UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]      Quarterly  Report  Pursuant  to Section  13 or 15(d) of the  Securities
         Exchange Act of 1934

                  For the quarterly period ended JUNE 30, 2001

[ ]      Transition  Report  under  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934

             For the transition period from _________ to __________.

                          Commission File No. 333-3074

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

            DELAWARE                                          37-1356503
            --------                                          ----------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification Number)


1101 BRICKELL AVENUE, NORTH TOWER, SUITE 200,                   33131
 MIAMI, FLORIDA
------------------------------------------------               --------
  (Address of principal executive offices)                    (Zip Code)


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


(1)      Registrant has filed all reports  required to be filed by Section 13 or
         15(d) of the  Securities  Exchange Act of 1934 during the  preceding 12
         months (or for such shorter  period that the registrant was required to
         file such reports), and

(2)      has been subject to such filing  requirements  for the past 90 days
         [X] Yes [ ] No

As of August 10, 2001, there were 36,153,385 shares outstanding of the issuer's
common stock.



<PAGE>




PART I


FINANCIAL INFORMATION


ITEM 1.       FINANCIAL STATEMENTS


















                                       2
<PAGE>
















                          NEXLAND, INC. AND SUBSIDIARY

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2001




















                                       3
<PAGE>



FINANCIAL STATEMENTS

    Condensed Consolidated Balance Sheets at June 30, 2001 (Unaudited)
    and December 31, 2000...................................................  5

    Condensed Consolidated Statements of Operations for the three months
    ended June 30, 2001 and 2000 and the six months ended
    June 30, 2001 and 2000 (Unaudited)....................................... 6

    Condensed Consolidated Statements of Cash Flows for the six months
    ended June 30, 2001 and 2000 (Unaudited)................................. 7

    Notes to Condensed Consolidated Financial Statements....................8-9



















                                       4

<PAGE>
<TABLE>
NEXLAND, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

<CAPTION>
                                     ASSETS
                                     ------
                                                                          JUNE 30,              DECEMBER 31,
                                                                            2001                    2000*
                                                                        -----------             ------------
<S>                                                                           <C>                      <C>
          Current assets:
               Cash                                                           $  66,067                $  59,523
               Accounts receivables                                              90,776                  119,131
               Inventory                                                        139,072                   75,949
                                                                              -----------              -----------
                   Total current assets                                         295,915                  254,603
                                                                              -----------              -----------


          Property and equipment, net                                            38,265                   32,072
                                                                              -----------              -----------
          Other assets:
               Deposits and other assets                                         33,110                   30,000
                                                                              -----------              -----------
                   Total other assets                                            33,110                   30,000
                                                                              -----------              -----------
                   Total assets                                               $ 367,290                $ 316,675
                                                                              ===========              ===========

                         LIABILITIES AND STOCKHOLDERS' DEFICIT
                         -------------------------------------

          Current liabilities:
               Accounts payable                                                $ 237,821               $  56,876
               Accrued professional fees                                         209,686                 219,194
               Accrued expenses                                                  183,987                  73,424
               Due to related party supplier                                     577,178                 401,819
               Other liabilities                                                  97,356                  97,356
                                                                              -----------              -----------
                   Total current liabilities                                   1,306,028                 848,669
                                                                              -----------              -----------

          Long-term debt                                                         255,000                       -
                                                                              -----------              -----------
                   Total liabilities                                           1,561,028                 848,669
                                                                              -----------              -----------
          Stockholders' deficit:
               Preferred stock, $0.0001 par value; 10,000,000 shares
                 authorized; no shares outstanding                                     -                       -
               Common stock, $0.0001 par value; 50,000,000 shares
                 authorized; 36,153,385 and 36,027,368 shares
                 issued and outstanding, respectively                              3,617                   3,603
               Additional paid-in capital                                      3,467,557               3,001,613
               Unearned compensation                                            (208,338)               (333,336)
               Accumulated deficit                                            (4,456,574)             (3,203,874)
                                                                              -----------              -----------
                   Total stockholders' deficit                                (1,193,738)               (531,994)
                                                                              -----------              -----------
                   Total liabilities and stockholders' deficit                $  367,290               $ 316,675
                                                                              ===========              ===========

</TABLE>



*Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

            See notes to condensed consolidated financial statements.

                                        5





<PAGE>
<TABLE>
NEXLAND, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)





<CAPTION>
                                                            FOR THE THREE MONTHS ENDED                   FOR THE SIX MONTHS ENDED
                                                                    JUNE 30,                                    JUNE 30,
                                                            --------------------------                   ------------------------
                                                           2001                  2000                  2001                 2000
                                                           ----                  ----                  ----                 ----

<S>                                                     <C>                  <C>                   <C>                  <C>
  Sales                                                  $ 777,473             $ 241,270           $ 1,535,171            $ 440,880

  Cost of sales                                            382,851                91,463               824,484              177,195
                                                        -----------          ------------          ------------         ------------

  Gross profit                                             394,622               149,807               710,687              263,685
                                                        -----------          ------------          ------------         ------------
  Operating expenses:
       Selling, general and administrative               1,068,061             1,504,786             1,881,601            2,035,544
       Depreciation                                          3,035                 1,274                 5,651                2,114
                                                        -----------          ------------          ------------         ------------
           Total operating expenses                      1,071,096             1,506,060             1,887,252            2,037,658
                                                        -----------          ------------          ------------         ------------

  Loss from operations                                    (676,474)           (1,356,253)           (1,176,565)          (1,773,973)
                                                        -----------          ------------          ------------         ------------
  Other income (expense):
       Interest expense                                    (70,580)               (5,536)              (76,135)             (11,072)
                                                        -----------          ------------          ------------         ------------
           Total other income (expense)                    (70,580)               (5,536)              (76,135)             (11,072)
                                                        -----------          ------------          ------------         ------------

  Net loss                                              $ (747,054)          $(1,361,789)          $(1,252,700)         $(1,785,045)
                                                        ===========          ============          ============         ============






  Net loss per common share, basic and diluted             $ (0.03)              $ (0.04)              $ (0.03)             $ (0.05)
                                                        ===========          ============          ============         ============


  Weighted-average number of common shares              36,100,189            34,457,472            36,153,385            34,293,178
                                                        ===========          ============          ============         ============

</TABLE>

            See notes to condensed consolidated financial statements.



                                        6


<PAGE>
<TABLE>
NEXLAND, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<CAPTION>
                                                                                                FOR THE SIX MONTHS ENDED
                                                                                                       JUNE 30,
                                                                                          --------------------------------------

                                                                                              2001                      2000
                                                                                          -----------              ------------
<S>                                                                                      <C>                     <C>
         Cash flows from operating activities:
             Net loss                                                                    $ (1,252,700)           $ (1,785,045)
             Adjustments to reconcile net loss to net cash used in
               operating activities:
                 Compensation expenses in connection with:
                      Employment agreement                                                    124,998                  41,666
                      Severance                                                                     -               1,125,000
                      Stock options issued                                                    214,854                       -
                 Contributed research and development services                                127,636                       -
                 Common stock issued for services                                              88,591                 378,929
                 Interest expense on convertible debentures                                    76,819                       -
                 Provision for bad debts                                                       16,681                       -
                 Provision for inventory obsolecense                                           45,307                       -
                 Depreciation expense                                                           5,644                   2,114
                 (Increase) decrease in:
                      Accounts receivable                                                      11,674                 (46,858)
                      Inventory                                                              (108,430)               (116,891)
                      Deposits and other assets                                                (3,110)                (30,000)
                 (Decrease) increase in:
                      Accounts payable                                                        180,945                 322,045
                      Accrued professional fees                                                (9,508)                      -
                      Accrued expenses                                                        110,564                       -
                      Due to related party supplier                                           175,359                       -
                                                                                             ---------               ---------
         Net cash used in operating activities                                               (194,676)               (109,040)
                                                                                             ---------               ---------

         Cash flows from investing activities:
             Purchase of property and equipment                                               (11,837)                (17,046)
                                                                                             ---------               ---------
         Net cash used by investing activities                                                (11,837)                (17,046)
                                                                                             ---------               ---------


         Cash flows from financing activities:
             Proceeds from exercise of warrants and options                                        17                 160,000
             Proceeds from issuance of convertible debentures                                 255,000                       -
             Costs on issuance of convertible debentures                                      (41,960)                     -
                                                                                             ---------               ---------
         Net cash provided by financing activities                                           213,057                 160,000
                                                                                             ---------               ---------


         Net increase in cash                                                                   6,544                  33,914


         Cash, beginning of period                                                            59,523                   4,231
                                                                                             ---------               ---------

         Cash, end of period                                                                $ 66,067                $ 38,145
                                                                                            ----------              ----------
         Supplemental cash flow disclosure:
             Interest paid                                                                  $        -              $        -
                                                                                            ----------              ----------
             Taxes                                                                          $        -              $        -
                                                                                            ----------              ----------
</TABLE>

                                        7
<PAGE>


NOTE 1 -  FINANCIAL STATEMENTS

In the opinion of the Company, the accompanying unaudited condensed consolidated
financial  statements have been prepared in accordance  with generally  accepted
accounting principles for interim financial information and Regulation S-X.

In the  opinion  of  management,  all  adjustments  (consisting  only of  normal
recurring accruals), which are necessary for a fair presentation for the periods
presented  have been  included.  Certain  information  and footnote  disclosures
normally  included  in  the  consolidated   financial   statements  prepared  in
accordance with generally accepted accounting  principles have been omitted. The
condensed  consolidated  balance sheet  information  as of December 31, 2000 was
derived  from the  audited  consolidated  financial  statements  included in the
Company's Form 10-K.

It is suggested that these condensed  consolidated  financial statements be read
in conjunction  with the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.  The results of operations  for the six months ended June 30,
2001 are not  necessarily  indicative of the results to be expected for the full
year.

The consolidated financial statements of the Company for the year ended December
31, 2000 were prepared on a going-concern basis. For the year ended December 31,
2000,  the Company  incurred a net annual loss of $2,876,244 and had deficits of
$3,203,874.  These  losses  raise  substantial  doubt  about the  ability of the
Company to continue  as a going  concern.  Management  believes  that  resources
available from private and public  sources in 2001 will ensure the  continuation
of the operations of the Company.


NOTE 2 - EARNINGS PER SHARE

Net loss per share of common  stock is based on the weighted  average  number of
common shares outstanding  during each period.  Diluted loss per share of common
stock is computed on the basis of the weighted  average  number of common shares
and  dilutive  options and warrants  outstanding.  All  outstanding  options and
warrants have an anti-dilutive effect and are excluded from the calculation.


NOTE 3 - FACTORING ARRANGEMENTS

On January  31,  2001,  the Company  entered  into a  factoring  agreement.  The
agreement  expires on January 31, 2002 or until  terminated by either party with
proper notice given as defined.  The Company has assigned  substantially  all of
its  accounts  receivable  to the factor,  typically  on a recourse  basis.  The
Company may request advances up to 75% of the eligible  receivables.  The factor
charges the Company a commission  equal to 0.0667% per day for each  uncollected
receivable  from the invoice  date to the  payment  date of such  invoice,  plus
interest of approximately 10%.


NOTE 4 - CONVERTIBLE DEBENTURES

The Company sold $255,000 of 6% convertible debentures in the three months ended
June 30, 2001 through a Private Placement  Agreement under Regulation D. The net
proceeds  after  costs  incurred  was  $213,040.  The  intrinsic  value  of  the
beneficial  conversion  feature was recorded as a non-cash  charge of $76,819 to
interest expense and a corresponding credit to the additional paid in capital of
the Company.


                                       8

<PAGE>


NOTE 5 - LINE OF CREDIT AGREEMENT

The  Company  entered  into a line of credit  agreement  where an  institutional
investor agreed to purchase $5 million of convertible  debentures,  if requested
by the  Company.  At June 30,  2001,  the Company  had made no  requests  and no
debentures had been issued.


NOTE 6 - STOCKHOLDERS' EQUITY

During the six months ended June 30, 2001 the Company  issued  126,000 shares of
its common stock pursuant to a consulting services agreement relating to capital
investment.  The Company recorded a non-cash charge to consulting fees, based on
the then market value of the common stock, of $88,591.


NOTE 7 - STOCK OPTIONS

During the six months  ended  June 30,  2001,  the  Company  granted  options to
purchase  450,000 shares of the Company's  common stock to certain  employees of
the Company. The Company also granted 666,179 options during the six-month ended
June 30, 2001 to certain consultants. The weighted average fair value of options
granted  during the six months ended June 30, 2001,  is estimated on the date of
the grant,  using an  option-pricing  model for public  companies.  The weighted
average  grant-date  fair value was $0.35 for options whose  exercise  price was
equal to the market price on the date of the grant.  All options granted have an
exercise price equal to the market price on the date of grant.

The  Company  has  elected to account  for the stock  options  under  Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related   interpretations.   Accordingly,   no  compensation  expense  has  been
recognized on the employee stock options. The Company accounts for stock options
granted to consultants under Financial  Accounting Standards Board Statement No.
123,  "Accounting  For  Stock-Based  Compensation,"  and has recorded a non-cash
charge of $214,854 to professional fees.

The fair value of each option is  estimated  on the date of grant using the fair
value-pricing model with the assumption:

                 Risk-free interest rate                6.0%
                 Expected life (years)                  various
                 Expected volatility                    various
                 Expected dividends                     None

Had the  compensation  expense for the employee  stock  options been  determined
based on the fair value of the  options at the grant  date  consistent  with the
methodology   prescribed  under  Statement  of  Financial   Standards  No.  123,
"Accounting  for Stock Based  Compensation",  the Company's net loss for the six
months ended June 30, 2001, would have been increased by $186,000.

The  Company's  net loss and loss per share  would have been  reduced to the pro
forma amounts indicated below:


                                                                  June 30, 2001
                                                            --------------------
      Net loss
          As reported                                                (1,252,700)
          Pro forma                                                  (1,438,700)

                                        9

<PAGE>


ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS


INTRODUCTORY STATEMENTS


         FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

         This filing contains forward-looking  statements,  including statements
regarding,  among other things, (a) the growth strategies of Nexland,  Inc. (the
"Company"),  (b) anticipated trends in the Company's industry, (c) the Company's
future  financing  plans and (d) the Company's  ability to obtain  financing and
continue  operations.   In  addition,  when  used  in  this  filing,  the  words
"believes,"  "anticipates,"  "intends," "in anticipation  of," and similar words
are   intended   to   identify   certain   forward-looking   statements.   These
forward-looking  statements are based largely on the Company's  expectations and
are subject to a number of risks and uncertainties, many of which are beyond the
Company's   control.   Actual  results  could  differ   materially   from  these
forward-looking  statements  as a result of changes in trends in the economy and
the Company's  industry,  reductions in the  availability of financing and other
factors.  In light of these risks and  uncertainties,  there can be no assurance
that the forward-looking statements contained in this filing will in fact occur.
The Company does not undertake any obligation to publicly release the results of
any revisions to these  forward-looking  statements  that may be made to reflect
any future events or circumstances.


GOING CONCERN

         Our  Company's   auditors  stated  that  the   consolidated   financial
statements of our Company for the years ended December 31, 2000 and December 31,
1999 were prepared on a  going-concern  basis.  For the years ended December 31,
2000  and  1999,  respectively,  our  Company  incurred  a net  annual  loss  of
$2,876,244  and  $131,343,   respectively,  and  our  Company  had  deficits  of
$3,203,874  and $327,630,  respectively,  in the  corresponding  periods.  These
losses raise substantial doubt about the ability of our Company to continue as a
going concern. Management believes that resources will be available from private
and public  sources in 2001 to continue the marketing of our Company's  Internet
sharing  devices.  The  financial  statements  do not  include  any  adjustments
relating to the  recoverability  and  classification  of recorded assets, or the
amounts and  classification  of liabilities that might be necessary in the event
our Company  cannot  continue in existence.  Management  has  established  plans
intended to increase the sales of our Company's products.  Management intends to
seek new capital from new equity securities offerings to provide funds needed to
increase  liquidity,  fund growth and implement its business plan;  however,  no
assurance  can be given that our  Company  will be able to raise any  additional
capital.


SIGNIFICANT PLANT OR EQUIPMENT PURCHASES

         We do not  currently  anticipate  any  significant  plant or  equipment
purchases during the next twelve months.


CHANGES IN THE NUMBER OF EMPLOYEES

         We  currently  have  twelve  (12)  employees  in Miami  and nine (9) in
Canada. If our Company is successful in increasing its sales level or in raising
significant new capital,  we anticipate hiring twelve (12) additional  personnel
during the remainder of 2001. We believe that these  personnel  will be adequate
to accomplish the tasks set forth in our plan.


MANAGEMENT'S DISCUSSION AND ANALYSIS


         RESULTS OF OPERATIONS


                FOR THE THREE-MONTH AND SIX-MONTHS PERIODS ENDED JUNE 30, 2001
                AND 2000

         (1)  REVENUES.  For the three and six month  ended June 30,  2001,  our
Company had $777,473 and $1,535,171 in revenue  consisting of sales of 6,398 and
10,927  units of Internet  access  "hardware  routers" for small office and home
users.  During the three and six months  ended June 30,  2000,  our  Company had
sales of $241,270  and $440,880  from the sale of 1,092 and 1,855 units.  During
the three and six months ended June 30, 2001, our average selling price per unit
was $122 and $141.  The increase on the average  selling  price is due to higher
selling prices on the some of our new Internet access hardware routers.

         (2) COST OF SALES.  Cost of sales for the  three and six  months  ended
June 30, 2001 was $382,851 and $824,484, as compared to $91,463 and $177,195 for
the same periods in 2000. Cost of sales consisted  substantially of the purchase
price and  in-bound  freight of  pre-assembled  finished  goods  inventory  from

                                       10

<PAGE>


subcontractors in Taiwan,  Republic of China. In June 2001, the Company recorded
a $45,307  non-cash  charge to reserve for  inventory  obsolescence.  During the
three and six months ended June 30,  2001,  our average  purchase  cost per unit
decreased by $24 and $20 per unit as compared to the same periods in 2000.

         (3) GROSS  PROFIT.  The gross profit of our products was  approximately
51% and 46% for the three and six months ended June 30, 2001, as compared to 62%
and 60% for the same  periods  in 2000.  The  decrease  in the  gross  profit is
attributable to lower sales prices given to large volume customers.  Our Company
expects  pricing  pressures  from our  competition,  but we believe that we will
continue to lower our cost  procurement  from  subcontractors  by obtaining  the
benefits of lower product costs through  volume  purchases.  We expect the gross
margin to be smaller in the near future.

         (4) SELLING,  GENERAL AND ADMINISTRATIVE  EXPENSES.  THREE MONTHS ENDED
JUNE 30, 2001 and 2000. Selling,  general and administrative  expenses increased
to $1,068,061 for the three months ended June 30, 2001 as compared to $1,504,786
for the three months ended June 30, 2000.  The decrease of $436,725 is primarily
the result of 500,000 shares of common stock valued at $1,125,000, issued to our
former  Chief  Executive  Officer in  consideration  of the  termination  of his
employment  agreement  on June 30,  2000 and a  consulting  expense of  $46,000.
During this period,  our payroll costs increased by $188,000,  professional fees
increased by $100,500,  and commission  fees  increased to $77,000.  During this
period, we had three transactions that resulted in non-cash  expenditures by our
Company.  A company  controlled  by one of our principal  shareholders  incurred
research and development costs on our behalf for the further  development of our
Internet access hardware routers.  In this connection,  we recorded as a capital
contribution  $127,736,  which  represents  the actual  costs  incurred  by this
company on our behalf,  substantially  consisting  of  technician  salaries  for
subcontractors  located in Taiwan. We have no formal agreement with this company
and we are in the  preliminary  phase  of  evaluating  the  acquisition  of this
company  during the next 12 months.  During the  comparable  period in 2000, our
Company did not incur any research  and  development  costs,  since we purchased
ready-to-sell  finished goods  inventory.  In addition,  our Company recorded an
increase  in the charge of $20,500 in  connection  with the  issuance  of common
stock to our Chief  Financial  Officer to amortize his unearned  compensation in
accordance with his employment  agreement.  Lastly, we issued 666,179 options to
consultants, recording a charge of $214,854. Our Company expects to increase its
selling, general and administrative in the future in proportion to our Company's
anticipated growth in sales.

         SIX  MONTHS  ENDED  JUNE  30,  2001  AND  2000.  Selling,  general  and
administrative  expenses  decreased to $1,881,601  for the six months ended June
30, 2001 as compared to $2,035,544  for the six months ended June 30, 2000.  The
decrease of $153,943 is primarily  the result of 500,000  shares of common stock
valued  at  $1,125,000,   issued  to  our  former  Chief  Executive  Officer  in
consideration of the termination of his employment agreement on June 30, 2000, a
consulting  expense of $139,000 and a penalty of $240,000 for the late filing of
our S-1  Registration  Statement.  Our  payroll  costs  increased  by  $364,000,
professional fees increased by $209,000,  commission fees increased to $115,000,
and rent and other office expenses decreased by $27,000.  During this period, we
had three transactions that resulted in non-cash  expenditures by our Company. A
company  controlled by one of our principal  shareholders  incurred research and
development  costs on our behalf for the  further  development  of our  Internet
access hardware routers. We recorded as a capital contribution  $127,636,  which
represents   the  actual   costs   incurred  by  this  company  on  our  behalf,
substantially  consisting of technician  salaries for subcontractors  located in
Taiwan.  We  have  no  formal  agreement  with  this  company  and we are in the
preliminary  phase of evaluating the acquisition of this company during the next
12 months.  During the comparable  period in 2000, our Company did not incur any
research and development costs, since we purchased  ready-to-sell finished goods
inventory.  In addition, our Company recorded a charge of $125,000 in connection
with the issuance of common stock to our Chief Financial Officer to amortize his
unearned compensation in accordance with his employment  agreement.  Our Company
issued  126,000  shares of  our common  stock to a  consultant  for services and
recorded a noncash transaction of $88,591.  Lastly, we issued 666,179 options to
consultants, recording a charge of $214,854. Our Company expects to increase its
selling, general and administrative in the future in proportion to our Company's
anticipated growth in sales.


LIQUIDITY AND CAPITAL RESOURCES.

         Since inception,  our Company has relied  principally upon the proceeds
of private equity financings and loans to fund its working capital  requirements
and capital  expenditures.  Our Company's net cash used in operating  activities
for the six months ended June 30, 2001 was ($194,676),  compared to cash used in
operating  activities  of  ($109,040)  for the six months ended June 30, 2000, a
decrease of $85,636.  This decrease resulted from increases in our Company's net
loss,  which  included  non-cash  charges of (i)  $124,998 for  compensation  in
connection  with an  employment  agreement,  (ii) $214,854 for  compensation  to
consultants   with  options,   (iii)  $127,636  for  contributed   research  and
development  services (iv) $88,591 for expenses paid by issuance of common stock
to a  consultant  and  increases  in  receivables  and  inventories,  offset  by

                                       11
<PAGE>


increases in accounts payable,  accrued professional fees and expenses,  and due
to related party supplier.  These  increases  resulted from the expansion of our
Company's operations.

         Our  Company's net cash  provided by financing  activities  for the six
months period ended June 30, 2001 was $213,057  resulting from proceeds received
from the issuance of debentures.  The company sold $255,000  debentures with net
proceeds of $213,040 after legal and consulting  fees. Our Company's  short-term
and long-term liquidity requirements are expected to result from working capital
needs to purchase  inventory  and pay other  operating  expenses.  Although  our
Company cannot accurately  predict the precise timing of its future capital,  we
estimate that we will need to expend approximately  $2,000,000,  within the next
twelve months.  Our Company estimates that of that amount (i) $1,000,000 will be
for pre-assembled  finished goods inventory from  subcontractors,  (ii) $250,000
for sales and marketing  forces,  (iii) $250,000 for professional  fees and (iv)
$500,000  for  other  operating  expenses,  such as  payroll,  rent  and  office
expenses.

         Our Company has no assured  available  financial  resources to meet its
June 30, 2001 working capital deficit of $1,193,738 and future operating costs.

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

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

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

                  (b) On March 19,  2001,  we  entered  into an  Equity  Line of
Credit  Agreement.  Pursuant  to the  equity  line of credit,  an  institutional
investor  agreed,  if requested by the Company,  to purchase up to $5 million of
our debentures.  The debentures are convertible  into shares of our common stock
at a conversion price equal to a 20% discount of the market price of such stock,
as  defined  in the  agreement.  The  timing  of each  sale  and the  number  of
debentures  to be sold is at our  discretion,  subject  to  various  conditions,
including an effective  registration of the conversion shares. The dollar amount
that our Company can request under any individual sale is subject to the average
trading volume of our common stock for the preceding 40-day trading period.  The
maximum  term of the  equity  line of credit  is two years  from the date of the
agreement.

         The  agreement   contains  various   representations,   warranties  and
covenants by us,  including  limitations  on our ability to sell common stock or
common  stock  equivalents,  all  assets,  merge or  enter  into  certain  other
transactions.  There were no amounts outstanding on the equity line of credit at
June 30, 2001.

                  (c) On  March  19,  2001,  our  Company  also  entered  into a
Securities  Purchase Agreement with third-party  investors and a Placement Agent
Agreement  to provide up to  $250,000  less  certain  fees and  expenses  of the
placement agent by the issuance of convertible  debentures.  The debentures bear
interest  at 6% per year  and  convert  into  our  Company's  common  stock.  In
connection  with the issuance of such  debentures,  the  difference  between the
conversion  price and the fair value of the common stock to which the debentures
are  convertible,  multiplied  by the  number of shares  into  which the debt is
convertible at the issuance date of the debt are recorded as intrinsic  value of
the  beneficial  conversion  feature  and  charged  to  interest  expense in our
Company's  statement of operations.  We recorded  $76,819 of interest expense at
June 30, 2001.  Through June 30, 2001, our Company issued debentures of $255,000
from which our Company  received net  proceeds of  approximately  $213,040.  The
debenture  holders are entitled to convert all or part of the  principal  amount
plus accrued  interest into shares of our Company's common stock equal to either
(a) an amount  equal to 120% of the  closing bid price of our  Company's  common
stock as of the date of the debenture  issuance or (b) an amount equal to 80% of
the lowest six closing bid prices of our Company's  common stock for the 10 days
immediately  preceding the date of conversion of the  debenture.  Our Company is
obligated to register the resale of the  conversion  shares under the Securities
Act of 1933, as amended.  The debentures are  subordinate and junior in right of
payment to all accounts  payable of our Company  incurred in the ordinary course
of business and/or bank debt of our Company not to exceed $250,000.  Our Company
has the right to require the debenture  holders to convert any unpaid  principal
and accrued  interest on the  debentures  upon the five-year  anniversary of the
debenture issuance.

                                       12


<PAGE>

PART II


ITEM 1.       LEGAL PROCEEDINGS

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


ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

         Between April and June 2001, our Company issued  debentures of $255,000
from which our Company  received  net  proceeds of  aproximately  $195,540.  The
debenture  holders are entitled to convert all or part of the  principal  amount
plus accrued  interest into shares of our Company's common stock equal to either
(a) an amount  equal to 120% of the  closing bid price of our  Company's  common
stock as of the date of the debenture  issuance or (b) an amount equal to 80% of
the lowest  three  closing bid prices of our  Company's  common stock for the 10
days immediately preceding the date of conversion of the debenture.  Our Company
is  obligated  to  register  the  resale  of the  conversion  shares  under  the
Securities Act of 1933. The  debentures are  subordinate  and junior in right of
payment to all accounts  payable of our Company  incurred in the ordinary course
of business and/or bank debt of our Company not to exceed $250,000.  Our Company
has the right to require the debenture  holders to convert any unpaid  principal
and and accrued interest on the debentures upon the five-year anniversary of the
debenture issuance.


         With respect to the sale of unregistered  securities  referenced above,
all transactions were exempt from  registration  pursuant to Section 4(2) of the
Securities Act of 1933 (the "1933 ACT"), and Regulation D promulgated  under the
1933 Act. In each instance,  the purchaser  had access to sufficient information
regarding  our  Company  so as to make an  informed  investment  decision.  More
specifically each purchaser signed a written subscription agreement with respect
to  their  financial  status  and  investment   sophistication   in  which  they
represented and warranted, among other things, that they had:

        o  the ability to bear the economic risks of an investment in the shares
           of common stock of our Company;

        o  a certain net worth sufficient to meet the suitability standards of
           our Company; and

        o  been  provided  with  all  material  information   requested  by  the
           purchaser  or  his or  her  representatives,  and  been  provided  an
           opportunity to ask questions of and receive  answers from our Company
           concerning our Company and the terms of the offering.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

         Not applicable.


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

         None.




                                       13

<PAGE>

ITEM 5.       EXHIBITS

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

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

3.1                 Articles of Incorporation.

3.2                 Amended Articles of Incorporation.

3.3                 Bylaws of the Company.

4.1                 Specimen certificate for Common Stock.

4.2                 Specimen certificate for Class A Redeemable Warrants.

4.3                 Specimen certificate for Class B Redeemable Warrants.

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

99.1                Stock Purchase Agreement.

99.2                Employment Agreement with Fred Schmid.

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

3.3                 Amended Articles of Incorporation dated December 31, 1997.

3.4                 Amended Articles of Incorporation dated April 15, 1998.

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

3.3                 Amended Articles of Incorporation dated December 31, 1997.

3.4                 Amended Articles of Incorporation dated April 15, 1998.

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

2.                   Acquisition Agreement and Exhibits attached thereto.

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

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

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

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

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

10.4                Employment Contract of Enrique Dillon.

10.5                Employment Contract of Martin Dell'Oca.

                                       14
<PAGE>


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

4.4                 2000 Stock Incentive Plan

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

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

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

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

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

10.11               Form of Convertible Debenture

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

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

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

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

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


                                       15

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

DATED:   AUGUST 10, 2001                         NEXLAND, INC.

                                                 By:     /s/ Martin Dell'Oca
                                                       -------------------------
                                                         Martin Dell'Oca