UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-K

/X/  Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

                   For the fiscal year ended DECEMBER 31, 2000

/ /  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

                 For the transition period from to __________ to


                         Commission file number 333-3074
                                                --------

                                  NEXLAND, INC.
                                  -------------
             (Exact name of registrant as specified in its charter)

                 DELAWARE                          37-1356503
     (State or other jurisdiction of            (I.R.S. Employer
      incorporation or organization)           Identification No.)

        1101 BRICKELL AVENUE, SUITE 200 NORTH TOWER, MIAMI, FLORIDA 33131
                    (Address of Principal Executive Offices)

       Registrant's telephone number, including area code: (305) 358-7771

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

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

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

                                  Common Stock
--------------------------------------------------------------------------------
                               (Title of class)

         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.

                           /X/   Yes    / /   No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.            / /

         The aggregate  market value of the voting and non-voting  common equity
held by non-affiliates  of the registrant was approximately  $5,816,890.50 as of
April 19, 2001,  based upon the closing price of $0.30 on the OTCBB  reported on
such date.  Shares of Common Stock held by each  executive  officer and director
and by each person who beneficially owns more than 5% of the outstanding  Common
Stock have been excluded in that such persons may under certain circumstances be
deemed  to  be  affiliates.  This  determination  of  affiliate  status  is  not
necessarily a conclusive determination for other purposes.

         As of April 19, 2001, there were 36,153,385  shares of the Registrant's
Common Stock issued and  outstanding.  There were no shares of the  Registrant's
Preferred stock outstanding.

<PAGE>

FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS

         Some of the  information  in this  Form 10-K  contains  forward-looking
statements that involve  substantial risks and  uncertainties.  You can identify
these  statements  by  forward-looking  words  such as "may,"  will,"  "expect,"
"anticipate," "believe," "estimate, and "continue," or similar words. You should
read statements that contain these words carefully because they: (i) discuss our
expectations  about our future  performance;  (ii)  contain  projections  of our
future operating results or of our future financial  conditions;  or (iii) state
other "forward-looking"  information.  We believe it is important to communicate
our expectations to our investors.  There may be events in the future,  however,
that we are not accurately able to predict or over which we have no control. The
risk factors listed in the section entitled "Certain Business Risks," as well as
any  cautionary   language  in  this  Form  10-K  provide   examples  of  risks,
uncertainties  and events that may cause our actual results to differ materially
from  the  expectations  we  describe  in  our  forward-looking  statements.  We
undertake  no  obligation  to revise or  publicly  release  the  results  of any
revision to these forward-looking statements.



                                     PART I


ITEM 1.       BUSINESS.


GENERAL

         WindStar Resources, Inc., (before the name change to Nexland, Inc.) was
formed in Arizona on March 22, 1995,  (under the name  Turtleback  Mountain Gold
Co., Inc.) to engage in the business of mineral  exploration,  and if warranted,
development  and  production,  or  the  sale  of  precious  minerals.   WindStar
Resources,  Inc. failed to achieve its goals and business objectives and in 1999
concluded it was no longer  economical to continue as a public gold  exploration
mining company.  Nexland, Inc., was incorporated in Florida on December 4, 1994,
but was inactive until November 17, 1999 when it was acquired by us. Nexland LP,
a Florida  limited  partnership,  formed on September 25, 1997, was an operating
company until November 15, 1999 when it assigned all of its  partnership  assets
to Nexland, Inc. in exchange for 17,000 of the latter's common shares.

         On  November  17,  1999,  we  acquired  Nexland,   Inc.  in  a  reverse
acquisition  transaction  resulting in the change of our business from mining to
computer security equipment. We changed our name to "Nexland,  Inc." on December
8, 1999.  As WindStar  Resources,  Inc.,  we never owned an operating  mine and,
prior to the Nexland, Inc. acquisition,  had no other  revenue-producing  mining
activities.  Since our merger with  Nexland,  Inc., we have become a supplier of
hardware routers and Internet firewall devices and have shed all connection with
the mining business.

         Our Internet  Sharing Box product line allows multiple users on a local
area  network  to  simultaneously  share  the  same  Internet  connection  while
optimizing each user's access speed, as well as providing firewall security. Our
Internet  Sharing Box product  line is  intended to support  multiple  operating
systems, including Windows, Macintosh, UNIX and Linux. Our products are designed
to be compatible with existing  telephone and data connection  lines, as well as
integrated services digital networks and emerging access  technologies,  such as
digital  subscriber lines and cable modem  connections.  An integrated  services
digital network is an  international  telecommunications  standard for providing
digital service from a customer's  premises to a dial-up  telephone  network.  A
digital  subscriber  line is a type of  technology  that  increases  the digital
capacity of ordinary  telephone lines into a home or office.  Digital subscriber
line speeds are tied to the distance between a customer and a telephone company.
Our   products   enable   multiple   users  to  securely   access  the  Internet
simultaneously through regular telephone lines, slow speed data connections,  or
high-speed  digital  connections.  We  primarily  market  and sell our  products
through North American based Internet service providers,  value-added resellers,
and telephone companies; however, in the past, we have had minor sales to direct
end-users. During fiscal year 2000, we made sales to over 100 customers.


EXPLANATION AND BACKGROUND OF THE INTERNET

         The Internet is a global collection of interconnected computer networks
that transmit any  combination of voice,  video and/or data between  users.  The
Internet allows commercial organizations,  educational institutions,  government
agencies,  and  individuals  to  electronically  communicate,  access  and share

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<PAGE>


information,  and conduct business. As businesses have begun to use e-mail, file
transfer and area  networks,  commercial  usage has become a major  component of
Internet traffic.

         In the mid-1990s,  Internet  service  providers  began to offer access,
e-mail, customized content, and other specialized services and products aimed at
allowing  both  commercial  and  residential  customers  to obtain and  transmit
information, as well as access other available resources on the Internet.

         The  emergence  of  the  Web,  which  is  the   graphical,   multimedia
environment of the Internet,  has resulted in the development of the Internet as
a new mass  communication  medium.  The Internet has experienced rapid growth in
recent years as evidenced by the volume of Internet  traffic and the increase in
the number of Internet  users,  Web sites and  Internet-based  applications.  In
addition, there has been a proliferation of Internet-based services, including:

         o        chat rooms;

         o        online magazines;

         o        news feeds;

         o        interactive games;

         o        educational and entertainment information;

         o        development of online communities; and

         o        virtual private networking.

         This rapid  growth is expected to continue as  businesses  increasingly
use the Internet to access and share  information  and to interact  with a large
number of geographically dispersed consumers and business partners. Furthermore,
an  Internet-based  economy is emerging as more  businesses  use the Internet to
sell  products and  services,  implement  electronic  commerce  initiatives  and
utilize new generations of Internet-enabled business applications.

         In our opinion,  participation in this emerging  Internet-based economy
and   realization   of  the  benefits  and   efficiencies   facilitated  by  new
Internet-enabled  business applications are becoming increasingly  important for
the small business office market,  as well as the Internet service providers and
telephone  companies which provide  Internet service to them. The small business
office market includes small  businesses,  home offices and remote  offices.  We
believe the Internet  allows these  businesses to communicate  more  effectively
with their  suppliers and customers  and to access and share  critical  business
information both internally and externally. Overall, we believe the Internet and
the  business   applications   enabled  by  the  Internet   present   tremendous
opportunities  for  businesses  to  improve  communications,   collaborate  with
partners,  suppliers  and  customers,  perform  important  processes  online and
realize cost and operational efficiencies that may position them to compete more
effectively with organizations that have greater resources and market presence.

         INTERNET  ACCESS  TECHNOLOGIES  FACILITATE  NEW  APPLICATIONS.   Analog
dial-up  modems,  which utilize regular  telephone  lines and data  connections,
currently  represent the most widely  utilized method of accessing the Internet.
While many  markets  worldwide  will  continue to depend on these  slower  speed
Internet  access  technologies,  new high-speed and high  transmission  capacity
Internet access technologies, such as digital subscriber lines and cable modems,
have emerged in recent years.

         THE BROADBAND MARKET - HIGH-SPEED ACCESS.  Integrated  services digital
networks  are rapidly  becoming  available  in the United  States as a method to
transmit more data over existing  telephone lines.  Integrated  services digital
networks are, in most markets,  priced  comparably to standard analog  telephone
circuits. These networks transmit data at greater speeds than the analog dial-up
modems.   However,   new  emerging  access   technologies   offer  even  greater
transmission capacity, provide much faster access speeds and enable a variety of
new data  intensive,  multimedia  and graphical  applications.  These  broadband
markets include:

         o        Digital  Subscriber  Line,  which is a method for moving  data
                  over existing  copper  telephone  lines,  but at a much faster
                  rate than a regular telephone connection;

         o        Interactive Cable, which allows for communication across cable
                  infrastructure;


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<PAGE>


         o        cable modems and cable modem termination centers; and

         o        wireless  transmissions,  which are  movements  of  packets of
                  information over airwaves.

         As  these  access   technologies  become  more  affordable  and  widely
available, we believe they will present increasingly attractive alternatives for
satisfying the Internet access requirements of small business offices.

         In addition,  we believe the small  business  office  environment  will
experience  an even  greater  need to access  the  Internet  via these  emerging
technologies  as new  generations  of business  applications  emerge that larger
competitors  will be able to  access  through  relatively  expensive,  dedicated
high-speed  leased  lines.  Furthermore,  the higher cost of digital  subscriber
lines and cable modem access  technologies  compared to analog technologies will
increase the need of small business  offices to utilize shared  Internet  access
solutions that enable costs to be allocated across a greater number of users.

         TODAY'S SMALL BUSINESS OFFICE INTERNET ACCESS  ENVIRONMENT.  Worldwide,
there is an increasing  demand for broadband  access  services.  The Internet is
becoming  increasingly popular to consumers for conducting business and personal
pursuits.   Consequently,  these  consumers  are  seeking  high-speed,  low-cost
solutions that enable them to benefit from advances in data transfer speed.

         o        SHARED ACCESS.  Many small business offices have addressed the
                  Internet  access  problem  by  installing  a single  dedicated
                  computer  that is connected  to the  Internet via a modem,  an
                  analog  telephone line and a single  Internet  service account
                  shared  by  all  users  in  the  office.   This   approach  is
                  inefficient  because it  requires  users to wait in line until
                  the  Internet   terminal  becomes   available.   In  addition,
                  productivity  is often reduced since many users fail to access
                  the Internet  because it is not  conveniently  accessible from
                  their  individual  workplaces.  As an alternative,  some small
                  business  offices have added additional  modems,  analog phone
                  lines  and  Internet   service   accounts  for  each  employee
                  requiring  Internet  access.  However,   maintaining  separate
                  Internet  connections for each user is costly and difficult to
                  manage.  Moreover,  neither of these solutions  enables shared
                  Internet access among multiple users.

         o        EASE OF  INSTALLATION  AND USE.  In our  opinion,  most  small
                  business   offices  lack   in-house   information   technology
                  personnel,  as well as  sufficient  resources  to hire outside
                  consultants to implement and maintain  complex Internet access
                  solutions.  Therefore, small business offices require Internet
                  access solutions that are easy to install,  use,  maintain and
                  upgrade.

         o        AFFORDABILITY.  Small  business  offices are often  subject to
                  budgetary  constraints.  Therefore,  the networking  solutions
                  that have been  widely  adopted  by  larger  organizations  to
                  accommodate  shared access often are  prohibitively  expensive
                  for small business offices.

         o        EXPANDABILITY  AND  COMPATIBILITY.  We believe small  business
                  offices need Internet access solutions that accommodate  their
                  current  requirements  and that can be expanded to accommodate
                  additional users as their  businesses grow. In addition,  many
                  small  business  offices seek  solutions that meet these needs
                  without having to replace existing systems, invest significant
                  capital in upgrades or employ in-house information  technology
                  personnel.  Many small  business  offices  have  already  made
                  significant  investments  in  computer  hardware,  modems  and
                  software,   and  utilize   widely   available   analog  access
                  technologies.  As  a  result,  these  small  business  offices
                  require  Internet  access  solutions that are compatible  with
                  existing  hardware and software and flexible enough to support
                  analog  access  technologies,  as well as emerging  high-speed
                  access technologies.

         In  order  to  more  fully  participate  in the  evolving  uses  of the
Internet,  we believe the small business office market will require easy-to-use,
affordable  and  expandable  products  that  enable  shared  Internet  access by
multiple  users  and  that  support  a  full  range  of  existing  and  emerging
Internet-enabled applications and services.

         THE BENEFITS  OUR  PRODUCTS  ARE DESIGNED TO PROVIDE.  Our products are
designed to provide a secure,  shared  Internet  access  solution.  Our solution
allows multiple users in an office,  workplace or home to  simultaneously  share
the same  Internet  connection.  Our products  are designed to support  multiple
operating systems such as Windows,  Macintosh,  UNIX and Linux,  while providing
network security during the delivery and receipt of Internet data packets.

         Our products are designed to be compatible with  traditional  telephone
and  data  connections  that  operate  at slow  speeds,  as  well as  high-speed


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<PAGE>

technologies, including integrated services digital networks, digital subscriber
lines and cable modems. In addition,  our products extend the benefits of analog
technology  by enabling  multiple  users to access the  Internet  simultaneously
through  regular  telephone lines and analog modems at up to 30 times the access
speed of a single  analog  connection.  Our  products  offer the  following  key
benefits:

         o        EFFICIENT  SHARED INTERNET  ACCESS.  The Internet  Sharing Box
                  product  line enables an entire  office to share  information,
                  use e-mail, and access the Internet  independent of the access
                  technology  utilized.  Multiple users in an office can share a
                  single  Internet  connection  and  Internet  service  provider
                  account.

         o        EASE OF  INSTALLATION  AND USE.  We deliver a shared  Internet
                  access solution. To facilitate easy installation, our Internet
                  Sharing Box product package contains step-by-step installation
                  instructions and easy-to-follow diagrams and illustrations for
                  a variety of network environments. Users can determine whether
                  their computers are appropriately configured to connect to our
                  product.  Our  integrated  firmware,  which is a  category  of
                  memory chips that hold their content without  electrical power
                  and is sometimes  referred to as "hard  software",  provides a
                  single  screen  configuration  to connect the entire office to
                  the   Internet.   Our  products   work  within  most  existing
                  environments   and   operating   systems,   such  as  Windows,
                  Macintosh, UNIX and Linux.

         o        HIGH-SPEED  ACCESS.  Our  Internet  Sharing Box  product  line
                  supports  all  major  Internet  access  technologies  used  by
                  offices, including traditional telephone and data connections,
                  integrated  services  digital  networks,   digital  subscriber
                  lines, and cable and wireless connections.

         o        LOW COST OF OWNERSHIP.  Our Internet  Sharing Box product line
                  is designed to minimize installation, maintenance and Internet
                  access expenditures by enabling multiple users in an office to
                  share  a  single  Internet  connection  and  Internet  service
                  provider  account.  In addition,  the ease of installation and
                  use of the Internet  Sharing Box product  line  enables  small
                  business   offices  to  avoid  hiring   in-house   information
                  technology  personnel  that might  otherwise  be  required  to
                  implement and maintain an effective Internet access solution.

         o        EXPANDABILITY  AND  COMPATIBILITY.  Our  Internet  Sharing Box
                  product   line  is  designed  to  be   compatible   with  most
                  widely-used computers, software, modems, and terminal adapters
                  such as those  manufactured by 3Com,  Cisco and Alcatel.  This
                  broad  compatibility  enables most  offices to leverage  their
                  prior  technology  investments  by utilizing our products with
                  hardware and software  that have  already been  installed.  In
                  addition,  our product line provides an office the flexibility
                  to expand Internet access as their needs require.

         o        FIREWALL PROTECTION. Our Internet Sharing Box products provide
                  firewall  security  among shared users. A firewall is a method
                  for keeping a network  secure.  Our products are also designed
                  to keep internal network traffic secure.

         o        VIRTUAL  PRIVATE  NETWORK.  A virtual  private network usually
                  refers to a network in which  some of the parts are  connected
                  using  the  public  Internet,   but  data  is  transmitted  in
                  encrypted form, thus making the network  "virtually  private."
                  Our ISB2LAN product supports this function.

         A DESCRIPTION OF OUR PRODUCTS. Our primary product line is the Internet
Sharing Box (ISB)  series.  The ISB products  include the  ISB100e,  the ISB2LAN
Cable/xDSL  Internet Sharing Box and the ISB2LAN-H4  Cable/xDSL Internet Sharing
Box. The ISB products  are  hardware  routers that allow users,  connected on an
ethernet  local area network,  to share  Internet  access at the same time using
only one modem, one telephone line or cable connection,  and one Internet access
account.  In addition,  the ISB series of products are a  "firewall,"  providing
network security.  The ISB products are compatible with personal computers,  PC,
Macintosh,  UNIX, NT, Linux  computers and any computer that uses a transmission
control protocol/Internet protocol (TCP/IP) browser interface.

         From the simple  single port  ISB100e,  to the  powerful  cable/digital
subscriber line supporting  ISB2LAN and ISB2LAN-H4,  we have an Internet Sharing
Box for most  Internet  connections,  including a home office with three or four
PC's to an office with up to 250 PCS.  The  Internet  connection  utilized by an
office will determine the choice of product.

         All of the ISB products allow  simultaneous  and  independent  Internet
access for all users on a network,  as well as firewall  security  protection to
prevent any unwanted access to the local network.


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<PAGE>

         o        ISB100e  -- One  serial  port  connection  for  use  with  any
                  external analog or integrated  services  digital network modem
                  up to a maximum  transfer rate of 230k.  Expanded  features of
                  this product include modem sharing, fax sharing, remote access
                  capability and virtual private network functionality.

         o        ISB2LAN and  ISB2LAN-H4  -- Designed  specifically  for shared
                  Internet   access,   the   ISB2LAN  and   ISB2LAN-H4   feature
                  step-by-step  installation  and  configuration.   These  units
                  connect to a cable or digital subscriber line modem through an
                  ethernet    connection   to   accommodate    high-speed   data
                  transmission.  An ethernet  connection is a shared media local
                  area  network  where all stations  share the total  bandwidth,
                  which  is  either  10  Mbps   (ethernet)  or  100  Mbps  (fast
                  ethernet). The ISB2LAN-H4 comes with an integrated 4-Port Hub,
                  which is a  device  used to  connect  computers  together  and
                  create a local area network.

         BUSINESS  STRATEGY.  Our mission is to become a recognized  provider of
Internet  sharing and  firewall  security  devices.  We believe that in order to
accomplish  our mission we need to be  successful  in  completing  the following
tasks:

         o        SATISFY  CUSTOMERS.   We  believe  that  the  Internet  access
                  solutions  currently  offered by most  personal  computing and
                  networking  vendors  continue  to be  technically  complex and
                  generally  unable to satisfy  the unique  requirements  of the
                  work-at-home  employee,  telecommuter,  or home  office  user.
                  Therefore,  we believe  the  opportunity  in these  markets is
                  significant  and we intend to  continue  to focus our  product
                  development  efforts,   distribution  strategies  and  support
                  services to satisfy the specific  requirements of these market
                  segments.

                  o CONTINUING TO INTEGRATE  EMERGING ACCESS  TECHNOLOGIES  INTO
                  OUR PRODUCTS.  Our products are designed to support most major
                  Internet access technologies used by consumers. We believe our
                  strategy  of  developing  products  that are  capable of being
                  expanded  will  enable our  current  and future  customers  to
                  benefit   from  the   deployment   of   emerging,   high-speed
                  transmission  technologies.   Further,  we  believe  emerging,
                  high-speed transmission  technologies will increase the demand
                  in offices for shared Internet access solutions. Therefore, we
                  intend to  support  the  commercialization  of new  high-speed
                  transmission technologies by pursuing partnering relationships
                  with  high-speed   transmission   technology  providers  while
                  continuing to pursue the existing  market for our  traditional
                  telephone and data connection products.

         o        DEVELOP  STRATEGIC  ALLIANCES.  In  order  to be  apprised  of
                  industry trends,  to be compatible with emerging  technologies
                  and to be recognized as a  technologically  savvy company,  we
                  have developed  relationships  with various industry  leaders,
                  including Bell Canada, Alaska Phone Company and Motorola.

         SALES  AND  MARKETING  OVERVIEW.   Because  of  our  limited  financial
resources we have not had the resources to fully implement a marketing and sales
force.  In order to increase our  revenues,  we will have to develop a marketing
and sales force with technical expertise and marketing capability. We anticipate
that our future sales staff will be employed both on an  independent  contractor
basis and as in-house employees.

         We believe that the principal competitive factors for companies seeking
to use our type of products are product reliability and customer service.

         We are  developing  our  customer  base  through  an  active  sales and
marketing campaign,  primarily centered on building  relationships with Internet
service providers and telephone companies.  At present, we are concentrating our
efforts in North America. Unlike many of our competitors who target distributors
and  retailers,  our  strategy  is to  target  Internet  service  providers  and
telephone companies. We believe these entities can target our ultimate consumer,
the small  business  office and home user. We believe that this approach will be
more efficient and less expensive than if we only use direct marketing or market
our products through value-added resellers and distributors.

         o        SALES STRATEGY.  Currently,  we primarily rely on direct sales
                  to generate new customers and to maintain  relationships  with
                  existing customers. We have six sales representatives.  As our
                  capacity and  operations  grow we anticipate  hiring  regional
                  sales engineers and a Vice-President of Marketing and Sales to
                  build an in-house direct sales force.

         o        MARKETING STRATEGY.  We plan to utilize a variety of marketing
                  techniques to generate awareness and inquiries.



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<PAGE>

         o        MAGAZINE/PROFESSIONAL JOURNAL/NEWSPAPER ADVERTISEMENT. We plan
                  to   advertise  in  major   telecommunications   and  Internet
                  magazines  throughout the country using  postcard  inserts and
                  other mail-in  techniques  to foster  inquiries and to solicit
                  sales.

         o        WEBSITE. We have a website (www.Nexland.com) where information
                  about our Company and our services can be obtained.  Users can
                  also  e-mail  a  request  for  contact  by one  of  our  sales
                  representatives at  Sales@Nexland.com.  Interested parties can
                  also  call  a  toll-free  number  (888-NEX-5264)  and  request
                  informational literature.

         o        WEBSITE  BANNER  ADVERTISING.   We  currently  utilize  banner
                  advertising   on   selected   websites,   such  as   Microsoft
                  LinkExchange, Practically Networked and Carrick Solutions.

         o        EXPANSION STRATEGY:  INTRODUCE NEW PRODUCTS AND SERVICES.  Our
                  objective  is to  become a  recognized  provider  of  secured,
                  shared  Internet  access.  We realize that in order to achieve
                  this,  we  must  be  innovative  in  our  product  design  and
                  functionality.  In  addition,  we must  continue to  establish
                  strategic relationships.

         COMPETITION.  We compete in several different markets,  each having its
own growth potential, expectations,  customer base, and competitors. Some of our
competitors are affiliated with major international  companies and, as a result,
are well financed and present a formidable challenge.  We cannot be certain that
we will be able to compete with significant pricing pressure by our competitors.

         Our current and potential  competitors  offer a variety of  competitive
products,  including shared Internet access products offered by Linksys, Netopia
and SMC and networking  equipment  products offered by Cisco,  3Com,  Nortel and
Intel.

         Many of our competitors are  substantially  larger than we are and have
significantly   greater   financial,   sales  and  marketing,   technical,   and
manufacturing  resources,  as well as more  established  distribution  channels.
These  competitors may be able to respond more rapidly to emerging  technologies
and changes in customer requirements, as well as devote greater resources to the
development,  promotion  and sale of their  products.  Furthermore,  some of our
competitors   may  make   strategic   acquisitions   or  establish   cooperative
relationships  among  themselves or with third parties to increase their ability
to gain market share.  Our  competitors may enter our existing or future markets
with  solutions  that may be less  expensive,  provide  higher  performance  and
additional  features or be  introduced  earlier  than our  solutions.  Given the
market opportunity in the shared Internet access market, we also expect that new
competitors may enter our market with better products and  technologies.  If any
technology is more reliable, faster, less expensive or has other advantages over
our  technology,  then the demand for our products could  decrease,  which could
seriously harm our business.

         We expect our  competitors  to continue to improve the  performance  of
their  current  products and to  introduce  new  products  and  technologies  as
industry  standards  and customer  requirements  evolve.  These new products and
technologies  may supplant or provide lower cost  alternatives  to our products.
Successful new product  introductions  or enhancements by our competitors  could
reduce the sales or market  acceptance of our products and services,  perpetuate
intense price competition or make our products obsolete.  To be competitive,  we
must invest in research  and  development,  sales and  marketing,  and  customer
support.  We cannot be sure that we will have sufficient  resources to make such
investments or that we will be able to make the technological advances necessary
to be  competitive.  As a  result,  we may not be able  to  compete  effectively
against our  competitors.  Our failure to maintain  and enhance our  competitive
position   within  the  market  may  seriously  harm  our  business.   Increased
competition is likely to result in price reductions,  reduced gross margins, and
longer sales cycles,  any of which would seriously harm our business.  We cannot
be  certain  that we will be able to  compete  successfully  against  current or
future  competitors  or that  competitive  pressures will not seriously harm our
business.

         On  November  17,  1999,  we  entered  into  a  Mutual  Non-Competition
Agreement with Nexland,  S.A. a French  corporation,  owned by several principal
stockholders of our Company. The agreement provides for the following:

         o        a five year non-competition period;

         o        Nexland France shall have exclusive sales rights to Europe;

         o        we shall have  exclusive  sales and marketing  rights to North
                  America, South America, Central America and the Caribbean;


                                       6
<PAGE>

         o        if either  party sells into the other's  territory,  the sales
                  contracts  shall  be  assigned  to the  other  party,  and the
                  assignee  shall pay the assignor 20% of the gross value of the
                  contract.

         INTELLECTUAL  PROPERTY.  We rely and intend to rely on a combination of
patent,  copyright,   trademark  and  trade  secret  laws  and  restrictions  on
disclosure to protect our intellectual  property rights. We have one U.S. patent
pending relating to technology  incorporated in our Internet Sharing Box product
line,  consisting  of an  algorithm  that  allows the  virtual  private  network
encrypted protocol to pass through our network address translation routers, thus
securing the communication from unintended third parties. In addition, we design
and  implement  proprietary  coded  "firmware"  which  is  designed  to make the
Internet Sharing Box products function.

         We also  intend  to  enter  into  confidentiality  agreements  with our
employees  and  consultants,  and  control  access  to and  distribution  of our
documentation  and other  proprietary  information.  We cannot  assure  you that
others will not independently develop similar or competing  technology.  Despite
our efforts to protect our proprietary rights,  unauthorized parties may attempt
to copy or otherwise obtain and use our products or technology. We cannot assure
you that these precautions will prevent  misappropriation or infringement of our
intellectual property. Monitoring unauthorized use of our products is difficult,
and  we  cannot   assure  you  that  the  steps  we  have  taken  will   prevent
misappropriation of our technology,  particularly in foreign countries where the
laws may not protect our proprietary rights as fully as in the United States.

         Our  industry is  characterized  by the  existence of a large number of
patents and  frequent  claims and  litigation  regarding  such patents and other
intellectual  property  rights.  In  particular,  leading  companies in the data
communication  and networking  markets have  extensive  patent  portfolios  with
respect to modem and networking technology.  From time to time, these companies,
as well as others,  have asserted and may assert  exclusive  patent,  copyright,
trademark and other  intellectual  property rights to  technologies  and related
standards  that are  important  to us. We  expect  that we may  increasingly  be
subject to infringement  claims as the number of products and competitors in the
small business office market for shared Internet access  solutions  increase and
the functionality of products overlaps.  In addition,  we cannot assure you that
third parties will not assert additional claims or initiate  litigation  against
us or our manufacturers,  suppliers or customers alleging  infringement of their
proprietary  rights with respect to our existing or future  products.  We may in
the future initiate claims or litigation  against third parties for infringement
of our proprietary rights to determine the scope and validity of our proprietary
rights. Any such claims, with or without merit, could be time-consuming,  result
in costly  litigation  and divert the  attention  of  technical  and  management
personnel,  or  require us to develop  non-infringing  technology  or enter into
royalty or  licensing  agreements.  Such  royalty or  licensing  agreements,  if
required, may not be available on acceptable terms, if at all. In the event of a
successful  claim of  infringement  and our  failure  or  inability  to  develop
non-infringing  technology or license the proprietary  rights on a timely basis,
our  business,  operating  results and financial  condition  could be materially
adversely affected.

         EMPLOYEES.  As of April 1, 2001, we employed  thirteen persons in Miami
and nine in Canada,  including  nine in operations  and  administration,  one in
marketing,  and five in customer support.  We also employ seven commissioned and
salaried sales representatives.  None of our employees is represented by a labor
union and we have experienced no work stoppages to date. We believe our employee
relations are good.


CERTAIN BUSINESS RISKS

         Our Company is subject to various risks,  which may materially harm our
business,  financial  condition and results of operations.  You should carefully
consider the risks and  uncertainties  described below and the other information
in this filing before  deciding to purchase our Common Stock.  These are not the
only  risks  and  uncertainties   that  we  face.  If  any  of  these  risks  or
uncertainties  actually occurs, our business,  financial  condition or operating
results  could be  materially  harmed.  In that case,  the trading  price of our
Common Stock could decline and you could lose all or part of your investment.


WE HAVE HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE

         We have  historically  lost money. For the year ended December 31, 2000
and the year ended  December 31, 1999,  we sustained  losses of $2.8 million and
$0.1 million,  respectively.  Future losses are likely to occur. Our independent
auditors  have noted that our  Company  may not have  significant  cash or other
material  assets to cover its  operating  costs and to allow it to continue as a
going  concern.  Our ability to obtain  additional  funding will  determine  our
ability  to  continue  as  a  going  concern.  Accordingly,  we  may  experience
significant  liquidity  and  cash  flow  problems  if we are not  able to  raise
additional capital as needed and on acceptable terms. No assurances can be given
that we will be successful in reaching or maintaining profitable operations.


                                       7
<PAGE>


WE NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS

         We  have  relied  on  significant   external   financing  to  fund  our
operations.   Such  financing  has  historically  come  from  a  combination  of
borrowings  from and sale of Common Stock to third parties and funds provided by
certain officers and directors.  We may need to raise additional capital to fund
our anticipated  operating  expenses and future expansion.  We cannot assure you
that  financing  whether  from  external  sources  or  related  parties  will be
available if needed or on favorable terms. The sale of our Common Stock to raise
capital may cause dilution to our existing shareholders. Our inability to obtain
adequate financing will result in the need to curtail business  operations.  Any
of these events would be materially  harmful to our business and may result in a
lower stock price.

WE HAVE BEEN THE SUBJECT OF A GOING CONCERN OPINION FROM OUR INDEPENDENT
AUDITORS

         Our independent  auditors have added an explanatory  paragraph to their
audit opinions issued in connection with the 2000 and 1999 financial  statements
which states that our Company may not have  significant  cash or other  material
assets  to cover its  operating  costs  and to allow it to  continue  as a going
concern.  Our ability to obtain additional funding will determine our ability to
continue  as a going  concern.  Our  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.


WE HAVE BEEN AND CONTINUE TO BE SUBJECT TO A WORKING CAPITAL DEFICIT AND
ACCUMULATED DEFICIT

         We had a working  capital  deficit of $0.6  million and $0.2 million at
December 31, 2000 and 1999, respectively.  We had an accumulated deficit of $3.2
million and $0.3 million at December 31, 2000 and 1999, respectively.


OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND
MAY FLUCTUATE SIGNIFICANTLY

         There has been a limited  public  market for our Common Stock and there
can be no  assurance  that an active  trading  market for our Common  Stock will
develop. As a result,  this could adversely affect our shareholders'  ability to
sell our Common  Stock in short time  periods,  or possibly  at all.  Our Common
Stock has  experienced,  and is likely to experience in the future,  significant
price and volume fluctuations,  which could adversely affect the market price of
our Common Stock without regard to our operating  performance.  In addition,  we
believe that factors such as quarterly  fluctuations  in our financial  results,
announcements  by our  competitors  and  changes in the  overall  economy or the
condition of the financial  markets could cause the price of our Common Stock to
fluctuate substantially.


WE HAVE BEEN IN BUSINESS FOR A SHORT PERIOD OF TIME

         Because we have been in business for a short  period of time,  there is
limited  information  upon which  investors can evaluate our  business.  We were
incorporated on December 4, 1994 but did not begin significant  operations until
the third  quarter of 1999.  You should  consider the  likelihood  of our future
success to be highly  speculative in view of our limited operating  history,  as
well as the complications frequently encountered by other companies in the early
stages  of  development,   particularly  companies  in  the  highly  competitive
technology industry.


WE HAVE HAD A HISTORY OF A LIMITED CUSTOMER BASE AND THIS MAY CONTINUE

         At present,  our customer base consists  primarily of Internet  service
providers,  telephone  companies,  and  value-added  resellers.  Our  ability to
operate depends on increasing our customer base and achieving  sufficient  gross
profit  margins.  We  cannot  assure  you that we will be able to  increase  our
customer base or to operate  profitably.  If any of our major  customers stop or
delay their purchases of our products,  our revenue and  profitability  would be
adversely  affected.  We anticipate that sales of our products to relatively few
customers will continue to account for a significant  portion of our revenue. In
1999, sales to three customers accounted for 60% of our revenue,  while in 2000,
sales to 10  customers  accounted  for 53% of our revenue.  If  these  customers
cancel or delay their purchase orders,  our revenue may decline and the price of
our Common Stock may fall. We cannot assure you that our current  customers will
continue  to place  orders  with us,  that  orders by  existing  customers  will
continue  at the  levels of  previous  periods or that we will be able to obtain
orders from new customers.  Although our financial  performance depends on large
orders  from  a few  key  customers  and  resellers,  we  do  not  have  binding
commitments from any of them.


                                       8
<PAGE>


WE MAY BE HARMED BY IMPORT RESTRICTIONS

         Our imported  materials are subject to certain quota  restrictions  and
U.S. customs duties,  which are a material part of our cost of goods. A decrease
in quota  restrictions  or an increase in customs duties could harm our business
by making needed materials scarce or by increasing the cost of such materials.


WE MAY BE EXPOSED TO INTERNATIONAL BUSINESS AND CURRENCY FLUCTUATIONS

         Although we are not dependent on international  sales for a substantial
amount of our revenue (10% of total revenue in 1999 and in 2000),  we still face
the risks of international business and associated currency fluctuations,  which
might  adversely  affect our operating  results.  These risks include  potential
regulation of our technology by foreign governments,  general geopolitical risks
associated  with political and economic  instability,  changes in diplomatic and
trade  relationships,  and foreign laws  affecting the Internet  generally.  Our
risks of doing business  abroad also include our ability to develop and maintain
distribution  relationships  on favorable  terms. To the extent we are unable to
favorably renew our distribution  agreements or make  alternative  arrangements,
revenue may decrease from our international  operations.  In addition, delays in
deliveries  from our component  suppliers could cause our revenue to decline and
adversely affect our results of operations.


OUR COMMON STOCK MAY BE DEEMED TO BE "PENNY STOCK"

         Our  Common  Stock may be  deemed  to be "penny  stock" as that term is
defined in Rule 3a51-1  promulgated  under the Securities  Exchange Act of 1934.
Penny stocks are stock:

         o        With a price of less than $5.00 per share;

         o        That are not traded on a "recognized" national exchange;

         o        Whose prices are not quoted on the Nasdaq automated  quotation
                  system  (Nasdaq  listed  stock  must still have a price of not
                  less than $5.00 per share); or

         o        In issuers with net tangible assets less than $2.0 million (if
                  the issuer has been in continuous operation for at least three
                  years) or $5.0 million (if in  continuous  operation  for less
                  than three years),  or with average revenues of less than $6.0
                  million for the last three years.

         Broker/dealers   dealing  in  penny  stocks  are  required  to  provide
potential  investors  with a  document  disclosing  the  risks of penny  stocks.
Moreover,  broker/dealers  are required to determine  whether an investment in a
penny  stock  is  a  suitable  investment  for  a  prospective  investor.  These
requirements  may reduce the  potential  market for our Common Stock by reducing
the number of potential investors. This may make it more difficult for investors
in our Common Stock to resell shares to third parties or to otherwise dispose of
them. This could cause our stock price to decline.


OUR STOCK PRICE COULD DECLINE DUE TO FLUCTUATIONS IN THE DEMAND FOR OUR
PRODUCTS AND GENERAL ECONOMIC CONDITIONS

         Fluctuations  in  consumer  demand  and the timing and amount of orders
from key customers  contribute to the variability of our operating  results.  In
addition, any general economic downturn, whether real or perceived, could change
consumer spending  habits and decrease  demand for our products.  As a result of
these and other factors,  our operating  results may fall below market analysts'
expectations in some future quarters, and our stock price may decline.

         We are subject to all of the substantial  risks inherent in an Internet
related business, any one of which may harm our ability to operate successfully.
These include, but are not limited to:

         o        Our inability to attract or retain customers;

         o        Our failure to anticipate and adapt to a developing market;

         o        Our inability to upgrade and develop competitive products; and

         o        Technical difficulties with product development.


                                       9
<PAGE>

         In  addition,  we believe that many  potential  customers in our target
markets  are not fully  aware of the need for  Internet  security  products  and
services.   Historically,  only  enterprises  with  substantial  resources  have
developed or purchased Internet security solutions.  Also, there is a perception
that Internet security is costly and difficult to implement.  Therefore, we will
not succeed unless we can educate our target markets about the need for Internet
security  and  convince  potential  customers  of our  ability to  provide  this
security in a cost-effective and easy-to-use manner. Although we have spent, and
will continue to spend,  considerable  resources  educating  potential customers
about the need for  Internet  security  and the  benefits  of our  products  and
services, our efforts may be unsuccessful.


WE HAVE A  SUBSTANTIAL  AMOUNT OF STOCK THAT WILL  BECOME  AVAILABLE  FOR
RESALE UNDER RULE 144,  WHICH MAY HAVE AN ADVERSE  EFFECT ON THE MARKET AND
OUR ABILITY TO OBTAIN EQUITY FINANCING

         As of April 30, 2001, we have issued and outstanding  36,153,385 shares
of Common Stock of which 32,804,652  shares are "restricted  securities" as that
term is defined under Rule 144  promulgated  under the  Securities  Act.  Future
sales of the  restricted  shares may be made under Rule 144. Such sales may have
an adverse  effect on the then  prevailing  market  price of the  Common  Stock,
adversely  affect our ability to obtain future financing in the capital markets,
and may create a potential market overhang.


OUR ARTICLES OF INCORPORATION ALLOW AUTHORIZATION AND DISCRETIONARY  ISSUANCE OF
BLANK CHECK  PREFERRED  STOCK WHICH COULD DELAY,  DETER,  OR PREVENT A TAKEOVER,
MERGER OR CHANGE OF CONTROL AND MAY PREVENT YOU FROM REALIZING A PREMIUM RETURN

         Our Articles of Incorporation  authorize the issuance of "blank check,"
preferred  stock.  The Board of  Directors  is  empowered,  without  shareholder
approval,  to designate  and issue  additional  series of  preferred  stock with
dividend,  liquidation,  conversion, voting or other rights, including the right
to  issue  convertible  securities  with no  limitations  on  conversion.  These
designations and issuances, could:

         o        Adversely  affect  the  voting  power or other  rights  of the
                  holders of our Common Stock.

         o        Substantially dilute the common shareholder's interest.

         o        Depress the price of our Common Stock.

         o        Delay,  deter,  or  prevent a  merger,  takeover  or change in
                  control without any action by the shareholders.


OUR BUSINESS PLAN CONTEMPLATES FUTURE INTERNATIONAL OPERATIONS BUT THERE ARE
NUMEROUS RISKS AND UNCERTAINTIES IN OFFERING PRODUCTS OUTSIDE OF THE
UNITED STATES

         We intend to expand into  international  markets.  We currently  have a
technology sharing business relationship with Nexland France, which precludes us
from marketing in Europe. We cannot be sure that we will be able to successfully
sell our  products or  adequately  maintain  operations  outside  North or South
America.  In addition,  there are certain risks inherent in operating a business
internationally. These include:

         o        Unexpected changes in regulatory requirements;

         o        Ability to secure and maintain the necessary physical and
                  telecommunications infrastructure;

         o        Challenges in staffing and managing foreign operations; and

         o        Employment laws and practices in foreign countries.

         Any  of  these  could  adversely  affect  our  proposed   international
operations.  Furthermore,  some  foreign  governments  have  enforced  laws  and
regulations on content  distributed  over the Internet that are more restrictive
than those  currently  in place in the United  States.  In  addition,  companies
located in Taiwan  perform  our  manufacturing.  The current  political  tension
between  Taiwan and Mainland China may impair our ability to import product from
our  manufacturers.  Anyone or more of these factors could adversely  affect our
contemplated future international operations, and consequently, our business.


                                       10
<PAGE>

WE MAY BE UNABLE TO PROTECT  OUR  INTELLECTUAL  PROPERTY  RIGHTS OR TO  CONTINUE
USING  INTELLECTUAL  PROPERTY  THAT WE LICENSE FROM  OTHERS;  WE MAY ALSO BE THE
SUBJECT OF INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS

         We rely  and  intend  to  rely on a  combination  of  pending  patents,
copyright,  trademark,  service  mark,  and trade  secret  laws and  contractual
restrictions to establish and protect certain of our proprietary rights. We have
a patent  pending  for  certain  technology,  which is included in our family of
Internet  sharing  products.  There can be no assurance  that we will be able to
obtain such protection.  Despite our efforts to protect our proprietary  rights,
we cannot assure you that unauthorized parties will not copy or otherwise obtain
and use our data or  technology  or will not  independently  develop  similar or
competing  technology.  We cannot assure you that these precautions will prevent
misappropriation  or  infringement  of  our  intellectual  property.  Monitoring
unauthorized use of our products is difficult, and we cannot assure you that the
steps  we  have  taken  will  prevent  misappropriation  of  our  technology  or
intellectual property,  particularly in foreign countries where the laws may not
protect our proprietary rights as fully as in the United States.

         Our  industry is  characterized  by the  existence of a large number of
patents and frequent claims and related  litigation  regarding  patent and other
intellectual  property  rights.  In  particular,  leading  companies in the data
communications  and networking  markets have extensive  patent  portfolios  with
respect to modem and networking  technology.  From time to time,  third parties,
including  these  leading  companies,  have  asserted  and may assert  exclusive
patent,   copyright,   trademark  and  other  intellectual  property  rights  to
technologies  and related  standards that are important to us. We expect that we
may  increasingly be subject to  infringement  claims as the numbers of products
and competitors in the office market for shared  Internet access  solutions grow
and the  functionality of products  overlaps.  As of the date of this filing, we
have not been the recipient of any such claims.

         We may in the  future  initiate  claims  or  litigation  against  third
parties for  infringement of our  proprietary  rights to determine the scope and
validity of our  proprietary  rights.  Any such claims,  with or without  merit,
could be time consuming,  result in costly litigation and diversion of technical
and management personnel, or require us to develop non-infringing  technology or
enter  into  royalty  or  licensing   agreements.   Such  royalty  or  licensing
agreements, if required, may not be available on acceptable terms, if at all. In
the event of a successful  claim of infringement and our failure or inability to
develop non-infringing  technology or license the proprietary rights on a timely
basis, our business would be harmed.


BECAUSE OF THE UNCERTAINTY ASSOCIATED WITH UNPROVEN BUSINESS MODELS, WE MAY BE
UNABLE TO ACHIEVE WIDESPREAD MARKET ACCEPTANCE

         Since our business model is relatively new and unproven,  we may not be
able to anticipate  or adapt to a developing  market.  In addition,  our success
will depend upon the widespread  commercial acceptance of shared Internet access
products in the office and home markets.  Businesses have only recently begun to
deploy shared Internet access products, and the market for these products is not
fully developed.  If single Internet access devices  currently  utilized by many
offices are deemed sufficient even though they do not enable shared access, then
the market  acceptance  of our products may be slower than  expected.  Potential
users of our products may have concerns  regarding  the  security,  reliability,
cost, ease of use and capability of our products.  We cannot accurately  predict
the future growth rate or the ultimate size of the office or home markets.


WE CANNOT BE CERTAIN THAT WE WILL BE ABLE TO COMPETE WITH SIGNIFICANT PRICING
PRESSURE BY OUR COMPETITORS

         As a result of  increased  competition  in our  industry,  we expect to
encounter  significant  pricing  pressure.  We cannot be certain that we will be
able to offset the effects of any price  reductions  we may be forced to give to
our customers or that we will have the resources to compete successfully.


OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE LOSE MARKET SHARE

         We compete in a new, rapidly evolving and highly competitive market. We
expect  competition  to persist and  intensify  in the  future.  Our current and
potential competitors offer a variety of competitive products,  including shared
Internet access products offered by RAMP Networks,  Flowpoint,  Intel,  Netopia,
Watchguard,  Netscreen,  Nortel, Cisco,  Sonicwall,  Linksys, Cayman Systems and
others, and high-end networking  equipment offered by companies such as 3Com and
Nortel.

         Many of our competitors are  substantially  larger than we are and have
significantly greater financial, sales, marketing, technical,  manufacturing and
other resources and more established  distribution  channels.  These competitors
may be able to respond more quickly to new or emerging  technologies and changes
in  customer  requirements  or  devote  greater  resources  to the  development,
promotion  and  sale of their  products  than we can.  Furthermore,  some of our
competitors   may  make   strategic   acquisitions   or  establish   cooperative


                                       11
<PAGE>


relationships  to  increase  their  ability  to  rapidly  gain  market  share by
addressing the needs of our prospective  customers.  These competitors may enter
our  existing  or future  markets  with  solutions  that may be less  expensive,
provide higher performance or additional  features or be introduced earlier than
our  solutions.  Given the  market  opportunity  in the shared  Internet  access
market,  we also  expect that other  companies  may enter our market with better
products and technologies.  If any technology is more reliable, faster, and less
expensive or has other  advantages over our technology,  then the demand for our
products and services would decrease, which would seriously harm our business.

         We expect our  competitors  to continue to improve the  performance  of
their current  products and introduce new products and  technologies as industry
standards and customer  requirements evolve. These new products and technologies
could  supplant  or  provide  lower cost  alternatives  to our  products.  To be
competitive,  we must continue to invest  significant  resources in research and
development, sales and marketing, and customer support.

         Increased competition is likely to result in price reductions,  reduced
gross margins, longer sales cycles, and loss of market share, any of which would
seriously harm our business and results of operations.

         The market for shared Internet  access  solutions is  characterized  by
rapidly changing  technologies and short product life cycles. Our future success
will depend in large part upon our ability to:

         o        Identify and respond to emerging  technological  trends in the
                  market;

         o        Develop and maintain competitive products;

         o        Enhance  our  products  by  adding  innovative  features  that
                  differentiate our products from those of our competitors;

         o        Bring  products to market on a timely basis and at competitive
                  prices;

         o        Respond  effectively  to  new  technological  changes  or  new
                  product announcements by others; and

         o        Respond to emerging broadband access technologies.

         The technical  innovations  required for us to remain  competitive  are
inherently complex,  require long development cycles, and are dependent, in some
cases,  on sole source  suppliers.  We will be required to continue to invest in
research  and  development  in order to  attempt to  maintain  and  enhance  our
existing  technologies and products,  but we may not have the funds available to
do so. Even if we have  sufficient  funds,  these  investments may not serve the
needs of customers or be compatible with changing technological  requirements or
standards.   Most  development   expenses  are  incurred  before  the  technical
feasibility  or  commercial  viability  of  new  or  enhanced  products  can  be
ascertained.  Revenue from future  products or product  enhancements  may not be
sufficient to recover the associated development costs.


WE HAVE LIMITED MARKETING AND SALES CAPABILITY

         Because of our limited working capital in the past, we have not had the
resources to fully  implement  our  marketing  and sales  strategy.  In order to
increase our revenues, we are in the process of further implementing a marketing
and sales force with technical expertise and marketing capability.  There can be
no assurance that we will be able to:

         o        Establish and develop such a sales force;

         o        Gain market acceptance for our products;

         o        Obtain and retain  qualified  sales  personnel  on  acceptable
                  terms; and

         o        Meet our proposed marketing schedules or plans.

                  To the extent that we arrange with third parties to market our
products,  the success of such  products may depend on the efforts of such third
parties.


                                       12
<PAGE>


OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS, TOGETHER, MAY BE
ABLE TO EFFECTIVELY EXERCISE CONTROL OVER ALL MATTERS SUBMITTED TO A VOTE OF
SHAREHOLDERS

         Our  executive   officers,   directors,   and  principal   shareholders
beneficially own, in the aggregate,  approximately 84% of our outstanding shares
of  Common  Stock.  These  shareholders,  if  acting  together,  will be able to
effectively  control most matters requiring approval by our shareholders.  These
shareholders  can designate the members of our Board of Directors and can decide
our operations and business strategy.  You may disagree with these shareholders'
decisions.  Even if you do not like the members of our Board of  Directors,  you
will not be able to remove them from office. Additionally,  these members of our
Board of Directors would be able to significantly influence a proposed amendment
to our  charter,  a merger  proposal,  a proposed  sale of assets or other major
corporate transaction or a non-negotiated  takeover attempt. Their influence may
not be beneficial to you. If they prevent or delay a merger or takeover, you may
not realize the premium return that shareholders may realize in conjunction with
corporate takeovers. Moreover, there are no preemptive rights in connection with
our Common Stock. Finally, cumulative voting in the election of our Directors is
not provided for. Accordingly, the holders of a majority of the shares of Common
Stock,  present  in  person  or by  proxy,  will  be able  to  elect  all of our
Directors.


WE HAVE NOT PAID NOR DO WE EXPECT TO PAY DIVIDENDS IN THE NEAR FUTURE

         It is not  anticipated  that we will pay any  dividends  on our  Common
Stock in the  future.  The  Board of  Directors  intends  to  follow a policy of
retaining earnings, if any, for use in our business operations. As a result, the
return on your investment in us will depend upon any  appreciation in the market
price of the Common Stock.


THE INSIDE SHAREHOLDERS RECEIVED SHARES FOR LESS CONSIDERATION THAN YOU ARE
ASKED TO PAY

         The number of shares of Common Stock issued to our present shareholders
for cash and  property  was  arbitrarily  determined  and was not the product of
arm's length transactions. The inside shareholders received shares of our Common
Stock from $0.0104 to $0.1223 per share,  which is  substantially  less than you
might pay.


THE OFFICERS AND DIRECTORS MAY BE ENTITLED TO INDEMNIFICATION FOR SECURITIES
LIABILITIES BY OUR COMPANY RESULTING IN SUBSTANTIAL EXPENDITURES FOR US AND
PREVENTING ANY RECOVERY FROM OFFICERS AND DIRECTORS

         Our  Articles  of  Incorporation  provide  that  we may  indemnify  any
Director,  officer,  agent, and/or employee as to those liabilities and on those
terms and conditions as are specified in the Delaware Business  Corporation Act.
Further,  we may purchase  and maintain  insurance on behalf of any such persons
whether or not the  corporation  would have the power to  indemnify  such person
against the liability insured against. The foregoing could result in substantial
expenditures  by us and  prevent  any  recovery  from our  Directors,  officers,
agents,  and employees for losses  incurred by us as a result of their  actions.
Further, we have been advised that in the opinion of the Securities and Exchange
Commission,  indemnification  is  against  public  policy  as  expressed  in the
Securities Act of 1933, as amended, and is, therefore, unenforceable.


WE HAVE EXPERIENCED NEGATIVE CASH FLOW WHICH COULD RESULT IN OUR INABILITY TO
FUND PROGRAMS AND CREATE A NEED FOR ADDITIONAL FINANCING

         Since inception, we have experienced negative cash flow from operations
and we expect to continue to experience  negative cash flow from  operations for
the foreseeable  future.  Therefore,  we have relied solely on limited revenues,
shareholder loans and the issuances of equity securities to fund our operations.
In  particular,  we may  need  to  raise  additional  funds,  especially  if our
estimates of revenue,  working capital and/or capital  expenditure  requirements
change or prove  inaccurate  or in order for us to respond to  technological  or
marketing hurdles or to take advantage of unanticipated opportunities. We cannot
be certain that additional financing,  through the issuance of equity securities
or otherwise,  will be available to us on favorable  terms when required,  or at
all. If adequate  funds are not  available,  or are not  available on acceptable
terms, we may not be able to take advantage of market opportunities, develop new
products or otherwise  respond to competitive  pressures  which could  adversely
affect our ability to achieve and sustain  positive cash flow and  profitability
in the future.


WE DEPEND ON CONTRACT MANUFACTURERS FOR SUBSTANTIALLY ALL OF OUR MANUFACTURING
REQUIREMENTS; THE INABILITY OF OUR CONTRACT MANUFACTURERS TO PROVIDE US WITH
ADEQUATE SUPPLIES OF HIGH QUALITY PRODUCTS OR THE LOSS OF ANY OF OUR CONTRACT
MANUFACTURERS WOULD CAUSE A DELAY IN OUR ABILITY TO FULFILL ORDERS WHILE WE
OBTAIN A REPLACEMENT MANUFACTURER

         We have developed an outsourced contract  manufacturing  capability for
the  production  of our  products.  Our primary  relationship  with our contract
manufacturers  has been  accomplished  through  Smerwick,  Ltd., our  Hong  Kong

                                       13

<PAGE>

affiliate  located  in  Taiwan,  with whom we have  entered  into a  Cooperation
Agreement.  We rely on contract  manufacturers to procure components,  assemble,
test and package our products.  We rely  primarily on one contract  manufacturer
for all of our product  manufacturing and assembly,  and if we cannot obtain its
services, we may not be able to ship products.

         We outsource all of our hardware  manufacturing and assembly  primarily
to one manufacturer  and assembly house. We employ Smerwick,  Ltd. to coordinate
all  manufacturing and packaging with this  manufacturer.  We do not have a long
term manufacturing  contract with this manufacturer.  To date, this manufacturer
has produced products with acceptable quality,  quantity and cost, but there can
be no  assurance  it will be able or  willing to meet our  future  demands.  Our
operations could be disrupted if we have to switch to a replacement vendor or if
our hardware  supply is  interrupted  for an extended  period.  While we believe
there are alternative  manufacturing  companies available at competitive prices,
any   interruption   in  the  operations  of  one  or  more  of  these  contract
manufacturers or delays in their shipment of products would adversely affect our
ability to meet scheduled  product  deliveries to our customers and could result
in a loss in customer orders and revenue.

         We intend to introduce new products and product  enhancements that will
require us to rapidly achieve volume production by coordinating our efforts with
those of our suppliers and contract manufacturers. The inability of our contract
manufacturers  to provide us with adequate  supplies of high quality products or
the loss of any of our contract manufacturers would cause a delay in our ability
to fulfill orders while we obtain a replacement  manufacturer.  In addition, our
inability to accurately forecast the actual demand for our products could result
in supply,  manufacturing or testing  capacity  constraints.  These  constraints
could  result in delays in the  delivery of our products or the loss of existing
or potential customers.

         Although we perform random spot testing on  manufactured  products,  we
rely on our  contract  manufacturers  for  assembly  and primary  testing of our
products. Any product shortages or quality assurance problems could increase the
costs of manufacturing, assembling or testing our products.


IF WE FAIL TO DEVELOP AND EXPAND OUR DISTRIBUTION CHANNELS OUR BUSINESS WILL
SUFFER

         Our product  distribution  strategy focuses  primarily on continuing to
develop and expand our distribution channels through Internet service providers,
value-added  resellers,  and  telephone  companies.  If we fail to  develop  and
cultivate  relationships with these customers,  or if they are not successful in
their sales  efforts,  our product sales may decrease and our operating  results
may suffer.  Many of our  resellers  also sell  products  that  compete with our
products.  We cannot  assure you that our  customers  will  market our  products
effectively  or continue to devote the  resources  necessary  to provide us with
effective sales, marketing and technical support.


OUR FINANCIAL RESULTS MAY PERIODICALLY VARY DUE TO FACTORS WHICH MAY AFFECT OUR
STOCK

         Our operating results may vary due to factors unrelated to the progress
of our business and beyond our control. These factors include:

         o        Continued market acceptance of our products;

         o        Fluctuations in demand for our products and services;

         o        Variations  in  the  timing of  orders  and  shipments  of our
                  products;

         o        Timing of new  product and service  introductions by us or our
                  competitors;

         o        Our ability to obtain  sufficient  supplies of sole or limited
                  source components for our products;

         o        Unfavorable  changes  in  the  prices  of  the  components  we
                  purchase;

         o        Our  ability to attain and  maintain  production  volumes  and
                  quality levels for our products; and

         o        Our  ability  to  integrate  new  technologies  we  develop or
                  acquire into our products.

         The amount and timing of our  operating  expenses  generally  will vary
from  quarter  to  quarter  depending  on the  level of actual  and  anticipated
business  activities.  Research and development expenses will vary as we develop

                                       14
<PAGE>

new products.  General and administrative  expense  fluctuations in past periods
have been due primarily to the level of sales and marketing expenses  associated
with new product introductions. In the past, we have experienced fluctuations in
operating results.


WE ARE SUBJECT TO VARIOUS RISKS PERTAINING TO THE INTERNET INDUSTRY

         Our revenue  growth is dependent on the  continued  growth of broadband
access services, which are currently in early stages of development, and if such
services  are  not  widely  adopted  or we are  unable  to  address  the  issues
associated  with the  development of such services,  our sales will be adversely
affected.

         Sales  of our  products  depend  on the  increased  use and  widespread
adoption of broadband access services,  such as cable, digital subscriber lines,
integrated  services digital networks,  frame relay and  point-to-point  digital
circuits.  These  broadband  access  services  typically are more expensive with
respect to the required  equipment and ongoing  access  charges than is the case
with Internet  dial-up access  providers.  Our business,  prospects,  results of
operations and financial condition would be materially adversely affected if the
use of broadband  access  services  does not increase as  anticipated  or if our
customers' access to broadband  services is limited.  Critical issues concerning
the use of broadband  access  services are unresolved and will likely affect the
use of broadband access services. These issues include:

         o        Security;

         o        Reliability;

         o        Capacity;

         o        Congestion;

         o        Cost;

         o        Ease of access; and

         o        Quality of service.

         If the  market  for  products  that  provide  broadband  access  to the
Internet  fails  to  develop,  or  if it  develops  at a  slower  pace  than  we
anticipate,  our  business,  prospects,  results  of  operations  and  financial
condition would be materially adversely affected.

         The broadband  access  service  market is new and is  characterized  by
rapid  technological  change,  frequent  enhancements to existing products,  new
product  introductions,  changes in customer  requirements and evolving industry
standards.  We  may be  unable  to  respond  quickly  or  effectively  to  these
developments. The introduction of new products by competitors, market acceptance
of products  based on new or alternative  technologies,  or the emergence of new
industry standards, could render our existing or future products obsolete, which
would materially adversely affect our business, prospects, results of operations
and financial condition.

         The  emergence of new industry  standards  might require us to redesign
our  products.  If our  products  fail to comply  with widely  adopted  industry
standards,  our customers and potential customers may not purchase our products.
This would have a material adverse effect on our business, prospects, results of
operations and financial condition.

         Governmental  regulations  affecting Internet security could affect our
revenue.  Any  additional  governmental  regulation  of  imports/exports  or the
failure to obtain required export approval of our encryption  technologies could
adversely  affect our  international  and domestic sales.  The United States and
various foreign governments have imposed controls,  export license  requirements
and  restrictions  on the import and export of certain  technologies,  including
encryption technology. In addition, from time to time governmental agencies have
proposed additional regulations on encryption technology,  such as requiring the
escrow  and  governmental   recovery  of  private  encryption  keys.  Additional
regulation of encryption  technology  could delay or prevent the  acceptance and
use of encryption products and public networks for secure communications.  This,
in turn, could decrease demand for our products.

         In addition,  some foreign  competitors  are subject to less  stringent
controls on exporting their encryption  technologies.  As a result,  they may be
able  to  compete  more  effectively  than  we  can  in the  United  States  and
internationally.

                                       15
<PAGE>

THE PURCHASE OF SHARES IN OUR COMPANY WILL BE SUBJECT TO VARIOUS INVESTMENT
RISKS

         Because  our  officers,  directors,  principal  shareholders  and their
affiliates beneficially own approximately 84% of our stock ownership,  they will
be able to elect  the Board of  Directors  and  control  all  matters  requiring
shareholder approval.

         The price of our Common  Stock has been  volatile  and may  continue to
experience volatility.

         The trading price of our Common Stock may fluctuate  widely as a result
of a number of factors,  most of which are outside  our  control.  Some of these
factors include:

         o        Quarterly variations in our operating results;

         o        Announcements  by our  Company  about the  performance  of our
                  products and our competitors'  announcements about performance
                  of their products; and

         o        Changes in earnings  estimates by analysts,  or the failure to
                  meet the expectations of analysts.

         In addition,  the stock market has experienced extreme price and volume
fluctuations,  which  have  particularly  affected  the  market  prices  of many
technology and computer  software  companies and which have in some cases,  been
unrelated to the operating performance of these companies.


CHARTER AND BYLAW PROVISIONS OF OUR COMPANY LIMIT THE AUTHORITY OF OUR
SHAREHOLDERS, AND THEREFORE MINORITY SHAREHOLDERS MAY NOT BE ABLE TO
SIGNIFICANTLY INFLUENCE THE COMPANY'S GOVERNANCE OR AFFAIRS

         Our Board of Directors  has the  authority to issue shares of preferred
stock  and  to  determine  the  price,  rights,   preferences,   privileges  and
restrictions,  including voting rights, of those shares without any further vote
or action by  shareholders.  The rights of the  holders of Common  Stock will be
subject to, and may be  adversely  affected by, the rights of the holders of any
preferred  stock that may be issued in the future.  The  issuance  of  preferred
stock, while providing  flexibility in connection with possible acquisitions and
other corporate purposes,  could have the effect of making it more difficult for
a third party to acquire a majority of our outstanding voting stock.

         Substantial future sales of our Common Stock in the public market could
cause our stock price to fall. If our shareholders  sell substantial  amounts of
our Common Stock in the public market, including shares issued upon the exercise
of outstanding  options,  the trading price of our Common Stock could fall. Such
sales also might make it more difficult for us to raise capital in the future at
a time and price that we deem appropriate.


WE COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL

         Our  success  largely  depends  on the  efforts  and  abilities  of key
executives and  consultants,  including  Gregory S. Levine,  our President and a
Director of our Company, and Martin Dell'Oca,  our Chief Financial Officer and a
Director of our  Company.  The loss of the services of any of these people could
materially  harm our business  because of the cost and time necessary to replace
and train such  personnel.  Such a loss would also divert  management  attention
away from operational  issues.  We have entered into employment  agreements with
Mr.  Levine and Mr.  Dell'Oca,  respectively.  We do not  maintain  key-man life
insurance policies on any of these people.


WE MAY BE UNABLE TO MANAGE GROWTH

         Successful  implementation  of our  business  strategy  requires  us to
manage our growth. Growth could place an increasing strain on our management and
financial resources. To manage growth effectively, we will need to:

         o        Implement changes in certain aspects of our business;

         o        Enhance our  information  systems and operations to respond to
                  increased demand;

         o        Attract and retain qualified personnel; and

         o        Develop,   train   and   manage   an   increasing   number  of
                  management-level and other employees.

                                       16
<PAGE>

         If we fail to manage our growth  effectively,  our business,  financial
condition or operating results could be materially  harmed,  and our stock price
may decline.


FUTURE SALES BY OUR SHAREHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR
ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS

         Sales of our  Common  Stock in the  public  market by our  shareholders
could  lower  the  market  price of our  Common  Stock and may also make it more
difficult for us to sell equity securities or  equity-related  securities in the
future at a time and price that our  management  deems  acceptable or at all. Of
the 36,153,385 shares of Common Stock outstanding as of April 30, 2001 (assuming
no  exercise  of  options or  warrants),  3,348,733  shares are freely  tradable
without  restriction,  unless  purchased  by  our  "affiliates."  The  remaining
32,804,652 shares of Common Stock held by existing  stockholders are "restricted
securities"  and may be  resold  in the  public  market  only if  registered  or
pursuant to an exemption from registration.

EXISTING SHAREHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM OUR SALE OF
SHARES UNDER THE LINE OF CREDIT

         The sale of shares  pursuant to our Line of Credit will have a dilutive
impact on our shareholders. As a result, our net income per share will decrease
in future  periods,  and the market price of our Common Stock could decline.  In
addition,  the lower our stock price is the more shares of Common  Stock we will
have to issue under the Line of Credit.  If our stock  price is lower,  then our
existing shareholders would experience greater dilution.


THE INVESTOR UNDER THE LINE OF CREDIT WILL PAY LESS THAN THE THEN-PREVAILING
MARKET PRICE OF OUR COMMON STOCK

         The  Common  Stock  to be  issued  upon  conversion  of  the  debenture
purchased  under the Line of Credit  will be  issued  at a 20%  discount  to the
lowest closing bid price for the 10 days  immediately  following the notice date
of conversion.  These discounted sales could cause the price of our Common Stock
to decline.


THE SELLING SHAREHOLDERS INTEND TO SELL THEIR SHARES OF COMMON STOCK IN THE
MARKET, WHICH SALES MAY CAUSE OUR STOCK PRICE TO DECLINE

         Upon the effectiveness of a registration statement expected to be filed
in the second  quarter of 2001,  the  selling  shareholders  in our most  recent
private  offering intend to sell in the public market the shares of Common Stock
purchased  in  that  private  offering.  That  means  that  up to  approximately
70,000,000  shares of Common  Stock,  the number of shares we  anticipate  to be
registered  pursuant to that  offering may be sold subject to an increase in our
Company's  authorized  Common  Stock.  Such  sales may cause our stock  price to
decline.


OUR COMMON STOCK HAS BEEN RELATIVELY THINLY TRADED AND WE CANNOT PREDICT THE
EXTENT TO WHICH A TRADING MARKET WILL DEVELOP

         Our Common Stock is traded on the Over-the-Counter  Bulletin Board. Our
Common Stock is thinly traded compared to larger, more widely known companies in
our industry.  Thinly traded Common Stock can be more volatile than Common Stock
trading in an active  public  market.  We cannot  predict the extent to which an
active public market for our Common Stock will develop or be sustained.


ITEM 2.       PROPERTIES.

         In June 2000, we entered into a 3-year lease for our offices located at
1101 Brickell Avenue, 2nd Floor North Tower, Miami,  Florida 33131 consisting of
8,000  square feet of  corporate  office space for $7,333 per month plus tax for
the first year, $14,808 for the second and $15,452 for the third. For accounting
purposes, rent expense is recorded on a straight-line basis.

         In August 2000, Nexland Canada, our Canadian  wholly-owned  subsidiary,
entered into a 1-year lease for an office located in Victoria, Canada consisting
of 1,000 square feet of corporate office space for $1,000 per month plus tax.


                                       17
<PAGE>



ITEM 3.       LEGAL PROCEEDINGS.

         None.


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

         There  were no  matters  submitted  to a vote of our  security  holders
during the year ended December 31, 2000.

                                       18
<PAGE>

                                     PART II


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

         Our  Common  Stock is traded  on the  Over-the-Counter  Bulletin  Board
market under the symbol "XLND." There has been trading in our Common Stock since
December 23, 1999.

         The  following  table  sets  forth,  for  each  of the  fiscal  periods
indicated,  the high and low bid prices for our Common Stock, as reported on the
Over-the-Counter Bulletin Board. These per share quotations reflect inter-dealer
prices  in the  over-the-counter  market  without  real  mark-up,  markdown,  or
commissions and may not necessarily represent actual transactions.

                                                  Calendar Year 1999
                                                High Bid         Low Bid
                                            ------------     -----------

           Fourth Quarter                       $7.8125           $5.125


                                                  Calendar Year 2000
                                                High Bid         Low Bid
                                            ------------     -----------

           First Quarter                        $7.8750           $3.750
           Second Quarter                       $6.2500           $1.250
           Third Quarter                        $2.3125           $0.625
           Fourth Quarter                       $0.7500           $0.100




         On April 19,  2001,  the  closing  trade  price of the Common  Stock as
reported  on the  Over-the-Counter  Bulletin  Board was $0.30.  As of such date,
there were  approximately 400 holders of record of our Common Stock. As a result
of our  Company's  failure  to  timely  file  our Form  10-K for the year  ended
December 31,  2000,  our Company was no longer in  compliance  with the National
Association of Securities Dealers,  Inc. filing requirements.  Accordingly,  the
letter "E" was appended to our trading symbol on April 27, 2001.

         VOLATILITY AND FLUCTUATION OF OUR COMMON STOCK. The price of our Common
Stock is highly  volatile,  as is the price of Common  Stock of  networking  and
telecommunication companies in general. During the period from December 23, 1999
to April 19,  2001,  the bid and ask price of our Common Stock has ranged from a
high of $8.0625 to a low of $0.10.  This  volatility may  negatively  impact the
liquidity  and value of your shares.  The market price of our Common Stock could
continue to fluctuate substantially due to a variety of factors, including:

         o        the  number of shares in the market at the time as well as the
                  number of shares we may be  required  to issue in the  future,
                  compared to the market demand for our shares;

         o        the Company's  performance,  including  whether or not we meet
                  our projections;

         o        general economic and market conditions;

         o        quarterly fluctuations in results of operations;

         o        the commencement of litigation;

         o        announcement of new products or services and key  developments
                  by competitors;

         o        announcement and consummation of acquisitions;

         o        changes in earnings estimates by analysts;

         o        press coverage of favorable or unfavorable developments in our
                  business;

         o        loss of key personnel;





                                       19
<PAGE>


         o        changes in accounting principles or policies;

         o        sales of Common Stock by existing shareholders; and

         o        economic and political conditions.

         The  market  price for our  Common  Stock may also be  affected  by our
inability   to  meet   analysts'   expectations.   Any  failure  to  meet  these
expectations, even slightly, could have an adverse effect on the market price of
our Common Stock.  In addition,  the market prices of securities  issued by many
companies may change for reasons unrelated to the operating performance of these
companies. Further, following periods of volatility in the market price of other
companies'  securities,  class  action  securities  litigation  has  often  been
instituted. If similar litigation were instituted against us, it could result in
substantial  costs and a diversion of our management's  attention and resources,
which could have an adverse effect on our business.

         DIVIDEND  POLICY.  We have not  declared or paid cash  dividends on our
Common Stock. We currently intend to retain all of our earnings, if any, for use
in  our  business  and  do not  anticipate  paying  any  cash  dividends  in the
foreseeable  future.  The  payment  of  any  future  dividends  will  be at  the
discretion of our Board of Directors,  and will depend upon a number of factors,
including,  future  earnings,  the success of our business  activities,  capital
requirements,  the  general  financial  condition  and future  prospects  of our
business,  general  business  conditions  and such other factors as the Board of
Directors may deem relevant.


ITEM 6.       SELECTED CONSOLIDATED FINANCIAL DATA.


         The following  statements  of operations  and balance sheet data of our
Company is set forth  below for each year  during  the  five-year  period  ended
December 31, 2000. The information  presented should be read in conjunction with
Financial  Statements  as of December 31, 2000 and 1999 and each of the years in
the  three-year  period  ended  December  31,  2000 and notes  thereto  included
elsewhere in this filing.




<TABLE>
<CAPTION>
                                                          2000           1999 (1)       1998 (1)      1997 (1)     1996 (3)
                                                     ---------------   ------------    ------------  ----------   ----------
<S>                                                     <C>               <C>             <C>          <C>              <C>

Statement of Operations Data:......................
Net Sales..........................................      $1,472,950        $263,338           $-0-         $-0-         $-0-
Net (Loss).........................................     (2,876,244)       (131,343)       (99,902)     (53,324)            -
Net (Loss) per share...............................           (.08)             Nil            Nil          Nil            -

Balance Sheet Data:................................
Working Capital (deficit)..........................       (594,066)       (130,258)        (2,430)        9,340            -
Total Assets.......................................         316,675         147,250         11,906       14,776            -
Long-term Debt.....................................               -         174,317         87,136            -            -
Stockholders' Equity (deficit) (2).................       (531,994)       (324,220)       (85,326)       14,776            -

Cash Dividends                                                    -               -              -            -            -
</TABLE>


    (1)  Includes  the  financial  information  of Nexland  LP, the  predecessor
         entity until November 15, 1999. From inception until November 15, 1999,
         Nexland,  Inc.  was  inactive.  On November  15,  1999 the  partners of
         Nexland LP assigned all their rights, title and interest in partnership
         assets to Nexland,  Inc. in exchange for 17,000  shares of Common Stock
         of  Nexland,  Inc. On  November  17,  1999,  WindStar  Resources,  Inc.
         ("WindStar") acquired all of the outstanding Common Stock of Nexland by
         exchanging  each of its  shares  of Common  Stock  for 1,475  shares of
         WindStar. Nexland's stockholders received 29,500,000 shares of WindStar
         for their  20,000  shares of Nexland's  Common  Stock.  For  accounting
         purposes  the  acquisition  has been  treated as a reverse  merger with
         Nexland as the acquirer.

    (2)  For 1997 and 1998,  Stockholder's  Equity (Deficit) includes the equity
         (deficit) of Nexland, LP and of Nexland, Inc.

    (3)  Operations commenced in 1997.


                                       20
<PAGE>


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

         OVERVIEW.  The  following is a discussion  of our results of operations
and our  liquidity and capital  resources.  Our Company  sells  Internet  access
"hardware  routers" for small office and home users. Our products allow multiple
users in an office or home to share one Internet connection simultaneously while
optimizing each user's access speed and providing a secure firewall (shield from
outside  intrusion).  Our products support existing  telephone lines, as well as
emerging access  technologies such as digital  subscriber lines and cable modems
(faster than phone connections).

         RESULTS OF OPERATIONS.  The  discussion of our  historical  results set
forth below  addresses our historical  results of operations for the fiscal year
ended  December 31, 2000,  fiscal year ended  December 31, 1999, and fiscal year
ended December 31, 1998. The predecessor companies, Nexland LP and Nexland, Inc.
(Florida) for 1998 and part of 1999 are included in the historical comparison.


FOR YEARS ENDING DECEMBER 31, 2000, 1999 AND 1998:

         REVENUES.  For the year  ended  December  31,  2000,  our  Company  had
$1,472,950  in revenue  consisting  of sales of 6,696 units of  Internet  access
"hardware routers" for small office and home users.  During the third quarter of
2000, our Company opened an office in Victoria,  B.C.  Revenues relating to this
office were $263,960.  Our Company  expects sales to increase during the next 12
months from this Canadian subsidiary. During 2000, our average selling price per
unit decreased by $132 per unit as compared to 1999. This decrease resulted from
our Company  reducing its selling price to take  advantage of large volume sales
opportunities. For the year ended December 31, 1999, our Company had $263,338 in
revenue  consisting  of sales of 750 units.  Actual  product sales did not begin
until January 1999; therefore, there are no comparable sales in 1998.

         COST OF SALES.  Cost of sales for the year ended  December 31, 2000 was
$734,364.  Cost of sales for the year ended December 31, 1999 was $129,311. Cost
of sales consisted  substantially  of the purchase price and in-bound freight of
pre-assembled  finished goods inventory from subcontractors in Taiwan,  Republic
of China. Actual sales did not begin until January 1999; therefore, there are no
costs of sales  for  1998.  During  2000,  our  average  purchase  cost per unit
decreased by $62 per unit as compared to 1999.  This  decrease  resulted  from a
combination  of two  factors,  the first of which is our  Company's  success  in
obtaining  lower  priced  units from our  supplier and also as a result from our
Company  effectively  modifying our product  specifications  which resulted in a
lower cost to purchase. While our Company expects the dollar amount of purchases
of pre-assembled finished goods inventory from subcontractors to increase in the
future as our Company  increases  sales,  our Company  anticipates  paying lower
prices as a result of increased volume purchases.

         GROSS  PROFIT.   The  gross  profit  of  our  Company's   products  was
approximately  50% during 2000.  The gross profit of our Company`s  products was
approximately  51% during 1999.  Actual sales did not begin until  January 1999;
therefore,  there is no gross profit  percentage  in 1998.  Our Company  expects
pricing  pressures  from our  competition,  but will  attempt  to lower our cost
procurement from subcontractors by obtaining the benefits of lower product costs
through volume purchases.  In order to maximize our Company`s growth from sales,
our Company may in the future,  reduce selling prices to take advantage of large
volume sales opportunities, thus, the gross margin could be lower in the future.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses increased to $3,585,957 for the year ended December 31,
2000 as compared to $263,664  for the year ended  December  31, 1999 and $99,902
for the year ended  December 31, 1998.  The increase of $3,322,293  from 1999 to
2000 is  primarily  as a  result  of our  growth,  and  associated  increase  in
personnel  and  other  related  costs,   which  are  explained  below.  In  this
connection, our payroll costs increased by $374,000, our facilities expenses and
office expense increased by $62,000,  professional fees by $495,000,  samples to
customers $77,000, travel and entertainment $44,000 and other operating expenses
by $126,000.  During this period,  we had seven  transactions  that  resulted in
non-cash  expenditures  to  our  Company.  A  company  controlled  by one of our
principal  shareholders,  incurred  research and development costs on our behalf
for the further  development of our Internet  access hardware  routers.  In this
connection, we recorded as a capital contribution $318,850, which represents the
actual costs, incurred by this company on our behalf,  substantially  consisting
of technician salaries for subcontractors  located in Taiwan. Our Company has no
formal  agreement with this company.  During the comparable  period in 1999, our
Company did not incur any research  and  development  costs,  since we purchased
ready to sell finished goods inventory. On June 30, 2000, Mr. Dillon, our former
Chief  Executive  Officer,  resigned  from  his  position  in  our  Company.  In
connection with his resignation,  the 1,170,000 shares of Common Stock issued in
connection  with his  employment  agreement  were  forfeited.  Our  Company,  in
consideration  of the  termination of the employment  agreement,  issued 500,000
shares of Common Stock to the former executive. Such shares were valued based on
the then fair market  value of our  Company`s  Common  Stock at  $1,125,000.  In
addition, our Company  recorded a charge in the amount of $166,664 in connection

                                       21
<PAGE>

with the issuance of Common Stock to our Chief Financial Officer to amortize his
unearned compensation in accordance with his employment  agreement.  Our Company
also  issued  Common  Stock  valued at  $248,000,  the then fair  market  value,
pursuant to a penalty provision  resulting from the late filing of our form S-1.
Our Company also issued  Common Stock to a  consultant  valued at $134,000,  the
then market  value of the Common  Stock.  The  consultant  was hired to help our
Company raise capital.  The contract was terminated effective June 18, 2000. The
Company  recorded an expense for $77,000 in connection  with an extension of the
time to exercise certain warrants and $75,000 in connection with options granted
during the year 2000.

         Selling and  administrative  expenses  for the year ended  December 31,
1999 were  $263,664 as compared  to $99,902 for 1998.  The  increase in selling,
general and  administrative  expenses of $163,762 from 1998 to 1999 consisted of
increases  in salaries,  resulting  from hiring new  personnel of  approximately
$115,909, including casual labor, postage of approximately $6,000, consulting of
approximately  $6,000,  rent  of  approximately  $11,454,   office  supplies  of
approximately  $4,342,  telephone  expense  of  approximately  $535,  travel  of
approximately  $3,774 and other office expenses of  approximately  $16,000.  Our
Company expects to increase our selling,  general and administrative expenses in
the future in proportion to our Company's anticipated growth in sales.

         DEPRECIATION.  Depreciation  expense  increased  to $5,914 for the year
ended  December 31, 2000 as compared to $0 for the year ended  December 31, 1999
and for the year ended December 31, 1999, respectively.

         INTEREST  EXPENSE.  Interest expense  increased to $21,872 for the year
ended  December  31, 2000 as compared to $1,087 for the year ended  December 31,
1999 and for the year  ended  December  31,  1999,  respectively.  The  interest
expense mainly related to interest on notes payable to a principal  shareholder,
whose debt was converted into equity during the latter part of 2000.

         PROVISION FOR INCOME TAXES. No provision for income taxes was necessary
in 2000,  1999 and 1998 due to the loss  reported  for such years (see Note 8 to
the financial  statements).  Further, given the uncertainties as to realization,
the deferred tax assets have been fully reserved.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception,  our Company has relied  principally upon the proceeds
of private equity financings and loans to fund our working capital  requirements
and capital  expenditures.  Our Company has generated only minimal revenues from
operations to date. Our Company`s net cash used in operating  activities for the
year ended  December 31, 2000 was  $239,179  compared to $109,997 for the twelve
months ended December 31, 1999, an increase of $129,182.  This increase resulted
from increases in our Company`s net loss, receivables and inventories, offset by
increases in accounts payable,  accrued expenses,  accrued professional fees and
due to related party supplier.  These  increases  resulted from the expansion of
our  Company`s  operations.   Our  Company's  net  cash  provided  by  financing
activities  amounted to $327,682  from  proceeds  received  from the exercise of
options and warrants and the issuance of Common Stock.

         Our Company's  short-term  and  long-term  liquidity  requirements  are
expected to result from  working  capital  needs to purchase  inventory  and pay
other operating  expenses.  Although our Company cannot  accurately  predict the
precise timing of our future capital, our Company estimates that it will need to
expend  approximately  $2,000,000,  within the next twelve  months.  Our Company
estimates that of that amount (i) $1,000,000 will be for pre-assembled  finished
goods  inventory  from  subcontractors,  (ii)  $250,000 for sales and  marketing
forces,  (iii)  $250,000  for  professional  fees and (iv)  $500,000  for  other
operating expenses, such as payroll, rent and office expenses.

         Our Company has no assured  available  financial  resources to meet our
December  31, 2000  working  capital  deficit of $594,066  and future  operating
costs.

         Our  Company  is  seeking   additional   equity  capital  from  private
offerings.  There is no  assurance,  that our Company will be able to raise such
additional capital during the next 12 months. If our Company is unable to obtain
the  necessary  additional  capital,  we may be required to change our  proposed
business plan and decrease our planned  operations,  which could have a material
adverse effect upon our business, financial condition, or results of operations.

         Subsequent to December 31, 2000 management of our Company has taken the
following steps to improve our cash flow:

         (a)  In  January  31,  2001,  our  Company  entered  into  a  factoring
agreement.  The  agreement  expires on January 31, 2002 or until  terminated  by
either  party with  proper  notice  given as defined.  The Company has  assigned
substantially  all of its  accounts  receivable  to the factor,  typically  on a
recourse  basis.  The  Company may  request  advances up to 75% of the  eligible
receivables. The factor charges our Company a commission equal to .0667% per day
for each  uncollected  receivable  from the invoice  date to the payment date of
such invoice, plus interest on advanced funds equal to the greater of 10% or the
interest publicly  announced by Citibank N. A., plus 2%.  Obligations due to the
factor under the factoring  agreement are  collateralized by  "receivables",  as
defined.

                                       22
<PAGE>

         (b) On March 19,  2001,  we entered  into a Line of Credit with Cornell
Capital Partners,  LP. Pursuant to the Line of Credit, Cornell Capital Partners,
LP  agreed,  if  requested  by our  Company,  to acquire up to $5 million of our
debentures.  The debentures are convertible into shares of our Common Stock at a
conversion price equal to a 20% discount to the lowest closing bid price for the
10 days immediately following the notice of conversion.  The timing of each sale
and the number of debentures to be sold is at our discretion, subject to various
conditions,  including an effective  registration of the conversion  shares. The
dollar amount that our Company can request under any individual  sale is subject
to the  average  trading  volume of our Common  Stock for the  preceding  40-day
trading  period.  The  maximum  term of the Line of Credit is two years from the
date  of  the  agreement.   The  agreement  contains  various   representations,
warranties  and covenants by us,  including  limitations  on our ability to sell
Common  Stock or Common  Stock  equivalents,  all  assets,  merge or enter  into
certain other transactions.

         On March  19,  2001,  the  Company  entered  into  Securities  Purchase
Agreement  with third party  investors  and also entered into a Placement  Agent
Agreement  to provide up to  $250,000  less  certain  fees and  expenses  of the
placement agent by the issuance of convertible  debentures.  The debentures bear
interest at 6% per year and convert into our  Company's  Common  Stock.  Through
April 19, 2001, our Company issued  debentures of $65,000 from which our Company
received  net  proceeds of  approximately  $43,000.  The  debenture  holders are
entitled to convert all or part of the  principal  amount plus accrued  interest
into shares of our Company's Common Stock equal to either (a) an amount equal to
120% of the closing bid price of our  Company's  Common  Stock as of the date of
the debenture issuance or (b) an amount equal to 80% of the lowest three closing
bid prices of our Company's Common Stock for the 10 days  immediately  preceding
the date of  conversion of the  debenture.  Our Company is obligated to register
the  resale of the  conversion  shares  under the  Securities  Act of 1933.  The
debentures  are  subordinate  and  junior in right of  payment  to all  accounts
payable to our Company  incurred in the ordinary  course of business and/or bank
debt or our Company not to exceed $250,000. Our Company has the right to require
the debenture  holders to convert any unpaid  principal and accrued  interest on
the  debentures  upon the five-year  anniversary of the debenture  issuance.  In
connection  with the  issuance of such  deentures,  the  difference  between the
conversion  price  and the  fair  value  of the  Common  Stock  into  which  the
debentures  are  convertible,  multiplied by the number of shares into which the
debt is  convertible  at the issuance  date of the debt or the date at which the
debentures  become  convertible  will be  recorded  as  intrinsic  value  of the
beneficial  conversion  feature and charged to interest expense in our Company's
statement  of  operations.  Such amounts may be material to our  Company's  2001
financial statements.

GOING CONCERN QUALIFICATION

         Our  Company's  auditors  stated that the  financial  statements of our
Company  for the years  ended  December  31,  1999 and  December  31,  2000 were
prepared on the  going-concern  basis. For the years ended December 31, 2000 and
1999,  our  Company  incurred  net annual  losses of  $2,876,244  and  $131,343,
respectively,  and  our  Company  had a  deficit  of  $3,203,874  and  $327,360,
respectively.  These  losses  raise  substantial  doubt about the ability of our
Company to continue as a going concern.  Management believes that resources will
be  available  from  private  sources in 2001 to continue  the  marketing of our
Internet  sharing  devices.   The  financial   statements  do  not  include  any
adjustments  relating  to the  recoverability  and  classification  of  recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event our Company cannot continue in existence.

         Management has established  plans intended to increase the sales of our
Company's  products.  Management  intends  to seek new  capital  from new equity
securities offerings to provide funds needed to increase liquidity,  fund growth
and implement  its business  plan;  however,  no assurance can be given that our
Company will be able to raise any additional capital.

ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

EXCHANGE RATE SENSITIVITY

         Currently,  the majority of our sales and expenses are  denominated  in
U.S.  dollars  and as a  result,  we have  experienced  no  significant  foreign
exchange gains and losses to date. While we have conducted some  transactions in
foreign  currencies  during  the year  ended  December  31,  2000 and  expect to
continue to do so, we do not  anticipate  that foreign  exchange gains or losses
will be significant.  We have not engaged in foreign currency hedging activities
to date, however, we may do so in the future.

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         See Part IV, Item 14 of this Report.

ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE.

         Williams & Webster,  P.S.'s report on our financial  statements did not
contain an adverse  opinion or  disclaimer  of opinion or was not  qualified  or
modified,  as to  uncertainty,  audit,  scope,  or  accounting  principals.  The
decision to change  accountants  was  recommended  and approved by our Company's
Board of Directors. During the two most recent fiscal years and during any

                                       23
<PAGE>

subsequent  interim periods preceding the decision,  there were no disagreements
with  Williams & Webster,  P.S. on any manner of  accounting  of  principals  or
practice,  financial statement disclosure or auditing scope or procedure,  which
disagreements,  if not resolved to the satisfaction of Williams & Webster, P.S.,
would  have  caused  it to  make  a  reference  to  the  subject  matter  of the
disagreements  in  connection  with its report.  The reason for our  decision to
change  accounting firms was that our business and  administration is located in
Miami,  Florida.  Williams & Webster,  P.S. is located in  Spokane,  Washington.
Accordingly,  on May 12, 2000 we engaged the accounting firm of BDO Seidman, LLP
to serve as our independent accountants for the year ended December 31, 2000.


                                    PART III


ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following  table sets  forth the name, age and  posisition  of each
Officer and Director of our Company:

<TABLE>
<CAPTION>
NAME                              AGE      POSITION                                             TERM
----                              ---      --------                                             ----
<S>                               <C>      <C>                                                 <C>

Gregory S. Levine                 33       President, Chairman of the Board of Directors        1999-2001

Martin E. Dell'Oca                38       Chief Financial Officer, Secretary and Director      2000-2001

I. Daniel Sultan                  50       Chief Technology Officer and Director                2000-2001
</TABLE>


TERM OF OFFICE

         The terms of office of the current directors  continue until the annual
meeting of  shareholders,  which the bylaws of our Company provide shall be held
on the third Friday of November of each year; officers are elected at the annual
meeting of the Board of Directors,  which immediately follows the annual meeting
of  shareholders.  In  August  2000  the  Company  had  its  annual  meeting  of
shareholders at which time the current  directors were elected for an additional
term.


DIRECTOR AND KEY EMPLOYEE BACKGROUNDS

         GREGORY  SCOTT  LEVINE,  33,  President  and  Chairman  of our Board of
Directors,  received  his Bachelor of Arts Degree in Speech,  Communication  and
English  Writing from the  University  of Florida in 1989.  In 1991,  Mr. Levine
entered the computer  industry as Purchasing  Manager with All Exim,  located in
Miami, Florida,  where he was employed until 1995. From 1995 to 1997, Mr. Levine
worked as a  self-employed  consultant.  In 1997,  Mr.  Levine  was hired as the
Business   Unit   Manager  for  Mass   Storage  and   Components   for  Computer
2000/AmeriQuest  Technologies  where he  supervised  the  business  unit and was
associated  with the  development  of the OEM Memory Broker Desk. In 1998,  when
C2000 sold AmeriQuest, Mr. Levine opened his own consulting firm, the HG America
Group,  Inc., which served major industry  telephone  companies (AT&T, GTE, Bell
Atlantic) with Internet  sharing and firewall  products.  Mr. Levine operated HG
America Group,  Inc. until he joined our Company in December,  1998. None of Mr.
Levine's prior employers are affiliated with our Company.

         MARTIN E. DELL'OCA,  38, became Chief Financial Officer and a member of
the Board of Directors of our Company in May 2000.  During March and April 2000,
Mr.  Dell'Oca was a  self-employed  consultant to our Company.  From May 1998 to
December 1999, Mr.  Dell'Oca  served as Chief  Financial  Officer of CHS Dinexim
after Dinexim was sold to CHS. From 1995 to May 1998, Mr. Dell'Oca was the Chief
Financial Officer of Dinexim.  Mr. Dell'Oca received his undergraduate degree in
Marine  Science and Economics from the University of Miami in 1985 and a Masters
Degree in International Business from Florida International University in 1989.

         ISRAEL  DANIEL  SULTAN,  50, is the founder of Nexland,  Inc. and Chief
Technology  Officer and a  Director.  Mr.  Sultan  began his career as a Nuclear
Physics  System  Programmer  at the  College  de France  Laboratory  of  Nuclear
Physics.  In 1973,  he started a software  training  center in France,  which is
still in business today under the direction of his wife. In 1990, Mr. Sultan ran
IPC  France,  a startup PC  manufacturer,  which grew to obtain 5% of the French
market in three years,  prior to being sold in 1993. In 1994, Mr. Sultan founded
Nexland,  LP and  is  currently  Technical  Director  of  Nexland  France  and a
principal  shareholder  of our  Company.  Mr.  Sultan  assisted  our  Company in
becoming the first  company to offer a digital  subscriber  line and cable modem
sharing device based upon the Internet  protocol of pppoe  (point-to-point  over
ethernet).  Mr.  Sultan  earned his Ph.D.  in computing  from the  University of
Paris, Jussieu, in 1986.

                                       24
<PAGE>

ITEM 11.      EXECUTIVE COMPENSATION.

         The following table sets forth information relating to the compensation
paid by us for the past three fiscal  years to: (1) Our  Chairman and  President
and (2) our Chief Financial Officer and Secretary, who earned more than $100,000
during the fiscal year ended December 31, 2000:

<TABLE>
<CAPTION>
                                                  SUMMARY COMPENSATION TABLE

                                     ANNUAL COMPENSATION                                    LONG-TERM COMPENSATION
                    --------------------------------------------------------  ------------------------------------------------------
                                                                                 AWARDS        PAYOUTS
(A)                   (B)         (C)           (D)             (E)               (F)            (G)          (H)          (I)
NAME &                                                         OTHER           RESTRICTED     SECURITIES
PRINCIPAL                                                      ANNUAL            STOCK        UNDERLYING      LTIP       ALL OTHER
COMPENSATION          YEAR     SALARY ($)     BONUS ($)    COMPENSATION ($)      AWARDS        OPTIONS      PAYOUTS    COMPENSATION
-------------       --------  ------------   ----------   ------------------  -------------  ------------  ---------  --------------
<S>                 <C>       <C>            <C>          <C>                 <C>            <C>           <C>        <C>
Greg Levine            2000       $100,000          -0-             $10,000             -0-   700,000 (1)        -0-             -0-
President and          1999       $100,000          -0-                 -0-             -0-           -0-        -0-             -0-
Chairman of the
Board

Martin                 2000    $92,667 (2)          -0-                 -0-    $500,000 (3)   400,000 (3)        -0-             -0-
Dell'Oca               1999            -0-          -0-                 -0-             -0-           -0-        -0-             -0-
Chief Financial
Officer and
Secretary
</TABLE>

     (1) Mr. Levine  received  700,000  options,  of which 550,000 are currently
         vested and, commencing September 6, 2001, 37,500 options vest each year
         for a 4-year period.

     (2) Mr.  Dell'Oca  received  $76,000 as salary and $16,667  for  consulting
         services  rendered to our Company from March 1 to April 30, 2000, prior
         to his position as Chief Financial Officer.

     (3) Mr. Dell'Oca  received 200,000 shares of Common Stock of our Company on
         May 1, 2000.  Such Common Stock is  forfeitable  by Mr.  Dell'Oca if he
         resigns  from  our  Company  prior  to the  expiration  of his two year
         employment  term  or if he  is  terminated  for  "cause."  Our  Company
         recorded  the  transaction  at a market value of $2.50 per share and is
         amortizing it over 24 months.

     (4) Mr. Dell'Oca  received 400,000 options,  of which 250,000 are currently
         vested and, commencing September 6, 2001, 37,500 options vest each year
         for a 4-year period.

EMPLOYMENT AGREEMENTS

         On May 1,  2000,  our  Company  entered  into  a  five-year  employment
agreement with Mr. Levine. Pursuant to this agreement, Mr. Levine is employed as
the President of our Company.  Mr. Levine has an annual base salary of $100,000,
which will increase to $150,000 upon our Company  obtaining  equity  investments
and/or debt  financing  totalling in the  aggregate of at least  $1,000,000.  In
addition,  Mr.  Levine will be entitled to incentive  bonus  compensation  in an
amount  to be  determined  by our  Board of  Directors.  In the  event  that Mr.
Levine's  employment is terminated by our Company without "cause," other than in
connection with a change of control,  he is entitled to receive his salary for a
period of 12 months from the date of  termination.  The agreement  provides that
Mr. Levine will not compete with our Company  during his  employment and for one
year thereafter.

         On May  1,  2000,  our  Company  entered  into  a  two-year  employment
agreement  with Mr.  Dell'Oca.  Pursuant  to this  agreement,  Mr.  Dell'Oca  is
employed as the Chief  Financial  Officer of our  Company.  Mr.  Dell'Oca has an
annual base salary of $100,000, which will increase to $120,000 upon our Company
obtaining equity investments and/or debt financing totalling in the aggregate of
at least $1,000,000. In addition, Mr. Dell'Oca received 200,000 shares of Common
Stock of our Company, which will be forfeited by Mr. Dell'Oca if he resigns from
his  employment  prior  to the  expiration  of the  employment  term or if he is
terminated  for "cause." Mr.  Dell'Oca has piggy-back  registration  rights with
respect to his stock in our Company. In the event that Mr. Dell'Oca's employment
is terminated by our Company on or after May 1, 2001 without "cause," other than
in connection with a change of control, he is entitled to receive his salary for

                                       25
<PAGE>

a period of 12 months from the date of termination.  The agreement provides that
Mr. Dell'Oca will not compete with our Company during his employment and for one
year thereafter.


ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The  following  table sets forth  certain  information  with respect to
beneficial  ownership of our Common  Stock as of April 19, 2001,  as to (i) each
person (or group of affiliated  persons)  known by us to own  beneficially  more
than 5% of our outstanding Common Stock, (ii) each of our directors,  (iii) each
of our executive officers,  and (iv) all directors and executive officers of our
Company as a group.

         For the purpose of this table,  beneficial  ownership is  determined in
accordance with the rules of the Securities and Exchange Commission.  The number
of shares beneficially owned by a person includes shares of Common Stock subject
to options held by that person that are  currently  exercisable  or  exercisable
within 60 days of April 19, 2001.  Shares issuable  pursuant to such options are
deemed outstanding for computing the percentage  ownership of the person holding
such options,  but are not deemed  outstanding for the purposes of computing the
percentage ownership of each other person.

         NAME AND ADDRESS                    NUMBER OF
         OF BENEFICIAL OWNER               COMMON SHARES     PERCENTAGE OF CLASS
         -------------------               -------------     -------------------

         I. Daniel Sultan                 13,161,250(1)(2)              35.86 %
         P.O. Box 3783
         Hallandale, Florida  33008

         Andre Chouraqui                       5,544,500                 15.34 %
         Barker Road #2, House #9
         The Peak, Hong Kong

         Laurent Solomon (3)                   5,044,500                 13.95 %
         P.O. Box 9096
         Daytona Beach, Florida   32120

         Greg Levine                       3,152,500(4)(5)                8.59 %
         P.O. Box 693267
         Miami, Florida 33169

         Yves Many (6)                         2,522,250                  6.98 %
         P.O. Box 693267
         Miami, Florida 33169

         Enrique Dillon                          500,000                  1.38 %
         c/o Nexland Inc.
         1101 Brickell Avenue
         Suite 200, North Tower
         Miami, Florida 33131

         Martin Dell'Oca                     450,000 (7)                  1.24 %
         385 Hampton Lane
         Key Biscayne, FL 33149

         All directors and executive          16,763,750                 45.69 %
         officers as a group (3 persons)


   (1)   Includes  12,414,884  shares  that are held of  record  by BH  Investor
         Group, LLC. This entity is controlled by Israel Daniel Sultan.

                                       26
<PAGE>

   (2)   Includes  options owned by Mr. Sultan to acquire  550,000 shares of our
         Company's Common Stock within 60 days of April 19, 2001.

   (3)   These shares are held of record by Fast-Access  Group, LLC. This entity
         is controlled by Laurent Solomon.

   (4)   Includes 2,522,250 shares that are held of record by Broadband Investor
         Group, LLC. This entity is controlled by Greg Levine, our President.

   (5)   Includes  options owned by Mr. Levine to acquire  550,000 shares of our
         Company's Common Stock within 60 days of April 19, 2001.

   (6)   These shares are held of record by High-Speed Venture, LLC. This entity
         is controlled by Yves Many.

   (7)   Includes 200,000 shares of our Company's Common Stock that were granted
         to Mr. Dell'Oca pursuant to his employment agreement.  These shares are
         subject to forfeiture  under certain  conditions and are held in escrow
         during the forfeiture period.  Also includes options to acquire 250,000
         share of our Company's Common Stock within 60 days of April 19, 2001.

         To the knowledge of our management,  there are no present  arrangements
or pledges of securities of our Company, which may result in a change in control
of our Company.

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Our  Company  has  not engaged  in  any transactions with management or
others in which the amount involved exceeds $60,000 other than the following:

         On March 14,  2000,  we entered into a five-year  Consulting  Agreement
with Nexland France, which provides for the following:

         o        $175,000 per annum to commence  January 1, 2001 for consulting
                  services if we obtain at least $1,000,000 in financing;

         o        the  consulting  services  will be performed by Israel  Daniel
                  Sultan,  Nexland  LP's  founder,  and  one  of  our  principal
                  shareholders and a director of our Company;

         o        we may terminate the  agreement  without cause after  December
                  31, 2001,  other than in connection  with a change of control,
                  in which case the consultant  shall receive one year severance
                  pay; and

         o        should the  consultant be terminated,  without cause,  90 days
                  prior,  or one year  subsequent,  to a change of control,  the
                  consultant  shall be entitled to twice its annual fee. "Change
                  of  control"  is defined as any person or group (as defined by
                  the Securities  Exchange Act of 1934) obtaining 50% or more of
                  our voting securities, or a restructuring of our Company.

         During 2000,  our Company  issued  30,000 shares of Common Stock to Mr.
Fred  Schmid,  former  CEO  and  President  of  WindStar  Resources,  Inc.,  for
management and financial  consulting  services  (consulting  shares),  which was
recorded by a charge to operations  and credit to paid-in  capital for $134,375.
In addition,  our Company issued 39,213 shares of Common Stock to Mr. Schmid and
Mr. Erik Nelson,  both of whom were former  shareholders of WindStar  Resources,
Inc. as a result of a late filing of our  Company's  Form S-1 (penalty  shares),
which  resulted in a charge to  operations  and a credit to paid-in  capital for
$247,532.

         On September  20,  2000,  we entered  into a licensing  agreement  with
Nexland,  S.A. Pursuant to the agreement we licensed to Nexland, S.A. the rights
to utilize the technology in Europe, Africa and the Middle East for 10 years.

         On November 22, 2000 our Company entered into a settlement agreement in
which it agreed to dismiss a threatened  lawsuit  against Mr. Fred Schmid,  Fred
Schmid  Inc.,  Mr.  Dale  Runyon,  a former  principal  shareholder  of WindStar
Resources,  Inc. and Mr. Erik Nelson  (WindStar  parties),  and to terminate Mr.
Schmid's consulting  agreement.  In this connection,  Messrs.  Schmid and Nelson
agreed to escrow the  consulting  shares and the  penalty  shares with an escrow
agent and Mr. Dale Runyon agreed to return  800,000  shares of Common Stock that
were issued to him in a prior year. The settlement  agreement  provides that the
escrow agent holds the  above-mentioned  shares until such time as a Form S-1 is
declared effective by the Securities and Exchange Commission. After a Form S-1

                                       27
<PAGE>

is declared effective,  the shares will be given to our Company. Upon completion
of the stock  transfer and a Form S-1 being  declared  effective,  the agreement
will be deemed to be fully  performed  and our Company will record the return of
these shares.

         Our  Company  purchases  all its  Internet  sharing  devices  from  one
supplier,  Smerwick,  Ltd. The supplier is located in Taiwan,  and its principal
shareholders,   Laurent   Solomon  and  Andre   Chouraqui  are  also   principal
shareholders of our Company.  Purchases from this supplier  aggregated  $621,000
for 2000. Although there are a limited number of manufacturers of the particular
Internet sharing devices, management believes that other suppliers could provide
similar Internet sharing devices on comparable terms. A change in this supplier,
however, could cause a delay in manufacturing and affect results adversely.

         On October  18,  2000,  our  Company  entered  into an  agreement  with
Smerwick Ltd., to issue 500,000  shares of our Common Stock to satisfy  supplier
debt of  $486,441.  According to the  agreement,  our Company has the option (as
defined) to repurchase  the 500,000  shares.  In the event,  Smerwick  sells the
shares for an amount less than the supplier  debt of $486,441,  our Company will
be indebted  to  Smerwick  for the  shortfall.  Since our Company is  ultimately
liable for  repayment  of this  obligation,  our  Company has not  recorded  the
satisfaction  of this obligation for the 500,000 shares of issued stock. In this
connection,  our Company has recorded the issuance of the 500,000  shares at par
value, by debiting paid in capital and crediting Common Stock.

         As of December  31,  1999 our  Company  had a unsecured  demand loan of
$174,317  from a principal  shareholder,  Israel D.  Sultan.  During  2000,  our
Company  and Mr.  Sultan  agreed to convert  the then  balance of the  unsecured
demand loan plus interest of $196,367  into 196,367  shares of our Common Stock.
At the date of this transaction,  our Company's Common Stock had a fair value of
$0.45 per share.  Accordingly,  our Company  recorded the excess of the existing
obligation over the fair value of the Common Stock as a capital contribution.

         A company controlled by one principal shareholder incurred research and
development  costs on our Company's  behalf for the further  development  of the
Internet access hardware routers. In this connection,  our Company recorded as a
capital contribution  $318,850,  which represents the actual costs,  incurred by
this company on our  Company's  behalf,  substantially  consisting of technician
salaries  for  subcontractors  located  in  Taiwan.  Our  Company  has no formal
agreement with this company.




                                       28
<PAGE>

                                     PART IV


ITEM 14.      EXHIBITS, FINANCIAL SCHEDULES, AND REPORTS ON FORM 10-K.

         (a)      The following documents are filed as a part of this Report:

                  (1)      Financial Statements:

                  Balance  Sheets,   Statements  of  Operation,   Statements  of
Stockholders'   Equity,   Statements  of  Cash  Flows  and  Notes  to  Financial
Statements.

                  All schedules are omitted  because they are not  applicable or
the required information is shown in the financial statements or notes thereto.

                  (2)      Exhibits:

                  The  exhibits  listed  below  are  required  by  Item  601  of
Regulation  S-K. Each management  contract or  compensatory  plan or arrangement
required to be filed as an exhibit to this Form 10-K has been identified.

         The following  documents are incorporated  herein by reference from the
Registrant's  Form S-1  Registration  Statement  filed with the  Securities  and
Exchange  Commission (the  "Commission"),  Commission file #333-3074 on April 1,
1996 and declared effective by the Commission August 16, 1996:

NUMBER            DOCUMENT
------            --------

3.1               Articles of Incorporation.

3.2               Amended Articles of Incorporation.

3.3               Bylaws of the Company.

4.1               Specimen certificate for Common Stock.

4.2               Specimen certificate for Class A Redeemable Warrants.

4.3               Specimen certificate for Class B Redeemable Warrants.

                  The following documents are incorporated herein by reference
                  from the Registrant's Form 10-K Annual Report for the period
                  ended December 31, 1997:

99.1              Stock Purchase Agreement.

99.2              Employment Agreement with Fred Schmid.

         The following  documents are incorporated  herein by reference from the
Registrant's Form 10-K Annual Report for the period ended December 31, 1998:

3.3               Amended Articles of Incorporation dated December 31, 1997.

3.4               Amended Articles of Incorporation dated April 15, 1998.

         The following  documents are incorporated  herein by reference from the
Registrant's Post Effective Amendment 1 to Form S-1 Registration Statement filed
with the Securities and Exchange Commission (the "Commission"),  Commission file
#333-3074 on June 17,1998 and declared effective by the Commission June 19,1998:

3.3               Amended Articles of Incorporation dated December 31, 1997.

                                       29
<PAGE>


3.4               Amended Articles of Incorporation dated April 15, 1998.

         The following  documents are incorporated  herein by reference from the
Registrant's Form 8-K Report filed on December 3, 1999:

2.                Acquisition Agreement and Exhibits attached thereto.

         The  following   documents  are  incorporated  by  reference  from  the
Registrant's Post-Effective Amendment 2 to Form S-1 Registration Statement filed
with the Commission, Commission file #333-3074 on April 3, 2000.


10.1              March 14, 2000,  Consulting Agreement between Nexland S.A. and
                  the Company.

10.2              November 17, 1999,  Mutual  Non-Competition  Agreement between
                  Nexland, S.A. and the Company.

10.3              November 17, 1999  Co-Operation  Agreement  between  Smerwick,
                  Ltd. and the Company.

         The  following   documents  are  incorporated  by  reference  from  the
Registrant's Form 8K filed with the Commission, Commission file #333-3074 on May
12, 2000.

10.4              Employment Contract of Enrique Dillon.

10.5              Employment Contract of Martin Dell'Oca.



         The following documents are provided herewith:


 4.4              2000 Stock Incentive Plan

10.6              Promissory Note dated August 1, 2000, by the Company payable
                  to Israel D. Sultan

10.7              Conversion Agreement dated October 26, 2000, between Israel D.
                  Sultan and the Company.

10.8              Line of Credit Agreement dated March 19, 2001, between Cornell
                  Capital Partners, L.P. and the Company.

10.9              Registration  Rights  Agreement dated March 19, 2001,  between
                  Cornell Capital Partners, L.P. and the Company.

10.10             Escrow Agreement dated March 19, 2001, between Cornell Capital
                  Partners,  L.P.,  the Company,  Butler  Gonzalez LLP and First
                  Union National Bank.

10.11             Form of Convertible Debenture

10.12             Consulting  Services  Agreement dated March 19, 2001,  between
                  Yorkville Advisors Management, L.L.C. and the Company.

10.13             Securities  Purchase  Agreement dated March 19, 2001,  between
                  the investors on Schedule I attached thereto (the "Investors")
                  and the Company.

10.14             Registration  Rights  Agreement dated March 19, 2001,  between
                  the Investors and the Company.

10.15             Placement Agent  Agreement  dated March 19, 2001,  between May
                  Davis Group, Inc. ("May Davis") and the Company.

10.16             Escrow Agreement dated March 19, 2001,  between May Davis, the
                  Company and First Union National Bank.

                                       30

<PAGE>

                                   SIGNATURES

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

Dated:   May 7, 2001

                                         Nexland, Inc.

                                         By: /s/Gregory S. Levine
                                           -----------------------------------
                                             Gregory S. Levine, President

                                       31

<PAGE>





                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                    <C>

Reports of Independent Certified Public Accountants                                                     F-2 to F-3
Consolidated Balance Sheets as of December 31, 2000 and 1999                                                   F-4
Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998                     F-5
Consolidated Statements of Capital Deficit for the Years Ended December 31, 2000, 1999 and 1998                F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998                     F-7
Notes to Consolidated financial statements                                                             F-8 to F-18


</TABLE>

















                                      F-1

<PAGE>










               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors
of Nexland, Inc. and Subsidiary


We have audited the accompanying consolidated balance sheet of Nexland, Inc. and
Subsidiary  as of December 31, 2000 and the related  consolidated  statements of
operations,  capital  deficit  and cash  flows  for the year then  ended.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of Nexland,  Inc. and
Subsidiary  as of December 31,  2000,  and the results of their  operations  and
their  cash  flows  for the  year  then  ended  in  conformity  with  accounting
principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 14 to
the  consolidated  financial  statements,  the  Company's  dependence on outside
financing and losses since inception raise  substantial  doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described in Note 14. The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.


Miami, Florida
January 26, 2001
Except for Note 17, which is as of January 31 and March 19, 2001

/s/ BDO Seidman, LLP
--------------------
BDO Seidman, LLP


                                      F-2
<PAGE>

Board of Directors
Nexland, Inc.
Miami, Florida

                          Independent Auditor's Report
                          ----------------------------

We have audited the accompanying  balance sheet of Nexland,  Inc. as of December
31, 1999 and the related statements of operations and stockholders'  equity, and
cash flows,  for the years ended  December  31, 1999 and 1998.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of Nexland,  Inc. as of December
31,  1999,  and the results of its  operations  and its cash flows for the years
ended  December  31,  1999  and  1998  in  comformity  with  generally  accepted
accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 17 to the
financial  statements,  the Company's significant losses raise substantial doubt
about its ability to continue as a going concern.  Management's  plans regarding
the  resolution  of this  issue are also  discussed  in Note 17.  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

As described  in Note 18 to the  financial  statements,  the  Company's  earlier
method  of  accounting  for  certain  business  combinations  have  been  deemed
inappropriate. The Company has elected to correct these financial statements for
the  effects  of  these  combinations.  Accordingly,  1999  and  1998  financial
statements have been restated.


William & Webster, P.S.
Spokane, Washington
March 13,  2000  (except  for Note 18, as to which the date is May 12,  2000 and
Notes 2 and 10, as to which the date is March 3, 2001 - all note  references are
to the originally filed financial statements.)

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
                          NEXLAND, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


DECEMBER 31,                                                                   2000               1999
                                                                     ---------------    ---------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

ASSETS
CURRENT
   Cash                                                                 $   59,523       $      4,231
   Accounts receivable (Note 17)                                           119,131             78,597
   Inventory (Note 3)                                                       75,949             56,467
                                                                     ---------------    ---------------

TOTAL CURRENT ASSETS                                                       254,603            139,295

PROPERTY AND EQUIPMENT, less accumulated depreciation
   (Note 4)                                                                 32,072              4,775
DEPOSITS AND OTHER ASSETS                                                   30,000              3,180
                                                                     ---------------    ---------------

TOTAL ASSETS                                                            $  316,675         $  147,250
                                                                     ===============    ===============

LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES
   Accounts payable                                                      $  56,876      $           -
   Accrued professional fees                                               219,194                  -
   Accrued expenses                                                         73,424             16,683
    Due to related party supplier (Note 7(c))                              401,819            180,113
   Other liabilities (Note 7(b))                                            97,356            100,357
                                                                     ---------------    ---------------

TOTAL CURRENT LIABILITIES                                                  848,669            297,153

NOTES PAYABLE - RELATED PARTY (Note 7(d))                                        -            174,317
                                                                     ---------------    ---------------

TOTAL LIABILITIES                                                          848,669            471,470
                                                                     ---------------    ---------------

COMMITMENTS AND CONTINGENCIES (Notes 7, 12, 14 and 17)

CAPITAL DEFICIT (Notes 7, 9, and 10)
   Preferred stock, $0.0001 par value; shares
     authorized 10,000,000; no shares outstanding                                -                  -
   Common Stock, $0.0001 par value ; shares
     authorized 50,000,000, 36,027,378 and 34,094,703
     issued and outstanding, respectively                                    3,603              3,410
ADDITIONAL PAID-IN CAPITAL                                               3,001,613                  -
UNEARNED COMPENSATION                                                     (333,336)                 -
DEFICIT                                                                 (3,203,874)          (327,630)
                                                                     ---------------    ---------------

TOTAL CAPITAL DEFICIT                                                     (531,994)          (324,220)
                                                                     ---------------    ---------------

TOTAL LIABILITIES AND CAPITAL DEFICIT                                $     316,675        $   147,250
                                                                     ===============    ===============
</TABLE>

                 See accompanying notes to the consolidated financial statements




                                      F-4
<PAGE>


<TABLE>
<CAPTION>
                          NEXLAND, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


YEARS ENDED DECEMBER 31,                                                       2000              1999             1998
                                                                       ------------  ----------------      -----------
<S>                                                                    <C>           <C>                   <C>
SALES (Notes 5 and 13)                                                  $ 1,472,950         $ 263,338          $     -
COST OF SALES (Note 7(c))                                                   734,364           129,311                -
                                                                       ------------  ----------------      -----------

GROSS PROFIT                                                                738,586           134,027                -
                                                                       ------------  ----------------      -----------
OPERATING EXPENSES:
   Selling, general and administrative (Notes 7, 9 and 10)                3,585,957           263,664           99,902
   Depreciation                                                               5,914                 -                -
                                                                       ------------  ----------------      -----------

TOTAL OPERATING EXPENSES                                                  3,591,871           263,664           99,902
                                                                       ------------  ----------------      -----------

INTEREST EXPENSE                                                             21,872             1,706                -

OTHER EXPENSE                                                                 1,087                 -                -
                                                                       ------------  ----------------      -----------
NET (LOSS)                                                            $ (2,876,244)       $ (131,343)        $(99,902)
                                                                      =============  ================      ===========
PER SHARE AMOUNTS (Note 9)
   Net loss per common share, basic and diluted                          $    (.08)            $    -           $    -
                                                                      =============  ================      ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                                 34,833,231        30,053,926       29,500,000
                                                                      =============  ================      ===========
</TABLE>

           See accompanying notes to the consolidated financial statements.

                                      F-5
<PAGE>


<TABLE>
<CAPTION>
                          NEXLAND, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CAPITAL DEFICIT
                         (NOTES 7, 9, 10, 11, 12 AND 17)


                                                            Additional
                                              Common           Paid-in           Unearned
                                               Stock           Capital         Compensation        (Deficit)             Total
                                    ----------------   ---------------     ----------------   --------------     -------------
<S>                                 <C>                <C>                 <C>                <C>                <C>
Balance, December 31, 1997                      2950       $    64,950      $                  $    (53,324)       $    14,576

Net loss for the year                              -                 -                    -         (99,902)          (99,902)
                                    ----------------   ---------------     ----------------   --------------     -------------
Balance, December 31, 1998                      2950            64,950                    -        (153,226)          (85,326)

Stock exchanged in reverse
   acquisition recapitalization
   of WindStar Resources, Inc. by
   Nexland, Inc.                                 460          (64,950)                   --        (43,061)          (107,551)
Net loss for the year                              -                 -                    -       (131,343)          (131,343)
                                    ----------------   ---------------     ----------------   --------------     -------------

Balance, December 31, 1999                      3410                 -                    -       (327,630)          (324,220)


Issuance of Common Stock for cash                 25           115,302                    -               -            115,327
Issuance of equity instruments for
   services                                        7           533,900                    -               -            533,907
Issuance of Common Stock in
   connection with employment
   agreement                                      20           499,980            (333,336)               -            166,664
Issuance of Common Stock in
   connection with severance
   agreement                                      50         1,124,950                    -               -          1,125,000
Issuance of Common Stock in
   connection with exercise of
   warrants and options                           21           212,334                    -               -            212,355

Conversion of debt to Common Stock                20           196,347                    -               -            196,367
Issuance of Common Stock to
   stockholder                                    50              (50)                    -               -                  -
Contributed research and
    development services                           -           318,850                                                 318,850
Net loss for the year                              -                 -                           (2,876,244)       (2,876,244)
                                    ----------------   ---------------     ----------------   --------------     -------------

Balance, December 31, 2000                     3,603       $ 3,001,613      $     (333,336)    $ (3,203,874)       $ (531,994)
                                    ================   ================    ================   ==============     =============
</TABLE>

          See accompanying notes to the consolidated financial statements.


                                      F-6
<PAGE>

<TABLE>
<CAPTION>
                          NEXLAND, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (NOTE 15)


YEARS ENDED DECEMBER 31,                                                             2000             1999              1998
                                                                          ---------------    -------------   ---------------

OPERATING ACTIVITIES
  Net loss                                                               $     (2,876,244)   $    (131,343)   $      (99,902)
                                                                          ---------------     -------------    ---------------
<S>                                                                      <C>                 <C>              <C>
Adjustments to reconcile net loss to net cash (used in) operating
activities:
     Compensation charge in connection with employment agreement                 166,664                -                 -
     Compensation charge in connection with severance                          1,125,000                -                 -
     Expenses paid by issuance of Common Stock                                   381,907                -                 -
     Contributed research and development services                               318,850
     Expense in connection with reduction of warrant exercise price               77,000                -                 -
     Expense in connection with issuance of options to consultants                75,000                -                 -
       Interest relating to conversion of debt to Common Stock                    15,948                -                 -
       Straight-lining of lease payments                                          36,000                -                 -
     Depreciation                                                                  5,914            1,716             1,528
     (Increase) decrease in:
         Accounts receivable                                                     (40,534)         (78,597)                -
         Inventory                                                               (19,482)         (48,824)           (7,643)
         Deposits and other assets                                               (26,820)          (3,180)                -
     (Decrease) increase in:
         Accounts payable                                                         56,876           98,745             7,643
         Accrued professional fees                                               219,194                -                 -
         Accrued expenses                                                         20,741           51,486             2,253
         Due to related party supplier                                           221,706                -                 -
         Other                                                                     3,101                -                 -
                                                                          ---------------    -------------   ---------------

Total adjustments                                                              2,637,065           21,346             3,781
                                                                          ---------------    -------------   ---------------

Net cash (used in) operating activities                                         (239,179)        (109,997)          (96,121)
                                                                          ---------------    -------------   ---------------

INVESTING ACTIVITIES
     Purchase of property and equipment                                          (33,211)          (2,251)             (532)
                                                                          ---------------    -------------   ---------------

Net cash (used in) investing activities                                          (33,211)          (2,251)             (532)
                                                                          ---------------    -------------   ---------------

FINANCING ACTIVITIES
     Proceeds from exercise of warrants and options                              212,355                -                 -
     Proceeds from issuance of Common Stock                                      115,327                -                 -
     Advances from stockholder                                                         -          114,781            87,136
     Other                                                                             -            1,675                 -
                                                                          ---------------    -------------   ---------------

Net cash provided by financing activities                                        327,682          116,456            87,136
                                                                          ---------------    -------------   ---------------

Net increase (decrease) in cash                                                   55,292            4,208            (9,517)
Cash, beginning of year                                                            4,231               23             9,540
                                                                          ---------------    -------------   ---------------

Cash, end of year                                                        $        59,523    $       4,231   $            23
                                                                          ===============    =============   ===============
</TABLE>



         See accompanying notes to the consolidated financial statements

                                      F-7
<PAGE>

                          NEXLAND, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

         Nexland, Inc. ("Nexland" or "the Company") was incorporated on December
4, 1994 under the laws of the State of  Florida.  The  Company is engaged in the
production  and  distribution  of Internet  sharing boxes that provide  security
solutions  that  include   firewall,   content  filtering  and  virtual  private
networking.  It considers  these  operations  to be organized in one  reportable
segment. The Company's sales are principally to United States customers with the
balance to customers in Canada.

         Effective  November  17,  1999,  the Company  was merged with  WindStar
Resources Inc. (WindStar) through a reverse merger (See Note 11).

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES


PRINCIPLES OF CONSOLIDATION
---------------------------

         The consolidated  financial statements include the accounts of Nexland,
Inc. and its subsidiary.  All material  intercompany  balances and  transactions
have been eliminated in the consolidation.

INVENTORIES
-----------

         Inventories are stated at the lower of cost or market,  with cost being
determined on an average cost basis.

PROPERTY AND EQUIPMENT
----------------------

         Property and  equipment  are stated at cost.  Depreciation  is provided
using the  straight-line  method over the estimated  useful lives of the assets,
ranging from three to seven years.

LONG-LIVED ASSETS
-----------------

         The  Company   reviews  the  carrying  values  of  its  long-lived  and
identifiable  intangible  assets  for  possible  impairment  whenever  events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable. The Company evaluates the recoverability of long-lived assets by
measuring the carrying  amount of the assets against the estimated  undiscounted
future cash flows  associated with them. At such time the  evaluations  indicate
that the future  undiscounted  cash flows of the long-lived  assets would not be
sufficient  to recover the carrying  value of such  assets,  the assets would be
adjusted to their fair  values.  Any  long-lived  assets held for  disposal  are
reported at the lower of their carrying amounts or fair value less cost to sell.

INCOME TAXES
------------

         Income taxes are  calculated  using the liability  method  specified by
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes."

REVENUE RECOGNITION
-------------------

         Revenue is recognized when products are shipped.

ADVERTISING
-----------

         Advertising costs are charged to operations in the year incurred;  such
amounts aggregated $38,878 in 2000, $10,364 in 1999 and $0 in 1998.



                                      F-8
<PAGE>

ESTIMATES
---------

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

NET LOSS PER COMMON SHARE
-------------------------

         Net loss per common  share is  calculated  according  to  Statement  of
Financial  Accounting  Standards No. 128,  "Earnings  Per Share" which  requires
companies to present basic and diluted  earnings per share.  Net loss per common
share -  Basic  is  based  on the  weighted  average  number  of  common  shares
outstanding during the year. Net loss per common share - Diluted is based on the
weighted  average number of common shares and dilutive  potential  common shares
outstanding during the year.

FOREIGN CURRENCY TRANSLATION
----------------------------

         Foreign  currency  denominated  assets and  liabilities of subsidiaries
with local  functional  currencies  are  translated to United States  dollars at
year-end  exchange  rates.  The  effects  of  translation  are  recorded  in the
cumulative  translation component of capital deficit.  Exchange gains and losses
arising from  transactions  denominated in foreign  currencies are translated at
average  exchange  rates.  The Company began its foreign  operations  during the
latter part of 2000; the effects of any exchange  adjustments  were not material
during  2000,  and  accordingly,  no  amounts  were  recorded  as  a  cumulative
translation component of capital deficit as of December 31, 2000.

RECLASSIFICATIONS
-----------------

         Certain 1999 and 1998 amounts have been  reclassified to conform to the
2000 presentation.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

         In March 2000, the Financial  Accounting  Standards Board (FASB) issued
FASB   Interpretation  No.  44  (Interpretation   44),  Accounting  for  Certain
Transactions  Involving Stock Compensation.  Interpretation 44 provides criteria
for the recognition of compensation expense in certain stock-based  compensation
arrangements  that are accounted for under  Accounting  Principles Board Opinion
No. 25, Accounting for Stock-Based Compensation.  Interpretation 44 is effective
July 1, 2000,  with certain  provisions  that were  effective  retroactively  to
December 15, 1998 and January 12, 2000.  Adoption of  Interpretation  44 did not
have a material impact on the Company's earnings or financial position.

         In December 1999, the Securities and Exchange  Commission  issued Staff
Accounting  Bulletin 101,  "Revenue  Recognition in Financial  Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation and disclosure
of revenues in  financial  statements  and  required  adoption no later than the
fourth fiscal  quarter of fiscal years  beginning  after  December 15, 1999. The
Company  implemented SAB 101 effective  January 1, 2000 and its adoption did not
have a material impact on the Company's earnings or financial position.

         In June 1998, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards ("SFAS") No. 133,  "Accounting for
Derivative Instruments and Hedging Activities".  SFAS 133 establishes accounting
and  reporting  standards  for  derivative  instruments,   including  derivative
instruments  embedded in other contracts,  and for hedging activities.  SFAS 133
was  amended  by SFAS 138 in June 1999 and is  effective,  as  amended,  for all
fiscal  quarters of fiscal years  beginning after June 15, 2000. The adoption of
SFAS 133 on  January 1, 2001 will not have a  material  impact on the  Company's
earnings or financial position.


NOTE 3 - INVENTORY

         Finished  goods  inventories  at December  31, 2000 and 1999 consist of
Internet sharing devices held for resale.








                                      F-9
<PAGE>



NOTE 4 - PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

       DECEMBER 31,                                  2000             1999
                                          ----------------   --------------

       Furniture and fixtures            $         23,715   $        8,434
       Office equipment                            17,930                -
                                          ----------------   --------------
                                                   41,645            8,434
       Less accumulated depreciation               (9,573)          (3,659)
                                          ----------------   --------------

                                         $         32,072   $        4,775
                                          ================   ==============


NOTE 5 - DEPENDENCY ON A CUSTOMER

         Approximately  18% of the  Company's  revenues  were  generated  by one
customer in the financial industry sector in 2000 and none in 1999 and 1998.

NOTE 6 - CONCENTRATIONS OF CREDIT RISK

         The Company  manufactures  and  distributes  Internet  sharing boxes to
companies  in  diversified  industries.  The Company  performs  periodic  credit
evaluations of its customers' financial condition and generally does not require
collateral. At December 31, 2000 and 1999, accounts receivable from customers in
the financial industry sector were approximately  $33,000 and $0,  respectively.
Receivables generally are due within 30 days.


NOTE 7 - RELATED PARTY TRANSACTIONS

         a.       SETTLEMENT AGREEMENT
                  --------------------

         During 2000,  the Company  issued 30,000 shares of Common Stock to Fred
Schmid,  former CEO and  President of WindStar,  for  management  and  financial
consulting  services  (CONSULTING  SHARES),  which was  recorded  by a charge to
operations  and  credit  to  paid-in  capital  and par value  for  $134,375.  In
addition,  the Company  issued  39,213 shares of Common Stock to Schmid and Erik
Nelson, both of whom were former stockholders of WindStar, as a result of a late
filing of the Company's Form S-1 (PENALTY SHARES), which resulted in a charge to
operations and a credit to paid-in capital and par value for $247,532.

         On November 22, 2000 the Company entered into a settlement agreement in
which it agreed to dismiss a threatened lawsuit against Fred Schmid, Fred Schmid
Inc., Dale Runyon,  a former  principal  shareholder of WindStar and Erik Nelson
(WindStar  parties),  and to terminate Schmid's  consulting  agreement.  In this
connection,  Schmid and Nelson  agreed to escrow the  CONSULTING  SHARES and the
PENALTY  SHARES with an Escrow  Agent and Dale Runyon  agreed to return  800,000
TRANSFER  SHARES of Common  Stock that were issued to him in a prior  year.  The
settlement  agreement  provides  that the escrow agent hold the  above-mentioned
shares until such time as a Form S-1 is declared  effective by the SEC.  After a
Form S-1 is declared  effective,  the shares will be given to the Company.  Upon
completion of the stock  transfer and a Form S-1 being declared  effective,  the
agreement  will be deemed to be fully  performed and the Company will record the
return of these shares.

         b.       OTHER LIABILITIES
                  -----------------

         In connection  with the reverse  merger,  the Company  assumed  various
current  liabilities.  As  of  December  31,  2000  and  1999  such  liabilities
aggregated $97,356 and $100,357, respectively.



                                      F-10
<PAGE>


         c.       DEPENDENCY ON A SUPPLIER
                  ------------------------

         The  Company  purchases  all its  Internet  sharing  devices  from  one
supplier,  Smerwick,  Ltd. The supplier is located in Taiwan,  and its principal
shareholders,   Laurent   Solomon  and  Andre   Chouraqui  are  also   principal
shareholders of the Company.  Purchases from this supplier aggregated  $621,000,
$178,000 and $8,000 for 2000, 1999 and 1998, respectively.  Although there are a
limited number of  manufacturers  of the particular  Internet  sharing  devices,
management  believes that other suppliers could provide similar Internet sharing
devices on comparable terms. A change in this supplier,  however,  could cause a
delay in manufacturing and affect results adversely.

         On October  18,  2000,  the  Company  entered  into an  agreement  with
Smerwick Ltd., to issue 500,000  shares of its Common Stock to satisfy  supplier
payables of $486,441. According to the agreement, the Company has the option (as
defined) to  repurchase  the 500,000  shares.  In the event  Smerwick  sells the
shares for an amount less than the supplier  debt of $486,441,  the Company will
be indebted  to  Smerwick  for the  shortfall.  Since the Company is  ultimately
liable for  repayment  of this  obligation,  the  Company has not  recorded  the
satisfaction  of this obligation for the 500,000 shares of issued stock. In this
connection,  the Company has recorded the issuance of the 500,000  shares at par
value, by debiting paid in capital and crediting Common Stock.

         d.       DUE TO PRINCIPAL STOCKHOLDER
                  ----------------------------

         As of December  31, 1999 the  Company had an  unsecured  demand loan of
$174,317 from an officer and  principal  shareholder,  Israel D. Sultan.  During
2000,  the Company  and Mr.  Sultan  agreed to convert  the then  balance of the
$196,367  unsecured  demand loan plus  interest  into  196,367  shares of Common
Stock. At the date of this  transaction,  the Company's  Common Stock had a fair
value of $0.45 per share.  Accordingly,  the Company  recorded the excess of the
existing  obligation  over  the  fair  value of the  Common  Stock as a  capital
contribution.

         e.       NONQUALIFIED OPTIONS TO LAW FIRM
                  --------------------------------

         On December 31, 2000, the Company granted nonqualified options pursuant
to the 2000 Stock  Incentive Plan to a law firm to purchase up to 238,000 shares
of  Common  Stock at an  exercise  price of $0.25  per  share.  The law firm and
certain  partners  therein are  shareholders of the Company.  These options vest
immediately  and may be  exercised  within  ten years of the date of grant.  The
Company  recorded  the fair value of each  option at the grant date by using the
Black-Scholes option pricing model. The fair value of these options amounting to
$38,000 was charged to operations in 2000.

         f.       CONTRIBUTED RESEARCH AND DEVELOPMENT
                  ------------------------------------

         A company controlled by one principal shareholder incurred research and
development  costs on the Company's  behalf for the further  development  of the
Internet access hardware routers. In this connection,  the Company recorded as a
capital contribution of $318,850, which represents the actual costs, incurred by
this company on the  Company's  behalf,  substantially  consisting of technician
salaries  for  subcontractors  located  in  Taiwan.  The  Company  has no formal
agreement with this company.  During the comparable  period in 1999, the Company
did not incur any research and  development  costs,  since it purchased ready to
sell finished goods inventory.

         g.       NEXLAND S.A.
                  ------------

         On November 17, 1999 the Company entered into a mutual  non-competition
agreement  with Nexland S.A., a French  corporation  owned by certain  principal
stockholders of the Company. The agreement provides for:

         o        a five year non-competition period;

         o        Nexland France shall have exclusive sales rights to Europe;

         o        the Company shall have exclusive sales and marketing rights to
                  North  America,   South  America,   Central  America  and  the
                  Caribbean;

         o        if either  party sells into the other's  territory,  the sales
                  contracts  shall  be  assigned  to the  other  party,  and the
                  assignee  shall pay the assignor 20% of the gross value of the
                  contract.

                                      F-11
<PAGE>

         On September 20, 2000, the Company  entered into a licensing  agreement
with Nexland,  S.A.  Pursuant to the agreement the Company  licensed to Nexland,
S.A. the rights to utilize its technology in Europe,  Africa and the Middle East
for 10 years.


NOTE 8 - INCOME TAXES

         Deferred  income  taxes  reflect  the  net  tax  effects  of  temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. At December 31,
2000,  the  Company  had federal net  operating  losses  (NOL) of  approximately
$2,500,000. The NOL expires during the years 2019-2020. In the event of a change
in ownership of the Company,  the  utilization of the NOL  carryforward  will be
subject to limitation under certain provisions of the Internal Revenue Code.

         Realization  of any  portion  of the  approximate  $1,100,000  deferred
federal tax asset at December 31, 2000,  resulting  from the  utilization of the
NOL, is considered more likely than not by management;  accordingly, a valuation
of allowance has been established for the full amount of such asset.

Significant  components of the Company's  deferred tax liabilities and assets at
December 31, 2000, 1999 and 1998 are as follows:

<TABLE>
                                                                          2000            1999             1998
                                                                  -------------   -------------    -------------
<S>                                                              <C>             <C>              <C>

         Deferred tax assets:
         Professional and consulting fees                              137,000               -                -
         Net operating loss carryforwards                              963,000           9,500                -
         Valuation allowance for deferred tax assets                (1,100,000)         (9,500)               -
                                                                  -------------   -------------    -------------

         Net deferred tax asset                                  $           -   $           -    $           -
                                                                  =============   =============    =============
</TABLE>

A  reconciliation  between actual income taxes and amounts  computed by applying
the federal  statutory  rate of 34% to pre-tax loss before loss is summarized as
follows:

<TABLE>
                                                                              2000             1999(a)              1998(a)
                                                             --------------------------------------------------------------
<S>                                                          <C>
U.S. Federal statutory rate on earnings (loss)
before income taxes                                                    $ (924,000)         $ ( 44,657)         $  (33,967)
State income tax, net of Federal benefit                                 (158,000)                  -                   -
Increase in valuation allowance                                         1,090,500                   -                   -
Other                                                                      (8,500)             44,657              33,967
                                                             --------------------------------------------------------------
Income tax expense (benefit)                                           $        -          $  ________         $   ______
                                                             --------------------------------------------------------------
</TABLE>

(a)  Through  November  16,  1999,  these  losses  pertain  to  Nexland  LP  and
accordingly, for tax purposes, there is no corporate benefit.

NOTE 9 - COMMON STOCK

         During 1998, the Board of Directors of WindStar  authorized a 1-for-250
reverse stock split,  thereby  decreasing  the number of issued and  outstanding
shares and increasing the par value of each share to $0.0001.

         On April 25,  2000,  pursuant  to an  employment  contract  between the
Company  and  Enrique  Dillon (the Chief  Executive  Officer at that time),  the
Company issued 1,170,000 shares of Common Stock to him. On May 1, 2000, pursuant
to an  employment  contract  between  the  Company  and Martin  Dell'Oca  (Chief
Financial  Officer) the Company issued 200,000 shares of Common Stock to him. In
connection with the employment agreement for Mr. Dell'Oca,  the Company recorded
unearned  compensation  as a charge to capital deficit in the amount of $500,000
representing  the fair  value of the  Common  Stock at the date of  grant.  Such
amount  is  being  amortized  over  the  period  of  the  employment  agreement.
Amortization expense aggregated $166,664 during 2000.


                                      F-12
<PAGE>

         On June 30, 2000, Mr. Dillon resigned from his position in the Company.
In connection with his resignation,  the 1,170,000 shares of Common Stock issued
in connection  with his  employment  agreement  were  forfeited.  The Company in
consideration  of the  termination  of the employment  agreement  issued 500,000
shares of Common Stock to the former  executive.  In connection  therewith,  the
Company recorded a charge to operations in the amount of $1,125,000 during 2000.

         At December 31, 2000,  2,298,000  shares of Common Stock were  reserved
for issuance under outstanding options and 3,702,000 shares of Common Stock were
reserved for the granting of additional shares. In addition, 3,089,203 shares of
Common Stock were reserved for issuance under warrants.

The  following  reconciles  the  components  of the  earnings  per  share  (EPS)
computation:

<TABLE>
<CAPTION>
For the years ended                  2000                                 1999                              1998
December 31,
                     ---------------------------------------------------------------------------------------------------------------
                        Loss         Shares      Per Share       Loss       Shares    Per Share     Loss      Shares     Per Share
                     Numerator     Denominator    Amount      Numerator   Denominator   Amount    Numerator Denominator    Amount
<S>                  <C>            <C>           <C>        <C>           <C>         <C>         <C>                    <C>

Loss per common
share - basic:        ($2,876,244)   34,833,231   $  (0.08)  $  (131,343)  30,053,926  $    -    $(99,902)  29,500,000    $   -

Effect of Dilutive
Securities
Options                       -            -            -              -          -          -         -             -          -
Warrants                      -            -            -              -          -          -         -             -          -
                     -----------------------------------------------------------------------------  ------------------------------


Loss per common
share - assuming
dilution:             $ (2,876,244) 34,833,231   $  (0.08)  $  (131,343)  30,053,926    $    -    $(99,902)  29,500,000  $      -
                     ---------------------------------------------------------------------------------------------------------------
</TABLE>


         Options to purchase 2,298,000  shares of Common Stock  prices  ranging
from $0.12 to $0.927 per share were not included in the  computation of loss per
share assuming  dilution for 2000, as they would have an  anti-dilutive  effect.
There were no options to purchase Common Stock that would have a dilutive effect
on the  computation  of loss per  common  share in 1999 and  1998.  Warrants  to
purchase  3,089,203 shares of Common Stock at prices ranging from $2.50 to $5.00
per share were not included in the computation of loss per common share assuming
dilution for 2000, 1999 and for 1998 as they would have an anti-dilutive effect.


NOTE 10 - OPTIONS AND WARRANTS

         On September 6, 2000, the Company  adopted a Stock  Incentive Plan (the
Plan),  which  provides for the granting of  6,000,000  stock  options and stock
appreciation  rights  (SARs) to key  employees.  Options  granted  may be either
"incentive  stock  options,"  within the meaning of Section 422A of the Internal
Revenue Code, or non-qualified options.

         The stock options are exercisable over a period determined by the Board
of  Directors,  but no longer  than ten years  after the date they are  granted.
Information with respect to stock options under the Plan is as follows:


         Year ended December 31                  Price per share           2000
                                               ---------------------------------

         Options outstanding at January 1                      -              -
         Options granted                          $ 0.12 - 0.927      2,323,000
         Options exercised/surrendered                         -              -
         Options cancelled                            $    0.843       (25,000)
                                                                   -------------
         Options outstanding at December 31                    -      2,298,000
         Options available for grant under the                 -      3,702,000
         Plan at December 31                                          ----------

         Total reserved shares under the Plan                  -      6,000,000

         Options exercisable under the Plan                    -      1,453,000
         at December 31                                            =============


                                      F-13
<PAGE>


         The  following  table  summarizes  information  about stock  options at
December 31:
<TABLE>
<CAPTION>
                                                 NUMBER OF          WEIGHTED
                                                   OPTIONS           AVERAGE      WEIGHTED   NUMBER OF OPTIONS       WEIGHTED
                                               OUTSTANDING         REMAINING       AVERAGE     EXERCISABLE AT         AVERAGE
                                              DECEMBER 31,       CONTRACTUAL      EXERCISE       DECEMBER 31,        EXERCISE
  Range of Exercise Prices                           2000               LIFE         PRICE               2000           PRICE
                                        ------------------  ----------------  ------------    ---------------   -------------
<S>                                     <C>                 <C>               <C>             <C>               <C>


  $0.12 - $0.132                                   750,000              9.91        $0.125            750,000          $0.125
  $0.23 - $0.25                                    623,000             10.00        $0.241            553,000          $0.242
  $0.843 to $0.927                                 925,000              9.75        $0.870            150,000          $0.843
                                         --------------------                               --------------------
                                                 2,298,000                                          1,453,000
</TABLE>

         A former  officer of the Company's  predecessor is entitled to purchase
up to 160,000 shares of the stock during the ten-year period commencing November
11, 1997 for exercise  prices  ranging from $0.25 to $2.50 per share,  and up to
160,000  additional  shares of stock, for the exercise price of $5.00 per share.
No options were granted or exercised during 1998 or 1999. In March 2000, options
were  exercised  at $1.00  per  share  with  the  Company  receiving  a total of
$160,000.  Such amounts were issued  outside of the  Company's  Stock  Incentive
Plan.

         The  Company  applies APB  Opinion 25 and  related  Interpretations  in
accounting for its plan.  Accordingly,  no compensation cost has been recognized
for its stock option plan. Had compensation  cost for the Company's  stock-based
compensation plan been determined based on the fair value at the grant dates for
awards  under  such  plan  consistent  with the  method of FASB  Statement  123,
"Accounting for Stock-Based  Compensation,"  the Company's net loss and loss per
share would have been reduced to the pro forma amounts indicated below:

<TABLE>
                                                                          2000            1999             1998
                                                                  -------------   -------------    -------------
<S>                                                              <C>              <C>              <C>

         Net (loss) as reported                                  $  (2,876,244)   $     (131,343)  $    (99,902)
         Net (loss) pro forma                                       (3,422,565)         (131,343)       (99,902)
         Basic earnings (loss) per share as reported                      (.08)                -              -
         Basic earnings (loss) per share pro forma                        (.09)                -              -

</TABLE>

         The Company  estimates the fair value of each stock option at the grant
date by using the  Black-Scholes  option  pricing  model based on the  following
assumptions:

         YEAR ENDED DECEMBER 31,                                   2000
                                                       -----------------

         Risk free interest rate                          5.10% - 6.02%
         Expected life                                  9.75 - 10 years
         Expected volatility                                        49%
         Dividend yield                                             0.0


         In August 2000, in  connection  with a private  placement,  the Company
issued  254,741 shares of Common Stock at prices ranging from $0.12 to $0.45 per
share for cash of $115,327.

         During 1996,  the Company's  predecessor  (WindStar)  issued  1,600,000
units in exchange for certain  obligations.  Each unit consisted of one share of
Common  Stock,  one "Class A Warrant"  and one "Class B Warrant."  Each "Class A
Warrant"  may be  exercised  to purchase  one share of Common  Stock at exercise
prices  ranging  from $0.25 to $2.50 per share.  Each  "Class B Warrant"  may be
exercised to purchase  one share of Common Stock at an exercise  price of $5.00.
The  warrants are  redeemable  at any time upon the Company  giving  thirty days
written notice to the holder thereof at redemption price of $0.0025 per warrant.
The warrants are  exercisable  up to five years from the  effective  date of the
offering unless called sooner. In September 2000,  private  investors  exercised
warrants to purchase  52,355 shares of the  Company's  Common Stock at $1.00 per
share. As of December 31, 2000,  1,489,203 "Class A Warrants" remain  authorized
and outstanding (not exercised). No "Class B Warrants" have been exercised.



                                      F-14
<PAGE>



NOTE 11 - MERGER AND ACQUISITIONS

         From  inception  until  November 15,  1999,  Nexland was  inactive.  On
November 15, 1999,  the partners of Nexland LP assigned all their rights,  title
and  interest  in  partnership  assets to Nexland,  Inc. in exchange  for 17,000
shares of Common Stock of Nexland, Inc. In a prior year, Mr. Israel D. Sultan, a
principal  stockholder of Nexland,  who owned 50% of Nexland LP was issued 3,000
shares of the Company's Common Stock for $3,000.

         On November 17, 1999,  WindStar acquired all of the outstanding  Common
Stock of Nexland  by  exchanging  each of its  shares of Common  Stock for 1,475
shares  of  WindStar.  Nexland's  shareholders  received  29,500,000  shares  of
WindStar  for their 20,000  shares of Nexland's  Common  Stock.  For  accounting
purposes the  acquisition  has been treated as a reverse  merger with Nexland as
the acquirer. WindStar was incorporated on March 22, 1995, under the laws of the
State of Arizona  under the name of the  Turtleback  Mountain  Gold Co., Inc. to
conduct business in the fields of mineral exploration,  construction and mining.
WindStar has not realized any significant revenues from its planned operations.

         The Company's  unaudited pro forma  consolidated  results of operations
assuming the reverse merger occurred on January 1, 1998 is as follows:

                                                                  PROFORMA
         PROFORMA FOR THE YEAR ENDED DECEMBER 31, 1999:              TOTAL
                                                             --------------
                                                                (UNAUDITED)

         Revenue                                                   263,338
         Net loss                                                 (426,402)
         Loss per share                                              (0.01)
         Weighted average number of Common Stock shares
            outstanding                                         33,713,230


                                                                  PROFORMA
         PRO FORMA FOR YEAR ENDED DECEMBER 31, 1998:                 TOTAL
                                                             --------------
                                                                (UNAUDITED)

         Revenue                                                         -
         Net loss                                                 (260,566)
         Loss per share                                              (0.01)
         Weighted average number of Common Stock shares
            outstanding                                         33,662,223




NOTE 12 - COMMITMENTS AND CONTINGENCIES

         The Company leases  commercial  office space and office equipment under
lease  agreements,  which  expire at  various  dates  through  2003.  The leases
generally  contain  renewal  options  and  require  that  the  Company  pay  for
utilities,  insurance,  property  taxes,  rental  expense and  maintenance.  The
Company  currently leases office space in Florida and in Canada.  Rental expense
for 2000, 1999 and 1998 aggregated  approximately  $81,000,  $19,081 and $8,546,
respectively.  The Company has recorded the effect of  straight-lining  the rent
expense over the actual  payments.  In this  connection,  $36,000 is included in
accrued expenses as of December 31, 2000.

         Minimum rental  obligations under all  noncancellable-operating  leases
with terms of one year or more as of December 31, 2000, are as follows:

                                      F-15
<PAGE>


          Years ending December 31,                         Amount
                                                  ----------------

              2001                               $         149,000
              2002                                         182,000
              2003                                          77,000
                                                  ----------------

                                                 $         408,000
                                                  ================



NOTE 13 - OPERATIONS IN GEOGRAPHIC AREAS
<TABLE>
<CAPTION>
                                                                                        ADJUSTMENTS          CONSOLIDATED
                                                         UNITED                                 AND
     Year ended December 31, 2000                        STATES           CANADA       ELIMINATIONS                 TOTAL
     ----------------------------                  -------------    -------------    ---------------    ------------------
<S>                                               <C>              <C>              <C>                <C>

     Sales to unaffiliated customers              $   1,208,990    $     263,960    $                  $        1,472,950
     Transfers between geographic areas           $     160,781    $                $     (160,781)                     -
                                                   -------------    -------------    ---------------    ------------------

     Total sales                                  $   1,369,771    $     263,960    $     (160,781)    $        1,472,950
                                                   =============    =============    ===============    ==================

     Operating profit (loss)                      $ (2,858,322)    $       5,037    $                  $      (2,853,285)
                                                   =============    =============    ===============    ==================

     Identifiable assets as of December 31,
       2000                                       $     296,841    $      80,664    $      (60,830)    $          316,675
                                                   =============    =============    ===============    ==================
</TABLE>



         Operating profit (loss) is total sales less operating expenses.

         Identifiable assets are those assets of the Company that are identified
with operations in each geographic  area.  There were no operations  outside the
United States in 1999 and 1998.


NOTE 14 - GOING CONCERN

         The  accompanying   consolidated  financial  statements  were  prepared
assuming  that the  Company  will  continue  as a going  concern.  This basis of
accounting   contemplates   the  recovery  of  the  Company's   assets  and  the
satisfaction  of its  liabilities  in the  normal  course of  operations.  Since
inception,  the Company has been  involved in the  development  of its  Internet
sharing   devices   organizational   infrastructure,   and  the  performance  of
preliminary  marketing  and  sales.  The  Company's  ultimate  ability to attain
profitable  operations is dependent upon obtaining  additional  financing and to
achieve a level of sales adequate to support its cost structure. During the year
ended  December 31, 2000,  the Company  incurred  losses of  approximately  $2.9
million,  has a working capital  deficiency of $594,066 and has $59,523 of cash,
all of which raises substantial doubt about the Company's ability to continue as
a going concern.

         Management  plans to  undertake a  comprehensive  review of its ongoing
business  to address  reductions  in its  selling,  general  and  administrative
expenses,  including  reductions in rent and  professional  fees. The Company is
involved in active ongoing  negotiations with investment banks and other members
of the financial  community to obtain additional  sources of capital.  Effective
February 1, 2001, it has begun factoring its  receivables.  As discussed in Note
17, the Company has taken the following steps to improve its cash flow for 2001:

         o  On January 31, 2001, the Company entered into a factoring agreement.

         o  On March 19, 2001,  the Company  entered  into an agreement  with an
            institutional investor to purchase up to $5 million of the Company's
            convetible debentures.

         o  The Company is in  negotiations  with  potential  purchasers  of the
            Company's Internet sharing boxes in substantial quantities.


                                      F-16
<PAGE>

         Accordingly,   there  are  no  assurances  that  the  Company  will  be
         successful  in  achieving  the  above  plans,  or that such  plans,  if
         consummated, will enable the Company to obtain profitable operations or
         continue as a going concern.



NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION

         Supplemental disclosure is as follows:


                                                  2000        1999       1998
                                             -----------  ----------  ----------

             Cash paid for interest         $        -    $  1,706  $      -
             Cash paid for taxes                     -           -         -


NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement   of   Financial   Accounting   Standards   (SFAS)  No.  107,
"Disclosures about Fair Value of Financial  Statements," requires estimated fair
value  amounts to be  determined by the  Company's  management  using  available
market information and other valuation methods. However,  considerable judgement
is required to interpret  market data in developing the estimates of fair value.
Accordingly,  the  estimates are not  necessarily  indicative of the amounts the
Company could realize in a current market exchange.  The use of different market
assumptions  and/or  estimation  methods  may  have  a  material  effect  on the
estimated  fair  value  amounts.  Furthermore,  the  Company  does not intend to
dispose of a significant portion of its financial instruments.

         The  Company's  financial  instruments  consist  principally  of  cash,
accounts  receivable and notes payable.  The carrying  amounts of such financial
instruments approximated fair value at December 31, 2000 and 1999.



NOTE 17 - SUBSEQUENT EVENTS


(a)      FACTORING
         ---------

         On January 31, 2001,  the Company  entered into a factoring  agreement.
The  agreement  expires on January 31, 2002 or until  terminated by either party
with proper notice given as defined. The Company has assigned  substantially all
of its accounts  receivable to the factor,  typically on a recourse  basis.  The
Company may request advances up to 75% of the eligible  receivables.  The factor
charges the Company a  commission  equal to .0667% per day for each  uncollected
receivable  from the invoice  date to the  payment  date of such  invoice,  plus
interest on advanced funds equal to the greater of 10% or the interest  publicly
announced  by Citibank N. A., plus 2%.  Obligations  due to the factor under the
factoring agreement are collateralized by "receivables", as defined.

(b)      LINE OF CREDIT
         --------------

         On March 19, 2001, the Company entered into a Line of Credit  Agreement
(the " Credit  Line").  Pursuant to the Credit Line, an  institutional  investor
agreed,  if  requested  by the  Company,  to  purchase  up to $5  million of the
Company's  debentures.  The  debentures are  convertible  into Common Stock at a
conversion  price equal to a 20% discount of the market price of such stock,  as
defined in the  agreement.  The timing of each sale and the number of debentures
to be sold is at the discretion of the Company,  subject to various  conditions,
including an effective  registration of the conversion shares. The dollar amount
that the Company can request under any individual sale is subject to the average
trading  volume of the Company's  Common Stock for the preceding  40-day trading
period.  The  maximum  term of the  Credit  Line is two  years as  defined.  The
agreement  contains  various  representations,  warranties  and covenants by the
Company,  including limitations on the Company's ability to sell Common Stock or
Common Stock  equivalents,  sell  assets,  merge,  or enter into  certain  other
transactions.



                                      F-17
<PAGE>

         SECURITIES PURCHASE AGREEMENT
         -----------------------------

         On March 19,  2001,  the Company  entered  into a  Securities  Purchase
Agreement with third party  investors and a Placement Agent Agreement to provide
up to $250,000  less  certain fees and  expenses of the  placement  agent by the
issuance of convertible debentures.  The debentures bear interest at 6% per year
and convert into the Company's Common Stock. Through April 19, 2001, the Company
issued  debentures  of $65,000  from which the Company  received net proceeds of
approximately $43,000.

         In  connection  with the issuance of such  debentures,  the  difference
between the  conversion  price and the fair value of the Common Stock into which
the debentures are convertible, multipled by the number of shares into which the
debt is  convertible  at the issuance  date of the debt or the date at which the
debentures  become  convertible  will be  recorded  as  intrinsic  value  of the
beneficial  conversion  feature and charged to interest expense in the Company's
statement  of  operations.  Such amounts may be material to the  Company's  2001
financial statements.

         CONSULTING AGREEMENT
         --------------------

         In  connection  with  entering  into the Credit Line,  the Company also
entered into consulting  services  agreement relating to capital investment and,
or debt financing.  Under the agreement, the consultant will receive a fee equal
to 8.4% of the gross  proceeds  from each  advance  under the  Credit  Line.  In
addition,  on March 16, 2001,  the Company  issued  126,000 shares of its Common
Stock pursuant to the consulting services agreement.

         The Company has granted the Credit Line  investor,  the  consultant and
the placement agent certain  registration  rights.  Pursuant to the registration
rights agreements, the Company is obligated to, among other things, register the
sale of the shares, in connection with the agreements referred to above.

<TABLE>
<CAPTION>
NOTE 18 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

2000 Quarter Ended                       March 31     June 30 (a)     September 30      December 31
                                      -----------------------------------------------------------------
<S>                                   <C>            <C>             <C>              <C>

Revenues                               $  208,607    $     241,270   $      319,574   $     703,499
Gross Profit                           $  122,875    $     149,807   $      174,665   $     291,239
Net income (loss)                      $ (423,256)   $  (1,361,789)  $     (480,474)  $    (610,725)
Basic and diluted earnings (loss)
per common share                       $    (0.01)   $       (0.04)  $        (0.01)  $       (0.02)


1999 Quarter Ended                       March 31       June 30       September 30    December 31 (b)
                                      -----------------------------------------------------------------

Revenues                               $      3,887  $       31,015  $       47,876   $     180,560
Gross Profit                           $    (2,051)  $        9,612  $       (7,068)  $     133,534
Net income (loss)                      $    (7,616)  $       (2,224) $      (71,355)  $     (50,148)
Basic and diluted earnings (loss)
per common share                                   -               -               -               -
</TABLE>

(a)      During the quarter ended June 30, 2000,  the Company  recorded a charge
         to compensation in connection with issuance of 500,000 shares of common
         stock  valued  at  $1,125,000  resulting  from  the  severance  of  the
         Company's former Chief Executive Officer.

(b)      See footnote  11,  which  discusses  the reverse  merger that  occurred
         during the fourth quarter of 1999.


                                      F-18