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, 2002            Commission File Number 0-26673

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


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

     3260 Norwell Drive, Suite 205                            V9T 1X5
       Nanaimo, British Columbia                              -------
       -------------------------                             (Zip Code)
 (Address of Principal Executive Offices)

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

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:  $294,930

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 30, 2002, was $216,317.

The number of shares  outstanding of the issuer's  common stock as of August 30,
2002, was 1,621,058

Documents Incorporated By Reference:  None

Transitional Small Business Disclosure Format:        Yes               No X
                                                          --               --


<PAGE>



ITEM 1.  DESCRIPTION OF BUSINESS

General

     We  provide a full  range of  internet  services  for the  forest  and wood
products  industry.  Our website address is  "forestindustry.com."  Our internet
site  provides a  directory  of  companies  associated  with the forest and wood
products  industry.  Our website is divided  into three  categories:  Forest and
Logging,  Wood  Processing  and Logs,  Lumber and Wood  Products.  Companies may
advertise  their  services on our website and exchange  information  through our
online  discussion  forums.  Our website  includes The World Wood Exchange which
allows  manufacturers,  buyers  and  intermediaries  to list  all  types of wood
products for purchase and sale through the website. It also provides information
on industry  related trade shows,  conferences  and news items.  All updates and
changes made to the website are  completed by our technical  staff.  We generate
revenues by charging a monthly fee to customers  using our website  based on the
size of  advertisements  and charging for internet related services  provided to
forest and wood-related businesses.

     During the year  ended May 31,  2002,  approximately  40% of  revenues  are
generated from our website  advertisers and the other 60% through website design
services.  Prior to January 31, 2000,  we had no source of revenues.  On January
31, 2000, we acquired The Forest Industry  Online Inc. and our current  business
is now that which was being conducted by them.

     The internet related services which we provide include all services which a
business needs to promote itself and to advertise and/or sell its forest or wood
related  products  and  services  through the  internet,  including  the design,
development and hosting of websites for our customers.

     We are currently  experiencing a cash shortage.  Although the core business
of The Forest  Industry Online is earning  revenues,  at its current level it is
insufficient to operate and pay for expenses related to a public company. We are
seeking to raise capital through an offering of 3 million shares of common stock
at $0.10 per share.  Proceeds from the offering, if any, will be used to pay off
or settle  accounts  payables and other  liabilities.  No assurance can be given
that we will be able to raise  any  funds  from the  offering.  Due our  current
financial  condition,  we are  currently  operating  in a manner to sustain  our
operations.


     Our corporate offices and operations are located at Suite 205, 3260 Norwell
Drive, Nanaimo, British Columbia, Canada, V9T 1X5. Our telephone number is (250)
758-0665. We have one wholly-owned subsidiary, The Forest Industry Online, Inc.,
which maintains business offices at our principal business office in Nanaimo.

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

     On June 1, 2001, we effected a ten-for-one  reverse stock split.  Reference
to shares in this report have been adjusted to reflect this reverse split unless
otherwise noted.
<PAGE>

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  1,000,000
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  3,750  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 Ltd. 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."

     On July 6, 2001, the Company, Teaco Properties,  the Company's then largest
shareholder, Sean Curran and Joe Nemeth entered into a stock purchase agreement.
Under the terms of the stock purchase  agreement,  Teaco Properties sold 900,000
shares in the aggregate of the  Company's  common stock that it owned to Messrs.
Curran and Nemeth.  Marc White and Dave  McNaught are the  beneficial  owners of
Teaco Properties Ltd. Prior to the transaction, Teaco Properties owned 1,000,000
shares in the aggregate.  After the transaction,  Teaco Properties owned 100,000
shares;  Curran  owed  600,000  shares and Nemeth  owed  300,000  shares,  which
represented  approximately  37.0% and 18.5%, of the then outstanding  shares. In
connection  with the stock purchase  agreement,  Messrs.  Curran and Nemeth were
appointed to the Company's Board of Directors.  Mr. Perraton  continues to serve
as president and a director of the Company. Mr. Curran subsequently  transferred
his 600,000  shares to Cherry Point  Consulting,  a company  wholly owned by Mr.
Perraton.

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

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

     During  the  month of  August  2002,  Cherry  Point  Consulting,  a company
wholly-owned  by Mr. Joe  Perraton,  sold its  600,000  shares of the Company to
unaffiliated  investors at a nominal value as an inducement to such investors to
purchase  additional  shares in the  Company  pursuant  to its  offering.  It is
anticipated  that Mr.  Nemeth  will also sell his  shares at a nominal  value to
unaffiliated  investors as an  inducement  for such  investors to also  purchase
additional shares in the Company's offering.

     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.

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 subscribe to 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; trade magazines;  supplier listings and
provides access to secure  shopping  sites.  All updates and changes made to the
website are completed by our 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 $32 to $99.

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, hosting 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  secure  online  storefronts  and distributor catalogues for products and
        services offered by our members
     o  industrial equipment inventory applications for  distributors of  new or
        used industrial equipment parts
     o  dedicated email server and accounts for members
     o  internet video services
     o  link for online equipment financing
     o  collocation, disk storage and bandwidth
     o  industry specific template web sites

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

New Products

     Due to the Company's inability to raise additional capital as of August 31,
2002, all new product development is currently on hold. The plan of business for
the Company is to carry on with current business products only.

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.

     In August 2001, we  established a Marketing  and  Communications  Group who
were  responsible  for selling our  promotional and hosting service plans to new
customers.  In  addition,  we  created  an Agency  Program  wherein  independent
contractors  identified new customers and sold our customized  applications  and
services.  In order to generate new leads for both these groups,  we hired a new
employee in September 2001 as a Business  Development Manager. In November 2001,
the Company terminated both programs in order to reduce capital expenditures.
<PAGE>

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

     As of May  31,  2002,  the  Company  had 385  customers.  During  2002,  we
discontinued our associate program. We have no reliance on any specific customer
or  small  group  of  customers.  Approximately  67% of our  customers  are U.S.
companies and 33% are from Canada.

Competition

     There are  currently  very few web sites  devoted  to the  forest  industry
sector.  Our  competitors  include  "forestexpress"  and  "Woodweb,"  and  other
companies  such as Woodlist,  Inc. We also  compete  with  various  regional and
national commodity exchanges.

     forestexpress  and Woodweb provide  internet  websites which connect buyers
and sellers of wood and related  products  directly and facilitate  transactions
electronically.  Their  websites  include  news  and  information  for the  wood
products industry.

     Woodlist,  Inc.  provides an internet  website  which  connects  buyers and
sellers of wood products,  flooring,  cabinets,  and surplus building materials.
They also provide an online web catalog service.

     VerticalNet is an enterprise  level software  provider that helps business'
leverage the internet for business services.  VerticalNet also 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 web hosting 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  30,  2002,  we  have  three  full-time  employees  and  two
independent  contractors.  We do not plan on hiring any additional staff at this
time.  During fiscal year 2002, we hired four new employees for  administration,
marketing,   technical  and  customer  service   positions  as  well  as  eleven
independent  contractors  and five Agents.  In November  2001, we terminated the
services of eleven contractors,  five Agents and reduced our full time employees
from seven to three.

<PAGE>

 RISK FACTORS

     An investment in our securities  involves a high degree of risk. You should
read and consider carefully the following risk factors.

We expect to incur losses in the near future.

     We have  incurred  losses  since our merger in January  2000.  Our  current
revenues  are not  sufficient  to pay all of our  expenses.  Our net  losses are
expected to continue.  As a result of these losses and negative  cash flows from
operations,  our  ability to continue  operations  will depend on our ability to
generate  revenues for working capital,  the availability of outside capital and
our efforts at reducing expenses until we achieve break-even operations.

     Our audited  consolidated  financial  statements for the year ended May 31,
2002,  were prepared on a going  concern basis in accordance  with United States
generally   accepted   accounting   principles.   The  going  concern  basis  of
presentation  assumes  that we will  continue in operation  for the  foreseeable
future and will be able to realize our assets and discharge our  liabilities and
commitments  in the  normal  course  of  business.  Our  inability  to  generate
sufficient   revenue  raises   substantial  doubt  upon  the  validity  of  this
assumption.

The sale of our common stock may result in a change in control

     We are currently offering up to 3,000,000 shares of our common stock to pay
off our debts.  Assuming the sale of all 3,000,000  shares,  this will represent
approximately  65% of the outstanding  shares.  Because this potential  issuance
will represent more than our existing outstanding shares, if our common stock is
sold to an entity or group, completion of the offering may result in a change in
control of the Company. We believe that it will be easier to sell our shares and
raise  capital  from one  entity or small  group,  and we  intend to direct  our
efforts at a limited number of entities.  As a result of this possible change in
control,  the new majority owner, or owners,  may be able to effect  substantial
transactions without further shareholder approval.

We may become a company with no operating business

     It is our intent that the proceeds raised through the offering will be used
to pay off or settle existing accounts payables and other liabilities.  Although
at this time we intend to continue to offer our Internet services for the forest
and wood  products  industry,  we may find it  advantageous  to sell The  Forest
Industry Online in order to raise the necessary  capital to meet our liabilities
and other obligations.  We previously had discussions regarding the sale of that
business,  and we cannot assure you that we will not have similar discussions in
the future.  If we were to sell The Forest  Industry  Online,  we would become a
company without any operating business.

All of our assets are secured by a general security agreement

     During July 2001,  we entered  into a $70,471 loan  agreement  with Messrs.
Curran and  Nemeth,  two of our  directors  and other  individuals.  The loan is
secured by a general  security  agreement  over all of our assets.  The loan was
originally due on December 31, 2001. However, even though we are in default, the
creditors  have taken no action to collect the debt.  In the event the creditors
Nemeth bring  collection  efforts and we are unable to repay the loan, they have
the  right  to  attach  all of our  assets  which  would  adversely  affect  our
operations.
<PAGE>

Trading in our stock is restricted by the SEC's penny stock regulations, which
may limit a stockholder's ability to buy and sell our stock

     Trading  in  our  common   stock  is  subject  to  the  SEC's  penny  stock
regulations,  which may limit a stockholder's  ability to buy or sell our common
stock. The U.S. Securities and Exchange Commission has adopted regulations which
generally define "penny stock" to be any equity security that has a market price
(as  defined)  of less than  $5.00 per share or an  exercise  price of less than
$5.00 per share,  subject to certain  exceptions.  Our common stock is currently
covered  by the penny  stock  rules,  which  impose  additional  sales  practice
requirements  on  broker-dealers  who sell to  persons  other  than  established
customers and financially qualified investors.  For transactions covered by this
rule, the broker-dealers  must make a special  suitability  determination of the
purchaser and receive the purchaser's written agreement of the transaction prior
to the sale. Consequently,  these rules may affect the ability of broker-dealers
to trade our common  stock and affect the  ability of existing  stockholders  to
sell their shares in the secondary market.

ITEM 2. DESCRIPTION OF PROPERTY

     Our  corporate  offices  are  located  at 3260  Norwell  Drive,  Suite 205,
Nanaimo, British Columbia, Canada, V9T 1X5. The Company leases approximately 300
square feet of office space under a month to month lease.

     The Company's computer and  telecommunications  equipment is located partly
at its Nanaimo office and partly at a local  telecommunication  facility.  As of
August 30,  2002,  the Company is operating at 40% capacity and does not foresee
the need to upgrade until its customer base triples.

ITEM 3.  LEGAL PROCEEDINGS

None.

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

None.

                                     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 OTC
Bulletin  Board,  initially  under the symbol  "AUYE",  after February 25, 2000,
under the symbol  "FXCH" and after May 29,  2001,  under the  symbol  "FTIC".  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 on the OTC
Bulletin Board. The market quotations reflect interdealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions. The
below  prices,  prior to May 31, 2001,  have not been adjusted to give effect to
the one-for-ten share consolidation effective June 1, 2001.
                                                Common Stock
                Quarter Ended                   High      Low
                -------------                  ------    ------
                May 31, 2002                    $0.13     $0.13
<PAGE>

                February 28, 2002               $0.13     $0.13
                November 30, 2001               $0.15     $0.15
                August 31, 2001                 $0.29     $0.29
                May 31, 2001                    $0.04     $0.02
                February 28, 2001               $0.14     $0.09
                November 30, 2000               $1.06     $0.38
                August 31, 2000                 $1.69     $1.06
                May 31, 2000                    $1.25     $1.25

     Approximate  number of holders of common stock dividends.  As of August 30,
2002, there were 62 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.

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

General and Going Concern Issue

     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,  2002,  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.

     On May 29, 2001,  we held an annual  meeting of  stockholders  at which the
stockholders  approved an  amendment to the  Company's  Amended  Certificate  of
Incorporation  to effect a ten-for-one  share  consolidation  effective  June 1,
2001.

     During July 2001, the Company's then largest  shareholder sold their shares
to a new group of investors.  The new investors consisted of Messrs.  Curran and

<PAGE>

Nemeth who became  directors  and began to hire new  personnel  in an attempt to
increase  revenues.  During  the  latter  part of  calendar  year  2001,  it was
determined that we would be unable to profitably operate forestindustry.com as a
public company unless our liabilities were reduced.  The costs associated with a
public company  exceeded the revenues  derived from The Forest Industry  Online,
Inc. business.  Therefore,  our majority shareholders sought potential buyers to
pay off existing debt and maintain our operating  business.  During  January and
February  2002, the majority  shareholders  held a series of  conversations  and
entered into an agreement  whereby a third party would lend  $250,000 to Mr. Joe
Perraton,  who would then acquire 2,000,000 of our shares at $0.10 per share and
purchase The Forest Industry  Online,  Inc.  business for $50,000.  The $250,000
received by us would be used to pay off or settle existing accounts payables and
other liabilities.  Mr. Perraton would then pay off the loan in exchange for his
2,000,000 shares. After further discussion,  however, the parties were unable to
enter into a definitive agreement and the proposed transaction was terminated.

     We are currently  experiencing a cash shortage.  Although the core business
of The Forest  Industry  Online,  Inc.  continues to generate  revenues,  at its
current level it is  insufficient  to operate and pay for expenses  related to a
public  company.  As a result,  we are seeking to raise capital through a public
offering of up to 3 million  shares of common stock at $0.10 in order to pay off
or settle  accounts  payables and other  liabilities.  No assurance can be given
that we will be able to raise any monies.  In the event we are not successful in
settling  our  debts  we may  have to  file  for  bankruptcy.  In  addition,  in
connection  with the sale of  common  stock,  we may  sell The  Forest  Industry
Online,  Inc.  In the event we are able to raise  capital  to pay off and settle
existing accounts payables and other liabilities and/or are required to sell The
Forest Industry Online, Inc. we will file the appropriate reports with the SEC.

Plan of Operations

     Currently, the Company plans on maintaining its current operations only. It
does not plan on  expanding  its  business.  We will  need to raise  significant
outside capital to fund our operations over the next twelve months.

     In order to  reduce  expenses  during  the year  ending  May 31,  2002,  we
permanently  laid  off  9 of  our  employees  and  ended  services  with  eleven
independent contractors in November 2001. We plan on building our operations and
re-hiring our employees once revenues  exceed our operating  costs. As of August
30, 2002, we have three full time employees and two independent contractors.

Results of Operations

For the Fiscal Years Ended May 31, 2002 and May 31, 2001

     Revenues.  Revenues decreased by 37% to $294,930 for the year ended May 31,
2002,  as compared to revenues of $466,326  for the year ended May 31,  2001.  A
decrease  in sales  were  attributable  to a  general  economic  decline  in the
industry as well as fewer  subscribers  to the  Company's  web site services and
reduction in number of sales and customer service staff employed by the Company.
During fiscal 2002, we terminated  nine employees,  eleven  contractors and five
agents which  contributed to decrease in revenues and decline in customers.  The
customer base decreased to approximately 385 customers by May 31, 2002, compared
to 860  customers  at May 31,  2001.  This  reduction in customers is due to the
Company's   elimination  of  an  associate   member  plan  which  accounted  for
approximately  fifty percent of customers in the past.  Approximately 40% of the
revenue is attributable to hosting and advertising  services while the remaining
60% of revenues were derived from web design services and special applications.
<PAGE>

     Expenses.  Total  operating  expenses  for the  year  ended  May 31,  2002,
decreased by 56% to $676,457  compared to $1,208,247  for the year ended May 31,
2001. The decrease is due to the termination in number of employees, consultants
and   independent   contractors   during  2002  and  reduction  in  general  and
administrative  costs during this period.  Consulting fees were $239,254 for the
year ended May 31, 2002  compared to $156,315  for the year ended May 31,  2001.
Consulting  fees increased by 35% due to the addition of two senior  consultants
during  fiscal  2002 as  well as the  reliance  on four  additional  independent
contractors.  Professional  fees decreased by $23,238 during 2002, from $119,820
for the year ended May 31,  2001,  to $96,582  for the year ended May 31,  2002.
Professional fees included legal and accounting fees relating to the preparation
of our registration statements and financial statements.

     Net and Comprehensive  Loss. Based on the above, we sustained a net loss of
$392,124  and  comprehensive  loss of $397,602  for the year ended May 31, 2002,
compared to a net and  comprehensive  loss of $741,92 for the year ended May 31,
2001.  The decrease in losses for the period  ended May 31, 2002,  is due to the
significant decrease in operating, administrative and employee expenses.

     The weighted  average shares  outstanding  for the year ended May 31, 2002,
were  1,598,318,  an increase of 212,395  shares  (13%) in the same twelve month
period of 2001.

Liquidity and Capital Resources

     As of May 31,  2002,  total  assets were  $76,135,  a decrease of $122,841,
compared to $198,976 as at May 31,  2001.  This  decrease is due to a decline in
revenues,  decline  in capital  expenditures  and  increase  in  consulting  and
management fees.  Although the core business of The Forest Industry Online, Inc.
continues  to generate  revenues,  at its current  level it is  insufficient  to
purchase equipment or expand its operations. The Company is not implementing its
new product  development at this time but instead,  maintaining current business
functions.

     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 12 month period ended May 31,  2002,  the Company  obtained
$70,479 in funds through  promissory  notes.  The promissory notes bear interest
from ten to twenty percent per annum,  secured by a general  security  agreement
over all assets of the Company and its subsidiary,  and were all due on December
31, 2001.  Payable to  shareholder  of the Company is a  promissory  note in the
amount of  $22,184.  As of May 31,  2002,  the  promissory  notes  have not been
repaid.  The Company will require  additional  capital  investments  or borrowed
funds to meet cash flow  projections.  To date, the Company has reduced expenses
to cover monthly cash  requirements,  however,  the Company has not been able to
eliminate  accounts payable and accrued  liabilities.  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.  The  failure  to  secure
adequate outside funding would have an adverse affect on the Company's operating
results.

     To May 31, 2002, the Company has not been  profitable  and has  experienced
negative cash flows from operations; the Company incurred a loss of $392,124 for
the current  year and has a working  capital  deficiency  of $515,454 at May 31,
2002.  Operations  have been  financed  through the issuance of stocks and other
external financing. The Company's future operations are dependent upon continued
external funding and our ability to increase revenues and reduce expenses.

     We are currently  experiencing a cash shortage.  Although the core business
of The Forest  Industry  Online,  Inc.  continues to generate  revenues,  at its
current level it is  insufficient  to operate and pay for expenses  related to a
public  company.  As a result,  we are seeking to raise capital through a public
offering of up to 3 million  shares of common stock at $0.10 in order to pay off
or settle  accounts  payables and other  liabilities.  No assurance can be given

<PAGE>

that we will be able to raise any monies.  In the event we are not successful in
settling  our  debts  we may  have to  file  for  bankruptcy.  In  addition,  in
connection  with the sale of  common  stock,  we may  sell The  Forest  Industry
Online,  Inc.  In the event we are able to raise  capital  to pay off and settle
existing accounts payables and other liabilities and/or are required to sell The
Forest Industry Online, Inc., we will file the appropriate reports with the SEC.

     The  Company  did not invest in property  and  equipment  during the twelve
months  ended  May  31,  2002  due  to  limited  financial  resources.   Capital
expenditures,  including  those under capital  leases,  totaled $27,009 in 1999;
$119,377 in 2000; and $31,265 in 2001. The Company expects capital  expenditures
will increase and growth in its personnel and infrastructure will be required if
it is able to increase its customer base during 2003.

     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.

     In August 2001, the Company entered into a Debt  Settlement  Agreement with
one of our creditors. The agreement settles approximately $100,402 (Cdn$155,710)
in debt through the payment in cash of $47,685  (Cdn$75,000) and the issuance of
100,000 shares of our common stock in full settlement of the debt. As at May 31,
2002, the Company has not made the cash payment.

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.

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

None.
<PAGE>

                                    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:

Name             Position                           Age     Period

Joe Perraton     President, Secretary, Chief        36      January 31, 2000 -
                 Financial Officer and Director             Present

Joe Nemeth       Director                           35      July 6, 2001 -
                                                            Present

Sean Curran      Director                           41      July 6, 2001 -
                                                            Present

Business Experience

     The following is  information  on the business  experience of each officer,
director and director nominee.

     Joe  Perraton  has  served as  president,  chief  financial  officer  and a
director since January 31, 2000, and as Secretary  since May 11, 2000.  Prior to
the  acquisition  by our company of our subsidiary  The Forest  Industry  Online
Inc., 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.  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.

     Joe Nemeth served as Vice  President,  North American  Newsprint  Sales for
Fletcher  Challenge  Canada Ltd. from 1999 to 2000. From 1996 to 1998, Mr Nemeth
served as their Production Director in their Elk Falls Paper Division. Currently
Mr. Nemeth is a Director of the following companies: Green Belt Renewable Energy
Inc.,  Cultus  Lake  Capital  VCC  Board,  and  the  International  Bio-Recovery
Vancouver  Island Board.  Mr. Nemeth holds a Masters of Business  Administration
from the University of Western Ontario.

     Sean  Curran  served as the  North  American  Newsprint  Sales  Manager  of
Norske-Skog Canada Ltd. from 1999 to August 2001.  Norske-Skog is engaged in the
business of pulp and paper.  For seven years  prior,  Mr.  Curran  worked as the
General  Manager for Atlantic  Newsprint  Inc.  within their sales and marketing
department.  Mr. Curran has worked within the pulp and paper  industry in senior
sales management positions for over 15 years.

     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>

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of the Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of beneficial ownership
("Forms 3") and other equity securities of the Company ("Forms 4"). Officers,
directors, and greater than 10% shareholders of the company are required by SEC
regulations to furnish to the company copies of all Section 16(a) reports that
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the company, all Section 16(a) filing requirements
applicable to its officers, directors, and greater than 10% beneficial owners
were complied with for the year ended May 31, 2002.

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 officer or
director received annual  compensation in excess of $100,000 during the last two
complete fiscal years.

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

                           SUMMARY COMPENSATION TABLE

                             Annual Compensation                                 Long Term Compensation
                   -----------------------------------------          --------------------------------------------------
                                                                                  Awards            Payout
                                                                      --------------------------   ---------
                                                                       Restricted  Securities       LTIP     All Other
                                       Management    Other Annual        Stock     Underlying      Payout   Compensation
                   Year      Salary     Fees ($)    Compensation ($)     Award(s)  Options (#)       ($)         ($)
                ----------   -------   ----------   ----------------   ----------  -------------   ------   ------------
Joe Perraton    2002(1)(3)   $29,307      -0-            -0-               -0-          -0-          -0-        -0-
President       2001(2)      $46,500      -0-            -0-               -0-          -0-          -0-        -0-

-----------------
(1)  For the period June 1, 2001 to May 31, 2002.
(2)  For the period January 31, 2001 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's January 31, 2000 to May 31, 2000 - $28,428; June 1, 1999 to January
     30, 2000 - $13,406; fiscal year 1999 - $49,410; fiscal year 1998 - $25,325.
(3) Monies owed to the President and Directors of the Company for management fees and expense reimbursements total $90,782.
</TABLE>

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 $46,000 at current exchange rates).

     On January 31, 2001, the Company amended the employment  agreement  entered
into with Joe Perraton, our President,  and revised it to a consulting agreement
for the same  remuneration  and a term of two  years.  As of May 31,  2002,  the
consulting agreement has been terminated.

     In February 2001 the Company's wholly owned subsidiary, The Forest Industry
Online Inc.,  entered  into  consulting  agreements  with three  consultants  to

<PAGE>

provide  management,  administration,  sales and  production  services for total
monthly fees of $7,368.  The contract terms are to February 1, 2003. The Company
may terminate each agreement upon thirty days notice. As of May 31, 2002, all of
the consulting agreements have been terminated.

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 annual  report no director  received
any form of compensation from the Company during the year ended May 31, 2002.

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 25,000 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 50,000 shares of the
Company's common stock and expanded the definition of an eligible person for the
purpose of authorizing stock options.

     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.
<PAGE>

     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  7,050  shares of common  stock were issued to three
employees and two  non-employees.  These options have exercise  prices of $0.60,
$2.00 and $4.00 per share and expire in December, 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
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.
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT

     The following  table sets forth,  as of August 30, 2002,  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               Class
----------------                ------------             ----------

Teaco Properties Ltd.             100,000                    6.2%
5299 Budd Crescent
Nanaimo, British Columbia
V9T 5N9

Joe Nemeth                        300,000                   18.5%
9311 - 213th Street
Langley, British Columbia
V1M 1P6

All Officers and Directors        300,000                   18.5%
as a Group (3 persons)

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Except  as  otherwise  indicated  below,  we have  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 our knowledge,  any of our 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.

     Should a  transaction,  proposed  transaction,  or series  of  transactions
involve an officer  or  director  of  forestindustry  or a related  entity or an
affiliate of a related  entity,  or holders of stock  representing 5% or more of
the voting power (a "related entity") of the then outstanding  voting stock, the
transactions  must  be  approved  by  the  unanimous  consent  of our  board  of
directors.  In the event a member of the board of directors is a related  party,
that member will abstain from the vote.

     We have  issued  shares of our  common  stock or  approved  the sale of our
common stock to the  following  persons  during the past two years,  who, at the
time of issuance, were affiliated with us:

                      Date of    Number of
Name                  Issuance    Shares     Share Value   Consideration
----                  --------   ---------   -----------   -------------
Century Capital        01/00       3,750       $9,375      Consulting services
Management Ltd. (1)

Todd Hilditch          02/00      20,000      $50,000      Services Rendered

---------------------
(1)  The beneficial owner of Century Capital Management Ltd. is Andrew Hromyk, a
     former officer and director.
<PAGE>

     We engaged Century Capital Management Ltd. as an advisor in connection with
our acquisition of The Forest  Industry Online Inc. For its services,  we issued
Century  Capital  Management  Ltd.  3,750  shares of our common  stock.  Century
Capital  Management  Ltd.  is owned by  Andrew  Hromyk,  a  former  officer  and
director.  In  addition,  we granted  20,000  shares of common stock to Mr. Todd
Hilditch for  compensation as a consultant.  Neither Century Capital  Management
and Andrew Hromyk nor Mr. Hilditch are currently associated with the Company.

     In  July  2001,  the  Company,  Teaco  Properties,  the  Company's  largest
shareholder, Sean Curran and Joe Nemeth entered into a stock purchase agreement.
Under the terms of the stock purchase  agreement,  Teaco Properties sold 900,000
shares in the  aggregate  of the  Company's  common  stock that it owned to each
Messrs.  Curran and Nemeth for the  purchase  price of $10.  Marc White and Dave
McNaught  are the  beneficial  owners  of  Teaco  Properties  Ltd.  Prior to the
transaction,  Teaco  Properties  owned 1,000,000  shares in the aggregate.  As a
result of this  transaction  Teaco  Properties  currently  owns 100,000  (6.2%),
Curran owns 600,000 (37.0%), and Nemeth owns 300,000 (18.5%), of the outstanding
shares.  In connection  with the stock purchase  agreement,  Messrs.  Curran and
Nemeth  were  appointed  to  the  Company's  Board  of  Directors.   Mr.  Curran
subsequently  transferred his to Cherry Point Consulting, a company owned by Mr.
Perraton.

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

     As of May 31,  2002,  Messrs.  Curran and Nemeth are owed  $30,609 each for
management  services  provided to the Company.  Due to the  Company's  financial
condition,  the  Company has not paid these  amounts  due to Messrs.  Curran and
Nemeth.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

     (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

         (2)      Exhibits
<PAGE>

 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          Incorporated  by reference
                                                      to Exhibit No. 4.2 to  the
                                                      Company's Form 10KSB filed
                                                      on August 31, 2000

   10.1       Share Purchase Agreement with Teaco     Incorporated  by reference
              Properties, Ltd., Joe Perraton and      to ExhibitNo. 10.1 to  the
              Lara Perraton                           Company's Form SB-2  filed
                                                      on May 19, 2000

   10.2       Perraton Employment Agreement           Incorporated  by reference
                                                      to Exhibit No. 10.2 to the
                                                      Company's Form 10KSB filed
                                                      on August 31, 2000

   10.3       Consulting Agreement with Todd          Incorporated  by reference
              Hilditch                                to  Exhibit No. 4.2 to the
                                                      Company's Form 10KSB filed
                                                      on August 31, 2000

   10.4       Consulting Agreement with Summit        Incorporated  by reference
              Media Partners Inc.                     to Exhibit No. 4.2  to the
                                                      Company's Form 10KSB filed
                                                      on August 31, 2000

   10.5       Consulting Agreement with Joe           Previously    filed    and
              Perraton                                incorporated  by reference
                                                      to      the      Company's
                                                      registration  statement on
                                                      Form  SB-2 (file  no. 333-
                                                      56426) filed  on  March 2,
                                                      2001.

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

   99.1       CEO and CFO certification               Filed herewith

     (b)      Reports on Form 8-K for the  quarter ended May 31, 2002: None



<PAGE>


                                   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                   Director              September 12, 2002
--------------------
Joe Perraton


/s/  Joe Nemeth                     Director              September 12, 2002
--------------------
Joe Nemeth


/s/  Sean Curran                    Director              September 12, 2002
--------------------
Sean Curran

<PAGE>

Independent Auditors' Report
--------------------------------------------------------------------------------

To the Stockholders and Board of Directors of:
forestindustry.com, Inc.


We   have   audited   the   accompanying    consolidated   balance   sheets   of
forestindustry.com,  Inc.  and  Subsidiary  as of May 31,  2002 and 2001 and the
related   consolidated   statements  of  operations  and   comprehensive   loss,
stockholders'  equity  (deficit) and cash flows for the years ended May 31, 2002
and 2001.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of  forestindustry.com,  Inc. and
Subsidiary as of May 31, 2002 and 2001 and the results of their  operations  and
their cash flows for the years ended May 31, 2002 and 2001, in  conformity  with
accounting principles generally accepted in the United States.

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 and has a net capital deficiency that raises
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  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


Signed "Watson Dauphinee & Masuch"
Chartered Accountants


Vancouver, B.C., Canada
August 30, 2002


<PAGE>


                            forestindustry.com, Inc.
<TABLE>
<CAPTION>
<S>                                                                                        <C>               <C>

Consolidated Balance Sheets
  As at May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------------------------------------------

                                                                                          2002                2001

ASSETS                                                                                       $                   $

CURRENT ASSETS

Cash and Cash Equivalents                                                                  480              27,551
Accounts Receivable (Net of Allowance for Doubtful
    Accounts: 2002 - $16,360; 2001 - $16,250)                                           37,158              52,926
Work in Process                                                                          1,148               8,537
Prepaid Expenses                                                                             -                 141
                                                                                    ------------------------------
                                                                                        38,786              89,155

Property and Equipment (Note 4)                                                         37,349             109,821
                                                                                   -------------------------------

                                                                                        76,135             198,976
                                                                                   ===============================

LIABILITIES and STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

Accounts Payable and Accrued Liabilities                                               327,352             280,519
Unearned Revenues                                                                       55,259              53,424
Promissory Notes Payable (Note 5)                                                       70,479                   -
Due to Shareholders (Note 6)                                                           101,150                   -
                                                                                   -------------------------------

                                                                                       554,240             333,943
                                                                                   -------------------------------

Commitment (Note 9)
Subsequent Event (Note 10)

STOCKHOLDERS' EQUITY (DEFICIT)

Stock Capital (Note 7)
Common Stock, $0.0001 par value, Voting
    30,000,000 Authorized; Issued and Outstanding:
    2002 - 1,621,058; 2001 - 1,521,058                                                     162                 152
Preferred Stock, $0.0001 par value, Non Voting 5,000,000 Authorized; Issued and
    Outstanding:
    2002 - Nil; 2001 - Nil                                                                   -                   -
Additional Paid in Capital                                                           1,237,888           1,183,434
Cumulative Translation Adjustment                                                        4,536              10,014
(Deficit)                                                                          (1,720,691)         (1,328,567)
                                                                                   -------------------------------

                                                                                     (478,105)           (134,967)
                                                                                   -------------------------------

                                                                                        76,135             198,976
                                                                                   ===============================

</TABLE>

See accompanying notes to consolidated financial statements


<PAGE>



                            forestindustry.com, Inc.
<TABLE>
<CAPTION>
<S>                                                                                       <C>                 <C>

Consolidated Statements of Operations and Comprehensive Loss
  For the Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------

                                                                                          2002                2001

                                                                                             $                   $

REVENUES                                                                               294,930             466,326
                                                                                   -------------------------------

EXPENSES

Consulting and Management Fees                                                          239,254             156,315
Depreciation                                                                             55,446              45,236
General and Administrative                                                              285,175             886,876
Professional Fees                                                                        96,582             119,820
                                                                                   --------------------------------

                                                                                        676,457           1,208,247
                                                                                   --------------------------------

(LOSS) FOR THE YEAR BEFORE OTHER ITEM                                                 (381,527)           (741,921)

Write Down Property and Equipment                                                      (10,597)                   -
                                                                                   --------------------------------

NET (LOSS) FOR THE YEAR                                                               (392,124)           (741,921)

Foreign Currency Translation Adjustment                                                 (5,478)                   -
                                                                                   --------------------------------

COMPREHENSIVE (LOSS) FOR THE YEAR                                                     (397,602)           (741,921)
                                                                                   ================================

Weighted Average Number of Shares Outstanding, Basic and Diluted                      1,598,318           1,385,923
                                                                                   ================================

(Loss) per Common Share,
Basic and Diluted                                                                        (0.25)              (0.54)
                                                                                   ================================

</TABLE>

See accompanying notes to consolidated financial statements


<PAGE>



                            forestindustry.com, Inc.
<TABLE>
<CAPTION>
<S>                             <C>         <C>       <C>      <C>         <C>        <C>            <C>          <C>       <C>

Consolidated Statements of Stockholders' Equity (Deficit)
  For the Periods from July 31, 1998 to May 31, 2002 (Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------------------

                                   Common Stock      Preferred Stock     Additional  Deferred      Cumulative   Deficit    Total
                                ---------------------------------------
                                                                         Paid in     Stock         Translation
                                Number of   Amount   Number of   Amount  Capital     Compensation  Adjustment
                                 Shares       $       Shares       $        $           $              $           $         $
------------------------------------------------------------------------------------------------------------------------------------
Balance, July 31, 1998          1,000,000    100         -         -       (99)          -             991      (127,524) (126,532)

Translation adjustment,
year ended July 31, 1999            -         -          -         -         -           -             459          -          459

Net loss, year ended July 31,
1999                                -         -          -         -         -           -              -           (541)     (541)

Common stock issued to
purchase all issued and
outstanding shares of The
Forest Industry Online
Inc., January 31, 2000 (note 3)   492,698     49         -         -       (49)          -              -           -           -

Adjustment to comply with
recapitalization accounting
(note 3)                            -          -         -         -   (28,042)          -              -           -      (28,042)

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
services, January 31, 2000,
valued at $2.50 per share
(note 3)                            3,750      1         -         -     9,374           -              -           -        9,375

Common stock issued for
services in February 2000,
valued at $2.50 per share          35,000      4         -         -    87,496           -              -           -       87,500

Common stock issued on
conversion of 375 Series `A'
convertible preferred stock
(note 7(a))                        24,922      2       (375)       -        (3)          -              -           -           (1)

Retirement of common stock
returned to the Company at
no cost by a founding
shareholder (note 7(d))          (259,724)   (26)        -         -        26           -              -           -          -

Deferred compensation                -         -         -         -    17,253        (17,253)          -           -          -

Translation adjustment, ten
months ended May 31, 2000            -         -         -         -      -              -            8,564         -        8,564

Net loss, ten months ended
May 31, 2000                         -         -         -         -      -              -              -       (458,581) (458,581)
------------------------------------------------------------------------------------------------------------------------------------

Balance, May 31, 2000           1,296,646     130       375        1   835,955        (17,253)       10,014     (586,646)  242,201
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements


<PAGE>



                            forestindustry.com, Inc.
<TABLE>
<CAPTION>
<S>                             <C>         <C>       <C>      <C>         <C>        <C>            <C>          <C>       <C>

Consolidated Statements of Stockholders' Equity (Deficit)
For the Periods from July 31, 1998 to May 31, 2002 (Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------------------

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

Balance, May 31, 2000
(Continued)                     1,296,646     130       375        1     835,955       (17,253)      10,014    (586,646)   242,201

Common stock issued for
services in June 2000,
valued at $8.00 per share
(note 7(c))                        20,000       2        -         -     159,998          -            -           -       160,000

Common stock issued on
conversion of 375 Series `A'
convertible preferred stock
(note 7(a))                       109,412      10      (375)      (1)         (9)         -            -           -          -

Retirement of common stock
returned to the Company at
no cost by a consultant for
services (note 7(d))               (5,000)      -        -         -     (12,500)         -            -           -       (12,500)

Common stock issued on
conversion of 200 Series `B'
convertible preferred stocks
issued for cash, August 01,
2000 at $1,000 per share (note
7(a))                             100,000      10        -         -     199,990          -            -           -       200,000

Amortization of deferred
compensation                         -          -        -         -        -           17,253         -           -        17,253

Net loss, year ended May 31,
2001                                 -          -        -         -        -             -            -       (741,921)  (741,921)
------------------------------------------------------------------------------------------------------------------------------------

Balance, May 31, 2001           1,521,058      152       -         -   1,183,434          -          10,014  (1,328,567)  (134,967)

Common stock issued for debt
in August 2001, valued at
$0.54464 per share (note
7(c))                             100,000       10       -         -      54,454          -            -           -        54,464

Translation adjustment, year
ended May 31, 2002                   -          -        -         -        -             -          (5,478)       -        (5,478)

Net loss, year ended May 31,
2002                                 -          -        -         -        -             -            -       (392,124)  (392,124)
------------------------------------------------------------------------------------------------------------------------------------

Balance, May 31, 2002           1,621,058      162       -         -   1,237,888          -           4,536   1,720,691)  (478,105)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements

<PAGE>



                            forestindustry.com, Inc.
<TABLE>
<CAPTION>
<S>     <C>                                                                                  <C>             <C>
Consolidated Statements of Cash Flows
For the Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
---------------------------------------------------------------------------------------------------------------------

                                                                                            2002             2001

                                                                                               $                $

CASH WAS PROVIDED FROM, UTILIZED (FOR):
OPERATING ACTIVITIES

Net (Loss) for the Year                                                                 (392,124)        (741,921)
Non-Cash Items:
Depreciation                                                                               55,446           45,236
Write Down Property and Equipment                                                          10,597                -
Common Stocks Issued in Exchange for Services                                                   -          160,000
Amortization Deferred Compensation                                                              -           17,253
Retirement of Common Stocks Issued for Services                                                 -         (12,500)
Change in Non-Cash Working Capital Accounts:
    Accounts Receivable                                                                    15,768           31,225
    Work in Process                                                                         7,389              600
    Prepaid Expenses                                                                          141            1,407
    Accounts Payable and Accrued Liabilities                                              102,248          151,006
    Unearned Revenues                                                                       1,835            9,547
                                                                                  --------------------------------

Net Cash (Used in) Operating Activities                                                 (198,700)        (338,147)
                                                                                  --------------------------------

FINANCING ACTIVITIES

Proceeds from Promissory Notes Payable                                                     70,479                -
Advances from Shareholders                                                                101,150                -
Net Proceeds from Issuance of Preferred Stocks                                                  -          200,000
                                                                                  --------------------------------

Net Cash Provided by Financing Activities                                                 171,629          200,000
                                                                                  --------------------------------

INVESTING ACTIVITY

Acquisition of Property and Equipment (Net)                                                     -         (31,265)
                                                                                  --------------------------------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS                                              (27,071)        (169,412)

Cash and Cash Equivalents, Beginning of the Year                                           27,551          196,963
                                                                                  --------------------------------

CASH AND CASH EQUIVALENTS, END OF THE YEAR                                                    480           27,551
                                                                                  --------------------------------

Supplemental Disclosures
Interest Paid                                                                              12,214            7,676

Non-Cash Activity
Settlement of Accounts Payable for Common Stock                                            54,464                -
                                                                                  --------------------------------

See accompanying notes to consolidated financial statements

</TABLE>

<PAGE>



                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS

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

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

These  consolidated  financial  statements have been prepared on a going concern
basis in accordance with accounting  principles generally accepted in the United
States.  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,  2002,  the  Company  has not  been  profitable  and has  experienced
negative cash flows from operations; the Company incurred a loss of $392,124 for
the current  year and has a working  capital  deficiency  of $515,454 at May 31,
2002.  Operations  have been  financed  through the issuance of stocks and other
external financing. The Company's future operations are dependent upon continued
external funding and its ability to increase revenues and reduce expenses. There
are no assurances that the above conditions will occur.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)  Reverse Takeover and Basis of Presentation

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

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

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>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

NOTE 2 - SUMMARY OF 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 three to ten
years,  or their lease terms.  Prior to the fiscal year ended May 31, 2002,  the
Company amortized  property and equipment over five to ten years, or their lease
terms.

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

The Company  recognizes  compensation  expense in accordance  with provisions of
SFAS No. 123 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 7(c).

<PAGE>


                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 2 - SUMMARY OF 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.

The balance  sheets of the  Company's  Canadian  subsidiary  are  translated  at
year-end exchange rates for monetary items and historical  transaction  exchange
rates for non-monetary items, and the statements of operations are translated at
the weighted  average  exchange rate for the period.  Gains or losses  resulting
from translating foreign currency financial statements are reported as a foreign
currency translation adjustment in the consolidated statements of operations and
comprehensive loss and stockholders' equity.

l)  Impairment of Long-Lived Assets

The Company evaluates  long-lived assets for possible impairment whenever events
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable.  This evaluation is based on a number of factors,  including
expectations for operating  income and undiscounted  cash flows that will result
from the use of such assets. If the Company believes an impairment  exists,  the
carrying  amount of these assets is reduced to fair value as defined in SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets".

<PAGE>




                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 2 - SUMMARY OF SIGNIFICANT ACCounting Policies (continued)

m)  Recent Accounting Pronouncements

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations", which replaces Accounting Principles Board ("APB")
Opinion No. 16, SFAS No. 142,  "Goodwill  and Other  Intangible  Assets",  which
replaces  APB  Opinion  No.  17 and  amends  SFAS No.  121,  and  SFAS No.  143,
"Accounting for Asset Retirement Obligations".

Under the provisions of SFAS No. 141, all business combinations  initiated after
June 30, 2001 must be accounted for by the purchase  method of  accounting.  The
use of the pooling-of-interest method of accounting for business combinations is
prohibited  after that date.  The Company  does not expect that the  adoption of
SFAS No. 141 will have a significant immediate impact on the financial condition
or  results  of  operations  as the  Company  has no  current  planned  business
combinations.

Under  the  provisions  of SFAS No.  142,  amortization  of  goodwill  and other
intangible assets that have an indeterminate life is discontinued;  however,  an
impairment  analysis must be performed for these intangible assets annually with
any related losses  charged to earnings when incurred.  SFAS No. 142 is required
to be applied to fiscal years  beginning  after  December 15, 2001.  The Company
does not expect that the adoption of SFAS No. 142 will have a significant impact
of its  financial  condition  or  results of  operation  as the  Company  has no
goodwill or other intangible assets with indefinite lives at May 31, 2002.

SFAS  No.  143  establishes  the  accounting  and  reporting   requirements  for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. Specifically, it requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which  it is  incurred  if a  reasonable  estimate  of fair  value  can be made.
Additionally,  it requires certain disclosures  including  descriptions of asset
retirement obligations and reconciliations of changes in the components of those
obligations.  SFAS No. 143 is required to be applied to fiscal  years  beginning
after June 15,  2002.  The Company does not expect that the adoption of SFAS No.
143 will have a  significant  immediate  impact on the  financial  condition  or
results  of  operations  as the  Company  has no plan  to  retire  any  tangible
long-lived assets.

In August 2001,  FASB issued SFAS No. 144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived Assets".  This statement  addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets by superceding
SFAS  No.  121 and APB  Opinion  No.  30.  SFAS  No.  144  establishes  a single
accounting  model  for  measuring  the  impairment  of  long-lived  assets to be
disposed of by sale and expands the scope of asset  disposals  that are reported
as   discontinued   operations.   This  statement   also  resolves   significant
implementation  issues related to SFAS No. 121 regarding the measurement and the
reporting of impairment losses associated with long-lived  assets.  SFAS No. 144
is required to be applied to fiscal years beginning after December 15, 2001. The
Company does not expect that the adoption of this statement will have a material
impact on its financial position, results of operations or cash flows.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections".
Under  the  provisions  of SFAS  No.  145,  gains  and  losses  from  the  early
extinguishment of debt are no longer classified as an extraordinary item, net of
income taxes,  but are included in the  determination  of pretax  earnings.  The
effective  date for SFAS No. 145 is for  fiscal  years  beginning  after May 15,
2002, with early  application  encouraged.  Upon adoption,  all gains and losses
from the  extinguishment  of debt previously  reported as an extraordinary  item
shall be reclassified to pretax earnings.
<PAGE>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (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 the agreement, the Company issued 1,000,000 common shares for
all of the 100 common issued and outstanding shares of Forest. As at January 31,
2000,  there were 492,698 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, 2000 in the Consolidated
Statements of  Stockholders'  Equity).  The  acquisition  was accounted for as a
recapitalization  of Forest.  The  transaction  was  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                       (19,530)
                                              ----------
                                              $ 730,470
                                              ==========


Total costs related to this  recapitalization  transaction  were  $24,375.  They
included cash expense in the estimated amount of $15,000 and non-cash expense in
the amount of $9,375.  The  non-cash  expense  related to the  issuance of 3,750
shares of common  stock of the  Company.  The fair value of these  services  was
based upon the  estimated  fair  value of the  shares at $2.50 per share.  Total
transaction costs were recorded as a charge to the  stockholders'  equity of the
Company.

Cash and 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 were
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 500 shares of common stock for
one  share of  preferred  stock and a  minimum  conversion  rate of 25 shares of
common stock for one share of preferred stock.  24,922 and 109,412 shares of the
Company's  common  stock were  issued in,  respectively,  2000 and 2001,  on the
conversion in each year of 375 shares of Series "A" convertible preferred stock.

NOTE 4 - PROPERTY AND EQUIPMENT

                                      Accumulated          Net Book Value
                              Cost    Depreciation   May 31, 2002   May 31, 2001
                               $           $               $              $
                            ----------------------------------------------------

Computer Equipment          120,851      92,958          27,893         83,047
Furniture and Fixtures       29,863      20,407           9,456         18,408
Software                     20,242      20,242            -             2,353
Leasehold Improvements        6,705       6,705            -             6,013
                            ----------------------------------------------------
                            177,661     140,312          37,349        109,821
                            ====================================================


<PAGE>


                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

NOTE 5 - PROMISSORY NOTES PAYABLE

The promissory  notes payable were issued for funds loaned to the Company.  They
bear  interest  ranging from ten to twenty  percent per annum,  are secured by a
general  security  agreement over all assets of the Company and its  subsidiary,
and were all due on December 31, 2001.  (Payable to a shareholder of the Company
is a promissory note in the amount of $22,184.)

As at the independent  auditors' report date, the promissory notes have not been
repaid by the Company.

NOTE 6 - DUE TO SHAREHOLDERS

Amounts  due to  shareholders  are for  services  provided to the  Company,  are
payable on demand, and are unsecured.

Note 7 - Stockholders' Equity

a)  Preferred Stock

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

The Series "A"  preferred  stock was  convertible,  at the option of the holder,
into common  stock at 75% of the last ten day  average  closing bid price of the
Company  subject to a maximum  conversion rate of 500 shares of common stock for
one  share of  preferred  stock and a  minimum  conversion  rate of 25 shares of
common  stock for one share of  preferred  stock.  In  addition,  all series "A"
preferred stock was deemed to convert into common stock on or before January 31,
2002, the first anniversary date.

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

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

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

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

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

<PAGE>



                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 7 - 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 25,000 shares of the
Company's  common  stock.  The plan was  amended  in June 2000 to  increase  the
allowable number of stock options to be issued under this plan to 50,000 shares.
The Board of Directors  determines the terms of the options  granted,  including
the number of options granted, the exercise price and the vesting schedule.  The
exercise price for qualified  incentive stock options is not to be less than the
fair  market  value of the  underlying  stock at the date of grant,  and to have
terms no longer than ten years from the date of grant. There was no stock option
plan prior to February 2000.

Issued to Employees

On February 29, 2000, the Company  granted  options to purchase a total of 2,900
shares of the Company's  common stock at a price of $4.00 per share to employees
of the  Company.  The  options  vest on  February  29,  2001 and expire  between
February  and  April  2005.  During  years  2002 and 2001,  700 and 1,200  stock
options, respectively, were forfeited as employees left the Company.

On June 11,  2000,  the  Company  granted  options to  purchase a total of 5,400
shares of the Company's  common stock at a price of $2.00 per share to employees
of the  Company.  The options vest on June 11, 2001 and expire on June 11, 2005.
During  years 2002 and 2001,  650 and 4,200 stock  options,  respectively,  were
forfeited as employees left the Company.

On December 18, 2000, the Company  granted  options to purchase a total of 4,500
shares of the Company's  common stock at a price of $0.60 per share to employees
of the Company.  The options vest on January 31, 2001 and expire on December 15,
2005.  During years 2002 and 2001,  2,500 and 500 stock  options,  respectively,
were forfeited as employees left the Company.

As  discussed  in Note 2(i),  the Company  continues to account for its employee
stock-based  awards using the intrinsic  value method in accordance with APB No.
25, "Accounting for Stock Issued to 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 600%; and an expected life of the options
of 2.5 years.  Accordingly,  compensation  expense  using the fair value  method
would have been $2,070, amortized over their respective vesting periods.

<PAGE>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 7 - Stockholders' Equity (continued)

b)  Stock Options (continued)

Issued to Employees (continued)

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

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

                                          Year               Year
                                          Ended              Ended
                                      May 31, 2002       May 31, 2001
                                           $                  $

Net (loss) as reported                 (392,124)          (741,921)

Compensation expense from
  stock options under
  SFAS No. 123                             (486)              (915)
                                      ---------------------------------

Pro forma net (loss)                   (392,610)          (742,836)
                                      =================================

Pro forma (loss) per common share,
  Basic and Diluted                       (0.25)             (0.54)
                                      =================================

Issued to Non-Employees

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

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

<PAGE>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 7 - Stockholders' Equity (continued)

b)  Stock Options (continued)

Additional Stock Option Plan Information

A summary status of the Company's fixed stock option plan and changes during the
period ended May 31, 2002 are as follows:

                                           Number of       Weighted Average
                                            Shares          Exercise Price
                                                                   $
Outstanding, June 01, 2000                   6,900                   2.84
    Granted                                  9,900                   1.36
    Forfeited                               (5,900)                  2.29
                                           -------------------------------------

Outstanding, May 31, 2001                   10,900                   1.80
  Granted                                     -                       -
  Forfeited                                 (3,850)                  1.45
                                           -------------------------------------

Outstanding, May 31, 2002                    7,050                   1.99
                                           =====================================

Options exercisable at end of
May 31, 2002                                 7,050                   1.99
                                           =====================================

The following  table  summarizes  information  about the  Company's  fixed stock
options outstanding at May 31, 2002:

                                                    Options Outstanding
                                                    -------------------
                              Number        Weighted Average    Weighted Average
Range of                  Outstanding at       Remaining            Exercise
Exercise Prices            May 31, 2002     Contractual Life          Price
$                                              (in years)               $

4.00 - 4.00                   1,000                3                   4.00
2.00 - 2.00                   4,550                3                   2.00
0.60 - 0.60                   1,500                3                   0.60
                          ------------------------------------------------------
                              7,050                3                   1.99
                          ======================================================

The  options  outstanding  at May 31,  2002 will  expire  between  February  and
December 2005.

<PAGE>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 7 - Stockholders' Equity (continued)

c)  Stock-Based Compensation

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

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

In August  2001,  the Company  issued  100,000  shares of common stock at a fair
value of $54,464 as partial settlement of an account payable.

d)  Retirement of Common Stocks

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

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

e)  Stock Purchase Warrants

In July 2001, in order to attract new  investors,  the Company and the Company's
largest  shareholder,  Teaco  Properties  Ltd.  ("Teaco"),  entered into a stock
purchase  agreement  with Messrs.  Sean Curran and Joe Nemeth whereby Teaco sold
900,000  shares of the Company's  common stock which it owned to Messrs.  Curran
and Nemeth for a nominal  amount of $10. Prior to the  transaction,  Teaco owned
1,000,000 shares (65.7%) of the common stock of the Company.  In connection with
the stock purchase agreement, Messrs. Curran and Nemeth were appointed Directors
of the Company.

As part of the  agreement,  the  Company  granted to each of the two  beneficial
owners of Teaco,  110,000 stock  purchase  warrants.  Each warrant  entitles the
holder to purchase one share of common stock of the Company at an exercise price
based on the last  twenty-day  average  market price,  but in no case to be less
than $0.20 per share. The warrants expire on July 06, 2003.

f)  Stock and Stock Option Split

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

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

<PAGE>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 8 - INCOME TAXES

Deferred tax assets and liabilities

                                            May 31, 2002       May 31, 2001
                                                 $                  $

Deferred tax assets:
  Operating losses carryforward                635,489            475,000
  Book depreciation in excess of tax
   depreciation                                 28,486             19,000
                                            ------------------------------------

Total deferred tax assets before
  valuation allowance                          663,975            494,000
Valuation allowance                           (663,975)          (494,000)
                                            ------------------------------------

Net deferred tax assets                           -                  -
                                            ====================================

Management  believes  that it is more  likely  than not that it will not  create
sufficient  taxable income 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 losses  carryforward for Canadian income tax
purposes at May 31, 2002 of  approximately  $1,095,000 (CDN  $1,685,000).  These
operating losses begin to expire in fiscal year 2004.

Note 9 - Commitment

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

NOTE 10 - SUBSEQUENT EVENT

The Company is conducting an offering of 3 million shares of its common stock at
$.10 per share.  As at the independent  auditors'  report date, no agreement has
been finalized.

<PAGE>

                            forestindustry.com, Inc.

Notes to the Consolidated Financial Statements
Years Ended May 31, 2002 and 2001 (Expressed in U.S. Dollars)
--------------------------------------------------------------------------------

Note 11 - RELATED PARTY TRANSACTIONS

                                               Year                 Year
                                              Ended                Ended
                                           May 31, 2002         May 31, 2001
                                                 $                    $

Management fees charged by the
 President of the Company for
 management, administration and
 supervision services                         29,307               46,500

Management fees charged by the
 Directors of the Company for
 management, administration and
 supervision services                         61,219                 -

Interest accrued and payable to
 shareholders for funds loaned to
 the Company                                   1,594                 -

Monies owed to the President and
 Directors of the Company for
 management fees and expense
 reimbursements                               90,782                7,136

Note 12 - Financial Instruments

Financial  instruments  include  cash  and  equivalents,   accounts  receivable,
accounts payable and accrued  liabilities,  promissory notes payable and amounts
due to  shareholders.  The estimated  fair value of such  financial  instruments
approximates their carrying value.

Note 13 - GEOGRAPHIC SEGMENTS

Financial information regarding geographic segments is set out below:

                                               Year               Year
                                               Ended              Ended
                                            May 31, 2002       May 31, 2001
Revenues
  United States                                197,810            311,739
  Canada                                        97,120            154,587
                                            ------------------------------------

Total Revenues                                 294,930            466,326
                                            ====================================

Property and Equipment, Net Book Value
  United States                                   -                  -
  Canada                                        37,349            109,821
                                            ------------------------------------

Total Property and Equipment                    37,349            109,821
                                            ====================================


<PAGE>


                                                                    Exhibit 99.1

                                  CERTIFICATION


     I, Joe  Perraton,  Chief  Executive  Officer and Chief  Financial  Officer,
certify that:

     1.   I  have  reviewed this annual report on Form 10-KSB of forestindustry.
com, inc.;

     2.   Based on my knowledge, this annual report does not contain any  untrue
statement of a material fact or omit to state a material fact necessary to  make
the statements made, in light of the circumstances  under which  such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3.   Based  on  my knowledge, the financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

          Date:  September 16,2002

                                                     /S/ Joe Perraton,
                                                     Chief Executive Officer and
                                                     Chief Financial Officer