UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-KSB

(x)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended                June 30, 2001
                          ------------------------------------------------------

( )  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from             to
                               -----------    -----------

Commission File number      0-30927
                       ------------------

                               VANSTAR FILMS, INC,
              ----------------------------------------------------
               (Exact name of registrant as specified in charter)

                   Nevada                                  98-0209053
--------------------------------------------       --------------------------
State or other jurisdiction of incorporation       (I.R.S. Employer I.D. No.)
or organization

1895 26th Street, West Vnacouver, BC, Canada                           V7V 4K2
---------------------------------------------------    ------------------
(Address of principal executive offices)                  (Zip Code)

Issuer's telephone number, including area code      1-604-482-0111
                                               --------------------------

Securities registered pursuant to section 12 (b) of the Act:

Title of each class                    Name of each exchange on which registered


       None                                             None
-------------------                   ------------------------------------------


Securities registered pursuant to section 12 (g ) of the Act:

                                      None
           ----------------------------------------------------------
                                (Title of Class)

Check whether the Issuer (1 ) filed all reports  required to be filed by section
13 or 15 (d) of the  Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing  requirements  for the past 90 days.

   (1) Yes [ ] No [ x ]                    (2) Yes [x] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]


                                       -1-

<PAGE>



State issuer's revenues for its most recent fiscal year:  $    0
                                                           ----------

State the aggregate  market value of the voting stock held by non  affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold,  or the average bid and asked  prices of such
stock,  as of a specified  date within the past 60 days.  At June 30, 2001,  the
aggregate   market  value  of  the  voting  stock  held  by  non  affiliates  is
undeterminable  and is  considered  to be 0. During the past two years there has
been no trading on an exchange  however there has been  over-counter-trading  in
small  quantities  and therefore the  Registrant  has  arbitrarily  valued these
shares with no value.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

                                 Not applicable

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

As of June 30, 2001, the registrant had 4,951,500  shares of common stock issued
and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the part
of the form 10- KSB (e.g.,  part I, part II,  etc.) into which the  document  is
incorporated:  (1) Any annual report to security holders; (2) any proxy or other
information statement;  and (3) Any prospectus filed pursuant to rule 424 (b) or
(c) under the Securities Act of 1933: None



                                       -2-

<PAGE>

<TABLE>
<CAPTION>



                                     TABLE OF CONTENTS

------------------------------------------------------------------------------------------------
<S>           <C>                                                                     <C>

PART I
                                                                                       Page

ITEM 1.        DESCRIPTION OF BUSINESS                                                   4

ITEM 2.        DESCRIPTION OF PROPERTIES                                                 4

ITEM 3.        LEGAL PROCEEDINGS                                                         4

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


PART II

ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                  4


ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                 5

ITEM 7.        FINANCIAL STATEMENTS                                                      5

ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
               AND FINANCIAL DISCLOSURE                                                  5


PART III

ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
               COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT                        5

ITEM 10.       EXECUTIVE COMPENSATION                                                    7

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT            8

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                            8


ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K                                          9
</TABLE>

                                       -3-

<PAGE>



--------------------------------------------------------------------------------
                         ITEM 1. DESCRIPTION OF BUSINESS
--------------------------------------------------------------------------------


History and Organization

Vanstar Films, Inc. (the  "Registrant" or the "Company") was incorporated  under
the laws of the State of Nevada on July 8, 1997 with authorized  common stock of
50,000,000 shares at $.001 par value and 10,000,000 shares of preferred stock at
$.001 par value.  The preferred stock will have rights and preferences as may be
determined by the Board of Directors when issued.

The  Company  was  organized  for the  purpose to develop a business in the film
industry. On September 7, 2001 the Company's officers and directors resigned and
appointed  new officers and  directors.  The new  management  has  abandoned any
efforts in the film industry and is in the process of evaluating a new direction
for the Company.

--------------------------------------------------------------------------------
                        ITEM 2. DESCRIPTION OF PROPERTIES
--------------------------------------------------------------------------------


The Registrant's administrative offices are located at 1895 26th Street, West
Vancouver, BC Canada, V&V 4K2.

--------------------------------------------------------------------------------
                            ITEM 3. LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

                                      None

--------------------------------------------------------------------------------
          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
--------------------------------------------------------------------------------

                                      None
--------------------------------------------------------------------------------
        ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------


During the year  through  June 30,  2001 there has been no  established  trading
market for the shares of the Registrant's  common stock over an exchange however
the stock has been trading  over-the-counter  in small  quantities.  The trading
amounts for a share of stock for the year are listed below by quarter:


                                 2000                             2001
                             Low     High                     Low      High
     First                   .55     .88                      .30      .63
     Second                  .51     .70                      .04      .40
     Third                   .51    1.00                      .04      .18
     Fourth                  .12    .85                       .05      .15



                                       -4-

<PAGE>



During the last fiscal year the  Registrant  did not issue any common shares of
Its capital. Since its inception,  the Company has not paid any dividends on its
Common stock,  and the Company does not  anticipate  that it will pay  dividends
in the foreseeable   future.  At  June  30,  2001  the  Company  had
approximately  77 shareholders.

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


Overview

From its inception in July , 1997 the Registrant attempted to develop a
film production business but without any success. Over the past four years the
Company never managed to enter into any agreements nor did it ever
commence to produce any films.

On September 7, 2001 all existing officers and directors resigned and new
officers and directors were appointed. The new Board has abandoned efforts
directed toward the film industry and is now in the process of evaluating a
new business for the company.


Results of Operations

The Company has not yet started operations and consequently has no revenues.  It
had  administrative  expenses  totaling $70,360 for the year ended June 30, 2001
compared to $37,114 for the prior year.

--------------------------------------------------------------------------------
                          ITEM 7. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


The financial statements of the Company are included  immediately  following the
signature page to this form 10-KSB.

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


The Company has had no disagreements  with its certified public accountants with
respect to accounting practices or procedures of financial disclosure.

--------------------------------------------------------------------------------
        ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
           PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
--------------------------------------------------------------------------------


The following table as of June 30, 2001, includes the name, age, and position of
each  executive  officer and director and the term of office of each director of
the Company.

Name               Age     Position                        Director and/or
----               ---     --------                         Officer Since
                                                            -------------
John Curry         55      President  and Director            September 2001

David Raffa        43      Secretary and Director             September 2001

Ron Voyer          45      Director                           September 2001


                                      -5-
<PAGE>

Each  director  of the  Company  serves  for a term of one  year and  until  his
successor  is elected  at the  Company's  annual  shareholders'  meeting  and is
qualified,  subject to  removal  by the  Company's  shareholders.  Each  officer
serves,  at the pleasure of the board of  directors,  for a term of one year and
until his  successor is elected at the annual  meeting of the board of directors
and is qualified.

Included  below  is  certain  biographical  information  regarding  each  of the
Company's executive officers and directors.

John Curry
-------------

President and Director is a chartered  accountant and experienced  entrepreneur.
He is a founding partner (retired) in Bedford Curry,  Chartered  Accountants,  a
mid size firm in Vancouver.  John is also a Director of WaveRider (NASDAQ: WAVC)
and Voice Mobility (TSE:  VMY,  OTCBB:  VMII and FWB: VMY). Mr. Curry resides at
1895 26th Street, West Vancouver, British Columbia, Canada.

David Raffa
-------------

Secretary  and  Director,  Mr. Raffa is a partner and COO of Catalyst  Corporate
Finance  Lawyers  which is a law  firm in  Vancouver  focused  on  building  and
financing  young  technology  companies.  David also has expertise in matters of
corporate  governance  and all matters  relating to  structuring  and  operating
Boards. David is also a Director of two other public companies that trade on the
Canadian CDNX:  Brightwave  Ventures Inc.  CDNX: BW and Duran Gold  Corporation.
CDNX:  DRN. Mr. Raffa resides at 1050 Carnaby Place,  North  Vancouver,  British
Columbia.

Ron Voyer
------------

A Director and a partner in  BlairCrossonVoyer an accounting firm specialized in
providing taxation,  valuation and litigation support services whose clients are
lawyers,  accountants and government agencies. Ron is also a Director of Emercap
Ventures  Inc. ( CDNX:  ECV) .Mr.  Voyer  resides  at, 2626  Lawson  Ave.,  West
Vancouver, British Columbia, Canada.

Except as indicated below, to the knowledge of management,  during the past five
years, no present or former director,  executive  officer or person nominated to
become a director or an executive officer of the Company:

(1) filed a petition under the federal  bankruptcy laws or any state  insolvency
law, nor had a receiver,  fiscal agent or similar  officer  appointed by a court
for the business or property of such person,  or any partnership in which he was
a general partner at or within two years before the time of such filing;

(2) was  convicted  in a  criminal  proceeding  or named  subject  of a  pending
criminal proceeding (excluding traffic violations and other minor offenses);

(3) was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated,  of any court of competent  jurisdiction,  permanently  or
temporarily enjoining him from or otherwise limiting, the following activities:

              (i) acting as a futures commission  merchant,  introducing broker,
              commodity trading advisor,  commodity pool operator, floor broker,
              leverage  transaction  merchant,  associated  person of any of the
              foregoing,  or as an investment  advisor,  underwriter,  broker or
              dealer in  securities,  or as an  affiliate  person,  director  or
              employee of any investment  company,  or engaging in or continuing
              any conduct or practice in connection with such activity;

              (ii)  engaging in any type of business practice; or

              (iii) engaging in any activity in connection  with the purchase or
              sale of any  security  or  commodity  or in  connection  with  any
              violation  of  federal  or  state   securities   laws  or  federal
              commodities laws;

(4)  was the  subject  of any  order,  judgment,  or  decree,  not  subsequently
reversed,  suspended,  or vacated,  of any federal or state  authority  barring,
suspending or otherwise  limiting for more than 60 days the right of such person
to engage in any activity  described  above under this Item, or to be associated
with persons engaged in any such activity;


                                      -6-
<PAGE>

(5) was found by a court of competent  jurisdiction  in a civil action or by the
Securities  and  Exchange  Commission  to have  violated  any  federal  or state
securities  law,  and the  judgment  in such  civil  action  or  finding  by the
Securities  and  Exchange   Commission  has  not  been  subsequently   reversed,
suspended, or vacated.

(6) was found by a court of competent  jurisdiction  in a civil action or by the
Commodity  Futures Trading  Commission to have violated any federal  commodities
law, and the judgement in such civil action or finding by the Commodity  Futures
Trading Commission has not been subsequently reversed, suspended or vacated.

                Compliance with Section 16(a) of the Exchange Act

The Company  knows of no person,  who at any time during the  subsequent  fiscal
years, was a director, officer, beneficial owner of more than ten percent of any
class of equity securities of the registrant  registered  pursuant to Section 12
("Reporting Person"), that failed to file on a timely basis any reports required
to be furnished pursuant to Section 16 (a).

Based  upon a review of Forms 3 and 4  furnished  to the  registrant  under Rule
16a-3(d)  during its most recent fiscal year,  other than disclosed  below,  the
registrant knows of no Reporting Person that failed to file the required reports
during the most recent fiscal year or prior years.

The following table as of June 30, 2001,  includes the name and position of each
Reporting  Person  that failed to file on a timely  basis any  reports  required
pursuant to Section 16(a) during the most recent fiscal year or prior years.

Name                         Position                         Report to be Filed

Louis Tardif                 President  and Director                 Form 3
Marvin Wideen                Vice President and Director             Form 3
Grant Curran                 Secretary and Director                  Form 3


--------------------------------------------------------------------------------
                         ITEM 10. EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------


Cash Compensation

None


Bonuses and Deferred Compensation

None.


Compensation Pursuant to Plans

None.


Pension Table

None.


Other Compensation

A fee due to a consultant for investor  relations  services and expenses  during
1999 and 2000 totaling $59,500 was recorded during the year.


Compensation of Directors

During the year  remuneration  has been  accrued to an officer and  director for
accounting services over the past four years for a total of $20,000.



                                       -7-

<PAGE>

Termination of Employment and Change of Control Arrangement

There  are no  compensatory  plans or  arrangements,  including  payments  to be
received from the Company, with respect to any person named in Cash Compensation
set out above  which  would in any way  result in  payments  to any such  person
because of his resignation,  retirement,  or other  termination of such person's
employment with the Company or its subsidiaries, or any change in control of the
Company,  or a change in the person's  responsibilities  following a changing in
control of the Company.

--------------------------------------------------------------------------------
     ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------


The following  table as of June 30, 2000,  includes the name and address and the
number of shares of the Company's Common Stock, par value $0.001 per share, held
of record or beneficially by each person who held of record, or was known by the
Company  to  own  beneficially,  more  than  5%  of  the  4,951,500  issued  and
outstanding  shares  of the  Company's  Common  Stock,  and the name  and  share
holdings of each director and of all officers and directors as a group.



                                   Nature of          Number of
Name of Person or Group            Ownership (1)      Shares Owned    Percent
-----------------------            --------------     ------------    -------
Officers and Directors and
  Principal Shareholders:

Louis Tardif                        Direct              1,858,500       37
Marvin Wideen                       Direct                 40,000        -
Grant Curran                        Direct                 15,000        -

All Officers and Directors
  as a Group (3 persons)            Direct              1,913,500       37

Ann Huber, 4136 Almondel Ct         Direct                752,458       15
West Vancouver, BC, Canada

(1)  All shares owned directly are owned  beneficially  and of record,  and such
     shareholder  has sole voting,  investment,  and dispositive  power,  unless
     otherwise noted.



--------------------------------------------------------------------------------
             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------


Transactions with Management and Others

Except as indicated below, and for the periods indicated, there were no material
transactions,  or series of similar  transactions,  since the  beginning  of the
Company's last fiscal year, or any currently proposed transactions, or series of
similar  transactions,  to which the Company was or is to be party, in which the
amount involved exceeds $60,000, and in which any director or executive officer,
or any  security  holder  who  is  known  by the  Company  to own of  record  or
beneficially  more than 5% of any class of the Company's  common  stock,  or any
member of the immediate family of any of the foregoing persons, has an interest.


                                      -8-
<PAGE>

Indebtedness of Management

There were no material  transactions,  or series of similar transactions,  since
the  beginning of the  Company's  last fiscal year,  or any  currently  proposed
transactions,  or series of similar transactions, to which the Company was or is
to be a party,  in which the amount  involved  exceeds  $60,000 and in which any
director  or  executive  officer,  or any  security  holder  who is known to the
Company  to own of  record  or  beneficially  more  than 5% of any  class of the
Company's  common  stock,  or any member of the  immediate  family of any of the
foregoing persons, has an interest.


Transactions with Promoters

A fee due to a consultant for investor  relations  services and expenses  during
1999 and 2000 totaling $59,500 was recorded during the year.

--------------------------------------------------------------------------------
                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------


(a)(1) Financial  Statements.  The following financial statements are included
       in this report:

Title of Document                                                           Page

Report of Andersen, Andersen & Strong, Certified Public Accountants           13

Balance Sheet as of June 30, 2001                                             14

Statements of Operations for years ended June 30, 2001 and 2000               15
    and from inception

Statements of Stockholders' Equity for the period July 8, 1997
    to June 30, 2001                                                          16

Statements of Cash Flows for the years ended June 30, 2001 and 2000           17
   and from inception

Notes to Financial Statements                                                 18


(a)(2)  Financial  Statement   Schedules.   The  following  financial  statement
     schedules are included as part of this report: None

(a)(3)  Exhibits.

 None








                                      -9-

<PAGE>



--------------------------------------------------------------------------------
                                   SIGNATURES
--------------------------------------------------------------------------------


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this  report  has been  signed  below by  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:


                                           VANSTAR  FILMS,  INC.


Date: October 9, 2001               By  /s/ John Curry
                                    --------------------------------------------
                                    John Curry,  President and Director


Date: October 9, 2001                By  /s/ David Raffa
                                     -------------------------------------------
                                     Secretary and Director










                                      -10-

<PAGE>



ANDERSEN ANDERSEN & STRONG, L.C.
Certified Public Accountants and Business Consultants

                                                  941 East 3300 South, Suite 202
                                                      Salt Lake City, Utah 84106
                                                          Telephone 801 486-0096
                                                                Fax 801 486-0098



Board of Directors
Vanstar Films, Inc.
Vancouver, B.C.


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We  have  audited  the  accompanying  balance  sheets  of  Vanstar  Films,  Inc.
(development stage company) at June 30, 2001 , and the statements of operations,
stockholders'  equity, and cash flows for the years ended June 30, 2001 and 2000
and the  period  July 8,  1997  (date  of  inception)  to June 30,  2001.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Vanstar Films, Inc. at June 30,
2001, and the results of operations, and cash flows for the years ended June 30,
2001 and 2000 and the period July 8, 1997 (date of  inception) to June 30, 2001,
in conformity with accounting principles generally accepted in the United States
of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  The Company does not have  sufficient
working capital to service its debt and for its planned  activity,  which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in  regard to these  matters  are  described  in Note 4.  These  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.



Salt Lake City, Utah
October 4, 2001                                   s/Andersen Andersen and Strong


                                      -11-
<PAGE>

                               VANSTAR FILMS, INC.
                          ( Development Stage Company)
                                  BALANCE SHEET
                                  June 30, 2001

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



ASSETS
CURRENT ASSETS

   Cash                                                               $     520
                                                                      ---------

   Total Current Assets                                               $     520
                                                                      =========



LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

    Accounts payable - related parties                                $  27,793
   Accounts payable                                                      42,957
                                                                      ---------

       Total Current Liabilities                                         70,750
                                                                      ---------

STOCKHOLDERS' EQUITY

    Preferred Stock
       10,000,000 shares authorized at $0.001 par
       value; none issued and outstanding                                  --

   Common stock
        50,000,000 shares authorized  at $0.001 par value;
        4,951,500 shares issued and outstanding                           4,952

   Capital in excess of par value                                       155,799
   Translation adjustment                                                  (344)
    Deficit accumulated during the development stage                   (230,637)
                                                                      ---------

       Total Stockholders' Deficiency                                   (70,230)
                                                                      ---------

                                                                      $     520
                                                                      ==========
   The accompanying notes are an integral part of these financial statements.


                                      -12-
<PAGE>
<TABLE>
<CAPTION>

                                         VANSTAR FILMS INC.
                                    ( Development Stage Company)
                                      STATEMENTS OF OPERATIONS
                     For the Years Ended June 30, 2001 and 2000 and the Period
                         July 8, 1997 (Date of Inception) to June 30, 2001

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


                                                                                    July 8, 1997
                                                     June 30        June 30      (Date of Inception) to
                                                      2001           2000           June  30, 2001
                                                   -----------    -----------        -----------
<S>                                                <C>            <C>              <C>
REVENUES                                           $      --      $      --          $       136

EXPENSES                                                64,333         36,697            230,773
                                                   -----------    -----------        -----------

NET LOSS                                               (64,333)       (36,697)          (230,637)

COMPREHENSIVE LOSS

   Gain (loss) from foreign currency translation         1,621           (417)              (344)
                                                   -----------    -----------        -----------

NET COMPREHENSIVE LOSS                             $   (62,712)   $   (37,114)       $  (230,981)
                                                   ===========    ===========        ===========


NET LOSS PER COMMON
   SHARE

       Basic                                       $      (.01)   $      (.01)
                                                   -----------    -----------




AVERAGE OUTSTANDING
   SHARES


         Basic                                       4,951,500      4,918,500
                                                   -----------    -----------






   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      -13-
<PAGE>
<TABLE>
<CAPTION>

                                         VANSTAR FILMS, INC.
                                    ( Development Stage Company)
                            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                            Period from July 8, 1997 (Date of Inception)
                                          to June 30, 2001

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


                                                        Common Stock          Capital in
                                                   ------------------------   Excess of    Accumulated
                                                     Shares        Amount     Par Value      Deficit
                                                   ----------   -----------   -----------  -----------
<S>                                                <C>          <C>           <C>          <C>
Balance July 8,  1997 (date of inception)               --      $     --      $     --     $     --

Issuance of common stock for cash at               2,315,000         2,315        19,900         --
    $.0088 - July 10, 1997
Issuance of common stock for cash at
    $.0089 - Sept 18, 1997                         2,301,000         2,301        19,900         --
Issuance of common stock for cash at
    $.001 - Sept 30, 1997                             86,000            86          --           --
Issuance of common stock for cash at
    $.27 - Jan 2, 1998                               107,500           108        31,392         --
Issuance of common stock for cash at
   $.37 - April 20, 1998                              50,000            50        19,950         --
Net operating loss  for the year ended
    June 30, 1998                                       --            --            --        (96,716)
Issuance of common stock for cash at                  70,000            70        20,930         --
   $.31 - Sept 15, 1998
Cancellation of common stock -
    December  9, 1998                                (44,000)          (44)         --
Contributions to capital by officers - expenses         --            --           9,655         --
Net operating loss for the year
   ended  June 30, 1999                                 --            --            --        (32,891)
                                                   ----------   -----------   -----------  -----------
Balance June 30, 1999                              4,885,500         4,886       121,727     (129,607)

Issuance of common stock for cash at $1.49 -
   September and October 1999                         16,000            16        23,812         --
Issuance of common stock for cash at $.21 -
   March 9, 2000                                      50,000            50        10,260         --
Net operating loss for the year ended
   June 30, 2000                                        --            --            --        (36,697)
                                                   ----------   -----------   -----------  -----------
Balance June 30, 2000                              4,951,500         4,952       155,799     (166,304)

Net operating loss for the year ended
   June 30, 2001                                        --            --            --        (64,333)

                                                   ----------   -----------   -----------  -----------
Balance June 30, 2001                              4,951,500    $    4,952    $  155,799   $ (230,637)
                                                  ==========    ==========    ==========   ==========




   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      -14-
<PAGE>
<TABLE>
<CAPTION>


                                     VANSTAR FILMS, INC.
                                 ( Development Stage Company)
                                   STATEMENT OF CASH FLOWS
                      For the Years Ended June 30, 2001 and 2000 and the
                   Period July 8, 1997 (Date of Inception) to June 30, 2001

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


                                                                                   July 8, 1997
                                                      June 30      June 30     (Date of Inception)
                                                        2001        2000         to June 30, 2001
                                                     ---------    ---------     -----------------
<S>                                                  <C>          <C>            <C>
CASH FLOWS FROM
   OPERATING ACTIVITIES

   Net loss                                          $ (64,333)   $ (36,697)       $(230,637)

   Adjustments to reconcile net loss to
       net cash provided by operating
       activities

          Changes  in accounts payable                  62,223        3,002           70,750
          Conributions to capital - expenses              --           --              9,655
          Foreign currency translations                  1,621         (417)            (344)


          Net Decrease in Cash From Operations            (489)     (34,112)        (150,576)
                                                     ---------    ---------        ---------

CASH FLOWS FROM INVESTING
   ACTIVITIES
                                                          --           --               --
                                                     ---------    ---------        ---------

CASH FLOWS FROM FINANCING
   ACTIVITIES

          Proceeds from issuance of common stock          --         34,138          151,096
                                                     ---------    ---------        ---------

   Net Increase (Decrease)  in Cash                       (489)          26              520

   Cash at Beginning of Period                           1,009          983             --
                                                     ---------    ---------        ---------

   Cash at End of Period                             $     520    $   1,009        $     520
                                                     =========    =========        =========








   The accompanying notes are an integral part of these financial statements.

</TABLE>

                                      -15-
<PAGE>



                               VANSTAR FILMS, INC.
                          ( Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

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


1. ORGANIZATION

The  Company was  incorporated  under the laws of the State of Nevada on July 8,
1997 with  authorized  common stock of 50,000,000  shares at $.001 par value and
10,000,000 shares of preferred stock at $.001 par value.

The preferred stock will have rights and preferences as may be determined by the
Board of Directors when issued.

The  Corporation  was organized  for the purpose of  conducting  business in the
field of the  production  of films for the  theater and  television  and related
services  however  during the current year the Company  abandoned any efforts in
the film industry and is seeking other opportunities.

The Company has been in the development stage since inception.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods
------------------

The  Company  recognizes  income and  expenses  based on the  accrual  method of
accounting.


Dividend Policy
---------------

The Company has not yet adopted a policy regarding payment of dividends.


Income Taxes
------------

On June 30,  2001,  the  Company  had a net  operating  loss carry  forward of $
230,637.  The tax benefit of  approximately  $69,191 from the loss carry forward
has been fully offset by a valuation  reserve  because the use of the future tax
benefit is  undeterminable  since the Company has no  operations.  The operating
loss expires in 2022.


Basic and Diluted Net Income (Loss) Per Share
---------------------------------------------

Basic net income  (loss) per share  amounts are  computed  based on the weighted
average  number of shares  actually  outstanding.  Diluted net income (loss) per
share amounts are computed  using the weighted  average  number of common shares
and common  equivalent  shares  outstanding  as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes  antidilutive
and then only the basic per share amounts are shown in the report.






                                      -16-
<PAGE>


                               VANSTAR FILMS, INC.
                          ( Development Stage Company)
                    NOTES TO FINANCIAL STATEMENTS (Continued)

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


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments
---------------------

The  carrying  amounts of  financial  instruments,  including  cash and accounts
payable, are considered by management to be their estimated fair values.


Comprehensive Income
--------------------

The Company  adopted  Statement of Financial  Accounting  Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity.


Recent Accounting Pronouncements
--------------------------------

The  Company  does not  expect  that the  adoption  of other  recent  accounting
pronouncements will have a material impact on its financial statements.


Foreign Currency Translation
----------------------------

The  transactions  of the Company were  completed in Canadian  currency which is
considered to be the  functional  currency.  For reporting  purposes the balance
sheet  accounts  have been  translated  to US currency at the  exchange  rate in
effect at the time,  and the  operating  accounts at the average rates in effect
during the year. The gain or loss is shown under the comprehensive loss.


Estimates and Assumptions
-------------------------

Management uses estimates and assumptions in preparing  financial  statements in
accordance with generally accepted  accounting  principles.  Those estimates and
assumptions  affect the  reported  amounts of the  assets and  liabilities,  the
disclosure of contingent  assets and liabilities,  and the reported revenues and
expenses.  Actual  results  could vary from the  estimates  that were assumed in
preparing these financial statements.


3.  RELATED PARTY TRANSACTIONS

Related parties own 53% of the outstanding stock of the Company.


4.  GOING CONCERN

Continuation  of the  Company as a going  concern is  dependent  upon  obtaining
sufficient  working capital to service its debt and for its planned activity and
the  management of the Company has developed a strategy,  which it believes will
accomplish  this objective,  through  additional  equity funding,  and long term
financing, which will enable the Company to operate for the coming year.





                                      -17-