SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

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

                          COMMISSION FILE NO. 333-3074

                                  NEXLAND, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>    <C>                                                                  <C>
                             Delaware                                                     37-1356503
                             --------                                                     ----------
                   (State or Other Jurisdiction                             (I.R.S. Employer Identification Number)
                of Incorporation or Organization)

           1101 Brickell Avenue, Suite 200, North Tower                                      33131
           --------------------------------------------                                      -----
                          Miami, Florida
                          --------------
             (Address of Principal Executive Offices)                                     (Zip Code)
        Registrant's telephone number, including area code                              (305) 358-7771

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

                                          Common Stock, Par Value $0.0001 Per Share
                                          -----------------------------------------
                                                      (Title of Class)
</TABLE>

         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,  and (2) has been  subject to such
filing requirements for the past 90 days. Yes X No
                                              -   ---

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

         The  aggregate  market  value  of  the  voting  common  stock  held  by
non-affiliates  of the Registrant on April 1, 2002, was  $1,927,158.50  based on
the average bid and asked prices on such date of $0.25.

         The Registrant had 35,653,385 shares of Common Stock, par value $0.0001
per share, outstanding on April 1, 2002.




<PAGE>




                                     PART I


ITEM 1.  BUSINESS


GENERAL DESCRIPTION OF BUSINESS

         FORWARD-LOOKING  STATEMENTS AND ASSOCIATED  RISKS. THIS FILING CONTAINS
FORWARD-LOOKING STATEMENTS,  INCLUDING STATEMENTS REGARDING, AMONG OTHER THINGS:
(A) OUR  PROJECTED  SALES AND  PROFITABILITY,  (B) OUR  GROWTH  STRATEGIES,  (C)
ANTICIPATED TRENDS IN OUR INDUSTRY,  (D) OUR FUTURE FINANCING PLANS, AND (E) OUR
ANTICIPATED  NEEDS FOR WORKING CAPITAL.  IN ADDITION,  WHEN USED IN THIS FILING,
THE WORDS "BELIEVES," "ANTICIPATES," "INTENDS," "IN ANTICIPATION OF," "EXPECTS,"
AND SIMILAR WORDS ARE INTENDED TO IDENTIFY CERTAIN  FORWARD-LOOKING  STATEMENTS.
THESE  FORWARD-LOOKING  STATEMENTS ARE BASED LARGELY ON OUR EXPECTATIONS AND ARE
SUBJECT  TO A NUMBER OF RISKS AND  UNCERTAINTIES,  MANY OF WHICH ARE  BEYOND OUR
CONTROL.  ACTUAL  RESULTS  COULD DIFFER  MATERIALLY  FROM THESE  FORWARD-LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS,  INCLUDING,  WITHOUT LIMITATION,  THE
RISKS OUTLINED UNDER  "CERTAIN  BUSINESS RISK FACTORS" AND MATTERS  DESCRIBED IN
THIS FILING GENERALLY.  IN LIGHT OF THESE RISKS AND UNCERTAINTIES,  THERE CAN BE
NO ASSURANCE THAT THE FORWARD-LOOKING  STATEMENTS  CONTAINED IN THIS FILING WILL
IN FACT OCCUR.  WE DO NOT  UNDERTAKE  ANY  OBLIGATION  TO  PUBLICLY  RELEASE THE
RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO
REFLECT ANY FUTURE EVENTS OR CIRCUMSTANCES.


OUR COMPANY

         We are a Delaware  corporation.  Our  principal  executive  offices are
located at 1101 Brickell Avenue,  Suite 200, North Tower, Miami,  Florida 33131.
Our  telephone  number  is  (305)  358-7771.  The  address  of  our  website  is
www.nexland.com. Information on our website is not part of this filing.


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,
telephone  companies,  as well as  customize  our  products  for resale by other
Internet security  companies;  however,  in the past, we have had minor sales to
direct  end-users.  During  fiscal year 2001 and 2000, we made sales to over 100
customers.


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<PAGE>

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
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


                                       3
<PAGE>

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
               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;

         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.

                                       4
<PAGE>

         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
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 ISB  Pro  Series
               product supports this function.


                                       5
<PAGE>

A DESCRIPTION OF OUR PRODUCTS

         We design and sell the Internet  Sharing Box ("ISB")  product line. The
ISB  products  include the ISB SOHO,  ISB Pro100,  ISB Pro400,  ISB Pro800,  ISB
Pro800 Turbo and ISB Wave Base. The ISB products are hardware routers that allow
users, connected to the Internet to share their 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.

         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.  All ISB products allow up to
253 users to share one Internet connection.

         o     ISB SOHO - Designed  specifically  for shared Internet access and
               Internet  Security for the home or small  officer  user.  The ISB
               SOHO features simple installation and configuration.  It connects
               to a cable or digital  subscriber  line modem through an ethernet
               connection to accommodate high speed data  transmission.  The ISB
               SOHO has a high  speed 4 port  10/100  switch  and is  great  for
               Internet games.

         o     ISB PRO100 - Designed specifically for shared Internet access and
               Internet  Security.  The ISB Pro100 features simple  installation
               and configuration.  The ISB Pro100 connects to a cable or digital
               subscriber   line  modem   through  an  ethernet   connection  to
               accommodate  high speed data  transmission and has a high speed 1
               port  10/100  switch  with  Duplex,  over  8MB of  Bi-Directional
               throughput to MAX out the connection,  Multi Session Ipsec, Multi
               Session PPPoE and a CAT5 Cable included.

         o     ISB PRO400 - Designed specifically for shared Internet access and
               Internet  Security,  the ISB Pro400 features simple  installation
               and configuration.  The ISB Pro400 connects to a cable or digital
               subscriber   line  modem   through  an  ethernet   connection  to
               accommodate  high speed data  transmission and has a high speed 4
               port  10/100  switch  with  Duplex,  over  8MB of  Bi-Directional
               throughput to MAX out the connection,  Multi Session IPsec, Multi
               Session PPPoE and a CAT5 Cable included.

         o     ISB PRO800 - Designed specifically for shared Internet access and
               Internet  Security,  the ISB Pro800 features simple  installation
               and configuration  and connects to a cable or digital  subscriber
               line modem  through an ethernet  connection to  accommodate  high
               speed data  transmission.  The ISB Pro800 has a high speed 8 port
               10/100 switch with Duplex, over 8MB of Bi-Directional  throughput
               to MAX out the  connection,  Multi Session  IPsec,  Multi Session
               PPPoE and a CAT5 Cable included.

         o     ISB PRO800  TURBO -  Designed  specifically  for shared  Internet
               access and Internet Security the ISB Pro800 Turbo features simple
               installation and configuration.  The ISB Pro800 Turbo connects to
               a cable or  digital  subscriber  line modem  through an  ethernet
               connection to accommodate high speed data  transmission and has a
               high speed 8 port 10/100 switch with Duplex, 2 modem ports,  load
               balance 2  broadband  connections,  double  redundant  connection
               backup,  over  8MB of  Bi-Directional  throughput  to MAX out the
               connection,  Multi Session IPsec,  Multi Session PPPoE and a CAT5
               Cable included. This product is built for more demanding users.

         o     ISB WAVE BASE - Designed  specifically for shared Internet access
               and  Internet   Security  the  ISB  Wave  Base  features   simple
               installation and  configuration and is an 802.11B (11MB) wireless
               Access  Point.  The ISB Wave Base has a high speed 4 port  10/100
               switch with Duplex, over 8MB of Bi-Directional  throughput to MAX
               out the connection,  Multi Session IPsec, Multi Session PPPoE and
               a CAT5 Cable  included.  This  product is designed  for  notebook
               users.

         We produce the following products exclusively for Symantec Corporation:

         o     SYMANTEC  FIREWALL  VPN 100 AND VPN 200.  Designed as  integrated
               security and  networking  devices that provide  easy,  secure and
               cost-effective  Internet  connectivity  between  locations.  With
               their  all-in-one  functionality,  small  businesses  and  remote
               offices can create a high-speed local network that enables secure
               access and  interaction  via the Internet with remote  locations,
               business  partners and corporate  networks.  The appliance can be
               installed  quickly,  offering  offices  with up to 30 employees a
               turnkey  solution for securing  outbound and inbound web,  e-mail
               and  FTP  traffic.  For  larger,  more  dispersed  organizations,


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<PAGE>

               Nexland's  Symantec Firewall VPN products offer an affordable and
               easy to manage  solution for extending  firewall  protection  and
               IPSec  gateway-to-gateway  VPN access to  satellite  offices  and
               branch  locations  and a remote  client-to-gateway  IPSec VPN for
               travel users.


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, Symantec 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  design,  functionality,  price  and
reliability, as well as 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,  as well as other Internet security 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 of
               April 1, 2002, we hired a Sales Manager to build the sales force.

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

         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.



                                       7
<PAGE>

         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 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
shorter 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 ten-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;

         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.

                                       8
<PAGE>

         On September 20, 2000,  Nexland S.A. and we signed a ten-year licensing
agreement  whereby we were granted the right to use the "Nexland" names,  logos,
marketing techniques, trade secrets and know-how for sale of products to Europe,
Africa and the Middle East. Nexland S.A. also granted to us the exclusive rights
to its technology,  whether or not patented or patent pending, trademarks, trade
names,  logos,  marketing  techniques,  trade  secrets and  know-how for sale of
products  to the  rest  of the  world,  excluding  Asia,  which  is open to both
companies.

         On November 16, 2001,  Nexland S.A.  waived  certain  provisions in the
2000 licensing agreement with respect to a large customer.  We are authorized to
design and manufacture  certain products for purchase,  distribution and sale by
this certain customer anywhere in the world.


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  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.  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, 2002, we employed nineteen persons in Miami and eight in
Canada, including eight in operations and administration,  one in marketing, six
in research  and  development  and six in customer  support.  We also employ six
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 RISK FACTORS

         We are  subject to  various  risks  which may have a  material  adverse
effect on our business,  financial condition and results of operations,  and may
result in a decline in our stock price. Certain risks are discussed below:


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

         We have  historically  lost money. For the year ended December 31, 2001
and the year ended  December 31, 2000, we sustained  losses of $1.67 million and
$2.88 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


                                       9
<PAGE>

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.


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 will 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  explanatory  paragraphs to their
audit opinions issued in connection with the 2001 and 2000 financial  statements
which  state  that our Company is  dependent  on outside  financing  and has had
losses  since  inception  that  raise  substantial  doubt  about 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 $1.3 million and $0.6 million and
at December 31, 2001 and 2000,  respectively.  We had an accumulated  deficit of
$4.9 million and $3.2 million at December 31, 2001 and 2000,  respectively.  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.

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 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
2000,  sales to 10 customers  accounted  for 53% of our revenue,  while in 2001,
sales to 10  customers  accounted  for 48% 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.

                                       10
<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

         Because  we are  dependent  on  international  sales for a  substantial
amount of our revenue  (10% of total  revenue in 2000 and 28% in 2001),  we 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.


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 1, 2002, we have issued and outstanding  35,653,385  shares
of common stock of which 29,558,758  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.


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.


                                       11
<PAGE>



ITEM 2.  PROPERTIES

         In June  2000,  we  entered  into a  three-year  lease for our  offices
located at 1101 Brickell Avenue, 2nd Floor, North Tower,  Miami,  Florida 33131,
consisting  of 7,500 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 October 2001, the lease was amended and the rent expense was reduced
to $10,739 per month plus tax for the  remainder  of the second year and $11,206
per month for the third year of the lease.

         In August 2000, Nexland Canada, our Canadian  wholly-owned  subsidiary,
entered  into a  one-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. The lease was renewed for 1 additional year.

         We consider our existing  facilities to be adequate for our foreseeable
needs.


ITEM 3.  LEGAL PROCEEDINGS

         The officers and directors of our Company  believe that, to the best of
their  knowledge,  neither our Company nor any of its officers and directors are
parties  to any legal  proceeding  or  litigation.  Further,  the  officers  and
directors know of no threatened or contemplated legal proceedings or litigation.


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

         None.




                                       12
<PAGE>



                                     PART II


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

         Our common stock trades on the  Over-the-Counter  Bulletin  Board under
the trading  symbol  "XLND."  There has been  trading on 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.

<TABLE>
                                                                         CALENDAR YEAR 2001
                                                                         ------------------
                                                                         HIGH BID         LOW BID
                                                                     ------------  --------------
<S>          <C>                                                          <C>             <C>
             First Quarter (January 2001 - March 2001)                    $1.7812         $0.1900
             Second Quarter (April 2001 - June 2001)                      $0.9000         $0.2700
             Third Quarter (July 2001 - September 2001)                   $0.5500         $0.2000
             Fourth Quarter (October 2001 - December 2001)                $0.5500         $0.2200
</TABLE>

<TABLE>
<CAPTION>

                                                                         CALENDAR YEAR 2000
                                                                         ------------------
                                                                         HIGH BID         LOW BID
                                                                     ------------  --------------
<S>          <C>                                                          <C>             <C>
             First Quarter (January 2000 - March 2000)                    $7.8750          $3.750
             Second Quarter (April 2000 - June 2000)                      $6.2500          $1.250
             Third Quarter (July 2000 - September 2000)                   $2.3125          $0.625
             Fourth Quarter (October 2000 - December 2000)                $0.7500          $0.100

</TABLE>


         On April 1,  2002,  the  closing  trade  price of the  common  stock as
reported  on the  Over-the-Counter  Bulletin  Board was $0.25.  As of such date,
there were approximately 402 holders of record of our common stock.


DIVIDENDS

         We have not  declared  or paid  dividends  on our common  stock  during
fiscal  2000 or 2001 and do not plan to declare or pay  dividends  on our common
stock during fiscal 2002. Our dividend  practices are determined by our Board of
Directors  and may be changed  from time to time.  We will base any  issuance of
dividends upon our earnings (if any), financial condition, capital requirements,
acquisition  strategies,  and other factors considered important by our Board of
Directors.  Delaware law and our Certificate of Incorporation do not require our
Board of Directors to declare dividends on our common stock. We expect to retain
any earnings  generated by our operations for the  development  and expansion of
our business and do not anticipate  paying any dividends to our stockholders for
the foreseeable future.


RECENT SALES OF UNREGISTERED SECURITIES

         On February 23, 1999,  our Company  issued 2,000 shares of common stock
valued at $0.25 per share  pursuant  to the  exercise of Class A Warrants of our
Company. All of these shares were purchased by unrelated parties.

         On October 28, 1999,  our Company  issued  29,500,000  shares of common
stock pursuant to the acquisition of Windstar Resources, Inc.

         On November 5, 1999,  our Company issued 382,173 shares of common stock
for  conversion  of debt to  equity.  All of  these  shares  were  purchased  by
unrelated parties.

         On March 21, 2000,  our Company  issued  39,213  shares of common stock
valued at $6.31 per share to Erik  Nelson and Fred Schmid in  connection  with a
penalty for the late filing of our Company's Form S-1 Registration Statement.

         On March 21, 2000,  our Company  issued  160,000 shares of common stock
valued at $1.00 per share to Fred Schmid, our former Chief Executive Officer, in
connection  with the exercise of options of our Company  issued  pursuant to the
acquisition of Windstar Resources, Inc.



                                       13
<PAGE>

         On March 21, 2000,  our Company issued 15,000 shares of common stock to
Fred Schmid, our former Chief Executive Officer and President. Of this issuance,
5,000  shares were valued at $4.00 per share,  5,000 shares were valued at $3.38
per share, and 5,000 shares were valued at $2.00 per share.

         On May 5, 2000, our Company issued  1,170,000 shares of common stock to
Enrique Dillon, our former Chief Executive Officer, valued at $3.38 per share in
consideration  of his  employment.  On July 7,  2000,  Mr.  Dillon  subsequently
forfeited  these shares and was issued  500,000 shares of common stock valued at
$2.25 per share pursuant to a severance agreement with our Company.

         On May 5, 2000,  our  Company  issued  200,000  shares of common  stock
valued at $2.50 per share to Martin Dell'Oca,  our Chief Financial Officer and a
Director, in consideration of his employment.

         In July,  2000,  our Company issued 6,313 shares of common stock valued
at $1.00 per share  pursuant to the exercise of Class A Warrants of our Company.
All of these shares were purchased by unrelated parties.

         In August,  2000,  our Company  issued  23,600  shares of common  stock
valued at $1.00 per share  pursuant  to the  exercise of Class A Warrants of our
Company. All of these shares were purchased by unrelated parties.

         In September,  2000,  our Company  issued 19,359 shares of common stock
valued at $1.00 per share  pursuant  to the  exercise of Class A Warrants of our
Company. All of these shares were purchased by unrelated parties.

         On October 26, 2000,  our Company issued 196,367 shares of common stock
valued at $1.04 per share to Daniel  Sultan,  a  Director  of our  Company,  for
conversion of debt to equity.

         On October 26, 2000,  our Company issued 500,000 shares of common stock
valued at $0.0001 per share to Andre Chouraqui for conversion of debt to equity.
On December 21, 2001, Mr. Chouraqui  returned the 500,000 shares of common stock
to our Company.

         Between  October 26, 2000 and  December 20,  2000,  our Company  issued
254,741  shares of common  stock for cash of  $115,327.  These  shares of common
stock were sold at prices  ranging  from $0.18 to $1.71 per share.  All of these
shares were purchased by unrelated parties.

         Between  November  29, 2000 and  December 9, 2000,  our Company  issued
3,083 shares of common stock valued at $1.00 per share  pursuant to the exercise
of Class A Warrants  of our  Company.  All of these  shares  were  purchased  by
unrelated parties.

         On March 15, 2001,  our Company  issued 7 shares of common stock valued
at $2.50 per share  pursuant to the exercise of Class A Warrants of our Company.
All of these shares were purchased by unrelated parties.

         On March 15, 2001,  our Company  issued  126,000 shares of common stock
valued at $0.70  pursuant  to a  consulting  service  agreement  with  Yorkville
Advisors LLC.

         With respect to the sale of unregistered  securities  referenced above,
all transactions were exempt from  registration  pursuant to Section 4(2) of the
Securities Act of 1933 (the "1933 ACT"), and Regulation D promulgated  under the
1933 Act. In each instance,  the purchaser had access to sufficient  information
regarding  our  Company  so as to make an  informed  investment  decision.  More
specifically,  our Company had a reasonable basis to believe that each purchaser
was an  "accredited  investor"  as defined in  Regulation  D of the 1933 Act and
otherwise  had  the  requisite  sophistication  to  make  an  investment  in our
Company's common stock.





                                       14
<PAGE>




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

         The  following  information  should  be read in  conjunction  with  our
consolidated  financial  statements and the notes thereto appearing elsewhere in
this filing.

         Certain  statements  within this Item and throughout this Annual Report
on Form  10-KSB  and the  documents  incorporated  herein  are  "forward-looking
statements"  as  described  in  the  "safe  harbor"  provision  of  the  Private
Securities  Litigation Reform Act of 1995. These statements  involve a number of
risks and  uncertainties  and actual results could differ  materially from those
projected.

CRITICAL ACCOUNTING POLICIES

         Financial  Reporting Release No. 60, which was recently released by the
U.S. Securities and Exchange  Commission,  encourages all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Our consolidated financial statements include a summary of
the significant  accounting  policies and methods used in the preparation of our
consolidated financial statements.

         Management  believes the following critical  accounting policies affect
the significant judgments and estimates used in the preparation of the financial
statements.


REVENUE RECOGNITION

         Revenues  are  recognized  at the time of  shipment  of the  respective
merchandise. The Company includes shipping and handling fees billed to customers
as revenues.  Costs of sales  include  outbound  freight.  Products are under an
unconditional  money-back guarantee for the first 30 days after purchase. A five
year warranty covering the repair of the unit is provided on all products.


USE OF ESTIMATES

         Management's discussion and analysis of financial condition and results
of operations is based upon our consolidated  financial  statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and judgments  that affect the reported  amounts of
assets,   liabilities,   revenues,  and  expenses,  and  related  disclosure  of
contingent  assets and liabilities.  On an ongoing basis,  management  evaluates
these  estimates,  including  those related to allowances for doubtful  accounts
receivable  and  the  carrying  value  of  inventories  and  long-lived  assets.
Management  bases these estimates on historical  experience and on various other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
results of which form the basis of making  judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources.  Actual
results  may  differ  from  these  estimates  under  different   assumptions  or
conditions.


GENERAL

         The  following  table  sets  forth  for  the  periods  presented,   the
percentage of net sales represented by certain items in our Company's statements
of operations:

                                                     PERCENTAGE OF NET SALES
                                                   ----------------------------
                                                      YEAR ENDED DECEMBER 31,
                                                   ----------------------------
                                                     2001              2000
                                                   --------------  ------------
Total net sales                                       100.0%             100.0%
                                                   --------------  ------------

Total cost of goods sold                              (49.5)             (49.9)
                                                   --------------  ------------

Gross profit                                            50.5               50.1

Operating expenses                                    (88.7)            (243.8)
                                                   --------------  -------------
Income (loss) from operations                         (38.1)            (193.7)

                                       15
<PAGE>

                                                     PERCENTAGE OF NET SALES
                                                   ----------------------------
                                                      YEAR ENDED DECEMBER 31,
                                                   ----------------------------
                                                     2001              2000
                                                   --------------  ------------

Interest expense and other                             (2.7)              (1.6)
                                                   --------------  ------------
Net Loss                                              (40.9)            (195.3)
                                                   ==============  ============


RESULTS OF OPERATIONS

         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 years
ended December 31, 2001 and December 31, 2000.


YEARS ENDED DECEMBER 31, 2001 AND 2000

         REVENUES.  We had revenue of $4,080,170 for the year ended December 31,
2001 compared to revenue of $1,472,950  for the year ended December 31, 2000, an
increase of 177%.  For the year ended  December 31, 2001, we had sales of 23,342
units of our Internet access "hardware routers" for small offices and home users
compared  to sales of 6,696  units for the year  ended  December  31,  2000,  an
increase of 16,646 units or 248.6%. During the year ended December 31, 2001, our
average  selling  price per unit  decreased $45 per unit as compared to the same
period in 2000.  This decrease  resulted  from our Company  reducing its selling
price to take  advantage of large volume sales  opportunities.  During the third
quarter  of 2000,  our  Company  opened  an office in  Victoria,  B.C.  Revenues
relating to this office for 2001 were $1,152,848 as compared to $263,960 for the
same period in 2000, an increase of 336.8%.

         COST OF SALES.  Cost of sales for the year ended  December 31, 2001 was
$2,018,323 as compared to $734,364 for the year ended December 31, 2000. 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. During the year ended December 31, 2001, our average purchase cost per
unit  decreased  by $23 per unit as compared  to the same  period in 2000.  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.  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.

         GROSS  PROFIT.   The  gross  profit  of  our  Company's   products  was
approximately  51%  for  the  year  ended  December  31,  2001  as  compared  to
approximately  50% for the year ended  December  31, 2000.  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, which could lower our gross margin in the future.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses increased to $3,605,529 for the year ended December 31,
2001 as  compared  to  $3,585,957  for the year ended  December  31,  2000.  The
increase of $19,572  from 2001 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 $705,698,
our facilities  expenses and office expense  increased by $28,884,  professional
fees by $303,322, travel and entertainment ($9,166) and other operating expenses
by $224,340.

         For the year ended  December  31 2001,  we had five  transactions  that
resulted  in  non-cash  expenditures  i) a  company  controlled  by  one  of the
principal shareholders incurred research and development costs on the behalf for


                                       16
<PAGE>

the further  development of the Internet access hardware routers. We recorded as
a capital  contribution  of $183,487 as compared by $318,850 for the same period
in 2000,  an actual  change of  ($135,363)  which  represents  the actual  costs
incurred by the company on our behalf,  substantially  consisting  of technician
salaries for subcontractors  located in Taiwan. We have no formal agreement with
this  company and ii) we recorded a charge of  $249,996 in  connection  with the
issuance of common stock to our Chief Financial Officer to amortize his unearned
compensation in accordance with his employment agreement. We recorded an expense
of $166,664 in the same period in 2000,  a change of $83,332 for the period iii)
we issued  126,000  shares of the common stock to a consultant  for services and
recorded  a  non-cash  charge of  $88,578  iv) we issued  1,266,179  options  to
consultants,  recording  a  non-cash  charge  of  $424,854.  For the year  ended
December  31,  2000,  we  had  six   transactions   that  resulted  in  non-cash
expenditures and a corresponding  decrease of expenses in the comparable  period
in 2001 i) we issued 500,000 shares of common stock valued at $1,125,000, issued
to our former Chief Executive Officer in consideration of the termination of his
employment  agreement on September 30, 2000 ii) a consulting expense of $134,375
iii) a penalty of $247,532 for the late filing of the S-1 Registration Statement
iv) we recorded $36,000 of  straight-lining  of lease payments v) we recorded an
expense of $77,000  in  connection  with an  extension  of the time to  exercise
certain  warrants and vi) $75,000 in connection  with options granted during the
year 2000. We expect to increase its selling,  general and administrative in the
future in proportion to our  anticipated  growth in sales,  however,  we believe
that non-cash charges will decrease in the future.

         DEPRECIATION. Depreciation expense increased to $11,539 for the year
ended December 31, 2001 as compared to $5,914 for the year ended December 31,
2000.

         INTEREST  EXPENSE.  Interest expense increased to $111,981 for the year
ended  December 31, 2001 as compared to $21,872 for the year ended  December 31,
2000. The interest  expense mainly related to the factoring and the  debentures.
We charged  $76,819  for  interest  expense  for the  beneficial  conversion  of
debentures.

         PROVISION FOR INCOME TAXES. No provision for income taxes was necessary
in 2001,  and 2000 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,  the Company has relied  principally upon the proceeds
of private equity financings and loans to fund its working capital  requirements
and capital  expenditures.  The Company's net cash used in operating  activities
for the year ended  December 31, 2001 was  ($190,710),  compared to cash used in
operating  activities  of  ($239,179)  for the year ended  December  31, 2000, a
decrease of $48,469.  This decrease resulted from decreases in the Company's net
loss,  which  included  non-cash  charges of (i)  $249,996 for  compensation  in
connection  with an  employment  agreement,  (ii) $424,854 for  compensation  to
consultants   with  options,   (iii)  $183,487  for  contributed   research  and
development  services (iv) $88,591 for expenses paid by issuance of common stock
to a consultant (v) $76,819 for interest expense on convertible  debentures (vi)
$11,705 for  depreciation  expense (vii) $243,533 for increases in inventory for
cushion  during our supplier  change  (viii)  (2,434) for  decreases in Accounts
receivable, deposits and other assets and (ix) $682,315 for increase in accounts
payable, due to related party supplier and accrued expenses.

         The Company's  investing  activities  for year ended  December 31, 2001
used cash of $41,970 for the purchase of property and equipment.

         The Company's net cash provided by financing activities for the for the
year ended  December  31, 2001 was $213,040  consisting  of $255,000 of proceeds
from debentures  with net proceeds of $213,058 after legal and consulting  fees.
Although the Company cannot accurately  predict the precise timing of its future
capital  requirements,  we  estimate  that we will need to expend an  additional
$2,000,000  within the next 12 months,  which the  Company  anticipates  will be
obtained from cash flow from the operations and/or equity financing. The Company
estimates that of that amount (i) $1,000,000 will be for pre-assembled  finished
goods  inventory  from  subcontractors,  (ii)  $250,000  will be for  sales  and
marketing forces, (iii) $250,000 will be for professional fees and (iv) $500,000
will be for other operating expenses, such as payroll, rent and office expenses.

         The Company has no assured  available  financial  resources to meet its
December 31, 2001 working  capital  deficit of $1,312,863  and future  operating
costs.

         The Company  intends to seek  additional  equity  capital.  There is no
assurance that the Company will be able to raise such additional  capital during
the next 12 months. If the Company is unable to obtain the necessary  additional


                                       17
<PAGE>

capital,  the Company may be required to change its proposed  business  plan and
decrease its planned operations, which could have a material adverse effect upon
its business, financial condition, or results of operations.

         The management of the Company has taken the following  steps to improve
its cash flow:

         (a) On  January  31,  2001,  the  Company,  entered  into  a  Factoring
Agreement.  The Factoring Agreement  automatically  renews for successive 1-year
terms unless 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%.

         (b) On March 19,  2001,  the Company  also  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.  In connection  with the
issuance of such debentures, the difference between the conversion price and the
fair  value of the  common  stock  to  which  the  debentures  are  convertible,
multiplied  by the number of shares  into which the debt is  convertible  at the
issuance  date of the debt are  recorded as  intrinsic  value of the  beneficial
conversion feature and charged to interest expense in the Company's statement of
operations.  The Company  recorded  $76,819 of interest  expense at December 31,
2001.  Through December 31, 2001, the Company issued debentures of $255,000 from
which it received net proceeds of approximately  $213,040. The debenture holders
are  entitled  to  convert  all or part of the  principal  amount  plus  accrued
interest into shares of the Company's common stock equal to either (a) an amount
equal to 120% of the closing bid price of the  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 the  Company's  common  stock for the 10 days  immediately
preceding  the date of  conversion  of the  debenture.  On August 7,  2001,  the
Company  filed  a  registration  statement  covering  13,000,000  shares  of the
Company's  common  stock,  which  included  conversion  shares of  common  stock
underlying  the  debentures.  On January  28,  2002,  the Company  withdrew  the
registration  statement.  The debentures are  subordinate and junior in right of
payment to all accounts  payable of the Company  incurred in the ordinary course
of business and/or bank debt of the Company not to exceed $250,000.  The 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.  Since the Company did not  register  the  securities,  the
convertible  debentures  are due on demand and are  accordingly  presented  as a
short-term liability. The Company is obligated to pay 2% of the liquidated value
of approximately $5,000 as liquidated damages.

         On March 19,  2001,  the Company  entered into an Equity Line of Credit
Agreement.  Pursuant to the equity  line of credit,  an  institutional  investor
agreed,  if  requested  by the  Company,  to  purchase  up to $5  million of the
company's  common stock at 80% of the lowest  closing bid price of the Company's
common stock on the Over-the-Counter  Bulletin Board for the 10 days immediately
following  the notice date.  The timing of each sale and the number of shares of
common  stock  to be sold  was to be at the  Company's  discretion,  subject  to
various conditions. The dollar amount that the Company was to be able to request
under any individual sale was to be subject to the average trading volume of the
Company's common stock for the preceding 40-day trading period. The maximum term
of the equity line of credit was to be two years from the date of the agreement.
The agreement contained various representations, warranties and covenants by the
Company, including limitations on the ability to sell common stock, common stock
equivalents  or  all  assets,  and to  merge  or to  enter  into  certain  other
transactions.  There were no amounts outstanding on the equity line of credit at
December 31, 2001. Effective January 28, 2002, the Company and the institutional
investor  mutually agreed to terminate the equity line of credit. On January 28,
2002,  the Company  withdrew  the  registration  statement,  which  included the
registration of shares of common stock to be sold pursuant to the equity line of
credit.


GOING CONCERN QUALIFICATION

         The  Company's  auditors  stated  in  their  reports  on the  financial
statements of the Company for the years ended December 31, 2001 and December 31,
2000 that the Company is dependent on outside financing and has had losses since
inception that raise  substantial doubt about our ability to continue as a going
concern.  For the years ended December 31, 2001 and 2000,  the Company  incurred
net annual losses of $1,667,202 and  $2,876,244,  respectively,  and the Company
had  an  accumulated   deficit  of  $4,871,076  and  $3,203,874,   respectively.
Management  believes that resources  will be available  from private  sources in
2002 to continue the marketing of the Company's  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 the Company
cannot continue in existence.

                                       18
<PAGE>

         Management has established  plans intended to increase the sales of the
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 the
Company will be able to raise any additional capital.



ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Our consolidated financial statements appear beginning at page 20.







                                       19
<PAGE>



















                          NEXLAND, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000










                                       20
<PAGE>





<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
<S>                                                                                                              <C>
Independent Auditor's Report.............................................................................        22

Report of Independent Certified Public Accountants.......................................................        23

Consolidated Financial Statements:

Consolidated Balance Sheets at December 31, 2001 and 2000................................................        24

Consolidated Statements of Operations for the years ending December 31, 2001 and 2000....................        25

Consolidated Statements of Capital Deficit for the years ending December 31, 2001 and 2000...............        26

Consolidated Statements of Cash Flows for the years ending December 31, 2001 and 2000....................        27

Notes to Consolidated Financial Statements...............................................................        28
</TABLE>






                                       21
<PAGE>





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

To The Board of Directors and Stockholders
Nexland, Inc. and subsidiary
Miami, Florida

We have audited the accompanying consolidated balance sheet of Nexland, Inc. and
subsidiary  as of December 31, 2001 and the related  consolidated  statements of
operations,  changes in  stockholders'  equity and cash flows for the year ended
December  31,   2001.   These   consolidated   financial   statements   are  the
responsibility  of  the  management  of  Nexland,   Inc.  and  subsidiary.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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 consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of Nexland,  Inc. and
subsidiary  as of December  31, 2001 and the results of its  operations  and its
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
the Company  will  continue as a going  concern.  As discussed in Note 15 to the
financial statements,  the Company has suffered recurring losses from operations
and had working capital  deficiencies,  which raise  substantial doubt about the
Company's ability to continue as a going concern.  Management's  plans regarding
those  matters are also  described  in the Note 15. The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

                             /S/ DASZKAL BOLTON LLP

Boca Raton, Florida
January 29, 2002






                                       22
<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 15 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 15. 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 3,  which is as of January  31, and Note 6, which is as of March
19, 2001

/S/ BDO SEIDMAN, LLP
--------------------
BDO Seidman, LLP







                                       23
<PAGE>





NEXLAND, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000


  <TABLE>
<CAPTION>
                                                       ASSETS
                                                      ------
                                                                                 2001              2000
                                                                            --------------  ---------------
<S>     <C>                                                                     <C>           <C>
        Current assets:
           Cash                                                             $      39,901   $       59,523
           Accounts receivable                                                    113,739          119,131
           Inventory                                                              319,482           75,949
                                                                            --------------  ---------------
                 Total current assets                                             473,122          254,603
                                                                            --------------  ---------------
        Property and equipment, net                                                62,503           32,072

        Other assets:
           Deposits                                                                32,968           30,000
           Loan closing cost                                                       41,960                -
                                                                            --------------  ---------------
                                                                                   74,928           30,000
                                                                            --------------  ---------------

                 Total assets                                               $     610,553   $      316,675
                                                                            ==============  ===============
                     LIABILITIES AND CAPITAL DEFICIT

        Current liabilities:
           Accounts payable                                                 $      200,018   $       56,876
           Accrued professional fees                                               282,093          219,194
           Accrued expenses                                                        285,309           73,424
           Due to related party supplier                                           666,209          401,819
           Convertible Debentures                                                  255,000                -
           Other liabilities                                                        97,356           97,356
                                                                            --------------  ---------------
                 Total current liabilities                                       1,785,985          848,669
                                                                            --------------  ---------------

        Commitments and contingencies

        Capital deficit:
           Preferred stock, $0.0001 par value; 10,000,000 shares
             authorized; no shares outstanding                                           -                -
           Common stock, $0.0001 par value; 50,000,000 shares
             authorized; 35,653,385 and 36,027,378 shares
             issued and outstanding, at December 31, 2001 and
             2000, respectively                                                      3,566            3,603
           Additional paid-in capital                                            3,775,418        3,001,613
           Unearned compensation                                                   (83,340)        (333,336)
           Accumulated deficit                                                  (4,871,076)      (3,203,874)
                                                                            --------------  ---------------
                 Total capital deficit                                          (1,175,432)        (531,994)
                                                                            --------------  ---------------

                 Total liabilities and capital deficit                      $      610,553  $       316,675
                                                                            ==============  ================


                             See accompanying notes to consolidated financial statements.
</TABLE>





                                       24
<PAGE>


NEXLAND, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
DECEMBER 31, 2001 AND 2000

<TABLE>

                                                                      2001            2000
                                                                   --------------  -------------
<S>      <C>                                                        <C>            <C>
         Sales                                                      $  4,080,170   $  1,472,950

         Cost of sales                                                 2,018,323        734,364

                                                                   --------------  -------------
         Gross profit                                                  2,061,847        738,586
                                                                   --------------  -------------

         Operating expenses:
             Selling, general and administrative                       3,605,529      3,585,957
             Depreciation                                                 11,539          5,914
                                                                   --------------  -------------
                        Total operating expenses                       3,617,068      3,591,871
                                                                   --------------  -------------

         Loss from operations                                         (1,555,221)    (2,853,285)
                                                                   --------------  -------------

         Other expense:
             Interest expense                                            111,981         21,872
             Other expense                                                     -          1,087
                                                                   -------------   -------------

                        Total other expense                              111,981         22,959
                                                                   --------------  -------------

         Net loss                                                   $(1,667,202)   $ (2,876,244)
                                                                   ==============  =============


         Net loss per common share, basic and diluted               $     (0.05)   $      (0.08)
                                                                   ==============  =============

         Weighted-average number of common shares                     36,113,795      34,833,231
                                                                   ==============  =============




                             See  accompanying  notes to consolidated  financial statements.
</TABLE>





                                       25
<PAGE>



NEXLAND, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITAL DEFICIT
YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>


                                                         COMMON STOCK           ADDITIONAL
                                                         ------------            PAID-IN      UNEARNED    ACCUMULATED
                                                    SHARES        AMOUNT         CAPITAL    COMPENSATION    DEFICIT         TOTAL
                                                 ------------- ------------  ------------  -------------- ------------- ------------
<S>                                              <C>           <C>           <C>           <C>            <C>           <C>
Balance, December 31, 1999                         34,094,703     $  3,410    $        -    $       -     $  (327,630)  $  (324,220)
Issuance of common stock for cash                     254,741           25       115,302            -                -       115,327
Issuance of equity instruments for services            69,212            7       533,900            -                -       533,907
Issuance of common stock in connection with
   employment agreement                               200,000           20       499,980     (333,336)               -       166,664
Issuance of common stock in connection with
   severance agreement                                500,000           50     1,124,950            -                -     1,125,000
Issuance of common stock in connection with
   exercise of warrants and options                   212,355           21       212,334            -                -       212,355
Conversion of debt to common stock                    196,367           20       196,347            -                -       196,367
Issuance of common stock to stockholder               500,000           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                         36,027,378        3,603     3,001,613     (333,336)     (3,203,874)     (531,994)
Issuance of equity instruments for services           126,000           13       513,431            -                -       513,444
Embedded interest on conversion of debentures               -            -        76,819            -                -        76,819
Issuance of common stock in connection with
   exercise of warrants                                     7            -            18            -                -            18
Surrender of common stock by stockholder             (500,000)        (50)            50            -                -             -
Contributed research and development services               -            -       183,487            -                -       183,487
Amortization of unearned compensation                       -            -             -      249,996                -       249,996
Net loss for the year                                       -            -             -            -      (1,667,202)   (1,667,202)
                                                 ------------- ------------  ------------  -------------- ------------- ------------
Balance, December 31, 2001                         35,653,385     $  3,566    $3,775,418    $ (83,340)    $(4,871,076)  $(1,175,432)
                                                 ============= ============  ============  ============== ============  ============




                           See accompanying notes to consolidated financial statements.
</TABLE>


                                       26
<PAGE>



NEXLAND, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>

                                                                            2001            2000
                                                                        --------------  -------------
<S>                                                                      <C>             <C>
Cash flows from operating activities:
     Net loss                                                           $  (1,667,202)  $  (2,876,244)
     Adjustments to reconcile net loss to net cash used in
       operating activities:
         Compensation expenses in connection with:
            Employment agreement                                              249,996         166,664
            Severance                                                               -       1,125,000
            Stock and stock options issued                                    513,444         456,907
         Contributed research and development services                        183,487         318,850
         Expense due to reduction of warrant exercise price                         -          77,000
         Beneficial conversion feature                                         76,819               -
         Interest due to conversion of debt to common stock                         -          15,948
         Straight-lining of lease payments                                          -          36,000
         Depreciation expense                                                  11,539           5,914
         (Increase) decrease in:
            Accounts receivable                                                 5,392         (40,534)
            Inventory                                                        (243,533)        (19,482)
            Deposits and other assets                                          (2,968)        (26,820)
         Increase in:
            Accounts payable                                                  143,142          56,876
            Accrued professional fees                                          62,899         219,194
            Accrued expenses                                                  211,885          20,741
            Due to related party supplier                                     264,390         221,706
            Other                                                                   -           3,101
                                                                        --------------  -------------
Net cash used in operating activities                                        (190,710)       (239,179)
                                                                        --------------  -------------

Cash flows from investing activities:
     Purchase of property and equipment                                       (41,970)        (33,211)
                                                                        --------------  -------------

Cash flows from financing activities:
     Proceeds from exercise of warrants and options                                18         212,355
     Proceeds from issuance of common stock                                         -         115,327
     Proceeds from debentures                                                 255,000               -
     Cost of issuance of debentures                                           (41,960)              -
                                                                        --------------  -------------
Net cash provided by financing activities                                     213,058         327,682
                                                                        --------------  -------------

Net increase (decrease) in cash                                               (19,622)         55,292
Cash, beginning of year                                                        59,523           4,231
                                                                        --------------  -------------
Cash, end of year                                                       $      39,901   $      59,523
                                                                        ==============  =============
Supplemental Cash Flow Information:
     Cash paid for interest                                             $      25,932   $           -
                                                                        ==============  =============
     Cash paid for taxes                                                $           -   $           -
                                                                        ==============  =============


                             See accompanying notes to consolidated financial statements.
</TABLE>



                                       27
<PAGE>


NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - NATURE OF BUSINESS
---------------------------

Nexland, Inc. ("the Company") designs, manufactures and sells broadband routers,
known as Internet  Sharing  Devices.  The Internet  Sharing Devices are hardware
routers that allow users,  connected to the  Internet,  to share their  Internet
access  at the same time  using  only one  modem,  one  telephone  line or cable
connection,  and one Internet access account. In addition,  the Internet Sharing
Devices are a  "firewall,"  providing  network  security.  Nexland  products are
unique in their  capability  to provide both Network  Access  Translation  (NAT)
technology  with the higher level of data security using IPsec security  (patent
pending).

The Company was incorporated  under the laws of the State of Delaware.  In 1999,
the Company merged with Windstar  Resources,  Inc.  through a reverse merger and
the surviving company changed its name to Nexland, Inc. For accounting purposes,
the merger has been treated as a recapitalization of the Company.


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 consolidation.

Cash and Cash Equivalents
-------------------------

The  Company   considers  all  highly  liquid  debt  instruments  with  original
maturities  of three months or less to be cash  equivalents.  The Company has no
cash equivalents at December 31, 2001 and 2000.

Inventory
---------

Inventories are stated at the lower of cost or market.  Cost is determined on an
average cost basis that  approximates  the first-in,  first-out  (FIFO)  method.
Market is determined based on net realizable value. Appropriate consideration is
given to obsolescence,  excessive  levels,  deterioration,  and other factors in
evaluating net realizable value.

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. If the  evaluations  indicate that the
future  undiscounted cash flows of the long-lived assets would not be sufficient
to recover the  carrying  value of the assets,  the assets  would be adjusted to
their fair values. Any long-lived assets held for disposal are adjusted to their
fair value. Any long-lived assets held for disposal are reported at the lower of
their carrying amounts or fair value less cost to sell.

                                       28
<PAGE>
NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------

New Accounting Pronouncements
-----------------------------

On June 29, 2001, the Financial  Accounting Standards Board ("FASB") unanimously
approved the issuance of Statements of Financial  Accounting  Standards No. 141,
"Business   Combinations"  ("SFAS  141"),  and  No.  142,  "Goodwill  and  Other
Intangible  Assets" ("SFAS 142").  SFAS 141 eliminates the  pooling-of-interests
method of accounting for business  combinations  except for qualifying  business
combinations  that were  initiated  prior to July 1, 2001.  SFAS 141 changes the
criteria to recognize intangible assets apart from goodwill. The requirements of
SFAS  141  are  effective  for any  business  combination  accounted  for by the
purchase method that is completed after June 30, 2001.

Under SFAS 142,  goodwill and indefinite lived  intangible  assets are no longer
amortized but are reviewed annually, or more frequently if impairment indicators
arise,  for  impairment.  Identifiable  intangible  assets  will  continue to be
amortized  over their  estimated  useful lives.  Early adoption is permitted for
companies with fiscal years beginning after March 15, 2001,  provided that their
first quarter  financial  statements  have not been issued.  The Company adopted
SFAS 142 beginning  January 1, 2002. The adoption of SFAS 142 is not expected to
have a material impact on the Company's earnings or financial position.

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 143,
"Accounting for Asset Retirement  Obligations"  ("SFAS 143").  SFAS 143 requires
that  fair  value  of a  liability  for an  asset  retirement  obligation  to be
recognized  in the period in which it is  incurred if a  reasonable  estimate of
fair value can be made. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived  asset.  SFAS 143 is effective for
fiscal years beginning after June 15, 2002. The Company believes the adoption of
SFAS 143 will not have a material impact on its financial statements.

In October 2001, the Financial  Accounting  Standards Board issued SFAS No. 144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets" ("SFAS 144").
SFAS 144  requires  that those  long-lived  assets be  measured  at the lower of
carrying amount or fair value less cost to sell,  whether reported in continuing
operations or in discontinued  operations.  Therefore,  discontinued  operations
will no longer be  measured  at net  realizable  value or  include  amounts  for
operating losses that have not yet occurred. SFAS 144 is effective for financial
statements  issued for fiscal  years  beginning  after  December  15,  2001 and,
generally,  are to be  applied  prospectively.  The  Company  believes  that the
adoption  of  FSAS  144  will  not  have a  material  impact  on  its  financial
statements.

Revenue Recognition
-------------------

Revenue is recognized  when  products are shipped to the customer.  Products are
under  an  unconditional  money-back  guarantee  for the  first  30  days  after
purchase.  A five-year  warranty  covering the repair of the unit is provided on
all products. During the years ended December 31, 2001 and 2000, the Company did
not experience any significant warranty expense.

Advertising
-----------

Advertising  costs are charged to operations in the year incurred;  such amounts
aggregated $19,696 in 2001 and $38,878 in 2000.

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.

                                       29
<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------

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  potentially  common  shares  outstanding
during the year.  The potential  common stock  equivalents  were not included in
diluted  loss per share  because  the  effect  would  have  been  anti-dilutive.
Accordingly, basic and diluted loss per common share are the same.

Stock Compensation
------------------

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation." SFAS 123 encourages the
use of a  fair-value-based  method of accounting  for  stock-based  awards under
which the fair  value of stock  options is  determined  on the date of grant and
expensed  over the  vesting  period.  Under SFAS 123,  companies  may,  however,
measure  compensation  costs of those  plans  using the  methods  prescribed  by
Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock
Issued to  Employees."  Companies  that apply APB No. 25 are required to include
pro  forma  disclosures  of  net  earnings  and  earnings  per  share  as if the
fair-value-based  method of  accounting  had been applied.  The Company  elected
reporting for such plans under the provisions of APB No. 25.

Foreign Currency Translation
----------------------------

In accordance with FASB No. 52, "Foreign  Currency  Translation,"  the financial
statements of the Company's  Canadian  subsidiary is re-measured  using the U.S.
dollar as the functional currency.  Monetary assets and liabilities  denominated
in a foreign currency are re-measured into U.S. dollars at the year-end exchange
rates.  Non-monetary assets and liabilities and related income statement amounts
are re-measured at historical exchange rates.

Reclassifications
-----------------

Certain reclassifications have been made to prior year amounts to conform to the
current year presentation.  These  reclassifications had no effect on previously
reported net loss.


NOTE 3 - ACCOUNTS RECEIVABLE
----------------------------

On January  31,  2001,  the Company  entered  into a  factoring  agreement.  The
agreement was renewed on January 31, 2002 for an additional  year. The agreement
may be  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 the  invoice,  plus  interest  on  advanced  funds equal to the
greater of 10% or the interest  publicly  announced by Citibank,  N.A.,  plus 2%
(6.75% at December 31, 2001).  Obligations due to the factor under the factoring
agreement  are  collateralized  by  receivables,  as defined,  and by all of the
Company's inventory.





                                       30
<PAGE>
NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - ACCOUNTS RECEIVABLE, CONTINUED
---------------------------------------

Accounts receivable consist of the following at December 31, 2001 and 2000:

                                                      2001            2000
                                                   -----------    ----------
Receivables assigned to factor                     $  317,440     $        -
Advance from factor                                  (205,490)             -
                                                   -----------    ----------
Amounts due from factor                               111,950              -
Unfactored accounts                                    25,680        120,817
Allowance for returns and discounts                   (23,891)        (1,686)
                                                   -----------    -----------
                                                   $  113,739     $  119,131
                                                   ==========     ===========

Bad debt  expense was $22,205 and $3,093 for the years ended  December  31, 2001
and 2000, respectively.



NOTE 4 - INVENTORY
------------------

Finished  goods  inventories  at December  31, 2001 and 2000 consist of Internet
sharing  devices held for resale.  At December 31,  2001,  inventory  included a
$109,485 deposit with the supplier in Taiwan.  Allowances for obsolete inventory
at December 31, 2001 and 2000 were $71,626 and $0 respectively.


NOTE 5 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consist of the following:


                                                  2001            2000
                                           -------------    -------------

Furniture and fixtures                      $    54,433      $    23,715
Office equipment                                 29,182           17,930
                                            ------------     ------------
                                                 83,615           41,645
Less accumulated depreciation                   (21,112)          (9,573)
                                            ------------     ------------
                                            $    62,503      $    32,072
                                            ============     ============

Depreciation  expense was $11,539  and $5,914 for the years ended  December  31,
2001 and 2000, respectively.



                                       31
<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - DEBT
-------------


Equity 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 at a 20% discount from the market value. The agreement was terminated
on January 28, 2002 and no amounts were obtained under the agreement.

Convertible Debentures
----------------------

The Company sold $255,000 of 6% convertible debentures in the three months ended
June 30, 2001 through a Securities  Purchase  Agreement under  Regulation D. The
net proceeds after $41,960 costs incurred were $213,040.  The intrinsic value of
the beneficial  conversion  feature was recorded as a non-cash charge of $76,819
to interest expense and a corresponding credit to the additional paid in capital
of the Company. The debenture holders are entitled to convert all or part of the
principal amount plus accrued interest into shares of the Company's common stock
equal to either  (a) an  amount  equal to 120% of the  closing  bid price of the
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 the  Company's
common stock for the 10 days immediately preceding the date of conversion of the
debenture.  On  August 7,  2001,  the  Company  filed a  registration  statement
covering  13,000,000  shares  of the  Company's  common  stock,  which  included
conversion  shares of common stock  underlying  the  debentures.  On January 28,
2002,  the Company  withdrew the  registration  statement.  The  debentures  are
subordinate  and  junior in right of  payment  to all  accounts  payable  of the
Company  incurred in the  ordinary  course of  business  and/or bank debt of the
Company  not to  exceed  $250,000.  The  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.  The
debentures mature in 2006. Accrued interest at December 31, 2001 was $9,230.


The Company is obligated to use reasonable  efforts to prepare and file with the
Securities and Exchange Commission ("SEC"), a registration statement on Form S-1
under the 1933 Act.  This would  register  for resale,  the shares of the common
stock to be issued upon  conversion  of the  convertible  debentures.  Since the
Company did not register the securities, the convertible debentures are due upon
demand and are accordingly presented as a short-term  liability.  The Company is
obligated  to  pay  2% of  the  liquidated  value  of  approximately  $5,000  as
liquidated damages.


NOTE 7 - CONCENTRATIONS
-----------------------

Dependency On a Customer
------------------------

In 2001,  approximately  29% of the  Company's  revenues  were  generated by one
customer in the technology  sector. In 2000,  approximately 18% of the Company's
revenues were generated by one customer in the financial industry sector.

Concentrations of Credit Risk

The Company  manufactures and distributes Internet sharing boxes to companies in
diversified industries. The Company routinely assesses the financial strength of
its customers and as a consequence believes its trade accounts receivable credit
risk is  limited.  The Company  generally  does not  require  collateral.  As of
December 31, 2001,  no  individual  customer  balance  exceeded 10% of the total
accounts receivable balance.



                                       32
<PAGE>
NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - CONCENTRATIONS, CONTINUED
----------------------------------

Concentrations of Bank Risk
---------------------------

The  Company   maintains   its  cash  in  deposit   accounts  at  two  financial
institutions, which, at times, may exceed federally insured limits. Accounts are
insured by the Federal Deposit Insurance  Corporation (FDIC) up to $100,000.  At
December 31, 2001 and 2000,  the Company had no cash  balances in excess of FDIC
insurance  limits  and  the  Company  has not  experienced  any  losses  in such
accounts.


NOTE 8 - RELATED PARTY TRANSACTIONS
-----------------------------------

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
are  also  principal  shareholders  of  the  Company.  Purchases  from  Smerwick
aggregated  $1,614,144  and $621,000 for 2001 and 2000,  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.  An unexpected  change in this  supplier,
however, could cause a delay in manufacturing and affect results adversely.

The Company has entered into a manufacturing  agreement with a U.S. manufacturer
and intends to begin  production in the U.S.  during the second quarter of 2002.
The Company's present supplier will continue to produce the Company's product as
needed and no production delays are anticipated.

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.

On  December  21,  2001,  the 500,000  shares  were  returned to the Company and
retired. At December 31, 2001, the Company owed Smerwick $666,209.

Contributed Research and Development
------------------------------------

Smerwick, Ltd., a company controlled by a principal shareholder, incurs research
and  development   ("R&D")  costs  on  the  Company's  behalf  for  the  further
development of the Internet  Sharing Devices.  In this  connection,  the Company
recorded  capital  contributions  of  $183,487  and  $318,850  in 2001  and 2000
respectively,  which  represent  the actual  costs,  incurred by this company on
Nexland's behalf.  These services consist  primarily of the technician  salaries
located in Taiwan.  The Company  created an internal  research  and  development
department  during the fourth quarter of 2001 and all  subcontracted R&D will be
transferred to the Company in 2002.

Nexland S.A.
------------

The Internet  Sharing Device was initially  developed by Nexland S.A. in France.
In 1997, Nexland, Inc. began enhancing the core technology and developed various
components.



                                       33
<PAGE>


NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - RELATED PARTY TRANSACTIONS, CONTINUED
----------------------------------------------

On September  15, 1999,  Nexland  S.A.  and  Nexland,  Inc.  signed a technology
sharing  agreement  whereby Nexland Inc. and Nexland S.A. would share technology
developed by either company.  Additionally,  on September 20, 2000, Nexland S.A.
and Nexland,  Inc. signed a ten-year licensing  agreement whereby Nexland,  Inc.
granted names, logos, marketing techniques,  trade secrets and know-how for sale
in products to Europe, Africa and the Middle East. Nexland S.A. granted Nexland,
Inc.  exclusive  rights to its  technology,  whether or not  patented  or patent
pending,  trademarks, trade names, logos marketing techniques, trade secrets and
know-how for sale in products to the rest of the world, excluding Asia, which is
open to both companies.

In March 2000, the Company  entered into a five-year  consulting  agreement with
Nexland S.A. that provided for compensation of $175,000 per annum if the Company
was able to obtain at least  $1,000,000  in  financing.  This  agreement  may be
terminated  without cause after December 31, 2001, other than in connection with
a change of control,  in which case  Nexland  S.A.  would  received  one year of
severance  pay. No payments were made or accrued under this agreement in 2001 or
2000.

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.

Commencing  January 1, 2001, the Company agreed to pay I. Dan Sultan,  principal
stockholder  of  the  Company  and of  Nexland  S.A.,  $150,000  per  annum  for
consulting  services.  During  2001,  the Company  paid  $52,000 and accrued the
balance of $98,000.

On November  16,  2001,  Nexland  S.A.  waived  certain  provisions  in the 2000
licensing  agreement  with  respect  to a  large  customer.  Nexland,  Inc.  was
authorized to design and manufacture certain products for purchase, distribution
and sale by this certain customer.


NOTE 9 - 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 of assets and liabilities used for income tax purposes.
At December  31, 2001 and 2000,  the  Company had federal net  operating  losses
("NOL")  of  approximately  $1,600,000  and  $1,000,000,  respectively.  The NOL
expires during the years 2018-2019.

In the event of a change in ownership of the Company, the utilization of the NOL
carry  forward will be subject to  limitation  under  certain  provisions of the
Internal Revenue Code.

The Company has not recognized  any benefit of net operating loss  carryforwards
in the  accompanying  financial  statements in accordance with the provisions of
SFAS No. 109, "Accounting for Income Taxes," as the realization of this deferred
tax  benefit is not more likely than not. A 100%  valuation  allowance  has been
recognized to offset the entire effect of the Company's net deferred tax assets.









                                       34
<PAGE>
NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES, CONTINUED
--------------------------------

The net  provision  (benefit)  for income taxes  consisted  of the  following at
December 31, 2001 and 2000:

                                                   2001        2000
                                               -----------  -----------


      Current income taxes                     $        -   $        -
      Deferred income taxes                             -            -
                                               ----------   ----------
      Net provisions(benefit for income taxes  $        -   $        -
                                               ==========   ==========


Significant  components of the Company's  deferred tax liabilities and assets at
December 31, 2001 and 2000 are as follows:


                                                        2001          2000
                                                    -------------   -----------
Deferred tax assets:
    Professional and consulting fees                 $   868,142   $   596,655
     Accrued salaries                                     78,469             -
     Allowance for inventory                              26,953             -
     Allowance for doubtful accounts                       8,355
     Other                                                86,105       110,938
     Net operating loss carry forwards                   597,593       392,407
     Valuation allowance for deferred tax assets      (1,665,617)   (1,100,000)
                                                     -----------   -----------
Net deferred tax asset                               $         -   $         -
                                                     ===========   ===========


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>
<CAPTION>
                                                                   2001                  2000
                                                                -----------           -----------
<S>                                                             <C>                   <C>

U.S. Federal statutory rate on earnings (loss)
  before income taxes                                           $ (566,849)           $  (978,000)

State income tax, net of Federal benefit                           (52,511)              (112,000)

Increase in valuation allowance                                    619,360              1,090,000
                                                                -----------           -----------
Income tax expense (benefit)                                    $        -            $        -
                                                                ===========           ===========
</TABLE>



                                       35
<PAGE>




NOTE 10 - STOCKHOLDERS' EQUITY
------------------------------

2001
----

In  connection  with  entering  into the Equity Line of Credit (see Note 6), the
Company also  entered into  consulting  services  agreement  relating to capital
investment and/or debt financing,  which was subsequently terminated.  Under the
agreement,  the  consultant  was to  receive  a fee  equal to 8.4% of the  gross
proceeds  from each advance  under the Equity Line of Credit.  In  addition,  on
March 16, 2001,  the Company issued 126,000 shares of its common stock valued at
$0.70 per share  pursuant  to the  consulting  services  agreement.  The Company
recorded  compensation  expense of  $88,590.  The Company has granted the Equity
Line of  Credit  investor,  the  consultant  and  the  placement  agent  certain
registration rights.

The Company issued options to purchase  5,095,179  shares of its common stock to
various  consultants and employees.  These options were issued at various prices
between $0.25 and $.70 per share. The Company recorded  compensation  expense of
$424,854.

On October 18, 2000, the Company  entered into an agreement with Smerwick,  Ltd.
to issue 500,000 shares of its common stock as satisfaction of supplier payables
of $486,441.  During the year ended  December 31,  2001,  Smerwick  returned the
shares to the Company and the agreement was cancelled. See Note 8.

2000
----


On May 1, 2000,  pursuant to an employment  contract between the Company and the
Company's Chief Financial Officer,  the Company issued 200,000 restricted shares
of common stock to him. In connection with the employment agreement, the Company
recorded unearned  compensation in the amount of $500,000  representing the fair
value of the  common  stock  at the  date of the  grant.  Such  amount  is being
amortized over the period of the employment agreement.  Compensation expense was
$249,996 and $166,664 during 2001 and 2000, respectively.

The Company issued 30,000 shares of common stock to the former CEO and President
of WindStar,  for management and financial consulting services. In addition, the
Company issued 39,213 shares of common stock as a result of a late filing of the
Company's  Form  S-1.  These  two  transactions  were  recorded  as a charge  to
operations and credit to equity for $381,907.

In August,  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.

On April 25, pursuant to an employment contract with the former CEO, the Company
issued   1,170,000  shares  of  common  stock.  In  connection  with  the  CEO's
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. The Company recorded compensation expense in the amount of
$1,125,000.

On December 31, the Company and an officer and principal shareholder, Mr. Sultan
agreed to convert an  unsecured  demand  loan of  $196,367  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  $108,001 as the excess of the existing  obligation over the fair value
of the common stock as a capital contribution.

The Company  issued  212,355 shares of common stock when a former officer of the
Company  and a private  investor  exercised  options  and  warrants at $1.00 per
share.


                                       36
<PAGE>





NOTE 10 - STOCKHOLDERS' EQUITY CONTINUED
----------------------------------------

The  Company  issued  options  to  purchase  shares of common  stock to  several
consultants, resulting in a charge to operations of $75,000.

The Company extended the time to exercise certain  warrants,  recording a charge
to operations of $77,000.


NOTE 11 - OPTIONS AND WARRANTS
------------------------------

Stock Incentive Plan
--------------------

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.

During 2001, the Company granted options to purchase  3,329,000 shares of common
stock within the Plan at prices  ranging  from $0.25 to $0.70 per share.  During
2000, the Company granted options to purchase  2,323,000  shares of common stock
with the Plan at prices ranging from $0.12 to $0.927 per share.

At  December  31,  2001,  4,887,000  shares of common  stock were  reserved  for
issuance under outstanding options under the Plan and 1,113,000 shares of common
stock available  options under the Plan. 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 available under the 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 date for awards under
the 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>
<CAPTION>

                                                 2001                   2000
                                           ----------------       ----------------
<S>                                         <C>                    <C>

Net loss as reported                        $  (1,667,202)         $  (2,876,244)
                                            ==============         ==============
Proforma net loss                           $  (2,656,552)         $  (3,422,565)
                                            ==============         ==============
Basic earnings (loss) per share as reported         (0.05)                 (0.08)
                                            ==============         ==============
Basic earnings (loss) per share pro forma           (0.07)                 (0.09)
                                            ==============         ==============


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:

                                                2001                   2000
                                           ----------------       ----------------

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


NOTE 11 - OPTIONS AND WARRANTS, CONTINUED
-----------------------------------------

Stock Incentives Outside the Plan
---------------------------------

Options  have been  granted  outside of the plan with  approval  of the Board of
Directors for non-employees of the Company providing  consulting  services.  The

                                       37
<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company has granted  options to purchase  1,766,179  and shares of common  stock
outside of the Plan during the year ended  December  31,  2001.  No options were
granted outside of the Plan during the year ended December 31, 2000.

During 2001, the Company  granted  options to consultants to purchase  shares of
common stock as follows:

         Five advisory  board members were granted  options to purchase  100,000
         shares of common stock at $0.30 per share.  An  individual  advisor was
         granted options to purchase 100,000 shares of common stock at $0.35 per
         share and  500,000  shares of common  stock at $0.27 per  share.  These
         options vested immediately and expire in 2011. The board was terminated
         during 2001.

         A management  consultant was granted options to purchase 100,000 shares
         of common stock at $0.45 per share.  These options  vested  immediately
         and expire in 2011.

         A financial  advisor was granted options to purchase  500,000 shares of
         common  stock at $0.35 per share.  These  options vest in July 2002 and
         expire in 2011.

         In return for legal services,  a lawyer was granted options to purchase
         66,179 shares of common stock at $0.30 per share.  These options vested
         immediately and expire in 2011.

For options granted outside of the Plan, 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 $424,854 was charged to operations
in 2001.

Warrants
--------

At December 31, 2000, there were 3,089,203 warrants to purchase shares of common
stock. These warrants expired in 2001.

The Company's  predecessor  (WindStar)  issued  1,600,000  units in exchange for
certain  obligations in 1996.  Each unit consisted of one share of common stock,
one "Class A Warrant" and one "Class B Warrant."

In September 2000,  private  investors  exercised "Class A Warrants" to purchase
52,355  shares of the  Company's  common  stock at $1.00 per share.  No "Class B
Warrants" were exercised.

In March 2001,  private  investors  exercised  "Class A Warrants"  to purchase 7
shares of the Company's  common stock at $2.50 per share.  No "Class B Warrants"
were  exercised.  The  remaining  1,547,638  "Class  A  Warrants"  and  "Class B
Warrants" expired in August 2001.


                                       38
<PAGE>
NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - OPTIONS AND WARRANTS, CONTINUED
-----------------------------------------

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 is as follows:

<TABLE>
<CAPTION>
                                                               2001                                 2000
                                                 -------------------------------      ---------------------------------
            Year ended December 31               Price per Share        Amount        Price per Share         Amount
-----------------------------------------------  ---------------    ------------      ---------------    --------------
<S>                                              <C>                  <C>              <C>                 <C>

Options outstanding at January 1                 0.12 - 0.927         2,298,000             -                   -
Options granted                                   0.25 - 0.70         5,095,179         0.12 - 0.927       2,323,000
Options exercised/surrendered                                                 -                                    -
Options forfeited                                 0.29 - 0.70          (740,000)           0.843             (25,000)
                                                                    ------------                         --------------
Options outstanding at December 31                                    6,653,179                            2,298,000
Options available for grant at December 31                            1,113,000        $                   3,702,000
                                                                    ------------                         --------------
Total reserved shares                                                 7,766,179                            6,000,000
Options exercisable at December 31                                    4,539,179                            1,453,000
                                                                    ============                         ==============
</TABLE>

The following table summarizes  information  about stock options at December 31,
2001:

<TABLE>
<CAPTION>

                                Number        Weighted                        Number of
                                Options        Average         Weighted        Options         Weighted
                              Outstanding     Remaining         Average     Exercisable at      Average
                             December 31,    Contractual        Exercise    December 31,        Exercise
Range of Exercise Prices         2001           Life              Price        2001              Price
------------------------    --------------  -------------     -----------  ---------------   --------------
<S>                             <C>             <C>              <C>            <C>              <C>

$0.12 - $0.29                   2,613,000       9.32             $0.222         2,251,750      $0.216
$0.30 - $0.45                   3,135,179       9.58             $0.344         1,836,179      $0.346
$0.843 - $0.927                   905,000       8.69             $0.871           451,250      $0.878
                             ------------                                   --------------
                                6,653,179                                       4,539,179
                             ============                                   ==============
</TABLE>



The following table summarizes  information  about stock options at December 31,
2000:

<TABLE>
<CAPTION>

                                Number        Weighted                        Number of
                                Options        Average         Weighted        Options         Weighted
                              Outstanding     Remaining         Average     Exercisable at      Average
                             December 31,    Contractual        Exercise    December 31,        Exercise
Range of Exercise Prices         2001           Life              Price        2001              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 - $0.927                 925,000         9.75             $0.870           150,000        $0.843
                            --------------                                 ---------------
                              2,298,000                                         1,453,000
                            ==============                                 ===============
</TABLE>




                                       39
<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

Settlement Agreements
---------------------

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, which were recorded by a charge to operations and credit to equity 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 equity 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.  On  January  28,  2002 the S-1 was  withdrawn  and the
Company  will rely on the opinion of counsel on the  appropriate  time to record
the return of these shares.

Other Liabilities
-----------------

In  connection  with the reverse  merger in 1999,  the Company  assumed  various
current  liabilities.  As of  December  31,  2001  and  2000,  such  liabilities
aggregated $97,356 and $97,356, respectively.

Lease Commitments
-----------------

The  Company  leases  commercial  office  space in Florida and Canada 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. Rental
expense  for  2001 and  2000  aggregated  approximately  $141,000  and  $81,000,
respectively.  The Company has recorded the effect of  straight-lining  the rent
expense over the actual payments. In this connection, $0 and $36,000 is included
in accrued expenses as of December 31, 2001 and 2000, respectively.

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

        Years ending December 31,                               Amount
    -----------------------------------                  ------------------
                   2002                                     $    144,054
                   2003                                           67,236
                   2004                                                -
                                                            -------------
                                                            $     211,290
                                                            =============


                                       40
<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - OPERATIONS IN GEOGRAPHIC AREAS
----------------------------------------

Identifiable  assets are those  assets of the Company that are  identified  with
operations in each geographic area.

<TABLE>
<CAPTION>

                                                                                  Adjustments
                                                                                      and                 Consolidated
Year ended December 31, 2001:                  United States       Canada         Eliminations               Total
-----------------------------------            -------------    ------------     -------------            ------------
<S>                                            <C>              <C>              <C>                      <C>
Sales to unaffiliated customers                $   2,927,322    $ 1,152,848      $           -            $   4,080,170
Transfers between goegraphic areas                   679,584              -          (679,584)                        -
                                               -------------    -----------      -------------            -------------
Total sales                                    $   3,606,906    $ 1,152,848      $   (679,854)            $   4,080,170
                                               =============    ===========      ============             =============
Operating profit (loss)                        $  (1,507,747)   $   (47,474)     $          -             $  (1,555,221)
                                               ==============   ===========      =============            ==============
Identifiable assets as of December 31, 2001          516,244    $   127,348      $    (33,039)            $     610,553
                                               ==============   ===========      ============             =============
</TABLE>




<TABLE>
<CAPTION>

                                                                                  Adjustments
                                                                                      and                 Consolidated
Year ended December 31, 2000:                  United States       Canada         Eliminations               Total
-----------------------------------            -------------    ------------     -------------            ------------
<S>                                            <C>              <C>              <C>                      <C>
Sales to unaffiliated customers                $   1,208,990    $   263,960      $           -            $   1,472,950
Transfers between goegraphic 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>


NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------

The carrying amount of cash, accounts receivables,  deposits,  accounts payable,
other  payables and  debentures  approximates  fair value because of their short
maturities.


NOTE 15 - GOING CONCERN
-----------------------

During the years ended December 31, 2001 and 2000, the Company  incurred  losses
of $1,667,202 and $2,876,244, has a working capital deficiency of $1,057,863 and
$594,066  and has $39,901  and  $59,523 of cash at  December  31, 2001 and 2000,
respectively,  all of which raises substantial doubt about the Company's ability
to continue as a going concern.




                                       41
<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - GOING CONCERN, CONTINUED
----------------------------------

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.

Management plans to undertake a comprehensive  review of its ongoing business to
substantially  increase  sales  through  current  channels and develop new sales
opportunities.

       o    In March 2002, the Company entered into an employment agreement with
            a sales executive to develop a comprehensive sales methodology.

       o    In January 2002,  the Company moved its research and  development to
            the United States in order to develop new products.

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.



                                       42
<PAGE>


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

         On March 14,  2000,  our  Company  dismissed  Williams & Webster,  P.S.
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  principles.  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  subsequent  interim
periods  preceding the  decision,  there were no  disagreements  with Williams &
Webster,  P.S. on any manner of accounting of principles or practice,  financial
statement disclosure or auditing scope or procedure,  which 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.

         On  July  2,  2001,  our  Company  dismissed  BDO  Seidman,  LLP as its
independent  certified public accountant.  BDO Seidman's report on our Company's
financial  statements  for the fiscal year ended  December 31, 2000 contained an
explanatory  paragraph expressing  substantial doubt about our Company's ability
to continue as a going  concern.  BDO  Seidman's  dismissal  was approved by our
Company's  Board of Directors.  During our Company's most recent fiscal year, as
well as any  subsequent  interim  period  through  July 2,  2001,  there were no
disagreements  on any matter of accounting  principles  or practices,  financial
statement disclosure or auditing scope or procedures, which disagreements if not
resolved  to their  satisfaction  would have caused  them to make  reference  in
connection  with their opinion to the subject  matter of the  disagreement.  BDO
Seidman  communicated by letter dated January 26, 2001 to the audit committee of
our Company's Board of Directors, three material weaknesses in internal controls
relating to the following  areas:  (1) recording  significant  transactions on a
timely basis; (2) lack of written policies setting forth our Company's  policies
and procedures  relating to accounting  internal  controls and  safeguarding  of
corporate  assets;  and (3)  lack of  financial  personnel  with a  professional
certification in accounting or equivalent experience.

         On  July  2,  2001,  our  Company  engaged  Daszkal  Bolton  LLP as its
principal  accountant to audit our Company's financial  statements.  Our Company
did not consult  Daszkal  Bolton on any matters  during our  Company's  two most
recent fiscal years or any subsequent  interim period prior to engaging  Daszkal
Bolton.



                                       43
<PAGE>



                                    PART III


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Our  directors  and  executive  officers  and their ages as of April 1,
2002, are as follows:
<TABLE>
<CAPTION>

NAME                                               AGE          POSITION
-------------------------                     -----------       ---------------------------------------------
<S>                                                <C>          <C>

Gregory S. Levine                                  35           President, Chairman of the Board of Directors

Martin E.  Dell'Oca                                39           Chief Financial Officer, Secretary and Director

I. Daniel Sultan                                   51           Director
</TABLE>



TERM OF OFFICE

         The terms of office of the current  directors  continue  until the next
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.

         The following is a brief description of the background of the directors
and executive officers of our Company.

         GREGORY SCOTT LEVINE, 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,  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,  is the founder of Nexland,  Inc. 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.


EXECUTIVE COMPENSATION

         The  following  table  shows  all  the  cash  compensation  paid by our
Company,  as well as certain  other  compensation  paid or  accrued,  during the
fiscal years ended  December 31, 2001 and 2000 to our Company's two highest paid
executive officers. No restricted stock awards, long-term incentive plan payouts
or other types of compensation,  other than the  compensation  identified in the
chart below, were paid to these executive officers during these fiscal years. No
other executive  officer earned a total annual salary and bonus for any of these
years in excess of $100,000.

                                       44
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION

         The following table sets forth  compensation  for the fiscal year ended
December 31, 2001 for our current executive officers:
<TABLE>
<CAPTION>


                           SUMMARY COMPENSATION TABLE

                                    ANNUAL COMPENSATION                                LONG-TERM COMPENSATION
                    ------------------------------------------------     -------------------------------------------------
                                                                            AWARDS                   PAYOUTS
                                                                         -----------   -----------------------------------
(A)                   (B)         (C)          (D)           (E)             (F)           (G)        (H)          (I)
                                                                          RESTRICTED   SECURITIES
NAME & PRINCIPAL                                         OTHER 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            2001       $150,000        -0-               -0-           -0-   400,000(1)       -0-     $25,000(2)
  President and        2000       $100,000        -0-           $10,000           -0-   700,000(3)       -0-            -0-
  Chairman of          1999            -0-        -0-               -0-           -0-          -0-       -0-            -0-
  the Board

Martin Dell'Oca        2001       $150,000        -0-               -0-           -0-   400,000(4)       -0-     $25,500(5)
  Chief                2000     $92,667(6)        -0-               -0-   $500,000(7)   400,000(8)       -0-            -0-
  Financial            1999            -0-        -0-               -0-           -0-          -0-       -0-            -0-
  Officer and
  Secretary
</TABLE>



(1)      Mr. Levine received 400,000 vested options in 2001.

(2)      Represents the value,  at fiscal year end, of unexercised  in-the-money
         options granted in 2001.

(3)      Mr.  Levine  received  700,000  options in 2000,  of which  587,500 are
         currently vested and, commencing September 6, 2001, 37,500 options vest
         each year for a 4-year period.

(4)      Mr. Dell'Oca received 400,000 vested options in 2001.

(5)      Represents the value,  at fiscal year end, of unexercised  in-the-money
         options granted in 2001.

(6)      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.

(7)      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.

(8)      Mr.  Dell'Oca  received  400,000  options in 2000, of which 287,500 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  totaling 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 January 1, 2001, the Board of Directors of our Company and
Mr.  Levine agreed to increase Mr.  Levine's  annual base salary to $150,000 and
remove the provision in the agreement that provides an increase in the salary in
the event the Company obtains equity financing.

         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 totaling 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


                                       45
<PAGE>

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
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.  On January 1, 2001,  our Board of Directors and Mr.  Dell'Oca
agreed to increase Mr.  Dell'Oca's annual base salary to $150,000 and remove the
provision in the agreement  that provides an increase in the salary in the event
the Company obtains an equity financing.

         The following table contains information regarding options exercised in
the year  ended  December  31,  2001 and the  number of  shares of common  stock
underlying  options  held as of  December  31, 2001 by our  Company's  executive
officers.

<TABLE>
<CAPTION>

                        AGGREGATED OPTIONS/SAR EXERCISES

                             IN LAST FISCAL YEAR AND
                      FISCAL YEAR END OPTIONS/SAR VALUES(1)

                                                                                NUMBER OF SECURITIES      VALUE OF UNEXERCISED
                                         SHARES                                UNDERLYING UNEXERCISED         IN-THE-MONEY
                                       ACQUIRED ON              VALUE              OPTIONS/SAR'S             OPTIONS/SAR'S
NAME                                    EXERCISE            REALIZED ($)       AT FISCAL YEAR END(1)     AT FISCAL YEAR END(2)
-----------------------------        ----------------      --------------     ------------------------  -----------------------
<S>                                         <C>                  <C>          <C>                            <C>

Gregory S. Levine                           -0-                  -0-          Exercisable:     987,500       $126,500
                                            -0-                  -0-          Unexercisable:   112,500             --

Martin Dell'Oca                             -0-                  -0-          Exercisable:     687,500        $84,500
                                            -0-                  -0-          Unexercisable:   112,500             --
</TABLE>

---------------------------------
(1)      These grants represent  options to purchase common stock. No SAR's have
         been granted.


(2)      The value of the  unexercised  in-the-money  options were calculated by
         determining the difference  between the fair market value of the common
         stock  underlying  the options and the exercise price of the options as
         of December 31, 2001.


         The following  table  contains  information  regarding  grants of stock
options made during the year ended December 31, 2001 to our Company's  executive
officers.

<TABLE>
<CAPTION>

OPTION/SAR GRANTS TABLE

                                                               % TOTAL
                                    NO. OF SECURITIES       OPTIONS/SAR'S
                                       UNDERLYING            GRANTED TO
                                      OPTIONS/SAR'S         EMPLOYEES IN       EXERCISE OR BASE PRICE
              NAME                     GRANTED (#)         FISCAL YEAR (%)         ($ PER SHARE)            EXPIRATION DATE
-------------------------------    ------------------     -----------------    -----------------------     -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Gregory S. Levine                       150,000                 3.9%                    $0.400          May 23, 2011
                                        150,000                 3.9%                    $0.290          November 28, 2011
                                        100,000                 2.6%                    $0.310          December 19, 2011

Martin Dell'Oca                         150,000                 3.9%                    $0.400          May 23, 2011
                                        150,000                 3.9%                    $0.290          November 28, 2011
                                        100,000                 2.6%                    $0.310          December 19, 2011

</TABLE>

                                       46
<PAGE>


COMPENSATION OF DIRECTORS

         The shareholders  elect all directors for a two-year term. No directors
are paid for their  services on the Board,  except that  non-employee  directors
will be granted options to purchase  shares of our Company's  common stock on an
annual  basis.  These  options  have an exercise  price equal to the fair market
value of such stock on the date of grant,  are immediately  exercisable and have
up to a ten-year term.

STOCK INCENTIVE PLAN

         On September 6, 2000, our Company adopted a Stock Incentive Plan, which
provides  for the  granting of 6,000,000  stock  options and stock  appreciation
rights  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.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  our
directors  and  executive  officers,  and  persons  who own  more  than 10% of a
registered  class of our  equity  securities  to file  with the  Securities  and
Exchange  commission  initial  reports of  ownership  and  reports of changes in
ownership  of  Common  Stock  and  other  of our  equity  securities.  Officers,
directors and greater than 10%  shareholders  are required by SEC regulations to
furnish us copies of all Section 16(a) forms they file.

         To our  knowledge,  based  solely  on a review  of the  copies  of such
reports furnished to us and written  representations  that no other reports were
required  during the fiscal year ended  December  31,  2001,  all Section  16(a)
filing requirements  applicable to our officers,  directors and greater than 10%
beneficial owners were complied with.


                                       47
<PAGE>


ITEM 11.  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 1, 2002,  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 1, 2002.  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.


<TABLE>
<CAPTION>

                                                                             COMMON STOCK
                                                                          BENEFICIALLY OWNED
                          NAME AND ADDRESS
                          OF BENEFICIAL OWNER                          NUMBER         PERCENTAGE(1)
                          --------------------------------           ------------     -------------
<S>                       <C>                                     <C>                          <C>

                          I.  Daniel Sultan                       13,711,251(2)(3)             37.31%
                          P.O. Box 3783
                          Hallandale, Florida  33008

                          Andre Chouraqui                             5,044,500                14.15%
                          Barker Road #2, House #9
                          The Peak, Hong Kong

                          Laurent Solomon(4)                          5,044,500                14.15%
                          P.O.  Box 9096
                          Daytona Beach, Florida  32120

                          Greg Levine                              3,622,250(5)(6)              9.86%
                          P.O.  Box 693267
                          Miami, Florida 33169

                          Yves Many(7)                                2,522,250                 7.07%
                          P.O.  Box 693267
                          Miami, Florida 33169

                          Martin Dell'Oca                           1,000,000(8)                2.74%
                          385 Hampton Lane
                          Key Biscayne, FL 33149

                          All directors and executive                18,333,501                49.91%
                          officers as a group (3 persons)
</TABLE>

(1)      Applicable  percentage  of ownership is based on  35,653,385  shares of
         common stock outstanding as of April 1, 2002,  together with applicable
         options for each  shareholder.  Beneficial  ownership is  determined in
         accordance  with the rules of the  Commission  and  generally  includes
         voting an investment power with respect to securities. Shares of common
         stock subject to options that are currently  exercisable or exercisable
         within 60 days of April 1, 2002 are deemed to be beneficially  owned by
         the person  holding  such  options  for the  purpose of  computing  the
         percentage  of  ownership  of  such  person,  but are  not  treated  as
         outstanding  for the purpose of computing the  percentage  ownership of
         any other  person.  The common stock is the only  outstanding  class of
         equity securities of our Company.

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

(3)      Includes options owned by Mr. Sultan to acquire 1,100,000 shares of our
         Company's common stock.

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

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


(6)      Includes options owned by Mr. Levine to acquire 1,100,000 shares of our
         Company's common stock..

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

                                       48
<PAGE>

(8)      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 800,000
         share of our Company's common stock.


         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.






                                       49
<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         We believe that all prior related party  transactions have been entered
into upon terms no less  favorable to us than those that could be obtained  from
unaffiliated  third parties.  Our reasonable  belief of fair value is based upon
proximate  similar  transactions  with third  parties or  attempts to obtain the
consideration from third parties.  All ongoing and future transactions with such
persons,  including any loans or compensation to such persons,  will be approved
by a majority of disinterested members of the Board of Directors.

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

         In January 2001, our Company agreed to pay consulting  fees of $150,000
to I.  Daniel  Sultan,  of which our  Company  paid  $52,000 in cash and accrued
$98,000 of these consulting fees.

         During  2001,  our  Company  issued the  following  options to purchase
shares of common stock:

<TABLE>
<CAPTION>

DATE OF ISSUANCE           RECIPIENT                   NUMBER OF OPTIONS         EXERCISE PRICE       EXPIRATION DATE
<S>                        <C>                               <C>                      <C>             <C>

May 23, 2001               I. Daniel Sultan                  150,000                  $0.44           May 23, 2011
May 23, 2001               Gregory Levine                    150,000                  $0.40           May 23, 2011
May 23, 2001               Martin Dell'Oca                   150,000                  $0.40           May 23, 2011

November 28, 2001          I. Daniel Sultan                  150,000                  $0.32           November 28, 2011
November 28, 2001          Gregory Levine                    150,000                  $0.29           November 28, 2011
November 28, 2001          Martin Dell'Oca                   150,000                  $0.29           November 28, 2011

December 19, 2001          I. Daniel Sultan                  100,000                  $0.34           December 19, 2011
December 19, 2001          Gregory Levine                    100,000                  $0.31           December 19, 2011
December 19, 2001          Martin Dell'Oca                   100,000                  $0.31           December 19, 2011
</TABLE>


         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 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 April 25, 2000, our Company issued  1,170,000 shares of common stock
to Enrique Dillon, former Chief Executive Officer of our Company, pursuant to an


                                       50
<PAGE>

employment agreement. In connection with Mr. Dillon's resignation, the 1,170,000
shares of common stock were  forfeited.  Our Company  issued  500,000  shares of
common stock to Mr.  Dillon in  consideration  of his  resignation.  Our Company
recorded a compensation expense in the amount of $1,125,000.

         On May 1, 2000,  our Company  issued  200,000 shares of common stock to
Martin  Dell'Oca,  Chief  Financial  Officer  of  our  Company,  pursuant  to an
employment  agreement.  Our Company recorded unearned compensation in the amount
of $500,000  representing  the fair value of the common stock at the date of the
grant.

         On December  31,  2000,  our Company  and I.  Daniel  Sultan  agreed to
convert an unsecured  demand loan of $196,367 plus interest into 196,367  shares
of 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 $108,001 as
the excess of the existing obligation over the fair value of the common stock as
a capital contribution.

         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 16, 2001,  Nexland S.A.  waived  certain  provisions in the
2000  licensing  agreement  with  respect to a large  customer.  Our Company was
authorized to design and manufacture certain products for purchase, distribution
and sale by this customer.

         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
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 and  $1,614,144  for 2001,  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,  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. On December 21,
2001 the  500,000  shares were  returned  to our  Company and the  corresponding
entries to paid in capital and common stock were reversed.

         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  of  $183,487  for  2000  and  $318,850  for  2001,  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.



                                       51
<PAGE>






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

         (a)(1)(2)  FINANCIAL  STATEMENTS.  See index to consolidated  financial
                    statements and supporting schedules.

         (a)(3)     EXHIBITS.

         The  following   exhibits  are  filed  as  part  of  this  registration
statement:

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

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.

                                       52
<PAGE>

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  incorporated  by  reference  from  the
Registrant's Form 10-K filed with the Commission on May 14, 2001:

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.


         (b)        REPORTS ON FORM 8-K.

         On July 5, 2001,  the Company  filed a Current  Report on Form 8-K with
respect to Item 4. Change in Registrant's Certifying Accountant.




                                       53
<PAGE>


<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements of Sections 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, thereto duly authorized.

Date:    April 16, 2002                         NEXLAND, INC.


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


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

SIGNATURE                                       TITLE                                               DATE
---------                                       -----                                               ----
<S>                                             <C>                                                 <C>


/s/ Gregory S. Levine                           President and Director                              April 16, 2002
------------------------------------
Gregory S. Levine


/s/ Martin E. Dell'Oca                          Chief Financial Officer and Director                April 16, 2002
------------------------------------
Martin E. Dell'Oca


/s/ Daniel Sultan                               Director                                            April 16, 2002
------------------------------------
I. Daniel Sultan

</TABLE>



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