SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


  For The Fiscal Year Ended May 31, 2000       Commission File Number 0-26673


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


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



              2480 Kenworth Road, Suite 11
                Nanaimo, British Columbia                   V9T 3Y3
       -----------------------------------------          -----------
       (Address of Principal Executive Offices)            (Zip Code)


 Registrant's telephone number including area code:         (604) 632-3802


Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $0.0001.

Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by  Section 13 or 15(d) of the  Exchange  Act during the past 12 months
(or for such shorter  period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

  YES X       NO

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year: $335,287

The aggregate  market value of the issuer's voting stock held by  non-affiliates
of the issuer  based upon the average  bid and asked  prices of such stock as of
August 28, 2000, was $4,550,499

The number of shares  outstanding of the issuer's  common stock as of August 28,
2000, was 13,783,666.

Documents  Incorporated By Reference:  Certain exhibits required by Item 13 have
been  incorporated  by reference from the Company's Form 10-SB filed on November
4, 1999 and the  Company's  Registration  Statement  on Form SB-2  filed May 19,
2000.

Transitional Small Business Disclosure Format:   Yes         No X

<PAGE>2


ITEM 1.  DESCRIPTION OF BUSINESS

General

         forestindustry.com,  Inc. is an internet service provider to the forest
and wood products  industry.  Our website  includes  information and advertising
relating to forest and logging;  wood  processing  and logs; and lumber and wood
products.  We are also in the  process of  establishing  a business  to business
exchange  to support  the  purchase  and sale of wood,  wood  products  and wood
related services.  Our strategy is to become an internet leader in supporting an
e-focused marketplace for the highly fragmented global forest industry.

         As used in this report,  the terms "we," "us," "our," the "Company" and
"forestindustry"  means  forestindustry.com,  Inc. and its subsidiaries,  unless
otherwise  indicated.  All dollar  amounts refer to United States dollars unless
otherwise noted.

Corporate History

         We were originally  incorporated in Delaware on December 18, l997 under
the name "Autoeye Inc."  Autoeye's  initial plan of business was to merge with a
company in the  industry  of  vehicle  surveillance  systems,  but this plan was
abandoned prior to any operations.  Prior to Autoeye's acquisition of The Forest
Industry  Online Inc., it had not commenced  any  operations  other than initial
corporate formation and capitalization.

         On January 31, 2000 Autoeye  acquired all of the issued and outstanding
common  shares of The Forest  Industry  Online Inc. in exchange  for  10,000,000
shares of Autoeye common stock.  The Forest  Industry  Online,  Inc. has been in
operation  since 1995,  first as a  proprietorship  and since  January 1997 as a
corporation.  The value  attributed to the share exchange was CDN $335,000.  The
principals of The Forest  Industry  Online were Joe Perraton,  Lara Perraton and
Teaco  Properties  Ltd.  (which  is  beneficially  owned by Marc  White and Dave
McNaught). Autoeye's then president, Andrew Hromyk, represented the interests of
Autoeye.  Concurrent  with the  acquisition of The Forest  Industry Online Inc.,
Autoeye issued 750 shares of its Series A Convertible preferred stock at a price
of $1,000 per share for gross  proceeds  of  $750,000.  The  subscribers  of the
preferred shares were Augustine Fund, LP, Ascent Financial,  and Indenture Trust
of James F. Cool.  Autoeye  also  issued  37,500  shares of its common  stock to
Century  Capital  Management  Ltd,  as  consideration  for  consulting  services
provided in connection with Autoeye's  acquisition of The Forest Industry Online
Inc. Century Capital Management is controlled by Andrew Hromyk.

         Following the acquisition of The Forest Industry Online Inc. Mr.
Perraton,  a principal  of The Forest  Industry  Online Inc.,  was  appointed as
Autoeye's President as well as a director.  Mr. Marc White was also appointed as
a director.  Autoeye's  former  President,  Andrew  Hromyk,  resigned  from that
position and was appointed as Autoeye's  Secretary.  Mr.  Hromyk  resigned as an
officer  and  director  in May 2000.  Mr.  White  resigned  as a director of the
Company in July 2000.

         On February 25, 2000, Autoeye changed its name to  "forestindustry.com,
Inc." We have also done business under the name "The Forest Industry Network."

         Our  business  is a  continuation  of that which was  previously  being
conducted  by The Forest  Industry  Online,  Inc.  which  remains a wholly owned
subsidiary of the Company.

<PAGE>3


Products and Services

Website Hosting/Advertising

         Our  primary   business   is   supporting   our   website   located  at
"www.forestindustry.com." This site provides a directory of companies associated
with the forest and wood industry. Our website is divided into three categories:
Forest and Logging, Wood Processing and Lumber and Wood Products.  Within Forest
and Logging we list  services  pertaining to logging  equipment,  reforestation,
trucks, safety supplies, computer services, contractors and ancilliary services.
The Wood  Processing  section  contains  services  related  to  mills  including
equipment, safety services, computers,  consultants and ancilliary services. The
Lumber and Wood  Product  section of our website  contains  services  related to
pallets,  boxes and containers,  mill and  woodworking  machinery and consulting
services.  All  sections  are  linked  through  an  alphabetical  listing of all
customers who list on our website.

         Our   website   includes   The  World  Wood   Exchange   which   allows
manufacturers,  buyers and intermediaries to purchase and sell all types of wood
products through the website.  Our website also provides information on industry
related trade shows,  conferences  and news items and allows for the exchange of
information  through our online discussion  forums. All updates and changes made
to the website are completed by our in-house technical staff.

         Our website  also  allows  companies  to  advertise  their  products or
services.  We  charge  a  monthly  fee to  customers  based  on the  size of the
advertisement.  Our monthly fees for basic advertising  services currently range
from $39 to $86.

Internet Services

         The internet  related  services we provide are essentially all services
which a  business  needs to  promote  itself and to  advertise  and/or  sell its
products and services  through the internet.  We charge either a monthly fee for
these  services or a fee based upon the number of hours involved in the project.
Our  services,  all of which  can be  customized  to the  specific  needs of the
customer, include:

o    complete web site design and maintenance
o    design and maintenance of databases for new and used:
     o    equipment
     o    parts and supplies
     o    inventories of wood products
     o    real estate listings
     o    customers
o    design of forms used to pay for products and services with a credit card
o    customized   layouts  for  order  forms,   multi-state  tax   calculations,
     international taxes
o    database  administration  programs which provide customers with the ability
     to:
     o    modify product prices
     o    provide product and services
     o    input shipping methods based on price, quantity and weight variables
o    transaction and billing reports
o    online  storefronts and catalogues for products and services offered by our
     members
o    online classified advertisements
o    email accounts for members

         We have technical and customer  support staff who are available  during
business hours to assist all members with the use of our services.
<PAGE>4

New Products

         The Company plans to develop an online business exchange for the forest
and wood industry called the Lumber and Equipment Exchange, or LEE. The LEE will
host  auctions of lumber,  equipment  and other wood  products.  Revenue will be
generated on a commission basis. We will need to license sophisticated  software
and hardware to support the LEE program.  We hope to attract an alliance partner
to help finance and develop the LEE program.  Once an alliance  partner is found
and financing has been secured, we anticipate it will take approximately 6 weeks
to design the basic  framework for the LEE. We will require  ongoing  design and
technical assistance from an alliance partner in the following areas: e-commerce
infrastructure,  systems  integration  and  installation  of  enabling  internet
software.  We estimate  that it will take  between  12-18 months to have a fully
integrated exchange developed and operational.  Related services,  which we plan
to  offer  to  customers  of the  LEE,  include  credit  verification,  delivery
scheduling, inspection services and payment settlement.

         The Company also plans to design a standard storefront for our members.
We intend to upgrade existing  storefronts used by our members to increase their
efficiency.  Once our standard storefront is developed, we will be able to adapt
it to the needs of any of our customers with minimal effort.

         The Company  further plans on developing a data and training  component
to our online services.  Training  programs will be  standardized,  hosted on an
application service provider model and marketed to the forest and wood industry.

Pending Acquisition

         Subsequent to the year-end,  the Company signed a non-binding letter of
intent to acquire C.C. Crow Publishing,  Inc. for $330,000 and 400,000 shares of
our common stock.  Crow's was  established in 1921 and publishes  market reports
for the softwood  industry.  Crow's  currently  publishes  seven  weekly  market
reports  which  include  the  Crow's  Weekly  Market  Report of Lumber and Panel
Prices.  Crow's also publishes  monthly the Crow's Forest Industry Journal which
is a trade  journal  directed  toward  major  issues  facing the wood and lumber
industry.  This  acquisition  is  subject to several  conditions  including  the
Company's  ability to pay the cash  portion of this  transaction  by the closing
date of December 31, 2000.  There is no assurance that this  acquisition will be
consummated.  The Company has placed the  400,000  shares in escrow  pending the
closing of this transaction.  125,000 shares of this amount are a non-refundable
deposit  which will be issued to the owner of Crow's  whether  this  acquisition
closes or not.

Sales and Marketing

         We promote our website by participating in the following:

     o    industry trade shows and conferences
     o    advertising in industry journals
     o    working with key forest  associations  to  advertise  our products and
          services; and,
     o    publishing  a  yearly  guidebook  which  includes  information  on our
          products and services,  upcoming  industry  conferences  and events as
          well as a directory listing of organizations  which utilize our online
          services.

         Due to the seasonal nature of the forest industry,  our advertising and
marketing expenses will normally be higher in the second and fourth quarters.
<PAGE>5

         As of May 31, 2000, the Company had over 640 customers which number has
almost  doubled  since the fiscal year end. We have no reliance on any  specific
customer or small group of  customers.  Approximately  70% of our  customers are
U.S.  companies,  20% are from Canada and approximately 5% are from Europe, Asia
and Australia.

Competition

         There are currently very few internet websites devoted to the forest
industry   sector.   Our   competitors   include   "e-wood.com,"    "Talpx.com,"
"VerticalNet,"  and other startup company's such as  forestweb.com.  The Company
also competes with various regional and national commodity exchanges.

         e-wood.com and Talpx Inc. provide internet websites which connect
buyers and sellers of wood and related products and include news and information
for the wood products industry.

         VerticalNet  provides  websites  for  companies  in the forest and wood
products  industry but does not currently provide any news or information on its
websites, which relate to the forest or wood products industry.

         Indirect   competitors   include  various  webhosting  and  web  design
companies  ranging  from large  corporate  internet  service  providers to small
home-based  businesses.  These  competitors  comprise a small  proportion of our
competition  and  often  have  little or no  specific  knowledge  of the  forest
industry.

Intellectual Property, Government Approvals and Regulation

         Our internet  services,  web site design and database  programs are not
protected by any patents or  copyrights.  Our website  domain name is registered
with   Network   Solutions,   Inc.   We   also   have   registered   the   names
"forestindustry.net;"  "logsandlumber.com"  and other web addresses.  We are not
subject to government  regulation nor do we require any government  approvals in
either Canada or the United States to provide internet or web design services to
our  customers.  We may be  subject  to  regulations  in the  future if state or
federal agencies choose to impose regulations applicable to the Internet.

Employees

         As of August 28,  2000 we had 26  full-time  employees.  We  anticipate
hiring 5 more employees over the next six months to service  customers using our
web site. We also utilize the services of 3 consultants.

ITEM 2 DESCRIPTION OF PROPERTY

         Our  corporate  offices were  located at Suite 504,  999 Canada  Place,
Vancouver, British Columbia V6C 3E1 where the Company leased approximately 2,000
square feet of space under a subtenancy  lease which  expires on  September  30,
2001. However, subsequent to the year-end the Company consolidated its corporate
offices with its operational and administrative offices located at 2480 Kenworth
Road, Suite 11, Nanaimo,  British  Columbia,  Canada V9T 3Y3. The Company leases
approximately 4,000 square feet of office space under a lease, which expires May
31, 2001.

         All of the  Company's  computer  and  telecommunications  equipment  is
located at its Nanaimo offices. As of August 28, 2000, the Company was operating
at 30% to 40%  capacity  and does not  foresee  the need to  upgrade  until  its
customer base doubles.
<PAGE>6

Risks Associated with Company's Developing Business

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

         The Company's  ability to  successfully  operate and expand its website
and market its services will depend on, among other things:

o    the continued  improvement of its internet technology to support the forest
     and wood industry
o    the development and expansion of its internet services
o    the expansion of its subscriber base
o    the  establishment of its website as an effective  advertising and business
     medium for the forest and wood industry

         Given the Company's limited  operating history and revenues,  there can
be no assurance that it will be able to achieve any of these goals and develop a
sufficiently large subscriber base to be profitable.

         Until  revenues are  sufficient to support the Company's  business,  it
will depend almost  exclusively on outside capital to pay for the development of
its e-commerce business. Such outside capital may include the sale of additional
stock and/or commercial  borrowing.  There can be no assurance that capital will
be available if necessary to the Company to meet these  development costs or, if
the capital is available,  it will be on terms  acceptable  to the Company.  The
issuance  of  additional  equity  securities  by the Company  would  result in a
further dilution in the equity interests of the current stockholders.  Obtaining
commercial  loans,  assuming  those loans would be available,  will increase the
Company's liabilities and future cash commitments.

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

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

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

         The success of the  Company  will also depend on its ability to respond
to technological  advances and emerging  industry  standards in a cost-effective
and timely manner.  The Company may not have the technical or financial  ability
to respond to these technical challenges.
<PAGE>7

ITEM 3. LEGAL PROCEEDINGS

None.

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

            On February 25, 2000, a special meeting of the Stockholders was duly
held, at which there was present a majority of the  stockholders of the Company,
to vote upon amending  Article I of the Articles of  Incorporation to change the
name of the Company from Autoeye Inc. to forestindustry.com, Inc. At the special
meeting there were present,  either by proxy or in person,  14,137,240 shares of
the 14,964,540 shares of the Company's  outstanding Common Stock. All 14,137,240
shares  present voted for adopting the amendment to Article I of the Articles of
Incorporation. The stockholders of the Company that were not present by proxy or
in person were given notice of the special  meeting in  accordance  with Section
222 of the Delaware General Corporation Law.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Principal Market

         Since  December 1999 the Company's  common stock has been quoted on the
National Association of Securities Dealers' OTC Bulletin Board,  initially under
the symbol  "AUYE",  and after  February  25,  2000 under the symbol  "FXCH".  A
trading market only developed on March 1, 2000. Prior to that date, there was no
public market for the Company's  common stock.  Set forth below are the range of
high and low bid quotations  for the periods  indicated as reported by the NASD.
The market  quotations  reflect  interdealer  prices,  without  retail  mark-up,
mark-down or commissions and may not represent actual transactions.

                                                 Common Stock
                                          -------------------------
  Month Ended                              High                Low
  ---------------                         -----               -----
  March 31, 2000                          $8.00               $7.81
  April 30, 2000                          $3.00               $3.00
  May 31, 2000                            $1.25               $1.25

         Approximate  number of holders of common stock dividends.  As of August
28, 2000 there were 58 holders of record of the  Company's  common  stock.  This
number  does not include  stockholders  who hold the  Company's  stock in street
name.

Dividends

         Holders of the  Company's  common  stock are  entitled to receive  such
dividends as may be declared by the Board of  Directors.  The Board of Directors
is not  obligated to declare a dividend.  The Company has not paid any dividends
on its common stock and it does not have any current  plans to pay any dividends
in the foreseeable future.
<PAGE>8

Capital Stock

         During the  Company's  last fiscal year ended May 31, 2000, it sold the
following equity securities  pursuant to exemptions from registration  under the
Securities Act of 1933.

         On January 31, 2000, the Company issued 10,000,000 shares of its common
stock  in  exchange  for all of the  outstanding  stock of The  Forest  Industry
Online,  Inc.  from 3  shareholders  of The  Forest  Industry  Online,  Inc.  In
conjunction with this acquisition,  37,500 shares of common stock were issued to
one consultant for services  rendered  relating to the  acquisition.  The shares
were issued to investors  residing outside of the United States. The issuance of
the Company's shares of common stock was deemed exempt pursuant to Regulation S.
No commissions were paid.

         On  January  31,  2000,  the  Company  sold 750  shares of its Series A
Convertible  Preferred  Stock to three  institutional  investors  for  aggregate
proceeds of $750,000.  Each Series A preferred  share may be  converted,  at the
option of the holder,  into shares of common stock equal in number to the amount
determined  by dividing  $1,000 by 75% of the  average  closing bid price of the
Company's  common stock for the ten trading days preceding the conversion  date,
subject  to a maximum  of 5,000  shares of common  stock  being  issued for each
Series A  preferred  share and a minimum  of 250  shares of common  stock  being
issued for each Series A preferred share. In addition,  all outstanding Series A
preferred  shares will  automatically  convert  into  shares of common  stock on
January 31, 2001 at the conversion rate described above. In May 2000, 375 Series
A  preferred  shares  were  converted  into  249,221  shares  of  common  stock.
Subsequent to the year-end,  an  additional  125 Series A preferred  shares were
converted  into 155,039 shares of common stock and another 50 Series A preferred
shares were converted into 62,106 shares of common stock. As of August 28, 2000,
200 Series A Convertible Preferred Shares remained outstanding. All sales of the
Company's  Series A preferred stocks were exempt from  registration  pursuant to
Rule 506 of the Securities and Exchange Commission.  All shares of the preferred
stock  were  acquired  for  investment  purposes  only  and  without  a view  to
distribution.  All of the persons who acquired the Company's  Series A preferred
stock were fully  informed and advised  about  matters  concerning  the Company,
including its business,  financial affairs and other matters.  The purchasers of
the Company's  Series A preferred  stock  acquired the  securities for their own
accounts. The certificates  evidencing the Series A preferred stock bear legends
stating that they may not be offered, sold or transferred other than pursuant to
an  effective  registration  statement  under  the  Securities  Act of 1933,  or
pursuant to an effective  registration  statement  under the  Securities  Act of
1933, or pursuant to an applicable  exemption  from  registration.  All Series A
preferred shares are "restricted" securities as defined in Rule 144 of the Rules
and Regulations of the SEC.

         On February 24, 2000,  the Company  issued 200,000 shares of its common
stock to one  consultant  in payment  for  services  to the  Company,  valued at
$4,600.  On February 29, 2000,  the Company  issued 150,000 shares of its common
stock to one consultant in payment for services  rendered  to the  Company.  The
services were valued at $3,450.  These  transactions  were private in nature and
involved investors who were not residents of the United States. On June 7, 2000,
the Company  issued  200,000  shares of its common  stock to one  consultant  in
payment  for  services  rendered to the  Company.  The  services  were valued at
$160,000.  This transaction was private in nature and involved one sophisticated
investor.  Accordingly,  the above  issuances  were  deemed  to be  exempt  from
registration by Regulation S or Section 4(2) of the Securities Act and the stock
is deemed to be restricted securities.
<PAGE>9

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

         The following  discussion  may contain  forward-looking  statements and
projections.  Because these forward-looking statements and projections are based
on a number of  assumptions  and are subject to  significant  uncertainties  and
contingencies,  many of which are  beyond  the  Company's  control,  there is no
assurance that they will be realized,  and actual results may vary significantly
from those shown.

         The  Company was formed on  December  18, 1997 under the name  Autoeye,
Inc. Autoeye's business was to evaluate businesses for possible acquisition.  On
January 31, 2000, we acquired 100% of The Forest Industry Online, Inc. Following
the transaction,  the  shareholders of The Forest Industry Online,  Inc. owned a
majority of  Autoeye's  outstanding  shares of common  stock.  Accordingly,  for
financial  reporting  purposes the  transaction  was  accounted for as a reverse
acquisition  with The Forest  Industry  Online,  Inc.  considered the accounting
acquirer.  (See  Notes  2(a) and 3 to the May 31,  2000  consolidated  financial
statements).  As such, The Forest Industry Online,  Inc.'s historical  financial
statements are now reported as the Company's financial  statements.  On February
25, 2000, the Company changed its name from Autoeye, Inc. to forestindustry.com,
Inc. Prior to the acquisition of The Forest Industry  Online,  Inc., the Company
had not generated any revenue and had not  commenced any  operations  other than
initial corporate formation and capitalization.

Plan of Operations

         In order to expand the  Company's  operations  it will need  additional
capital.  The Company does not have any  commitments  from any source to provide
additional  capital.  It will need to raise significant  outside capital to fund
its anticipated capital requirements over the next twelve months.  Approximately
$2.6  million  has been  budgeted to finance the  development  of the  Company's
technology,  development  of new products and services and  increased  sales and
marketing over the next 12 months. The Company anticipates needing approximately
$200,000 to acquire additional  equipment over the next 12 months to support the
Lumber  and  Equipment  Exchange.  The  Company  will need  capital  to  finance
anticipated  acquisitions  during  the next 12  months.  The  Company  will need
$330,000 by December 31, 2000 if it determines to consummate a pending corporate
acquisition.   Capital   commitments  for  the  next  12  month  period  include
approximately   $21,468  in  lease  obligations  for  the  one  office  premise;
consultant  agreements  totaling $50,000;  other leases $18,000;  and employment
agreements totaling $98,600. As a result of this increased business activity and
anticipated   increase   in   employees,   the  Company   expects   general  and
administrative  expenses and compensation  costs to increase  significantly from
current levels.

         An  essential  element  of the  Company's  business  plan is to  obtain
license  technology  and hardware to support its proposed  Lumber and  Equipment
Exchange  or LEE.  The LEE  program is expected  to cost  between  $300,000  and
$400,000 to implement.

         Since  inception,  the Company has relied on equity  financings to fund
its  operations.  Funds  required  to  finance  its  future  internet  services,
marketing  efforts and ongoing business are expected to come primarily from debt
and equity  financing and alliance  partners  with the  remainder  provided from
operating revenues. Operating revenues to date have been substantially less than
the  cost of  operations.  Future  financings  will  be  necessary  to meet  the
Company's  anticipated working capital needs over the next 12 months.  Potential
sources of additional  capital  include private  placements  with  institutional
investors and/or a public offering of its common stock.
<PAGE>10

Results of Operations
For the Fiscal Years Ended May 31, 2000 (10 months) and July 31,1999

         As  indicated  above,  the Company  commenced  business  operations  in
January of 2000. As of May 31, 1999 and up to January 2000,  the Company was not
conducting  any business  operations.  Consequently,  a comparison of the fiscal
years ended May 31,  2000 and 1999 would not be  meaningful.  Instead,  the more
meaningful  management's  discussion  compares the Company's  latest fiscal year
ended May 31,  1999 with the prior  fiscal year of The Forest  Industry  Online,
Inc.  ending July 31,  1999.  However,  the  Company's  most recent  fiscal year
consists of only ten months rather than a full twelve-month fiscal year.

         Revenues.  Revenues  increased 11% to $335,287 for the 10-month  period
ended May 31, 2000 as compared to sales of $300,362  for the year ended July 31,
1999.  Increased  sales were  attributable  to an increase in subscribers to the
Company's web site services and web design services. The customer base increased
to approximately  640 customers by May 31, 2000 as compared to approximately 350
at July 31, 1999.  Approximately  60% of the revenue is attributable to web site
services  while the  remaining  40% of  revenues  were  derived  from web design
services.

         Expenses. Selling, general and administrative expenses for the 10-month
period ended May 31, 2000  increased 94% to $534,976 as compared to $275,061 for
the year ended July 31, 1999.  This  increase is due to the hiring of additional
sales and technical staff and attendance at more trade shows during this period.
Consulting and professional fees were $151,616 for the 10-month period ended May
31, 2000 compared to $18,079 for the year ended July 31, 1999. Professional fees
increased  by over 600% due to the  acquisition  in January  2000 and the change
from a privately held company to a publicly reporting company. Professional fees
also  included  legal and  accounting  fees  relating  to the  preparation  of a
registration statement.

         Net and Comprehensive Loss. The Company recorded a net loss of $379,131
and a  comprehensive  loss of  $370,567  for the 10 months  ended  May 31,  2000
compared  to a net  loss of $541  and a  comprehensive  loss of $82 for the year
ended July 31, 1999. The increase in losses for the period ended May 31, 2000 is
due to the significant  increase in operating,  administrative  and professional
expenses.

Liquidity and Capital Resources

         The  Company is in a growth  stage in which  expenses  are  expected to
increase as the Company  implements  its business plan. Due to the fact that the
Company has not generated  sufficient  cash flow to fund all of its  operations,
the Company  has relied  heavily on outside  sources of  capital.  During the 10
month period ended May 31, 2000, the Company raised $750,000 through the sale of
its Series A Convertible  Preferred Stock.  The Company will require  additional
capital  investments or borrowed funds to meet cash flow projections.  There can
be no  assurance  that the  Company  will be able to raise  capital  from  these
outside sources in sufficient amounts to fund the Company's business  expansion.
The failure to secure  adequate  outside funding would have an adverse affect on
the Company's operating results.

         The Company  expects its expenses will continue to increase  during the
next twelve months as a result of increased marketing expenses and the expansion
of its online services.

         The Company plans to develop the Lumber and Equipment Exchange, or LEE,
which will  conduct  auctions of lumber,  equipment  and other wood  products by
means of the  internet.  To  establish  the LEE, it will need to license  from a
third party the  sophisticated  computer  software  systems needed to operate an
internet-based auction site. The Company will earn commissions on any sales made
through  the LEE.  A  license  for the  computer  system  needed  for the LEE is
<PAGE>11

expected to cost  approximately  $300,000.  In the alternative,  the Company may
attempt to establish a joint venture or similar arrangement with a company which
has the rights to such a computer system,  in which case the initial cost of the
license would be less but the Company would be required to share any revenues it
earned from the LEE with its joint  venture  partner.  As of August 28, 2000 the
Company had not  obtained any license for the  computer  programs  which will be
required for the LEE and the launch date of the LEE will remain  uncertain until
additional sources of capital are obtained.

         Subsequent  to the year-end,  the Company  signed a letter of intent to
acquire a business  whereby the Company will issue 400,000  shares of its common
stock and pay  $330,000 in cash in exchange  for all the issued and  outstanding
shares of the  business.  The  Company  has  until  December  31,  2000 to raise
sufficient  capital to acquire the  business.  The  Company  plans to obtain the
capital  through debt and/or  equity  financing.  If the Company  fails to raise
sufficient  capital or for some other  reason  decides  not to  consummate  this
acquisition,  the  Company  will pay a  non-refundable  deposit in the amount of
125,000 shares of its common stock.

         Investing  activities  during  the ten months  ended May 31,  2000 have
consisted  mainly of  purchasing  property  and  equipment,  primarily  computer
hardware and  software.  Capital  expenditures,  including  those under  capital
leases,  totaled  $27,009 in 1999 and  $119,377  in 2000.  The  Company  expects
capital   expenditures   will   increase  and  growth  in  its   personnel   and
infrastructure will be required to support the growing customer base.

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

         Capital commitments for the next 12 month period include  approximately
$21,468  in lease  obligations  for 1  office  premises;  consultant  agreements
totaling  $50,000;  other leases  $18,000;  and employment  agreements  totaling
$98,600.

         As of May 31, 2000,  the Company had working  capital of  approximately
$118,409. The Company anticipates obtaining the additional capital which it will
require  through  revenues from its operations and through a combination of debt
and  equity  financing.  We will  also  consider  joint  ventures  or  strategic
alliances to develop  future  programs.  Current cash and cash  equivalents  are
projected  to sustain the  Nanaimo  operations  but  alternate  sources  will be
required to fund additional expenses.  The Company will seek to raise additional
funds through public and private equity financings, borrowed funds or from other
sources.  There is no assurance  that the Company will be able to obtain capital
it will need or that its estimates of its capital  requirements will prove to be
accurate.  As of the  date  of  this  report,  the  Company  did  not  have  any
commitments from any source to provide additional capital.

ITEM 7. FINANCIAL STATEMENTS

         The  financial  statements  of the Company,  including  notes  thereto,
together with the report of independent  certified public  accountants  thereon,
are presented as an exhibit under Item 13 beginning on page F-1.
<PAGE>12

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

         Effective  February 24, 2000, the Company  retained Watson  Dauphinee &
Masuch  ("Watson")  to  act  as  the  Company's   independent  certified  public
accountant.  In this regard  Watson  replaced  Ernst & Young LLP  ("E&Y")  which
audited the  Company's  financial  statement  for the fiscal years ended May 31,
1999 and 1998.  The  reports of E&Y for these  fiscal  years did not  contain an
adverse  opinion or  disclaimer of opinion and were not qualified or modified as
to uncertainty  audit scope or accounting  principles.  During the Company's two
most  recent  fiscal  years  and  subsequent  interim  periods,  there  were  no
disagreements  with E&Y on any matter of  accounting  principles  or  practices,
financial   statement   disclosure  or  auditing  scope  or  procedures,   which
disagreements,  if not resolved to the  satisfaction of E&Y would have caused it
to make reference to such disagreements in its reports.

         The change in the Company's auditors was recommended and approved by
the  Board of  Directors  of the  Company.  The  Company  does not have an audit
committee. See "Item 13. Exhibits and Reports on Form 8-K."

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16 (A) OF THE EXCHANGE ACT

Directors and Executive Officers

         The directors and executive officers, and their ages and positions, and
duration as such, are as follows:

<TABLE>
<S>                    <C>                                                <C>     <C>


Name                   Position                                           Age     Period

Joe Perraton           President, Secretary, Chief Financial Officer      35      January 31, 2000 - Present
                       and Director
Todd Hilditch          Vice President, Corporate Relations Officer        32      February 24, 2000 - Present
John A. Carmichael     Chief Information Officer of The Forest            30      February 29, 2000 - July 21, 2000
                       Industry Online, Inc.
Marc R. White          Director                                           40      January 31, 2000 to July 12, 2000
Andrew Hromyk          Secretary and Director                             34      December 18, 1997 to May 31, 2000
</TABLE>

Business Experience

         The following is a description of our executive  officers and directors
and their business background for at least the past five years.

         Joe Perraton has served as president, secretary and a director of the
Company  since  January 31,  2000.  Prior to the  acquisition  by  Autoeye,  Mr.
Perraton  served as  president,  co-founder  and  operations  manager  since the
inception of the business "forest industry online" as a proprietorship  in 1995.
He became president of The Forest Industry Online,  Inc. upon its  incorporation
in January  1997.  As  co-founder  Mr.  Perraton had a unique  vision of how the
forest industry could use the internet to improve the industry as a whole.  With

<PAGE>13

over 10 years  experience  directly in the forest  industry  and over five years
working with internet and client/sever technologies. Mr. Perraton has insight on
how technologies relate to the forest industry. Prior to establishing The Forest
Industry  Online Inc.  Mr.  Perraton  was  engaged in the forest  industry as an
independent logging contractor.

         Todd Hilditch became Vice President of Corporate Relations as of
February 24, 2000. Mr. Hilditch has been an independent  business consultant for
the past 7 years.  From 1992 to 1993 Mr.  Hilditch was a financial  planner with
Albany  Financial  Group, a private  financial  planning firm. Prior to this Mr.
Hilditch was a professional hockey player. Mr. Hilditch has been involved in all
aspects of public company business formation,  including seed capital financing,
business plan development and  implementation,  senior listing  applications and
shareholder communication.  Mr. Hilditch has provided consulting services to two
start-up  environmental  wood product  companies,  Kafus Industries Ltd. and The
Canfiber  Group Ltd.,  both of which are publicly held  companies  listed on the
American Stock Exchange and the Canadian over-the-counter market,  respectively.
Mr. Hilditch is also the President and a director of Terraco Energy Corporation,
an oil and gas  exploration  company.  Mr.  Hilditch holds a Bachelor of Science
degree in Management from Rensselaer Polytechnic Institute in New York State.

         John A. Carmichael has served as the Chief Information  Officer for the
Company's  predecessor  since  February  29,  2000.  He is an  internet  systems
architect and has been an independent technical consultant for the past 4 years,
providing  services as a subcontractor to IMRglobal Corp. From 1990 to 1994, Mr.
Carmichael  was  employed  as a sawmill  worker  by Tolko  Industries  Ltd.  Mr.
Carmichael  has  extensive  experience in designing  and  implementing  database
enabled  applications and is fluent in application  servers,  database  servers,
Microsoft and Java technologies and Internet based applications.  Mr. Carmichael
specializes in systems  integration,  and has provided systems  architecture for
Creo Products Inc., BC Ferries  Corporation,  Canadian  Pacific Railways and the
government of Ontario.  Mr. Carmichael  studied computer science at Simon Fraser
University in Vancouver,  British  Columbia.  Mr.  Carmichael  resigned from his
position with the Company's subsidiary on July 21, 2000.

         Marc Ralph White has served as a director since January 31, 2000.
He has 25 years  experience  working  directly in the  harvesting  sector of the
forest  industry.  Mr. White's work in the  harvesting  sector has been based on
contract work for various businesses. Currently, Mr. White is a contractor for a
large  forest  company  and a partner  in many  small  woodlots  with  continual
involvement  in the  industry.  Mr.  White's  business  experience  and in-depth
industry   knowledge  have  enabled  him  to  assist  in  guiding  the  business
development of The Forest Industry Online,  Inc., as well as providing  valuable
management experience. Mr. White resigned from the Board on July 12, 2000.

         Andrew  Hromyk  served  as the  Company's  President,  Secretary  and a
director since its formation in December, 1997. On January 31, 2000, he resigned
his  position as President  and on May 11, 2000  resigned as the  Secretary  and
director.  Mr. Hromyk has been president of Century Capital  Management  Ltd., a
financial and business  consulting firm located in Vancouver,  British  Columbia
since 1993.  Since  October  1999 Mr.  Hromyk has also served as a director  and
officer of Capital One Ventures Corp., a reporting company. He has held director
positions with several other companies in the past.

         Each  director  holds office until his successor is duly elected by the
stockholders.  Executive  officers  serve  at  the  pleasure  of  the  Board  of
Directors.

Family Relationships

         There are no family  relationships  between any  director or  executive
officer.

<PAGE>14

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's  executive  officers and  directors,  and persons who own
more than 10% of the  Company's  Common  Stock,  to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the  Securities and Exchange
Commission (the "SEC"). Such executive officers,  directors and 10% stockholders
are also required by SEC rules to furnish the Company with copies of all Section
16(a)  forms they  file.  Based  solely  upon its review of copies of such forms
received by it, or on written  representations  from certain  reporting  persons
that other filings were required for such persons,  the Company  believes  that,
during the year ended May 31, 2000,  its executive  officers,  directors and 10%
stockholders  complied with all  applicable  Section  16(a) filing  requirements
except  that Bona Vista West Ltd.  filed two Form 4's which were filed after the
due date. The Company  believes Bona Vista West Ltd. is no longer subject to the
reporting obligations of Section 16(a)

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth the  compensation of the Company's Chief
Executive  Officer during the last two complete  fiscal years. No other officers
or directors received annual  compensation in excess of $100,000 during the last
two complete fiscal years.

<TABLE>
<S>                 <C>        <C>        <C>          <C>                     <C>             <C>           <C>       <C>


                                                      SUMMARY COMPENSATION TABLE

                                          Annual Compensation                                    Long Term Compensation
                    ------------------------------------------------------     -----------------------------------------------------
                                                                                        Awards                Payout
                                                                               --------------------------    ---------
                                                                               Restricted    Securities      LTIP         All Other
                                                         Other Annual             Stock      Underlying      Payout    Compensation
                      Year     Salary     Bonus ($)    Compensation ($)         Award(s)    Options (#)        ($)           ($)
                    --------- ---------- ---------------------------------     ------------ -------------    --------- -------------
Joe Perraton        2000(1)     $15,022      -0-             -0-                   -0-          -0-            -0-           -0-
President
Andrew Hromyk       2000(2)         -0-      -0-             -0-                   -0-          -0-            -0-           -0-
Prior President
                    1999            -0-      -0-             -0-                   -0-          -0-            -0-           -0-
                    1998            -0-      -0-             -0-                   -0-          -0-            -0-           -0-
-----------------

</TABLE>

(1)  For the period January 31, 2000 to May 31, 2000. Prior to January 31, 2000,
     Mr. Perraton was paid the following  salary by The Forest Industry  Online,
     Inc.  (a  subsidiary  of the  Company):  June  1,1999 to January 30, 2000 -
     $13,406; fiscal year 1999 - $31,761; fiscal year 1998 - $25,284.

(2)  For the period June 1, 1999 to January 31, 2000.

         In January 2000, Joe Perraton replaced Andrew Hromyk as President of
the Company.  Mr.  Hromyk  continued to serve as the Secretary and a director of
the Company until May 11, 2000 at which time he resigned from both positions.

Employment/Consulting Agreements

         On January  31,2000 we  acquired  The Forest  Industry  Online  Inc. In
connection  with  this  acquisition  the  Company  entered  into  an  employment
agreement with Joe Perraton,  the President of The Forest Industry  Online.  The
employment  agreement provides for a term of three years and an annual salary of
CDN $70,000 (approximately $50,000 at current exchange rates).

<PAGE>15


         In February  2000 the  Company's  wholly  owned  subsidiary  The Forest
Industry Online Inc.  entered into an employment  agreement with John Carmichael
pursuant  to which  Mr.  Carmichael  agreed  to serve  as that  Company's  Chief
Information  Officer.  The employment  agreement provides for a term of one year
and an annual salary of CDN $75,000  (approximately  $50,000 at current exchange
rates).  In addition,  Mr.  Carmichael  was issued  150,000 shares of our common
stock  as  consideration  for  entering  into  this  employment  agreement.  Mr.
Carmichael  resigned as of July 21,  2000 and  voluntarily  returned  the shares
issued in conjunction with the employment agreement.

         In February  2000 the  Company's  wholly  owned  subsidiary  The Forest
Industry  Online Inc.  entered into a consulting  agreement  with Todd  Hilditch
pursuant  to which  Mr.  Hilditch  agreed to serve as that  Company's  corporate
relations officer. The consulting agreement provides for a term of one year with
monthly payments of CDN $3,500 (approximately $2,400 at current exchange rates).
In addition,  Mr.  Hilditch was issued  200,000  shares of the Company's  common
stock as consideration for entering into this consulting agreement. Mr. Hilditch
was also appointed as the Company's Vice-President of Corporate Relations by the
Board of Directors as of the 24th of February 2000.

         On March 1, 2000, the Company entered into a consulting  agreement with
Summit Media  Partners.  The  agreement  had a term of 92 days and a cost of CDN
$15,000. Subsequent to the year-end the Company entered into a second consulting
agreement  with Summit Media  Partners.  The agreement had a term of 92 days and
expires on September 7, 2000.  The Company  issued  200,000 shares of its common
stock  valued at  $160,000  in  payment  for  these  services.  Summit  Media is
providing  advertising  and  marketing  services  through  featured  advertorial
mailings.

Employee Pension, Profit Sharing or other Retirement Plans

         The  Company  does not have a defined  benefit,  pension  plan,  profit
sharing  or other  retirement  plan,  although  it may adopt one or more of such
plans in the future.

Director's Compensation

         At  present  the  Company  does  not pay its  directors  for  attending
meetings  of the Board of  Directors,  although  it  expects to adopt a director
compensation  policy in the future.  The  Company  has no  standard  arrangement
pursuant to which its directors are compensated  for any services  provided as a
director or for committee participation or special assignments.

         Except as disclosed  elsewhere in this prospectus no director  received
any form of compensation from the Company during the year ended May 31, 2000.

Stock Option Plan

         In  February  2000 the  Company's  Board of  Directors  adopted a stock
option plan which  authorizes  the issuance of options to purchase up to 250,000
shares of our common stock. The option plan will remain in effect until February
2010, unless earlier terminated by action of the Board of Directors. Pursuant to
the option plan, the Company's employees and officers are eligible to be granted
options.  The Company's  directors may not be granted  options  unless they also
serve as  officers.  The option  exercise  price is  determined  by the Board of
Directors. On May 26, 2000, the Board of Directors amended the 2000 Stock Option
Plan to authorize  the  issuance of options to purchase up to 500,000  shares of
the Company's common stock and expanded the definition of an eligible person for
the purpose of authorizing stock options.

<PAGE>16

         Options  granted  pursuant  to the Option  Plan  terminate  on the date
established  by the Board of  Directors  when the option was  granted and in any
event cannot exceed ten years from the date of grant.

         Options  granted  pursuant to the Option  plan may be either  Incentive
Stock Options within the meaning of Section 422 of the Internal  Revenue Code or
Nonqualified Stock Options.

         The  exercise  price of options  granted  pursuant  to the Option  Plan
cannot be less than the fair market  value of the shares of our common  stock on
the date of the grant and, in the case of Incentive Stock Options granted to any
of our employees who own more than 10% of the voting power of all classes of the
Company's shares, the exercise price cannot be less than 110% of the fair market
value of the shares of our common stock on the date of the grant.

         The Option Plan is  administered  by the Company's  Board of Directors.
The Board of Directors  has the  authority to interpret  the  provisions  of the
Option Plan and  supervise the  administration  of the Option Plan. In addition,
the Board of Directors is empowered to select those  persons to whom options are
to be granted,  to  determine  the number of shares  subject to each grant of an
option and to determine when, and upon what conditions options granted under the
Option Plan will vest or otherwise be subject to forfeiture and cancellation.

         In the  discretion  of the  Company's  Board of  Directors,  any option
granted pursuant to the Option Plan may include installment  exercise terms such
that the option becomes fully  exercisable  in a series of cumulating  portions.
The  Company's  Board of Directors may also  accelerate  the date upon which any
option (or any part of any options) is first  exercisable.  Any options  granted
pursuant  to the  Option  Plan  will  be  forfeited  if the  "vesting"  schedule
established  by the Board of  Directors at the time of the grant is not met. For
this purpose,  vesting means the period during which the employee must remain an
employee of forestindustry.com or our subsidiary The Forest Industry Online Inc.
At the time an employee  ceases  working for the Company,  any options not fully
vested will be forfeited and cancelled.  Payment for the shares of the Company's
common stock  underlying the options granted to its officers may be paid through
the delivery of shares of its common stock having an aggregate fair market value
equal to the option  price,  provided  such shares have been owned by the option
holder for at least one year prior to such  exercise.  A combination of cash and
shares of the Company's  common stock may also be permitted at the discretion of
the Board of Directors. Options are generally non-transferable except upon death
of the option holder.

         The  Company's  Board of  Directors  may at any time,  and from time to
time,  amend,  terminate,  or  suspend  the  Option  Plan in any manner it deems
appropriate,  provided that such  amendment,  termination  or suspension  cannot
adversely  affect  rights or  obligations  with  respect  to  shares or  options
previously granted.

         The Option Plan is not qualified  under Section  401(a) of the Internal
Revenue Code,  nor is it subject to any  provisions  of the Employee  Retirement
Income Security Act of 1974.

         No  directors  or officers  were  granted  any options  during the past
fiscal year.  Options to purchase  69,000  shares of common stock were issued to
thirteen employees and two non-employees.  These options had exercise  prices of
$2.00 and $4.00 per share and expire in April and May of 2005.

Limitation of Liability and Indemnification Matters

         The  General   Corporation  Law  of  the  State  of  Delaware   permits
indemnification  of directors,  officers,  and employees of  corporations  under
certain   conditions   subject  to   certain   limitations.   Article   XIII  of
forestindustry's  Certificate  of  Incorporation  states  that the  Company  may
provide  indemnification of its agents,  including its officers and directors to

<PAGE>17

the maximum extent permitted by the Delaware Corporation Law.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
forestindustry   pursuant   to   the   foregoing   provisions,   or   otherwise,
forestindustry  has been  advised  that in the  opinion of the  Commission  such
indemnification  is against public policy as expressed in the Securities Act and
is,  therefore,  unenforceable.  In the event  that a claim for  indemnification
against such liabilities  (other than the payment by  forestindustry of expenses
incurred or paid by a director,  officer or controlling person of forestindustry
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, forestindustry will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed  in the  Securities  Act and will be  governed by the final
adjudication of such issue.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of August 28, 2000, information with
respect to the only persons owning  beneficially  5% or more of our  outstanding
common stock and the number and percentage of  outstanding  shares owned by each
of our  directors  and officers  and by our  officers and  directors as a group.
Unless  otherwise  indicated,  each owner has sole voting and investment  powers
over his shares of common stock.

                                              Shares of           Percent of
Name and Address                            Common Stock (3)       Class  (2)
----------------                           -------------------     ----------

Teaco Properties Ltd. (1)                    6,900,000               50.1%
5299 Budd Crescent
Nanaimo, British Columbia
V9T 5N9

Joe Perraton                                 2,400,000               17.4%
7491 Elizabeth Way
Lantzville, British Columbia
V0R 2H0

Todd Hilditch                                  200,000                1.4%
Suite 1301
1188 Quebec Street
Vancouver, British Columbia
Canada V6A 4B3

All Officers and Directors                   2,600,000               18.9%
  as a Group (4 persons)
-----------------------
(1)  Teaco  Properties Ltd. is beneficially  owned by Marc Ralph White and David
     McNaught,. Mr. White was a former director of the Company.

(2)  Computed without giving effect to any common stock which may be issued upon
     the  conversion  of our  Series  A  Preferred  shares  since  these  shares
     represent less than 5% of the outstanding stock.

(3)  Under  Securities  and  Exchange  Commission  rules,  beneficial  ownership
     includes  any shares as to which an  individual  has sole or shared  voting
     power or investment power. Unless otherwise indicated, the Company believes
     that all persons named in the table have sole voting and  investment  power

<PAGE>18

     with  respect to all shares of Common Stock  beneficially  owned by them. A
     person  is also  deemed  to be the  beneficial  of  securities  that can be
     acquired  by such  person  within  60 days  from the date  hereof  upon the
     exercise  of  warrants  or  options.  Each  beneficial  owner's  percentage
     ownership is  determined by assuming that options or warrants that are held
     by such  person  and  which  are  exercisable  within 60 days form the date
     hereof have been exercised.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Except as  otherwise  indicated  below,  forestindustry  has not been a
party to any  transaction,  proposed  transaction,  or series of transactions in
which the amount involved exceeds $60,000,  and in which, to its knowledge,  any
of its directors,  officers,  five percent  beneficial  security holder,  or any
member of the immediate  family of the foregoing  persons has had or will have a
direct or indirect material interest.

         The  Company  has issued  shares of our common  stock to the  following
persons during the past two years, who are or were affiliated with us:

<TABLE>
<S>                              <C>                    <C>                     <C>


                                 Date of                 Number
           Name                  Issuance               of Shares (3)           Consideration
-----------------------          --------               -------------           -----------------------

Teaco Properties Ltd(1)           01/00                  6,900,000              69 shares of The Forest
                                                                                Industry Online Inc.

Joe Perraton                      01/00                  2,400,000              24 shares of The Forest
                                                                                Industry Online Inc.

Century Capital                   01/00                     37,500              Consulting services
Management Ltd. (2)

John Carmichael                   02/00                    150,000              Services rendered

Todd Hilditch                     02/00                    200,000              Services rendered
-----------------
</TABLE>


(1)  The  beneficial  owners of Teaco  Properties are Marc Ralph White and David
     McNaught. Mr. White is a former director of the Company and Mr. McNaught is
     a former director of The Forest Industry Online, Inc.
(2)  The beneficial owner of Century Capital Management Ltd. is Andrew Hromyk, a
     former officer and director.
(3)  Price per share deemed value was $0.023.

         In May 2000 Bona  Vista  West  Ltd.,  a former  principal  stockholder,
returned  2,547,240  shares of common stock to us for  cancellation  by way of a
stock retirement  agreement dated May 11, 2000. Bona Vista West Ltd. agreed with
us that in order to attract  future  financings it would be in our best interest
to reduce our issued and  outstanding  share  capital  through the surrender and
retirement of the control stock originally issued to Bona Vista West Ltd.

<PAGE>19

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
<TABLE>
         <S>                                                                                         <C>


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

         (1)      Financial Statements

         Report of Independent Accountants                                                                      F-1
         Year-end Consolidated Balance Sheets                                                                   F-2
         Year-end Consolidated Statements of Operations and Comprehensive Income                                F-3
         Year-end Consolidated Statements of Stockholders' Equity                                               F-4
         Year-end Consolidated Statements of Cash Flows                                                         F-5
         Notes to Consolidated Financial Statements                                                   F-6 thru F-21
</TABLE>


         (2)      Exhibits

<TABLE>
           <S>                      <C>                                         <C>

                 EXHIBIT
                   NO.                           DESCRIPTION                                   LOCATION
           ---------------------    --------------------------------------      ---------------------------------------

                3.1 - 3.2           Articles of Incorporation and Bylaws        Incorporated by reference to Exhibits
                                                                                No. 3.1-3.2 to the Company's Form
                                                                                SB-2 filed on May 19, 2000

                   4.1              Stock Option Plan                           Incorporated  by  reference to Exhibit
                                                                                No.  4.1 to the  Company's  Form  SB-2
                                                                                filed on May 19, 2000

                   4.2              Amended 2000 Stock Option Plan              Filed herewith

                   10.1             Share Purchase Agreement with Teaco         Incorporated  by  reference to Exhibit
                                    Properties, Ltd., Joe Perraton and          No.  10.1 to the  Company's  Form SB-2
                                    Lara Perraton                               filed on May 19, 2000

                   10.2             Perraton Employment Agreement               Filed herewith

                   10.3             Consulting Agreement with Todd              Filed herewith
                                    Hilditch

                   10.4             Consulting Agreement with Summit            Filed herewith
                                    Media Partners Inc.

                   16.1             Letter regarding Changes in                 Incorporated  by  reference to Exhibit
                                    Certifying Accountant                       No.  16.1 to the  Company's  Form  8-K
                                                                                filed on March 8, 2000
</TABLE>


(b)  Reports on Form 8-K for the quarter ended May 31, 2000:

     A Form 8-K dated  February  24, 2000 (filed March 8, 2000) was filed during
     the last  fiscal  quarter.  The Form 8-K  reported  an Item 4 and an Item 5
     event and included exhibits pursuant to Item 7.

<PAGE>20

                                                           SIGNATURES

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

                                                     FORESTINDUSTRY.COM, INC.

                                                 By  /s/ JOE PERRATON
                                                         -----------------------
                                                         Joe Perraton, President

                                                 By  /s/ JOE PERRATON
                                                         -----------------------
                                                         Joe Perraton, Secretary

              Pursuant to the  requirements  of the Securities Act of l933, this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.


                                    Title                            Date


/s/ JOE PERRATON
---------------------
    Joe Perraton                   Director                  September 12, 2000

<PAGE>F-1


To the Stockholders and Board of Directors of:
forestindustry.com, Inc.
(formerly Autoeye Inc.)


We have audited the Consolidated Balance Sheets of forestindustry.com,  Inc. and
subsidiary  as of May 31, 2000 and July 31,  1999 and the  related  Consolidated
Statements of Operations and Comprehensive Income, Stockholders' Equity and Cash
Flows for the ten month  period ended May 31, 2000 and year ended July 31, 1999.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the  financial  position of  forestindustry.com,  Inc.  and
subsidiary  as of May 31,  2000  and  July 31,  1999  and the  results  of their
operations  and their cash flows for the ten month period ended May 31, 2000 and
the year ended  July 31,  1999,  in  conformity  with  United  States  generally
accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 1 to the
consolidated financial statements, the Company has suffered recurring losses and
negative  cash flows from  operations  that 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 1. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

Chartered Accountants

/S/ Watson Dauphinee & Masuch

Vancouver, B.C., Canada
August 11, 2000


<PAGE>F-2


Consolidated Balance Sheets
-----------------------------
<TABLE>
<S>                                                          <C>                  <C>                <C>

                                                                      (Audited)      (Unaudited)          (Audited)
                                                                    May 31, 2000     May 31, 1999      July 31, 1999
                                                                          US $             US $               US $
                                                                  --------------    --------------     --------------
ASSETS

CURRENT

Cash and Equivalents                                                   196,963           13,135              2,819
Accounts Receivable (Net of Allowance for Doubtful Accounts -
   May 31, 2000 - $20,697; July 31, 1999 - $8,630)                      84,151           54,133             64,657
Work in Process                                                          9,137                -                  -
Prepaid Expenses                                                         1,548              228              1,795
Due from Affiliated Company                                                  -              326                166
                                                                  --------------    --------------     --------------
                                                                       291,799           67,822             69,437

Property and Equipment (Note 4)                                        123,792           28,195             32,481
                                                                  --------------    --------------     --------------
                                                                       415,591           96,017            101,918
                                                                  ==============    ==============     ==============

LIABILITIES and STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Operating Line of Credit (Note 5)                                            -            9,770             13,278
Accounts Payable and Accrued Liabilities                               129,513           17,651             39,265
Unearned Revenues                                                       43,877           22,797             52,281
Due to Stockholders (Note 6)                                                 -           73,496             68,013
Demand Bank Loan (Note 7)                                                    -           57,756             55,695
                                                                  --------------    --------------     --------------
                                                                       173,390          181,470            228,532
                                                                  --------------    --------------     --------------
Commitments (Note 10)
Subsequent Events (Note 11)

STOCKHOLDERS' EQUITY

Share Capital (Note 8)
Common Stock, $0.0001 par value
    30,000,000 Authorized; Issued and Outstanding:
    May 31, 2000 - 12,966,521; July 31, 1999 - 10,000,000                1,296            1,000              1,000
Preferred Stock, $0.0001 par value
    5,000,000 Authorized; Issued and Outstanding:
   May 31, 2000 - 375; July 31, 1999 - Nil                                   1                -                  -
Additional Paid in Capital                                             755,339             (999)              (999)
Deferred Stock Compensation                                            (17,253)               -                  -
Cumulative Translation Adjustment                                       10,014              991              1,450
Deficit                                                               (507,196)         (86,445)          (128,065)
                                                                  --------------    --------------     --------------
                                                                       242,201          (85,453)          (126,614)
                                                                  --------------    --------------     --------------
                                                                       415,591           96,017            101,918
                                                                  ==============    ==============     ==============
</TABLE>

See notes to consolidated financial statements


<PAGE>F-3

Consolidated Statements of Operations and Comprehensive Income
-------------------------------------------------------------------------------

<TABLE>
<S>                                                         <C>                   <C>               <C>

                                                               (Audited)            (Unaudited)          (Audited)
                                                                       Ten Months Ended                 Year Ended
                                                                May 31, 2000          May 31,1999      July 31, 1999
                                                                    US $                 US $               US $
                                                              ---------------       --------------    --------------

REVENUES                                                          335,287              270,176              300,362


EXPENSES

Consulting Fees                                                    45,649                  487                  487
Depreciation                                                       27,826                2,316                7,763
General and Administrative                                        534,976              213,846              275,061
Professional Fees                                                 105,967               11,456               17,592
                                                              ---------------       --------------    --------------
                                                                  714,418              228,105              300,903
                                                              ---------------       --------------    --------------


NET INCOME (LOSS)
FOR THE PERIOD                                                   (379,131)              42,071                 (541)

Foreign Currency Translation Adjustment                             8,564                    -                  459
                                                              ---------------       --------------    --------------
COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD                       (370,567)              42,071                  (82)
                                                              ===============       ==============    ==============
Weighted Average Number of Shares Outstanding,
Basic and Diluted                                              10,521,802           10,000,000           10,000,000
                                                              ===============       ==============    ==============
Earnings (Loss) per Common Share,
Basic and Diluted                                                 (0.035)                0.004               (0.001)
                                                              ===============       ==============    ==============


</TABLE>

See notes to consolidated financial statements



<PAGE>F-4


Consolidated  Statements of  Stockholders'  Equity For the Periods from July 31,
1998 to May 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<S>                                <C>          <C>    <C>          <C>     <C>         <C>          <C>          <C>       <C>


                                       Common Stock       Preferred Stock                                         Deficit     Total
                                   ------------------  --------------------  Additional   Deferred    Cumulative
                                    Number of            Number of            Paid in      Stock     Translation
                                      Shares    Amount    Shares     Amount   Capital   Compensation  Adjustment
                                                  US $                 US $      US $        US $         US $     US $        US $
                                   ------------ ------ -----------   ------  ---------- ------------ ----------- --------- ---------

Balance, July 31, 1998              10,000,000   1,000       --         --      (999)        --           991    (127,524) (126,532)

Translation Adjustment
 for the Period                             --      --       --         --        --         --           459          --       459

Net Loss for the Year                       --      --       --         --        --         --            --        (541)     (541)

Common stock issued to
 purchase all issued and
 outstanding shares of The
 Forest Industry Online Inc.,
 January 31, 2000 (note 3)           4,927,040     493       --         --      (493)        --            --          --        --


Adjustment to comply with
 recapitalization accounting
 (note 3)                                   --      --       --         --   (19,530)        --            --          --   (19,530)

750 Series `A' convertible
 preferred stocks issued for
 cash, January 31, 2000
 at $1,000 per share (note 3)               --      --      750          1   749,999         --            --          --   750,000


Common stock issued for
 service, January 31, 2000,
 valued at approximately
 $0.023 per share (note 3)              37,500       4       --         --       859         --            --          --       863

Common stock issued for
 services in February, 2000,
 valued at approximately  $0.023
 per share (note 5(c))                 350,000      35       --         --     8,015         --            --          --     8,050


Common stock issued on conversion
 of series `A' convertible
 preferred stock                       249,221      24     (375)        --       (25)        --            --          --        (1)

Retirement of common stock
 returned to the Company at no
 cost by the founding stockholder   (2,597,240)   (260)      --         --       260         --            --          --        --

Deferred Compensation                       --      --       --         --    17,253    (17,253)           --          --        --

Translation Adjustment for the
 Period                                     --      --       --         --        --         --         8,564          --     8,564

Net Loss for the Period                     --      --       --         --        --         --            --    (379,131) (379,131)
                                   ------------ ------ -----------   ------  ---------- ------------ ----------- --------- ---------
Balance, May 31, 2000               12,966,521   1,296      375          1   755,339    (17,253)       10,014    (507,196)  242,201
                                   ============ ====== ===========   ======  ========== ============ ==========  ========= =========


</TABLE>


See notes to consolidated financial statements

<PAGE>F-5

Consolidated Statements of Cash Flows
------------------------------------------------------------------------------
<TABLE>
<S>                                                                               <C>              <C>              <C>


                                                                                (Audited)        (Unaudited)        (Audited)
                                                                                       Ten Months Ended            Year Ended
                                                                                May 31, 2000     May 31,1999      July 31, 1999
                                                                                    US $             US $               US $
                                                                                ------------    ------------      --------------
CASH WAS PROVIDED FROM, UTILIZED (FOR):

OPERATING ACTIVITIES
Net Income (Loss) for the Period                                                 (379,131)          42,071             (541)
Non-Cash Items:
Depreciation                                                                       27,826            2,316            7,763
Common Stock Issued in Exchange for Services                                        8,050                -                -
Change in Non-Cash Working Capital Accounts:
   Accounts Receivable                                                            (19,494)         (30,635)         (41,159)
   Work in Process                                                                 (9,137)               -                -
   Note Receivable                                                                      -           14,406           14,406
   Prepaid Expenses                                                                   247              186           (1,381)
   Accounts Payable and Accrued Liabilities                                        80,384          (16,547)           5,067
   Unearned Revenues                                                               (8,404)            (365)          29,119
                                                                                ------------    ------------      --------------
Net Cash Provided by (Used in) Operating Activities                              (299,659)          11,432           13,274
                                                                                ------------    ------------      --------------
FINANCING ACTIVITIES
Long-term Debt and Operating Line of Credit Advances (Repayments)                 (68,973)          67,526           68,973
Advances from (to) Affiliated Company                                                 166             (326)            (166)
Advances (to) Stockholders                                                        (68,013)         (49,559)         (55,042)
Net Proceeds from Issuance of Preferred Stocks                                    750,000                -                -
                                                                                ------------    ------------      --------------
Net Cash Provided by Financing Activities                                         613,180           17,641           13,765
                                                                                ------------    ------------      --------------
INVESTING ACTIVITY

Acquisition of Capital Assets (Net)                                              (119,377)         (18,727)         (27,009)
                                                                                ------------    ------------      --------------
NET INCREASE
IN CASH AND EQUIVALENTS                                                           194,144           10,346               30

Cash and Equivalents, Beginning of the Period                                       2,819            2,789            2,789

CASH AND EQUIVALENTS, END OF THE PERIOD                                           196,963           13,135            2,819
                                                                                ============    ============      ==============
Supplemental Disclosure
Interest Paid                                                                      10,035           12,309           14,534
                                                                                ============    ============      ==============


</TABLE>

See notes to consolidated financial statements


<PAGE>F-6

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------

NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS

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

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

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

To May 31,  2000,  the  Company  has not  been  profitable  and has  experienced
negative cash flows from  operations.  Operations have been financed through the
issuance of preferred stocks and other external financing.  The Company's future
operations  are  dependent  upon  continued  external  funding,  its  ability to
increase  revenues  and  reduce  expenses,  and  the  success  of  its  proposed
development of an online  business  exchange  auction website for the forest and
wood industries. There are no assurances that the above conditions will occur.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a)   Reverse Takeover and Basis of Presentation

On January 31,  2000,  the Company  acquired  all of the issued and  outstanding
shares of Forest by issuing to Forest's stockholders 10,000,000 shares of common
stock and control of the Company.  The acquisition  was a reverse  takeover with
Forest being the deemed accounting  acquiror for financial  statement  purposes.
The  acquisition  has been  accounted for as a capital  transaction  effectively
representing   an  issue  of   stocks   by   Forest   for  the  net   assets  of
forestindustry.com, Inc.

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

b)   Basis of Consolidation

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

c)   Work in Process

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

<PAGE>F-7


Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------

Note 2 - Significant Accounting Policies (continued)


d)   Property and Equipment and Depreciation

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


e)   Cash and Equivalents

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


f)   Revenue Recognition and Unearned Revenues

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

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

g)   Use of Estimates

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


h)   Net Earnings (Loss) Per Share

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

i)   Stock-Based Compensation

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

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

<PAGE>F-8


Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------


Note 2 - Significant Accounting Policies (continued)

j)   Income Taxes

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

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

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

k)   Foreign Currency Translation

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

l)   Impairment of Long-Lived Assets

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

m)   Comparative Figures

Certain  figures  presented for comparative  purposes have been  reclassified to
conform  with   current   period   financial   statement   presentation.   These
reclassifications had no effect on net loss or stockholders' equity.



<PAGE>F-9

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


Note 3 - Acquisition

On January 31,  2000,  the Company  acquired  all of the issued and  outstanding
shares of Forest.  The acquisition was a reverse  takeover with Forest being the
deemed accounting acquiror for financial statement purposes.

Under the terms of agreement,  the Company issued  10,000,000  common shares for
all of the 100 common issued and outstanding shares of Forest. As at January 31,
2000, there were 4,927,040 common shares of the Company (after reflecting a 21:1
stock  consolidation  which  occurred on August 20, 1999 and a subsequent  stock
split of 1:40 which occurred on August 21, 1999.  These stock  adjustments  have
been retroactively adjusted and presented as of May 31, 1999 in the Consolidated
Statements of  Stockholders'  Equity).  The  acquisition  was accounted for as a
recapitalization  of Forest. The transaction has been accounted for as a capital
transaction  effectively  representing  an issue of shares by Forest for the net
assets of the  Company.  On  January  31,  2000 the net  assets  of the  Company
consisted of:

         Cash and Equivalents                                    $ 750,000
         Accounts Payable                                          (19,703)
                                                                 ----------
                                                                 $ 730,297
                                                                 ==========


Total costs  related to this  recapitalization  transaction  were  estimated  at
$15,863.  They  include  cash  expense in the  estimated  amount of $15,000  and
non-cash  expense in the amount of $863.  The  non-cash  expense  relates to the
issuance  of 37,500  shares of common  stock of the  Company.  The fair value of
these  services was estimated  based upon the estimated fair value of the shares
at $0.023 per share.  Total  transaction costs have been recorded as a charge to
the stockholders' equity of the Company.

Cash and cash  equivalents  held by the Company in the amount of  $750,000  were
obtained through  subscriptions  for a private placement of 750 shares of Series
"A" convertible  preferred stock at a price of $1,000 per share.  The closing of
this private  placement and the release of funds held in escrow were  contingent
on this acquisition  being  completed.  The shares of Series "A" preferred stock
are  convertible,  at the option of the holder,  and at any time after March 16,
2000,  into common stock at 75% of the last ten day average closing bid price of
the Company subject to a maximum conversion rate of 5,000 shares of common stock
for one share of preferred stock and a minimum  conversion rate of 250 shares of
common stock for one share of preferred  stock.  In addition,  if a registration
statement  in respect of the common  stock  underlying  the  preferred  stock is
effective,  all Series "A" preferred stock will be deemed to convert into common
stock on or before January 31, 2001, the first anniversary date.

The following table reflects pro forma information which combines the operations
of forestindustry.com, Inc. for the ten months ended May 31, 2000 and year ended
July 31, 1999 as if the acquisition of forestindustry.com,  Inc. had taken place
at the beginning of the period.  There were no pro forma adjustments required in
combining  this  information of these two entities.  This pro forma  information
does not reflect any non-recurring  charges or credits directly  attributable to
the transaction. This pro forma information does not purport to be indicative of
the revenues and net loss that could have resulted had the  acquisition  been in
effect for the period presented and is not intended to be a projection of future
results or trends.

<PAGE>F-10

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------

Note 3 - Acquisition (continued)

                                       Ten Months Ended        Year Ended
                                         May 31, 2000         July 31, 1999
                                               $                    $
                                       -----------------      --------------

Revenues                                    335,287              300,362

Expenses

    Consulting Fees                          45,649                  487
    Depreciation                             27,826                7,763
    General and Administrative              539,008              275,061
    Professional Fees                       109,822               27,344
                                       -----------------      --------------

Net (Loss) for the Period                 (387,018)              (10,293)
                                       =================      ==============
Net (Loss) Per Share                        (0.037)               (0.001)
                                       =================      ==============


NOTE 4 - PROPERTY AND EQUIPMENT

<TABLE>
<S>                                       <C>                  <C>                 <C>           <C>


                                                          Accumulated               Net Book Value
                                          Cost           Depreciation         May 31, 2000   July 31, 1999
                                           $                  $                    $              $
                                       -----------      --------------       -------------- --------------
Computer Equipment                       110,076              25,176               84,900       26,542
Furniture and Fixtures                    33,927               3,884               30,043        3,477
Software                                  15,549              10,445                5,104        2,462
Leasehold Improvements                     4,161                 416                3,745            -
                                      -----------      --------------       -------------- --------------
                                         163,713              39,921              123,792       32,481
                                      ===========      ==============       ============== ==============

</TABLE>

Note 5 - Operating Line of Credit

The Company has a NIL (1999 -$10,347 (CDN $15,000))  revolving operating line of
credit  with the Royal Bank of Canada.  The line of credit was paid off in March
2000  and  the  general  security  agreement  as  well  as the  guarantees  were
cancelled.



<PAGE>F-11

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------


NOTE 6 - DUE TO STOCKHOLDERS

Amounts  due to  stockholders  were  unsecured  and  had no  specific  terms  of
repayment except for $49,840 which bore interest at prime plus 5% per annum. The
amounts due to stockholders were repaid in March 2000.

                                      May 31, 2000  July 31, 1999
                                            $               $

Due to Stockholders                         -          68,013
                                     -------------- ------------


NOTE 7 - DEMAND BANK LOAN


Demand Bank Loan, Royal Bank

The demand loan is repayable  in
monthly  instalments  of $1,992
including interest  at prime plus
2% per annum and is  secured by a
general  security agreement  over
all the assets of the Company,
guarantees by the corporate
stockholder and personal
guarantees of the principals of
the Company.  The loan was repaid
in March 2000.                              -          55,695
                                      -------------- ------------

Note 8 - Stockholders' Equity

a)   Preferred Stock

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

The Series "A" preferred stock is convertible,  at the option of the holder, and
at any time after March 16,  2000,  into common stock at 75% of the last ten day
average closing bid price of the Company subject to a maximum conversion rate of
5,000  shares of common  stock  for one share of  preferred  stock and a minimum
conversion rate of 250 shares of common stock for one share of preferred  stock.
In  addition,  if a  registration  statement  in  respect  of the  common  stock
underlying the preferred stock is effective, all Series "A" preferred stock will
be deemed to convert into common stock on or before  January 31, 2001, the first
anniversary date.

On May 10, 2000,  the Company  issued  249,221 shares of its common stock on the
conversion of 375 Series "A" convertible preferred stocks.

<PAGE>F-12

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


Note 8 - Stockholders' Equity (continued)

b)   Stock Options

In February  2000,  the Company  adopted a fixed stock option plan that provides
for the  issuance of  incentive  and  non-qualified  stock  options to officers,
directors,  employees and  non-employees  to acquire up to 250,000 shares of the
Company's  common  stock.  The plan was  amended  in June 2000 to  increase  the
allowable  number of stock  options  to be  issued  under  this plan to  500,000
shares.  The Board of  Directors  determines  the terms of the options  granted,
including  the number of options  granted,  the  exercise  price and the vesting
schedule.  The exercise price for qualified incentive stock options is not to be
less than the fair market  value of the  underlying  stock at the date of grant,
and to have terms no longer than ten years from the date of grant.  There was no
stock option plan prior to February 2000.

Issued to Employees

On February 29, 2000, the Company  granted options to purchase a total of 29,000
shares of the Company's  common stock at a price of $4.00 per share to employees
of the  Company.  The  options  vest on or after  February  29,  2001 and expire
between February and April 2005.

As  discussed  in Note 2(i),  the Company  continues to account for its employee
stock-based  awards using the intrinsic  value method in accordance with APB No.
25, "Accounting for Stock Issued to Employees", and its related interpretations.
Accordingly,  no  compensation  expense  has been  recognized  in the  financial
statements  for employee  stock  arrangements,  because the fair value of common
stock at the measurement date is not greater than the option exercise price.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been  determined  as if the Company had  accounted for its
employee stock options under the fair value method of that  statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:  risk-free
interest rate of 6.0% dividend yield of 0%;  volatility  factors of the expected
market price of the Company's  stock of 78%; and an expected life of the options
of 2.5 years.  Accordingly,  compensation  expense  using the fair value  method
would have been $4,870, amortized over their respective vesting period.

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

<PAGE>F-13


Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------

Note 8 - Stockholders' Equity (continued)

b)   Stock Options (continued)

Issued to Employees (continued)

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

<TABLE>
<S>                                                              <C>                      <C>
                                                                      Ten Months Ended      Year Ended
                                                                        May 31, 2000      July 31, 1999
                                                                               $                  $
                                                                      -----------------  ---------------

Net (loss) as reported                                                     (379,131)            (541)
Compensation expense from stock options under SFAS No. 123                   (1,217)               -
                                                                      -----------------  ---------------

Pro forma net (loss)                                                       (380,348)            (541)
                                                                     =================  ===============

Pro forma (loss) per common share:
     Basic and Diluted                                                       (0.036)          (0.001)
                                                                     =================  ===============
</TABLE>

Issued to Non-Employees

On May 26,  2000,  the  Company  granted  options to  purchase a total of 40,000
shares  of the  Company's  common  stock  at a  price  of  $2.00  per  share  to
non-employees  of the  Company.  The options vest and expire on May 01, 2001 and
May 01, 2005, respectively.  Stock options issued to non-employees are accounted
for in accordance  with the  provisions of SFAS No. 123,  "Accounting  for Stock
Based  Compensation",  using the fair value  method.  Accordingly,  compensation
expense relating to these stock options in the amount of $17,253 was recorded as
deferred  stock  compensation  to be  amortized  over their  respective  vesting
period.

Additional Stock Option Plan Information

A summary status of the Company's fixed stock option plan and changes during the
period ended May 31, 2000 are as follows. There were no stock options as of July
31, 1999.

                                         Number of        Weighted Average
                                           Shares          Exercise Price
                                                                $
                                        ------------    -------------------
Outstanding, August 01, 1999                     -                  -
     Granted                                73,000               2.90
     Forfeited                              (4,000)              4.00
                                        ------------    -------------------

Outstanding, May 31, 2000                   69,000               2.84
                                        ------------    -------------------

Options exercisable at end of period           Nil                  -
                                        ------------    -------------------



<PAGE>F-14

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 8 - Stockholders' Equity (continued)

b)   Stock Options (continued)

Additional Stock Option Plan Information (continued)

The following  table  summarizes  information  about the  Company's  fixed stock
options outstanding at May 31, 2000:

                                      Options Outstanding
                   -------------------------------------------------------------

                        Number           Weighted Average       Weighted Average
Range of           Outstanding at       Remaining Contractual        Exercise
Exercise Prices      May 31, 2000           Life (in years)          Price
     $                                                                  $
----------------  ---------------       ---------------------   ----------------

4.00 - 4.00             29,000                   5                    4.00
2.00 - 2.00             40,000                   5                    2.00
                  ---------------       ---------------------   ----------------
                        69,000                   5                    2.84
                  ---------------       ---------------------   ----------------

The options outstanding at May 31, 2000 will expire between April and May 2005.

c)   Stock-Based Compensation

In January 2000,  the Company  issued 37,500 shares of common stock to a company
controlled by the Company's former  president in exchange for services  relating
to the acquisition of forestindustry.com,  Inc. The fair value of these services
was estimated  based upon the  estimated  fair value of the shares at $0.023 per
share or $863. The costs were deducted from the additional  paid-in capital from
the said acquisition.

In February 2000, the Company recorded non-cash  compensation  expense of $8,050
relating  to  the  issuance  of  350,000  shares  of  common  stock  to  certain
consultants to the Company. The fair value of the shares was estimated at $0.023
per share at the time of the transaction.

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

d)   Retirement of Common Stocks

By way of a stock  retirement  agreement  dated  May 11,  2000 and for a nominal
amount  of  $1.00,  a  former  principal  stockholder  of the  Company  returned
2,547,240  shares  of  common  stock  to  the  Company  for  cancellation.   The
stockholder  agreed that in order for the Company to attract  future  financing,
the Company should reduce its issued and outstanding share capital of its common
stock through the surrender and retirement of these shares.


<PAGE>F-15

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------

Note 8 - Stockholders' Equity (continued)

e)   Stock Splits

The Company  consolidated its share capital on June 16, 1999 by way of a reverse
stock split on the basis of one new common share for each two old common shares,
on  August  20,  1999 by way of a  reverse  stock  split on the basis of one new
common share for each  twenty-one old common  shares,  and on August 21, 1999 by
way of a stock split on the basis of forty new common  shares for one old common
share.  Issued and  outstanding  shares as of May 31, 1999 have been adjusted to
reflect these share splits.

Note 9 - INCOME TAXES

Deferred tax assets and liabilities

<TABLE>
<S>                                                             <C>                <C>

                                                                   May 31, 2000     July 31, 1999
                                                                         $                 $
                                                                   -------------    --------------
Deferred tax assets:
     Operating loss carryforward                                        210,000            56,000
                                                                   -------------    --------------

Total deferred tax assets before valuation allowance                    210,000            56,000
Valuation allowance                                                    (210,000)          (56,000)
                                                                  --------------    --------------
Net deferred tax assets                                                       -                 -
                                                                  ==============    ==============

</TABLE>


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

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

The Company has Canadian  operating loss  carryforwards  for Canadian income tax
purposes  at May 31,  2000  of  approximately  $490,000  (CDN  $739,000).  These
operating losses begin to expire in fiscal year 2004.

Note 10 - Commitments

a)   The Company has  entered  into an  agreement  to lease  office  premises in
     Nanaimo,  B.C.,  Canada to May 31,  2001.  The  monthly  lease  payment is,
     excluding operating costs, $1,789.

b)   The Company has  entered  into an  agreement  to lease  office  premises in
     Vancouver,  B.C.,  Canada to September 30, 2001.  The monthly lease payment
     is, excluding operating costs, $2,561.

c)   The Company has entered  into an  agreement to lease a vehicle to March 09,
     2003.  The monthly  lease  payment is $529 with an option to  purchase  the
     vehicle at the end of the lease for $14,717.


<PAGE>F-16

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 10 - Commitments (continued)

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

e)   The Company has entered into a consulting  contract  with an  individual to
     perform various investor relations and corporate  development functions for
     an initial  fee of $4,600,  which was  settled by the  issuance  of 200,000
     common  shares of the  Company at $0.023 per  share,  and a monthly  fee of
     $2,414.  The contract  term is from February 29, 2000 to February 28, 2001.
     The Company may terminate the agreement on fourteen days written notice.

f)   The Company has entered into an  employment  contract with the President of
     the Company for management and administrative services for an annual salary
     of $47,600.  The  employment  contract  term is from  February  01, 2000 to
     January 31, 2003. The Company may terminate the agreement only with cause.

g)   The  Company  has  entered  into an  employment  contract  with  the  Chief
     Information  Officer ("CIO") to oversee the Company's technical systems and
     applications  for a  signing  bonus of  $3,450,  which was  settled  by the
     issuance of 150,000  common shares of the Company at $0.023 per share,  and
     an annual salary of $51,000.  The employment contract term is from February
     29, 2000 to February 28, 2001.  Subsequent  to year-end,  on July 21, 2000,
     the CIO resigned.

h)   The Company has entered into a consulting  contract with a consulting  firm
     to provide strategic  management  services for a monthly fee of $3,450. The
     contract  term is from May 26, 2000 to November 26,  2000.  The Company may
     terminate  the  agreement on thirty days written  notice.  The Company also
     granted to the principals of the consulting firm stock options allowing the
     principals to acquire  40,000  common shares at an exercise  price of $2.00
     per share. The options vest on May 01, 2001 and expire on May 01, 2005 (see
     note 8(b)).

Minimum future lease payments under operating leases are as follows:

                                Year                               $

                                2001                             70,056
                                2002                             28,100
                                2003                             11,474

NOTE 11 - SUBSEQUENT EVENTS

a)   On June 07, 2000, the Company entered into an agreement for advertising and
     marketing  services  for a term of  three  months.  In  consideration,  the
     Company  issued  200,000  shares of its common  stock as  compensation  for
     services rendered.  The Company will record a non-cash compensation expense
     of  $212,500  based  upon the  estimated  fair  value of the  shares  which
     approximates the value of the services received.

b)   On June 12, 2000,  the Company  granted  54,000 stock  options to employees
     with an exercise  price of $2.00 per share.  The  options  vest on June 11,
     2001 and expire on June 11, 2005.

c)   On June 15,  2000,  the Company  issued  217,145 on the  conversion  of 175
     shares of its Series "A" convertible preferred stock.



<PAGE>F-17

Notes to the Consolidated Financial Statements
Ten Months Ended May 31, 2000 and Year Ended July 31, 1999
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


NOTE 11 - SUBSEQUENT EVENTS (continued)

d)   On July 12, 2000, the Company accepted the resignation of a director of the
     Company.

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

     The Series "B" preferred stock is convertible, at the option of the holder,
     and at any time after August 01, 2000, into common stock at 70% of the last
     five day  average  closing  bid price of the  Company  subject to a maximum
     conversion  rate of 5,000 shares of common stock for one share of preferred
     stock and a minimum  conversion  rate of 250 shares of common stock for one
     share of Series "B" preferred stock.

Note 12 - RELATED PARTY TRANSACTIONS

<TABLE>
<S>                                                                             <C>                        <C>

                                                                                   Ten Months Ended              Year Ended
                                                                                    May 31, 2000               July 31, 1999
                                                                                           $                          $

Wages  paid to the  President  of the  Company  for  management,
administration and supervision                                                           28,428                     31,761

Interest paid to stockholders for funds loaned to the Company                             3,490                     10,420

</TABLE>


Note 13 - Financial Instruments

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