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

                                   FORM 10-KSB

                  Annual Report pursuant to Section 13 or 15(d)
                      of the Securities Exchange Act of 1934

       [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                    For the fiscal year ended MAY 31, 2002
                                             --------------

           TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE
           ACT OF 1934
           For the transition period from ___________ To _____________

                         Commission File No.000-17058

                     PHOENIX INTERNATIONAL INDUSTRIES INC.
     -----------------------------------------------------------------
     (Exact name of small business issuer as specified in its charter)

                                   FLORIDA
      --------------------------------------------------------------
      (State or Other Jurisdiction of incorporation or organization)

                                  59-2564162
                      ---------------------------------
                      (IRS Employer Identification No.)

               1750 OSCEOLA DR. WEST PALM BEACH, FLORIDA 33409
               -----------------------------------------------
                   (Address of Principal Executive Offices)

                                 561-688-0440
              --------------------------------------------------
              (Issuer's telephone - number, including area code)

Check whether the issuer (1) 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 [ ]                 No [X]

State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:  as of May 31, 2002 there
were  76,848,327 shares of the issuer's Common Stock, $.001 par value,
outstanding.

                Transitional Small Business Disclosure Format

                        Yes [ ]                 No [X]

                        Common Stock, $.001 par value

<PAGE>     1



                     PHOENIX INTERNATIONAL INDUSTRIES, INC.

                                INDEX TO 10-KSB

                                    PART I

ITEM I   DESCRIPTION OF BUSINESS
ITEM 2   DESCRIPTION OF PROPERTY
ITEM 3   LEGAL PROCEEDINGS
ITEM 4   RESULTS OF VOTES OF SECURITY HOLDERS

                                   PART II

ITEM 5   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
ITEM 6   MANAGEMENT'S DISCUSSIONS OF DISCONTINUED OPERATIONS

ITEM 7   FINANCIAL STATEMENTS
ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

                                   PART III

ITEM 9   MANAGEMENT AND DIRECTORS
ITEM 10  EXECUTIVE COMPENSATION
ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT
ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13  EXHIBITS AND REPORTS


<PAGE>     2


                              PART I

ITEM 1	DESCRIPTION OF BUSINESS

Phoenix International Industries, Inc. is a holding company, with
primary interests in the telecommunications industry.  During the year
ending on May 31, 2002, the Company consisted of Phoenix International
Industries, Inc., the parent company and three wholly owned
subsidiaries, EPICUS, Inc., which is the primary, and only active
subsidiary, Moye & Associates ("TheBest.Net"), and Mic-Mac
Investments, Inc. which are currently inactive. Due to the method of
accounting used, the percentages of income are reported by three
segments, not by company. These segments and their percentages of our
total income are: Computer Consulting 12%, Telephone Services 88% and
Acquisition Services, a negligible %.

HISTORICAL DEVELOPMENT

We were incorporated on July 22 1985, pursuant to the laws of the
State of Florida under the name "Hydrobac, Inc. On July 7, 1986, the
company's name was changed to "ProBac, Inc." and on October 5, 1994,
its name was changed to Trident Environmental Systems, Inc. During
those periods our primary business was in various types of products
and systems for use in the environmental clean-up industry.
On October 2, 1996 our name was changed to Phoenix International
Industries, Inc. and our common stock was reverse split 15 to 1. Our
shareholders approved Amendments to the Articles of Incorporation,
changing the authorized capital to 20,000,000 shares of common stock,
par value $.001 per share, and up to 5,000 shares of Preferred Stock
for use as needed. From January 1996 through May 31, 1997, we sought
acquisitions as we wound down and closed our original environmental
clean-up business. We, therefore, treats all matters relating to the
environmental clean-up business as discontinued operations.

On June 13, 1998, we acquired 100% of the stock of Intuitive
Technology Consultants, Inc. ("ITC") of Atlanta, Georgia. ITC was
engaged in the business of computer system design and computer related
(MIS) employee placement. As of June 1999, we sold Intuitive
Technology Consultants Inc to a group headed by the current management
of ITC. We recognized a total gain of $479,583 on the sale of this
business.

On July 21, 1997 we acquired 100% of the stock of HDX 9000, Inc.
("HDX"), a company specializing in compliance methodology for the Y2K
problem and for the various types of "ISO" compliance certification.
Since the demand for HDX's primary product, a compliance methodology
to solve the Year 2000 date change problem, has become understandably
non-existent, and due to HDX's inability to establish a new marketable
product in a timely fashion, on March 20, 2000, it was the decision of
our Board of Directors, in concert with the previous shareholder of
100% of HDX's stock, to rescind the agreement by which HDX was
acquired by Phoenix. This was done and the stock of each company which
was originally exchanged to effect the acquisition was returned to the
original holder or issuer. We recognized a total loss of $99,140 in
connection with this transaction.

On April 9, 1998, we acquired 100% of the outstanding stock of Mic Mac
Investments, Inc., a long distance telephone service "reseller"
specializing in the hospitality industry. Mic-Mac ceased to operate
late in the third quarter of fiscal 1999, and had no remaining assets
or liabilities as of May 31, 1999, and Phoenix wrote off its remaining
investment in them in that fiscal year. We recognized a gain of
$13,417 in connection with the write off this investment. Although it
has ceased to operate, Mic-Mac, Inc., remains the property of the
Company until a decision is made as to its future.

Based on an agreement entered into on December 14, 1998, we acquired
100% of the stock of Cambridge Gas Transport Corporation (CGTC), a
Cayman Islands Corporation, in the business of owning and operating
specialized chemical/fuel tanker transport ships. Due to unspecified
disagreements, an agreement to rescind the acquisition has been
executed by the parties. We did not recognize any gain or loss on this
transaction. We filed litigation to recoup our payments to CTCG,
resulting in an out of court settlement on December 15, 2000.


<PAGE>     3


During fiscal 2000 we acquired 100% of the stock of Telephone Company
of Central Florida, Inc. ("TCCF"). TCCF is a "competitive local
exchange carrier" ("CLEC") telephone company and a reseller of other
telecommunications services. TCCF was at that time operating under the
protection of "Chapter 11"of the federal bankruptcy laws. The
effective date of the closing was ten days after the Order of
Confirmation was issued by the Bankruptcy court. The Order of
Confirmation was issued on June 9, 1999 and TCCF began operating as a
reorganized debtor on that date. We acquired TCCF within ten days of
the Confirmation Order. On January 17, 2001 the name of TCCF was
changed to EPICUS, Inc.

On July 28, 2000, we acquired 100% of the stock of Moye & Associates,
Inc. of St. Simons Island Georgia. Moye & Associate's primary business
was that of an Internet Service Provider (ISP) known as TheBest.Net.
This move was seen by the company as synergetic with, and a possible
future merger into TCCF.


BUSINESS OF AFFILIATES

EPICUS, Inc.

Our primary and currently only active subsidiary, EPICUS, Inc., is a
multi-service telecommunications company with approximately 10,000
active accounts in both the residential and business markets. We focus
on developing integrated telephone service in the Competitive Local
Exchange Carrier area of the telecommunications industry. Like many
other emerging Competitive Local Exchange Carriers, our entry in this
industry was facilitated by the passing of the Telecommunications Act
of 1996 which allows Competitive Local Exchange Carriers to lease
various elements of the networks of the Incumbent Local Exchange
Carriers that are necessary to provide local telephone service in a
cost-effective manner. We offer small businesses and residential
consumers an integrated set of telecommunications products and
services, including local exchange, local access, domestic and
international long distance telephone, data and dial up access to the
Internet. We are certified to offer long distance and internet
services in the 48 contiguous states. We are currently supplying local
and long distance service to customers in 7 of the 9 states in the
BellSouth System. Additionally, we have long distance customers in 40
of the 48 states in which we are certified.

We have built our company by primarily focusing on creating software
systems and processes to deliver telecommunication services over
leased networks, instead of concentrating on buying switches and
hardware to build a very expensive network which could be severely
under-utilized for a potentially long period of time. It is that major
expense which has led to the demise of many emerging telephone
companies. Instead, we have built a scalable operating platform that
can provision a local phone line, read usage records, rate phone calls
for billing purposes, and prepare monthly invoices to customers. We
can bill all of a customers telecommunication services on one itemized
bill.

Because of the expense and complexity of the business, we have focused
on improving our performance through automation. We believe one of the
greatest accomplishments in building our business over the past three
years was the development of our own operational support systems
("OSS"). It is these systems that allow us to rapidly execute our
customers orders like: orders for new service and repair orders, plus
real time information on billing and collections. It is more economic,
more efficient and more accurate than being solely dependant to our
advantage, both that these types of services and done in an automated
manner.

MOYE & ASSOCIATES, INC. (TheBest.Net)

A Georgia Corporation, Moye & Associates, dba "TheBest.Net" is an
Internet Service Provider (ISP). They are also involved in the
computer repair and e-commerce business. However, in recent history,
"TheBest.Net" as an internet service provider, accounts for more than
90% of its income.

To raise additional operating capital, Phoenix entered into an
agreement to sell the ISP customers of The Best.Net. to another
Internet Service Provider, the purchaser has paid a deposit of
$150,000 for those customers, however due to a discrepancy between the
number of customers purchased and the number delivered, there is still


<PAGE>     4


a balance due of $50,000 which will not be paid until an accurate
accounting of the number of customers can be ascertained.

Phoenix plans to completely merge the balance of Moye & Associates
operations into EPICUS and keep the corporation current, but inactive,
until a suitable use can be found for it. Tully Moye has agreed to a
re-negotiation of his employment agreement and the purchase price of
Moye and Associates due to their miscalculation, resulting in a
misrepresentation, of the number of customers they actually had. Those
re-negotiations are currently in progress.

MIC-MAC INVESTMENTS, INC. ("Mic-Mac")

Mic-Mac Investments, Inc. and Hospitality Telecom (together
"Hospitality") were acquired on April 1, 1998. For the period from the
date of acquisition through May 31, 1998, Hospitality had revenues of
$15,634 and expenses of $30,404.

Hospitality ceased to operate late in the third quarter of fiscal
1999, claiming they could not meet their business plan projections or
continue without Phoenix acquiring a long distance telephone company,
and since it had no remaining assets or liabilities as of May 31,
1999, we wrote off our remaining investment in them in that fiscal
year. Although it has ceased to operate, Mic- Mac, Inc., remains the
property of the Company until a decision is made as to its future.

ITEM 2

DESCRIPTION OF PROPERTY

Our principal executive offices are located at 1750 Osceola Drive,
West Palm Beach, Florida 33409 and our telephone number is (561) 688-
0440. This space is approximately 1,500 square feet including three
offices and a conference room. The annual lease cost is $3,500.00 per
month, plus expenses and expired in August 2002. The property is now
owned by the CEO of the Company and the Company continues to occupy
the property on a month to month basis while a new lease is being
negotiated.

ITEM 3

LEGAL PROCEEDINGS

One of our subsidiaries, EPICUS, has been involved in a dispute with
one of its former carriers, Sprint Florida, regarding a default in
payment for services. On August 23, 2000, Sprint filed suit in the
Circuit Court of the Ninth Judicial Circuit in and for Orange County
Florida. We believed that the accusation was incorrect, however after
obtaining advice from legal counsel, we decided not to litigate the
matter and on December 21, 2000, the carrier was awarded by that
court, a default judgment against EPICUS in the amount of $321,587.52.
In accordance with a Judgment Payment Agreement dated February 15,
2001, EPICUS agreed to pay Sprint as follows: Principal payments of
$10,000 each will be due commencing March 15, 2001 through September
15, 2002 (18 months). The final balloon payment of $142,000 is payable
on October 15, 2002.

On January 27, 1999 Phoenix filed suit in The Superior Court of Fulton
County Georgia against our former subsidiary Intuitive Technology
Consultants, Inc., (ITC) (now renamed Elite Technologies, Inc.), to
recover approximately $350,000 in loans extended to ITC when it was
one of our subsidiaries. On June 11, 2001, the day before the trial
was to begin, ITC and the ITC Acquisition Group filed for bankruptcy
under Chapter 7 of the Federal Bankruptcy Laws, virtually eliminating
any possibility of us collecting any amount of the debt from
litigation in that manner. We will search for other legal means of
recovering the money owed to Phoenix by them.

On June 22, 2000, EXL Information of Vancouver, BC, Canada filed suit
in the Supreme Court of British Columbia, Canada, for payment of
"royalty fees" it claims were owed by EPICUS for the use of their
billing program. EPICUS denies owing EXL any money maintaining that
the program was supposed to be adapted by EXL to meet EPICUS's needs,
which they never did, thereby nullifying the agreement. EXL is seeking
relief in the amount of US$184,761. The matter is still being


<PAGE>     5


litigated. The outcome of this litigation is not determinable at this
time. Management intends to aggressively defend this action to
conclusion.


ITEM 4	RESULTS OF VOTES OF SECURITY HOLDERS

During fiscal 2002 there were no votes of the shareholders of
Phoenix International Industries, Inc.


                               PART II


ITEM 5  MARKET  FOR COMMON  EQUITY AND RELATED STOCKHOLDERS MATTERS

The following table sets forth the range of high and low bid
prices as reported on the OTCBB during the periods commencing:

<TABLE>
<CAPTION>

                                                 CLOSING BID                CLOSING ASK
                                        ----------------------------------------------------
                                        HIGH              LOW           HIGH             LOW
                                        ----              ---           ----             ---
<S>                                     <C>               <C>           <C>              <C>
1998
07/01/98 through 09/30/98                .843            .4375           .875            .4687
10/01/98 through 12/31/98               1.28             .4062          1.37             .435

1999
01/02/99 through 03/31/99               1.00             .88            1.06             .94
04/01/99 through 06/30/99                .62             .47             .65             .50
07/01/99 through 09/30/99                .56             .36             .59             .39
10/01/99 through 12/31/99               1.62             .31            1.65             .34

2000
01/02/00 through 03/31/00               1.37             .34            1.41             .38
04/01/00 through 06/30/00               1.06             .43            1.06             .46
07/01/00 through 09/30/00                .43             .14             .46             .16
10/31/00 through 12/31/00                .139            .03             .153            .032

2001
01/01/01 through 03/31/01                .26             .03             .23             .032
04/01/01 through 06/30/01                .129            .06             .145            .072
07/01/01 through 09/30/01                .10             .06             .11             .07
10/01/01 through 12/31/01                .08             .04             .09             .05

2002
01/02/02 through 03/31/02                .04             .05             .05             .06
04/01/02 through 06/30/02                .05             .03             .06             .04

</TABLE>


The price of shares have been adjusted for all stock splits, and are
based on inter-dealer prices as the company is listed on the
electronic over the counter bulletin board.


<PAGE>     6


Dividends
---------

The Company has paid no dividends during the past five fiscal
years on any class of its issued and outstanding securities.

The payment by the Company of dividends, if any, in the future
rests within the discretion of its Board of Directors and will depend,
among other tier things, upon the Company's earnings, its capital
requirements and its financial condition, as well; as other relevant
factors. By reason of the Company's present financial condition, the
Company does not contemplate or anticipate paying any dividends on,
the Common Stock in the foreseeable future.


ITEM 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

Statement of Operations
-----------------------

The years ending May 31, 2001 and May 31, 2002
----------------------------------------------

For the year ending May 31, 2001 we reported revenues of $3,245,285
with a gross profit of $505,528 with operating expenses of $5,008,772
and a net loss of $5,507,198 versus the year ending May 31, 2002 with
revenues of $6,029,792 and a gross profit of $2,849,333 with operating
expenses of $6,990,923 and an operating loss of $4,141,590. These
revenues resulted from telecommunication service sales generated by
Phoenix's affiliates as disclosed in the combined financial statement
which is included in this filing.

The year 2002 increase in gross profit was primarily attributable to
an increase in revenue coupled with lower cost of sales resulting from
more favorable pricing from several suppliers, and the reduction net
loss was primarily the result of the decrease in staffing of both
sales and operational personnel. We anticipate the net loss to be
eliminated and instead to earn a net profit the year ending May 31,
2003. This is based upon maintaining the current low ratio of
operational and sales expenses to revenue generated.  Our current low
ratio is a direct result of increased computerization of billing and
provisioning, plus increased independent agent sales which are only
commissioned, not salaried plus commission. Our "in house" sales staff
has also been greatly reduced as more emphasis is placed on developing
our independent agent sales network.

During the year ended May 31, 2002, we incurred net losses of
$5,019,558 compared to net losses of $5,507,198 for the preceding
year. Our net losses for the year ended May 31, 2002, continue to be
the result of our consolidated operating loss of $4,141,590, the
effect of posting additional deposits to long distance carriers on
behalf of EPICUS ($50,000 to Qwest Communications and $75,000 to
Global Crossing) which removed that money from our cash flow,
increasing the amount of operating capital that had to be borrowed.
The $75,000 deposit for Global Crossing has since been applied to that
carrier's bill thereby causing their bankruptcy to have no effect on
it. As our revenues increase due to increasing our customer base, it
is expected that larger deposits will be requested by the underlying
carriers used by EPICUS, these deposit increases are generally in the
$50,000-$100,000 range and can put a temporary strain on the company's
cash flow, especially if they are requested from more than one carrier
at the same time. At this point we have no commitments for additional
capital expenditures for the next 12 months.

Also contributing to our loss during the period are the continued
expenses associated with continuing to operate and maintain Phoenix's
offices, professional fees, including legal and accounting plus other
expenses associated with being a reporting public company. Our net
losses for the year ending May 31, 2001, continue to be the result of
expenses involved with supporting the day to day operation of EPICUS,
and the expenses of expanding its affiliates sales operations,
including as referred to above, the posting of additional deposits to


<PAGE>     7


long distance carriers on behalf of EPICUS.  We also incurred non-cash
expenses associated with the issuance of 6,345,478 shares of stock to
the underwriters of the convertible debenture we entered into which
was reported in its 10KSB for the period ended May 31, 2001 and is
incorporated herein by reference.

In order for us to pay our operating expenses, including office rents,
communication expenses, accounting and bookkeeping fees, printing and
EDGAR preparation costs, publication costs, and other general and
administrative expenses, we have been dependent upon the funds
provided by non-interest bearing loans from our executive officers,
director and shareholders, and the sale of stock under the terms of
Regulation S of the Securities Act of 1933.

We still continue to be dependent upon the willingness of our
executive officers/directors and consultants to accept shares and/or
defer compensation for continued services to us, which services we
consider to be valuable and necessary to our continued operations.

A substantial portion of our operating loss for the years ended May
31, 2001 and 2002, which was due to funding the operating losses of
EPICUS, as well as ongoing legal and accounting expenses incurred in
the implementation of the plan of reorganization of EPICUS. Under the
Bankruptcy "Plan of Reorganization", we purchased and acquired 100% of
the common stock of EPICUS, and as the "Reorganized Debtor" we operate
EPICUS's business. In addition to the payment of $570,000 ten days
after the Plan of Reorganization was approved by the Court; a
"Creditors Trust" was established for all "Allowed Unsecured Claims"
in excess of $1,000, into which we paid an initial deposit of $100,000
and are to continue to make semi-annual deposits of $100,000 each to a
maximum of $500,000. In July of 2001 an agreement was made with the
Creditors Committee to reduce the semi- annual payment to $50,000, on
which the company is currently three payments in arrears. There
remains a balance due to the Creditors Trust of $350,000. For
"Priority Claims" we agreed to pay a maximum of $300,000 over a 6 year
period plus 8% simple interest with an initial deposit of $25,000.
There is no structured payment amount scheduled for the priority
claims. There is a balance remaining for Priority Claims of $275,000
plus interest of 8%. The total balance due on the purchase of EPICUS
is $625,000 plus applicable interest.

Discontinued Operations
-----------------------

In addition to EPICUS, we plan to continue to increase our presence in
the telecommunications industry. With that plan in mind on August 8,
2000, we announced the purchase of Moye & Associates, Inc., of St.
Simons, Georgia, the owner/operator of "The Best Net" an Internet
Service Provider, Web Site Host and E-commerce Company.

The Best Net had over 2,500 Internet subscribers, most of which were
obtained by offering their service at a large discount. On July 27,
2001 in order to solve a need for additional operating capital, The
Best Net's customer base was sold, the balance of its assets were
merged into EPICUS, and it became a discontinued operation. Although
it has ceased to operate, Moye & Associates, Inc. remains the property
of the Company until a decision is made as to its future.

Mic-Mac Investments, Inc. and Hospitality Telecom (together
"Hospitality") were acquired on April 1, 1998. For the period from the
date of acquisition through May 31, 1998, Hospitality had revenues of
$15,634 and expenses of $30,404.

At the time of the purchase of Mic-Mac and Hospitality, we were in the
process of purchasing American Telecommunications Enterprises, Inc.,
("American Telecom") a long distance reseller located in upstate New
York. Mic-Mac and Hospitality were specialists in the sale of long
distance service to the hotel industry. The plan was to have Mic-Mac
and Hospitality be the primary outside sales force for American
Telecom. The purchase of American Telecom was never finalized and by
the time we were able to find and purchase another telephone company,
EPICUS, Mic-Mac and Hospitality were no longer viable businesses and
therefore they were written off.

Hospitality ceased to operate late in the third quarter of fiscal
1999, claiming they could not meet their business plan projections or
continue without Phoenix acquiring a long distance telephone company
or other telephone service organization to give them support and
additional product. Mic-Mac Investments, Inc and Hospitality Telecom
had no remaining assets or liabilities as of May 31, 1999, and Phoenix


<PAGE>     8


wrote off its remaining investment in them in that fiscal year.
Although it has ceased to operate, Mic-Mac, Inc., remains the property
of the Company until a decision is made as to its future.

The Company's HDX subsidiary was acquired July 21, 1997 in a stock for
stock transaction. In exchange for 500,000 shares of Phoenix common
stock (restricted) Phoenix received 100% of the stock of HDX. For the
10 months and 10 days through May 31, 1998, HDX had revenues of
$160,039 and expenses of $132,656.

For the year ended May 31, 1999, HDX had no income and an operating
loss of $33,500. This was due to the expiration of the market for
HDX's primary product, a methodology for dealing with the Y2K computer
problem. On March 20, 2000 it was the decision of the Board of
Phoenix, in concert with the previous shareholder of 100% of HDX's
stock, to rescind the agreement by which HDX was acquired by Phoenix.
This was done and the stock of each company which was originally
exchanged to effect the acquisition was returned to the original
holder or issuer.

As of June 1, 1998, the Company sold its ITC subsidiary to the ITC
Acquisition Group, a group headed by ITC management. The Company
received $60,900 in cash. $290,000 in Notes and 1,413,000 shares of
the Company' Common Stock, plus relief from obligations totaling
approximately $800,000 in return for said sale. The Shares of Common
Stock have been returned to the treasury of the Company and have been
cancelled. To date, no payment of interest or principal on the Notes
has been made and said payments are past due. Additionally, the
Company has not received any confirmation of relief from the $800,000
in obligations. The operations of ITC have been treated as
discontinued operations. As of May 31, 2000 there had been no change
or decision regarding this situation and the matter remains in
litigation. On June 11, 2001 ITC and the ITC Acquisition Group, Inc.,
filed for Chapter 7 Bankruptcy in the US Bankruptcy Court in Atlanta,
Georgia. Phoenix is an unsecured creditor to that action, and has
little or hope of recovery of its loss.

Purchased on December 14th of 1998, Cambridge Gas Transport
Corporation (CGTC), is the owner of 58% (plus an option to purchase an
additional 10%) of NAVIGATOR GAS TRANSPORT PLC (NAVIGATOR). Navigator
has contracted to build five (5) 22,000 cubic meter semi- refrigerated
gas carriers. CGTC is a holding company whose primary business is to
act as the majority shareholder of Navigator, and to issue and oversee
the management contracts for the construction and operation of
Navigator's ships. The entire CTCG purchase agreement was published in
Phoenix's 10-KSB of May 31, 1998.

The acquisition was rescinded because a group of minority stockholders
of CGTC filed litigation to block any of the company's stock from
being transferred to Phoenix and Phoenix was not in a financial
position to become engaged in a long legal battle in at least two, and
probably three, different countries. In January 2000 Phoenix filed
litigation to recoup their payments to CTCG, resulting in an out of
court settlement.

Per our settlement agreement with Cambridge Gas Transport Corp., In
March of 2000, we were to receive the return of our $200,000 down
payment plus interest. $100,000 was received in April of 2000 and on
December 15, 2000 a new settlement was made reducing the balance due
to $85,000 which was received in January of 2001.

There is no materiality or commonality between CTCG and Phoenix,
however that is not relevant as Phoenix is a "holding company" whose
concept is to acquire either profitable or potentially profitable
companies with good management, and not to get involved in the "micro-
management" of those companies.

Liquidity and Capital Resources
-------------------------------

As of May 31, 2002 Phoenix had $4,539 in cash in its operating
account. To assist us in our cash flow requirements we may determine,
depending upon the prevailing stock price of our shares, to seek
subscriptions from the sale of securities to private investors,
although there can be no assurance that we will be successful in
securing any investment from private investors at terms and conditions
satisfactory to us, if at all.


<PAGE>     9


Assuming no unusual increase in expenses for the next 12 months, at
the present level of operations, the combined companies of Phoenix
will need a cash flow of approximately $595,000 per month.

During the year ending May 31, 2001 we issued 27,946,770 shares of
common stock for acquisitions, consulting services, the employee stock
option plan, private placement, offshore investment under Regulation
S, and the convertible debenture.

Previously, the Company has funded its capital requirements for
operating cash flow, by loans against its accounts receivable, loans
from shareholders, sales of equity securities and the issuance of
equity securities in exchange for assets acquired and services
rendered. During the 12 months ended May 31, 2001 the Company has been
and is continuing to attempt to attract new investment capital, which
the Company believes will be necessary to sustain its ongoing
operations and to facilitate growth. To that end on July 11, 2001, the
Company sold $2,000,000 in convertible debentures to two firms in New
York. The Company continues to explore opportunities to raise private
equity capital and, in conjunction therewith, to provide credit
support for the Company's operations and potential acquisitions.
Although the Company has in the past been, and continues to be, in
discussions with potential investors, there can be no assurance that
its efforts to raise any substantial amount of private capital will be
successful. Any substantial private equity investment in the Company
will result in voting dilution of the Company's existing stockholders
and could also result in economic dilution. If the Company is unable
to obtain new capital, the Company will be unable to carry out its
strategy of growth through acquisitions and the long-term ability of
the Company to continue its operations may be in doubt.

Our monthly operating expenses do not reflect any salary to Gerard
Haryman or Thomas Donaldson, our executive officers, whose salaries
have been accrued, but not paid, at the rate of $20,833 and $8,600 per
month respectively. We do not contemplate commencing full salary
payments to Messrs. Haryman and Donaldson unless and until we begin to
generate positive cash flow from operations.

COMPETITION

We have many competitors ranging from the very large like McLeod
Communications of with over 500,000 lines and ICG Communications with
over 700,000 lines to the very small who have less than 10,000 lines.
Those companies, both large and small, offer similar services as we
and our subsidiaries offer. The Company believes that the competitive
factors affecting its markets include features such as functionality,
adaptability, ease of use, quality, performance, price, customer
service and support, effectiveness of sales and marketing efforts and
Company reputation.   Although the Company believes that it currently
competes favorably with respect to such factors, there can be no
assurance that the Company can maintain its competitive position
against current and potential competitors, especially those with
greater financial marketing support and other resources than the
Company.

We believe that our "Alternative Sales" approach of using utility
companies gives us a distinct marketing advantage, as does our almost
total automation in provisioning of new services and billing. These
factors we believe, give us the competitive edge we need to continue
our growth. However, there can be no assurance that we can maintain
our competitive position against current and potential competitors,
especially those with greater financial resources than we have.

RISKS RELATED TO OUR BUSINESS
-----------------------------

Our auditors have expressed doubt about our ability to continue as a
going concern.

Our independent auditors have issued their report dated August 10,
2001 on our consolidated financial statements as of May 31, 2001,
which includes an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern. Among the reasons
cited by the independent auditors as raising substantial doubt as to
our ability to continue as a going concern are the following: we have
accumulated losses of approximately $18,000,000 as of February 28,
2002, have insufficient working capital and will continue to incur
selling, general and administrative expenses.  Additionally,
realization of certain assets is dependent upon our ability to meet
our future financing requirements, the success of future operations
and our continued funding by our CEO and the sale of common stock.
These conditions raise substantial doubt about our ability continue as


<PAGE>     10


a going concern.

We have a history of operating losses and may continue to incur
operating losses.

We have incurred operating losses since our inception and have an
accumulated deficit of approximately $18,000,000 as of February 28,
2002. We incurred a net loss of $5,507,198 for the year ended May 31,
2001 as compared with a net loss of $3,481,202 for the year ended May
31, 2000. For the nine months ended February 28, 2002, we incurred a
net loss of $1,939,053. These net losses continue to be the result of
expenses involved with supporting the day to day operation of EPICUS,
the expenses of expanding its sales operation during the period and
the continued expenses associated with continuing to operate and
maintain our offices, professional fees and expenses associated with
being a reporting public company, which include: legal, accounting and
EDGAR/printing preparation, and the write off of our $152,000
investment in HDX.

We may require additional financing and, if we are unable to raise
such funds, our operations may be adversely affected.

At May 31, 2002 we had current assets of $1,369,510 and total assets
of $2,138,426.  To assist us in our cash flow requirements we may
determine, depending upon the prevailing stock price of our shares, to
seek subscriptions from the sale of securities to private investors,
although there can be no assurance that we will be successful in
securing any investment from private investors at terms and conditions
satisfactory to us, if at all. Based upon our present liquid
resources, our present operating expenses, and the commitment of our
executive officers to continue to defer most or all of their salaries,
and if no increased revenues are generated from operations or other
sources, we believe we will be able to operate for a minimum of twelve
months. If additional funds are required, but cannot be raised, it
will have an adverse effect upon our operations. To the extent that
additional funds are obtained by the sale of equity securities, our
stockholders may sustain significant dilution.



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

There have been no disagreements with any of our accounts on
accounting and/or financial disclosure. The Company's auditor for the
period ending May 31, 2002 is Scott W. Hatfield, CPA of Dallas, Texas.
The Company's former auditor for the period ending May 31, 2001, May
31, 2000 and May 31, 1999 was Wieseneck, Andres, and Associates, PA.
772 US Hwy. One, North Palm Beach, Florida 33408.  The following is
excerpted from the Form 8-K filed by the Company on September 13,
2002:  "Item 4. Changes in Registrant's Certifying Accountant

The Company's financial statements for the fiscal years ended May 31,
1999, 2000 and 2001 were audited by the firm of Wieseneck, Andres and
Company, P.A. On July 15, 2002, the Company's Board of Directors made
a decision to terminate the services of Wieseneck, Andres &
Associates, P. A. of North Palm Beach, FL as the Company's independent
auditors. It was the decision of the Company to retain the firm Scott
W. Hatfield, C.P.A. of Dallas, Texas, as its new independent
accountant, as was reported in the Company's filing of Form 8-K/A
dated August 7, 2002 which is incorporated herein by reference.

As a result of the change in independent accountants, the Company
found it necessary to file a form 12b-25, Notice of Late Filing, dated
August 28, 2002. At that time the Company believed its form 10-KSB
would have been successfully completed and filed within the 15 day
extension period as required.

However, the firm of Wieseneck, Andres & Company, P.A. has not fully
cooperated with the Company in transmitting copies of all records
necessary for Scott W. Hatfield to complete the 2002 audit, resulting
in the Company not being able to file its 10-KSB within the additional
allocated time period. This change in the Company's independent
auditors, and the lack of cooperation has caused further delay in the
filing of its 2002 Annual Report. Every effort is being made by The


<PAGE>     11


Company to file its Form 10-KSB, 2002 Annual Report as soon as
possible.

Additionally, as of this date, the firm of Wieseneck, Andres &
Company, P.A., has not yet provided a letter, as is required, to be
included as an exhibit on our Form 8-K/A dated August 7, 2002, stating
that they agree or disagree with the Company's statement that of
during the period Wieseneck, Andres & Company, P.A., were acting as
our independent accountants, there were no disagreement(s) with them
on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure. The Company will
file a further amendment to that Form 8-K/A upon receipt of that
letter.

                            SIGNATURES

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

               PHOENIX INTERNATIONAL INDUSTRIES, INC.

                        September 12, 2002"
    (See SEC Forms 8-K-A filed on September 3, 2002 and 8-K filed on
       September 13, 2002 and incorporated herein by reference).


PATENTS

We own two patents for solidification of environmental waste, which
were acquired when we were involved in that business. However, we no
longer are involved in such business and believe that these patents
are of very little value today, as they have been rendered obsolete
due to the rapid development of the environmental clean-up industry.

EMPLOYEES

As of May 31, 2002, including our affiliates, we had 36 employees.


ITEM 9  MANAGEMENT

The following table sets forth certain information with respect to our
executive officers and directors. Each director serves a term of one
year or until a successor is elected.

<TABLE>
<CAPTION>

Name                 Position                             Director Since   Age
----                 --------                             --------------   ---
<S>                  <C>                                  <C>              <C>
Gerard Haryman       President, CEO, acting Principal          1996        58
                     Accounting Officer, acting CFO and
                     Chairman of the Board of Directors

Thomas Donaldson     Vice President, Secretary and
                     Director                                  1993        59

Timothy Palmer       Director                                  1997        57

</TABLE>

Gerard Haryman, has served as our Chairman of the Board, President and
Chief Executive Officer since January of 1996. Previously and
concurrently, since 1981 to the present, Mr. Haryman has been
President and Chief Executive Officer of SA, Sitmo, developers and
builders of commercial and residential properties throughout Europe,
with corporate offices in Paris, France. Mr. Haryman has also been
involved in the development of residential property in the Palm Beach
area since 1988, and during that period has also served on the Board
of Directors of several other companies, both public (American
Diversified Group, Inc.) and private . Mr. Haryman attended the
"Institute General de Finance" in Paris, France majoring in finance
and administration.

Thomas N. Donaldson, since February of 1993, Mr. Donaldson has been an
officer and director of Phoenix, and of Trident Environmental Systems,


<PAGE>     12


Phoenix's predecessor. Prior to his entering the public company arena,
he had a background in the electronic media, both television and
radio. Before being promoted to executive level management, he was an
award winning Producer/Director at both the local and network levels.
Additionally, he was a majority partner in the television production
company, "American Televent", which produced commercials and
syndicated programming. Mr. Donaldson attended both the University of
Miami and the University of Paris.

Timothy Palmer, has been President of HDX 9000, Inc., West Palm Beach,
Florida, a computer and business consulting firm since October 1993,
now a wholly-owned subsidiary of the Company, and a Director of the
Company since July 1997. from March 1997 to the present, he has been
President of Quality Advantage, Ltd. of Kingston, Jamaica, a computer
and business consulting firm. Prior to October 1993, he was manager of
the Palmer Family Trust in London, England. Mr. Palmer holds a
Bachelor of Commerce Degree from McGill University in Montreal,
Canada.

ITEM 10  EXECUTIVE COMPENSATION

The following table sets forth the cash compensation of our executive
officers and directors during each of the last three fiscal years. The
remuneration described in the table does not include the cost we
incurred in furnishing benefits to the named executive officers,
including premiums for health insurance and other benefits provided to
such individual that are extended in connection with the conduct of
our business. The value of such benefits cannot be precisely
determined, but the executive officers named below did not receive
other compensation in excess of the lesser of $25,000 or 10% of such
officer's cash compensation.


<TABLE>
<CAPTION>


                          Summary Compensation Table
Name and                                             Other
All
Principal                                            Annual           Restricted    Options/     LTIP         Other
Position                Year     Salary     Bonus    Compensation     Stock         SARs(#)      Payouts   Compensation
---------               ----     ------     -----    ------------     ----------    ----------   -------   ------------
<S>                     <C>      <C>        <C>      <C>              <C>           <C>
Gerard Haryman          2001     250,000(1)  -0-         -0-                           -0-         -0-       -0-
President, CEO,         2000     250,000(1)  -0-         -0-                           -0-         -0-       -0-
acting CFO and          1999     250,000(1)  -0-         -0-             (2)           -0-         -0-       -0-
Chairman of the         1998     250,000(1)  -0-         -0-                           -0-         -0-       -0-
Board of Directors      1997     250,000(1)  -0-         -0-                           -0-         -0-       -0-


Directors

Thomas N. Donaldson     2001     104,000(1)  -0-         -0-                           -0-         -0-       -0-
Vice President, COO,    2000     104,000(1)  -0-         -0-                           -0-         -0-       -0-
and Director            1999     104,000(1)  -0-         -0-             (3)           -0-         -0-       -0-
                        1998     104,000(1)  -0-         -0-                           -0-         -0-       -0-
                        1997     104,000(1)  -0-         -0-                           -0-         -0-       -0-

</TABLE>


(1) Due to our cash position, Mr. Haryman and Mr. Donaldson have
    deferred payment of their salaries and bonuses.

(2) Mr. Haryman received a grant of 1,400,000 shares of our common
    stock on April 8, 2000 valued at $1,484,000 and 2,000,000 shares on


<PAGE>     13


    February 1, 2001 valued at $538,000 and 300,000 shares on July 16,
    2001 valued at $21,000.
(3) Mr. Donaldson received a grant of 250,000 shares of our common
    stock on April 8, 2000 valued at $265,000 and 300,000 shares on
    February 1, 2001 valued at $134,500 and 300,000 shares on July 16,
    2001 valued at $21,000.

No additional shares have been issued to our executive officers since
July 16, 2001.

For the year ended May 31, 2002 we issued 4,296,277 shares of stock
under the Employee Stock Option Plan.

Employment Agreements
---------------------

We currently have no Employment Contracts in effect.

Compensation of Directors
-------------------------

Each of our Directors is to receive 12,000 shares of common stock for
each year cumulative of service plus reimbursement of out-of-pocket
expenses.

Outside Directors
-----------------

Currently, the Company has only one outside Director, Timothy Palmer.


ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>
Name and Address                Common Stock    Percentage of Class (1)(2)
----------------                ------------    -------------------
<S>                             <C>             <C>
Gerard Haryman
President/CEO
1750 Osceola Drive
West Palm Beach, FL  33409      4,273,948(3)              5.6%

Thomas Donaldson
VP/COO, Director
1750 Osceola Drive
West Palm Beach, FL  33409        490,000                  *

Timothy Palmer, Director
1750 Osceola Drive
West Palm Beach, FL  33409        500,000                  *

All Directors and Executive
Officers as a Group             5,543,948                 7.2%

</TABLE>

* less than 1%

(1)  Unless otherwise noted below, we believe that all persons named
     in the table have sole voting and investment power with respect to all
     shares of common stock beneficially owned by them.  For purposes
     hereof, a person is considered to be the beneficial owner of
     securities that can be acquired by such person within 60 days from the
     date hereof upon the exercise of warrants or options or the conversion
     of convertible debentures.  Each beneficial owner's  percentage
     ownership is determined by assuming that any such warrants, options or
     convertible debentures that are held by such person (but not those
     held by any other person) and which are exercisable within 60 days
     from the date hereof, have been exercised.

(2)  Percentage based on 76,848,327 shares outstanding as of May
     31, 2002.

(3)  Includes 280,000 shares owned by Mr. Haryman's wife that are
     deemed beneficially to be owned by him.



<PAGE>    14


ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The company was a party to and has a direct or indirect material
interest in the following transactions:

<TABLE>
<CAPTION>
                        Nature of       May 31, 2001    Nov. 30, 2001   Aug. 31, 2001
                        Person's        Amount          Amount          Amount          Amount
                        Relationship    interest in     of such         of such         of such
Name                    to issuer       transaction     interest        interest        interest
----                    ------------    ------------    -------------   -------------   --------
<S>                     <C>             <C>             <C>             <C>             <C>


Gerard Haryman          CEO and         personal loan   $  430,965      $  546,312      $ 566,969
                        Director        to company

Gerard Haryman          CEO and         corporate loan  $  472,600      $  541,994      $ 572,200
                        Director        to company
                                        from Aptek,
                                        100% owned
                                        by CEO

Thomas Donaldson        COO and         personal loan    $  15,000       $  15,000      $  15,000
                        Director        from company

</TABLE>

PATENTS

The Company owns two patents for solidification of environmental
waste, which were acquired when the Company was involved in that
business. However, the Company is no longer in such business and it is
believed by the Company that these patents are of very little value
today, as they have been rendered obsolete due to the rapid
development of the environmental clean-up industry.


COMPANY CAPITALIZATION

There are 200,000,000 shares of Common Stock authorized for
issuance. Of this amount, 48,901,557 shares are currently issued and
outstanding.  There are 20,000,000 shares of Preferred Stock
authorized, the designation and rights of which are to be determined
by the Board of Directors.


STOCK OPTION PLAN

On May 31, 1998, the Company's Board of Directors adopted a Stock
Option Plan far its employees, directors and consultants. On April 24,
2001 file a form S-8 to register 5,000,000 underlying shares of that
stock option plan.

With the exception of historical facts, the matters discussed
above include forward-looking statements that may involve a number of
risks and uncertainties.  Actual results may vary based upon a number
of factors, including, but not limited to, risks in product and
technology development, market acceptance of new products and
technology, continuing demand, the impact of competitive products and
pricing, and changing economic conditions.


<PAGE>     17


                           SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of West Palm Beach, Florida on  October 9, 2002

PHOENIX INTERNATIONAL INDUSTRIES, INC.

By: /s/ Gerard Haryman
   --------------------------------
   Gerard Haryman President, Chief
   Executive Officer and acting
   Chief Financial Officer

In accordance with the requirements of tile Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on, the
dates indicated,

SIGNATURE                           TITLE                      DATE


/s/ GERARD HARYMAN
----------------------------
Gerard Haryman                President, CEO, acting CFO
                              and Chairman of the Board     October 9, 2002

/s/ THOMAS DONALDSON
----------------------------
Thomas Donaldson              Vice President, Secretary     October 9, 2002
                              and Director


<PAGE>     18


ITEM 13  EXHIBITS AND REPORTS

INDEX TO EXHIBITS

(3)	ARTICLES OF INCORPORATION AND BY-LAWS

        'The Articles of Incorporation and Articles of Amendment to The
        Articles of Incorporation and By-Laws of the Registrant were
        pre-filed as Exhibits 3-1, 3.2, and 3.3, respectively, to the
        registrant's Form I 0-KSB, for the fiscal year 1995, under the
        Securities and Exchange Act of 1934, filed April 1, 1998, with
        the Securities and Exchange Commission and are incorporated
        herein by reference.

(10)    MATERIAL CONTRACTS. Some of the Material Contracts of the
        Registrant were filed as Exhibits 10.1, 10.2, 10.3, 10.4, and
        10.5, respectively, to the Registrant's Form 10-KSB as of May 31,
        1995 under the Securities and Exchange Ad: of 1934, filed
        April 1, 1998 with the Securities and Exchange Commission - The
        Contracts for the sale of ITC and the purchases of Hospitality
        Telecom Corp (formerly Mic Mac Investments, Inc.)and Cambridge
        Gas Transport Corporation, were included in Phoenix's 10-KSB for
        the year ended May 31, 1998 and are incorporated herein by
        reference.

(16)	LETTERS RE- CHANGE IN CERTIFYING ACCOUNTANTS

        See SEC Forms 8-K/A and 8-K as filed on Sept. 3, 2002 and Sept.
        13, 2002 respectfully, and incorporated herein by reference

EXHIBIT 16.A

	BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

	The following persons failed to file Form 5 for the fiscal year.
	Gerard Haryman
	Thomas Donaldson
	Timothy Palmer

(21)	SUBSIDIARIES OF THE REGISTRANT

        EPICUS, Inc. , Mic-Mac Investments, Inc. and Moye & Associates,
        Inc.


<PAGE>     19


                              PHOENIX
                           INTERNATIONAL
                          INDUSTRIES, INC.

                 Consolidated Financial Statements
                  and Independent Auditor's Report

                       May 31, 2002 and 2001













                         S.W. HATFIELD, CPA
                     certified public accountants

                Using our past to assist your future(sm)


<PAGE>


        PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                   Page
                                                                   ----

Report of Independent Certified Public Accountants
  S. W. Hatfield, CPA                                               F-3
  Wieseneck, Andres & Company, P. A.                                F-4

Consolidated Financial Statements

  Consolidated Balance Sheets
   as of May 31, 2002 and 2001                                      F-5

  Consolidated Statements of Operations and Comprehensive Loss
   for the years ended May 31, 2002 and 2001                        F-6

  Consolidated Statement of Changes in Stockholders' Equity
   for the years ended May 31, 2002 and 2001                        F-7

  Consolidated Statements of Cash Flows
   for the years ended May 31, 2002 and 2001                        F-8

  Notes to Consolidated Financial Statements                        F-9






                                                                        F-2

<PAGE>


S.W. HATFIELD, CPA
certified public accountants

Member:  Texas Society of Certified Public Accountants
         Press Club of Dallas


        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
        --------------------------------------------------


Board of Directors and Stockholders
Phoenix International Industries, Inc.

We have audited the accompanying consolidated balance sheet of Phoenix
International Industries, Inc. (a Florida corporation) and Subsidiaries
as of May 31, 2002 and the related statements of operations and
comprehensive loss, changes in stockholders' equity and cash flows for
the year ended May 31, 2002.  These consolidated financial statements are
the responsibility of the Company's management.  Our responsibility is
to express an opinion on these consolidated financial statements based
on our audit.  The consolidated financial statements of Phoenix
International Industries, Inc. as of and for the year ended May 31, 2001
were audited by other auditors whose report was dated August 10, 2001 and
included a paragraph expressing substantial doubt about Phoenix
International Industries, Inc.'s ability to continue as a going concern.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Phoenix International Industries, Inc. as of May 31, 2002 and
the results of its operations and its cash flows for the year ended May
31, 2002, in conformity with accounting principles generally accepted in
the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As discussed
in Note C to the consolidated financial statements, the Company continues
to experience operating losses and negative cash flow from operating
activities.  Liquidity during this period has been provided by management
and/or significant shareholders to provide sufficient working capital to
maintain the integrity of the corporate entity.  These circumstances
create substantial doubt about the Company's ability to continue as a
going concern.  The consolidated financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.



                                              S. W. HATFIELD, CPA
Dallas, Texas
September 22, 2002


                  Use our past to assist your future[sm]

(secure mailing address)               (overnight delivery/shipping address)
P.O. Box 820395                            9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395                           Dallas, Texas  75243-7212
214-342-9635 (voice)                                      (fax) 214-342-9601
800-244-0639                                                  SWHCPA@aol.com





<PAGE>

                   WIESENECK, ANDRES & COMPANY, P.A.
                      Certified Public Accountants
                     772 U.S. HIGHWAY 1, SUITE 200
                    NORTH PALM BEACH, FLORIDA 33408
                             (561) 626-0400

THOMAS B. ANDRES, C.P.A.*, C.V.A.                         FAX (561) 626-3453
 PAUL M. WIESENECK, C.P.A.

 *Regulated by the State of Florida


                   INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Phoenix International Industries, Inc.
West Palm Beach, Florida

We have audited the accompanying consolidated statement of operations and
comprehensive loss, changes in shareholders' deficit and cash flows of
Phoenix International Industries, Inc. and Subsidiaries for the year
ended May 31, 2001.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards.  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 accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of its operations
and its cash flows of the Company for the year ended May 31, 2001 in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note C to
the consolidated financial statements, the Company has accumulated losses
of approximately $16,000,000 as of May 31, 2001, has insufficient working
capital and may continue to incur selling, general and administrative
expenses.  Realization of certain assets is dependent upon the Company's
ability to meet its future financing requirements, the success of future
operations and the continued funding of the parent Company's operations
by its chief officers and sale of common stock.  The conditions raise
substantial doubt about the Company's ability to continue as a going
concern.  Management's plans regarding those matters are described in
Note C.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Wieseneck, Andres & Company, P.A.
Wieseneck, Andres & Company, P.A.

August 10, 2001


                                                                        F-3

<PAGE>

     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEET
                           May 31, 2002



                                                            May 31, 2002
                                                            ------------
                              ASSETS
                              ------
Current Assets
 Cash on hand and in bank                                   $        850
 Accounts receivable - Trade, net of allowance
    for doubtful accounts of approximately $185,000            1,353,660
 Advances due from officer                                        15,000
                                                            ------------
  Total current assets                                         1,369,510
                                                            ------------

Property and equipment - at cost                                 562,355
 Less Accumulated depreciation                                  (228,659)
                                                            ------------
  Net property and equipment                                     333,696
                                                            ------------

Other Assets
 Deposits                                                        207,898
 Restricted cash                                                 203,798
 Trademark and corporate name development costs                   23,524
                                                            ------------
   Total other assets                                            435,220


TOTAL ASSETS                                                $  2,138,426
                                                            ============



                          - Continued -




The accompaning notes are an integral part of these
consolidated financial statements.
                                                                        F-5

<PAGE>


      PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
              CONSOLIDATED BALANCE SHEET - CONTINUED
                           May 31, 2002


                                                            May 31, 2002
                                                            ------------
               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------

Current Liabilities
 Bank overdraft                                             $     74,206
 Notes payable to banks and other                              1,363,093
 Accounts payable - trade                                      2,531,854
 Accrued sales and service taxes payable                         623,677
 Accrued payroll and payroll taxes payable                       286,719
 Accrued rent payable to affiliate                                90,468
 Accrued interest payable                                        527,243
 Accrued officer compensation                                  2,119,176
                                                            ------------
  Total current liabilities                                    7,616,436
                                                            ------------

Long-term debt
 Advances from controlling shareholder/officer                 1,373,323
                                                            ------------
  Total liabilities                                            8,989,759
                                                            ------------

Commitments and contingencies

Convertible debentures                                         1,429,697
                                                            ------------


Stockholders' Equity (Deficit)
 Preferred stock - $0.001 par value
  5,000 shares authorized
  None issued and outstanding                                          -
 Common stock - $0.001 par value.
   200,000,000 shares authorized.
   74,332,327 shares issued and outstanding                       74,332
 Additional paid-in capital                                   13,145,002
 Accumulated deficit                                         (21,500,364)
                                                            ------------
  Total stockholders' equity                                  (8,281,030)
                                                            ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $  2,138,426
                                                            ============


The accompaning notes are an integral part of these
consolidated financial statements.
                                                                        F-6

<PAGE>



       PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS
                      AND COMPREHENSIVE LOSS
                Years ended May 31, 2002 and 2001


<TABLE>
<CAPTION>
                                                    Year ended       Year ended
                                                   May 31, 2002     May 31, 2001
                                                   ------------     ------------
<S>                                                <C>              <C>
Revenues - net                                     $  6,029,792     $  3,671,015
Cost of Sales                                        (3,180,459)      (2,661,409)
                                                   ------------     ------------
Gross Profit                                          2,849,333        1,009,606
                                                   ------------     ------------

Operating Expenses
 Selling expenses                                       780,645          543,667
 General and administrative expenses                  3,483,632        4,530,678
 Bad debt expense                                     1,969,657          160,000
 Depreciation and amortization                          197,620          278,506
 Compensation expense related to common
   stock issuances at less than "fair value"              84,563               -
                                                   ------------     ------------
  Total operating expenses                            6,516,117        5,512,851
                                                   ------------     ------------

Loss from operations                                 (3,666,784)      (4,503,245)
Other income
 Interest and other income (expense) - net              (78,267)          56,529
 Interest expense                                      (414,807)      (1,439,191)
 Accretion of Beneficial Conversion
  Feature Discount on Convertible Debentures           (158,823)               -
 Impairment adjustment of reorganization value
  in excess of amounts allocated to
  identifiable assets                                  (643,020)               -
 Abandonment and impairment of property and
   equipment                                           (305,656)               -
                                                   ------------     ------------

Loss before provision for income taxes,
  discontinued operations and extraordinary item     (5,267,357)      (5,885,867)
Provision for income taxes                                    -                -
                                                   ------------     ------------

Loss before discontinued operations and
  extraordinary item                                 (5,267,357)      (5,885,867)
Discontinued operations
  Loss on final settlement and disposition of
    assets and operations in closed subsidiaries,
    net of income taxes                                  20,913                -
 Income from operations of discontinued
   subsidiary, net of income taxes                            -            7,849
                                                   ------------     ------------

Loss before extraordinary item                       (5,246,444)      (5,878,018)
Extraordinary item
 Forgiveness and extinguishment of accounts
 payable                                                      -          370,820
                                                   ------------     ------------

Net Loss                                             (5,246,444)      (5,507,198)
Other comprehensive income                                    -                -
                                                   ------------     ------------

Comprehensive Loss                                 $ (5,246,444)    $ (5,507,198)
                                                   ============     ============
</TABLE>


                          - Continued -




The accompaning notes are an integral part of these
consolidated financial statements.
                                                                        F-7

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS
               AND COMPREHENSIVE LOSS - CONTINUED -
                Years ended May 31, 2002 and 2001


<TABLE>
<CAPTION>
                                                    Year ended       Year ended
                                                   May 31, 2002     May 31, 2001
                                                   ------------     ------------
<S>                                                <C>              <C>
Loss before provision for income taxes,
 discontinued operations and extraordinary item    $ (5,267,357)    $ (5,885,867)

Provision for income taxes                                    -                -
                                                   ------------     ------------

Loss before discontinued operations
 and extraordinary item                              (5,267,357)      (5,885,867)

Discontinued operations                                  20,913            7,849

Loss before extraordinary item                       (5,246,444)      (5,878,018)

Extraordinary item                                            -          370,820

Net Loss                                             (5,246,444)      (5,507,198)

Other comprehensive income                                    -                -

Comprehensive Loss                                 $ (5,246,444)    $ (5,507,198)


Net loss per weighted-average share
 of common stock outstanding, calculated
 on Net Loss - basic and fully diluted
  From continuing operations                       $      (0.08)    $      (0.17)
  Discontinued operations                                                      -
  Extraordinary item                                       0.00             0.01
                                                   ------------     ------------

                                                   $      (0.08)    $       0.16
                                                   ============     ============
Weighted-average number of shares
 of common stock outstanding                         64,444,538       34,902,572
                                                   ============     ============

</TABLE>



The accompaning notes are an integral part of these
consolidated financial statements.
                                                                        F-8

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                Years ended May 31, 2002 and 2001


<TABLE>
<CAPTION>
                                                            Additional
                                      Common Stock            paid-in        Accumulated
                                   Shares       Amount        capital         Deficit           Total
                                 ----------    --------     -----------    --------------    -------------
<S>                              <C>           <C>          <C>            <C>               <C>

Balances at June 1, 2000         19,353,847    $ 19,354     $ 7,543,466    $ (10,746,722)    $ (3,183,902)

Issuance of common stock
 For cash                        16,400,000      16,400       1,758,531                -        1,774,931
 For services rendered,
  interest and debt conversion    8,782,841       8,784       1,277,000                -        1,285,784
 For acquisition of Moye
  & Associates, Inc.                400,000         400          91,000                -           91,400
 For compensation to
  employees                       1,464,869       1,464         184,372                -          185,836
 For compensation to
  officers                        2,500,000       2,500         670,000                -          672,500

Net loss for the year                     -           -               -       (5,507,198)      (5,507,198)
                                 ----------    --------     -----------    -------------     ------------
Balances at May 31, 2001         48,901,557      48,902      11,524,369      (16,253,920)      (4,680,649)

Issuance of common stock
 For cash pursuant to a private
  placement in accordance
  with Regulation S               2,000,000       2,000          98,000                -          100,000
 For cash pursuant to options
  granted and exercised by
  non-officer employees           3,067,777       3,068         298,088                -          301,156
 For services rendered, interest
  and debt conversion            16,950,493      16,950       1,121,082                -        1,138,032
 For compensation to
  officers                        1,212,500       1,212          83,663                -           84,875
 For final settlement on
  disposition of Moye &
  Associates, Inc.                2,200,000       2,200          19,800                -           22,000

Net loss for the year                     -           -               -       (5,246,444)      (5,246,444)
                                 ----------    --------     -----------    -------------     ------------
Balances at May 31, 2002         74,332,327    $ 74,332     $13,145,002    $ (21,500,364)    $ (8,281,030)
                                 ==========    ========     ===========    =============     ============
</TABLE>




The accompaning notes are an integral part of these
consolidated financial statements.
                                                                        F-9

<PAGE>



     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                Years ended June 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                    Year ended       Year ended
                                                   May 31, 2002     May 31, 2001
                                                   ------------     ------------
<S>                                                <C>              <C>
Cash Flows from Operating Activities
 Net loss for the year                             $ (5,246,444)    $ (5,507,198)
 Adjustments to reconcile net loss to net cash
  provided by operating activities
   Depreciation                                         102,951          130,344
   Amortization                                          94,669          148,162
   Bad debt expense                                   1,969,657          160,000
   Expenses paid with common stock                      664,197        3,415,135
   Gain from extinguishment of debt                           -         (370,870)
   Impairment and abandonment charges to
     operations                                         948,676                -
   Compensation expense related to common stock
     issuances at less than "fair value"                 84,563                -
   Accretion of Beneficial Conversion Feature
     Discount on Convertible Debentures                 158,823                -
  (Increase) Decrease in
     Accounts receivable                             (2,248,490)        (948,174)
     Prepaid expenses                                     2,875           (2,667)
     Deposits, intangible and other assets              294,516         (552,049)
 Increase (Decrease) in
     Accounts payable                                   764,860          908,775
     Accrued liabilities                                675,816          170,124
     Accrued interest payable                           277,010          153,327
     Accrued officer compensation                       353,196          353,196
                                                   ------------     ------------
Net cash used in operating activities                (1,103,125)      (1,941,895)
                                                   ------------     ------------

Cash Flows from Investing Activities
 Increase in restricted cash                               (433)        (200,000)
 Purchase of property and equipment                     (50,255)        (176,477)
 Cash paid for intangible assets                              -          (23,524)
 Cash paid for refundable deposits                            -         (132,998)
                                                   ------------     ------------
Net cash used in investing activities                   (50,688)        (532,999)
                                                   ------------     ------------

Cash Flows from Financing Activities
 Increase in cash overdraft                              70,290                -
 Proceeds from sale of common stock                     328,905          800,218
 Cash paid to raise capital                             (30,727)               -
 Proceeds from convertible debentures                   155,000        1,792,500
 Payments on note payable to bankruptcy trustee               -          (50,000)
 Cash advanced from affiliated entities                 469,758                -
 Repayments of advances from stockholder                      -          (69,659)
 Proceeds from notes payable                            150,000          674,182
 Cash to repay notes payable                            (47,128)        (660,687)
                                                   ------------     ------------
Net cash used in financing activities                 1,096,098        2,486,554
                                                   ------------     ------------

Increase (Decrease) in Cash                             (57,715)          11,660
Cash at beginning of period                              58,568           46,905
                                                   ------------     ------------
Cash at end of period                              $        850     $     58,565
                                                   ============     ============
</TABLE>




The accompaning notes are an integral part of these
consolidated financial statements.
                                                                        F-10

<PAGE>


      PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                Years ended June 30, 2002 and 2001


<TABLE>
<CAPTION>
                                                    Year ended       Year ended
                                                   May 31, 2002     May 31, 2001
                                                   ------------     ------------
<S>                                                <C>              <C>
Supplemental Disclosure of
 Interest and Income Taxes Paid
    Interest paid for the period                   $          -     $          -
                                                   ============     ============

    Income taxes paid for the period               $          -     $          -
                                                   ============     ============

Supplemental Disclosure of Non-cash
 investing and financing activities
  Common stock issued for retirement of debt       $    440,303     $    284,500
                                                   ============     ============
  Common stock issued in payment of accrued
    interest                                       $    137,797     $     88,672
                                                   ============     ============

</TABLE>





The accompaning notes are an integral part of these
consolidated financial statements.

                                                                        F-11

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

Phoenix International Industries, Inc. (Company) was incorporated on July
22 1985, pursuant to the laws of the State of Florida under the name
Hydrobac, Inc. On July 7, 1986, the Company's name was changed to ProBac,
Inc. and on October 5, 1994, its name was changed to Trident
Environmental Systems, Inc. During those periods the Company's primary
business was in various types of products and systems for use in the
environmental clean-up industry. On October 2, 1996, the Company's name
was changed to Phoenix International Industries, Inc. From January 1996
through May 31, 1997, the Company sought acquisitions as it wound down
and closed its original environmental clean-up business.

On April 9, 1998, the Company acquired 100% of the outstanding stock of
Mic Mac Investments, Inc. (Mic Mac), a South Carolina corporation.  Mic
Mac at the time of acquisition was a  long distance telephone service
"reseller" specializing in services to the hospitality industry.  All
operations related to Mic Mac were discontinued by February 1999.

Pursuant to a December 14, 1998 agreement, the Company acquired 100% of
the stock of Cambridge Gas Transport Corporation (CGTC), a Cayman Islands
Corporation, in the business of owning and operating specialized
chemical/fuel tanker transport ships.  Due to various disagreements, this
acquisition was never consummated and was rescinded by agreement between
the holders the majority of CGTC stock, and the Company.  The Company
filed litigation to recoup their payments to CTCG and executed an out of
court settlement on December 15, 2000.

During Fiscal 2000, the Company acquired control of Telephone Company of
Central Florida, Inc. (TCCF), an entity then operating under Chapter 11
of the United States Bankruptcy Court.  As an integral component of
TCCF's Plan of Reorganization, the Company recapitalized TCCF, effective
on the effective date of TCCF's discharge from bankruptcy.  On July 9,
1999, the U. S. Bankruptcy Court issued an Order of Confirmation related
to TCCF's Plan of Reorganization and the Company recapitalized TCCF
within ten days of the Confirmation Order.  TCCF is a "competitive local
exchange carrier ("CLEC") telephone company and a reseller of other
telecommunications services.  On January 17, 2001 the corporate name of
TCCF was changed to EPICUS, Inc.  (Epicus).

On July 28, 2000, the Company acquired 100% of the stock of Moye &
Associates, Inc. (Moye) of St. Simons Island Georgia.  Moye's primary
business was that of an Internet Service Provider (ISP) known as
TheBest.Net.  This move was seen by management as being synergetic with
the operations of TCCF.  On July 19, 2001, the Company sold all operating
assets of Moye to an unrelated party and, effectively, discontinued all
operations within this subsidiary.


NOTE B - PREPARATION OF FINANCIAL STATEMENTS

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 disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  Actual
results could differ from those estimates.

The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America
and has adopted a year-end of May 31.


                                                                      F-12

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - PREPARATION OF FINANCIAL STATEMENTS - Continued

Management further acknowledges that it is solely responsible for
adopting sound accounting practices, establishing and maintaining a
system of internal accounting control and preventing and detecting fraud.
The Company's system of internal accounting control is designed to
assure, among other items, that 1) recorded transactions are valid; 2)
valid transactions are recorded; and 3) transactions are recorded in the
proper period in a timely manner to produce financial statements which
present fairly the financial condition, results of operations and cash
flows of the Company for the respective periods being presented

The preparation of financial statements in conformity with generally
accepted accounting principles 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 the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.

For segment reporting purposes, the Company operated in only one industry
segment during the periods represented in the accompanying financial
statements and makes all operating decisions and allocates resources
based on the best benefit to the Company as a whole.

These financial statements reflect the books and records of Phoenix
International Industries, Inc., EPICUS, Inc., Mic Mac, Inc. and Moye &
Associates, Inc. for the years ended May 31, 2002 and 2001, respectively.
All significant intercompany transactions have been eliminated in
consolidation.  The consolidated entities are referred to as Company.


NOTE C - GOING CONCERN UNCERTAINTY

The Company has experienced cumulative operating losses for the previous
three-year period of approximately $14,000,000 and has used cash in
operating activities for the same period of approximately $4,473,000.
In a effort to control costs and better manage the Company's key
operating subsidiary, Epicus, Inc., the Company has discontinued all
operations within Mic Mac and Moye and has sold or otherwise disposed of
all operating assets of these subsidiaries.

The Company's liquidity has been sustained through the sale of equity
securities, restricted and unrestricted, domestically and in
international markets.  Further, significant working capital advances
have been made by members of management or by entities owned or
controlled by members of management.

Management is of the opinion that Epicus can become cash flow positive
during the second or third quarter of Fiscal 2003 (year ending May 31,
2003) and that this event will provide sufficient cash to support the
Company's day-to-day liquidity requirements as well as retire outstanding
debt and delinquent trade payables.

The Company's continued existence is dependent upon its ability to
generate sufficient cash flows from operations to support its daily
operations as well as provide sufficient resources to retire existing
liabilities and obligations on a timely basis.

Because of the Company's lack of positive cash flows, the Company's
continuance is fully dependent either future sales of securities or upon
its current management and/or advances or loans from significant
stockholders or corporate officers to provide sufficient working capital
to preserve the integrity of the corporate entity.


                                                                      F-13

<PAGE>

     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - GOING CONCERN UNCERTAINTY - Continued

There is no assurance that the Company will be able to obtain additional
funding through the sales of additional securities or, that such funding,
if available, will be obtained on terms favorable to or affordable by the
Company.

It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the
integrity of the corporate entity.  However, there is no legal obligation
for either management or significant stockholders to provide additional
future funding.


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.  Cash and cash equivalents
    -------------------------

    For Statement of Cash Flows purposes, the Company considers all cash
    on hand and in banks, including accounts in book overdraft positions,
    certificates of deposit and other highly-liquid investments with
    maturities of three months or less, when purchased, to be cash and
    cash equivalents.

    Cash overdraft positions may occur from time to time due to the timing
    of making bank deposits and releasing checks, in accordance with the
    Company's cash management policies.

2.  Accounts receivable
    -------------------

    In the normal course of business, the Company extends unsecured credit
    to virtually all of its customers which are located throughout the
    United States and are principally concentrated in the southeastern
    quadrant of the country.  Because of the credit risk involved,
    management has provided an allowance for doubtful accounts which
    reflects its opinion of amounts which will eventually become
    uncollectible.  In the event of complete non-performance, the maximum
    exposure to the Company is the recorded amount of trade accounts
    receivable shown on the balance sheet at the date of non-performance.

3. Property and Equipment
   ----------------------

   Property and equipment are recorded at historical cost.  These costs
   are depreciated over the estimated useful lives, generally three to
   ten years, of the individual assets using the straight-line method.
   Gains and losses from the disposition of property and equipment are
   included in operations as incurred.

4. Intangible Assets
   -----------------

   Monies paid for development of the trade name "Epicus", approximately
   $23,525, were capitalized as a component of Other Assets on the
   Company's consolidated balance sheet.  In accordance with Statement of
   Financial Accounting Standards No. 121, "Accounting for the Impairment
   of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the
   Company follows the policy of evaluating all qualifying assets as of
   the end of each reporting quarter.  For each of the years ended May
   31, 2002 and 2001, no charges to operations were made for impairments
   in the future benefit of this trade name.

   Other intangible assets are amortized over the estimated useful life
   of the underlying asset using the straight-line method.


                                                                      F-14

<PAGE>


      PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

5. Goodwill and Reorganization Value in Excess of Amounts Allocable to
   Identifiable Assets

   Goodwill represents the excess of the purchase price paid for a
   subsidiary over the fair market values of the underlying assets and
   liabilities assumed in the acquisition transaction.  These amounts are
   amortized over a five to ten year period using the straight-line
   method.  As of May 31, 2002, all goodwill has been charged to
   operations as a result of the discontinuing of all operations in
   acquired subsidiaries.

   Reorganization Value in Excess of Amounts Allocable to Identified
   Assets represents the excess of the recapitalized value of Epicus over
   the fair market value of the assets acquired upon final settlement of
   Epicus' filing under Chapter 11 of the United States Bankruptcy Code.
   This amount was originally being amortized over a forty year term
   using the straight-line method.  In accordance with Statement of
   Financial Accounting Standards No. 121, "Accounting for the Impairment
   of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the
   Company follows the policy of evaluating all qualifying assets as of
   the end of each reporting quarter.

   For the year ended May 31, 2001, management determined that there were
   no permanent impairments to the remaining carrying value of this
   balance.  As of May 31, 2002, management, upon realization that the
   Fiscal 2002 operational objectives were not met, recorded an
   impairment of future recoverability of the recorded reorganization
   value in excess of amounts allocated to identifiable assets equivalent
   to 100.0% of the unamortized goodwill remaining at May 31, 2002.

6. Revenue Recognition

   Local telephone services for business and residential service are
   billed to the respective customer in advance at the initiation of each
   monthly billing cycle.  Long distance telephone services are billed in
   arrears in the month following the provision of the service.  All
   revenue for both local and long distance services are  recognized at
   the respective date of billing.

   In the event of cancellation of service by a customer prior to the
   expiration of the completion of the monthly billing cycle results in
   a partial refund due to the customer.  These reductions of revenue,
   due to cancellation of service, are recognized at the point of service
   termination and are recognized as a component of trade accounts
   payable until final settlement of the customer's account balance.

   The Company discontinued the issuance and recognition of prepaid long-
   distance phone cards in May 1998.  Any remaining commitment, if any,
   for unused prepaid long-distance phone cards are recognized in expense
   at the point of billing by the respective third- party carrier
   providing the long-distance service.  The Company's exposure in this
   particular area is insignificant due to the time period between the
   termination of this type of revenue stream and the current date.

7. Income Taxes

   The Company uses the asset and liability method of accounting for
   income taxes.  At May 31, 2002 and 2001, the deferred tax asset and
   deferred tax liability accounts, as recorded when material to the
   financial statements, are entirely the result of temporary
   differences.  Temporary differences represent differences in the
   recognition of assets and liabilities for tax and financial reporting
   purposes, primarily accumulated depreciation and amortization,
   allowance for doubtful accounts and vacation accruals.

   As of May 31, 2002 and 2001, the deferred tax asset related to the
   Company's net operating loss carryforward is fully reserved.


                                                                      F-15

<PAGE>


        PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

8.  Advertising costs

    The Company does not conduct any direct response advertising
    activities.  For non-direct response advertising, the Company charges
    the costs of these efforts to operations at the first time the related
    advertising is published.

9.  Earnings (loss) per share

    Basic earnings (loss) per share is computed by dividing the net income
    (loss) by the weighted-average number of shares of common stock and
    common stock equivalents (primarily outstanding options and warrants).
    Common stock equivalents represent the dilutive effect of the assumed
    exercise of the outstanding stock options and warrants, using the
    treasury stock method.  The calculation of fully diluted earnings
    (loss) per share assumes the dilutive effect of the exercise of
    outstanding options and warrants at either the beginning of the
    respective period presented or the date of issuance, whichever is
    later.  As of May 31, 2002 and 2001, the Company's issued and
    outstanding, warrants, options and convertible debt are considered
    antidilutive due to the Company's net operating loss position.

10. Employee Stock Options

    The Company has adopted the policy of fair value based accounting for
    stock-based compensation in accordance with Statement of Financial
    Accounting Standards No. 123.

11. Reclassifications

    Certain May 31, 2001 amounts have been reclassified to conform to May
    31, 2002 presentations.


NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash, accounts receivable, accounts payable and
notes payable, as applicable, approximates fair value due to the short
term nature of these items and/or the current interest rates payable in
relation to current market conditions.

Interest rate risk is the risk that the Company's earnings are subject
to fluctuations in interest rates on either investments or on debt and
is fully dependent upon the volatility of these rates.  The Company does
not use derivative instruments to moderate its exposure to interest rate
risk, if any.

Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully
dependent upon the volatility of these rates.  The company does not use
derivative instruments to moderate its exposure to financial risk, if
any.


                                                                      F-16

<PAGE>

     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE F - CONCENTRATIONS OF CREDIT RISK

The Company and its Epicus subsidiary maintain their respective cash
accounts in a financial institution subject to insurance coverage issued
by the Federal Deposit Insurance Corporation (FDIC).  Under FDIC rules,
the Company and its subsidiaries are entitled to aggregate coverage of
$100,000 per account type per separate legal entity per financial
institution.  During the years ended May 31, 2002 and 2001, respectively,
the various operating companies had deposits in a financial institution
with credit risk exposures in excess of statutory FDIC coverage.  The
Company has incurred no losses during 2002 or 2001 as a result of any of
these unsecured situations.


NOTE G - BUSINESS COMBINATIONS

In accordance with an Agreement and Plan of Share Exchange the Company
acquired 100% of the outstanding shares of common stock of Moye and
Associates, Inc., a Georgia Corporation, doing business as TheBest.Net
(Moye) on July 28, 2000.  The Company exchanged 600,000 shares of
restricted, unregistered common stock for 100.0% of the issued and
outstanding stock of Moye.  In accordance with the terms of the
Agreement, the first 200,000 shares of the Company stock were issued
immediately after the effective date,  the second 200,000 shares were
issued 135 days subsequent to the effective date and the final 200,000
shares are to be issued 270 days subsequent to the effective date.  The
final 200,000 shares were issued in June 2001.  The transaction was
accounted for using the purchase method of accounting.  Goodwill is
normally recorded when the purchase price exceeds the fair value of the
net assets and liabilities acquired.  Management reviewed the prospects
of recovery of goodwill that was recorded on the date of purchase and
determined that the goodwill was 100% impaired based on the Letter of
Intent to sell Moye & Associates (see below).  The excess of the fair
value of the liabilities assumed over the fair value of the assets
acquired (negative book value) was not recorded as negative Goodwill.

As part of an Employment Agreement also dated July 28, 2000, between Moye
and Tully Moye, former stockholder of the Company, Moye will employ Mr.
Moye for three years beginning July 28, 2000 at an annual base salary of
$50,000 in year one, $60,000 in year two and $70,000 in year three.  This
will occur only if the financial state of the Company is such that it can
meet this increase based on revenue generated by the Company; and the
Company will not be forced to go to sources outside the Company to meet
the increase.  Should that not be the case employee's annual base salary
will remain at $50,000 until the above condition can be met, at which
time the increase will go into effect.

If, one year from the anniversary date of this agreement, the closing bid
price of Phoenix International Stock is less than one dollar ($1.00) per
share, making the value of 600,000 shares less than $600,000 dollars,
employee will receive the difference between $600,000 and the actual
value in additional stock of Phoenix International Industries, Inc.

Another provision of the Employment Agreement, Moye will reimburse Tully
Moye $100,000 for interest free loans Mr. Moye made to Moye.  The loan
will be paid as follows:  $25,000 at the closing of the Share Exchange
Agreement, $50,000 on September 1, 2000, and $25,000 180 days from the
execution of the Share Exchange Agreement.  The second two payments have
not been made but the payable has been reduced by the amount of personal
expense paid by the Company on behalf of Mr. Moye.

On July 19, 2001, the Company signed a Letter of Intent to sell the
active clients of Moye.  The buyer will pay $133.33 for each
existing"dial-up" and "domain hosting client".  It was estimated that
there were between approximately 1,500 and 2,700 active fee-for-service
clients on the date of signing the Letter of Intent.  The buyer deposited
a down payment of $150,000 with the Company and an additional $50,000
into an interest bearing account at the date of signing.   As of May 31,
2002, all amounts due under this sale of assets contract have been
satisfied.


                                                                      F-17

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE H - RESTRICTED CASH

As collateral for a stand-by letter of credit securing telephone service
provided by BellSouth, the Company has placed on deposit approximately
$204,000 in an interest bearing certificate of deposit.


NOTE I - ADVANCES DUE FROM OFFICER

The Company has advanced approximately $15,000 to a corporate officer.
This amount is non-interest bearing and is unsecured.  The advance is
repayable upon demand and may, at the officer's discretion, be used to
offset accrued, but unpaid, compensation.


NOTE J - PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                       May 31, 2002     May 31, 2001    Estimated life
                                       ------------     ------------    --------------
<S>                                    <C>              <C>             <C>
     Computer equipment                $    349,980     $    251,671            5 years
     Office furniture and fixtures           67,336          390,722            7-10 years
     Software and system programming        145,039          443,400            5 years
                                            562,355        1,085,793
     Less accumulated depreciation         (228,659)        (329,901)
                                       ------------     ------------
     Net property and equipment        $    333,696     $    755,892
                                       ============     ============

</TABLE>


Depreciation expense for the years ended May 31, 2002 and 2001, was
$102,951 and $61,746, respectively.

During the fourth quarter, management performed a complete physical
inventory of all property and equipment, reevaluated the estimated useful
lives of all property and equipment remaining in service at May 31, 2002,
and evaluated the potential recoverability of all property and equipment
pursuant to Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of".  On May 31, 2002, the Company recognized an
abandonment of certain previously capitalized property and equipment
resulting in a charge to operations of approximately $305,656.
Additionally, management established new estimated useful lives of
property and equipment as follows:

<TABLE>
<CAPTION>
                                       May 31, 2002        May 31, 2001
                                       ------------        ------------
<S>                                    <C>                 <C>
     Computer equipment                   5 years            12 years
     Office furniture and fixtures      7-10 years           12 years
     Software development                 5 years            12 years
</TABLE>

The effect of this change in estimate was recognized in the fourth
quarter for Fiscal 2002 and prospectively for all remaining balances to
be depreciated.


                                                                      F-18

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE K - ACCRUED OFFICER COMPENSATION

As of May 31, 2002, the Company has accrued approximately $2,119,176 for
earned, but unpaid, compensation to it's Chief Executive Officer and
Chief Operating Officer, at a rate of approximately at the rate of
approximately $20,833 and $8,600 per month respectively.

In February and July 2001, the Company's Board of Directors approved the
issuance of a bonus to the Company's Chief Executive Officer and Chief
Operating Officer, to be paid in the form of common stock registered
pursuant to a Registration Statement on Form S-8, as additional
compensation for the Company's inability to provide consistent cash
compensation to these officers.  In February 2001, the Company issued
2,500,000 shares of common stock in a transaction valued at approximately
$650,000, which equaled the closing quoted price of the Company's
equivalent securities on the date of the transaction.  In July 2001, the
Company issued 600,000 shares of common stock in a transaction valued at
approximately $36,000, which equaled the closing quoted price of the
Company's equivalent securities on the date of the transaction.


NOTE L - NOTES PAYABLE TO BANKS AND OTHERS

Notes payable to banks and others at May 31, 2002 are as follows:

                                                              May 31, 2002
                                                              ------------

$750,000 note payable to a foreign corporation.
  Interest at 13.0% Accrued interest payable quarterly.
  Final maturity due in June 2003 and automatically
  renewable for one-year periods upon written notice by
  the Company prior to the maturity date.  Collateralized
  by 3,000,000 shares of restricted, unregistered common
  stock of the Company.                                       $    750,000

$400,000 note payable to creditor trust fund.  Interest
  at 8.0%. Payable in quarterly installments of $25,000
  plus accrued interest.  Final maturity in April 2004.
  In the event the Company fails to make any scheduled
  quarterly payment, the Creditors' Trust is entitled to
  an immediate entry of judgment for any remaining amounts
  due upon the filing of an Affidavit of Non-Payment by
  the Creditors' Trust.                                            350,000

$150,000 note payable to an individual.  Interest at ____%.
  Principal and unpaid interest due upon demand.
  Unsecured                                                        111,000

$97,878 note payable to an unrelated entity.  Non-interest
  bearing.  Unsecured.  Due upon demand                             97,878

$100,000 note payable to former employee pursuant to an
  employment agreement for advances made by former
  owner of an acquired subsidiary.  Non-interest bearing.
  Due in full during Fiscal 2001.                                   54,215
                                                              ------------
 Total notes payable to banks and others                      $  1,363,093
                                                              ============



                                                                      F-19

<PAGE>


      PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE M - LONG-TERM DEBT

Long-term debt consists of the following at May 31, 2002:

                                                              May 31, 2002
                                                              ------------

Unsecured advances made by the Company's Chief Executive
  Officer and/or entities controlled by either Company
  officers and/or individuals related to the Company's
  Chief Executive Officer.  Interest at 6.25%.  Due upon
  demand.  Unsecured                                          $  1,373,323
                                                              ============

NOTE N - CONVERTIBLE DEBENTURES

As of May 31, 2002, the Company has issued and outstanding approximately
$1,429,6977 in 12.0% convertible debentures that mature in January 2003.
The proceeds were used to retire previously issued debt of similar
nature.  Interest is payable quarterly, in either cash or restricted,
unregistered common stock, commencing on December 31, 2001.  All interest
payments which are not timely made incur a penalty and late fee of 15.0%
per annum.

On September 28, 2001 AJW Partners, LLC and New Millennium Capital
Partners II, LLC purchased an aggregate of $700,000 of 12% convertible
debentures and warrants to purchase, respectively, a total of 1,225,000
and 2,275,000 shares of common stock from us in a private placement
transaction.  We have received $550,000 of the $700,000 invested and will
receive the remaining $150,000 upon effectiveness of this registration
statement and satisfaction of the conditions listed in Section 1.1(b) of
the purchase agreement that are outside of the investors' control.  AJW
Partners, LLC purchased a total of $245,000 of the debentures and New
Millennium Capital Partners II, LLC purchased the remaining $455,000.
Simultaneous with entering this transaction, AJW Partners, LLC and New
Millennium Capital Partners II, LLC agreed to the extension of
approximately $1,463,000 worth of debt we owed to them by accepting
additional debentures for this amount on identical terms to the new
investment.

The debentures are convertible into shares of our common stock, at the
option of the holder at any time and from time to time after the date
when the debentures where issued, at a conversion price equal to the
lower of (i) $0.08 per share and (ii) 50% of the average of the lowest
three inter-day trading prices of our common stock during the twenty
trading days immediately preceding the date of conversion.  The warrants
issued to AJW Partners and New Millennium Capital Partners are each
exercisable at an exercise price per share equal to 50% of the average
of the lowest three inter-day trading prices of our common stock during
the twenty trading days immediately preceding the date of exercise and
expire on April 14, 2003.  Interest on the debentures is payable on a
quarterly basis on March 31, June 30, September 30 and December 31 of
each year while such debentures are outstanding and on each Conversion
Date, whichever occurs earlier.  Interest may be paid, at the Company's
option, in either cash or restricted, unregistered common stock.  The
debentures must be prepaid if an event of default occurs under the
debentures and at the Company's option may be prepaid within thirty days
of the original issue date of the debentures.  Management is of the
opinion that the Company has sufficient authorized common shares to cover
the conversions.  In the event that the Company does not have adequate
authorized and unissued shares of common stock to effect the maximum
shares needed to effect the conversion, the Company may need to seek
shareholder consent to increase our amount of authorized shares.  If we
do not have enough authorized shares to cover the conversions and are
unable to obtain shareholder approval to increase our authorized shares,
such failure would be considered a breach of certain relevant provisions
and representations and warranties under the convertible debenture
documents and could result in the acceleration of all amounts due under
the convertible debentures.



                                                                      F-20

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - CONVERTIBLE DEBENTURES

Each holder of the debenture may not convert its securities into shares
of our common stock if after the conversion, such holders, together with
any of its affiliates, would beneficially own over 4.999% and 9.999% of
the outstanding shares of our common stock. This restriction may be
waived by each holder on not less than 61 days' notice to us. Since the
number of shares of our common stock issuable upon conversion of the
debentures will change based upon fluctuations of the market price of our
common stock prior to a conversion, the actual number of shares of our
common stock that will be issued under the debentures, and consequently
the number of shares of our common stock that will be beneficially owned
by AJW Partners and New Millennium Capital Partners cannot be determined
at this time. Because of this fluctuating characteristic, the Company has
agreed to file a Registration Statement on Form SB-2 to register a number
of shares of our common stock that exceeds the number of our shares of
common stock currently beneficially owned by AJW Partners and New
Millennium Capital Partners.

In conjunction with the issuance of the convertible debentures, the
debentures were issued with an equivalent per share value of common stock
below the ending quoted market price of the Company's common stock on the
issue date.  This difference created a Beneficial Conversion Feature
Discount of approximately $300,000.  This discount was then amortized
over the unexpired time period between the date of issue of the eligible
shares and the maturity date of the underlying debentures.  Approximately
$158,823 has been amortized to operations during the year ended May 31,
2002.   Upon conversion of any debentures, the related unamortized
balance was reclassified to additional paid-in capital.


NOTE O - INCOME TAXES

The components of income tax (benefit) expense for the years ended May
31, 2002 and 2001, respectively, are as follows:

<TABLE>
<CAPTION>
                               May 31, 2002      May 31, 2001
                               ------------      ------------
<S>                            <C>               <C>
   Federal:
     Current                   $     -           $     -
     Deferred                        -                 -
                               ------------      ------------
                                     -                 -
                               ------------      ------------
   State:
     Current                         -                 -
     Deferred                        -                 -
                               ------------      ------------
                                     -                 -
                               ------------      ------------

     Total                     $     -           $     -
                               ============      ============
</TABLE>


The Company has a net operating loss carryforward of approximately
$10,000,000 to offset future taxable income.  Subject to current
regulations, this carryforward will begin to expire in 2006.  The amount
and availability of the net operating loss carryforwards may be subject
to limitations set forth by the Internal Revenue Code. Factors such as
the number of shares ultimately issued within a three year look-back
period; whether there is a deemed more than 50 percent change in control;
the applicable long-term tax exempt bond rate; continuity of historical
business; and subsequent income of the Company all enter into the annual
computation of allowable annual utilization of the carryforwards.



                                                                      F-21

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE O - INCOME TAXES - Continued

The Company's income tax expense for the years ended May 31, 2002 and
2001, respectively, are as follows:

<TABLE>
<CAPTION>
                                                           May 31, 2002        May 31, 2001
                                                           ------------        ------------
<S>                                                        <C>                 <C>
Statutory rate applied to loss before income taxes         $ (1,784,000)       $ (1,872,000)
Increase (decrease) in income taxes resulting from:
  State income taxes                                              -                   -
  Other, including reserve for deferred tax asset             1,784,000           1,872,000
                                                           ------------        ------------
     Income tax expense                                    $      -            $      -
                                                           ============        ============
</TABLE>


Temporary differences, consisting primarily of statutory deferrals of
expenses for organizational costs and accrued, but unpaid, accruals for
officer compensation and statutory differences in the depreciable lives
for property and equipment, between the financial statement carrying
amounts and tax bases of assets and liabilities give rise to deferred tax
assets and liabilities as of May 31, 2002 and 2001, respectively:

<TABLE>
<CAPTION>
                                                           May 31, 2002        May 31, 2001
                                                           ------------        ------------
<S>                                                        <C>                 <C>
   Deferred tax assets
     Net operating loss carryforwards                      $  5,195,000        $  3,713,000
     Less valuation allowance                                (5,195,000)         (3,713,000)
                                                           ------------        ------------
   Net Deferred Tax Asset                                  $          -        $          -
                                                           ============        ============
</TABLE>


During the year ended May 31, 2002, the valuation allowance increased by
approximately $1,482,000.


NOTE P - PREFERRED STOCK

Our Articles of Incorporation authorize the issuance of 20,000,000 shares
of Preferred Stock, $0.001 par value per share, the designation and
rights of which are to be determined by our Board of Directors.  There
are no shares of Preferred Stock issued and outstanding at May 31, 2002.

Our Board of Directors has authority, without action by the shareholders,
to issue all or any portion of the authorized but unissued Preferred
Stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other
rights of such series.  We consider it desirable to have Preferred Stock
available to provide increased flexibility in structuring possible future
acquisitions and financings and in meeting corporate needs which may
arise.  If opportunities arise that would make desirable the issuance of
Preferred Stock through either public offering or private placements, the
provisions for Preferred Stock in our Articles of Incorporation would
avoid the possible delay and expense of a shareholder's meeting, except
as may be required by law or regulatory authorities.  Issuance of the
Preferred Stock could result, however, in a series of securities
outstanding that will have certain preferences with respect to dividends
and liquidation over the common stock that would result in dilution of
the income per share and net book value of the common stock.  Issuance
of additional common stock pursuant to any conversion right that may be
attached to the terms of any series of Preferred Stock may also result
in dilution of the net income per share and the net book value of the
common stock.  The specific terms of any series of Preferred Stock will
depend primarily on market conditions, terms of a proposed acquisition
or financing, and other factors existing at the time of issuance.
Therefore, it is not possible at this time to determine in what respect
a particular series of Preferred Stock will be superior to our common
stock or any other series of Preferred Stock which we may issue. Our
Board of Directors may issue additional Preferred Stock in future
financings, but has no current plans to do so at this time.


                                                                      F-22

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE Q - COMMON STOCK TRANSACTIONS

On February 1, 2001, the Company filed a Registration Statement under The
Securities Act of 1933 on Form S-8 registering an aggregate 5,000,000
shares of common stock.  During Fiscal 2002, the Company issued 1,080,000
shares to individuals providing various consulting and financial services
to the Company.  These transactions were valued at the closing quoted
price of the Company's common stock at the transaction date.  An
aggregate $71,000 was charged to operations as a result of these
transactions.

On April 24, 2001, the Company filed a Registration Statement under The
Securities Act of 1933 on Form S-8 registering an aggregate 5,000,000
shares of common stock to support the Company's 2001 Stock Option Plan.
During Fiscal 2002, the Company issued 4,280,000 shares to various
employees as compensation.  Each respective transaction was valued at the
closing quoted price of the Company's common stock at the transaction
date.  Cash proceeds of approximately $228,900 was received on the
concurrent exercise of these options and an additional $72,200 was
charged to operations as a result of the exercise price being below the
closing quoted price at the time of exercise.

On September 28, 2001, the Company filed a Registration Statement under
The Securities Act of 1933 on Form S-8 registering an aggregate 5,000,000
shares of common stock.  During Fiscal 2002, the Company issued an
aggregate 4,500,000 shares to individuals providing consulting , legal
and financial services to the Company.  These transactions were valued
at the closing quoted price of the Company's common stock at the
transaction date.  An aggregate $270,000 was charged to operations as a
result of these transactions.

On May 6, 2002, the Company filed a Registration Statement under The
Securities Act of 1933 on Form S-8 registering an aggregate 5,000,000
shares of common stock.  During Fiscal 2002, the Company issued an
aggregate 3,325,000 shares to individuals providing various consulting,
legal  and financial services to the Company.  These transactions were
valued at the closing quoted price of the Company's common stock at the
transaction date.  An aggregate $133,000 was charged to operations as a
result of these transactions.

During Fiscal 2002, the Company issued an aggregate 4,998,013 shares of
common stock as a result of the exercise of the conversion of outstanding
12% debentures.  Additionally, the Company issued 1,347,465 shares in
payment of accrued interest on these debentures.  These transactions were
valued pursuant to the debenture terms.

In February 2002, the Company sold an aggregate 2,000,000 shares of
common stock to foreign investors, pursuant to Regulation S, for gross
proceeds of $100,000.  The Company also incurred fees for capital
placement services of approximately $31,000.

In June 2001 and October 2001, the Company issued an aggregate 2,200,000
shares of common stock to former shareholders of Moye & Associates, Inc.
in final settlement of all outstanding issues, payments and compensation
related to this acquisition in a prior period.  Approximately $22,000 was
charged to operations on this transaction.

During Fiscal 2002, the Company issued an aggregate 1,700,000 shares of
restricted, unregistered common stock as payment for various business and
financial consulting services.  These transactions were valued on the
respective transaction date at the discounted closing quoted market price
of the Company's common stock.  As a result of these transactions,
approximately $54,000 was charged to operations.


NOTE R - STOCK WARRANTS

On September 28, 2001, in conjunction with the sale of an aggregate of
$700,000 of 12% convertible debentures, the Company issued warrants to
purchase an aggregate 3,500,000 shares of common stock.



                                                                      F-23

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - STOCK OPTIONS

On May 31, 1998, the Company's Board of Directors adopted a Stock Option
Plan far its employees, directors and consultants.  On April 24, 2001,
the Company filed a Registration Statement under the Securities Act of
1933 on Form S-8 to register 5,000,000 underlying shares of the stock
option plan.

The purpose of the plan is to promote success of the Company by providing
a method whereby eligible employees, directors and independent
contractors and consultants providing services to the Company may be
awarded additional remuneration for services rendered and invest in the
capital stock of the Company.   The plan will be
administered by the Compensation Committee of the Board of Directors and
will consist of not less than two people.  This committee shall have the
full power and authority to grant to eligible persons options under the
plan.  Persons eligible to participate in the plan include officers and
directors, employee, non-employee directors, independent contractors and
consultants of the Company, as the Committee shall select.  The plan
includes and participants may receive Incentive Stock Options or
Nonqualified Stock Options.  An option granted under the plan shall
remain exercisable during the term of the option to the extent provided
in the applicable agreement and the plan.  Shares of Common Stock
delivered in payment in connection with the exercise of an Option, and
shares of Common Stock withheld for such payment, shall be valued for
such purpose at their Fair Market Value as of the exercise date.  By
acceptance of an Award, the Award is a special incentive compensation
that will not be taken into account, in any manner, as salary,
compensation or bonus in determining the amount of any payment under any
pension, retirement or other employee benefit plan, program or policy of
the Company or any Subsidiary.

Employees of the Company who have been granted options are authorized by
the Committee to purchase the shares at a price equal to 55% of the three
day average closing bid price prior to the date of written election to
exercise.  At May 31, 2001, 1,464,869 options have been exercised
totaling $102,210.  All options granted at May 31, 2001 have been
exercised.


NOTE T - COMMITMENTS AND CONTINGENCIES

Leased facilities
-----------------

The Company leases its principal business location from a related party,
the spouse of the chief executive officer.  The lease, which provides for
annual rental of approximately $40,000, expires in September 2001.  Rent
expense for the years ended May 31, 2001 and 2000 was $42,400 and $40,000
respectively, of which $48,060 was accrued for the year ended May 31,
2001.

The Company was obligated for the long-term lease of an automobile with
monthly payments of approximately $508.  The lease expired in December
2001.

Litigation
----------

In accordance with a Judgment Payment Agreement dated February 15, 2001
between Epicus, Inc. and Sprint - Florida, Inc. (Sprint), Epicus agreed
to pay Sprint $332,000 together with interest at a rate provided by law.
Monthly principal payments of $10,000, commencing March 15, 2001,
through September 15, 2002 are required with a final balloon payment of
$142,000 due on October 15, 2002.  The $332,000 represents pre-petition
and post petition costs to Epicus as a reseller of local
telecommunication services that were provided by Sprint through a Master
Resale Agreement.


                                                                      F-24

<PAGE>


     PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE T - COMMITMENTS AND CONTINGENCIES - Continued

Litigation - continued
----------

The Company is subject to a default judgment related to litigation filed
against the Company for nonpayment of rents subsequent to vacating office
space occupied by the Company until approximately November 1995.  To
date, no collection action has been taken on the judgment by the holder
and, accordingly, the ultimate potential cost to the Company, if any, is
not determinable at this time.

On June 22, 2000, EXL Information of Vancouver, BC, Canada (EXL) filed
suit in the Supreme Court of British Columbia, Canada, for payment of
"royalty fees" it claims were owed by Epicus for the use of their billing
program. Epicus denies owing EXL any money maintaining that the program
was supposed to be adapted by EXL to meet Epicus's needs, which they
never did, thereby nullifying the agreement. EXL is seeking relief in the
amount of $184,761 US$.  The matter is still being litigated.  The
outcome of this litigation is not determinable at this time. Management
intends to aggressively defend this action to conclusion.

The Company signed a Consulting Agreement with an individual in Rio de
Janeiro, Brazil on April 1, 2001 for a period of one hundred eighty (180)
days.  The consultant provided consulting services solely in connection
with the Company's "marketability, image and information distribution"
regarding its interest in expanding its market into Brazil.  In
consideration for the services provided by Consultant to the Company, the
Company issued, pursuant to the Company's Employee Stock Option Plan,
200,000 shares of the Company's registered common stock.  The Consultant
was fully vested in the allocated shares on the30th day after the
effective date of the Agreement.

The Company signed a Consulting Agreement with Gerald R. Shugard (GRS)
of West Palm Beach, Florida on May 24, 2000 for a term of one year.  GRS
will serve as a General Management Consultant to advise the Company as
to its performance associated with the growth and development of the
Company.  Compensation may be in the form of cash payments, common stock,
stock options or a mutually agreeable combination of cash and common
stock and/or stock options.  Any other means of compensation must be
mutually agreed upon, memorialized and signed by both parties.

The owners of Mic Mac received 250,000 shares of restricted common stock
of the Company and were to receive another 250,000 shares if certain
budgeted financial targets were met.  The budgeted financial targets were
not met by Mic Mac and, therefore, the acquisition was rescinded.  The
Company requested that the 250,000 shares previously issued also be
returned.  The owners of Mic Mac requested that the second 250,000 be
issued and that all restrictions be removed from the shares.  In an
effort to amicably resolve the suit filed by the owners of Mic Mac, the
Company has advised the owners that they will not seek recovery of the
previously issued shares and have removed all restrictions.  The owners
of Mic Mac have not responded to this offer.  The final outcome is not
determinable at this time.



        (Remainder of this page left blank intentionally)


                                                                      F-25

<PAGE>

      PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE U - BUSINESS SEGMENTS

The Company conducted business activities in only one distinct business
segment during Fiscal 2002.  During Fiscal 2001, the Company's three
reportable segments consisted of 1)computer consulting; 2)
telecommunication services and 3) acquisition services.  Intercompany
loans have been eliminated from reported segment assets.  There have been
no intersegment sales, or transfers and there have been no allocation of
expenses between segments for the years ending May 31, 2001 and 2000.
The accounting policy used by all reporting segments is the same as those
described in the summary of significant accounting policies.

The following is a summary of segment activity for the year ended May 31,
2001:

<TABLE>
<CAPTION>

                                   Computer           Telephone     Acquisition
                                   Consulting         Services       Services        Totals
                                   ------------       ----------    -----------    -----------
<S>                                <C>                <C>           <C>            <C>
May 31, 2001
------------
Revenues                           $    425,729       $3,244,648    $       638    $ 3,671,015
Interest income                               -           46,933          9,636         56,569
Interest expense                              -           47,515        314,754        362,269
Depreciation and amortization             6,637          137,052        134,817        278,506
Segment profit (loss)                     7,849       (1,772,879)    (2,288,423)    (4,053,453)
Segment assets                          130,659        2,689,127        339,122      1,358,908

</TABLE>


                                                                      F-26

<PAGE>