Form 10-KSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

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

          For  the fiscal year ended: February 28, 2003

     |_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934

         For the transition period from ________________ to _________________

         Commission file number:  000-27225
                                  ---------



                                  eNetpc, Inc.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

          Minnesota                                  41-1427445
--------------------------------------------------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
 incorporation or organization)

 301 W Burnsville Parkway, Suite 201, Burnsville, Minnesota          55337
--------------------------------------------------------------------------------
         (Address of principal executive offices)                  (Zip Code)

Issuer's telephone number:  (952) 890-0112

Securities registered under Section 12(g) of the Exchange Act:

                                  Common Stock
--------------------------------------------------------------------------------
                                (Title of Class)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X|    No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

State issuer's revenues for its most recent fiscal year:      $   611,499.00
                                                              --------------



<PAGE>

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $43,964. based on shares held by non-affiliates as of May 23, 2003, and
the closing sale price for said shares in the Nasdaq National Market as of such
date.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,854,320 shares of Common Stock, as
of May 23, 2003.


                       DOCUMENTS INCORPORATED BY REFERENCE

         There are incorporated by reference in this report on Form 10-KSB
certain previously filed exhibits identified in Part III, Item 13 hereof.


                                       ii
<PAGE>


                                TABLE OF CONTENTS

                                                                            Page

PART I     1

Item 1.    Description of Business                                            1

Item 2.    Description of Property                                            4

Item 3.    Legal Proceedings                                                  4

Item 4.    Submission of Matters to a Vote of Security Holders                4

PART II                                                                       4

Item 5.    Market for the Common Equity and Related Stockholder Matters       4

Item 6.    Management's Discussion and Analysis or Plan of Operation          5

Item 7.    Financial Statements                                               9

Item 8.    Changes in and Disagreement with Accountants on Accounting and
           Financial Disclosure                                               9

PART III                                                                      9

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act                  9

Item 10.  Executive Compensation                                             10

Item 11.  Security Ownership of Certain Beneficial Owners and Management     11
               and Related Stockholder Matters

Item 12.  Certain Relationships and Related Transactions                     12

Item 13.  Exhibits,  List and Reports on Form 8-K                            12

Item 14.  Controls and Procedures                                            12

SIGNATURES                                                                   13



                                      iii


<PAGE>


                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         The Company was founded in 1982 under the laws of the State of
Minnesota as Command Small Computer Learning Center, Inc., a computer training
company. Over a period of years, the Company became involved in the sale of
computer components and, eventually, became a value added reseller (VAR) of
major computer brands. In 1987, the Company changed its name to Command
Electronics, Inc. In February 1995, the Company acquired CyberStar Computer
Systems, a manufacturer and marketer of microcomputers and servers, and in 1997
it changed its name to CyberStar Computer Corporation. In August of 2000 the
Company changed its name to eNetpc, Inc. Company headquarters are located at 301
West Burnsville Parkway, Suite 201, Burnsville, MN 55337, and its telephone and
facsimile numbers are (952) 890-2362 and (952) 890-4103, respectively. The
Company's Internet address is enetpc.com.

         eNetpc, Inc. is now a Value Added Reseller (VAR) specializing in B2B
software, e-commerce, and virtual distribution in addition to VAR activity.
eNetpc, Inc. is structured on the belief that the Internet will be the standard
method of virtual distribution. The Company's core strategy is to provide
leading edge B2B software, with fulfillment, to complement the needs of
just-in-time inventory.

         Through its .COM business unit, the Company provided eSelect 2.5
application software to Internet resellers enabling them to offer online
configuration, delivery, and fulfillment on the Internet through Nov 2002. In
Nov 2002 the Company launched a end-user second party version of eSelect on its
own website. The products, service and support are all outsourced to provide
maximum value to the customer, and eNetpc does not inventory, assemble or
directly support the products offered on eSelect 2.5 software, keeping overhead
to a minimum. The .COM business unit is responsible for 97% of the Company's
sales. Current products offered on eSelect 2.5 include:

o        Desktop Computers
o        Notebook Computers
o        File Servers
o        Computer Peripherals
o        Computer Services

         The business-to-business (B2B, e-commerce) industry continues to grow
in complexity and applications, while all industries look to downsizing their IT
departments for cost reduction. Systems (typically servers) are built to
customer specifications using the Build-To Order application in eSelect and are
placed in eNetpc's "online ordering system". Customers then take advantage of
eNetpc's real time inventory look up on over 100,000 products through multiple
distribution warehouses..


INDUSTRY OVERVIEW

         The PC industry continues to undergo fundamental shifts in distribution
processes and methods. In the past, manufacturers of branded products, such as
IBM, manufactured whole computers and shipped them to distributors and dealers
who, in turn, shipped them to dealers and end-users, respectively. End-users,
under this distribution process, purchased systems from dealers in whatever form
the original manufacturer provided. Consequently, limited opportunities existed
for end-users to custom-configure their computer systems. Further, this process
required dealers to stockpile considerable inventory levels which often could


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<PAGE>

not be sold out before an announced or expected change in technology. Dealers
were forced, in many cases, to sell obsolete systems. As a result, the
traditional distribution method created inefficiencies and additional costs, as
well as consumer dissatisfaction.

         While the traditional distribution method can still be found in certain
parts of the computer industry, in particular the retail segment, the trend
toward build-to-order and custom-configured computer systems is now the standard
business practice. Dell and Gateway pioneered this shift when they began
offering custom-built PC's to consumers primarily for home use. Today, many of
the tier one manufacturers, such as IBM and Compaq, also use channel assembly
methods. These manufacturers ship products that are not completely assembled to
their distributors and rely on the distributor for final assembly and shipment.
This distribution process, however, provides only limited build-to-order
benefits and does not provide the advantage of a direct contact person to whom
the end-user may direct technical and support questions.

         Increasingly, businesses have been developing electronic commerce sites
in response to the success of internet product sales . This increase in internet
sales / purchasing now crosses every type of product and consumer service, from
computers to tax service. The Company believes this increasing use of the
internet will continue to expand, and manufacturers and resellers will continue
to broaden their offerings via the internet sales channel. As an internet
solution provider, eNetpc brings a cost effective solution to the sales cycle.

COMPANY ORGANIZATION

         The Company operated two business units; .COM and .NET, both of which
use the eSelect software to differentiate their products and services to
potential customers.

..COM

         The .COM business unit developed eSelect, a proprietary internet-based
development tool, to capitalize on two significant trends: e-commerce and the
desire for custom-built, custom-configured computer systems. Through the
software, customers have the ability to custom configure, price and order
computer products directly on-line. After Nov 2002 the company used second party
applications to sell directly to end-user's

         Through its .COM business unit, the Company currently provides their
eSelect application software to internet end-user's enabling them to offer
online PC configuration, delivery, and fulfillment on the internet. The
products, service and support are all outsourced to provide maximum value to the
customer. eNetpc does not inventory, assemble or support the products offered on
eSelect software, thereby minimizing its overhead costs.

         eSelectTM 2.5 is a complete e-commerce application designed to provide
any web site the capability to sell any type of configurable or non-configurable
product on the internet with the customizable build to order configurators. The
configurator contains the appropriate sku's, model names and respective
component choices to build, ship, invoice and track custom configured items of
any type on the internet.

         The Company also designed the software to link eNetpc.com and eNetpc
licensed web sites directly to the Company. eSelectTM 2.5 acts as an invisible
window that will simultaneously route orders placed with individual customers to
the Company, manufacturer and reseller for processing and fulfillment.


         The Company continues to outsource the custom built products ordered
through the eSelect software. The Company believes that eSelect will allow users
to meet their needs in a flexible and efficient manner, and in a manner that
allows customers to provide cutting-edge technological choices without having to
maintain significant inventory levels.


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<PAGE>

..NET

         The .net operations were operated till November 2002. At which time all
customers were notified by August 2002 and moved to new servers by November 2002
in an orderly shut down of that unit.

         With the steep declining prices in web hosting services, management
decision was to discontinue those operations.

          The .NET business unit provided web hosting and development,
application software, server co-location, hardware implementation and complete
storage solutions.

         Below is a partial list of application software products eNetpc uses
for computer solution providers up in till November 2002

o        Microsoft .NET software platform
o        Microsoft 2000 products: SQL and Server
o        iPSWITCH IMAIL Server and List Server
o        Allaire Cold Fusion, Spectra, and J-Run
o        Media House Software Inc. Statistics Server
o        eNetpc's eSelect(TM)

MAJOR CUSTOMERS

The top five customers in terms of net sales represent 60% of fiscal year 2003
total net sales; the top 25 customers represent 90%. Four of the top five
customers are in the retail and services industry.

MANUFACTURING AND SUPPLIERS

         The Company's business model is one that outsources the manufacture and
fulfillment of hardware products entirely. By outsourcing the inventory and
fulfillment, the Company can focus on its sales and marketing strategies and
significantly reduce space and labor costs.

COMPETITION

         The microcomputer industry is intensely competitive and characterized
by dynamic customer demand patterns, frequent introduction of new products,
technological advances and product obsolescence. In addition, the pricing
environment is extremely competitive, and there is a variety of competing
distribution channels. The Company anticipates that the microcomputer industry
will continue to experience intense price competition and dramatic price
reductions, as well as intense competition among distribution channels. In
addition to pricing, the principal elements of competition among manufacturers
are product quality and usability, performance characteristics, distribution
capability, ability to customize, service and support and reputation. The
Company competes with a number of large tier one and tier two manufacturers,
including Compaq, IBM, Hewlett-Packard, Apple, Dell, and Gateway. The Company
competes with the larger name manufacturers mostly on the basis of quality,
price and performance. Substantially all of the Company's competitors have
significantly greater financial, marketing and technological resources than the
Company. Although all of the distribution channels are very competitive, the
Company believes that no one has the expertise in all areas from innovation to
implementation. eSelectTM is a new distribution channel that enables product


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distribution via the internet, by outsourcing as many of the company services as
possible and selling the products with the eSelect software through the
reseller.

INTELLECTUAL PROPERTY

         eNetpc owns no patents, nor has it applied for any patents covering its
products. The Company is subject to risks related to misappropriation of the
proprietary technology upon which its software is being designed. While eNetpc
believes that it is designing software to be secure, computer "hackers" are
becoming increasingly sophisticated. Any misappropriation of the Company's
technology could subject eNetpc to increased competition and the loss of its
perceived advantage over other competitors.

         eNetpc owns the rights to the registered trademark "eNetpc" and
"eSelect". The use of these marks is limited to products within the class of
electronic and scientific apparatus. Any use of the mark by others on products
in other classes may cause dilution of the mark and the goodwill created in the
mark. eNetpc claims common law trademark rights in FilePro(TM) file server and
CyberBook(TM) notebook.

SERVICE

         eNetpc provides end-users with access to its technical support line for
answers to questions that require immediate attention. The Company maintains a
database of technical information that it can easily access in response to
customer inquiries in order to provide quick and accurate answers to its
customers.

EMPLOYEES

         As of May 31, 2003, eNetpc had 3 employees, all of whom were contract
employees. None of these employees are represented by a union. eNetpc believes
that its relations with its employees are good.


ITEM 2.  DESCRIPTION OF PROPERTY

         eNetpc sub-leases approximately 1,000 square feet of space used for
offices and operations equipment storage at 301 W Burnsville Parkway, Suite 201,
Burnsville, Minnesota at a monthly rent of $750 renewable monthly.

ITEM 3.  LEGAL PROCEEDINGS

         eNetpc is, from time to time, a party to litigation arising in the
normal course of its business. eNetpc believes that none of these actions will
have a material adverse effect on its financial condition or results of
operations.


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

         None



                                     PART II

ITEM 5.  MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER   MATTERS


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         eNetpc's Common Stock has been traded on the OTC Bulletin Board
("OTCBB") since June 12, 1998. The following table sets forth the quarterly high
and low sales prices as reported by the Nasdaq National Market during the last
two fiscal years ended February 28, 2002 and February 28, 2003.


       Fiscal Year 2002                    Low            High
       -------------------------------------------------------------
       First Quarter                      $ .88          $2.00
       Second Quarter                       .75           2.15
       Third Quarter                        .59           1.30
       Fourth Quarter                       .60           1.65


       Fiscal Year 2003                    Low            High
       -------------------------------------------------------------
       First Quarter                      $ .16          $1.08
       Second Quarter                       .15            .60
       Third Quarter                        .07            .20
       Fourth Quarter                       .07            .12

These quotations represent interdealer prices, without retail markup, markdown,
or commission, and may not reflect actual transactions. As of April 16, 2002,
there were approximately 327 record holders of the Company's Common Stock.

DIVIDEND POLICY

         The Company has never paid cash dividends on any of its securities. The
Company currently intends to retain any earnings for use in its operations and
does not anticipate paying cash dividends in the foreseeable future. Future
dividend policy will be determined by the Company's Board of Directors based
upon the Company's earnings, if any, its capital needs and other relevant
factors.


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

         In fiscal year 2002, eNetpc, Inc. has two operating units, the .COM
division, the .NET division. Revenues from .COM operations are generated through
the sale of a wide range of computer systems and products, including personal
computers, work stations and file servers, under the CyberStar and eNetpc brand
names. This division is also an authorized reseller of products from Compaq,
Microsoft, IBM, Hewlett-Packard and Apple, among others, as well as selling
non-branded products. The .NET division focuses on providing web hosting and
development, application software, server co-location, hardware implementation
and complete storage solutions. The .net operations were operated till November
2002. At which time all customers were notified in August 2002 and all moved to
new servers by November 2002 in an orderly shut down of that unit.

         With the declining prices in web hosting services management decision
was to discontinue those operations.

         eNetpc incurred net losses in fiscal years 2003 and 2002. In both
years, losses resulted from decreased sales that were partially offset by a
decrease in operating expenses. The decrease in demand for computer and related
products and services in both years has challenged the Company to minimize labor
and overhead costs while maintaining viable solutions to its customer base.

         In fiscal 2002, continued recession of computer markets forced the
Company to further refine its product offerings and led to the closing of the
Virtual Distribution business. Development of eSelect was continued and resulted


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in the more robust product version 2.5. Management is pursuing alternative
markets for the eSelect solution, outside of the computer industry, and believes
the new version 2.5 has many applications in other internet businesses. In
fiscal 2001, sales volumes increased substantially through acquisition of
International Trade Center, Inc. and operating expenses were added to further
expand revenues. The global technology market decline resulted in a decrease in
prices and a decrease in gross profit margin. The Company responded with
reductions in operating expenses in the 4th quarter.

         1)       Management is closely monitoring every expenditure and
                  commitment as to absolute need and benefit. Management
                  acknowledges that improving the company cash position will
                  require additional equity financing which is in the planning
                  and execution stage as of February 28, 2003.

         2)       Management is considering the merger and/or buyout of the
                  company and operations in fiscal 2004.

RESULTS OF OPERATIONS

YEARS ENDED FEBRUARY 28, 2003 AND FEBRUARY 28, 2002

         Sales decreased by 85%, or $3,449,200 to $611,499 in fiscal 2003 from
$4,060,699 in fiscal 2002. This decrease was primarily due to the reduction in
demand for the Virtual Distribution products and services which accounted for $0
of total net sales in fiscal 2003, and $2,691,029, or 66% in fiscal year 2002.

         Gross profit decreased by 61%, or $229,644, to $146,819 in fiscal 2003
from $376,463 in fiscal 2002 primarily due to the decrease in sales. Gross
profit as a percentage of sales was 24% in fiscal 2003 as compared to 9% in
fiscal 2002. Margin was increased due to discontinued sales of high volume low
margin products and to concentrate on higher end non commodity computer products

         Selling, general and administrative expenses decreased by 63%, or
$755,859, to $440,970 in fiscal 2003 from $1,196,829 in fiscal 2002. This
decrease was primarily due to a reduction in employees and elimination of
certain operating expenses. In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" as
circumstances dictate, the Company evaluates whether changes have occurred that
would require revision of the remaining estimated lives of recorded long-lived
assets or render those assets not recoverable. If such circumstances arise,
recoverability is determined by comparing the undiscounted net cash flows of
long-lived assets to their respective carrying values. The amount of impairment,
if any, is measured based on the projected discounted cash flows using an
appropriate discount rate. In fiscal year 2002, such impairment was applied to
goodwill related to the Virtual Distribution business and was written off in the
amount of $17,385. The closing of the division also resulted in $179,684 of bad
debt reserve charges related to sales made by the division considered by
management to be uncollectible.

         The loss from operations decreased by $526,215 to $(294,151) in fiscal
2003 from $(820,366) in fiscal 2002, reflecting the decrease in operating
expense and the decrease in gross profit.

         Interest expense decreased by 35%, or $9,000, to $16,500 in fiscal 2003
from $25,500 in fiscal 2002 primarily as a result of the decrease in borrowing
related to the Virtual Distribution business.

         As a result of the foregoing factors, net loss decreased by $520,117 to
$(310,651) in fiscal 2003 from $(830,768) in fiscal
2002.



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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections," effective for fiscal years
beginning after May 15, 2002. The Company believes the adoption of SFAS No. 145
will not have a material effect on the Company's financial position or results
of operations.

In June 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities." SFAS No. 146 requires the recognition of a
liability for a cost associated with an exit or disposal activity when the
liability is incurred versus the date the Company commits to an exit plan. In
addition, SFAS No. 146 states the liability should be initially measured at fair
value. The requirements of SFAS No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002. The Company believes the
adoption of SFAS No. 146 will not have a material effect on the Company's
financial position or results of operations.

In October 2002, FASB issued SFAS No. 147, "Acquisitions of Certain Financial
Institutions." SFAS No. 147 is effective October 1, 2002. The adoption of SFAS
No. 147 did not have a material effect on the Company's financial position or
results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 is an amendment to SFAS
No. 123 providing alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation
and also provides required additional disclosures about the method of accounting
for stock-based employee compensation. The amendments are effective for
financial statements for fiscal years ending after December 15, 2002 and for the
interim periods beginning after December 15, 2002. The Company adopted the
annual disclosure provisions of SFAS No. 148. The Company has currently chosen
not to adopt the voluntary change to the fair value based method of accounting
for stock-based employee compensation, pursuant to SFAS No. 148, which, if
adopted, could have a material effect on the Company's financial position or
results of operations.

SIGNIFICANT ACCOUNTING POLICIES

         Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 1 of the Notes to the Financial Statements includes a
summary of the significant accounting policies and methods used in the
preparation of our Financial Statements. The following is a brief discussion of
the more significant accounting policies and methods used by the company. In
addition, Financial Reporting Release No. 61 was recently released by the SEC to
require all companies to include a discussion to address, among other things,
liquidity, off-balance sheet arrangements, contractual obligations and
commercial commitments.

         General

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the dates of the financial statements and reported amounts of revenues and
expenses during the reporting periods. The most significant estimates and
assumptions relate to the valuation of inventory, capitalized software
development costs, and the reserves set aside for bad debts. Actual amounts
could differ from these estimates.

         Inventory Valuation

         As noted in Note 1 of the Notes to the Financial Statements,
inventories consist primarily of purchased components and are valued at the
lower of cost or market (first-in, first-out method). Because of the continuing


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pressure on component pricing in the computer industry, the company regularly
reviews the costs used to value inventory and adjusts them to reflect upward or
downward market values. The company realized net downward adjustments of
inventory of $32,000 and $22,124 for the years ended February 28, 2003 and 2002
respectively.

         Within the last year, the company has changed its method of operation
from an inventory carrying manufacturer to outsourcing the manufacture and
delivery of its hardware products. This change allows the company to minimize
the carrying costs associated with large amounts of inventory and also decreases
significantly the risks of obsolescence and loss. The company continues to
further reduce its inventory levels and associated risks by selling off all
excess items.

         Capitalized Software Development

         Under the provisions of SOP 98-1, the Company capitalizes costs
associated with software developed or obtained for internal use when both the
preliminary project stage is completed and management has authorized further
funding for the project which it deems probable will be completed and used to
perform the function intended. Capitalized costs include only (1) external
direct costs of materials and services consumed in developing or obtaining
internal use software, (2) payroll and payroll related costs for employees who
are directly associated with and who devote time to the internal use software
project, and (3) interest costs incurred, when material, while developing
internal use software. Capitalization of such costs ceases no later than the
point at which the project is substantially complete and ready for its intended
purpose. At February 28, 2003 and 2002, unamortized software development costs
were $115,758 and $115,758, net of accumulated amortization of $64,074 and
$64,074 and are included in property and equipment.

         Reserves Set Aside for Bad Debts called "Allowance for Doubtful
Accounts"

The Company reviews customers' credit history before extending credit.
Generally, a minimum credit limit is established for a first time customer with
acceptable credit ratings. As experience is gained with a customer, an increase
in the credit limit can be made based on acceptable payment performance. An
allowance for doubtful accounts is made only after collection efforts have been
expended and management assesses the situation as unrecoverable, based upon
factors surrounding the credit risk, historical trend and other information.
Reserves are set aside on a customer by customer basis rather than on a
percentage basis of all customers and amounted to $255,000 and $77,250 at
February 28, 2002 and 2001 respectively. No additional reserves were needed in
2003

LIQUIDITY AND CAPITAL RESOURCES

         eNetpc's cash position at February 28, 2003 was $1,241, a decrease of
$15,325 from $16,566 at February 28, 2002. During the twelve months ended
February 28, 2003, net cash used in operating activities was $123,356 primarily
due to the net loss of $310,651.

         Net cash used in investing activities increased $22,334 to $56,957
during the year ended February 28, 2003 primarily due to investment in
equipment.

         Net cash provided by financing activities of $94,799 for the year ended
February 28, 2003 consisted primarily of net proceeds of $50,000 from a
stockholder loan, and $9,400 from subscriptions to purchase common stock and
$35,000 from a bank loan.

         The Company has entered into a personal loan agreement with a
shareholder in the amount of $100,000 and $50,000 for one year paying interest
at an annual rate of 12%.


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<PAGE>

FORWARD-LOOKING INFORMATION

         Any statements contained herein related to future events are
forward-looking statements and are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. These statements are
based upon management's current expectations and judgments about future
developments in eNetpc's business and may be affected by several factors,
including, without limitation, the ability to respond to customer demands, the
success of the e-commerce site, the ability to sell products at a profitable
price, and other factors affecting the computer industry in general. Readers are
cautioned not to place undue reliance on forward-looking statements. eNetpc
undertakes no obligation to update any such statements to reflect actual events.


ITEM 7.  FINANCIAL STATEMENTS

         Independent Auditors' Reports....................................16

         Financial Statements

             Balance Sheets...............................................17
             Statements of Operations.....................................18
             Statements of Stockholders' Equity (Deficit).................19
             Statements of Cash Flows.....................................20
             Notes to Financial Statements.............................21-27


ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE

         None.

                                    PART III

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

         Set forth below is certain information concerning each of the directors
and executive officers of eNetpc.

----------------------- ------- -----------------------------------------------
           Name           Age                  Position
----------------------- ------- -----------------------------------------------
Richard A. Pomije          48   Chairman, President, CEO & Secretary/Treasurer
----------------------- ------- -----------------------------------------------
James T. Greenfield        60   Director
----------------------- ------- -----------------------------------------------
Ed Havlik                  47   Director
----------------------- ------- -----------------------------------------------
Pierce McNally             51   Director
----------------------- ------- -----------------------------------------------


         RICHARD A. POMIJE has been with eNetpc since 1982 and has served as
President, Secretary, Treasurer, and a director since 1996. He had previously
served in such positions from 1983 through 1992. Mr. Pomije's primary
responsibilities include overall strategic planning. Mr. Pomije holds a degree
in Communication Technology, Audio Technology and Technical Services from Brown
Institute. Mr. Pomije also received a First Class FCC license with radar
endorsement.

         JAMES T. GREENFIELD became a director in December 1997. Mr. Greenfield
had previously served as Secretary and Treasurer of eNetpc from 1992 to 1996.
From 1982 through the present, Mr. Greenfield has served as the President of
Stone Fabrics, Inc., a wholesaler of fabrics. Mr. Greenfield is the
brother-in-law of Mr. Pomije.



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<PAGE>

         ED HAVLIK has been a director since February 1998. Since 1990, Mr.
Havlik has served as National Sales Manager for Panasonic Multimedia Division.
Until 1994, Mr. Havlik also served as Western Regional Manager for Panasonic
OAG.

         PIERCE MCNALLY, An advisor to numerous emerging growth businesses,
became a member of the Board of Directors of eNetpc, Inc. effective June 4,
2001. Mr. McNally is a Director of several companies and is a graduate of
Stanford University and the University of Wisconsin Law School. Mr. McNally
assists the Company on matters pertaining to valuation, strategic direction and
corporate finance.


         Directors are elected at the annual meeting of the shareholders and
serve until their successors are elected and qualified. Officers are elected by
the Board of Directors and serve at the discretion of the Board of Directors or
until their earlier resignation or removal.

Section 16 Beneficial Ownership Reporting Compliance

         Section 16 of the Securities Exchange Act of 1934, as amended, and the
rules promulgated there under require the Company's officers, directors, and
holders of 10% or more of its outstanding common stock to file certain reports
with the Securities and Exchange Commission (the "Commission"). To the company's
best knowledge, based solely on information provided by the reporting
individuals, all of the reports required to be filed by these individuals were
filed.

ITEM 10.  EXECUTIVE COMPENSATION

         The following table sets forth the compensation paid for services
rendered during the fiscal years ended February 28, 2003, February 28, 2002, and
February 28, 2001 to the Chairman and Chief Executive Officer. No other officers
earned cash compensation in excess of $100,000 in fiscal 2003.

                           Summary Compensation Table

------------------------------- ------------- ---------- -----------------------
Name and Principal Position     Fiscal Year   Salary     Other Annual
                                                         Compensation (1)
------------------------------- ------------- ---------- -----------------------
Richard A. Pomije, Chairman
and CEO                         2003          $86,000    $13,000
------------------------------- ------------- ---------- -----------------------
                                2002          $146,515   $13,323
------------------------------- ------------- ---------- -----------------------
                                2001          $193,115   $19,865
------------------------------- ------------- ---------- -----------------------

(1)      Automobile expenses.

OPTION GRANTS IN THE LAST FISCAL YEAR

         The following table sets forth information regarding options granted to
the Named Executive Officer during the 2003 fiscal year.
<TABLE>
<CAPTION>

---------------------------------------------------------------------------- -------------------
                                         Percent of Total
                     Number of Shares   Options Granted to
                    Underlying Options Employees in Fiscal  Exercise Price
          Name           Granted               Year           ($/Share)       Expiration Date
---------------------------------------------------------------------------- -------------------
<S>                 <C>                <C>                  <C>              <C>
Richard A. Pomije           --                  --                --                 --
---------------------------------------------------------------------------- -------------------



                                       10
<PAGE>

James Greenfield         175,000                64            $1.00/1.75             --
---------------------------------------------------------------------------- -------------------
Pierce McNally           100,000                37              $1.00                --
---------------------------------------------------------------------------- -------------------
All other employees         0                   0                 0                  --
---------------------------------------------------------------------------- -------------------
</TABLE>


AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

         The following table provides information relating to option exercises
during fiscal year 2002 and the number and value of shares of Common Stock
subject to options held by the Named Executive Officer as of February 28, 2003.
<TABLE>
<CAPTION>

--------------------------- ------------ -------------- ------------------------------- -------------------------------

                              Shares                           Number of shares              Value of Unexercised
                            Acquired on                     Underlying Unexercised         In-the-Money Options at
                             Exercise        Value        Options at Fiscal Year-End           Fiscal Year-End
           Name                            Realized       Exercisable/Unexercisable       Exercisable/Unexercisable
--------------------------- ------------ -------------- ------------------------------- -------------------------------
<S>                         <C>          <C>            <C>                             <C>
Richard A. Pomije               --            --                      --                              --
--------------------------- ------------ -------------- ------------------------------- -------------------------------
James Greenfield                --            --                  175,000/--                        --/--
--------------------------- ------------ -------------- ------------------------------- -------------------------------
Pierce McNally                  --            --                  100,000/--                        --/--
--------------------------- ------------ -------------- ------------------------------- -------------------------------
Ed Havlik                       --            --                  20,000/--                         --/--
--------------------------- ------------ -------------- ------------------------------- -------------------------------
All other employees             --            --                      0                             --/--
--------------------------- ------------ -------------- ------------------------------- -------------------------------
</TABLE>


DIRECTORS' COMPENSATION

         To date, eNetpc has not paid any cash compensation to its directors for
their services as directors, but may pay fees to its outside directors when it
becomes profitable.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

         The following table sets forth certain information as of February 28,
2003 with respect to the number of shares of Common Stock beneficially owned by
(i) each person known by eNetpc to own beneficially 5% or more of the Common
Stock; (ii) each director; (iii) the Chief Executive Officer, and (iv) all
directors and executive officers as a group. Unless otherwise noted, each person
listed below has sole voting and investment power with respect to his shares.
The address for each individual set forth below is 301 W Burnsville Parkway,
Suite 201, Burnsville, MN 55337.


<TABLE>
<CAPTION>

---------------------------------------- ------------------------- ---------------------------------
Name of Beneficial Owner (1)             Number of shares          Percentage of Outstanding Shares
---------------------------------------- ------------------------- ---------------------------------
<S>                                      <C>                       <C>
Richard A. Pomije                        3,095,720                 63.8%
---------------------------------------- ------------------------- ---------------------------------
James T. Greenfield                      175,000(2)                  3.6
---------------------------------------- ------------------------- ---------------------------------
Ed Havlik                                25,000(3)                    *
---------------------------------------- ------------------------- ---------------------------------
Pierce McNally                           120,000(4)                  2.1
---------------------------------------- ------------------------- ---------------------------------
All directors and executive officers     3,395,720                 70.0
as a group (4 persons)
---------------------------------------- ------------------------- ---------------------------------

*    Indicates an amount less than 1%
</TABLE>



                                       11
<PAGE>

(1) The securities "beneficially owned" by a person are determined in accordance
with the definition of "beneficial ownership" set forth in the regulations of
the Commission and, accordingly, may include securities owned by or for, among
others, the spouse, children or certain other relatives of such person as well
as other securities as to which the person has or shares voting or investment
power or has the right to acquire within 60 days.

(2) Includes 175,000 shares of Common Stock purchasable pursuant to the exercise
of currently exercisable options.

(3) Includes 20,000 shares of Common Stock purchasable pursuant to the exercise
of currently exercisable options.

(4) Includes 100,000 shares of Common Stock purchasable pursuant to the exercise
of currently exercisable options.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company has entered into a personal loan agreement with a
shareholder on October 4, 2001, in the amount of $100,000 for one year paying
interest at an annual rate of 12%.

         The Company has entered into a personal loan agreement with a
shareholder on first quarter, in the amount of $50,000 for one year paying
interest at an annual rate of 12%.


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

(a)      Exhibits

         3.1      Articles of Incorporation, as amended (1)
         3.2      Bylaws (1)
         10.2     1996 Employee Stock Option Plan, as amended to date (1)
         99.1     Certifications of Chief Executive Officer and Chief Financial
                  Officer

(1)      Incorporated by reference to exhibit filed as a part of Registration
         Statement on Form 10-SB (Commission File No. 000-27225).

(b)      Reports on Form 8-K

           None


ITEM 14.      CONTROLS AND PROCEDURES

         Within 90 days prior to the date of this Report, we carried out an
evaluation, under the supervision and with the participation of our chief
executive and chief financial officers, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934). Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in alerting them on a
timely basis to material information required to be disclosed in our periodic
reports to the Securities and Exchange Commission. There have been no
significant changes in our internal controls or in other factors which could
significantly affect internal controls subsequent to such evaluation.


                                       12
<PAGE>



                                   SIGNATURES


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



                                    ENETPC, INC.

Dated:  June 13, 2003          By:  /s/      Richard A. Pomije
                                    -------------------------------------------
                                    Richard A. Pomije, Chief Executive Officer
                                    (Principal executive officer)



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


Dated:  June 13, 2003      By:          /s/      Richard A. Pomije
                               ------------------------------------------------
                               Richard A. Pomije, Director, Chief Executive
                               Officer, Chief Financial Officer and President
                               (Principal executive officer)

Dated:  June 13, 2003      By:          /s/      James T. Greenfield
                               ------------------------------------------------
                               James T. Greenfield, Director

Dated:  June 13, 2003      By:          /s/      Ed Havlik
                               ------------------------------------------------
                               Ed Havlik, Director

Dated:  June 13, 2003      By:          /s/      Pierce McNally
                               ------------------------------------------------
                               Pierce McNally, Director





                                       13
<PAGE>


                                 CERTIFICATIONS

I, Richard A. Pomije, certify that:

1. I have reviewed this annual report on Form 10-KSB of eNetpc, Inc.;

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

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

4. The registrant's other certifying officers and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

            b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

            c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

            a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

            b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: June 13, 2003         Signed:     /s/  Richard A. Pomije
                                       --------------------------------------
                               Name:   Richard A. Pomije
                               Title:  Chief Executive Officer and Chief
                                       Financial Officer of  eNetpc, Inc.

                                       14
<PAGE>


                                  eNetpc, Inc.


                                FINANCIAL REPORT

                           FEBRUARY 28, 2003 AND 2002




<PAGE>



                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Stockholders
eNetpc, Inc.


         We have audited the accompanying balance sheets of eNetpc, Inc. as of
February 28, 2003 and 2002, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

         In our opinion, the financial statements present fairly, in all
material respects, the financial position of eNetpc, Inc. as of February 28,
2003 and 2002, and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and its current liabilities exceed its current assets. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



                                             /s/  VIRCHOW, KRAUSE & COMPANY, LLP



Minneapolis, Minnesota
June 13, 2003



                                       16
<PAGE>

<TABLE>
<CAPTION>


                                             eNetpc, Inc.

                                            BALANCE SHEETS
                                      February 28, 2003 and 2002


             ASSETS                                                           2003           2002
                                                                           -----------    -----------
                                                                           <S>            <C>
CURRENT ASSETS:
    Cash                                                                   $     1,241    $    16,566
    Trade accounts receivable, less allowance for
        doubtful accounts 2003 - $0; 2002 - $255,000                           120,709        226,620
    Inventories                                                                   --           59,650
    Prepaid expenses                                                              --
                                                                           -----------    -----------
                                                                                                3,286
             Total current assets                                              121,950        306,122

DEPOSITS                                                                          --           13,531

PROPERTY AND EQUIPMENT, NET                                                     55,000        151,109
                                                                           -----------    -----------

                                                                           $   176,950    $   470,762
                                                                           ===========    ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
    Accounts payable                                                       $   138,742    $   208,931
      Note payable - bank                                                       35,000           --
    Accrued payroll                                                               --            8,111
    Accrued liabilities                                                          1,936         25,873
    Due to stockholder                                                         150,000        100,000
    Accrued interest - stockholder                                              21,500          5,000
                                                                           -----------    -----------
             Total current liabilities                                         347,178        347,915
                                                                           -----------    -----------

STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock, $.01 par value, 20,000,000 shares authorized
        2003 - 4,854,320; 2002 - 4,854,320 shares issued and outstanding        48,543         48,543
    Additional paid-in capital                                               3,994,377      3,986,600
    Stockholder subscription receivable                                        (15,165)       (24,964)
    Accumulated deficit                                                     (4,197,983)    (3,887,332)
                                                                           -----------    -----------
                                                                              (170,228)       122,847
                                                                           -----------    -----------

                                                                           $   176,950    $   470,762
                                                                           ===========    ===========



See Notes to Financial Statements.
                                                  17
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                  eNetpc, Inc.

                            STATEMENTS OF OPERATIONS
                     Years Ended February 28, 2003 and 2002


                                                             2003           2002
                                                          -----------    -----------
<S>                                                       <C>            <C>
Revenues:
    Sales                                                 $   611,499    $ 4,060,699
    Cost of sales                                             464,680      3,684,236
                                                          -----------    -----------
             Gross profit                                     146,819        376,463

    Selling, general and administrative expenses              440,970      1,196,829
                                                          -----------    -----------

             Operating loss                                  (294,151)      (820,366)
                                                          -----------    -----------

Other income (expense):
    Interest and other income                                    --           15,098
    Interest expense                                          (16,500)       (25,500)
                                                          -----------    -----------
                                                              (16,500)       (10,402)
                                                          -----------    -----------

             Net loss                                     $  (310,651)   $  (830,768)
                                                          ===========    ===========


Basic and diluted loss per share                          $      (.06)   $      (.17)
                                                          ===========    ===========

Weighted average shares outstanding - basic and diluted     4,851,820      4,767,291
                                                          ===========    ===========



See Notes to Financial Statements.
                                       18
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                                             eNetpc, Inc.

                                             STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                                Years Ended February 28, 2003 and 2002



                                                         Common Stock            Additional                Stockholder
                                                   ------------------------      Paid-In      Deferred     Subscription  Accumulated
                                                     Shares        Amount        Capital    Compensation    Receivable     Deficit
                                                   -----------  -----------    -----------   -----------   -----------  -----------
<S>                                                <C>          <C>            <C>           <C>           <C>          <C>
Balance February 28, 2001                            4,691,496  $    46,915    $ 4,694,607   $  (564,914)  $      --    $(3,056,564)
    Issuance of common stock                            35,000          350         69,650          --            --           --
    Issuance of common stock for subscription
       receivable                                      137,400        1,374         67,326          --         (68,700)        --
    Payments on subscription receivable                   --           --             --            --          44,200         --
    Interest on subscription receivable                   --           --             --            --            (464)        --
    Reversal of deferred compensation                     --           --         (812,500)      564,914          --           --
    Stock redemption                                    (9,576)         (96)       (32,483)         --            --           --
    Net loss                                              --           --             --            --            --       (830,768)
                                                   -----------  -----------    -----------   -----------   -----------  -----------

Balance February 28, 2002                            4,854,320       48,543      3,986,600          --         (24,964)  (3,887,332)
    Payments on stock subscription receivable             --           --             --            --           9,799         --
    Compensation expense related to warrants issued       --           --            7,777          --            --           --
    Net loss                                              --           --             --            --            --       (310,651)
                                                   -----------  -----------    -----------   -----------   -----------  -----------

Balance, February 28, 2003                           4,854,320  $    48,543    $ 3,994,377   $      --     $   (15,165) $(4,197,983)
                                                   ===========  ===========    ===========   ===========   ===========  ===========






See Notes to Financial Statements.

</TABLE>
                                                                  19
<PAGE>

<TABLE>
<CAPTION>



                                    eNetpc, Inc.

                              STATEMENTS OF CASH FLOWS
                       Years Ended February 28, 2003 and 2002

                                                                  2003         2002
                                                               ---------    ---------
<S>                                                            <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                   $(310,651)   $(830,768)
    Adjustments to reconcile net loss to net
       cash used in operating activities:
       Depreciation and amortization                              81,770      100,866
       Impairment of property and equipment                       14,638         --
       Compensation expense related to warrants                    7,777         --
       Write off of goodwill                                        --         17,385
       Reversal of deferred compensation                            --       (247,586)
       Loss on disposal of equipment                                --          4,972
       Interest added to stockholder subscription receivable        --           (464)
       Interest added to due to stockholder                         --          5,000
       (Increase) decrease in trade accounts receivable          105,911      485,200
       (Increase) decrease in inventories                         59,650      105,093
       (Increase) decrease in prepaid expenses                     3,286       11,010
       Increase (decrease) in accounts payable                   (70,189)      55,775
       Increase (decrease) in other current liabilities          (15,548)     (44,790)
                                                               ---------    ---------
        Net cash used in operating activities                   (123,356)    (338,307)
                                                               ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                             (299)     (35,282)
    Other assets                                                  13,531          659
                                                               ---------    ---------
        Net cash provided by (used in) investing activities       13,232      (34,623)
                                                               ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from due to stockholder                              50,000      100,000
    Net borrowings on note payable - bank                         35,000         --
    Net proceeds from sale of common stock                          --         70,000
    Payments on stockholder subscription receivable                9,799       44,200
                                                               ---------    ---------
        Net cash provided by financing activities                 94,799      214,200
                                                               ---------    ---------

        Decrease in cash                                         (15,325)    (158,730)

Cash:
    Beginning                                                     16,566      175,296
                                                               ---------    ---------
    Ending                                                     $   1,241    $  16,566
                                                               =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash payments for interest                                 $    --      $  20,500
                                                               =========    =========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
    AND FINANCING ACTIVITIES:
    Issuance of common stock for stock subscription            $    --      $  68,700
                                                               =========    =========

    Stock redemption for accrued expense                       $    --      $  32,579
                                                               =========    =========

See Notes to Financial Statements

                                       20
</TABLE>

<PAGE>


                                  eNetpc, Inc.

                          NOTES TO FINANCIAL STATEMENTS
                     Years Ended February 28, 2003 and 2002



Note 1.       Nature of Business and Summary of Significant Accounting Policies:

              Nature of business:

              eNetpc, Inc. (the Company) consists of two reportable segments,
              .Com and .Net. The .Com segment markets a line of microcomputers,
              including personal computers, workstations and file servers under
              the CyberStar brand name and is an authorized reseller of products
              from Compaq, IBM, and Hewlett-Packard, among others. The .Net
              segment was comprised of the ASP (Application Service Provider)
              business unit which began on March 1, 2001 to provide application
              and data server services, web site hosting and development and
              e-commerce solutions. The Company discontinued the .Net operations
              in November 2002.

              Purchase and closure of division:

              On April 1, 2000, the Company entered into a stock exchange
              agreement with the stockholders of International Trade Center,
              Inc. (ITC) to acquire the stock of ITC. The Company issued 9,576
              shares of stock for the purchase. Operations of ITC are included
              in the Company's results of operations from the date of
              acquisition. During the year ended February 28, 2002, the Company
              closed this portion of its .COM segment.

              A summary of the Company's significant accounting policies
              follows:

              Cash and cash equivalents:

              The Company considers all highly liquid debt instruments purchased
              with a maturity of three months or less to be cash equivalents.
              Cash on deposit in excess of FDIC and similar insurance coverages
              is subject to the usual banking risks of funds in excess of those
              limits.

              Property and equipment:

              Property and equipment are stated at cost. Depreciation is
              provided using accelerated methods over the estimated useful lives
              of the assets ranging from three to seven years. Leasehold
              improvements are amortized over the shorter of the related lease
              term or estimated useful lives on a straight-line basis.

              Software costs:

              Under the provisions of Statement of Position 98-1, the Company
              capitalizes costs associated with software developed or obtained
              for internal use when both the preliminary project stage is
              completed and management has authorized further funding for the
              project which it deems probable will be completed and used to
              perform the function intended. Capitalized costs include only (1)
              external direct costs of materials and services consumed in
              developing or obtaining internal use software, (2) payroll and
              payroll related costs for employees who are directly associated
              with and who devote time to the internal use software project, and
              (3) interest costs incurred, when material, while developing
              internal use software. Capitalization of such costs ceases no
              later than the point at which the project is substantially
              complete and ready for its intended purpose. At February 28, 2003
              and 2002, unamortized software development costs were $115,758 and
              $115,758, net of accumulated amortization of $64,074 and $64,074
              and are included in property and equipment.

              Goodwill:

              The Company classified a portion of the purchase of ITC as
              goodwill. As part of the closure of its distribution line of
              business, goodwill was written off in 2002.

              In accordance with Statement of Financial Accounting Standard No.
              144 ("SFAS No. 144"), "Accounting for the Impairment or Disposal
              of Long-Lived Assets" as circumstances dictate, the Company
              evaluates whether changes have occurred that would require
              revision of the remaining estimated lives of recorded long-lived
              assets or render those assets not recoverable. If such
              circumstances arise, recoverability is determined by comparing the


                                       21
<PAGE>

              undiscounted net cash flows of long-lived assets to their
              respective carrying values. The amount of impairment, if any, is
              measured based on the projected discounted cash flows using an
              appropriate discount rate. During the year ended February 28, 2003
              the Company recorded charges of $14,638 related to impairment of
              property and equipment in accordance with SFAS No. 144. The
              impairment charge is included in operating expenses for the year
              ended February 28, 2003.

              Inventories:

              Inventories consist principally of purchased components and are
              valued at the lower of cost or market (first-in, first-out
              method). The Company has established a reserve to account for
              obsolescence of $32,000 and $0 at February 28, 2003 and 2002. This
              reserve is management's best estimate and could change in
              subsequent periods due to market fluctuations. The inventory
              balance was fully reserved for at February 28, 2003.

              Income taxes:

              Deferred taxes are provided on a liability method whereby deferred
              tax assets are recognized for deductible temporary differences and
              operating loss and tax credit carryforwards and deferred tax
              liabilities are recognized for taxable temporary differences.
              Temporary differences are the differences between the reported
              amounts of assets and liabilities and their tax basis. Deferred
              tax assets are reduced by a valuation allowance when, in the
              opinion of management, it is more likely than not that some
              portion or all of the deferred tax assets will not be realized.
              Deferred tax assets and liabilities are adjusted for the effects
              of changes in tax laws and rates on the date of the enactment.

              Stock-based employee compensation:

              The Company follows Accounting Principles Board Opinion No. 25,
              Accounting for Stock Issued to Employees ("APB 25") and related
              interpretations in accounting for its stock options. Under APB 25,
              when the exercise price of stock options equals the market price
              of the underlying stock on the date of grant, no compensation
              expense is recognized.

              The Company has elected to follow the disclosure only provisions
              of Statement of Financial Accounting Standards No. 123, Accounting
              for Stock-Based Compensation ("Statement 123"). Accordingly, the
              pro forma disclosures of what net loss would have been had the
              provisions of Statement 123 been applied to the Company's stock
              options is as follows:
<TABLE>
<CAPTION>

                                                                      2003                 2002
                                                                 --------------       --------------
                 <S>                                             <C>                  <C>
                 Pro forma net loss                              $     (310,651)      $   (1,133,827)

                 Basic and dilutive pro forma net loss per share $        (.06)       $        (.24)
</TABLE>

              Pro forma information regarding net loss is required by Statement
              123, and has been determined as if the Company had accounted for
              its employee stock options under the fair value method of
              Statement 123. The fair value for these options was estimated at
              the date of grant using the Black-Scholes option pricing model
              with the following weighted average assumptions: dividend yield of
              0%, volatility range of 150%, risk-free interest rates of 5.0% and
              5.5% in 2002 and a weighted average expected life of the option of
              four years in 2002. There was no compensation expense recognized
              during the year ended February 28, 2003.

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

              Advertising:

              The Company expenses advertising costs as they are incurred.
              Advertising costs were $1,500 and $1,900 for 2003 and 2002,
              respectively.



                                       22
<PAGE>

              Revenue recognition:

              The Company recognizes sales when the products are shipped.
              Revenue from services is recognized when the service is provided.
              The Company ensures that the transaction complies with the seven
              conditions and the six considerations contained in Accounting and
              Auditing Enforcement Release No. 108 of the Securities and
              Exchange Commission.

              Net loss per share:

              Basic loss per share is computed using the weighted average number
              of shares outstanding for the period. Diluted loss per share is
              computed using the weighted average number of shares outstanding
              per share adjusted for the incremental shares attributed to
              outstanding stock options under the Company's stock option plans
              and stock purchase warrants.


              Incremental shares attributable to the assumed exercise of stock
              options and stock purchase warrants for the years ended February
              28, 2003 and 2002 were excluded from the computation of diluted
              earnings per share as their effect would be anti-dilutive.

              Credit risk and allowance for doubtful accounts:

              The Company reviews customers' credit history before extending
              credit and establishes an allowance for doubtful accounts based
              upon factors surrounding the credit risk of specific customers,
              historical trends and other information. Invoices are due 30 days
              after presentation. Accounts receivable over 30 days are
              considered past due. The Company does not accrue interest on past
              due accounts receivable. The Company writes off accounts
              receivable when they are deemed uncollectible. Accounts receivable
              are shown net of an allowance for uncollectible accounts of $0 and
              $255,000 at February 28, 2003 and 2002, respectively.

              Carrying value of financial instruments:

              The carrying value of the Company's financial instruments
              approximates fair value at February 28, 2003 and 2002.

              Recently issued accounting pronouncements:

              In April 2002, the Financial Accounting Standards Board (FASB)
              issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
              and 64, Amendment of FASB Statement No. 13, and Technical
              Corrections," effective for fiscal years beginning after May 15,
              2002. The Company believes the adoption of SFAS No. 145 will not
              have a material effect on the Company's financial position or
              results of operations.

              In June 2002, FASB issued SFAS No. 146, "Accounting for Costs
              Associated with Exit or Disposal Activities." SFAS No. 146
              requires the recognition of a liability for a cost associated with
              an exit or disposal activity when the liability is incurred versus
              the date the Company commits to an exit plan. In addition, SFAS
              No. 146 states the liability should be initially measured at fair
              value. The requirements of SFAS No. 146 are effective for exit or
              disposal activities that are initiated after December 31, 2002.
              The Company believes the adoption of SFAS No. 146 will not have a
              material effect on the Company's financial position or results of
              operations.

              In October 2002, FASB issued SFAS No. 147, "Acquisitions of
              Certain Financial Institutions." SFAS No. 147 is effective
              October 1, 2002. The adoption of SFAS No. 147 did not have a
              material effect on the Company's financial position or results of
              operations.

              In December 2002, the FASB issued SFAS No. 148, "Accounting for
              Stock-Based Compensation - Transition and Disclosure." SFAS No.
              148 is an amendment to SFAS No. 123 providing alternative methods
              of transition for a voluntary change to the fair value based
              method of accounting for stock-based employee compensation and
              also provides required additional disclosures about the method of
              accounting for stock-based employee compensation. The amendments
              are effective for financial statements for fiscal years ending
              after December 15, 2002 and for the interim periods beginning
              after December 15, 2002. The Company adopted the annual disclosure
              provisions of SFAS No. 148. The Company has currently chosen not
              to adopt the voluntary change to the fair value based method of
              accounting for stock-based employee compensation, pursuant to SFAS
              No. 148, which, if adopted, could have a material effect on the
              Company's financial position or results of operations.


                                       23
<PAGE>

              Estimates and assumptions:

              The preparation of the financial statements in conformity with
              accounting principles generally accepted in the United States of
              America requires management to make estimates and assumptions that
              affect the reported amounts of assets and liabilities and
              disclosure of contingent assets and liabilities at the date of the
              financial statements and revenues and expenses during the
              reporting period. Significant estimates include the lives of
              patent rights and equipment and the valuation of stock issued.
              Actual results could differ from these estimates.

              Troubled Financial Condition and Management's Plans:

              The Company has experienced recurring net losses and current
              liabilities exceed current assets at February 28, 2003.

              Management's plans and objectives to improve the financial
              condition of the Company are as follows:

               1)   The Company has engaged an investment banking firm to
                    arrange for continuing financing in support of the Company's
                    short and long term objectives.
               2)   The acquisition of developed software applications, with
                    proven recurring revenue generation ability and high margin
                    performance, is in progress to broaden the company product
                    lines.
               3)   Continued reduction of overhead expenses through
                    consolidation of operating functions will be in constant
                    review.
               4)   Implementation of new marketing strategies for eSelect 2.5
                    that develop new recurring revenues for this product
                    offering are expected to add a moderate amount of new
                    revenues.
               5)   The Company is considering the merger and/or buyout of the
                    Company and operations in Fiscal 2004.

              There can be no assurance that management will be able to
              accomplish all of the above plans and objectives or achieve the
              necessary improvements in its cash flows and financial position to
              meet its obligations as they became due.

Note 2.       Property and Equipment:
<TABLE>
<CAPTION>

                                                                        2003                 2002
                                                                   --------------       --------------
                 <S>                                               <C>                  <C>
                 Office equipment and furniture                    $       469,666      $      469,366
                 Leasehold improvements                                    37,270               37,270
                 Production equipment                                      61,515               61,515
                                                                   --------------       --------------
                                                                          568,451              568,151
                 Less accumulated depreciation and amortization           498,813              417,042
                 Less impairment of property and equipment                 14,638                    -
                                                                   --------------       --------------
                                                                   $       55,000       $      151,109
                                                                   ==============       ==============
</TABLE>

Note 3.       Note Payable

              The Company entered into a $35,000 note with a bank to serve as a
              short-term loan to pay current obligations. The note bears
              interest at 6.75% and is due March 2003. The note is secured by
              the personal guarantee of the Company's Chief Executive Officer.

Note 4.       Due to Stockholder:

              The Company has a note payable to a stockholder which is due on
              demand, including interest at 12% per annum. The amount
              outstanding on the note was $150,000 and $100,000 at February 28,
              2003 and 2002, respectively. The note is collateralized by
              property owned by a related stockholder/officer. Interest accrued
              at February 28, 2003 and 2002 was $21,500 and $5,000,
              respectively. Interest expense on the note for the years ended
              February 28, 2003 and 2002 was $16,500 and $5,000, respectively.


Note 5.       Income Taxes:

              At February 28, 2003, the Company had net operating loss
              carryforwards of approximately $4,100,000. The net operating loss
              carryforwards are available to offset future taxable income
              through 2022 and may be subject to the limitations under Section
              382 of the Internal Revenue Code if significant changes in the
              equity ownership of the Company have occurred.


                                       24
<PAGE>

              The Company has recorded a full valuation allowance against its
              deferred tax asset due to the uncertainty of realizing the related
              benefits as follows:
<TABLE>
<CAPTION>

                                                                             2003              2002
                                                                        --------------    --------------
                 <S>                                                    <C>               <C>
                 Deferred tax assets:
                    Net operating loss carryforwards                    $    1,610,000    $    1,350,000
                    Other                                                            0           105,000
                                                                        --------------    --------------
                 Deferred tax assets before valuation allowance              1,610,000         1,455,000
                 Valuation allowance                                        (1,610,000)       (1,455,000)
                                                                        ---------------   ---------------
                 Net deferred tax assets                                $        -        $        -
                                                                        ==============    ==============
</TABLE>


              The change in valuation allowance was $155,000 and $275,000 for
              the years ended February 28, 2003 and 2002, respectively.

              Reconciliation between the federal statutory rate and the
              effective tax rate for the years ended February 28, 2003 and 2002
              is as follows:

                                                         2003          2002
                                                        -------      -------
      Federal statutory tax rate                          34.0%       34.0%
      State taxes, net of federal benefit                  4.0         4.0
      Change in valuation allowance                      (38.0)      (38.0)
                                                        -------      -------

         Effective tax rate                                0.0%        0.0%
                                                        =======      =======

Note 6.       Stockholders' Equity (Deficit):

              Warrants:

              In 1998, the Company issued 50,000 warrants to purchase common
              stock in connection with a sale of Company stock. The warrants
              carry an exercise price of $2.20 per share and expire in April
              2003.

              In January 2000, the Company sold 400,000 shares of common stock
              at $2.50 per share from which the Company received $897,070, net
              of offering costs. Each share purchased has an accompanying
              warrant to purchase one share of common stock at a price of $7.50
              per share which becomes exercisable in February 2001 and expires
              four years thereafter. In connection with the sale of shares, the
              Company issued 30,000 warrants to the selling agent, which have an
              exercise price of $3.00. The selling agent may receive an
              additional 30,000 five-year warrants with an exercise price of
              $9.00, based on the number of companion warrants issued. During
              the year ended February 28, 2002, the Company issued 29,000
              warrants to former employees with exercise prices of $1.00 to
              $2.00. During the year ended February 28, 2003, the Company issued
              625,000 warrants to former employees with exercise prices of $0.50
              to $3.00. Pursuant to SFAS No. 123, the Company recorded an
              expense of $7,777 during the year ended February 28, 2003 related
              to warrants issued to a non-employee. The expense was determined
              using the Black Scholes pricing model.



                                       25
<PAGE>


              Stock options:

              The Company has a stock option plan that includes both incentive
              and non-statutory stock options granted to directors, officers,
              employees and consultants of the Company. The maximum number of
              shares of Common Stock reserved for issuance is 1,000,000 shares
              under the 1996 Stock Option Plan. Option activity is summarized as
              follows:
<TABLE>
<CAPTION>

                                                         Stock Option Plan                                     Weighted
                                                     -------------------------
                                                       Shares                                                   Average
                                                      Available                                                 Exercise
                                                         for         Options       Non-Plan       Options        Price
                                                        Grant      Outstanding      Options     Outstanding    Per share
                                                     -----------   -----------   -----------   ------------  --------------
                 <S>                                 <C>           <C>           <C>           <C>           <C>
                 Balance at February 28, 2001            549,816       450,184       492,004       942,188         2.30
                    Options granted                     (405,000)      405,000         -           405,000         1.12
                    Options canceled                     126,550      (126,550)     (492,004)     (618,554)        2.80
                                                     -----------   ------------  ------------  ------------
                 Balance at February 28, 2002            271,366       728,634         -           728,634         1.47
                    Options granted                        -             -             -             -                -
                    Options canceled                     433,634      (433,634)        -          (433,634)        1.55
                                                     -----------   ------------  -----------   ------------
                 Balance at February 28, 2003            705,000       295,000         -           295,000   $     1.36
                                                     ===========   ===========   ===========   ===========   ==========
</TABLE>

              The Company had 295,000 exercisable options at February 28, 2003
              with a weighted average exercise price of $1.36. Exercise prices
              for options outstanding ranged from $1.00 to $2.50.

              In January 2000, the Company granted 300,000 options to an
              employee of the Company at an exercise price below the fair market
              value of the common stock. As a result, the Company had recorded
              deferred compensation expense of $262,500. The options vest over a
              five-year period; however, the vesting can be accelerated if
              certain performance goals are obtained. The Company believes it is
              more likely than not that the performance goals will be achieved
              and as a result is amortizing the compensation expense over the
              performance period. During the year ended February 28, 2001, the
              Company recognized $136,720 of compensation expense related to
              these options. As part of the purchase of ITC, the Company granted
              options to employees to purchase 100,000 shares of stock at $1.75
              per share. The options become exercisable five years after their
              issuance and may become exercisable three years after their
              issuance if certain performance criteria are met. Deferred
              compensation expense of $550,000 was recorded and the Company
              recognized $85,736 of compensation expense in 2001 related to
              these options. During the year ended February 28, 2002, the
              Company released the above employees and the options were
              cancelled which resulted in a reversal of any compensation expense
              previously recognized of $247,586.

Note 7.       Segment Data:

              The Company has two reportable segments: The first is .COM made up
              of computer systems and products. This segment, which is comprised
              of the CyberStar, VAR and Virtual Distribution divisions,
              distributes branded and proprietary computer systems, software and
              peripheral equipment. The second segment is .NET which provided
              web hosting and development, application software, server
              co-location, hardware implementation and complete storage
              solutions. The division targets its services to all solution
              providers who require assistance to sell their products on the
              internet. Sales information by division is as follows:

                                                      Year Ended
                                               ------------------------
                                               February 28, February 28,
                                                  2003         2002
                                               ----------   ----------
           Net sales:
             CyberStar division                $  594,862   $  709,658
             VAR division                            --
                                                               619,351
             Virtual Distribution division           --      2,691,029
                                               ----------   ----------
                 Subtotal .COM                    594,862    4,020,038
                                               ----------   ----------
             .NET division                         16,637       40,661
                                               ----------   ----------
                          Total Net Sales      $  611,499   $4,060,699
                                               ==========   ==========

Note 8.       Commitments and Contingencies:

              The Company leases office space in Minnesota and Arizona and also
              two vehicles under operating leases that expire at various times
              through February 2004. Lease expense for the years ended February
              28, 2003 and 2002 was $51,300 and $122,800, respectively. The
              Company terminated its office lease as of January 2003 and is
              currently paying its office lease on a month-to-month basis.


                                       26
<PAGE>

             The following is a schedule, by year, of future minimum rental
             payments at February 28, 2003:

                             Office
                              Space          Vehicles            Total
                         --------------   --------------    --------------
           2004          $        -       $       12,300    $       12,300

              The Company is exposed to asserted and unasserted claims
              encountered in the normal course of business. In the opinion of
              management, the resolution of these matters will not have a
              material adverse effect on the Company's financial position or
              results of operations.

Note 9.       Major Customers:

              The Company had four customers which represented 53% of sales in
              2003. Accounts receivable from these customers was $44,000
              February 28, 2003. The Company had three customers which
              represented 40% of sales in 2002. Accounts receivable from these
              customers was $40,000 at February 28, 2002.




                                       27