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, 2001


       |_|      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
incorporation or organization)                               Identification No.)


6825 Shady Oak Road, Eden Prairie, Minnesota                        55344
--------------------------------------------------------------------------------
  (Address of principal executive offices)                        (Zip Code)

Issuer's telephone number:  (952) 943-1598

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:      $   13,289,314.
                                                              ---------------
<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: $6,097,000. based on shares held by non-affiliates as of May 25, 2001, 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: 4,690,000 shares of Common Stock, as
of May 25, 2001.


                       DOCUMENTS INCORPORATED BY REFERENCE

The   registrant's   definitive  Proxy  Statement  for  the  Annual  Meeting  of
Shareholders to be held on July 24, 2001 (the "Proxy Statement") is incorporated
by  referenced  in Part III of this Form  10-KSB to the  extent  stated  herein.
Except with respect to  information  specifically  incorporated  by reference in
this  Form  10-KSB,  the  Proxy  Statement  is not  deemed to be filed as a part
hereof.  Such Proxy Statement is not filed herewith,  but will be filed with the
Commission not later than June 9 , 2001.

In addition,  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                                            7

Item 3.    Legal Proceedings                                                  7

Item 4.    Submission of Matters to a Vote of Security Holders                7

PART II                                                                       8

Item 5.    Market for the Common Equity and Related Stockholder Matters       8

Item 6.    Management's Discussion and Analysis or Plan of Operation          8

Item 7.    Financial Statements                                              10

Item 8.    Changes in and Disagreement with Accountants on Accounting and
               Financial Disclosure                                          11

PART III                                                                     12

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act             12

Item 10.  Executive Compensation                                             12

Item 11.  Security Ownership of Certain Beneficial Owners and Management     14

Item 12.  Certain Relationships and Related Transactions                     14

Item 13.  Exhibits and Reports on Form 8-K                                   15

SIGNATURES                                                                   16






<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 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 6825 Shady Oak Road, Eden
Prairie, Minnesota 55344, and its telephone and facsimile numbers are (952)
943-1598 and (952) 943-1599, respectively. The Company's Internet address is
enetpc.com.

         eNetpc, Inc. is now an Application Service Provider (ASP) specializing
in B2B software, e-commerce, and virtual distribution. eNetpc, Inc. is built 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.
eNetpc's innovative eSelect(TM) software brings manufacturers, resellers and
customers together.

         Through its .COM business unit, the Company currently provides eSelect
2.0 application software to Internet resellers enabling them to offer online
configuration, delivery, and fulfillment on the Internet. (The Company has
reorganized its business units at the end of fiscal year 2001 combining the
Cyberstar and VAR and Virtual Distribution divisions, as described in Part II
ITEM 6, into one .COM business unit. The reorganization established the new
business unit .NET to provide focus in fiscal year 2002.) 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 2.0 software, keeping overhead to a minimum. Current products offered on
eSelect 2.0 include:

     o    Desktop Computers
     o    Notebook Computers
     o    FileServers
     o    Computer Peripherals
     o    Computer Services

         The Company is also an international virtual distributor of computer
hardware, software and peripherals. With strategic supply partnerships spanning
over five continents, the company distributes tier-one computer related products
to and from the country's largest computer resellers.

         The .COM business unit is responsible for the majority, (90%) of the
Company's sales.

         Through its .NET business unit, the Company developed its first
application software, eSelect(TM). The Company runs the eSelect 2.0 application
software through the .NET business unit as an Application Service Provider
(ASP), which is necessary to support the .COM business unit.

                                       1
<PAGE>

         With the growth and increasing complexity of e-commerce, and the
general downsizing of IT departments, web site administrators need a solution to
the problem of maintaining the Internet infrastructure behind their web servers.
The Company fills the void by offering a complete assortment of hosting
solutions, development and management. Systems (usually servers) are built to
customer specifications using the Build-To Host application in eSelect 2.0 and
are placed in eNetpc's "server farm". Customers use this service to take
advantage of eNetpc's ASP services to host their business VPN, Intranet, or
Extranet applications.


INDUSTRY OVERVIEW

         In recent years, the PC industry has undergone a fundamental shift in
distribution processes and methods. Traditionally, manufacturers of branded
products, such as IBM, manufactured 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 format the original manufacturer provided. Consequently, limited
opportunities existed for end-users to custom-configure their computer systems.
Further, this method required dealers to stockpile considerable inventory
levels, which often could not be sold out before an announced or expected change
in technology. Thus, 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 traditional distribution methods persist in certain parts of the
computer industry, in particular in the retail segment, the trend is toward
build-to-order and custom-configured computer systems. 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 method 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 increase in internet. Computer resellers are spending
substantial time on the Internet conducting their business. The Company believes
that as resellers and end-users become more comfortable with the Internet they
will rely on it more and that this increased reliance will translate into a
desire on the part of resellers to offer their various merchandise via
electronic commerce.

         With the growth and increasing complexity of e-commerce, and the
general downsizing of IT departments, web site administrators need a solution to
the problem of maintaining the Internet infrastructure behind their web servers.
The Company fills the void by offering a complete assortment of hosting
solutions, development and management. Systems (usually servers) are built to
customer specifications using the Build-To Host application in eSelect 2.0 and
are placed in eNetpc's "server farm". Customers use this service to take
advantage of eNetpc's ASP services to host their business VPN, Intranet, or
Extranet applications.


                                       2
<PAGE>


COMPANY ORGANIZATION

         The Company currently operates two business units; .COM and .NET, both
of which will be using the eSelect software to differentiate their products and
services to potential customers.

 .COM

         The .COM business unit developed eSelectTM, 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 through their choice of internet
reseller.

         Through its .COM business unit, the Company currently provides their
eSelect 2.0 application software to Internet resellers 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 2.0 software, keeping their overhead to a minimum.

         eSelectTM 2.0 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 2.0 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 will continue to outsource the custom built products
ordered through the eSelect software. While the Company will maintain
proprietary rights in eSelect, the Company will provide the software to its
customers for their use, through software licensing. The Company believes that
eSelect will allow customers 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.

 .NET

         The .NET business unit provides web hosting and development,
application software, server co-location, hardware implementation and complete
storage solutions. The division targets its services to computer solution
providers who require assistance to sell their products on the internet.

         Companies need development tools and application servers to build
specific, internal applications. Companies often prefer buying software
packages, as compared to developing an IS from scratch. In this case, the
challenge is more in EAI (enterprise applications integration). Integrating new
complementary applications is, for the most part, a job for the IS department.

         Besides providing EAI, the Company is an application service provider
(ASP). ASP's offer business solutions and applications that are available over
the Internet. This presents an opportunity for the Company to continue focusing
on its software development while increasing its revenues as an ASP.


                                       3
<PAGE>

         With the growth and increasing complexity of e-commerce, web site
administrators need a solution to the problem of maintaining the Internet
infrastructure behind their web servers. eNetpc can fill the void so customers
can concentrate on their core business. eNetpc concentrates on ensuring maximum
uptime for their customers' web servers and offers them the convenience of an
ISP with the functionality of an ASP with a unique Build to Host Module.

         Systems (usually servers) are built to customer specifications using
eNetpc and are placed in eNetpc's "server farm". Customers use this service to
take advantage of eNetpc's ASP services to host their business VPN, Intranet, or
Extranet applications.

         We believe application hosting will be the area of greatest expansion
during the coming months. Our first opportunity as an ASP exists purely in the
rollout of the present and future versions of eSelect. Future opportunities will
become evident as the division expands. However, some prefabricated applications
currently offered include:

     o    Web-site builder
     o    Online folder management/data storage
     o    Data sharing
     o    Projects management
     o    Statistical tracking

         Below is a partial list of application software products eNetpc uses
for computer solution providers:

     o    Great Plains Dynamics & e-Enterprise
     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)2.0



MAJOR CUSTOMERS

         The Company had three customers which represented 44% of sales in 2001
and one customer which represented 11% of sales in 2000. Accounts receivable
from these customers was $448,005 and $10,128 at February 28, 2001 and February
29, 2000, respectively.


MANUFACTURING AND SUPPLIERS

         The Company's business model is one that will outsource the inventory
and fulfillment of their products as much as possible. By outsourcing the
inventory and fulfillment, the Company can focus on its sales and marketing
strategies while spending far less time and overhead on the operational side of
the business.

                                       4
<PAGE>

         The Company has signed a Contract Manufacturing Agreement with Tatung
Company of America, Inc. to build desktop computers. Under terms of the
agreement, Tatung will assemble desktop computers to the Company's
specifications at their ISO certified manufacturing facility in Long Beach, CA.
The contract manufacturing agreement with Tatung will give the Company a very
high production capacity and the ability to sign license agreements with the
largest computer resellers. Tatung was established in 1918 and stands out as
Taiwan's number one manufacturer of electronics, home appliances, and industrial
equipment. Tatung distributes more than 300 different products to over 100
countries throughout the world.

         The Company also has an agreement with Sceptre Technologies to build
notebook computers from their facilities in the City of Industry, CA. Under
terms of the agreement, Sceptre will source, inventory, assemble, and ship
products to the Company's customers. Sceptre has consistently received
prestigious industry awards on their notebook designs and performance, and
manufactures products for several other Tier 1 computer manufacturers. Sceptre's
parent company, Compal, is a publicly traded company in Taiwan with revenues in
excess of 1.5 billion.

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. The Company is basically creating a new distribution channel
that enables them to distribute product virtually via the internet, by
outsourcing as many of the company services as possible and selling the products
with the eSelect software through the reseller. At the same time, the Company
will leverage the high margin revenue stream through the .NET business unit as
an ASP by offering turnkey internet services.


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.

                                       5
<PAGE>

SERVICE AND PRODUCT WARRANTY

         eNetpc provides resellers with access to its technical support line for
answers to questions that require immediate attention. The Company maintains a
data base of technical information that it can easily access in response to
customer inquiries in order to provide quick and accurate answers to its
dealers. The Company also provides file access for its resellers, featuring a
secure Internet site equipped to provide access to up-to-date support and
technical information. eNetpc also provides its resellers with current product
information, including manuals, specifications and product change notifications.

         To support its customers, eNetpc contracts with Micro Warranty Services
L.L.C. ("MWS") of Irving, Texas to provide on-site warranty service. End-users
are provided with 24 hour, 7 days per week toll-free help desk support and an
on-site repair program. The help desk and parts dispatch are handled by MWS
through its toll-free service line, while parts are shipped via overnight
service by eNetpc. Similar to tier one manufacturers, an authorized eNetpc
reseller performs the repair work and is reimbursed for its services.

         eNetpc utilizes what it believes is an effective product tracking
system which allows it to track product failure history from initial quality
control testing to customer arrival and up to twelve months thereafter. Each
eNetpc product is sold with a one-year warranty for the benefit of the end-user.
The warranty can be upgraded to either a one- or three-year on-site warranty for
a modest upgrade price.

GOVERNMENT REGULATION

         In the United States, the Federal Communications Commission (the "FCC")
regulates the radio frequency emissions of computing equipment. The FCC has
established two standards for computer products, Class A and Class B. Only Class
B products may be sold for use in a residential environment. Both Class A and
Class B products may be sold for use in a commercial environment. All of
eNetpc's current desktop, notebook, workstation and network server systems are
sold under the more restrictive Class B certification.

         eNetpc's business also is subject to regulation by various other
federal and state governmental agencies. Such regulation includes the antitrust
regulatory activities of the U.S. Federal Trade Commission and Department of
Justice, the import/export regulatory activities of the U.S. Department of
Commerce and the product safety regulatory activities of the U.S. Consumer
Products Safety Commission.

         eNetpc also is required to obtain regulatory approvals in other
countries prior to the sale or shipment of products. In certain jurisdictions,
such requirements are more stringent than in the United States. Many developing
nations are just beginning to establish safety, environmental and other
regulatory requirements, which may vary greatly from U.S. requirements.

EMPLOYEES

         As of May 15, 2001, eNetpc had 12 employees, all of whom were full-time
employees. None of these employees is represented by a union. eNetpc believes
that its relations with its employees are good.



                                       6
<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY

         eNetpc leases approximately 14,265 square feet of space used for
offices, assembly, manufacturing and packaging at 6825 Shady Oak Road, Eden
Prairie, Minnesota 55344 at a monthly rent of $10,700. This lease expires on
April 30, 2001. On May 1, 2001, the Company downsized its space needs and
renewed the existing lease for 5,700 square feet at a monthly rent of $4,489.

         The Company also leases approximately 2,860 square feet of space used
for sales offices at 2227 South 48th Street, Suite A, Tempe, Arizona 85282 at a
monthly rent of $2,574.

ITEM 3.  LEGAL PROCEEDINGS

         In June, 2000, eNetpc (then Cyberstar) commenced legal proceedings
against Euler Solutions, Inc. alleging breach of contract, (Cyberstar Computer
Corporation v. Euler Solutions, Inc., Court file No. CT 008191, in State of
Minnesota, Hennepin county district Court), seeking refund of approximately
$31,000.00 paid to Euler for custom computer software that was never completed.
Euler has filed a counterclaim in the amount of approximately $90,000.00 plus
interest and consequential damages of over $100,000.00 it claims is owed by
eNetpc for computer consulting services provided by Euler.

         The parties have engaged in extensive discovery which is essentially
completed. Mediation efforts were undertaken on May 14, 2001. Those efforts were
unsuccessful.

         eNetpc has vigorously contested Euler's claims and the matter is now
set for trial beginning on June 25, 2001.

         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

                                       7
<PAGE>


                                     PART II

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

         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 29, 2000 and February 28, 2001.



       Fiscal Year 2000                    Low               High
       ----------------------------  -----------------  ---------------
       First Quarter                      $1.50             $1.50
       Second Quarter                      2.00              2.00
       Third Quarter                       1.25              3.625
       Fourth Quarter                      2.75              9.25


       Fiscal Year 2001                    Low               High
       ----------------------------  -----------------  ---------------
       First Quarter                      $7.20             $7.50
       Second Quarter                      5.83              5.97
       Third Quarter                       3.39              3.43
       Fourth Quarter                      1.82              1.91

These quotations represent interdealer prices, without retail markup, markdown,
or commission, and may not reflect actual transactions. As of April 14, 2001,
there were approximately 207 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 2001, eNetpc, Inc. has three operating units, the CyberStar
division, the VAR division, and the Virtual Distribution division. Revenues from
CyberStar 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. The VAR division is an
authorized reseller of products from Compaq, CyberStar, IBM, Hewlett-Packard and
Apple, among others, as well as selling non-branded products. The Virtual
Distribution division generates revenues from distributing tier-one computer
related products to and from the country's largest computer resellers.

         eNetpc incurred net losses in both fiscal 2000 and 2001. In fiscal
2000, losses resulted from decreased sales that were partially offset by an
increase in the gross profit margin and a decrease in operating expenses. In
fiscal 2001, losses resulted from increased development costs, increased
administrative costs associated with increased revenues, and downward market
pressure on prices decreasing gross profit margin.

                                       8
<PAGE>

         In fiscal 2000, desired sales volumes were not realized. In response,
staff levels were reduced and prices increased, widening the gross profit
margin. eNetpc also began forming relationships with outside sales and marketing
organizations to increase and expand sales volume.

         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. The Company
is planning to increase development of its e-commerce site engine and develop
application service provider capability to improve gross profit margins.


RESULTS OF OPERATIONS

YEARS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000

         Sales increased by 303%, or $8,896,246, to $13,289,314 in fiscal 2001
from $4,393,068 in fiscal 2000. This increase was primarily due to the
acquisition of International Trade Center, Inc. now referred to as the Virtual
Distribution division. In fiscal 2001 and 2000, CyberStar division sales
accounted for 10%, or $1,312,461, and 65%, or $2,854,097, respectively, of total
sales. Sales for the VAR division decreased by $593,016 to $945,955 in fiscal
2001 from $1,538,971 in fiscal 2000. Virtual Distribution division sales were
$83% of total sales in fiscal 2001, or $11,030,898.

         Gross profit increased by 17%, or $133,495, to $903,983 in fiscal 2001
from $770,488 in fiscal 2000. Gross profit as a percentage of sales was 7% in
fiscal 2001 as compared to 17% in fiscal 2000. The decrease in gross profit
percentage was primarily due to the lower gross profit margins in the Virtual
Distribution division.

         Selling, general and administrative expenses increased by 80%, or
$993,486, to $2,238,925 in fiscal 2001 from $1,245,439 in fiscal 2000. This
increase was primarily due to increases in employee related expenses $484,654,
professional fees $139,617, deferred compensation $222,456, and all other
expenses $146,759.

         The loss from operations increased by $859,991 to $(1,334,942) in
fiscal 2001 from $(474,951) in fiscal 2000, reflecting both the increase in
gross profit of $133,495 and the increase in operating expenses of $993,486.

         Interest expense increased by 317%, or $44,357, to $58,358 in fiscal
2001 from $14,001 in fiscal 2000 primarily as a result of increased rates of
interest and increased average borrowings in fiscal 2001.

         As a result of the foregoing factors, net loss increased by $916,199 to
$(1,383,372) in fiscal 2001 from $(467,173) in fiscal 2000.


LIQUIDITY AND CAPITAL RESOURCES

         eNetpc's cash position at February 28, 2001 was $175,296, a decrease of
$321,190 from $496,486 at February 29, 2000. During the twelve months ended
February 28, 2001, net cash used in operating activities was $1,157,160
primarily due to the net loss of $1,383.372.

                                       9
<PAGE>

         Net cash from financing activities of $1,000,005 in the twelve months
ended February 28, 2001 consisted primarily of net proceeds of $900,000 from
stockholder notes payable and $100,005 from the sale of common stock.

         Net cash flows used in investing activities in the twelve months ended
February 28, 2001 was $164,035 due to the purchases of property and equipment.

         The Company's revolving lines of credit of $300,000 and $150,000 with a
bank were not renewed. The Company entered into a loan and security agreement in
the amount of $2,500,000 which allows an advance of up to 85% of the Company's
eligible accounts receivable at an annual interest rate of prime plus 4% (prime
rate at February 29, 2001 is 8.5 %). Borrowings under this agreement are secured
by the Company's assets and guaranteed by the majority shareholder. As of
February 28, 2001, there were no borrowings.

         Management believes that cash on hand together with funds available
under the agreement noted above will be sufficient to satisfy fiscal 2002
operating requirements.


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.....................................18,19

         Financial Statements

             Balance Sheet...................................................20
             Statements of Operations........................................21
             Statements of Stockholder's Equity..............................22
             Statements of Cash Flows........................................23
             Notes to Financial Statements...................................24


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

         The information was previously reported on a Form 8-K filed with the
SEC on March 23, 2001.

         (a)      Previous independent accountants.

                                       10
<PAGE>

         (i) On March 19th, 2001, the Company dismissed Ernst & Young LLP
("E&Y"), which had previously served as the Company's independent auditors.

         (ii) The reports of E&Y on the financial statements of the Company for
the past two fiscal years contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles.

         (iii) The Company's Audit Committee and Board of Directors participated
in and approved the decision to change independent auditors on February 21,
2001.

         (iv) In connection with its audits for the 2000 and 1999 fiscal years
and through March 23,2001, there were no disagreements with E&Y on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
E&Y, would have caused E&Y to make reference to such disagreements in their
report on the financial statements for such years.

         (v) During the 2000 and 1999 fiscal years and through March 23, 2001,
there were no "reportable events" as that term is defined in Item 304(a)(1)(v)
of Regulation S-K.

         (vi) The Company has requested that E&Y furnish it with a letter
addressed to the Securities and Exchange Commission(the "Commission") stating
whether or not it agrees with the above statements. A copy of such letter, dated
March 23, 2001, was filed as Exhibit 16.1 to the Form 8-K filed on March 23,
2001.

         (b)  New independent accountants.

         On March 20, 2001, the Company engaged Virchow, Krause & Company, LLP
("Virchow") as its new independent accountants. Such engagement was approved by
the Company's Audit Committee and Board of Directors on February 21, 2001. In
the Company's two most recent fiscal years and any subsequent interim period to
the date hereof, the Company has not consulted with Virchow regarding either:

         (i) the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit opinion that
might be rendered on the Company's financial statements, and neither a written
report was provided to the Company nor oral advice was provided that Virchow
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue; or

         (ii) any matter that was either the subject of a "disagreement," as
that term is defined in Item 304(a)(1)(iv)of Regulation S-K and the related
instructions to Item 304 of Regulation S-K, or a "reportable event," as that
term is defined in Item 304(a)(1)(v) of Regulation S-K.


                                    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.

                                       11
<PAGE>

---------------------- ------   -----------------------------------------------
Name                     Age    Position
---------------------- ------   -----------------------------------------------
Richard A. Pomije        46     Chairman, President, CEO & Secretary/Treasurer
---------------------- ------   -----------------------------------------------
James T. Greenfield      55     Director
---------------------- ------   -----------------------------------------------
Ed Havlik                58     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.

         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.

         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, 2001, February 29, 2000, and
February 28, 19989 to the Chairman and to the Chief Executive Officer. No other
officers earned cash compensation in excess of $100,000 in fiscal 2001.


                           Summary Compensation Table

-------------------------------  ----    ---------- ----------------
Name and Principal Position      Year      Salary     Other Annual
                                                     Compensation (1)
-------------------------------  ----    ---------- ----------------
Richard A. Pomije, Chairman      2001     $193,115
-------------------------------  ----    ---------- ----------------
                                 2000     $102,655       $18,751
-------------------------------  ----    ---------- ----------------
                                 1999     $ 69,615       $15,094
-------------------------------  ----    ---------- ----------------
Jonathan Bumba,
President & CEO (2)              2001     $107,701        None
-------------------------------  ----    ---------- ----------------

(1)      Automobile expenses.
(2)      Mr. Bumba resigned effective March 30, 2001.



                                       12
<PAGE>

OPTION GRANTS IN THE LAST FISCAL YEAR

         The following table sets forth information regarding options granted to
the Named Executive Officer during the 2001 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                    --                          --                     --                 --
------------------------- -------------------------- --------------------------- ----------------- -------------------
</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 2001 and the number and value of shares of Common Stock
subject to options held by the Named Executive Officer as of February 28, 2001.
<TABLE>
<CAPTION>

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

                            Shares                             Number of shares             Value of Unexercised
                         Acquired on                        Underlying Unexercised         In-the-Money Options at
                           Exercise    Value Realized     Options at Fiscal Year-End           Fiscal Year-End
         Name                                             Exercisable/Unexercisable       Exercisable/Unexercisable
------------------------ ------------- ---------------- ------------------------------- ------------------------------
<S>                      <C>           <C>              <C>                             <C>
Richard A. Pomije             --             --                       --                             --
------------------------ ------------- ---------------- ------------------------------- ------------------------------

</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.

         In November 2000, eNetpc issued options to purchase 20,000 shares of
its common Stock to Ed Havlik as partial consideration for his service on the
Board. Such shares were valued at $50,000 as of the date of issuance.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                   MANAGEMENT

         The following table sets forth certain information as of February 28,
2001 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 6825 Shady Oak Road, Eden
Prairie, Minnesota 55344.

                                       13
<PAGE>
<TABLE>
<CAPTION>

---------------------------------------- ----------------- ---------------------------------
Name of Beneficial Owner (1)             Number of shares  Percentage of Outstanding Shares
---------------------------------------- ----------------- ---------------------------------
<S>                                      <C>                <C>
Richard A. Pomije                           3,112,386                 66.3%
---------------------------------------- ----------------- ---------------------------------
James T. Greenfield                           100,000(2)               2.1
---------------------------------------- ----------------- ---------------------------------
Ed Havlik                                      25,000(3)               *
---------------------------------------- ----------------- ---------------------------------
All directors  and  executive  officers     3,237,386                 69.0
as a group (3 persons)
---------------------------------------- ----------------- ---------------------------------

*    Indicates an amount less than 1%

(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  100,000  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.
</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 1, 2000 the Company entered into a Stock Exchange Agreement
(the "Agreement") with the shareholders of ITC, a global distributor of computer
and computer related accessories, to acquire all of the issued and outstanding
stock of ITC. All of the conditions required to close the transaction were
completed June 21, 2000 and on that date the Company acquired all of the issued
and outstanding stock of ITC.

         Under the terms of the Agreement, at closing, the Company issued shares
of its common stock in exchange for the stock of ITC. The shareholders of ITC
received an aggregate 9,576 shares of the Company's common stock. The four
shareholders of ITC were also each granted options to purchase 25,000 shares of
Company's common 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.

         Effective July 5, 2000, the Company announced that Jonathan J. Bumba
has been elected President and Chief  Executive Officer.  Mr. Bumba joined the
Company January 1, 2000. Prior to joining the Company, Mr. Bumba served as
President  and CEO of ITC since January 1999.  Mr. Bumba was granted options to
purchase 300,000 shares of the Company's Common Stock. The options become
exercisable beginning in January 2001.

         On March 30, 2001, Mr. Bumba resigned as President and CEO of the
Company and his options to purchase 300,000 shares of the Company's Common Stock
were cancelled.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

2.1      Stock Exchange Agreement among the Shareholders of  ITC and CyberStar
         Computer Corporation as of April 1, 2000. (1)

                                       14
<PAGE>

2.2      Form of Option Agreement for each of the four shareholders of ITC.(1)

99       Press Release dated June 21, 2000 announcing acquisition of ITC.(1)

(1)      Filed with Report on Form 8-K filed with the SEC on July 6, 2000.

Reports on Form 8-K

         No reports on Form 8-K were filed by the Company during the last
quarter of the fiscal year ended February 28, 2001.



                                       15
<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.

                           CYBERSTAR COMPUTER CORPORATION

Dated:  May 30, 2001     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:  May 30, 2001     By: /s/      Richard A. Pomije
                           -----------------------------------------------------
                           Richard A. Pomije, Director, Chief Executive Officer,
                           Chief Financial Officer and President
                           (Principal executive officer)

Dated:  May 30, 2001     By: /s/      James T. Greenfield
                           -----------------------------------------------------
                           James T. Greenfield, Director

Dated:  May 30, 2001     By: /s/      Ed Havlik
                           -----------------------------------------------------
                           Ed Havlik, Director




                                       16

<PAGE>









                                  eNetpc, Inc.

                   (formerly: CyberStar Computer Corporation)


                                FINANCIAL REPORT

                     FEBRUARY 28, 2001 AND FEBRUARY 29, 2000
















                                       17
<PAGE>



                          INDEPENDENT AUDITOR'S REPORT




To the Board of Directors and Shareholders
eNetpc, Inc.


         We have audited the accompanying balance sheet of eNetpc, Inc.
(formerly: CyberStar Computer Corporation), as of February 28, 2001, and the
related statements of operations, stockholders' equity and cash flows for the
year 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 audit. The financial statements of eNetpc,
Inc. (formerly CyberStar Computer Corporation) for the year ended February 29,
2000 were audited by other auditors whose report dated April 14, 2000 expressed
an unqualified opinion on those statements.

         We conducted our audit 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 audit provides 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,
2001, and the results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

                                              /s/ Virchow, Krause & Company, LLP




                                                  VIRCHOW, KRAUSE & COMPANY, LLP


Minneapolis, Minnesota
April 27, 2001

                                       18
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT




To the Board of Directors and Shareholders
eNetpc, Inc.


         We have audited the accompanying balance sheet of eNetpc, Inc.
(formerly: CyberStar Computer Corporation), as of February 29, 2000, and the
related statements of operations, stockholders' equity and cash flows for the
year 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 audit.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of eNetpc, Inc. as of
February 29, 2000, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States.

                                                          /s/ Ernst & Young  LLP




                                                             ERNST & YOUNG,  LLP


Minneapolis, Minnesota
April 14, 2000


                                       19
<PAGE>
<TABLE>
<CAPTION>


                                  eNetpc, Inc.
                   (formerly: CyberStar Computer Corporation)

                                 BALANCE SHEETS
                     February 28, 2001 and February 29, 2000


        ASSETS                                                             2001           2000
                                                                       -----------    -----------
<S>                                                                    <C>            <C>
CURRENT ASSETS:
    Cash and cash equivalents                                          $   175,296    $   496,486
    Trade accounts receivable, less allowance for
        doubtful accounts 2001 $77,250; 2000 $80,500                       711,820        574,506
    Inventories                                                            164,743        295,511
    Prepaid expenses                                                        14,296         16,026
                                                                       -----------    -----------
             Total current assets                                        1,066,155      1,382,529

OTHER ASSETS                                                                31,575         14,190

PROPERTY AND EQUIPMENT                                                     221,665        122,478
                                                                       -----------    -----------

                                                                       $ 1,319,395    $ 1,519,197
                                                                       ===========    ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                                   $   153,156    $   239,329
    Accrued payroll                                                         15,734         39,874
    Accrued liabilities                                                     30,461         38,176
                                                                       -----------    -----------
             Total current liabilities                                     199,351        317,379

STOCKHOLDERS' EQUITY:
    Common stock, $.01 par value, 20,000,000 shares authorized
        2001 4,691,496; 2000 4,333,095 shares issued and outstanding        46,915         43,331
    Additional paid-in capital                                           4,694,607      3,069,049
    Deferred compensation                                                 (564,914)      (237,370)
    Accumulated deficit                                                 (3,056,564)    (1,673,192)
                                                                       -----------    -----------
                                                                         1,120,044      1,201,818
                                                                       -----------    -----------

                                                                       $ 1,319,395    $ 1,519,197
                                                                       ===========    ===========



See Notes to Financial Statements.

</TABLE>
                                       20
<PAGE>
<TABLE>
<CAPTION>


                                  eNetpc, Inc.
                   (formerly: CyberStar Computer Corporation)

                            STATEMENTS OF OPERATIONS
               Years Ended February 28, 2001 and February 29, 2000


                                                              2001            2000
                                                          ------------    ------------
<S>                                                       <C>             <C>
Revenues:
    Sales                                                 $ 13,289,314    $  4,393,068
    Cost of sales                                           12,385,331       3,622,580
                                                          ------------    ------------
             Gross profit                                      903,983         770,488

    Selling, general and administrative expenses             2,238,925       1,245,439
                                                          ------------    ------------

             Operating loss                                 (1,334,942)       (474,951)

Other income (expense):
    Interest and other income                                    9,928          21,779
    Interest expense                                           (58,358)        (14,001)
                                                          ------------    ------------
                                                               (48,430)          7,778
                                                          ------------    ------------

             Net loss                                     $ (1,383,372)   $   (467,173)
                                                          ============    ============


Basic and diluted loss per share                          $       (.30)   $       (.12)
                                                          ============    ============

Weighted average shares outstanding - basic and diluted      4,571,090       3,964,300
                                                          ============    ============



See Notes to Financial Statements.


                                       21
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                                         eNetpc, Inc.
                                          (formerly: CyberStar Computer Corporation)

                                              STATEMENTS OF STOCKHOLDERS' EQUITY
                                     Years Ended February 28, 2001 and February 29, 2000



                                                              Common Stock      Additional
                                                        ----------------------   Paid-In      Deferred     Accumulated
                                                          Shares      Amount     Capital    Compensation     Deficit       Total
                                                        ----------  ---------- -----------  ------------   -----------  -----------
<S>                                                      <C>        <C>        <C>          <C>            <C>          <C>
Balance February 28, 1999                                3,928,095  $   39,281 $ 1,901,029   $      --     $(1,206,019) $   734,291
   Issuance of common stock, net of offering costs         400,000       4,000     893,070          --            --        897,070
   Issuance of common stock for services performed           5,000          50      12,450          --            --         12,500
   Deferred compensation related to stock option grants       --          --       262,500      (262,500)         --           --
   Amortization of deferred compensation                      --          --          --          25,130          --         25,130
   Net loss                                                   --          --          --            --        (467,173)    (467,173)
                                                        ----------  ---------- -----------   -----------   -----------  -----------

Balance, February 29, 2000                               4,333,095      43,331   3,069,049      (237,370)   (1,673,192)   1,201,818
   Purchase of ITC                                           9,576          96      52,567          --            --         52,663
   Issuance of common stock, net of offering costs          40,000         400      99,605          --            --        100,005
   Conversion of debt to common stock                      308,825       3,088     923,386          --            --        926,474
   Deferred compensation related to stock option grants       --          --       550,000      (550,000)         --           --
   Amortization of deferred compensation                      --          --          --         222,456          --        222,456
   Net loss                                                   --          --          --            --      (1,383,372)  (1,383,372)
                                                        ----------  ---------- -----------   -----------   -----------  -----------

Balance, February 28, 2001                               4,691,496  $   46,915 $ 4,694,607   $  (564,914)  $(3,056,564) $ 1,120,044
                                                        ==========  ========== ===========   ===========   ===========  ===========


See Notes to Financial Statements.

</TABLE>
                                                                    22
<PAGE>
<TABLE>
<CAPTION>


                                                    eNetpc, Inc.
                                     (formerly: CyberStar Computer Corporation)

                                              STATEMENTS OF CASH FLOWS
                                Years Ended February 28, 2001 and February 29, 2000


                                                                                             2001              2000
                                                                                        --------------    --------------
<S>                                                                                    <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                            $   (1,383,372)   $     (467,173)
    Adjustments to reconcile net loss to net
       cash used in operating activities:
       Depreciation and amortization                                                           100,126            88,668
       Stock compensation expense                                                              222,456            37,630
        Accrued interest converted to common stock                                              26,474             -
       (Increase) decrease in trade accounts receivable                                       (137,314)          118,984
       (Increase) decrease in insurance receivable                                               -               246,380
       (Increase) decrease in inventories                                                      130,768           167,792
       (Increase) decrease in deferred financing costs                                           -                25,000
       (Increase) decrease in prepaid expenses                                                   1,730           (14,536)
       Increase (decrease) in accounts payable                                                 (86,173)         (407,823)
       Increase (decrease) in accrued liabilities                                              (31,855)          (82,093)
                                                                                        --------------    --------------
        Net cash used in operating activities                                               (1,157,160)         (287,171)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                                        (164,035)          (36,604)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from notes payable, stockholder                                               900,000             -
    Net proceeds from sale of common stock                                                     100,005           897,070
    Net payments on line of credit                                                               -              (150,000)
                                                                                        --------------    --------------
        Net cash provided by financing activities                                            1,000,005           747,070

        Increase (decrease) in cash and cash equivalents                                      (321,190)          423,295

Cash and cash equivalents:
    Beginning                                                                                  496,486            73,191
                                                                                        --------------    --------------

    Ending                                                                              $      175,296    $      496,486
                                                                                        ==============    ==============


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash payments for interest                                                          $       31,884    $       14,001
                                                                                        ==============    ==============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
    AND FINANCING ACTIVITIES:
    Deferred compensation related to stock options grants                               $      550,000    $      262,500
                                                                                        ==============    ==============

    Note payable, stockholder and accrued interest converted to common stock            $      926,474
                                                                                        ==============

    Stock issued for purchase of ITC                                                    $       52,663
                                                                                        ==============


    See Notes to Financial Statements.

</TABLE>


                                                       23
<PAGE>

                                  eNetpc, Inc.
                   (formerly: CyberStar Computer Corporation)

                          NOTES TO FINANCIAL STATEMENTS
               Years Ended February 28, 2001 and February 29, 2000



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

              Nature of business:

              The Company currently has three operating divisions, CyberStar,
              VAR and Virtual Distribution (formerly ITC). The CyberStar
              Division manufactures and markets a line of microcomputers,
              including personal computers, workstations and file servers under
              the CyberStar brand name. The VAR Division currently is an
              authorized reseller of products from Compaq, IBM, Digital
              Equipment and Hewlett-Packard, among others. The Virtual
              Distribution division distributes tier-one computer hardware
              software and peripherals to large computer resellers and operates
              from an office in Arizona.

              Purchase 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. For the year ended February 29, 2000, unaudited pro
              forma results of the Company, as if the acquisition had taken
              place at the beginning of fiscal 2000, are as follows: net sales
              of $26,400,000, net loss of $(120,000) and net loss per share of
              $(.03).

              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 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, 2001, unamortized software
              development costs were $95,758, net of accumulated amortization of
              $26,599 and are included in property and equipment.



                                       24
<PAGE>

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

              Goodwill:

              The Company has classified a portion of the purchase of ITC as
              goodwill. Goodwill is being amortized over ten years and
              amortization expense for the year ended February 28, 2001 was
              $1,217.

              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. At this
              time, the Company believes that no significant impairment of
              long-lived assets has occurred and that no reduction of the
              estimated useful lives of such assets is warranted.

              Inventories:

              Inventories consist principally of purchased components and are
              valued at the lower of cost or market (first-in, first-out
              method).

              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
              Company made pro forma disclosures of what net loss would have
              been had the provisions of Statement 123 been applied to the
              Company's stock options.

              Advertising:

              The Company expenses advertising costs as they are incurred.
              Advertising costs were $8,900 and $8,025 for 2001 and 2000,
              respectively.


                                       25
<PAGE>


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

              Revenue recognition:

              The Company recognizes sales when the products are shipped. 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, when dilutive.

              Incremental shares attributable to the assumed exercise of stock
              options and stock purchase warrants for the years ended February
              28, 2001 and February 29, 2000 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.

              Carrying value of financial instruments:

              The carrying value of the Company's financial instruments
              approximates fair value at February 28, 2001 and February 29,
              2000.

              Recently issued accounting pronouncement:

              Statement of Financial Accounting Standards (SFAS) No. 133,
              "Accounting for Derivative Instruments and Hedging Activities," as
              amended, is effective for years beginning after June 15, 2000.
              SFAS No. 133 establishes accounting and reporting standards
              requiring that every derivative instrument, including certain
              derivative instruments embedded in other contracts, be recorded in
              the balance sheet as either an asset or liability measured at its
              fair value. SFAS No. 133 requires that changes in the derivative's
              fair value be recognized currently in earnings unless specific
              hedge criteria are met. Special accounting for qualifying hedges
              allows a derivative's gains or losses to offset related results on
              the hedged item in the statement of operations and requires that a
              company must formally document, designate and assess the
              effectiveness of transactions that receive hedge accounting. The
              Company believes the adoption of SFAS No. 133 will not have a
              material effect on the Company's financial position or results of
              operations.

              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.


                                       26
<PAGE>


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

              Reclassifications:

              Certain reclassifications have been made to the 2000 financial
              statements to conform to the classifications used in 2001. Such
              reclassifications had no effect on net loss or stockholders'
              equity.


Note 2.       Property and Equipment:


<TABLE>
<CAPTION>

                                                                        2001                 2000
                                                                   --------------       --------------
                 <S>                                               <C>                  <C>
                 Office equipment and furniture                    $      459,045       $      260,949
                 Leasehold improvements                                    37,270               37,270
                 Production equipment                                      46,915               46,915
                                                                   --------------       --------------
                                                                          543,230              345,134
                 Less accumulated depreciation and amortization           321,565              222,656
                                                                   --------------       --------------
                                                                   $      221,665       $      122,478
                                                                   ==============       ==============
</TABLE>


Note 3.       Other Assets:


<TABLE>
<CAPTION>

                                                                       2001                 2000
                                                                  --------------       --------------
                 <S>                                              <C>                  <C>
                 Goodwill                                         $       18,602       $        -
                 Less accumulated amortization                            (1,217)               -
                 Deposits                                                 14,190               14,190
                                                                  --------------       --------------
                                                                  $       31,575       $       14,190
                                                                  ==============       ==============
</TABLE>

Note 4.       Loan Agreement:

              The Company entered into a loan and security agreement with a
              financing institution in October 2000 in the amount of $2,500,000
              which allows an advance of up to 85% of the Company's eligible
              accounts receivable at an annual interest rate of prime plus 4%.
              Borrowings under this agreement are collateralized by the
              Company's assets and guaranteed by the majority stockholder. There
              were no borrowings at February 28, 2001 under this agreement.


Note 5.       Income Taxes:

              At February 28, 2001, the Company had net operating loss
              carryforwards of approximately $2,600,000. The net operating loss
              carryforwards are available to offset future taxable income
              through 2020 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. Significant
              components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>

                                                                         2001              2000
                                                                    --------------    --------------
                 <S>                                                <C>               <C>
                 Deferred tax assets:
                    Net operating loss carryforwards                $    1,050,000    $      579,400
                    Deferred compensation                                   90,000             -
                    Other                                                   40,000            29,600
                                                                    --------------    --------------
                 Deferred tax assets before valuation allowance          1,180,000           609,000
                 Valuation allowance                                    (1,180,000)         (609,000)
                                                                    --------------    --------------
                 Net deferred tax assets                            $        -        $        -
                                                                    ==============    ==============
</TABLE>


                                       27
<PAGE>


Note 6.       Stockholders' Equity:

              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.

              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, 1999            661,316       338,684         -           338,684   $     1.86
                    Options granted                     (173,000)      173,000       300,000       473,000         2.36
                    Options canceled                      81,500       (81,500)        -           (81,500)        1.85
                                                     -----------   -----------   -----------   -----------
                 Balance at February 29, 2000            569,816       430,184       300,000       730,184         2.19
                    Options granted                      (20,000)       20,000       192,004       212,004         2.69
                    Options canceled                       -             -             -             -              -
                                                     -----------   -----------   -----------   -----------
                 Balance at February 28, 2001            549,816       450,184       492,004       942,188   $     2.30
                                                     ===========   ===========   ===========   ===========
</TABLE>

              The Company had 493,184 exercisable options at February 28, 2001
              with a weighted average exercise price of $2.12. Exercise prices
              for options outstanding ranged from $1.75 to $3.75.

              The Company has elected to following Accounting Principles Board
              Opinion No. 25, Accounting for Stock Issued to Employees ("APB
              25", and related Interpretations in accounting for its employee
              stock options, because as discussed below, the alternative fair
              value accounting provided for under FASB Statement No. 123,
              Accounting for Stock-Based Compensation ("Statement 123"),
              requires use of option valuation models that were not developed
              for use in valuing employee stock options. Under APB25, if the
              exercise price of the Company's employee stock options equals the
              market price of the underlying stock on the date of grant, no
              compensation expense is recognized.

              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: risk-free
              interest rates of 5.5% in 2001 and 2000 and a weighted average
              expected life of the option of four years in 2000 and 2001.

                                       28
<PAGE>


Note 6.       Stockholders' Equity (Continued):

              The Black-Scholes option valuation model was developed for use in
              estimating the fair value of traded options which have no vesting
              restrictions and are fully transferable. In addition, option
              valuation models require the input of highly subjective
              assumptions. 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.

              For purposes of pro forma disclosures, the estimated fair value of
              the options is amortized to expense over the options' vesting
              period. The Company's pro forma information is as follows:
<TABLE>
<CAPTION>

                                                                        2001               2000
                                                                   --------------     --------------
                 <S>                                               <C>                <C>
                 Pro forma net loss                                $   (2,060,576)    $     (731,689)

                 Basic and dilutive pro forma net loss per share   $         (.45)     $        (.18)
</TABLE>

              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 has 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 and
              February 29, 2000, the Company recognized $136,720 and $25,130,
              respectively, 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.


Note 7.       Segment Data:

              The Company has one reportable segment, 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.
              Sales information by division is as follows:

                                                          Year Ended
                                                ------------------------------
                                                February 28,      February29,
                                                     2001            2000
                                                --------------  --------------
                                                Net sales:
                 CyberStar division             $    1,312,461  $    2,854,097
                 VAR division                          945,955       1,538,971
                 Virtual Distribution division      11,030,898           -
                                                --------------  --------------
                                                $   13,289,314  $    4,393,068
                                                ==============  ==============



                                       29
<PAGE>


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.

              The following is a schedule, by year, of future minimum rental
              payments as of February 28, 2001:

                               Office
                                Space          Vehicles            Total
                           --------------   --------------    --------------
                    2002   $       53,870   $       17,300    $       71,170
                    2003           32,950           17,300            50,250
                    2004           22,650           12,300            34,950
                           --------------   --------------    --------------
                           $      109,470   $       46,900    $      156,370
                           ==============   ==============    ==============

              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 three customers which represented 44% of sales in
              2001 and one customer which represented 11% of sales in 2000.
              Accounts receivable from these customers was $448,005 and $10,128
              at February 28, 2001 and February 29, 2000, respectively.


Note 10.      Subsequent Events:

              The Company issued 9,000 warrants to purchase common stock with an
              exercise price of $2.00 in March 2001.

              In March 2001, the Company terminated the employment of certain
              employees which thereby caused the cancellation of 350,000 stock
              options. As a result, the Company will record income of
              approximately $200,000.














                                       30