**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-QSB**

(Mark One)

X__Quarterly report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the
period ended June 30, 2002.

___Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the
transition period from ______ to ______.

**T.Z.F.  INTERNATIONAL INVESTMENTS, INC.******

(Exact name of registrant as specified in its charter)

|Nevada                                         | 0-31353                  | 88-0404186                          
|---------------------------------------------- | ------------------------ | ------------------------------------
|(State or other jurisdiction of
incorporation) | (Commission File
Number) | (IRS Employer Identification
Number)

|Unit 1, 3071 No. 5 Road

Richmond, B.C., Canada | V6X 2T4   
|----------------------------------------------- | ----------
|(Address of principal executive offices)        | (Zip Code)

Registrant's telephone number, including area code:  (604) 718-2188

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

Applicable only to issuers involved in bankruptcy proceedings during the past five years.

Check whether the issuer has filed all documents and reports required to be filed by Section 12,
13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a
court.  Yes .....  No .....

Applicable only to corporate issuers

State the number of shares outstanding of each of the issuer's classes of common equity, as of the
latest practicable date:  At June 30, 2002, there were 35,498,505 shares outstanding.

Transitional Small Business Disclosure Format (Check one):  Yes .....     No ..X..

PART 1 - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS AND EXHIBITS

(a)  The unaudited financial statements of registrant for the six  months ended June 30, 2002,
follow.  The financial statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim period presented.

T.Z.F.  INTERNATIONAL INVESTMENTS, INC.

(A Development Stage Company)

FINANCIAL STATEMENTS

Quarter Ended June 30, 2002

|INDEX TO FINANCIAL STATEMENTS:                            | 
|--------------------------------------------------------- | 
|                                                          | 
|Independent Accountants' Review Report                    | 
|ConsolidatedBalance Sheets                                | 
|Consolidated Statements of Operations                     | 
|Consolidated Statements of Retained Earnings (Deficit)    | 
|Consolidated Statements of Cash Flows                     | 
|Schedule of Fixed Assets/Intangible Assets                | 
|Consolidated Statement of Changes in Stockholders' Equity | 
|Notes to Consolidated Financial Statements                | 



**MOEN AND COMPANY**

********CHARTERED ACCOUNTANTS



|PO Box 10129            |            |              
|----------------------- | ---------- | -------------
|1400 IBM Tower          | Telephone: | (604)662-8899
|701 West Georgia Street | Fax:       | (604)662-8809
|Vancouver, BC   V7Y 1C6 |            |              



**INDEPENDENT ACCOUNTANTS' REVIEW REPORT**

Board of Directors and Stockholders

T.Z.F. International Investments, Inc.

(A Nevada Corporation)

We have reviewed the accompanying Consolidated Balance Sheets of T.Z.F. International
Investments, Inc. (A Nevada Corporation) as of June 30, 2002 and June 30, 2001, and the related
Consolidated Statements of Operations, Retained Earnings, Cash Flows and Changes in
Stockholders' Equity for the six month periods then ended in accordance with Statements on
Standards for Accounting and Review Services issued by the America Institute of Public
Accountants.  All information included in these financial statements is the representation of T.Z.F.
International Investments, Inc.

A review consists principally of inquiries of company personnel and analytical procedures applied
to financial data.  It is substantially less in scope than an examination 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.

On the basis of 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 United States
generally accepted accounting principles (GAAP).



"Moen and Company"

Chartered Accountants

Vancouver, British Columbia, Canada

July 7, 2002



|******T.Z.F. INTERNATIONAL INVESTMENTS, INC.**                                               
|---------------------------------------------------------------------------------------------
|******(A Nevada Corporation)**                                                               
|******Consolidated Balance Sheets**                                                          
|******June 30, 2002 and June 30, 2001**                                                      
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|Current Assets                                                                               
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|TOTAL CURRENT ASSETS                                                                         
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|Fixed Assets - Schedule A                                                                    
|Intangible Assets - Schedule A                                                               
|Goodwill, at cost (note 11)                                                                  
|TOTAL ASSETS (Pledged as security for bank loans
- Note 17)                                  
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|Current Liabilities                                                                          
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|TOTAL CURRENT LIABILITIES                                                                    
|Long-term Liabilities                                                                        
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|Minority interest                                                                            
|Stockholders' Equity                                                                         
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|TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                                                   
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|Approved on behalf of the board:                                                             
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|**************	, Director	

See Accompanying Notes and Independent Accountants' Review Report
|******T.Z.F. INTERNATIONAL INVESTMENTS, INC.**                                               
|******(A Nevada Corporation)**                                                               
|******Consolidated Statements of Operations**                                                
|******(In US Dollars)**                                                                      
|******(Unaudited)**                                                                          
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|Revenue                                                                                      
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|Expenses                                                                                     
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|Profit (loss) before income taxes                                                            
|Income taxes                                                                                 
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|Minority interest                                                                            
|Net profit (loss) for the period                                                             
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|Basic profit (loss) per share                                                                
|Diluted profit (loss) per share                                                              
|Weighted average number of                                                                   
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|See Accompanying Notes and Independent Accountants' Review Report                            
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|******T.Z.F. INTERNATIONAL INVESTMENTS, INC.**                                               
|******(A Nevada Corporation)**                                                               
|******Consolidated Statements of Retained Earnings (Deficit)**                               
|******(In US Dollars)**                                                                      
|******(Unaudited)**                                                                          
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|Retained earnings (deficit),                                                                 
|beginning of period                                                                          
|Net profit (loss) for the period                                                             
|Retained earnings,                                                                           
|end of period                                                                                
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|See Accompanying Notes and Independent Accountants' Review Report                            
|******T.Z.F. INTERNATIONAL INVESTMENTS, INC.**                                               
|******(A Nevada Corporation)**                                                               
|******Consolidated Statements of Cash Flows**                                                
|******(In US Dollars)**                                                                      
|******(Unaudited)**                                                                          
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|Cash derived from (used for)                                                                 
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|Cash, increase (decrease)                                                                    
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|Cash, beginning of period                                                                    
|Cash, end of period                                                                          
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|See Accompanying Notes and Independent Accountants' Review Report                            
|******T.Z.F. INTERNATIONAL INVESTMENTS, INC.****Schedule A**                                 
|******(A Nevada Corporation)**                                                               
|******Schedule of Fixed Assets/Intangible Assets**                                           
|******As at June 30, 2002**                                                                  
|******(In US Dollars)**                                                                      
|******(Unaudited)**                                                                          
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|Intangible Assets                                                                            
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See Accompanying Notes and Independent Accountants' Review Report

|******T.Z.F. INTERNATIONAL INVESTMENTS, INC.**                       
|---------------------------------------------------------------------
|**(A Nevada Corporation)**                                           
|**Consolidated Statement of Changes in Stockholders' Equity**        
|******From Date of Inception on September 15, 1998 to June 30, 2002**
|**(In U.S. Dollars)******                                            
|**(Unaudited)******                                                  
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|Balance, December 31, 1998                                           
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|Balance, December 31, 1999                                           
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|Balance, April 30, 2000                                              
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|05/15/00 10 to 1 forward split                                       
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|Balance, December 31, 2000                                           
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|Balance, December 31, 2001                                           
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|Balance, June 30, 2002                                               
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|See Accompanying Notes and Independent Accountants' Review Report    

**T.Z.F. INTERNATIONAL INVESTMENTS, INC.**

**(a Nevada Corporation)**

**Notes to Consolidated Financial Statements**

**March 31, 2002**

**(In U.S. Dollars)**

**(Unaudited)**

Note 1.	ORGANIZATION AND NATURE OF BUSINESS

The Company was incorporated under the laws of the State of Nevada on September 15, 1998, as Sabai
Sabai Enterprises, Corp., and on May 25, 2000, changed its name to T.Z.F. International Investments,
Inc.

Pursuant to a stock purchase agreement dated March 30, 2000, T.Z.F. International Herbs Investment
Inc., ("BC Company") purchased 1,000,000 shares of the issued and outstanding common stock of the
Company.  These shares were purchased in anticipation of the subsequent completion of a share
exchange transaction between the Company and the BC Company.  In conjunction with completion of
the share exchange transaction these shares were cancelled, effective April 30, 2000, and as a result,
the amount of the par value of $1,000 attributable to such shares was transferred to paid-in capital.

Pursuant to the terms of the share exchange which was effective as of April 30, 2000, the Company
acquired all of the issued and outstanding stock of the BC Company in exchange for the issuance of
18,451,843 shares of its authorized but previously unissued sharesof common stock, which shares
were valued at $5,352,932 for purposes of the acquisition.  Assets and liabilities of the BC Company at
the date of acquisition on April 30, 2000, were as follows:

|Assets                                                                                                                       |                                             |                                               |           | 
|---------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------------- | --------- | 
|                                                                                                                             | Cash and short term deposits                | $1,040,372                                   
|                                                                                                                             | Accounts receivable                         | 13,217                                       
|                                                                                                                             | Capital stock subscriptions receivable      | 374,546                                      
|                                                                                                                             | Prepaid expense and deposit                 | 5,382                                        
|                                                                                                                             | Inventories                                 | 206,532                                      
|                                                                                                                             | Deferred lease expense, net of amortization | 5,047                                        
|                                                                                                                             |                                             | Fixed assets, net of accumulated depreciation | 59,927   
|                                                                                                                             |                                             | Intangible assets, technology rights          | 4,038,229
|                                                                                                                             |                                             |                                               |           | 
|Liabilities                                                                                                                  |                                             |                                               |           | 
|                                                                                                                             | Accounts payable and accrued                |                                               | 114,917  
|                                                                                                                             | Accrued payroll deductions payable          | 45,767                                       
|                                                                                                                             | Management fees payable                     |                                               | 168,205  
|                                                                                                                             | Due to related parties                      |                                               | 60,755   
|                                                                                                                             |                                             |                                               |           | 
|Net assets including cumulative translation                                                                                  | 5,353,608                                  
|Cumulative translation, included in above,

Booked in stockholders' equity of Sabai Sabai                                    | (676)                                      
|Net value in exchange for 18,451,843 common

Shares off Sabai Sabai and net equity on date of

acquisition of the BC Company | $5,352,932                                 

In May 2000, the Company completed a 10:1 forward split of its outstanding stock. This forward split
increased the number of issued and outstanding shares from 600,000 (1,600,000 previously outstanding
less the 1,000,000 shares which were cancelled) to 6,000,000.

Subsequent to completion of the share exchange on April 30, 2000, the BC Company (the Company's
wholly-owned subsidiary) received subscriptions for 340,000 additional shares.  The Company elected
to convert such shares to shares of its own common stock on the same terms as it completed the share
exchange.  Therefore, effective as of July 4, 2000 the Company issued 340,000 additional shares in
exchange for shares of the BC Company

In May 2000, following completion of the forward split, the Company authorized the issuance of
250,000 restricted shares as compensation for consulting services at a price of CAD$1.50 per share, to
the following:

|Name           | Number of Shares | Consideration CAD $ | Equivalent US $
|-------------- | ---------------- | ------------------- | ---------------
|Robert Gelfand | 50,000           | $75,000             | $50,480        
|Fred Fisher    | 200,000          | 300,000             | 201,920        
|               | 250,000          | $ 375,000           | $ 252,400      

Accordingly, the amount of $252,400 was recorded as stock-based compensation in the financial
statements for the year ended December 31, 2000.

T.Z.F. International Herbs Investment Inc., which is now a wholly-owned subsidiary of the Company,
owns the formula and all distribution and intellectual property rights, including trademark, patent and
industry design rights, for Snow Lotus Tea products.

The Company and its wholly-owned subsidiary, the BC Company, are both based in Richmond, British
Columbia, Canada.

On December 21, 2000 the BC Company acquired 100% of issued and outstanding shares of Tianan
Investment Limited ("Tianan"), a British Virgin Islands company with an office in Hong Kong for the
total price of HK$21,500,000 (US$2,758,847),which was paid in cash in three installments. The BC
Company paid the first installment totaling HK $6,638,318.09 (approximately US $851,100) in two
parts, on July 7 and July 10, 2000. The second installment of HK $6,261,681.91 (approximately US
$802,800), and the final installment of HK$8,600,000.00 (approximately US $1,104,947), which were
paid on October 20, 2000 and December 20, 2000, respectively, were both paid by Xin Chen, one of
the principal shareholders.

The sole asset of Tianan is its 100% ownership of Tianan Pharmacy (Xiamen) Co., Ltd. ("Tianan
Pharmacy"), a manufacturer of Chinese biological and herbal medicine products. Tianan Pharmacy has
a plant which is located in the Torch High Tech Development Zone of Xiamen, China, where it
currently conducts research and development and produces herbal and biological medicines which it
distributes and sells in China.

As a result of the closing of this purchase transaction, Tianan became a wholly-owned subsidiary.

Assets and liabilities of Tianan at the date of acquisition on December 21, 2000, were as follows:

|Assets |                                       |                                               |           | 
|------ | ------------------------------------- | --------------------------------------------- | --------- | 
|       | Cash and cash equivalents             | $ 103,910                                    
|       | Accounts receivable, trade            | 198,910                                      
|       | Short-term loans                      | 831,875                                      
|       | Prepaid expense and deposit           | 5,069                                        
|       | Inventories                           | 449,147                                      
|       | Deferred expense, net of amortization | 27,957                                       
|       |                                       | Fixed assets, net of accumulated depreciation | 1,405,851
|       |                                       | Rights of use of land - 50 years              | 370,508  
|       |                                       |                                               |           | 

|Liabilities                        |                               |        |         | 
|---------------------------------- | ----------------------------- | ------ | ------- | 
|                                   | Accounts payable, trade       |        | 9,921  
|                                   | Accounts payable, others      | 42,176
|                                   | Taxes payable                 |        | 33,222 
|                                   | Deferred liabilities, pension |        | 212,562
|                                   | Bank loan                     |        |         | 
|                                   | 781,557                      
|Net assets                         | 2,611,670                    
|Goodwill on acquisition            | 147,177                      
|Total cash payments on acquisition | $2,758,847                   

On December 31, 2000, the BC Company completed the purchase of all of the shares of T.Z.F.
International Herbs (Jiangsu) Co. Ltd. ("TZF Jiangsu") (formerly Second Pharmacy Factory of
Yancheng City), ("Second Pharmacy"), a Chinese corporation. The assets were purchased from The
People's Government of JianWu County, JiangSu Province, the People's Republic of China. The
purchase was completed pursuant to the terms of an Acquisition and Investment Agreement dated
September 12, 2000.

In accordance with the Acquisition and Investment Agreement, the purchase price was a total of
RMB14,000,000.00 (US $1,786,591), which was paid in cash in two installments, plus assumption of
liabilities totaling approximately RMB400,000 (approximately US$48,000). The first cash installment
totaling RMB3,000,000.00 (approximately US $362,000) , was paid on September 18, 2000.  The
second cash installment of RMB11,000,000.00 (approximately US $1,376,591) was paid in two parts,
on November 22 and November 28, 2000.

The purchase price for the assets of TZF Jiangsu was determined through arms length negotiation with
the seller.

The cash purchase price for the assets of TZF Jiangsu was paid on our behalf by Xin Chen, one of the
principal shareholders. These payments were part of a total of US$5,000,000 which Mr. Chen paid or
advanced on behalf of the Company during the fiscal year ended December 31, 2000.

The assets of TZF Jiangsu consist primarily of an automated assembly line used for the production of
various pharmaceutical products. The Company will continue to use this equipment and factory for the
production of pharmaceutical products and will seek to expand and improve the operations.

In addition to payment of the initial purchase price of RMB14,000,000 for purchase of the existing
assets of TZF Jiangsu, the Acquisition and Investment Agreement contemplates that during the next
three years we will invest an additional sum of RMB14,000,000 in fixed assets, technological
improvements, research and development and marketing in order to improve and expand the operations
of TZF Jiangsu. In return for the Company's commitment to make this additional capital investment,
the seller, The People's Government of JianWu County, JiangSu Province, the People's Republic of
China has agreed to grant the Company various incentives, including rent free occupancy of certain
new plant space for 50 years, an agreement to refund certain Value Added Tax for 3 years, a 100%
exemption from income taxes for three years commencing in 2001, a 50% exemption from income
taxes for an additional 3 years thereafter, an exemption from the Industrial and Commercial
Administration Charge and other industry fees for one year, and an exemption from a variety of other
fees and surcharges during the period that the new plant space is under construction.

Assets and liabilities of TZF Jiangsu at the date of acquisition on December 31, 2000, were as follows:

|Assets |                                               |             |  | 
|------ | --------------------------------------------- | ----------- |  | 
|       | Cash and cash equivalents                     | $ 1,005,456
|       | Accounts receivable, trade                    | 1,675,847  
|       | Short-term loans                              | 701,927    
|       | Inventories                                   | 79,095     
|       | Construction in progress                      | 861,460    
|       | Fixed assets, net of accumulated depreciation | 548,421    
|       | Fixed assets, other                           | 239,261    
|       | Rights of use of land - 50 years              | 1,239,942  

|            |                                        |         |         | 8,269,783
|----------- | -------------------------------------- | ------- | ------- | ---------
|Liabilities |                                        |         |         |          
|            | Accounts payable, trade                |         | 913,669
|            | Accounts payable, others               | 350,001
|            | Taxes payable                          |         | 389,934
|            | Payroll and payroll deductions payable |         | 94,821 
|            | Long-term liabilities                  |         | 306,138
|            | Bank loans                             |         |         |          
|            | 3,150,089                             
|Net assets  | 5,119,694                             

|Gain - Negative goodwill on acquisition added to

paid-in capital in these financial statements | 3,333,103 
|----------------------------------------------------------------------------------------------- | ----------
|Total cash payments on acquisition                                                              | $1,786,591

By an Acquisition and Investment Agreement dated December 31, 2000, the Company completed the
purchase of all of the shares of Shenzhen Tianzifu Network Technology Ltd., ("Shenzhen TZF Net")
(formerly Shenzhen Xinhaihu Industry Trading & Development Co., Ltd.), a Chinese corporation.  The
purchase price is $3,000,000, of which, $2,481,410 was paid, and the balance of $518,590 is recorded
as payable on acquisition as a current liability in these financial statements.



The major businesses of Shenzhen TZF Net are in China and include pharmaceutical businesses,
material supply, computer network software and hardware development and related business
information consulting.

Note 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

**Principles of consolidation**

The accompanying consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary, T.Z.F. International Herbs Investment Inc., Tianan Investment Limited (and
its wholly-owned subsidiary Tianan Pharmacy (Xiamen) Co. Ltd.),TZF International Herbs (Jiangsu)
Co. Ltd. and Shenzhen Tianzhifu Network Technology Ltd.  All intercompany transactions and
balances have been eliminated.

**Basis of presentation**

These consolidated financial statements have been prepared in accordance with Accounting Principles
Generally Accepted in the United States ("USGAAP).

**Development stage company**

The consolidated financial statements of the Company to December 31, 2001 have been prepared in
accordance with the provisions of Statement of Financial Accounting Standard No. 7, "Accounting and
Reporting by Development Stage Enterprises", which included cumulative figures for the statement of
operations and cash flows from the date of inception on September 15, 1998 to December31, 2001.
Commencing January 1, 2002, the Company is not considered to still be a development stage company
and, accordingly, figures from date of inception are not disclosed.

**Business Combinations**

The Company uses the Purchase Method in accounting for its acquisitions.

Goodwill will be subject to review for impairment.  This review would be at the lowest reporting level
or levels that include the acquired business (i.e., the reporting unit).  Goodwill would be considered
impaired and subject to write-down if the fair value of the reporting unit's goodwill is less than its
carrying amount.  The fair value of goodwill would be determined by subtracting the fair value of the
recognized net assets of the reporting unit (excluding goodwill) from the fair value of the reporting
unit.  The amount of the impairment would be the difference between the carrying amount and the fair
value of the goodwill.

**Use of estimates**

The preparation of financial statements in conformity with USGAAP 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 dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ from those estimates.

**Cash and cash equivalents**

Cash and cash equivalents consists of cash on deposit and highly liquid short-term interest bearing
securities with a maturity at the date of purchase of three months or less.

**Income Taxes**

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred
taxes on temporary differences between the amount of taxable income and pretax financial income and
between the tax bases of assets and liabilities and their reported amounts in the financial statements.
Deferred tax assets and liabilities are included in the financial statement at currently enacted income
tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be
realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes.  As
changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.

**Compensated absences**

Employees of the corporation are entitled to paid vacations, sick days and other time off depending on
job classification, length of service and other factors.  It is impractical to estimate the amount of
compensation for future absences, and accordingly, no liability has been recorded in the accompanying
financial statements.  The corporation's policy is to recognize the costs of compensated absences when
paid to employees.

**Net earnings per share**

The Company adopted Statement of Financial Accounting Standards No. 128 that requires the
reporting of both basic and diluted earnings per share.  Basic earnings per share is computed by
dividing net income available to common shareowners by the weighted average number of common
shares outstanding for the period.  Diluted earnings per share reflects the potential dilution that could
occur if securities or other contacts to issue common stock were exercised or converted into common
stock.  In accordance with FASB 128, any anti-dilution effects on net loss per share are excluded.

**Disclosure about fair value of financial instruments**

The Company has financial instruments, none of which are held for trading purposes. The Company
estimates that the fair value of all financial instruments at December 31, 2001 as defined in FASB 107,
does not differ materially from the aggregate carrying values of its financial instruments recorded in the
accompanying balance sheets.  The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation methodologies.  Considerable
judgment is required in interpreting market data to develop the estimates of fair value, and accordingly,
the estimates are not necessarily indicative of the amounts that the Company could realize in a current
market exchange.

**Fixed assets**

Fixed assets are stated at cost less accumulated depreciation.  Depreciation is recorded on the following
rates, based upon the useful life of the assets.

|Office equipment      | - 20% per annum on the declining balance basis             
|--------------------- | -----------------------------------------------------------
|Leasehold improvement | - allocated on a straight-line basis over the term of lease
|Vehicles              | - 30% per annum on the declining balance basis             
|Computer equipment    | - 30% per annum on the declining balance basis             
|Buildings             | - 4.75% per annum on the straight-line basis               
|Mechanical devices    | - 19% per annum on the straight-line basis                 
|Electric devices      | - 19% per annum on the straight-line basis                 
|Shipping devices      | - 19% per annum on the straight-line basis                 
|Other devices         | - 19% per annum on the straight-line basis                 

**Long-lived assets**

Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of the asset
in question may not be recoverable.  This standard does not have a material effect on the Company's
results of operations, cash flows or financial position in these financial statements.

**Foreign currency translation**

The functional currency of the parent Company T.Z.F. International Investments, Inc. is the United
States Dollar and of T.Z.F. International Herbs Investment Inc. is the Canadian Dollar, Tianan
Pharmacy (Xiamen) Co. Ltd, T.Z.F. International Herbs (Jiangsu) Co. Ltd. and Shenzhen Tianzifu
Network Technology Ltd. are in Chinese Yuan and the reporting currency on a consolidated basis is the
United States Dollar.

The assets, liabilities, and operations of the Company are expressed in the functional currency of the
Company in United States Dollars.  Operations of the subsidiary, T.Z.F. International Herbs Investment
Inc. are in Canadian Dollars and in conformity with US GAAP they are translated into the reporting
currency, the United States Dollar.

Monetary assets and liabilities are translated at the current rate of exchange.

The weighted average exchange rate for the period is used to translate revenue, expenses, and gains or
losses from the functional currency to the reporting currency.

The gain or loss on translation is reported as a separate component of stockholders' equity and not
recognized in net income.  Gains or losses on remeasurement are recognized in current net income.

Gains or losses from foreign currency transactions are recognized in current net income.

Fixed assets are measured at historical exchange rates that existed at the time of the transaction.

Depreciation is remeasured at historical exchange rates that existed at the time the underlying related
asset was acquired.

An analysis of the changes in the cumulative translation adjustment as disclosed as part of
stockholders' equity, is as follows:

|                             | Six Months Ended

June 30,
|---------------------------- | --------------------------
|                             | 2002                      
|Balance, Beginning of period | $  4,987                  
|Change during the period     |                           
|Balance, End of period       | $  4,987                  

The effect of exchange rate changes on cash balances is reported in the statement of cash flows as a
separate part of the reconciliation of change in cash and cash equivalents during the period.

**Concentration of credit risk**

Financial instruments that potentially subject the Company to a significant concentration of credit risk
consist primarily of cash and cash equivalents which are not collateralized.  The Company limits its
exposure to credit loss by placing its cash and cash equivalents with high credit quality financial
institutions.

**Inventories**

The inventories are recorded at the lower of cost or market. As at June 30, 2002 the inventories total
$1,779,742 (June 30, 2001 - $2,185,094) (see note 7)

**Revenue Recognition**

The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101,
Revenue Recognition in Financial Statements, in December 1999.  The SAB summarizes certain of the
SEC staff's views in applying generally accepted accounting principles to revenue recognition in
financial statements.  During the current year, the Company performed a review of its revenue
recognition policies and determined that it is in compliance with SAB 101.

**Web Site Development Expenses**

Web site development expenses relate to the development of new online services and consist principally
of employee compensation, as well as costs for content, facilities and equipment.  The consensus in the
Financial Accounting Standards Board Emerging Issues Task Force (EITF) Issue No. 00-2, Accounting
for Web Site Development Costs, requires that certain costs to develop Web sites be capitalized or
expensed, depending on the nature of the costs.  Development expenses of $59,778 have been capitalized
and are being amortized over a period of 30 months (note 12).



**Shipping and Handing Fees and Costs**

In September 2000, the Financial Accounting Standards Board Emerging Issues Task Force (EITF) reached
a final consensus on EITF Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs.  This
consensus requires that all amounts billed to a customer in a sale transaction related to shipping and
handling, be classified as revenue.  The Company historically has netted shipping charges to customers
with shipping and handling costs which are included in operating expenses in the Statements of Operations.
With respect to the classification of costs related to shipping and handling incurred by the seller, the EITF
determined that the classification of such costs is an accounting policy decision that should be disclosed.
The Company adopted the consensus in the Issue in fiscal 2001.

**Segmented Information**

The Company's identifiable assets as at June 30, 2002 are located in the following countries:

|Canada            | $4,031,292 
|----------------- | -----------
|China             | 15,222,019 
|The United States | 3,231      
|                  | $19,256,542

Note 3.	  CASH AND CASH EQUIVALENTS - $259,919

The total for cash and equivalents as at June 30, 2002, is made up as follows:

|                    | TZF  US
Company | The BC
Company | Tian'an      | JZF Jiangsu | Shenzhen
TZF Net | Total    
|------------------- | --------------- | -------------- | ------------ | ----------- | ---------------- | ---------
|Petty cash          | $               | $              | $        272 | $ 33,762    | $ 820            | $ 34,854 
|Cash in trust       |                 | 2,769          |              |             |                  | 2,769    
|Cash in bank        |                 | 2,030          | 115,448      | 16,271      | 11,504           | 145,253  
|Short-term
deposits |                 |                |              | 76,315      |                  | 76,315   
|Total               | $ 0             | $ 4,799        | $115,270     | $ 126,348   | $   12,324       | $ 259,191



Note 4.  ACCOUNTS RECEIVABLE

This balance represents the following:

|                                  | TZF  US
Company | The BC
Company | Tian'an  | JZF
Jiangsu | Shenzhen
TZF Net | Total     
|--------------------------------- | --------------- | -------------- | -------- | ----------- | ---------------- | ----------
|Accounts receivable, trade        | $               | $              | $521,939 | $1,058,001  | $   29,793       | $1,609,733
|Accounts receivable,
Canadian GST |                 | 7,276          |          |             |                  | 7,276     
|Short-term loans                  |                 |                | 318,178  |             | 410,659          | 728,837   
|Accounts receivable, others       |                 |                |          | 1,120,839   |                  | 1,120,839 
|Total                             | $        0      | $   7,276      | $840,117 | $2,178,840  | $ 440,452        | $3,466,685

Note 5.  PREPAID EXPENSES AND DEPOSITS

The balance of prepaid expenses and deposit as at June 30, 2002, is as follows:

|                                                     | The BC
Company | Tian'an     | Shenzhen
TZF  Net | Total        
|---------------------------------------------------- | -------------- | ----------- | ----------------- | -------------
|Rental deposits                                      | $ 2,775        | $           | $                 | $       2,775
|Prepaid to Beijing Zhong Buo for
website development |                |             | 1,452,275         | 1,452,275    
|Prepaid new medicine application fees                |                | 247,625     |                   | 247,625      
|Total                                                | $2,775         | $   247,625 | $1,452,275        | $1,702,675   

As at June 30, 2002, Shenzhen TZF Net paid $1,439,535  to Beijing Zhongbuo Merchants Promotion
Internet Co. Ltd. for the setting up of website and computer systems.  This project is in progress as at June
30, 2002 and, accordingly, is recorded as a prepaid expense.

Note 6.  SUBSCRIPTIONS RECEIVABLE

As at September 11, 2000, Mr. Chung Yiu Chung signed a subscription agreement with the Company,
whereby he subscribed for 561,798 common share of the Company at a price of CAD$1.50 per share, of
which, 162,994 common shares were issued and paid.  The balance of $406,434 is unpaid.  As at December
31, 2001 the latter amount has been reversed and the issued share capital reduced, accordingly.

Note 7.  INVENTORIES

The inventories as at June 30, 2002, are made up as follows:

|                    | The BC
Company | Tian'an   | TZF Jiangsu | Shenzhen
TZF Net | Total     
|------------------- | -------------- | --------- | ----------- | ---------------- | ----------
|Raw materials       | $              | $ 54,632  | $ 74,600    | $                | $129,232  
|Packaging materials |                | 18,524    | 626,928     |                  | 645,452   
|Finished products   |                | 272,610   | 236,194     |                  | 508,804   
|Other               |                |           | 287,028     | 209,226          | 496,254   
|Total               | $         0    | $ 345,766 | $1,224,750  | $209,226         | $1,779,742

Note 8.  FIXED ASSETS

The totals for fixed assets and accumulated depreciation as at June 30, 2002, are made up as follows:

|                           | The BC
Company | Tian'an   | TZF Jiangsu | Shenzhen
TZF Net | Total    
|-------------------------- | -------------- | --------- | ----------- | ---------------- | ---------
|**Cost**                   |                |           |             |                  |          
|Computer equipment         | $ 14,364       | $         | $           | $                | $14,364  
|Office equipment           | 14,286         |           |             |                  | 14,286   
|Vehicles                   | 11,928         |           |             |                  | 11,928   
|Buildings and
improvements | 38,426         | 1,312,794 |             |                  | 1,351,220
|Mechanic devices           |                | 321,187   |             |                  | 321,187  
|Shipping devices           |                | 21,685    |             |                  | 21,685   
|Electronic devices         |                |           |             | 100,072          | 100,072  
|Other                      |                | 316,326   | 1,885,145   |                  | 2,201,471
|Total                      | 79,004         | 1,971,992 | 1,885,145   | 100,072          | 4,036,213

|**Accumulated Depreciation** |          |            |             |         
|---------------------------- | -------- | ---------- | ----------- | --------
|Computer equipment           | 6,673    |            |             |         
|Office equipment             | 5,785    |            |             |         
|Vehicles                     | 8,665    |            |             |         
|Buildings and
improvements   | 13,073   | 305,234    |             |         
|Mechanic devices             |          | 142,851    |             |         
|Shipping devices             |          | 19,517     |             |         
|Electronic devices           |          |            |             | 20,107  
|Other                        |          | 306,860    | 156,005     |         
|Total                        | 34,196   | 774,462    | 156,005     | 20,107  
|**Net book value**           |          |            |             |         
|Computer equipment           | 7,691    |            |             |         
|Office equipment             | 8,501    |            |             |         
|Vehicles                     | 3,263    |            |             |         
|Buildings and
improvements   | 25,353   | 1,007,560  |             |         
|Mechanic devices             |          | 178,336    |             |         
|Shipping devices             |          | 2,168      |             |         
|Electronic devices           |          |            |             | 79,965  
|Other                        |          | 9,466      | 1,729,140   |         
|Total (to Schedule A)        | $ 44,808 | $1,197,530 | $ 1,729,140 | $ 79,965

Note 9.  FIXED ASSETS - OTHERS

As at June 30, 2002, other fixed assets of $552,436 (June 30, 2001 - $793,813) as disclosed in Schedule
A, in addition to the above, represent the residual value of fixed assets located at TZF Jiangsu.

Note 10.  FIXED ASSETS - CONSTRUCTION IN PROGRESS

The construction in progress of $925,863 as at June 30, 2002, applies to new buildings and related
equipment located at TZF Jiangsu and will not be depreciated until the building has been completed and
the equipment put into use.  Certificate of completion is expected in 2002.

Note 11.  GOODWILL

As at June 30, 2002, goodwill of $1,206,554 is made up as follows:

|                         | Tian'an  | Shenzhen TZF  Net | Total     
|------------------------ | -------- | ----------------- | ----------
|Goodwill on acquisitions | $147,177 | $1,059,377        | $1,206,554

The goodwill will be evaluated on an annual basis as to any possible impairment.  The earnings of Tianan
justify the goodwill.  Shenzhen is expected to attain earnings to continue to justify the amount of goodwill
and, accordingly, no adjustment has been made to the goodwill booked for Shenzhen.

Note 12.   INTANGIBLE ASSETS - DEFERRED COSTS

As at June 30, 2002, deferred costs of $86,880 are made up as follows:

|                                                       | Tian'an  | Shenzhen
TZF  Net | Total  
|------------------------------------------------------ | -------- | ----------------- | -------
|Website development - to be amortized over 30 months   | $        | $59,778           | $59,778
|Net product development costs - to be expensed in 2002 | 32,840   |                   | 32,840 
|Amortization                                           |          | (5,738)           | (5,738)
|Net book value (to schedule A)                         | $ 32,840 | $ 54,040          | $86,880

Note 13.  INTANGIBLE ASSETS - TECHNOLOGY RIGHTS

By agreement dated December 15, 1999, Shenzhen Hengyunda Enterprises Co. Ltd. of P.R. China agreed
to sell and assign certain information and rights relating to a series of products known as the Snow Lotus
Tea series products to the BC Company.

The BC Company agreed to pay consideration of $4,038,229 for acquisition of these assets, through the
issuance of 6,000,000 shares of its Class B common stock, which were valued for purposes of the
acquisition at a price of CAD$1.00 per share, for total consideration of CAD$6,000,000 (US$4,038,229).

Shenzhen Hengyunda Enterprises Co. Ltd. has warranted that there are no charges or encumbrances against
the rights being acquired.

This agreement includes the sale, assignment and transfer of all the right, title and interest in and to the
Product Information and all the rights to use, exploit, develop or otherwise deal with the Product
Information or the Project, including the right to register any Intellectual Property in connection with the
Product, the same to be held and enjoyed by the BC Company and its successors and assigns as fully and
effectively as the same would have been held and enjoyed by Shenzhen Hengyunda Enterprises Co. Ltd.
had this transfer and assignment not been made.

Shenzhen Hengyunda Enterprises Co. Ltd. further agrees to execute and deliver all such documents and
further assurances as may be necessary or desirable to give effect to the sale and assignment.

These technology rights have subsequently been reevaluated (see subsequent event notes 28).

Note 14.   ACCOUNTS PAYABLE AND ACCRUED

Details of the total of accounts payable and accrued as at June 30, 2002, are as follows:

|                | TZF  US
Company | The BC
Company | Tian'an  | TZF
Jiangsu | Shenzhen
TZF Net | Total     
|--------------- | --------------- | -------------- | -------- | ----------- | ---------------- | ----------
|A/P, trade      |                 |                | $ 58,531 | $1,288,748  | $ 99,836         | $1,446,665
|Accrued payroll |                 |                | 12,928   | 13,271      | 10,460           | 36,659    
|Taxes payable   |                 |                | 4,754    | 133,745     | 83,264           | 221,763   
|Other payables  | 9,968           | 51,111         | 48,710   | 428,160     | 109,973          | 647,922   
|Total           | 9,968           | 51,111         | 124,923  | 1,863,924   | 303,083          | 2,353,009 

Note 15.  MANAGEMENT FEES PAYABLE

There are no management fees incurred for six month period ended June 30, 2002

.

Note 16.  RELATED PARTY TRANSACTIONS

a)	The amount of $560,552 represents loans to the Company by related parties as at June 30,
2002, is unsecured, non interest bearing, with no specific terms of repayment.

b)	The principal shareholders offered to all warrant holders to exchange their warrants for
shares held by the principal shareholders pursuant to such ratio so that, with the completion of the
warrant/share exchange, the per share cost of the share/warrant held by the minority shareholder effectively
stands at CAD$0.75 per share.  The share/warrant change became effective as of December 17, 2000.

c)	During the fiscal year ended December 31, 2000, Mr. Xin Chen, Director and Chairman of
Board of Directors of the Company, advanced a total of approximately $5,500,000 on behalf of the
Company. These funds were used in part for purchase of the assets of TZF Jiangsu, and in part for purchase
of all of the issued and outstanding stock of Tian'an Investments Limited, a British Virgin Islands
Corporation (which was completed on December 21, 2000) and part of the payment on the acquisition of
100% issued and outstanding shares of Shenzhen T.Z.F. Network Technologies Co., Ltd.

On December 28, 2000, the Company signed a Debt Settlement Agreement with Mr. Xin Chen.  Mr. Chen
agreed to take 10,000,000 common shares of the Company at a price of CAD$0.75 (US$0.50) per share
to repay $5,000,000 of his loan.  These shares have warrants attached entitling the holder to purchase
additional 10,000,000 common shares of the Company at a price of CAD$1.50 per share until December
28, 2001 (expired), and thereafter, at a price of CAD$2.50 per share until December 28, 2002.

Note 17.  BANK LOANS

Details of bank loans as at June 30, 2002, are as follows:

TZF Jiangsu

As at June 30, 2002, Jiangsu has bank loans, as follows, secured by its assets:

|                                              | Period of Loan    | Principal

Chinese
RMB | Principal

Equivalent to
US $ | Interest
Rate/Monthly
|--------------------------------------------- | ----------------- | ---------------------- | ----------------------------- | ---------------------
|Industries and Commerce
Bank of Jianhu, China | 6/30/02 - 6/30/03 | 8,559,996              | 1,035,066                     | 0.63375%             

Note 18.  LONG-TERM LIABILITIES

a)	The long-term debt of $214,208 represents long-term accounts payable owing by Second Pharmacy,
with payment deferred.

b)	The deferred liabilities of $212,562 for pensions applies to Tianan.

Note 19.  CAPITAL STOCK

Outstanding warrants at June 30, 2002

290,007  warrants to purchase 290,007 common shares exercisable at CAD$1.50 per share until December
17, 2002

10,000,000  warrants to purchase 10,000,000 common shares exercisable at CAD$2.50 per shares until
December 28, 2002.

10,290,007

Note 20.  INCOME TAXES

a)	The most recent Federal Income Tax filing for the Company for the US was for the year ended
December 31, 2000, disclosing no income taxes payable to the US Internal Revenue Service.

b)	The BC Company has filed Federal Income Tax Returns for the years ended December 31, 1999,
2000 and 2001.  To December 31, 2001, the BC Company had a total loss of CAD$1,203 (equivalent to
US$776).  No provision for Canadian Income Taxes is provided for in these consolidated financial
statements as the profit is reduced by the losses brought forward and other costs of the Company.

Note 21.  LEASE OBLIGATIONS - Subsequently terminated (note 28 (b))

a) 	Canon Copier (NP-3825) Lease

On October 1, 1999, the Company entered into a 48 month lease with Dominion Technologies for a Canon
Copier to be used by the Company.  Lease payments are expensed as they are incurred.  Lease obligations
are as follows:

|2002 | CAD$  1,327 
|---- | ------------
|2003 | CAD$     995

b) 	Computer Lease

On October 1, 1999, the Company entered into a 36 month lease with Dominion Technologies for
computer equipment to be used by the Company.  Lease payments are expensed as they are incurred.  Lease
obligations are as follows:

|2002 | CAD$     2,210
|---- | --------------

c)	Vehicle Leases

On July 29, 1999, the Company entered into a 36 month lease with Mercedes-Benz Credit of Canada Inc.
for two vehicles to be used by the Company.  Lease payments are expensed as they are incurred.  Lease
obligations are as follows:

|2002 | CAD$     12,207
|---- | ---------------

- Lease of Premises

The Company entered into a lease for offices on April 26, 1999 with Omnia Overseas Trading Ltd. for
three years for monthly rent and costs of CAD$3,133.51, that commenced on July 1, 1999.

The the last months rent of CAD$4,302 is due at the time of signing.  This amount has been paid and is
recorded as prepaid expense and deposit as at June 30, 2002.

Summary of lease obligations

|Year | CDN$    | Equivalent US$
|---- | ------- | --------------
|2002 | $34,545 | $23,250       
|2003 | 995     | 670           
|     | $35,540 | $23,920       

These lease payments are not capitalized, but are expensed as they are incurred.  All the above leases will
subsequently be terminated by the Company by August 31, 2002.

Note 22.  PENSION AND EMPLOYMENT LIABILITIES

The Company has liabilities which are deferred as at June 30, 2002, for pension, post-employment benefits
or post-retirement benefits in Tianan in the amount of $212,562.  This liability is unchanged from
December 21, 2000.  The parent company and other subsidiary companies, (except for Tianan) do not have
any liabilities for pensions and related costs.

Note 23.  DISTRIBUTORSHIP AGREEMENTS

The Company and/or its subsidiaries entered into various distributorship agreements with independent third
parties to market products of the Company and its subsidiaries.

Note 24.  LAWSUIT

Expediter Sales Ltd. ("Expediter") v. the BC Company

There is a claim filed against the BC Company by Expediter alleging a breach of contract and
misrepresentation.  Expediter is seeking damages for alleged loss of profits, loss of business and goodwill,
misrepresentation, set-up expenses and the alleged wrongful use of Expediter's name, and an injunction
to prevent the BC Company from selling an herbal tea in Canada.  The BC Company terminated the
contract of Expediter for non-performance and has, accordingly, counterclaimed against Expediter for
outstanding debts unpaid by Expediter.  No provision has been made in these financial statements for any
potential costs or contingent assets relating to this matter as the results of the claim and counterclaim are
not determinable at this time.

Note 25.  SALES IN CANADA

The Company maintains a products analysis and quality control system in Canada, for its products to be
distributed, in order to ensure that its products conform to relevant regulatory and health requirements.
Where any products are found not to meet the regulatory requirements, the Company will immediately take
such measures as necessary, or cause such measures to be taken, so that the said regulatory requirements
are complied with.

Note 26.  OPERATIONS OF SUBSIDIARY COMPANIES

Details of the operating figures for the Company and the four subsidiary companies for the six months
ended June 30, 2002, extracted from the applicable financial statements of those companies, are as follows:

|                                  | TZF US
Company | The BC
Company | Tian'an   | TZF
Jiangsu | Shenzhen
TZF Net | Total     
|--------------------------------- | -------------- | -------------- | --------- | ----------- | ---------------- | ----------
|Revenue                           |                |                |           |             |                  |           
|Sales                             | $              | $      6,429   | $470,396  | $1,540,988  | $ 53,856         | $2,071,669
|Cost of sales                     |                | $   22,208     | 196,195   | 977,493     | 29,710           | 1,225,606 
|Gross profit                      |                | (15,779)       | 274,201   | 563,494     | 24,146           | 846,063   
|Other income (expense)            |                | (14,186)       | 7,647     |             |                  | (6,539)   
|                                  |                | (29,965)       | (281,848) | 563,495     | 24,146           | 839,524   
|Selling expenses                  |                |                | 60,000    | 176,541     | 59,581           | 296,122   
|Administrative costs              | 2,380          | 133,164        | 77,068    | 34,237      | 46,561           | 293,410   
|Depreciation                      |                | 6,817          | 73,810    | 159,778     | 9,519            | 249,934   
|Bad debts                         | 8,826          | 592,582        |           |             |                  | 601,408   
|                                  | 11,206         | 732,563        | 210,878   | 370,566     | 115,661          | 1,440,874 
|Profit(Loss)  before
income taxes | (11,206)       | (762,528)      | 70,970    | 192,929     | (91,515)         | (601,350) 
|Income taxes                      |                |                | 1,939     |             |                  | 1,939     
|Net profit (loss)  for the
period | $ (11,206)     | $(762,528)     | $ 69,031  | $192,929    | $(91,515)        | $(603,289)

Note 27  DISTRIBUTION AGREEMENTS

a)	By agreement dated December 15, 2000, effective January 1, 2001, Trophic Canada Ltd. ("the
Supplier"), granted TZF International Investments, Inc. ("TZF") the exclusive right to promote,
distribute, and sell the supplier's products within the "Territory" of China, which includes Hong
Kong, SAR, for a period of five years.  Continuation of this exclusive right is contingent upon
meeting or exceeding the purchase of products for a minimum of CAD$50,000 within the first
distribution year, a minimum of CAD$200,000 within the second distribution year, and increases of
approximately 20% in each of the subsequent distribution years.

The supplier may terminate the distribution agreement if TZF breaches any terms of the agreement,
including but not restricted to the annual sales requirements, if any breaches are not remedied within
three months after written notice.

TZF cannot assign the agreement or subcontract its obligations under the agreement without the
consent in writing of the supplier.  The supplier is an arms length party unrelated to TZF.

b)	By agreement dated June 22, 2001, effective June 22, 2001, Puresource Inc. ("the Supplier")
granted TZF International Investments, Inc. ("TZF") the exclusive right to promote, distribute, and
sell the supplier's products within the "Territory" of China, which includes Hong Kong, SAR, for a
period of five years.  Continuation of this exclusive right is contingent upon meeting or exceeding
the purchase of products for a minimum of US$20,000 within 12 months after the initial Product has
been approved for sale in the Territory by the appropriate Government department.

The supplier may terminate the distribution agreement if TZF breaches any terms of the agreement,
including but not restricted to the annual sales requirements, if any breaches are not remedied within
45 days after written notice.

This agreement shall be renewed for additional successive renewal periods of five year terms upon
written notice by either of the parties, delivered at lease 60 days prior to the expiration of the
preceding period and in any case the Distributor will always have the first choice of renewal.

c)	By agreement dated July 25, 2001 effective July 25, 2001, Flora Manufacturing and Distributing
Ltd. ("the Supplier"), granted TZF International Investments, Inc. ("TZF") the exclusive right to
promote, distribute, and sell the supplier's products within the "Territory" of the Peoples' Republic
of China (excluding Hong Kong and Macao) for a period of three years.  Continuation of this
exclusive right is contingent upon meeting or exceeding the purchase of products for a minimum of
US$50,000 within 12 months after the initial Product has been approved for sale in the Territory by
the appropriate government department and in the next two years thereafter or US$200,000 in the
second year and US$400,000 in the third year.

The supplier may terminate the distribution agreement if TZF breaches any terms of the agreement,
including but not restricted to the annual sales requirements, if any breaches are not remedied within
three months after written notice.

This agreement shall be renewed for additional successive renewal periods of three year terms upon
written notice by either of the parties, delivered at least 60 days prior to the expiration of the
preceding period and, in any case, the Distributor will always have the first choice of renewal.

Note 28.  SUBSEQUENT EVENTS

- Reevaluation of Technology Rights

Subsequent to June 30, 2002, the technology rights have been reevaluated bvy management,
resulting in a write-down of $3,634,406 (CAD$5,400,000) and a return to the treasury of 5,400,000
Class B Common Shares previously issued for this technology.  The vendors of the technology are
to retain 600,000 Class B Common Shares.

- Termination of all Lease TZF Canada Office

In order to reduce operating costs, the Company has subsequently cancelled all leases applicable
to its Canadian office in British Columbia, Canada.

- Cancellation of Founders' Shares

Subsequent to June 30, 2002, the Company is negotiating with the founders for the cancellation of
a portion of their shares.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Statements.

Certain statements in this report, including statements in the following discussion which are not
statements of historical fact, are what are known as "forward looking statements,"which are basically
statements about the future, and which for that reason, involve risk and uncertainty, since no one can
accurately predict the future.  Words such as "plans," "intends," "will," "hopes," "seeks,"
"anticipates," "expects," "goal" and "objective" often identify such forward looking statements, but
are not the only indication that a statement is a forward looking statement.  Such forward looking
statements include statements of our plans and objectives with respect to the present and future
operations of the Company, and statements which express or imply that such present and future
operations will or may produce revenues, income or profits.  Numerous factors and future events
could cause the Company to change such plans and objectives, or fail to successfully implement such
plans or achieve such objectives, or cause such present and future operations to fail to produce
revenues, income or profits.  Therefore, the reader is advised that the following discussion should be
considered in light of the discussion of risks and other factors contained in this Form 10QSB and in
the Company's other filings with the Securities and Exchange Commission, and that no statements
contained in the following discussion or in this Form 10QSB should be construed as a guarantee or
assurance of future performance or future results.

The following discussion and analysis should be read in combination with our consolidated
financial statements included in Item 8 of this Form.

We are a manufacturer and distributor of Chinese herbal medicine products.

In this section we discuss our results of operations on a consolidated basis.  We also discuss our
liquidity, and capital resources.

1.	Financial Condition

|                                      | June 30,   
|------------------------------------- | -----------
|                                      | 2002       
|Current assets                        | $ 7,208,293
|Property, plant and equipment         | 6,716,585  
|Goodwill, intangible assets and other | 5,331,663  
|Consolidated assets                   | $19,256,542

TZF's consolidated assets decreased $4,105,846 from 2001 to 2002, reflecting mainly a decrease
in current assets of $4,403,681.  Current liabilities decreased by approximately $2 million.

The Company has deferred liabilities of $212,562 in its Tianan subsidiary for pension and related
benefits that were accumulated to December 21, 2000, the date of acquisition, and unchanged to
June 30, 2002.  There are no additional unfunded pension and related benefit liabilities at June 30,
2002.

The TZF debt-to-total-capital ratio was 23% at June 30, 2002 versus 27% at June 30, 2001,
assuming that the deferred liabilities are treated as debt.  Accordingly, the debt-to-total-capital
ratio is calculated defining "debt" as short term borrowing (current liabilities), long term debt and
deferred liabilities.  Total capital is defined as debt, plus stockholders' equity.

2.Liquidity and capital resources

|                | June 30,   
|--------------- | -----------
|                | 2002       
|Working capital | $ 3,259,666

Working capital, represented by current assets less current liabilities, decreased in the second
quarter of 2002 by $852,126 as compared to an increase of $1,177,874 in the second quarter of
2001. The TZF working capital ratio was 1.8:1 at June 30, 2002 and 1.9:1 at June 30, 2001.

The decrease in working capital in the second quarter of 2002 is due mainly to expenditures on
property, plant and equipment of $350,224 and a loss on operations of $624,030.

The quick ratio represented by the total of cash and cash equivalents and accounts receivable,
versus total current liabilities (excluding amounts due to related parties), was 0.96:1 at June 30,
2002 and 1.2:1 at June 30, 2001.

3.	Operating activities

|                                     | Quarter Ended June 30,
|------------------------------------ | ----------------------
|                                     | 2002                  
|Cash flows from operating activities | $ 763,842             

Cash flow for the quarter ended June 30, 2002 was used mainly in the acquisition of fixed assets
of $350,224 and reduction in debt of $789,709.  The loan from related parties was increased by
$245,846 during the quarter.  Cash decreased by $130,245 during the quarter, from $389,436 at
March 31, 2002 to $259,191 at June 30, 2002.

Cash flow for the comparative quarter ended June 30, 2001 was $305,882 from operations,
$74,366 from investing activities, and $386,440 received from financing activities.  Cash
increased by $766,688 during the quarter, from $866,922 at March 31, 2001, to $1,633,610 at
June 30, 2001.

The Company has four subsidiary companies.  Details of the consolidated operating figures for the
Company and the four subsidiary companies for the six months ended June 30, 2002, compared to
the six months ended June 30, 2001 extracted from the applicable financial statements of those
companies, are as follows:

Quarter #2 - Six months ended June 30, 2002

|                                  | TZF US
Company | The BC
Company | Tian'an   | TZF
Jiangsu | Shenzhen
TZF Net | Total     
|--------------------------------- | -------------- | -------------- | --------- | ----------- | ---------------- | ----------
|Revenue                           |                |                |           |             |                  |           
|Sales                             | $              | $      6,429   | $470,396  | $1,540,988  | $ 53,856         | $2,071,669
|Cost of sales                     |                | $   22,208     | 196,195   | 977,493     | 29,710           | 1,225,606 
|Gross profit                      |                | (15,779)       | 274,201   | 563,494     | 24,146           | 846,063   
|Other income (expense)            |                | (14,186)       | 7,647     |             |                  | (6,539)   
|                                  |                | (29,965)       | (281,848) | 563,495     | 24,146           | 839,524   
|Selling expenses                  |                |                | 60,000    | 176,541     | 59,581           | 296,122   
|Administrative costs              | 2,380          | 133,164        | 77,068    | 34,237      | 46,561           | 293,410   
|Depreciation                      |                | 6,817          | 73,810    | 159,778     | 9,519            | 249,934   
|Bad debts                         | 8,826          | 592,582        |           |             |                  | 601,408   
|                                  | 11,206         | 732,563        | 210,878   | 370,566     | 115,661          | 1,440,874 
|Profit(Loss)  before
income taxes | (11,206)       | (762,528)      | 70,970    | 192,929     | (91,515)         | (601,350) 
|Income taxes                      |                |                | 1,939     |             |                  | 1,939     
|Net profit (loss)  for the
period | $ (11,206)     | $(762,528)     | $ 69,031  | $192,929    | $(91,515)        | $(603,289)

Quarter #2 - Six months ended June 30, 2001

|                         | TZF US
Company | The BC
Company | Tian'an   | TZF
JiangSu | Shenzhen
TZF Net | Total     
|------------------------ | -------------- | -------------- | --------- | ----------- | ---------------- | ----------
|Revenue                  |                |                |           |             |                  |           
|Sales                    | $146,234       | $1,206,677     | $ 489,199 | $ 625,996   | $3,629,817       | $6,097,923
|Cost of sales            | 38,056         | 683,344        | 212,533   | 417,160     | 2,863,485        | 4,214,578 
|Gross profit             | 108,178        | 523,333        | 276,666   | 208,836     | 766,332          | 1,883,345 
|Selling expenses         |                | 16,509         | 45,836    | 79,177      | 27,466           | 168,988   
|                         | 108,178        | 506,824        | 230,830   | 129,659     | 738,866          | 1,714,357 
|Other income             | 70             | 2,306          | 65,683    | 121,827     | 70,360           | 260,246   
|                         | 108,248        | 509,130        | 296,513   | 251,486     | 809,226          | 1,974,603 
|Administrative costs     | 43,079         | 317,588        | 81,853    | 98,001      | 100,850          | 641,341   
|Amortization of
goodwill |                |                | 3,680     |             | 26,484           | 30,164    
|Depreciation             |                | 8,606          | 74,544    |             | 1,474            | 84,624    
|                         | 43,079         | 326,164        | 160,077   | 98,001      | 128,808          | 756,129   
|Profit (loss) before     | 65,169         | 182,966        | 136,436   | 153,485     | 680,418          | 1,218,474 
|Income taxes             |                |                | 21,017    |             | 190,536          | 211,553   
|                         | 65,169         | 182,966        | 115,419   | 153,485     | 489,882          | 1,006,921 
|Minority Interest        |                |                |           |             | 36,129           |           
|**Net Profit (loss)**    | $ 65,169       | $182,966       | $ 115,419 | $153,485    | $453,753         | $970,792  

Consolidated Net Profit

The consolidated net loss was $624,030 for the quarter ended June 30, 2002 versus a net profit of
$740,920 for the quarter ended June 30, 2001.

Consolidated Revenue

Sales decreased to $1,022,919 for the quarter ended June 30, 2002.  A reduction of approximately
79% versus sales of $4,811,377 for the quarter ended June 30, 2001.  Gross profit, as a percentage
of sales (excluding other income) was 46% for the quarter ended June 30, 2002 versus 28% for
the quarter ended June 30, 2001.

Goodwill and intangible assets

The goodwill will be evaluated on a continuous basis as to any possible impairment.  In the opinion
of management, the operations of Tianan justify the goodwill of $147,177.  Shenzhen is expected by
management to attain earnings to continue to justify goodwill of Shenzhen of $1,059,377.  Other
intangible assets, represented by deferred costs and technology rights, that total $4,125,109, will also
continue be evaluated periodically, in subsequent reporting periods.

4.Investing activities

|                                                       | Quarter Ended June 30,
|------------------------------------------------------ | ----------------------
|                                                       | 2002                  
|Cash flows provided by (used for) investing activities | $ (350,224)           

Funds were invested in the purchase of fixed assets of $350,224 for the quarter ended June 30, 2002,
and $260,283 for the quarter ended June 30, 2001.

5.	Financing activities

|                                                       | Quarter Ended June 30,
|------------------------------------------------------ | ----------------------
|                                                       | 2002                  
|Cash flows provided by (used for) financing activities | $ (543,863)           

Financing activities for the quarter ended June 30, 2002, reflect the repayment of long term debt of
$40,011, reduction in bank loans by $749,698, and increase in loans from related parties of $245,846.
Financing activities for the quarter ended June 30, 2001 reflect in increase in the bank loans by
$338,573.

6.	Capital requirements

TZF has current bank loans of $1,035,066 at June 30, 2002 versus $1,917,775 at June 30, 2001.

TZF JiangSu property, plant, and equipment is still in progress at June 30, 2002.  Certificate of
Completion of Construction is expected in the latter part of 2002.

At June 30, 2002, TZF management expects no further major capital expenditures to be incurred for
the balance of 2002.

PART II

ITEM 1.	LEGAL PROCEEDINGS

Expediter Sales Ltd. ("Expediter") v. the BC Company

There is a claim filed against the BC Company by Expediter alleging a breach of contract and
misrepresentation.  Expediter is seeking damages for alleged loss of profits, loss of business and
goodwill, misrepresentation, set-up expenses and the alleged wrongful use of Expediter's name, and
an injunction to prevent the BC Company from selling an herbal tea in Canada.  The BC Company
terminated the contract of Expediter for non-performance and has, accordingly, counterclaimed
against Expediter for outstanding debts unpaid by Expediter.  No provision has been made in these
financial statements for any potential costs or contingent assets relating to this matter as the results
of the claim and counterclaim are not determinable at this time.

ITEM 2.  	CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  	DEFAULTS UPON SENIOR SECURITIES

None.

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

No matters were submitted to a vote of the security holders of the Company during the third
quarter ending June 30, 2002.

ITEM 5.	OTHER INFORMATION

None.

ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K.

(a)	Exhibits 99.1 and 99.2**,** CEO AND CFO CERTIFICATION PURSUANT TO 18
U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002****are filed herewith.

(b)	No reports on Form 8-K were filed during the quarter ended June 30, 2002.

******SIGNATURES**

In accordance with the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

**T.Z.F. INTERNATIONAL INVESTMENTS, INC.**

By:/S/ CHUNG YU

Chung Yu, President, Chief Executive Officer, and a Director

By: /S/ XIN CHEN

Xin Chen, Chairman of the Board

By: /S/ HONG LI

Hong Li, a Director

By: /S/ CHUN SHENG GUO

Chun Sheng Guo, a Director

By: /S/ QING LIU

Qing Liu, Vice President and a Director

Date:	August 19, 2002



Exhibit 99.1**T.Z.F. INTERNATIONAL INVESTMENTS, INC.**.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of T.Z.F. International Investments, Inc. (the "Company")
on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Chung Yu, Chief Executive Officer and a Director
of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

By:/S/ CHUNG YU

Chung Yu, President, Chief Executive Officer, and a Director
Date: August 19, 2002

Exhibit 99.2**T.Z.F. INTERNATIONAL INVESTMENTS, INC.**

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of T.Z.F. International Investments, Inc. (the "Company")
on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Xin Chen, Chairman, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.



By: /S/ XIN CHEN

Xin Chen, Chairman of the Board
Date: August 19, 2002