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 September 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 incorporation               (I.R.S. Employer
                or organization)                          Identification Number)


1101 BRICKELL AVENUE, NORTH TOWER, SUITE 200, MIAMI, FLORIDA          33131
------------------------------------------------------------          -----
         (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 November 12,  2001,  there were  36,153,385  shares  outstanding  of
      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 NINE MONTH PERIOD
                            ENDED SEPTEMBER 30, 2001






                                       3
<PAGE>

                                TABLE OF CONTENTS


         Financial Statements:

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

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

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

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



                                       4
<PAGE>


NEXLAND, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
--------------------------------------------------------------------------------


                           ASSETS
                                                 September 30,      December 31,
                                                     2001               2000*
                                                 -------------      ------------
    Current assets:
        Cash                                      $    97,584        $   59,523
        Accounts receivables                          130,160           119,131
        Inventory                                     216,137            75,949
        Advance to related party supplier             553,000                 -
                                                     --------          --------
           Total current assets                       996,881           254,603
                                                     --------          --------

    Property and equipment, net                        38,832            32,072
                                                      -------           -------
    Other assets:
        Deposits and other assets                      32,995            30,000
                                                      -------           -------
           Total other assets                          32,995            30,000
                                                      -------           -------
           Total assets                           $ 1,068,708         $ 316,675
                                                 ============         =========

                 LIABILITIES AND STOCKHOLDERS' DEFICIT

    Current liabilities:
        Accounts payable                         $  281,124           $  56,876
        Accrued professional fees                   242,955             219,194
        Accrued expenses                            287,435              73,424
        Due to related party supplier               566,191             401,819
        Loan payable                                702,000                   -
        Other liabilities                            97,356              97,356
                                                    -------             -------

           Total current liabilities              2,177,061             848,669
                                                 ----------            --------
    Long-term debt                                  255,000                   -
                                                 ----------            --------

           Total liabilities                      2,432,061             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                3,692,668           3,001,613
        Unearned compensation                      (145,839)           (333,336)
        Accumulated deficit                      (4,913,799)         (3,203,874)
                                                -----------          ----------
           Total stockholders' deficit           (1,363,353)           (531,994)
                                                -----------          -----------
           Total liabilities and stockholders'
             deficit                            $ 1,068,708           $ 316,675
                                                ===========          ===========

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



            See notes to condensed consolidated financial statements.

                                       5


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

                           For the three months ended  For the nine months ended
                                   September 30,             September 30,
                           --------------------------  -------------------------
                             2001             2000        2001          2000

 Sales                      $  739,847     $ 319,574   $ 2,275,018   $ 760,454

 Cost of sales                 285,647       144,909     1,110,131     322,104
                            -----------    ----------  -----------    --------

 Gross profit                  454,200       174,665     1,164,887     438,350
                            -----------    ----------  -----------    --------
 Operating expenses:
    Selling, general and
    administrative             903,731       743,239     2,785,332   2,778,776
    Depreciation                 4,266         1,500         9,917       3,614
                            ----------     ----------    ---------   ---------
       Total operating
        expenses               907,997       744,739     2,795,249   2,782,390
                            ----------     ----------    ---------   ---------

 Loss from operations         (453,797)      (570,074)  (1,630,362) (2,344,040)
                            ----------     ----------   ----------  ----------

 Other income (expense):
   Interest expense             (3,428)        (5,400)     (79,563)    (16,472)
                            ----------     ----------  -----------  -----------
       Total other income
       (expense)                (3,428)        (5,400)     (79,563)    (16,472)
                            ----------     ----------  -----------  ----------

    Net loss                $ (457,225)    $ (575,474) $(1,709,925)$(2,360,512)
                            ==========     ==========  ===========  ==========


    Net loss per common
    share, basic and
    diluted                 $   (0.01)     $   (0.01)  $     (0.05)    $ (0.07)
                            =========      =========   ===========  ===========

    Weighted-average
    number of common
    shares                  36,153,385    35,079,382    36,117,923   34,558,126
                            ==========    ==========    ==========  ===========



            See notes to condensed consolidated financial statements.

                                       6

<PAGE>
NEXLAND, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------------------------------------------
                                                    For the nine months ended
                                                            September 30,
                                                    ----------------------------
                                                        2001          2000
   Cash flows from operating activities:

      Net loss                                      $ (1,709,925)  $ (2,265,512)
      Adjustments to reconcile net
        loss to net cash used in
        operating activities:
          Compensation expenses in connection with:
              Employment agreement                       187,497        104,165
              Severance                                        -      1,125,000
              Stock options issued                       424,854              -
          Contributed research and development
          services                                       142,747        199,000
          Common stock issued for services                88,590        378,929
          Interest expense on convertible debentures      76,819
          Provision for bad debts                         21,623              -
          Provision for inventory obsolecense             44,034              -
          Depreciation expense                             9,917          3,614
          (Increase) decrease in:
              Accounts receivable                        (32,652)       (78,992)
              Inventory                                 (184,222)       (99,300)
              Deposits and other assets                 (555,995)       (45,000)
          (Decrease) increase in:
              Accounts payable and accrued expenses      626,394        483,881
                                                        --------       --------
   Net cash used in operating activities                (860,319)      (194,215)
                                                        --------      ---------
   Cash flows from investing activities:
      Purchase of property and equipment                 (16,677)       (26,375)
                                                        --------       --------
   Net cash used by investing activities                 (16,677)       (26,375)
                                                        --------       --------
   Cash flows from financing activities:
      Loan proceeds                                     702,000              -
      Proceeds from exercise of warrants and options         17        304,844
      Proceeds from issuance of convertible debentures  255,000              -
      Costs on issuance of convertible debentures       (41,960)             -
                                                        --------            --
   Net cash provided by financing activities            915,057        304,844
                                                        --------      --------
   Net increase in cash                                  38,061         84,254

   Cash, beginning of period                             59,523          4,231
                                                        --------      --------
   Cash, end of period                                 $ 97,584       $ 88,485
                                                       =========      ========

   Supplemental cash flow disclosure:
      Interest paid                                    $ 79,580       $      -
                                                       =========      ========



            See notes to condensed consolidated financial statements.

                                       7


<PAGE>

NEXLAND, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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 nine months ended September
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 - ADVANCES
-----------------

In September 2001, the client received $702,000 as an advance from its factor on
future  accounts  receivable.  The terms of the advance are the terms offered to
the Company's other factored receivables.  The Company has recorded this advance
as a current liability.

The Company  advanced its vendor and related party  supplier in Taiwan  $553,000
for the manufacture of certain quantities of product for a significant customer.


NOTE 4 - STOCK OPTIONS
----------------------

During the nine months ended  September 30, 2001, the Company granted options to
purchase  2,069,000 shares of the Company's common stock to certain employees of
the Company.  The Company also granted  1,266,179  options during the nine-month
ended September 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 from $0.25 to $0.45 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.

                                       8
<PAGE>

NOTE 4 - STOCK OPTIONS (continued)
----------------------------------

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 $424,854 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 nine
months ended September 30, 2001, would have been increased by $642,400.

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

                                        September 30, 2001
                                        ------------------

            Net loss
                As reported              $    (1,709,925)
                                         ================
                Pro forma                $    (2,352,325)
                                         ================

NOTE 5 - PRIOR PERIOD ADJUSTMENT
--------------------------------

The balance of the accumulated deficit at the end of the year ended December 31,
2000 has been  restated  from the  balance  previously  reported  to  reflect an
aggregate  adjustment  of $95,000 in the three months ended  September 30, 2000.
This  adjustment  is for an  understatement  of rent  expense of $18,000  and an
understatement of compensation  expense of $77,000.  Consequently,  the net loss
for the period  ended  September  30,  2000 has been  restated  to reflect  this
$95,000 increase.



                                       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 our Company's industry, (c) our Company's
future  financing  plans and (d) our 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 our Company's  expectations and
are subject to a number of risks and uncertainties, many of which are beyond our
Company's   control.   Actual  results  could  differ   materially   from  these
forward-looking  statements  as a result of changes in trends in the economy and
our 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.
Our 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 our 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  nineteen  (19)  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 six (6)  additional  personnel
within the next twelve (12)  months.  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  NINE-MONTHS  PERIODS ENDED SEPTEMBER 30, 2001
AND 2000

         (1)  REVENUES.  For the three months  ended  September  30,  2001,  our
Company  had  $739,847  in  revenue  consisting  of sales of 4,639  units of our
Internet access "hardware  routers" for small offices and home users as compared
to $319,574 in revenue  consisting  of sales of 1,632 units for the three months
ended September 30, 2000.  During the three months ended September 30, 2001, the
average   selling  price  per  unit  was  $159  as  compared  to  $195  for  the
corresponding  period in 2000. The decrease in the average selling price was due
to pricing discounts given to large volume customers.  For the nine months ended
September 30, 2001, our Company had $2,275,018 in revenue consisting of sales of

                                       10
<PAGE>

15,566 units of our Internet access  "hardware  routers" as compared to $760,454
in  revenue  consisting  of sales  of 3,487  units  for the  nine  months  ended
September 30, 2000. During the nine months ended September 30, 2001 and the nine
months ended September 30, 2000, the average selling price per unit was $146.

         (2) COST OF SALES.  For the three months ended  September 30, 2001, our
Company  had  $285,647 in cost of sales as compared to $144,909 in cost of sales
for the three  months  ended  September  30,  2000.  For the nine  months  ended
September 30, 2001,  our Company had  $1,110,131 in cost of sales as compared to
$322,104 in cost of sales for the nine months  ended  September  30,  2000.  The
increase in cost of sales for the three months and nine months  ended  September
30, 2001 was due to the increase in the number of units sold.

         (3) GROSS PROFIT.  For the three months ended  September 30, 2001,  our
Company's  gross profit was 61% as compared to 55% in gross profit for the three
months ended September 30, 2000. The gross profit increased for the three months
ended  September  20, 2001 compared to the  corresponding  period in 2000 due to
lower costs and increased pricing on our new products. For the nine months ended
September  30, 2001,  our  Company's  gross profit was 51% as compared to 58% in
gross profit for the nine months  ended  September  30,  2000.  The gross profit
decreased  for  the  nine  months  ended  September  30,  2001  compared  to the
corresponding  period in 2000 due to lower sales  prices  given to large  volume
customers.

         (4)    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.

         THREE MONTHS ENDED  SEPTEMBER 30, 2001 AND 2000.  Selling,  general and
administrative  expenses  increased  to  $903,731  for the  three  months  ended
September 30, 2001 as compared to $743,239 for the three months ended  September
30, 2000. The increase of $160,492 is the result of the payroll costs  increased
by approximately $181,000, professional fees decreased by approximately $18,000,
commissions to third parties increased approximately $43,000, and rent and other
office expenses  decreased by approximately  $33,000.  Additionally,  during the
same period,  our Company had the following four  transactions  that resulted in
non-cash  expenditures.  (1) A  company  controlled  by  one  of  our  Company's
principal  shareholders incurred research and development costs on our Company's
behalf for the further  development of the Internet access hardware routers.  In
this connection, we recorded $73,000 as a capital contribution, which represents
the actual costs incurred by this company on our Company's 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 twelve months. During
the comparable  period in 2000, our Company incurred  approximately  $199,000 of
research and development  costs, a decrease of  approximately  $126,000 from the
same period in 2001. (2) Our Company  recorded a charge of $62,499 in connection
with the issuance of common stock to our Chief Financial Officer to amortize his
unearned compensation in accordance with his employment  agreement,  the same as
the  corresponding  period in 2000,  making no charge  for the  period.  (3) Our
Company issued 600,000 options to  consultants,  recording a charge of $210,000.
There was no  expense  for the  corresponding  period in 2000.  (4) Our  Company
restated  expenses for the three months ended  September  2000,  which  includes
$18,000 of accrued rent and $77,000 in connection  with the reduction of warrant
exercise  prices.   Our  Company  expects  to  increase  selling,   general  and
administrative expenses in the future in proportion to our Company's anticipated
growth in sales.

         NINE MONTHS ENDED  SEPTEMBER  30, 2001 AND 2000.  Selling,  general and
administrative  expenses  increased  to  $2,785,332  for the nine  months  ended
September 30, 2001 as compared to $2,778,776 for the nine months ended September
30, 2000. The increase of $6,556 is the result of an increase of payroll cost by
$539,000,  an  increase  of rent and  other  office  expenses  by  approximately
$72,000, and increase of professional fees by approximately $61,000, an increase
of  commissions  to third parties by  approximately  $162,000 and an increase of
insurance expense by approximately $47,000.  During the nine month period ending
in September 30, 2001,  the Company had the  following  four  transactions  that
resulted  in  non-cash  expenditures.  (1) A  company  controlled  by one of our
Company's principal  shareholders incurred research and development costs on our
Company's  behalf for the further  development of the Internet  access  hardware
routers. Our Company recorded as a capital contribution $326,000, as compared to
$199,000 for the  corresponding  period in 2000,  an actual  change of $127,000,
which  represents  the actual  costs  incurred by the  company on our  Company's
behalf,  substantially  consisting  of  technician  salaries for  subcontractors
located in Taiwan.  Our Company has no formal agreement with this company and it
is in the preliminary phase of evaluating the acquisition of this company during
the next  twelve  months.  (2) Our  Company  recorded  a charge of  $187,497  in
connection  with  issuance  of common  stock to our Chief  Financial  Officer to
amortize his unearned  compensation in accordance with his employment agreement.
Our Company recorded an expense of $104,000 in the corresponding period in 2000,
a change of $83,000 for the period.  (3) Our Company  issued  126,000  shares of
common  stock to a  consultant  for  services  rendered  and recorded a non-cash
transaction of $88,578. (4) Our Company issued 1,266,179 options to consultants,
recording a charge of $424,854.  For the nine months ended  September  30, 2000,
our Company had five (5) transactions that resulted in non-cash expenditures and
a corresponding  decrease of expenses in the comparable  period in 2001: (A) our
Company issued  500,000  shares of common stock valued at $1,125,000,  issued to
the former Chief Executive  Officer in  consideration  of the termination of his
employment  agreement  on  September  30,  2000;  (B) a  consulting  expense  of
approximately $139,000; (C) a penalty of $240,000 for the late filing of the S-1

                                       11
<PAGE>

Registration  Statement;  (D) the company recorded $18,000 of rent expense;  and
(E) our Company  recorded a warrant  expense of $77,000 in  connection  with the
reduction of warrant exercise prices.  Our Company expects to increase  selling,
general and administrative expenses 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 nine months ended  September 30, 2001 was  ($860,000),  compared to cash
used in operating  activities of ($194,000) for the nine months ended  September
30, 2000, a decrease of $666,000.  This decrease  resulted from decreases in our
Company's  net loss,  which  included  non-cash  charges  of: (i)  $187,497  for
compensation  in  connection  with an  employment  agreement;  (ii) $424,854 for
compensation  to  consultants  with  options;  (iii)  $142,747  for  contributed
research and development  services (iv) $88,590 for expenses paid by issuance of
common stock to a consultant;  (v) $76,819 for interest  expense on  convertible
debentures;  (vi)  $22,000  for  provision  for bad  debts;  (vii)  $44,034  for
provision for inventory  obsolescence;  (viii) $9,917 for depreciation  expense;
(ix) $772,869 for increases in accounts  receivable,  inventory and deposits and
other  assets;  and (x) $626,394  for  increase in accounts  payable and accrued
expenses.

         Our Company's net cash  used by investing  activities  for the nine
month period ended September 30, 2001 was  $16,677 for purchase of
property and equipment.

         Our Company's net cash  provided by financing  activities  for the nine
month  period ended  September  30, 2001 was $915,057  resulting  from  proceeds
received from the issuance of debentures and for an advance of $702,000 from our
factor on future accounts  receivables.  Our Company sold $255,000 of 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 will be for sales and  marketing  forces,  (iii)
$250,000  will be for  professional  fees and (iv)  $500,000  will be for  other
operating expenses, such as payroll, rent and office expenses.

         Our Company has no assured  available  financial  resources to meet its
September 30, 2001 working  capital  deficit of $1,180,000 and future  operating
costs.

         Our Company is seeking additional equity capital from private offerings
and public  offerings.  There is no assurance that we will be able to raise such
additional capital during the next twelve months. If we are 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,  we 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.  We 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 our Company,  to purchase up to $5 million of our common
stock at 80% of the lowest  closing bid price of our  Company's  common stock on
the  Over-the-Counter  Bulletin Board for the 10 days immediately  following the
notice date. The timing of each sale and the number of shares of common stock to
be sold is at our discretion,  subject to various conditions.  The dollar amount
that we 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 the  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 September 30, 2001.


                                       12
<PAGE>

         (c) On March 19,  2001,  we 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 September 30, 2001.  Through  September
30, 2001,  we issued  debentures of $255,000 from which we 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 (i) 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
(ii) 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.  On  August  7,  2001,  we  filed a  registration
statement on Form S-1  registering  13,000,000  shares of our  Company's  common
stock for the equity line of credit  investor  and the  debenture  holders.  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.  We have the right to require the
debenture  holders to convert any unpaid  principal and accrued  interest on the
debentures upon the five (5) year anniversary of the debenture issuance.

RISK FACTORS

         Our Company is subject to various risks which may  materially  harm our
business,  financial  condition  and results of  operations.  Certain  risks are
discussed below.

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

         We have  historically  lost money. For the three months ended September
30, 2001 and the nine months ended  September 30, 2001,  we sustained  losses of
$0.5 million and $1.7  million,  respectively.  For the year ended  December 31,
2000 and the year ended  December 31, 1999, we sustained  losses of $2.9 million
and  $0.1  million,  respectively.  Future  losses  are  likely  to  occur.  Our
independent  auditors have noted that our Company may not have  significant cash
or  other  material  assets  to cover  its  operating  costs  and to allow it to
continue as a going  concern.  Our  ability to obtain  additional  funding  will
determine  our  ability to  continue  as a going  concern.  Accordingly,  we may
experience  significant  liquidity  and cash flow problems if we are not able to
raise additional capital as needed and on acceptable terms. No assurances can be
given  that  we  will  be  successful  in  reaching  or  maintaining  profitable
operations.

WE NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS

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

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

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

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

         We had a working capital deficit of $1.2 million at September 30, 2001.
We had a working  capital  deficit of $0.6  million and $0.2 million at December
31, 2000 and 1999,  respectively.  We had an accumulated deficit of $3.2 million
and $0.3  million at December  31, 2000 and 1999,  respectively.  Our ability to

                                       13
<PAGE>

obtain  additional  funding  will  determine  our ability to continue as a going
concern.  Accordingly,  we may  experience  significant  liquidity and cash flow
problems  if we are not  able to  raise  additional  capital  as  needed  and on
acceptable  terms.  No  assurances  can be given that we will be  successful  in
reaching or maintaining profitable operations.

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

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

WE HAVE BEEN IN BUSINESS FOR A SHORT PERIOD OF TIME

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

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

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

WE MAY BE HARMED BY IMPORT RESTRICTIONS

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

WE MAY BE EXPOSED TO INTERNATIONAL BUSINESS AND CURRENCY FLUCTUATIONS

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

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

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

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

                                       14
<PAGE>

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

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

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

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

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

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

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

         o     Our inability to attract or retain customers;

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

         o     Our inability to upgrade and develop competitive products; and

         o     Technical difficulties with product development.

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

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

         As of November  12,  2001,  we have issued and  outstanding  36,153,385
shares of common stock of which 32,804,652 shares are "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act. Future
sales of the  restricted  shares may be made under Rule 144. Such sales may have
an adverse  effect on the then  prevailing  market  price of the  common  stock,
adversely  affect our ability to obtain future financing in the capital markets,
and may create a potential market overhang.

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

         Our Articles of Incorporation  authorize the issuance of "blank check,"
preferred  stock.  The Board of  Directors  is  empowered,  without  shareholder
approval,  to designate  and issue  additional  series of  preferred  stock with
dividend,  liquidation,  conversion, voting or other rights, including the right

                                       15
<PAGE>

to  issue  convertible  securities  with no  limitations  on  conversion.  These
designations and issuances, could:

         o     Adversely  affect the voting power or other rights of the holders
               of our common stock.

         o     Substantially dilute the common shareholder's interest.

         o     Depress the price of our common stock.

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

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

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

         o     Unexpected changes in regulatory requirements;

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

         o     Challenges in staffing and managing foreign operations; and

         o     Employment laws and practices in foreign countries.

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

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

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

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

         We may in the  future  initiate  claims  or  litigation  against  third
parties for  infringement of our  proprietary  rights to determine the scope and
validity of our  proprietary  rights.  Any such claims,  with or without  merit,

                                       16
<PAGE>

could be time consuming,  result in costly litigation and diversion of technical
and management personnel, or require us to develop non-infringing  technology or
enter  into  royalty  or  licensing   agreements.   Such  royalty  or  licensing
agreements, if required, may not be available on acceptable terms, if at all. In
the event of a successful  claim of infringement and our failure or inability to
develop non-infringing  technology or license the proprietary rights on a timely
basis, our business would be harmed.

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

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

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

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

OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE LOSE MARKET SHARE

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

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

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

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

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

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

         o     Develop and maintain competitive products;

                                       17
<PAGE>

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

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

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

         o     Respond to emerging broadband access technologies.

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

WE HAVE LIMITED MARKETING AND SALES CAPABILITY

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

         o     Establish and develop such a sales force;

         o     Gain market acceptance for our products;

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

         o     Meet our proposed marketing schedules or plans.

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

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

         Our  executive   officers,   directors,   and  principal   shareholders
beneficially own, in the aggregate,  approximately 81% of our outstanding shares
of  common  stock.  These  shareholders,  if  acting  together,  will be able to
effectively  control most matters requiring approval by our shareholders.  These
shareholders  can designate the members of our Board of Directors and can decide
our operations and business strategy.  You may disagree with these shareholders'
decisions.  Even if you do not like the members of our Board of  Directors,  you
will not be able to remove them from office. Additionally,  these members of our
Board of Directors would be able to significantly influence a proposed amendment
to our  charter,  a merger  proposal,  a proposed  sale of assets or other major
corporate transaction or a non-negotiated  takeover attempt. Their influence may
not be beneficial to you. If they prevent or delay a merger or takeover, you may
not realize the premium return that shareholders may realize in conjunction with
corporate takeovers. Moreover, there are no preemptive rights in connection with
our common stock. Finally, cumulative voting in the election of our Directors is
not provided for. Accordingly, the holders of a majority of the shares of common
stock,  present  in  person  or by  proxy,  will  be able  to  elect  all of our
Directors.

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

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

                                       18

<PAGE>

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

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

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

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

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

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

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

         We have developed an outsourced contract  manufacturing  capability for
the  production  of our  products.  Our primary  relationship  with our contract
manufacturers  has been  accomplished  through  Smerwick,  Ltd.,  our Hong  Kong
affiliate  located  in  Taiwan.  We rely on  contract  manufacturers  to procure
components,  assemble,  test and package our products.  We rely primarily on one
contract manufacturer for all of our product manufacturing and assembly,  and if
we cannot obtain its services, we may not be able to ship products.

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

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

                                       19
<PAGE>

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

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

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

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

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

         o     Continued market acceptance of our products;

         o     Fluctuations in demand for our products and services;

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

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

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

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

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

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

         The amount and timing of our  operating  expenses  generally  will vary
from  quarter  to  quarter  depending  on the  level of actual  and  anticipated
business  activities.  Research and development expenses will vary as we develop
new products.  General and administrative  expense  fluctuations in past periods
have been due primarily to the level of sales and marketing expenses  associated
with new product introductions. In the past, we have experienced fluctuations in
operating results.

WE ARE SUBJECT TO VARIOUS RISKS PERTAINING TO THE INTERNET INDUSTRY

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

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

         o     Security;

         o     Reliability;


                                       20
<PAGE>

         o     Capacity;

         o     Congestion;

         o     Cost;

         o     Ease of access; and

         o     Quality of service.

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

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

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

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

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

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

         Because  our  officers,  directors,  principal  shareholders  and their
affiliates beneficially own approximately 81% of our stock ownership,  they will
be able to elect  the Board of  Directors  and  control  all  matters  requiring
shareholder approval.

         The price of our common  stock has been  volatile  and may  continue to
experience volatility.

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

         o     Quarterly variations in our operating results;

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

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

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

                                       21
<PAGE>

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

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

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

WE COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL

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

WE MAY BE UNABLE TO MANAGE GROWTH

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

         o     Implement changes in certain aspects of our business;

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

         o     Attract and retain qualified personnel; and

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

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

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

         Sales of our  common  stock in the  public  market  following  our most
recent offering could lower the market price of our common stock. Sales may also
make it  more  difficult  for us to sell  equity  securities  or  equity-related
securities  in  the  future  at a time  and  price  that  our  management  deems
acceptable or at all. Of the 36,153,385 shares of common stock outstanding as of
November 10, 2001  (assuming no exercise of options),  3,348,733  shares are, or
will be, freely tradable without  restriction,  unless held by our "affiliates."
The remaining  32,804,652  shares of common stock held by existing  stockholders
are  "restricted  securities"  and may be resold in the  public  market  only if
registered or pursuant to an exemption from  registration.  Some of these shares
may be resold under Rule 144.  Immediately  following the effective  date of our
most recent  prospectus,  including  the shares to be issued to Cornell  Capital
Partners,  L.P., and upon conversion of debentures,  13,673,814 shares of common
stock  will  be  freely  tradeable  without  restriction,  unless  held  by  our
"affiliates."

         Upon  completion of our most recent  offering,  and assuming all shares
registered  in that offering are resold in the public  market,  there will be an
additional 13,673,814 shares of common stock outstanding. All of those shares of
common stock may be immediately  resold in the public market upon  effectiveness
of the  accompanying  registration  statement and the sale to the investor under
the terms of the Equity Line of Credit Agreement.

                                       22
<PAGE>

         In  addition,  we have issued  options to purchase a total of 4,399,179
shares of our common stock at exercise prices ranging from $0.120 to $0.0927 per
share.

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

         The sale of shares  pursuant  to the  Equity  Line of  Credit  and from
conversion of debentures will have a dilutive impact on our  stockholders.  As a
result,  our net income per share  could  decrease  in future  periods,  and the
market price of our common stock could decline. In addition, the lower our stock
price is the more shares of common  stock we will have to issue under the Equity
Line of Credit to draw down the full amount.  If our stock price is lower,  then
our existing stockholders would experience greater dilution.

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

         The common  stock to be issued  under the Equity Line of Credit will be
issued  at a 20%  discount  to the  lowest  closing  bid  price  for the 10 days
immediately  following the notice date.  These  discounted sales could cause the
price of our common stock to decline.

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

         The selling  stockholders in our most recent offering intend to sell in
the public market the shares of common stock being  registered in that offering.
That means that up to 13,673,814  shares of common  stock,  the number of shares
being  registered in that offering,  may be sold. Such sales may cause our stock
price to decline.

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

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

WE MAY NOT BE ABLE TO ACCESS  SUFFICIENT  FUNDS  UNDER THE EQUITY LINE OF CREDIT
WHEN NEEDED

         We are  dependent  on external  financing to fund our  operations.  Our
financing  needs are  expected,  in part, to be provided from the Equity Line of
Credit.  No  assurances  can be given that such  financing  will be available in
sufficient  amounts  or at all when  needed,  in part,  because  the  amount  of
financing  available  will  fluctuate  with the price and  volume of our  common
stock. As the price and volume decline,  then the amount of financing  available
under the Equity Line of Credit will decline.



                                       23
<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

         None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

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

         None.

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.


                                       24
<PAGE>

         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.

         Thefollowing   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.

         The following documents are provided herewith:

10.17       Employment Agreement, effective August 16, 2001, between the Company
            and Robert W. Nelson.

                                       25
<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:   November 13, 2001               NEXLAND, INC.

                                         By:  /s/ Martin Dell'Oca
                                             ----------------------------
                                                  Martin Dell'Oca
                                                  Chief Financial Officer




                                       26