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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------

                                   FORM 10-QSB

                   Quarterly Report Pursuant to Section 13 or 15(d)
                        of the Securities Exchange Act of 1934

For the Quarter Period Ended
March 31, 2001                                       Commission File No. 0-29381


                           PINECREST INVESTMENT GROUP, INC.
                           --------------------------------
                (Exact name of Registrant as specified in its Charter)

                  Florida                                  59-3467929
                  -------                                  ----------
         (State or jurisdiction of                         (IRS Employer
      incorporation or organization)                    Identification No.)

1211 Tech Boulevard, Suite 101, Tampa, Florida                 33619
----------------------------------------------                 -----
(Address of Principal Executive Office)                      (Zip Code)

Registrant's telephone number, including area code:    (813) 620-0044
---------------------------------------------------    --------------

Former name, former address and former fiscal year,
if changed since last report:  N/A
--------------------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or for a 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]


As of May 2, 2001, there were 7,654,836 shares of Common Stock, $.0008 par value
outstanding.

================================================================================

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                        PINECREST INVESTMENT GROUP, INC.

                              FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED MARCH 31, 2001
                                    REVIEWED

                                      INDEX

         Accountant's Report                                     F-1

         Balance Sheet                                           F-2

         Statement of Operations                               F-3,4
         For the nine months ended March 31, 2001

         Statement of Cash Flows                                 F-5
         For the nine months ended March 31, 2001

         Notes to Financial Statements                        F-6-11

                                       2
<PAGE>

                                    DRAKEFORD
                                        &
                                    DRAKEFORD
                         A LIMITED LIABILITY CORPORATION
                            ACCOUNTANTS & CONSULTANTS


John A. Della-Donna, CPA
3235 Satellite Boulevard
Georgia #3424
Building 400, Suite 300
Duluth, Georgia 30096


                         INDEPENDENT ACCOUNTANTS' REPORT

To Shareholders of:
PINECREST INVESTMENT GROUP, INC.
TAMPA, FLORIDA


We have reviewed the accompanying  balance sheet of PINECREST  INVESTMENT GROUP,
INC. as of March 31, 2001, and the related  statements of  operations,  and cash
flows for the nine months then ended, in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of Certified
Public Accountants.  All information  included in these financial  statements is
the representation of PINECREST INVESTMENT GROUP, INC.

A  review  consists  principally  of  inquiries  of  management  and  analytical
procedures  applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion  regarding the financial  statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the  accompanying  financial  statements  in order  for them to be in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have  been  prepared  solely  from the
accounts of PINECREST INVESTMENT GROUP, INC.

DRAKEFORD & DRAKEFORD, LLC
May 6, 2001

                                       F-1
<PAGE>
<TABLE>
<CAPTION>
                        PINECREST INVESTMENT GROUP, INC.
                           CONSOLIDATED BALANCE SHEET
                                                                                      REVIEWED        AUDITED
                                                                                      03/31/01       06/30/00
                                                                                   -----------------------------
                                             ASSETS

CURRENT ASSETS
<S>                                                                                 <C>           <C>
   CASH                                                                                 42,992        78,683
   ACCOUNTS RECEIVABLE                                                                  43,290             -
   INVENTORY                                                                           234,126             -
   OTHER ASSETS                                                                          8,090         1,050
                                                                                    -----------------------------
     TOTAL CURRENT ASSETS                                                              328,498        79,733
                                                                                    -----------------------------
PROPERTY, PLANT, AND EQUIPMENT
   GREENHOUSES AND EQUIPMENT                                                         1,419,062       681,939
   OFFICE FURNITURE AND EQUIPMENT                                                       43,924        27,609
   VEHICLES                                                                             49,503        12,000
   LAND AND IMPROVEMENTS                                                               567,686       524,882
                                                                                    -----------------------------
                                                                                     2,080,175     1,246,430

     LESS: ACCUM. DEPRECIATION                                                         (93,677)      (14,306)
                                                                                    -----------------------------

     TOTAL PROPERTY, PLANT AND EQUIPMENT                                             1,986,498     1,232,124
                                                                                    -----------------------------
OTHER ASSETS
   HYDROPONIC TECHNOLOGY                                                             3,446,715     3,446,715
   DEPOSITS                                                                              9,716         3,066
                                                                                    -----------------------------
                                                                                     3,456,431     3,449,781

     LESS: ACCUM. AMORTIZATION                                                          (9,855)            -
                                                                                    -----------------------------

     TOTAL OTHER ASSETS                                                              3,446,576     3,449,781
                                                                                    -----------------------------

TOTAL ASSETS                                                                         5,761,572     4,761,638
                                                                                    =============================

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   ACCOUNTS PAYABLE                                                                    441,803        27,675
   VEHICLE FINANCING                                                                     9,093             -
   MORTGAGE PAYABLE-CURRENT                                                                  -       288,000
                                                                                    -----------------------------
     TOTAL CURRENT LIABILITIES                                                         450,896       315,675
                                                                                    -----------------------------
LONG-TERM DEBT
   VEHICLE FINANCING                                                                    14,191             -
   MORTGAGE PAYABLE                                                                    400,000             -
                                                                                    -----------------------------
     TOTAL LONG-TERM DEBT                                                              414,191             -
                                                                                    -----------------------------

STOCKHOLDERS' EQUITY
   COMMON STOCK, $.0008 PAR VALUE,
   100,000,000 AUTHORIZED, 9,253,236;
   7,655,431 ISSUED & OUTSTANDING                                                        6,602         6,120
   ADDITIONAL PAID-IN CAPITAL                                                        8,286,604     5,704,702
   ACCUMULATED DEFICIT                                                              (3,396,721)   (1,264,859)
                                                                                    -----------------------------
     TOTAL STOCKHOLDERS' EQUITY                                                      4,896,485     4,445,963
                                                                                    -----------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           5,761,572     4,761,638
                                                                                    =============================
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                        PINECREST INVESTMENT GROUP, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                    REVIEWED
                                                                                                     NINE MONTHS ENDED
                                                                                                    03/31/01        03/31/00
                                                                                       ---------------------------------------
<S>                                                                                              <C>             <C>
INCOME                                                                                               262,521              -
COST OF GOODS SOLD                                                                                   148,655              -
                                                                                       ---------------------------------------
   GROSS MARGIN                                                                                      113,866              -
                                                                                       ---------------------------------------

EXPENSES
   SALARIES                                                                                          485,346         70,911
   PAYROLL TAXES & LEASING COST                                                                      175,884         50,705
   EMPLOYEE BENEFIT PROGRAMS                                                                          85,544              -
   ADVERTISING & PROMOTION                                                                            19,431         26,138
   AUTOMOTIVE EXPENSE                                                                                 18,902          3,870
   TRAVEL & ENTERTAINMENT                                                                             11,284          4,227
   CONSULTING FEES                                                                                    53,881         88,756
   CONTRACT & CASUAL LABOR                                                                             6,282         21,080
   INSURANCE                                                                                          22,737          1,608
   DEPRECIATION & AMORTIZATION                                                                        89,233          3,279
   REPAIRS & MAINTENANCE                                                                               8,110            626
   TAXES & LICENSES                                                                                   25,168          5,721
   LEGAL & ACCOUNTING                                                                                 14,720          5,043
   POSTAGE & FREIGHT                                                                                   8,561          3,762
   RENT                                                                                               56,791          9,589
   OFFICE SUPPLIES & EXPENSE                                                                          31,636          6,282
   TELEPHONE                                                                                          18,887         10,188
   STOCK TRANSFER FEES                                                                                 3,098          3,532
   SECURITY                                                                                           19,472              -
   UTILITIES                                                                                          19,441              -
   PUBLIC STOCK & ADMIN. FEES                                                                              -          6,548
   COST OF UNSOLD CROPS                                                                              394,562              -
   MISCELLANEOUS EXPENSE                                                                              31,115          4,491
                                                                                       ---------------------------------------
     TOTAL OPERATING EXPENSES                                                                      1,600,085        326,356
                                                                                       ---------------------------------------
   NET LOSS BEFORE OTHER INCOME(EXPENSES)                                                        (1,486,219)      (326,356)
                                                                                       ---------------------------------------

OTHER INCOME (EXPENSES)
   INTEREST INCOME                                                                                         -              -
   INTEREST EXPENSES                                                                               (662,525)       (24,379)
                                                                                       ---------------------------------------
     TOTAL OTHER INCOME (EXPENSES)                                                                 (662,525)       (24,379)
                                                                                       ---------------------------------------
     NET LOSS                                                                                    (2,148,744)      (350,735)
                                                                                       =======================================

     EARNINGS PER SHARE (LOSS)                                                                        -0.258         -0.059

     WEIGHTED AVERAGE SHARES OUTSTANDING                                                           8,624,523      5,866,327

SUPPLEMENTAL INFORMATION:
     CASH PAID FOR INTEREST                                                                          662,525         24,379
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                        PINECREST INVESTMENT GROUP, INC.
                 CONSOLIDATED STATEMENT OF OPERATIONS-CONDENSED
                                    REVIEWED

                                             THREE MO. ENDED                             NINE MO. ENDED
                                                   MARCH 31,                                  MARCH 31,
                                                  2001               2000                2001                  2000
                                          -----------------------------------------------------------------------------------
<S>                                           <C>                <C>              <C>                     <C>
INCOME                                          154,863                  -             262,521                      -
                                          -----------------------------------------------------------------------------------

COSTS AND EXPENSES:
   COST OF SALES                                 86,798                  -             148,655                      -
   SELLING,GENERAL,& ADMIN                      710,411            204,733           1,600,085                326,356
                                          -----------------------------------------------------------------------------------
                                                797,209            204,733           1,748,740                326,356
                                          -----------------------------------------------------------------------------------
OPERATING LOSS                                 (642,346)          (204,733)         (1,486,219)              (326,356)
                                          -----------------------------------------------------------------------------------

OTHER EXPENSES
   INTEREST                                    (385,824)            (8,640)           (662,525)               (24,379)
                                          -----------------------------------------------------------------------------------
                                               (385,824)            (8,640)           (662,525)               (24,379)
                                          -----------------------------------------------------------------------------------
NET LOSS                                     (1,028,170)          (213,373)         (2,148,744)              (350,735)
                                          ===================================================================================

WEIGHTED AVG. SHARES OUTSTANDING              8,603,857          5,759,482           8,624,523              5,866,327
NET LOSS PER SHARE                               -0.120             -0.037              -0.258                 -0.059
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                        PINECREST INVESTMENT GROUP, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                    REVIEWED
                                                                                                  NINE MONTHS ENDED
                                                                                            03/31/01             03/31/00
                                                                                          -----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                       <C>                    <C>
   NET LOSS                                                                               (2,148,744)            (350,735)
   ADJUSTMENTS TO RECONCILE NET LOSS TO
     NET CASH FLOWS USED IN OPERATING ACTIVITIES:
       DEPRECIATION & AMORTIZATION                                                            89,233                3,279
       ACCOUNTS RECEIVABLE                                                                   (43,290)                   -
       INVENTORY                                                                            (234,126)                   -
       EXECUTIVE BONUSES IN EXCHANGE FOR STOCK                                                     -               15,000
       OTHER CURRENT LIABILITIES                                                                   -               (6,205)
       OTHER CURRENT ASSETS                                                                   (7,040)                   -
       NOTES PAYABLE                                                                               -              (49,464)
       ACCOUNTS PAYABLE                                                                      414,128               (2,305)
                                                                                          -----------------------------------
   NET CASH FLOWS USED IN OPERATING ACTIVITIES                                            (1,929,839)            (390,430)
                                                                                          -----------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       VEHICLES                                                                              (37,503)                   -
       LAND & IMPROVEMENTS                                                                   (42,804)             (88,095)
       GREENHOUSES & EQUIPMENT                                                              (737,123)            (374,753)
       DEPOSITS                                                                               (6,650)
       OTHER FIXED ASSETS                                                                    (16,315)             (80,059)
                                                                                          -----------------------------------
   NET CASH  (USED FOR) INVESTING ACTIVITIES                                                (840,395)            (542,907)
                                                                                          -----------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
       NOTES PAYABLE                                                                         135,284               84,306
       COMMON STOCK SOLD FOR CASH                                                          2,599,259              911,955
                                                                                          -----------------------------------
   NET CASH FLOWS PROVIDED FROM FIN. ACTIVITIES                                            2,734,543              996,261
                                                                                          -----------------------------------

NET CHANGE IN CASH & CASH EQUIVALENTS                                                        (35,691)              62,924
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD                                                  78,683                    -
                                                                                          -----------------------------------

CASH & CASH EQUIVALENTS, END OF PERIOD                                                        42,992               62,924
                                                                                          ===================================
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       F-5
<PAGE>

                        PINECREST INVESTMENT GROUP, INC.
                                    REVIEWED
                          NOTES TO FINANCIAL STATEMENTS

         NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization

         The Company was  incorporated  on  September  9, 1997,  in the State of
         Florida under the name of Synthetic Flowers of America, Inc. On January
         15, 1999,  a stock  purchase  agreement  was signed  between  Synthetic
         Flowers of America,  Inc. and David B. Howe, and the corporate name was
         changed to Pinecrest  Investment Group, Inc. (See Note  B-Stockholders'
         Equity)  Since  January 15,  1999,  the  Company  has been  involved in
         financial  planning,  the raising of capital,  acquisition of property,
         plant,  equipment and other operating  assets,  training  personnel and
         developing of Markets. A brief list of the activities engaged in are as
         follows:  (a)  the  purchase  of  hydroponic  technology  from  Michael
         Foundation,  Limited and Tillman & Associates,  Inc., (b) entering into
         financial  arrangements  for funding of hydroponic  growth  facility in
         Lithia, Florida, (c) purchase of 40-acre property in Lithia, Florida to
         be used as site of first hydroponic growth facility of the Company, (d)
         negotiate,  contract and purchase greenhouse materials and equipment to
         be used for the first  hydroponic  growth facility of the Company,  (e)
         acquire  building  and  development  permits  for  construction  of the
         Company's first hydroponic growth facility,  (f) begin  construction on
         first hydroponic growth facility,  (g) hire and train personnel for the
         Company's first  hydroponic  growth  facility,  (h) specify and acquire
         computers,  software and  furniture to be used in the  Company's  first
         hydroponic growth facility,  (I) maintain contact with future customers
         on timing of start-up of operations of the Company's  first  hydroponic
         growth  facility,  and  (j)  revise  the  Company's  business  plan  as
         necessary.

         Year End

         The Company has elected June 30th as its fiscal year end.

         Cash, Equivalents and Fair Value of Financial Instruments

         All highly liquid  investments  with maturaties of three months or less
         when purchased are cash  equivalents.  Cash  equivalents are carried at
         the lower of cost or market.  Financial  instruments  that  potentially
         subject  the  Company  to  a  concentration   of  credit  risk  consist
         principally  of cash.  During the period  presented the Company did not
         maintain  cash  deposits  at  financial  institutions  in excess of the
         $100,000 limit covered by the Federal  Deposit  Insurance  Corporation.
         The Company does not hold or issue  financial  instruments  for trading
         purposes  nor  does  it  hold  or  issue  interest  rate  or  leveraged
         derivative financial instruments.

         Net Loss Per Share

         In February 1997,  the Financial  Accounting  Standards  Board ("FASB")
         issued SFAS No. 128,  "Earnings Per Share." SFAS No. 128 supersedes and
         simplifies  the  existing  computational  guidelines  under  Accounting
         Principles  Board  ("APB")  Opinion No. 15,  "Earnings  Per Share." The
         statement  is effective  for  financial  statements  issued for periods
         ending  after  December  15, 1997.  Among other  changes,  SFAS No. 128
         eliminates the  presentation of primary earnings per share and replaces
         it with basic earnings per share for which common stock equivalents are
         not considered in the  computation.  It also revises the computation of
         diluted  earnings  per share.  The Company has adopted SFAS No. 128 and
         there is no  material  impact  to the  Company's  earnings  per  share,
         financial condition,  or results of operations.  The Company's earnings
         per share have been restated for all periods presented to be consistent
         with SFAS No. 128.

                                       F-6
<PAGE>

                        PINECREST INVESTMENT GROUP, INC.
                                    REVIEWED
                          NOTES TO FINANCIAL STATEMENTS

         NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)

         The basic loss per share is computed  by dividing  the net loss for the
         period by the weighted average number of common shares  outstanding for
         the period.  When present,  common stock  equivalents are excluded from
         the computation if their effect would be  anti-dilutive.  Shares issued
         at inception  are  considered to be  outstanding  for the entire period
         presented.

         Income Taxes

         Deferred  income taxes may arise from temporary  differences  resulting
         from income and expense items reported for financial accounting and tax
         purposes in different periods. Deferred taxes are classified as current
         or  non-current,  depending  on the  classifications  of the assets and
         liabilities to which they relate. Deferred taxes arising from temporary
         differences  that  are  not  related  to  an  asset  or  liability  are
         classified as current or non-current  depending on the periods in which
         the  temporary  differences  are expected to reverse.  The deferred tax
         asset  related  to the  operating  loss  carryforward  has  been  fully
         reserved.

         The Company has not provided  current or deferred  income taxes for the
         period presented due to a loss from operations.  The Company  currently
         has a net operating loss carryforward which expires in 2013.

         Property, Plant and Equipment

         Property,  plant and  equipment  are carried at cost.  Depreciation  of
         furniture and fixtures,  equipment, and other fixed assets are provided
         on the  straight-line  method  over the  estimated  useful  life of the
         asset.  Expenditures  for  maintenance  and repairs are charges against
         operations.

         The  technology   purchased  from  Michael  Foundation  and  Tillman  &
         Associates,  Inc. will be amortized on a unit of production  basis. The
         rate of  amortization  will be $.015 per pound of product  produced and
         will begin  once the  Company  begins  production.  Revenue  generating
         operations  started in July 2000. It is anticipated that the technology
         will be fully amortized over seven years. Organizational cost have been
         fully expensed.

         NOTE B-STOCKHOLDERS' EQUITY

         On September 5, 1997, in connection  with the original  organization of
         the  Company,  4,000,000  shares of common  stock was  issued to Sheila
         Langley,  the original President of the Company,  for services provided
         and  reimbursement  of  organizational  costs and stock  offering costs
         incurred by the  Company  but paid for by Langley.  Fair value used for
         this  transaction  of $.0025  per share is based upon the fair value to
         the Company of the services  provided and billings  from the  Company's
         attorney.

         Subsequently,  on  January  15,  1999,  David B. Howe  executed a stock
         purchase  agreement  on  behalf  of  himself  and  several  independent
         investors  to  purchase  3,680,000  of the  4,000,000  shares  owned by
         Langley for $150,000  cash. On March 2, 1999,  the Company  repurchased
         2,185,000 shares of the 3,680,000  purchased by Howe and the investors,
         for the purchase of the hydroponics technology from Michael Foundation,
         Ltd.  (See  Note-E-  Related  Party  Transactions);  of  the  remaining
         1,495,000  shares,  400,000  shares were issued to Howe and the balance
         between the investors.

         On January 16,  1999,  the  Articles of  Incorporation  were amended to
         provide that the  aggregate  number of shares of capital stock that the
         Corporation  shall be  authorized to have  outstanding  at any one time
         shall be one hundred  million shares of common stock at $.001 par value
         per share and  twenty-five  million  shares of  preferred  at $.001 par
         value per share.

                                       F-7
<PAGE>

                        PINECREST INVESTMENT GROUP, INC.
                                    REVIEWED
                          NOTES TO FINANCIAL STATEMENTS


         NOTE B-STOCKHOLDERS' EQUITY-(Continued)

         On January 10, 2000 the Company's Board of Directors'  approved a 5 for
         4 stock split for  shareholders  of record on December 31, 1999,  for a
         total of 1,506,770 additional shares. Also, the Board adopted

         the  Pinecrest  Investment  Group,  Inc.  Incentive  Stock  Option Plan
         December  1999,  which was approved by a majority of the  shareholders.
         The Plan will be administered  by the Executive  Committee of the Board
         of Directors of the Company and  authorizes  the  Committee to grant or
         award to  eligible  executives  and  employees  of the  Company and its
         subsidiaries, until January 10, 2010, incentive stock options for up to
         1,200,000 shares of restricted common stock of the Company.

         On January 26, 2000 the Company  amended its Articles of  Incorporation
         to  authorize a class of  preferred  shares  consisting  of  10,000,000
         shares with no par value per share.

         NOTE C-OTHER ASSET-HYDROPONICS TECHNOLOGY

         On March 2, 1999,  the Company  entered  into  agreements  with Michael
         Foundation,  Ltd., a West Indies corporation, and Tillman & Associates,
         Inc., a Florida  corporation,  for the purchase of certain  hydroponics
         technology at a total purchase price of $3,437,500.  The purchase price
         in the agreement with Michael Foundation,  Ltd., consisted of 2,185,000
         shares of restricted  common stock with a current market value of $1.50
         per  share.  The  purchase  price  in  the  agreement  with  Tillman  &
         Associates, Inc., consisted of 50,000 shares of restricted common stock
         with a  current  market  value of $1.50  per  share  plus a note in the
         amount of $85,000.

         The aforementioned  information and technology  purchase includes,  but
         may not  necessarily  be  limited  to,  proprietary  hydroponic  growth
         solution formulas, equipment and greenhouse specifications and crop and
         equipment maintenance plans and programs.

         An independent  expert  analysis  opinion,  dated January 22, 1999, was
         performed by Jerry Pruitt, an agricultural consultant from Marbury, MD.
         His test included the validity of the  Hydroponics  Growing  System and
         the  salability  of the  retail/wholesale  products  derived  from  the
         process.  Mr. Pruitt valued the Hydroponics Growing System purchased by
         the Company at $3.2 million dollars.

         The Company intends to grow several varieties of leaf lettuce,  romaine
         lettuce,  spinach and a wide  assortment of culinary herbs that it sell
         and distribute directly to 4 and 5 star restaurants and resorts such as
         Disney World and Marriott.

                                       F-8
<PAGE>

                        PINECREST INVESTMENT GROUP, INC.
                                    REVIEWED
                          NOTES TO FINANCIAL STATEMENTS

         NOTE D-MORTGAGE PAYABLE

         Debt consists of the following mortgage payable:

                                              Current    Non-Current  Total
                                              -------    -----------  -----
         Theodore J. Couch, Sr. Rev. Trust
         Theodore J. Couch,Sr., as Trustee
         Secured by 40 acres, Lithia, Fl.
         Dated March 9, 2001, 12% simple
         Interest only,                     $        0     $400,000   $400,000
                                            ----------     --------   --------
                  TOTALS                    $        0     $400,000   $400,000
                                            ==========     ========   ========


         On April 9,  1999 the  Company  purchased  a  40-acre  tract of land in
         Lithia,  Fl.,  approximately  20  miles  southeast  of its  Tampa,  Fl.
         Corporate offices, for $360,000. The Company provided $72,000 as a down
         payment and the seller, Hopewell Land Partners,  Limited,  provided pur
         chase money mortgage financing for the balance of $288,000. On March 9,
         2001 the Company  refinanced  property  with  Theodore  J.  Couch,  Sr.
         Revocable  Trust in the  amount of  $400,000  with  interst  at 12% per
         annum, payable monthly for three years.

         Principal will be due and payable on March 9, 2004.

         NOTE E- INVENTORY AND COST OF UNSOLD PRODUCTS

         Inventory consists of unharvested crops based on an estimated number of
         pounds per square foot  planted;  and  harvested but unsold crops as of
         March 31, 2001. The weighted  average method is used in the calculation
         of the pounds per square footage planted.

         Since  the  Company  began  operations  it has  focused  on  increasing
         production of high quality products in order to pursue major contracts.
         Therefore,  while pursuing these contracts, the Company has been forced
         to produce  large volumes of products that go unsold until such time as
         the desired total volume of  production  is attained.  An allocation of
         the costs of  production  of unsold  products was made in the amount of
         $51,347 and  $149,784  for the three  months  ended  September  30, and
         December 31, 2000, respectively.

                                       F-9
<PAGE>

                        PINECREST INVESTMENT GROUP, INC.
                                    REVIEWED
                          NOTES TO FINANCIAL STATEMENTS

         NOTE F- RELATED PARTY TRANSACTIONS

         On March 2, 1999, the Company purchased  2,185,000 shares of restricted
         common stock from President, David B. Howe and affiliated investors for
         $90,000  (Howe's cost)  payable as follows:  $30,000 cash and a note in
         the  principal  amount of  $60,000  bearing  10% simple  interest,  due
         September 2, 2000. These shares were acquired by Howe and the investors
         in   connection   with   his   purchase   of  the   Corporation.   (See
         Note-B-Stockholders'  Equity).  As of December  6, 1999,  this debt was
         converted to 13,334 shares of restricted stock.

         These shares were then simultaneously exchanged as part of the purchase
         price for the hydroponics technology from Michael Foundation, Ltd., and
         Tillman & Associates,  Inc., that is necessary in the overall operation
         of the hydroponic herb and lettuce farm.

         On December  6, 1999,  the  remaining  balance of $80,000 due Tillman &
         Associares,   Inc.  on  the  promissory  note  given  in  exchange  for
         technology,  was converted into restricted  common stock of the Company
         at a rate of $6.00 per share for a total of 13,334 shares. The interest
         due on the note of $6,525.19 was paid in cash. Mr. Tillman is President
         of Tillman & Associates, Inc. and is President of Pinecrest Farms, Inc.

         In December 1999,  10,000 restricted shares of common stock were issued
         to Sheryl Salvadore,  the Company's Corporate Secretary,  pursuant to a
         grant to her as a bonus on March 2, 1999 at a value of $1.50 per share.

         In March 1999,  the Company  entered into a convertible  line of credit
         with Michael  Foundation,  Limited, a major stockholder of the Company.
         This credit  arrangement called for Michael Found- ation,  Limited,  to
         provide  working  capital for the Company  while it was  arranging  for
         acceptable  long-term  funding for its Phase I construction and working
         capital needed until the Company att- ained profitability. This line of
         credit was for a total of  $900,000,  which  amount  could be converted
         into  restricted  common  stock of the  Company at a price of $6.00 per
         share.   By  the  end  of  November  1999,  the  Company  had  borrowed
         approximately $300,000 against the Michael Foundation,  Limited line of
         credit.  In December 1999, the line of credit  arrangement with Michael
         Foundation,  Limited, was modified to call for the absolute purchase of
         150,000  shares  of  restricted  common  stock by  Michael  Foundation,
         Limited at a price of $6.00 per share for a total of $900,000.

         On April 10,  2000,  the Company  entered  into a  convertible  line of
         credit   arrangement  with  Michael   Foundation,   Limited,   a  major
         stockholder of the Company.  This credit  arrangement  called for Mich-
         ael Foundation,  Limited to provide working capital, from time to time,
         for the Company while it was arranging for acceptable long-term funding
         for its  Phase 1  construction  and  working  capital  needs  until the
         Company  attained  positive  cash  flow.  This line of credit was for a
         total of $1,500,000,  which could be converted into  restricted  common
         stock of the Company at a price of $6.00 per share.  On June 25,  2000,
         Michael Foundation,  Limited exercised its right to convert $744,758 on
         the line of credit, including approximately $8,991 in accrued interest,
         into 124,127 shares of restricted  common stock at a price of $6.00 per
         share. On October 6, 2000,  Michael  Foundation,  Limited exercised its
         right to convert  the  balance of  $664,602 on the line of credit as of
         September  30,2000,  including  app-  roximately  $9,506.98  in accrued
         interest,  into 110,768 shares of restricted common stock at a price of
         $6.00 per share.

                                      F-10
<PAGE>

                        PINECREST INVESTMENT GROUP, INC.
                                    REVIEWED
                          NOTES TO FINANCIAL STATEMENTS


         NOTE F- RELATED PARTY TRANSACTIONS-(continued)

         On February 26, 2001 the Michael  Foundation,  Limited convertible line
         of credit  arrangement  was increased from $2,500,000 to $3,500,000 and
         the conversion  rate for all funds extended after December 31, 2000 was
         changed from $6.00 per share to $2.00 per share.

         On April 12, 2001 Michael  Foundation,  Limited  exercised its right to
         convert the balance of approximately  $743,972 on the line of credit as
         of March 31, 2001, including approximately $10,508 in accrued interest,
         into 371,986 shares of restricted  common stock at a price of $2.00 per
         share.

         Pursuant to EITF 98-5,  when the Company  makes a draw of funds against
         the  aforementioned  line of credit,  a journal entry is made that: (1)
         debits  the amount of cash  received;  (2)  credits  the line of credit
         liability  account;  (3) debits a contingent debt discount  account for
         the  intrinsic  value of the  beneficial  conversion  feature;  and (4)
         credits  Additional  Paid  in  Capital  for  the  same  amount  as  the
         contingent debt discount account.  The amount debited to the contingent
         debt discount account is calculated as the difference  between the fair
         value  of the  stock  on the  date  the  funds  are  received  and  the
         beneficial conversion price of $6.00 multiplied by the number of shares
         to be issued upon  conversion,  based upon that particular draw amount.
         The contingent debt discount  account will be listed as a contra-equity
         account in the Stockholders'  Equity section of the Balance Sheet. Upon
         conversion,  at the lender's option and discretion,  a journal entry is
         made that (1)  debits  the line of  credit  liability  account  for the
         appropriate amount to be converted (Conversion Price of $6.00 per share
         times the number of shares being  issued);  (2) credits the  contingent
         debt  discount  account  for  the  intrinsic  value  of the  beneficial
         conversion  feature for the shares being  issued;  (3) debits  Interest
         Expense for the intrinsic  value of the beneficial  conversion  feature
         for the shares being issued; (4) credits Common Stock for the par value
         of the shares being issued;  and (5) credits Additional Paid in Capital
         for the balance.

         NOTE G- INVESTMENT IN SUBSIDIARY

         On April 8, 1999,  Articles of  Incorporation  were filed for Pinecrest
         Farms, Inc., a Florida corporation wholly-owned by Pinecrest Investment
         Group,  Inc.  Pinecrest Farms,  Inc.,  functions as a subsidiary of the
         Company  and was formed for the  purpose  of owning and  operating  the
         produce  farms.  The growing  technology  and the land for the farms is
         owned by the Company.

         The balance  sheet of Pinecrest  Investment  Group,  Inc. and Pinecrest
         Farms, Inc. are consolidated for these financial statements.

                                      F-11
<PAGE>

Item 2:    Management's Discussion and Analysis of Financial Condition
              and Results of Operations

OVERVIEW

         Pinecrest  Investment  Group,  Inc.   ("Pinecrest"  or  the  "Company")
utilizes  hydroponic  farming  techniques to grow gourmet  produce and medicinal
quality plants. We commenced growing  operations in August 2000 in our first two
ranges comprising  60,000 square feet of harvestable  production area. We intend
to increase  the size of our  harvestable  production  area to an  aggregate  of
570,000 square feet by the middle of 2002.

Results of Operations

NINE MONTHS ENDED MARCH 31, 2001  COMPARED  WITH THE NINE MONTHS ENDED MARCH 31,
2000

         We had  revenue  from  operations  of  $262,521  and a gross  profit of
$113,866 or 43.4% of sales for the nine months ended March 31, 2001  compared to
no revenues during the nine months ended March 31, 2000. We did not have a gross
profit  during the nine months ended March 31, 2000 because we had not commenced
generating revenues.

         Selling,  general and  administrative  expenses were $1,600,085 for the
nine months ended March 31, 2001  compared to $326,356 for the nine months ended
March 31, 2000. The increase is directly  attributable  to the  commencement  of
operations,  which included employee hirings necessary to handle our crop loads.
Our interest expense  increased  $638,146 during the nine months ended March 31,
2001  compared  to  the  same  period  last  year.  This  increase  is  directly
attributable  to  the  conversion  of  debt  to  common  stock  by  the  Michael
Foundation,  Limited  at a time  when  our  stock  was  higher  than  the  $2.00
conversion  rate  utilized  by the Michael  Foundation,  Limited.  The  interest
expense  attributable to this  conversion  recorded during the nine months ended
March 31, 2001 was $290,875.

         Net loss for the nine month period ended March 31, 2001 was  $2,148,744
or $.258 per share compared to a net loss of $350,735 or $.059 per share for the
nine months ended March 31, 2000. The increased losses for the nine months ended
March 31, 2001 were attributable to a larger interest expense,  increased salary
expenses resulting from the commencement of production,  costs related to unsold
crops and increased  depreciation and  amortization  compared to the same period
last year.

THREE MONTHS ENDED MARCH 31, 2001 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
200

         We had  revenue  from  operations  of  $154,863  and a gross  profit of
$68,065 or 44% of sales for the three months ended March 31, 2001 compared to no
revenues  during the three months ended March 31, 2000.  We did not have a gross
profit during the three months ended March 31, 2000 because we had not commenced
generating revenues.

                                       3
<PAGE>

         Selling,  general and  administrative  expenses  were  $710,411 for the
three  months  ended March 31, 2001  compared to $204,733  for the three  months
ended March 31, 2000. The increase is directly  attributable to the commencement
of operations,  which included  employee hirings  necessary to operate the farm.
Our interest expense increased  $377,184 during the three months ended March 31,
2001 compared to the period last year. This increase is directly attributable to
the  conversion of debt to common stock by the Michael  Foundation  Limited at a
time when our stock  was  higher  than the $2.00  conversion  rate  utilized  by
Michael Foundation Limited.

         Net loss for the three month period ended March 31, 2001 was $1,028,170
or $.12 per share  compared to a net loss of $213,373 or $.037 per share for the
three  months ended March 31, 2000.  The  increased  losses for the three months
ended March 31, 2001 were attributable to a larger interest  expense,  increased
salary expenses resulting from the commencement of production,  costs related to
unsold crops and increased  depreciation and  amortization  compared to the same
period last year.

Liquidity and Capital Resources

         We  are  a  development  stage  company,  our  operations  and  capital
expenditures  have been  completely  financed  through the use of short-term and
long-term credit  arrangements as well as the sale and/or exchange of our common
stock.  Cash generated  during the 12-month period ending December 1999 from our
financing  activities  totaled  approximately  $558,000  (inclusive of the funds
raised through Michael Foundation,  Limited, plus a subscription  receivable due
of $437,000). For the six months ended June 30, 2000 we received an aggregate of
$1,172,766  through  subscription   receivables   ($437,000)  and  approximately
$735,766  from Michael  Foundation  Limited  pursuant to a  convertible  line of
credit.

         During the nine-month period ended March 31, 2001 the Company generated
cash from financing  activities in the amount of $833,464 inclusive of the funds
raised through Michael Foundation, Limited pursuant to the previously referenced
convertible  line of credit  arrangement  and cash from  operations of $219,231.
Total sales from  operations  for this period  totaled  approximately  $262,521.
Trade accounts  receivable as of March 31, 2001 totaled  approximately  $43,290.
The Company  posted a $1,524,019  deficit from  operations  for this  nine-month
period.  Pursuant to FASB EITF 98-5,  $290,875 in interest  expense was recorded
during the  nine-month  period  from July 1, 2000  through  March 31,  2001 as a
beneficial  feature of the convertible  line of credit  arrangement with Michael
Foundation Limited.

         We have made arrangements with Michael Foundation Limited to provide us
with approximately $1,000,000 in additional cash, if needed.

         We  are  pursuing  a  Federal  Rural  Development  Act  Loan  or  other
comparable  financing  to  finance  Phase  II of the  Lithia  facility.  We have
received  significant  interest in this  project and we hope to complete  such a
transaction within the next few months, although there are no assurances that we
will be  successful  in obtaining  such  financing.  If we are  unsuccessful  in
obtaining this  financing,  the rate of build-out of Phase II will be slower and
resulting revenues and profits would be slower than projected since construction
may have to be financed out of profits.

                                       4
<PAGE>

         Construction of Phase II has been delayed due to construction materials
delays and  subcontractor  scheduling  conflicts  created  due to the  materials
delays. However, once Phase II, containing 5 greenhouse ranges, is completed and
in  operation,  total  monthly  revenues from Phase I and Phase II facilities (a
total of 7 greenhouse  ranges) are  anticipated  to be in excess of $700,000 and
monthly net income to be in excess of $300,000 ($42,857 per range).

         Based on our cash flow projections,  Phase III is to be financed out of
profits and, therefore, no financing is anticipated at that time.

         The Company  spent  approximately  $175,000 on  engineers,  permitting,
materials and equipment which were incorporated into the Phase I Lithia facility
and approximately $10,000 on research and development. Additional costs utilized
to complete Phase I of the Lithia facility totaled approximately $850,000.

         Phase II costs for  greenhouses  and equipment are anticipated to total
approximately $400,000 per greenhouse range.

         Phase III costs are  anticipated  to be expended in late 2001 and 2002.
The rate of completion  of Phase III will depend  greatly upon the timing of the
build-out of Phase II. Phase III  construction  costs will also be approximately
$400,000 per greenhouse  range. A total of 12 greenhouse ranges will be built in
Phase III at a total cost of $4,800,000.

                                       5
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

         From time to time, the Company is a party to  litigation,  which arise,
in the normal course of business.  There is no litigation pending, or threatened
that, if determined adversely, would have a material effect upon the business or
financial condition of the company.

Item 2.  Changes in Securities and Use of Proceeds

                  (a)      None
                  (b)      None
                  (c)      None
                  (d)      Not Applicable

Item 3.    Defaults upon Senior Securities

                  None

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

                  None

Item 5.    Other Information

                  None

Item 6.  Exhibits and Reports on Form 8-K

         (a)      The following exhibits are filed as part of this report:

                  None

         (b)      Reports on Form 8-K

                  None

                                       6
<PAGE>

                                   SIGNATURES

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

Dated:   May 11, 2001                   PINECREST INVESTMENT GROUP, INC.



                                        By: /s/ David B. Howe
                                           -----------------------
                                           David B. Howe, CEO and Principal
                                           Executive and Chief Financial Officer


                                       7