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, 2002

|_|  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              (I.R.S. Employer Identification No.)
of incorporation or organization)

      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:      $   4,060,699.
                                                              --------------



<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:  $1,021,020.  based on shares held by non-affiliates as of April 22, 2002,
and the closing sale price for said shares in the Nasdaq  National  Market as of
such date.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  4,854,320 shares of Common Stock, as
of April 22, 2002.


                       DOCUMENTS INCORPORATED BY REFERENCE

The   registrant's   definitive  Proxy  Statement  for  the  Annual  Meeting  of
Shareholders  to  be  held  on  August  6,  2002  (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 10, 2002.

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                                           5

Item 3.    Legal Proceedings                                                 5

Item 4.    Submission of Matters to a Vote of Security Holders               5

PART II                                                                      5

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

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

Item 7.    Financial Statements                                             10

PART III                                                                    10

Item 8.    Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act            10

Item 9.  Executive Compensation                                             11

Item 10.  Security Ownership of Certain Beneficial Owners and Management    12

Item 11.  Certain Relationships and Related Transactions                    13

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

SIGNATURES                                                                  14





                                      iii
<PAGE>



                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL


         The  Company  was  founded  in 1982  under  the  laws of the  State  of
Minnesota as Command Small Computer  Learning Center,  Inc., a computer training
company.  Over a period of years,  the  Company  became  involved in the sale of
computer  components  and,  eventually,  became a value added  reseller (VAR) of
major  computer  brands.  In 1987,  the  Company  changed  its  name to  Command
Electronics,  Inc. In February 1995,  the Company  acquired  CyberStar  Computer
Systems, a manufacturer and marketer of microcomputers and servers,  and in 1997
it changed its name to  CyberStar  Computer  Corporation.  In August of 2000 the
Company changed its name to eNetpc,  Inc.  Company  headquarters  are located at
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  in  addition  to VAR
activity. eNetpc, Inc. is structured on the belief that the Internet will be the
standard  method of virtual  distribution.  The  Company's  core  strategy is to
provide leading edge B2B software, with fulfillment,  to complement the needs of
just-in-time   inventory.   eNetpc's  innovative   eSelect(TM)  software  brings
manufacturers, resellers and customers together.

         Through its .COM business unit, the Company currently  provides eSelect
2.5  application  software to Internet  resellers  enabling them to offer online
configuration,  delivery, and fulfillment on the Internet. The products, service
and support are all  outsourced to provide  maximum  value to the customer,  and
eNetpc does not inventory,  assemble or directly support the products offered on
eSelect 2.5 software,  keeping overhead to a minimum.  The .COM business unit is
responsible for 99% of the Company's sales.  Current products offered on eSelect
2.5 include:

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


         The  business-to-business  (B2B, e-commerce) industry continues to grow
in complexity and applications, while all industries look to downsizing their IT
departments  for cost  reduction.  As an alternative to costly in-house web site
infrastructure,  eNetpc offers the eSelect solution,  a complete set of hosting,
development,  and site management  solutions.  Systems  (typically  servers) are
built to customer  specifications using the Build-To Host application in eSelect
and are placed in eNetpc's  "server  farm".  Customers  then take  advantage  of
eNetpc's  ASP  services  to host  their  business  VPN,  Intranet,  or  Extranet
applications.


INDUSTRY OVERVIEW

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


                                       1
<PAGE>

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

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

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


COMPANY ORGANIZATION

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

..COM

         The .COM business unit developed eSelect, a proprietary  internet-based
development  tool, to capitalize on two significant  trends:  e-commerce and the
desire  for  custom-built,   custom-configured  computer  systems.  Through  the
software,  customers  have the  ability  to  custom  configure,  price and order
computer products directly on-line through their choice of internet reseller.

         Through its .COM business  unit, the Company  currently  provides their
eSelect 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
software, thereby minimizing its overhead costs.

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

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



                                       2
<PAGE>


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

..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 all 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
instead of developing an application  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 division is an application  service provider
(ASP).  ASP's offer business  solutions and applications  that are available for
use over the  Internet.  Providing  this service  adds to eNetpc's  product line
revenues and builds on its software development efforts.

         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 concentrates on ensuring maximum
uptime for customers' web servers and offers the  convenience of an ISP with the
functionality of an ASP with a unique Build to Host Module.

         Application  hosting is an area of  expansion  in  industry.  Our first
opportunity  as an ASP exists 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    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)


                                       3
<PAGE>


MAJOR CUSTOMERS

The top five  customers in terms of net sales  represent 50% of fiscal year 2002
total  net  sales;  the top 25  customers  represent  75%.  Four of the top five
customers are in the computer and computer  parts reseller  industry,  and 15 of
the top 25 are in this same industry.

MANUFACTURING AND SUPPLIERS

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

COMPETITION

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

INTELLECTUAL PROPERTY

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

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

SERVICE

         eNetpc provides 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.


                                       4
<PAGE>


EMPLOYEES

         As of May 15, 2002, eNetpc had 6 employees,  all of whom were full-time
employees.  None of these employees are represented by a union.  eNetpc believes
that its relations with its employees are good.


ITEM 2.  DESCRIPTION OF PROPERTY

         eNetpc leases approximately 5,700 square feet of space used for offices
and operations equipment storage at 6825 Shady Oak Road, Eden Prairie, Minnesota
55344 at a monthly rent of $4,489  renewable  annually.  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 $2,702 expiring
October 31, 2003. Negotiations are in process to sublease the space in Arizona.

ITEM 3.  LEGAL PROCEEDINGS

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


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

         None

                                     PART II

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

         eNetpc's  Common  Stock  has  been  traded  on the OTC  Bulletin  Board
("OTCBB") since June 12, 1998. The following table sets forth the quarterly high
and low sales prices as reported by the Nasdaq  National  Market during the last
two fiscal years ended February 28, 2001 and February 28, 2002.


       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

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

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


                                       5
<PAGE>


DIVIDEND POLICY

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


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

In fiscal year 2002,  eNetpc,  Inc. has two operating  units, the .COM division,
the .NET division.  Revenues from .COM operations are generated through the sale
of a wide range of computer systems and products,  including personal computers,
work stations and file servers, under the CyberStar and eNetpc brand names. This
division is also an authorized reseller of products from Compaq, Microsoft, IBM,
Hewlett-Packard  and  Apple,  among  others,  as  well  as  selling  non-branded
products.  The .NET division  focuses on providing web hosting and  development,
application software,  server co-location,  hardware implementation and complete
storage  solutions.  The division targets its services to all solution providers
who require assistance to sell their products on the internet.

         eNetpc  incurred  net  losses in fiscal  years  2002 and 2001.  In both
years,  losses  resulted from decreased  sales that were  partially  offset by a
decrease in operating expenses.  The decrease in demand for computer and related
products and services in both years has challenged the Company to minimize labor
and overhead costs while maintaining viable solutions to its customer base.

         In fiscal  2002,  continued  recession of computer  markets  forced the
Company to further  refine its product  offerings  and led to the closing of the
Virtual Distribution business. Development of eSelect was continued and resulted
in the more robust  product  version  2.5.  Management  is pursuing  alternative
markets for the eSelect solution, outside of the computer industry, and believes
the new version  2.5 has many  applications  in other  internet  businesses.  In
fiscal 2001,  sales  volumes  increased  substantially  through  acquisition  of
International  Trade Center,  Inc. and operating  expenses were added to further
expand revenues.  The global technology market decline resulted in a decrease in
prices and a  decrease  in gross  profit  margin.  The  Company  responded  with
reductions in operating expenses in the 4th quarter.

         Management is closely monitoring every expenditure and commitment as to
absolute need and benefit.  Management  acknowledges  that improving the company
cash position will require  additional equity financing which is in the planning
and execution stage as of February 28, 2002.  Management  believes the following
efforts will move the company to improved cash flow and  profitability in fiscal
year 2003:

     1)   The  Company  has engaged an  investment  banking  firm to arrange for
          continuing  financing in support of the Company's  short and long term
          objectives.
     2)   The acquisition and development of software applications,  with proven
          recurring revenue generation  ability,  to broaden the company product
          lines.
     3)   Continued  reduction of overhead  expenses  through  consolidation  of
          operating functions.
     4)   Implementation  of new  marketing  strategies  for  eSelect  2.5  that
          develop new recurring revenues for this product offering.


                                       6
<PAGE>



RESULTS OF OPERATIONS

YEARS ENDED FEBRUARY 28, 2002 AND FEBRUARY 28, 2001

         Sales decreased by 69%, or $9,228,615 to $4,060,699 in fiscal 2002 from
$13,289,314 in fiscal 2001.  This decrease was primarily due to the reduction in
demand for the Virtual  Distribution  products and services which  accounted for
$2,691,029, or 66% of total net sales in fiscal 2002, and $11,030,898, or 83% in
fiscal year 2001.

         Gross profit decreased by 58%, or $527,520,  to $376,463 in fiscal 2002
from  $903,983  in fiscal 2001  primarily  due to the  decrease in sales.  Gross
profit  as a  percentage  of sales was 9% in fiscal  2002 as  compared  to 7% in
fiscal  2001.  Gross  profit  in the  Virtual  Distribution  division  decreased
$532,246, or 75% to $173,244 in fiscal 2002 from $705,490 in fiscal 2001.

         Selling,  general  and  administrative  expenses  decreased  by 47%, or
$1,042,096,  to $1,196,829 in fiscal 2002 from  $2,238,925 in fiscal 2001.  This
decrease was primarily due to the closing of the Virtual  Distribution  business
and elimination of its operating expenses in September, 2001. In accordance with
SFAS No.  121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
Long-Lived  Assets to be  Disposed  Of" as  circumstances  dictate,  the Company
evaluates  whether  changes have  occurred  that would  require  revision of the
remaining  estimated lives of recorded  long-lived assets or render those assets
not recoverable.  If such circumstances  arise,  recoverability is determined by
comparing  the  undiscounted  net  cash  flows  of  long-lived  assets  to their
respective carrying values. The amount of impairment,  if any, is measured based
on the projected  discounted  cash flows using an appropriate  discount rate. In
fiscal year 2002, such impairment was applied to goodwill related to the Virtual
Distribution  business and was written off in the amount of $17,385. The closing
of the division also resulted in $179,684 of bad debt reserve charges related to
sales made by the division considered by management to be uncollectible.

         The loss from operations  decreased by $552,604 to $(820,366) in fiscal
2002 from  $(1,334,942)  in fiscal  2001,  reflecting  the decrease in operating
expense and the decrease in gross profit.

         Interest  expense  decreased  by 56%, or $32,858,  to $25,500 in fiscal
2002 from  $58,358  in fiscal  2001  primarily  as a result of the  decrease  in
borrowing related to the Virtual Distribution business.

         As a result of the foregoing factors, net loss decreased by $552,604 to
$(830,768) in fiscal 2002 from $(1,383,372) in fiscal 2001.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         The  Financial   Accounting  Standards  Board  (FASB)  recently  issued
Statement of Financial Accounting Standards (SFAS) 141 "Business  Combinations."
This  Statement  addresses  financial  accounting  and  reporting  for  business
combinations.  It eliminates  the  pooling-of-interests  method and requires all
business combinations be accounted for using the purchase method. The provisions
of the Statement  apply to all business  combinations  initiated  after June 30,
2001, and to all business  combinations  accounted for using the purchase method
for which the date of acquisition is July 1, 2001 or later.  Adoption of the new
standard will have no initial effect on the Company's financial statements.

         The FASB also recently  issued SFAS 142 "Goodwill and Other  Intangible
Assets."  This  Statement  addresses  how  intangible  assets that are  acquired
individually  or with a  group  of  other  assets  should  be  accounted  for in
financial statements upon their acquisition.  It also addresses how goodwill and
other  intangible  assets should be accounted for after they have been initially
recognized in the financial statements. Under the new standard,  amortization of
existing  goodwill  ceases upon adoption of SFAS 142 and is replaced by periodic


                                       7
<PAGE>

evaluation for impairment using specific methodology.  SFAS 142 is effective for
fiscal years  beginning after December 15, 2001. The Company will apply SFAS 142
beginning  with the first  quarter of its fiscal year ending  February 28, 2003.
The effects of adoption of SFAS 142 on the Company's  financial  statements  are
not determinable currently or for any future periods.

         In June 2001, the FASB issued SFAS 143 "Accounting for Asset Retirement
Obligations."  SFAS 143 is effective  for fiscal year  beginning  after June 15,
2002. The Company is currently evaluating the impact of SFAS 143.

         In August 2001, the FASB issued SFAS 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets." SFAS 144 supercedes SFAS 121 and is effective
for financial  statements  issued for fiscal years  beginning after December 31,
2001. The provisions of SFAS 144 generally are to be applied prospectively.  The
Company is currently evaluating the impact of SFAS 144.


SIGNIFICANT ACCOUNTING POLICIES

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

         General

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

         Inventory Valuation

         As  noted  in  Note  1  of  the  Notes  to  the  Financial  Statements,
inventories  consist  primarily  of purchased  components  and are valued at the
lower of cost or market (first-in,  first-out method). Because of the continuing
pressure on component  pricing in the computer  industry,  the company regularly
reviews the costs used to value  inventory and adjusts them to reflect upward or
downward  market  values.  The company  realized  net  downward  adjustments  of
inventory of $22,124 and $81,715 for the years ended  February 28, 2002 and 2001
respectively.

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



                                       8
<PAGE>



         Capitalized Software Development

         Under  the  provisions  of SOP  98-1,  the  Company  capitalizes  costs
associated  with  software  developed or obtained for internal use when both the
preliminary  project stage is completed and management  has  authorized  further
funding for the project  which it deems  probable  will be completed and used to
perform the  function  intended.  Capitalized  costs  include  only (1) external
direct  costs of  materials  and services  consumed in  developing  or obtaining
internal use software,  (2) payroll and payroll  related costs for employees who
are  directly  associated  with and who devote time to the internal use software
project,  and (3) interest  costs  incurred,  when  material,  while  developing
internal  use  software.  Capitalization  of such costs ceases no later than the
point at which the project is substantially  complete and ready for its intended
purpose. At February 28, 2002 and 2001,  unamortized  software development costs
were  $115,758  and  $95,758,  net of  accumulated  amortization  of $64,074 and
$26,599 and are included in property and equipment.

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

        The Company reviews  customers' credit history before extending credit.
Generally,  a minimum credit limit is established for a first time customer with
acceptable credit ratings. As experience is gained with a customer,  an increase
in the credit  limit can be made based on  acceptable  payment  performance.  An
allowance for doubtful accounts is made only after collection  efforts have been
expended and  management  assesses the  situation as  unrecoverable,  based upon
factors  surrounding the credit risk,  historical  trend and other  information.
Reserves  are set  aside  on a  customer  by  customer  basis  rather  than on a
percentage  basis of all  customers  and  amounted  to  $255,000  and $77,250 at
February 28, 2002 and 2001 respectively.

LIQUIDITY AND CAPITAL RESOURCES

         eNetpc's cash position at February 28, 2002 was $16,566,  a decrease of
$158,730  from  $175,296 at February  28, 2001.  During the twelve  months ended
February 28, 2002, net cash used in operating  activities was $338,307 primarily
due to the net loss of $830,768

         Net cash used in  investing  activities  decreased  $129,412 to $34,623
during the year ended February 28, 2002 primarily due to decreased investment in
equipment.

         Net cash  provided by  financing  activities  of $214,200  for the year
ended  February 28, 2002  consisted  primarily of net proceeds of $100,000  from
stockholder notes payable,  $70,000 from sales of common stock, and $44,200 from
subscriptions to purchase common stock.

The Company's loan and security agreement with a financing  institution  expired
in  October,  2001 and was not  renewed.  No new lines of  credit  or  financing
agreements  have been entered into. The Company has entered into a personal loan
agreement  with a  shareholder  in the amount of  $100,000  for one year  paying
interest at an annual rate of 12%.


                                       9
<PAGE>



FORWARD-LOOKING INFORMATION

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

ITEM 7.  FINANCIAL STATEMENTS

         Independent Auditors' Reports....................................15,16

         Financial Statements

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


                                    PART III

ITEM 8.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

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

----------------------- --------- ----------------------------------------------
           Name           Age                  Position
----------------------- --------- ----------------------------------------------
Richard A. Pomije          47     Chairman, President, CEO & Secretary/Treasurer
----------------------- --------- ----------------------------------------------
James T. Greenfield        56     Director
----------------------- --------- ----------------------------------------------
Ed Havlik                  59     Director
----------------------- --------- ----------------------------------------------
Pierce McNally             50     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.



                                       10
<PAGE>


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

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

Section 16 Beneficial Ownership Reporting Compliance

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

ITEM 9.  EXECUTIVE COMPENSATION

         The  following  table sets  forth the  compensation  paid for  services
rendered during the fiscal years ended February 28, 2002, February 28, 2001, and
February 28, 2000 to the Chairman and Chief Executive Officer. No other officers
earned cash compensation in excess of $100,000 in fiscal 2002.

                           Summary Compensation Table

------------------------------- ---------------- ------------- -----------------
Name and Principal Position     Fiscal Year      Salary        Other Annual
                                                               Compensation (1)
------------------------------- ---------------- ------------- -----------------
Richard A. Pomije, Chairman
and CEO                         2002             $146,515      $13,323
------------------------------- ---------------- ------------- -----------------
                                2001             $193,115      $19,865
------------------------------- ---------------- ------------- -----------------
                                2000             $102,655      $18,751
------------------------------- ---------------- ------------- -----------------

(1) Automobile expenses.

OPTION GRANTS IN THE LAST FISCAL YEAR

         The following table sets forth information regarding options granted to
the Named Executive Officer during the 2002 fiscal year.
<TABLE>
<CAPTION>

--------------------- ---------------------- ------------------------- ----------------- -------------------
                        Number of Shares        Percent of Total
                       Underlying Options       Options Granted to      Exercise Price
       Name                 Granted          Employees in Fiscal Year      ($/Share)       Expiration Date
--------------------- ---------------------- ------------------------- ----------------- -------------------
<S>                   <C>                    <C>                       <C>               <C>
Richard A. Pomije              --                       --                    --                 --
--------------------- ---------------------- ------------------------- ----------------- -------------------
James Greenfield             75,000                    18.5                 $1.00                --
--------------------- ---------------------- ------------------------- ----------------- -------------------
Pierce McNally               100,000                   24.7                 $1.00                --
--------------------- ---------------------- ------------------------- ----------------- -------------------
All other employees          230,000                   56.8             $1.00 to $2.00           --
--------------------- ---------------------- ------------------------- ----------------- -------------------
</TABLE>


                                       11
<PAGE>


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

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

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

                                                           Number of shares             Value of Unexercised
                         Shares                         Underlying Unexercised         In-the-Money Options at
                       Acquired on       Value        Options at Fiscal Year-End           Fiscal Year-End
     Name               Exercise       Realized        Exercisable/Unexercisable       Exercisable/Unexercisable
---------------------- ------------ --------------- ------------------------------- ------------------------------
<S>                    <C>          <C>             <C>                             <C>
Richard A. Pomije          --             --                      --                             --
---------------------- ------------ --------------- ------------------------------- ------------------------------
James Greenfield           --             --                  175,000/--                        --/--
---------------------- ------------ --------------- ------------------------------- ------------------------------
Pierce McNally             --             --                  100,000/--                        --/--
---------------------- ------------ --------------- ------------------------------- ------------------------------
Ed Havlik                  --             --                  20,000/--                         --/--
---------------------- ------------ --------------- ------------------------------- ------------------------------
All other employees        --             --                396,634/37,000                      --/--
---------------------- ------------ --------------- ------------------------------- ------------------------------
</TABLE>

DIRECTORS' COMPENSATION

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



ITEM 10.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT

         The following  table sets forth certain  information as of February 28,
2002 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.

<TABLE>
<CAPTION>
---------------------------------------- ------------------------- ----------------------------------------
Name of Beneficial Owner (1)                 Number of shares         Percentage of Outstanding Shares
---------------------------------------- ------------------------- ----------------------------------------
<S>                                      <C>                       <C>
Richard A. Pomije                               3,095,720                           63.8%
---------------------------------------- ------------------------- ----------------------------------------
James T. Greenfield                             175,000(2)                           3.6
---------------------------------------- ------------------------- ----------------------------------------
Ed Havlik                                       25,000(3)                             *
---------------------------------------- ------------------------- ----------------------------------------
Pierce McNally                                  100,000(4)                           2.1
---------------------------------------- ------------------------- ----------------------------------------
All directors  and  executive  officers         3,395,720                           70.0
as a group (4 persons)
---------------------------------------- ------------------------- ----------------------------------------

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


                                       12
<PAGE>


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

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

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

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


ITEM 11.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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


ITEM 12.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Reports on Form 8-K

           Form 8-K dated  February 13, 2002,  reporting  under items 5 and 7 on
           the  Company  press  release  dated  February  6, 2002,  was filed on
           February 13, 2002.



                                       13
<PAGE>



                                   SIGNATURES


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



                                    ENETPC, INC.

Dated:  May 27, 2002           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.
<TABLE>
<CAPTION>

<S>                              <C>
Dated:  May 27, 2002             By: /s/      Richard A. Pomije
                                     ---------------------------------------------------------------
                                     Richard A. Pomije, Director, Chief Executive Officer, Chief
                                     Financial Officer and President (Principal executive officer)

Dated:  May 27, 2002             By: /s/      James T. Greenfield
                                     ---------------------------------------------------------------
                                     James T. Greenfield, Director

Dated:  May 27, 2002             By: /s/      Ed Havlik
                                     ---------------------------------------------------------------
                                     Ed Havlik, Director

</TABLE>



                                       14
<PAGE>






                                  eNetpc, Inc.


                                FINANCIAL REPORT

                           FEBRUARY 28, 2002 AND 2001






                                       15
<PAGE>





                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Shareholders
eNetpc, Inc.


         We have audited the accompanying  balance sheets of eNetpc,  Inc. as of
February  28,  2002  and  2001,  and  the  related   statements  of  operations,
stockholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

         In  our  opinion,  the  financial  statements  present  fairly,  in all
material  respects,  the financial  position of eNetpc,  Inc. as of February 28,
2002 and 2001,  and the  results  of its  operations  and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

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



                                            /s/  VIRCHOW, KRAUSE & COMPANY, LLP



Minneapolis, Minnesota
April 2, 2002

                                       16
<PAGE>
<TABLE>
<CAPTION>


                                           eNetpc, Inc.

                                          BALANCE SHEETS
                                    February 28, 2002 and 2001


             ASSETS                                                        2002           2001
                                                                       -----------    -----------
<S>                                                                    <C>            <C>
CURRENT ASSETS:
    Cash and cash equivalents                                          $    16,566    $   175,296
    Trade accounts receivable, less allowance for
        doubtful accounts 2002 $255,000; 2001 $77,250                      226,620        711,820
    Inventories                                                             59,650        164,743
    Prepaid expenses                                                         3,286         14,296
                                                                       -----------    -----------
             Total current assets                                          306,122      1,066,155

OTHER ASSETS                                                                13,531         31,575

PROPERTY AND EQUIPMENT                                                     151,109        221,665
                                                                       -----------    -----------

                                                                       $   470,762    $ 1,319,395
                                                                       ===========    ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                                   $   208,931    $   153,156
    Accrued payroll                                                          8,111         15,734
    Accrued liabilities                                                     25,873         30,461
    Due to stockholder                                                     105,000           --
                                                                       -----------    -----------
             Total current liabilities                                     347,915        199,351

STOCKHOLDERS' EQUITY:
    Common stock, $.01 par value, 20,000,000 shares authorized
        2002 4,854,320; 2001 4,691,496 shares issued and outstanding        48,543         46,915
    Additional paid-in capital                                           3,986,600      4,694,607
    Deferred compensation                                                     --         (564,914)
    Stockholder subscription receivable                                    (24,964)          --
    Accumulated deficit                                                 (3,887,332)    (3,056,564)
                                                                       -----------    -----------
                                                                           122,847      1,120,044
                                                                       -----------    -----------

                                                                       $   470,762    $ 1,319,395
                                                                       ===========    ===========
</TABLE>



See Notes to Financial Statements.



                                                17
<PAGE>
<TABLE>
<CAPTION>



                                      eNetpc, Inc.

                                STATEMENTS OF OPERATIONS
                         Years Ended February 28, 2002 and 2001


                                                              2002            2001
                                                          ------------    ------------
<S>                                                       <C>             <C>
Revenues:
    Sales                                                 $  4,060,699    $ 13,289,314
    Cost of sales                                            3,684,236      12,385,331
                                                          ------------    ------------
             Gross profit                                      376,463         903,983

    Selling, general and administrative expenses             1,196,829       2,238,925
                                                          ------------    ------------

             Operating loss                                   (820,366)     (1,334,942)

Other income (expense):
    Interest and other income                                   15,098           9,928
    Interest expense                                           (25,500)        (58,358)
                                                          ------------    ------------
                                                               (10,402)        (48,430)
                                                          ------------    ------------

             Net loss                                     $   (830,768)   $ (1,383,372)
                                                          ============    ============


Basic and diluted loss per share                          $       (.17)   $       (.30)
                                                          ============    ============

Weighted average shares outstanding - basic and diluted      4,767,291       4,571,090
                                                          ============    ============

</TABLE>


See Notes to Financial Statements.




                                          18
<PAGE>
<TABLE>
<CAPTION>


                                                            eNetpc, Inc.

                                                 STATEMENTS OF STOCKHOLDERS' EQUITY
                                               Years Ended February 28, 2002 and 2001



                                                             Common Stock       Additional                Stockholder
                                                       -----------------------    Paid-In     Deferred    Subscription  Accumulated
                                                         Shares      Amount       Capital   Compensation   Receivable     Deficit
                                                       ----------  -----------  -----------  -----------  -----------  -----------
<S>                                                    <C>         <C>          <C>          <C>          <C>          <C>
Balance, February 29, 2000                               4,333,095  $    43,331  $ 3,069,049  $  (237,370) $      --    $(1,673,192)
    Purchase of ITC                                          9,576           96       52,567         --           --           --
    Issuance of common stock, net of offering costs         40,000          400       99,605         --           --           --
    Conversion of debt to common stock                     308,825        3,088      923,386         --           --           --
    Deferred compensation related to stock option grants      --           --        550,000     (550,000)        --           --
    Amortization of deferred compensation                     --           --           --        222,456         --           --
    Net loss                                                  --           --           --           --           --     (1,383,372)
                                                        ----------  -----------  -----------  -----------  -----------  -----------

Balance February 28, 2001                                4,691,496       46,915    4,694,607     (564,914)        --     (3,056,564)
    Issuance of common stock                                35,000          350       69,650         --           --           --
    Issuance of common stock for subscription receivable   137,400        1,374       67,326         --        (68,700)        --
    Payments on subscriptions receivable                      --           --           --           --         44,200         --
    Interest on subscriptions receivable                      --           --           --           --           (464)        --
    Reversal of deferred compensation                         --           --       (812,500)     564,914         --           --
    Stock redemption                                        (9,576)         (96)     (32,483)        --           --           --
    Net loss                                                  --           --           --           --           --       (830,768)
                                                        ----------  -----------  -----------  -----------  -----------  -----------


Balance, February 28, 2002                               4,854,320  $    48,543  $ 3,986,600  $      --    $   (24,964) $(3,887,332)
                                                        ==========  ===========  ===========  ===========  ===========  ===========


</TABLE>




See Notes to Financial Statements.

                                                                 19

<PAGE>
<TABLE>
<CAPTION>


                                               eNetpc, Inc.

                                         STATEMENTS OF CASH FLOWS
                                  Years Ended February 28, 2002 and 2001

                                                                                   2002           2001
                                                                               -----------    -----------
<S>                                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                   $  (830,768)   $(1,383,372)
    Adjustments to reconcile net loss to net
       cash used in operating activities:
       Depreciation and amortization                                               100,866        100,126
       Stock compensation expense                                                     --          222,456
       Accrued interest converted to common stock                                     --           26,474
       Write off of goodwill                                                        17,385           --
       Reversal of deferred compensation                                          (247,586)          --
       Loss on disposal of equipment                                                 4,972           --
       Interest added to stockholder subscription receivable                          (464)          --
       Interest added to due to stockholder                                          5,000           --
       (Increase) decrease in trade accounts receivable                            485,200       (137,314)
       (Increase) decrease in inventories                                          105,093        130,768
       (Increase) decrease in prepaid expenses                                      11,010          1,730
       Increase (decrease) in accounts payable                                      55,775        (86,173)
       Increase (decrease) in accrued liabilities                                  (44,790)       (31,855)
                                                                               -----------    -----------
        Net cash used in operating activities                                     (338,307)    (1,157,160)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                             (35,282)      (164,035)
    Other assets                                                                       659           --
                                                                               -----------    -----------
        Net cash used in investing activities                                      (34,623)      (164,035)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from due to stockholder                                               100,000        900,000
    Net proceeds from sale of common stock                                          70,000        100,005
    Payments on stockholder subscriptions receivable                                44,200           --
                                                                               -----------    -----------
        Net cash provided by financing activities                                  214,200      1,000,005

        Increase (decrease) in cash and cash equivalents                          (158,730)      (321,190)

Cash and cash equivalents:
    Beginning                                                                      175,296        496,486
                                                                               -----------    -----------
    Ending                                                                     $    16,566    $   175,296
                                                                               ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash payments for interest                                                 $    20,500    $    31,884
                                                                               ===========    ===========

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

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

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

    Issuance of common stock for stock subscription                            $    68,700    $      --
                                                                               ===========    ===========

    Stock redemption for accrued expense                                       $    32,579    $      --
                                                                               ===========    ===========
</TABLE>

See Notes to Financial Statements.

                                                    20
<PAGE>


                                  eNetpc, Inc.

                          NOTES TO FINANCIAL STATEMENTS
                     Years Ended February 28, 2002 and 2001



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

              Nature of business:

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

              Purchase and closure of division:

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

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

              Cash and cash equivalents:

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

              Property and equipment:

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

              Software costs:

              Under the  provisions of 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,  2002 and 2001,  unamortized
              software  development  costs were  $115,758  and  $95,758,  net of
              accumulated  amortization  of $64,074 and $26,599 and are included
              in property and equipment.

              Goodwill:

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

              In accordance with 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


                                       21
<PAGE>

              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.

              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  $1,900  and  $8,900  for 2002 and  2001,
              respectively.

              Revenue recognition:

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

              Net loss per share:

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

              Incremental  shares  attributable to the assumed exercise of stock
              options and stock  purchase  warrants for the years ended February
              28, 2002 and 2001 were  excluded from the  computation  of diluted
              earnings per share as their effect would be anti-dilutive.



                                       22
<PAGE>



              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, 2002 and 2001.

              Recently issued accounting pronouncements:

              The Financial  Accounting  Standards  Board (FASB) recently issued
              Statement of Financial  Accounting  Standards (SFAS) 141 "Business
              Combinations." This Statement  addresses financial  accounting and
              reporting   for   business   combinations.   It   eliminates   the
              pooling-of-interests method and requires all business combinations
              be accounted for using the purchase method.  The provisions of the
              Statement apply to all business combinations  initiated after June
              30, 2001, and to all business combinations accounted for using the
              purchase  method for which the date of acquisition is July 1, 2001
              or later. Adoption of the new standard will have no initial effect
              on the Company's financial statements.

              The FASB  also  recently  issued  SFAS  142  "Goodwill  and  Other
              Intangible Assets." This Statement addresses how intangible assets
              that are  acquired  individually  or with a group of other  assets
              should  be  accounted  for  in  financial  statements  upon  their
              acquisition.  It also addresses how goodwill and other  intangible
              assets  should be  accounted  for after  they have been  initially
              recognized  in the financial  statements.  Under the new standard,
              amortization of existing goodwill ceases upon adoption of SFAS 142
              and is  replaced  by  periodic  evaluation  for  impairment  using
              specific  methodology.  SFAS 142 is  effective  for  fiscal  years
              beginning after December 15, 2001. The Company will apply SFAS 142
              beginning  with  the  first  quarter  of its  fiscal  year  ending
              February  28,  2003.  The  effects of  adoption of SFAS 142 on the
              Company's financial  statements are not determinable  currently or
              for any future periods.

              In June  2001,  the FASB  issued  SFAS 143  "Accounting  for Asset
              Retirement  Obligations."  SFAS 143 is  effective  for fiscal year
              beginning after June 15, 2002. The Company is currently evaluating
              the impact of SFAS 143.

              In August  2001,  the FASB  issued  SFAS 144  "Accounting  for the
              Impairment or Disposal of Long-Lived  Assets." SFAS 144 supercedes
              SFAS 121 and is  effective  for  financial  statements  issued for
              fiscal years  beginning after December 31, 2001. The provisions of
              SFAS 144 generally are to be applied prospectively. The Company is
              currently evaluating the impact of SFAS 144.

              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.


                                       23
<PAGE>






               Troubled Financial Condition and Management's Plans:

               The  Company  has  experienced  recurring  net losses and current
               liabilities exceed current assets at February 28, 2002.

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

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

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

Note 2.       Property and Equipment:

<TABLE>
<CAPTION>
                                                                      2002                 2001
                                                                 --------------       --------------
                 <S>                                             <C>                  <C>
                 Office equipment and furniture                  $      469,366       $      459,045
                 Leasehold improvements                                  37,270               37,270
                 Production equipment                                    61,515               46,915
                                                                 --------------       --------------
                                                                        568,151              543,230
                 Less accumulated depreciation and amortization         417,042              321,565
                                                                 --------------       --------------
                                                                 $      151,109       $      221,665
                                                                 ==============       ==============
Note 3.       Other Assets:

                                                                      2002                 2001
                                                                 --------------       --------------
                 Goodwill                                        $        -           $       18,602
                 Less accumulated amortization                            -                   (1,217)
                 Deposits                                                13,531               14,190
                                                                 --------------       --------------
                                                                 $       13,531       $       31,575
                                                                 ==============       ==============
</TABLE>

Note 4.       Due to Stockholder:

              The Company has a note payable to a  stockholder  in the amount of
              $100,000  at  February  28,  2002  which is due on October 4, 2002
              including interest at 12% per annum. The note is collateralized by
              property owned by a related stockholder/officer.  Interest accrued
              and expensed for the year ended February 28, 2002 was $5,000.

Note 5.       Income Taxes:

              At  February  28,  2002,   the  Company  had  net  operating  loss
              carryforwards of approximately $3,500,000.  The net operating loss
              carryforwards  are  available  to  offset  future  taxable  income
              through 2021 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>

                                                                       2002              2001
                                                                  --------------    --------------
                 <S>                                              <C>               <C>
                 Deferred tax assets:
                    Net operating loss carryforwards              $    1,350,000    $    1,050,000
                    Deferred compensation                                  -                90,000
                    Other                                                105,000            40,000
                                                                  --------------    --------------
                 Deferred tax assets before valuation allowance        1,455,000         1,180,000
                 Valuation allowance                                  (1,455,000)       (1,180,000)
                                                                  ---------------   ---------------
                 Net deferred tax assets                          $        -        $        -
                                                                  ==============    ==============
</TABLE>


                                       24
<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.  During
              the year ended  February  28,  2002,  the  Company  issued  29,000
              warrants  to former  employees  with  exercise  prices of $1.00 to
              $2.00.

              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 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
                    Options granted              (405,000)      405,000         -           405,000         1.12
                    Options canceled              126,550      (126,550)     (492,004)     (618,554)        2.80
                                              -----------   ------------  ------------  ------------

                 Balance at February 28, 2002     271,366       728,634         -           728,634   $     1.47
                                              ===========   ===========   ===========   ===========   ==========
</TABLE>


              The Company had 395,000  exercisable  options at February 28, 2002
              with a weighted average  exercise price of $1.13.  Exercise prices
              for options outstanding ranged from $1.00 to $3.00.

              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: dividend yield of
              0%, volatility range of 150%, risk-free interest rates of 5.0% and
              5.5% in 2002 and 2001 and a weighted  average expected life of the
              option of four years in 2002 and 2001.


                                       25
<PAGE>


              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>

                                                                      2002              2001
                                                                 --------------    --------------
              <S>                                                <C>               <C>
              Pro forma net loss                                 $   (1,133,827)   $   (2,060,576)

              Basic and dilutive pro forma net loss per share    $        (.24)    $        (.45)
              </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, the
              Company  recognized  $136,720 of  compensation  expense related to
              these options. As part of the purchase of ITC, the Company granted
              options to employees to purchase  100,000 shares of stock at $1.75
              per share.  The options become  exercisable five years after their
              issuance  and may  become  exercisable  three  years  after  their
              issuance  if  certain  performance   criteria  are  met.  Deferred
              compensation  expense of  $550,000  was  recorded  and the Company
              recognized  $85,736 of  compensation  expense  in 2001  related to
              these  options.  During  the year ended  February  28,  2002,  the
              Company   released  the  above  employees  and  the  options  were
              cancelled which resulted in a reversal of any compensation expense
              previously recognized of $247,586.


Note 7.       Segment Data:

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

                                                              Year Ended
                                                 -------------------------------
                                                  February 28,      February 28,
                                                     2002              2001
                                                 --------------    -------------
               Net sales:
                 CyberStar division              $      709,658    $  1,312,461
                 VAR division                           619,351         945,955
                 Virtual Distribution division        2,691,029      11,030,898
                                                 --------------    ------------
                       Subtotal .COM                  4,020,038      13,289,314
                 .NET division                           40,661           --
                                                 --------------    ------------
                       Total Net Sales           $    4,060,699    $ 13,289,314
                                                 ==============    ============




                                       26
<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. Lease expense for the years ended February
              28, 2002 and 2001 was $122,800 and $155,500, respectively.

              The following is a schedule,  by year, of future  minimum  rental
              payments as of February 28, 2002:

                                  Office
                                   Space          Vehicles            Total
                              --------------   --------------    --------------
                    2003      $       41,926   $       17,300    $       59,226
                    2004              22,648           12,300            34,948
                              --------------   --------------    --------------
                              $       64,574   $       29,600    $       94,174
                              ==============   ==============    ==============

              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 40% and 44% of
              sales in 2002 and 2001,  respectively.  Accounts  receivable  from
              these  customers was $40,000 and $448,005 at February 28, 2002 and
              2001, respectively.





                                       27