 2002"). The
Company will issue 30,000,000 common shares, which are subject to a Surplus
Security Escrow Agreement, as consideration for Data Fortress 2002 shares. The
Surplus Security Escrow Agreement, allows the release of shares on a
time-released basis over the next six years. Data Fortress 2002 owns all the
issued and outstanding shares of Data Fortress Technologies Ltd., Connect West
Networks Ltd. and Pacific Ram Distribution Corp. These companies provide
collocation and managed server hosting services, wholesale computer equipment
sales, networking services and the operation of a redundant 3.2-kilometer fiber
optic ring in downtown Vancouver. The transaction was approved by the
shareholders on April 19, 2002, shares were issued and regulatory approval was
obtained on August 30, 2002. The transaction had an effective date of August 30,
2002. The shares resulted in the recipients obtaining voting control of the
Company, and the acquisition accounted for as a reverse take-over in accordance
with Canadian Generally Accepted Accounting Principles.

In connection with the exchange agreement there was a finders fee of 1,500,000
common shares. The shares are subject to a Voluntary Pooling Agreement, which
stipulates that 33.3% of the shares will be released upon completion of the
transactions, 33.3% after eight months and the remaining 33.4% after twelve
months.

At September 30, 2002, the Company had a working capital deficiency of
($200,554) (June 30, 2002: $65,064) and incurred an operating loss of ($327,124)
(2001: $49,306) for the quarter ended. The loss includes non-cash transactions
from share issuance at a deemed value of $190,836 for a finder's fee, the
sponsorship fee and the accrued interest on a debenture settled with shares. The
business combination has been accounted for using the purchase method of
accounting and accordingly the results of operations of Data Fortress
Technologies (2002) Inc. are included in the consolidated financial statements
from the date of acquisition August 30, 2002 to this period ended September 30,
2002. The Company's ability to discharge liabilities in the normal course of
business is dependent upon future profitable operations and/or obtaining
additional debt or equity financing.

These financial statements do not give effect to any adjustments which would be
necessary should the Company be unable to continue as a going concern and
therefore be required to realize its assets and discharge its liabilities in the
normal course of business and at amounts different from those reflected in the
accompanying financial statements.

Principles of consolidation and basis of accounting - The consolidated financial
statements included the accounts of the Company and its wholly owned
subsidiaries as follows:
                                      -63-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

                  DNS Media.com Inc.
                  Stock Secrets Enterprises Ltd.
                  IaNett.com Internet Technologies Ltd.
                  Data Fortress Technologies Ltd.
                  Pacific Ram Distribution Corp.
                  Connect West Networks Ltd.

The Company's consolidated financial statements are prepared in accordance with
generally accepted accounting principles in Canada.

Revenue Recognition - Revenue predominately results from service-related
activities. Services can be on a time and materials basis or a fixed fee basis.
For fixed fee contracts, revenue is recognized on a percentage of completion
basis. For contracts that are on a time and materials basis, revenue is
recognized as the service is performed. Provisions for estimated losses on
contracts, if any, are recorded when identifiable.

Cash and cash equivalents - The Company considers deposits in bank and
short-term investments with original maturities of three months or less to be
cash equivalents.

Capital assets - Capital assets are recorded at cost less accumulated
amortization. Amortization is provided over the estimated useful lives of the
assets using the following basis and annual rates:

Asset                       Basis                    Rate
--------------------------------------------------------------------------------

Computer equipment          Straight-line            33%
Computer software           Straight-line            33% - 100%
Furniture and fixtures      Declining balance        20% - 30%
Office equipment            Declining balance        20% - 30%
UPS                         Declining balance        20% - 30%
Fiber Optic                 Declining balance         5%
Automotive                  Declining balance        30%
Leasehold improvements      Straight-line            Over the term of the lease
                                                     and one renewal period
--------------------------------------------------------------------------------
One half of the above rates are used in the year of acquisition
--------------------------------------------------------------------------------

                                      -64-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

2. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Investments - The Company makes investments in technology businesses. Such
investments, where the Company does not exert significant influence, have been
accounted for under the cost method whereby the investments are carried at cost.
When, in the opinion of management, the cost of an investment is permanently
impaired, the investment is written down to recognize the loss. Where the
Company does exert significant influence, investments are accounted for under
the equity method. Where the Company's initial investment is more than 20% but
where plans are in place for the investee to issue additional securities that
will dilute the ownership investment below 20%, such investments are accounted
for using the cost method.

Foreign currency translation and transactions - The Company's consolidated
financial statements are expressed in Canadian dollars. Monetary assets and
liabilities denominated in foreign currencies are translated into Canadian
dollars at the prevailing rates of exchange at the balance sheet date.
Non-monetary assets and liabilities are translated at historic exchange rates.
Revenues and expenses are translated into Canadian dollars at the rates of
exchange in effect at the related transaction dates. Exchange gains and losses
arising from translation of foreign currency items are included in the
determination of net income.

Use of estimates in the preparation of financial statements - The preparation of
financial statements in conformity with Canadian generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported accounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses for the period. Actual results could differ from those
estimates.

Earnings per share - Effective July 1, 2001, the Company retroactively adopted
the new accounting recommendations made by the Canadian Institute of Chartered
Accountants for presentation and disclosure of basic and diluted earnings per
share. The retroactive impact of adopting the new recommendations had no
significant impact on the Company's basic and diluted earnings per share.

                                      -65-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

2. SIGNIFICANT ACCOUNTING POLICIES (continued)
--------------------------------------------------------------------------------
Basic earnings per common share are calculated on the net earnings using the
weighted average number of shares outstanding during the fiscal period.

For the quarter ended September 30, 2002, the existence of stock options and
warrants affects the calculation of loss per share on a fully diluted basis. As
the effect of this dilution is to reduce the report share loss per share, fully
diluted loss per share information has not been shown.

Income taxes - Future income taxes relate to the expected future tax
consequences of differences between the carrying amount of balance sheet items
and their corresponding tax values. Future income tax assets, if any, are
recognized only to the extent that, in the opinion of management, it is more
likely than not that future income tax assets will be realized. Future income
tax assets and liabilities are adjusted for the effects of changes to tax laws
and rates at the date of enactment or substantive enactment.

3. CAPITAL ASSETS
--------------------------------------------------------------------------------
                                                            Net Book Value
                                                         -----------------------
                                         Accumulated     September      June
                              Cost       Depreciation      2002         2002
--------------------------------------------------------------------------------
Computer equipment          $339,972       153,110       186,862       36,006
Computer software                 --            --            --
Furniture and fixtures           884           128           756
Office equipment              50,726        31,210        19,516        8,406
UPS                           71,806         1,197        70,609
Fiber Optic                  178,158           742       177,416
Automotive                     2,000         1,331           669
Leasehold improvements        49,622        13,640        35,983

                            $693,169       201,358      $491,811      $44,412
================================================================================

4. DUE TO SHAREHOLDER
--------------------------------------------------------------------------------
Amounts due to shareholder are non-interest bearing with no formal terms of
repayment.
                                      -66-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

5. SHARE CAPITAL
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                       September 2002                June 2002
                                   -------------------------   -----------------------
                                     Number         Amount       Number      Amount
--------------------------------------------------------------------------------------
<S>                                <C>           <C>          <C>          <C>
Balance, beginning of year         17,311,328    $  100,050    5,445,851   $32,590,326
Shares issued for cash:
   Stock options                           --        90,000        9,000
   Warrants                                --     1,100,000      110,000
   Private placement                       --     4,838,000      483,800
Shares issued for other
considerations:
   For debt                         9,160,200       916,076    5,469,477       548,338
                                                                            30,000,000
   Escrow for RTO                     (43,919)           --           --
                                                                             1,500,000
   Finder's Fee                       150,000            --           --
                                                                               200,000
   Cannacord Sponsor Fee               20,000            --           --

   Shares issued for subsidiary            --            --      368,000            --
--------------------------------------------------------------------------------------
Balance, end of year               58,171,528    $1,142,207   17,311,328   $33,741,464
======================================================================================
</TABLE>
Warrants - The Company has stock purchase warrants outstanding as follows:
--------------------------------------------------------------------------------
           Outstanding                       Outstanding
Exercise     June 30,             Expired/    September           Expiry
 Price        2002        Issued  Exercised      2002              Date
--------------------------------------------------------------------------------

$ 0.12      2,438,000       -        -        2,438,000       October 18, 2003
--------------------------------------------------------------------------------
            2,438,000       -        -        2,438,000
================================================================================

Stock Option Plans - The Company has established stock option plans for
employees, directors and consultants. Under the plans, the exercise price of
each option equals the market price of the Company's stock on the last business
day prior to the date of the grant. An option's maximum term is five years from
the date of the grant. Options granted vest at various dates ranging from the
date of grant to the end of the eighteenth month from the date of grant. As at
September 30, 2002 remaining stock options outstanding were:

                                      -67-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

5. SHARE CAPITAL (continued)
--------------------------------------------------------------------------
  Price                           Number                       Expiry Date
--------------------------------------------------------------------------

 $0.10                             1,000                     July 12, 2004
 $0.10                             1,250                  November 8, 2004
 $0.10                             6,500                 December 21, 2004
 $0.10                            22,000                September 14, 2005
 $0.10                            90,000                 November 15, 2005
 $0.10                           354,250                   October 5, 2006
 $0.20                           500,000                   January 7, 2007
 $0.14                           250,000                    March 31, 2007
 $0.10                           100,000                   August 14, 2007
--------------------------------------------------------------------------
                               1,325,000
==========================================================================

6. RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------
There were related party transactions during the period with individuals or
companies that were controlled by directors or by officers of the Company.

a)       Rick Thomas - CEO - Management Contract Fees of $18,000 for the quarter
         Gordon Samson - CFO - Contract and Accounting Fees $15,000 for the
         quarter Michael Chong - COO - Salaried wages $8,400 for the quarter CK
         Chong - Accounting Fees - Salaried wages of $7,500 for the quarter

b)       Amounts due to Shareholders of $45,004 have no terms of repayment.

c)       Loans Receivable of $135,880 includes $25,000 to a Director, and
         $105,531 to a company associated with a Director. These loans have
         accumulated during the period September 2001 to August 2002 booked
         prior to the RTO transaction. Management expects these advances and
         loans to be recovered.

7. INCOME TAXES
--------------------------------------------------------------------------------
The company has non-capital losses for income tax purposes that may, subject to
certain restrictions, be available to offset future taxable income or taxes
payable. No benefit in respect of the future application of these losses has
been recognized in the financial statements.

8. LEGAL PROCEEDINGS
--------------------------------------------------------------------------------
To the best of its knowledge, the Company is not subject to any active or
pending legal proceedings or claims against it or any of its properties and all
known actions have been settled or dismissed.

From time to time, the Company may become subject to claims and litigation
generally associated with any business venture.

                                      -68-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

9. BANK OVERDRAFT
--------------------------------------------------------------------------------
The Bank overdraft consists of a cash balance of $63,105 less outstanding
balances on two lines of credit drawn by ($128,872). The net position ($65,767)
is reported as an overdraft position.
                                                       2002          2001
--------------------------------------------------------------------------------
1)     Canadian Imperial Bank of Commerce
       Line of Credit: $ 100,000                   $ 99,633.84        -
       Term: Prime rate plus 1.5% per year

2)     Coast Capital
       Line of Credit: $ 100,000
       Term: Prime rate plus 2.0% per year         $ 29,238.16        -

10. CAPITAL LEASE OBLIGATIONS
--------------------------------------------------------------------------------

Future minimum payments and the obligation due under capital leases are as
follows:
                               2002    2001
-------------------------------------------
2002                          20,834     -
2003                          79,889     -
2004                          59,082     -
2005                          17,014     -
2006                           7,241     -
-------------------------------------------
Less current portion     (83,335)        -
-------------------------------------------
                         100,725         -
-------------------------------------------

11. SEGMENTED INFORMATION
--------------------------------------------------------------------------------
The Company operates in one business segment, computers and network services,
thru various subsidiaries. All operations and assets are in Canada.

                                      -69-
<PAGE>
DATA FORTRESS SYSTEMS GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarter ended September 30, 2002 and 2001

12. SUPPLEMENTAL INFORMATION REQUIRED BY BC NOTICE 52-701
--------------------------------------------------------------------------------
iaNett International Systems Ltd.
For the period July 1, 2002 to August 30, 2002
CONSOLIDATED STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
(Prepared by Management - Unaudited)
                                                         August 31
                                                           2002
-------------------------------------------------------------------
REVENUE                                                $          9

EXPENSES
General and administrative                                   66,092
Tax credit recovery                                         (37,815)
-------------------------------------------------------------------
NET LOSS FROM OPERATIONS                                    (28,267)
-------------------------------------------------------------------
Deficit, beginning of period                            (33,759,116)
-------------------------------------------------------------------
DEFICIT, end of period                                 $(33,787,383)
===================================================================

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Prepared by Management - Unaudited)
                                                           August 31
                                                              2002
-------------------------------------------------------------------
OPERATIONS
Net Income (Loss)                                      $    (28,267)
Add (deduct) items not involving cash
-------------------------------------------------------------------
                                                            (28,267)
Net change in non-cash working capital items:
  Decrease (increase) in accounts receivable                  5,485
  Increase (decrease) in accounts payable                    19,485
-------------------------------------------------------------------
                                                             (3,297)
FINANCING
  Increase (decrease) in amounts due to Shareholders        (12,000)
-------------------------------------------------------------------
                                                            (12,000)
INVESTING
  Proceeds on disposition of investments                      3,047
  Decrease (increase) in loans receivable                    41,500
-------------------------------------------------------------------
                                                             44,547
-------------------------------------------------------------------
Increase (decrease) in bank overdraft                        29,250
Cash and cash equivalents, beginning of period                8,012
-------------------------------------------------------------------
Cash, end of period                                    $     37,262
===================================================================
                                      -70-
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ITEM 18. FINANCIAL STATEMENTS

Not applicable

ITEM 19. EXHIBITS

Exhibit Number           Description
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1.1(1)   Certificate of Incorporation of ATS Wheel Inc.

1.2(1)   Articles of Bear Lake Resources Ltd.

1.3(2)   Certificate of Change of Name of JSS Resources Inc.

1.4(4)   Certificate of Change of Name of WSi Interactive Corp. and revised
         Memorandum dated June 29, 1999.

1.5(4)   Form of stock certificate for the Common Shares of WSi Interactive
         Corp.

3.18(2)  Share Purchase Agreement dated May 11, 1998 between the Company, the
         Subsidiaries and GG Marketing.

3.19(2)  Debt Settlement Agreement between 430692 B.C. Ltd., Chablis Investments
         Ltd. and Calico Investments Ltd., the Company and GG Marketing, dated
         May 12, 1998, as amended.

3.20(3)  Acquisition Agreement dated May 19, 1999 by and between certain
         Investors represented by Theo Sanidas, Theo Sanidas and Lance Morginn,
         certain shareholders of JSS Resources, Inc. and JSS Resources, Inc.

3.21(3)  Irrevocable Letter of Instructions dated May 17, 1999 to James L.
         Harris.

3.22(4)  Escrow Agreement between the Company, Theo Sanidas and Computershare
         dated June 23, 1999.
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3.23(5)  Agreement in Principle between iaNett International Systems Ltd., and,
         the Data Fortress Group.

3.24(6)  Offerring Memorandum

3.25     2002 Stock Option Plan

3.26     March 31, 2002 Share Exchange Agreement

1        Incorporated by reference to the Company's 1995 Registration Statement
         on Form 20-F (File No. 0-25860).

2        Incorporated by reference to the Company's 1997 Annual Report on Form
         20-F (File No. 0-25860).

3        Incorporated by reference to the Company's 1998 Annual Report on Form
         20-F (File No. 0-25860).

4        Incorporated by reference to the Company's June 30, 1999 Transition
         Report on Form 20-F (File No. 0-25860).

5        Incorporated by reference to the Company's June 30, 2001 Transition
         Report on Form 20-F (File No. 0-25860).

6        Incorporated by reference to the Company's June 30, 2001 Transition
         Report on Form 20-F (File No. 0-25860).


                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company certifies that it meets all of the requirements for filing on
Form 20-F and has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.

DECEMBER 29, 2002
                                 Data Fortess Systems Group Ltd.
                                 "RICK THOMAS"


                                 Name:    Rick Thomas
                                 Title:   President, CEO, Director

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