U.S. SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549

                           FORM 10-KSB

[X]   Annual  report  pursuant to section  13  or  15(d)  of  the
Securities Exchange Act of 1934 for the fiscal year ended May 31,
2001, or

[    ]      Transition report pursuant to section 13 or 15(d)  of
the  Securities  Exchange act of 1934 for the  transition  period
from    to

                 Commission File No.  000-31727

               TRANSFORM PACK INTERNATIONAL, INC.
   (Name of Small Business Issuer as specified in its charter)

           Minnesota                        41-1886254
(State or Other Jurisdiction of           (IRS Employer
Incorporation or Organization)         Identification No.)

    PO Box 1354, 310 Baig Blvd., Moncton, NB, Canada E1C 8T6
      (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (506) 854-9211

Securities registered under Section 12(b) of the Act:  None

Securities registered under Section 12(g) of the Act:

                 Common Stock, Par Value $0.004

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

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  [X]

The issuer's revenues for its most recent fiscal year:
CDN$442,917.

The aggregate market value of voting stock held by non-affiliates
computed on the basis of the last sale price on August 9, 2001,
was $2,260,766.

As of August 15, 2001, the Registrant had outstanding 11,418,957
shares of Common Stock, par value $0.004.

Documents incorporated by reference:  None.

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                        TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                             Page

Part I

1.   Description of Business                                         3

2.   Description of Properties                                      11

3.   Legal Proceedings                                              11

4.   Submission of Matters to a Vote of Security Holders            11

Part II

5.   Market for Common Equity and Related Stockholder                11
     Matters

6.   Management's Discussion and Analysis of Financial               12
     Condition and Results of Operations

7.   Financial Statements                                            14

8.   Changes in and Disagreements with Accountants                   14
     on Accounting and Financial Disclosure

Part III

9.   Directors, Executive Officers, Promoters and Control            15
     Persons; Compliance with Section 16(a) of the Exchange Act

10.  Executive Compensation                                          16

11.  Security Ownership of Certain Beneficial Owners and             16
     Management

12.  Certain Relationships and Related Transactions                  18

13.  Exhibits and Reports on Form 8-K                                19

Signatures                                                           21

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                             PART I

                ITEM 1.  DESCRIPTION OF BUSINESS

Our Company

     Transform Pack International, Inc., is a development stage
company that has developed a cold dissolvable calibrating matrix
that makes it possible to apply seasoning and curing formulas
onto roll-stock plastic food packaging materials that are cut
into sheets for the final application to the food product.

     Transform Pack seasoning sheets are used primarily for meat,
fish and poultry products.  The matrix applied to the seasoning
sheets uses the natural juices of the food product to dissolve
the matrix and transfer the seasoning or curing agent to the
product.  Transform Pack produces seasoning sheets for boil in
the bag and roast in the bag applications, and to flavor food
products, glaze meat, cure fish, marinade food products, and age
beef.  We also have a smoke-curing sheet that creates a smoke
flavored food product.

    A review by the United States Food & Drug Administration
shows the pH (which is a measure of acidity) level of products
treated with our seasoning sheets and water soluble salts found
in our matrix closely conform to the specifications accepted by
the National Advisory Committee for Microbiological Criteria for
Foods recommendations for aerobically packed fish products to
protect against germination of botulism bacteria.  A test
conducted by an independent testing firm, Research Productivity
Council, Fredericton New Brunswick, showed that the rate of
growth of bacteria on beef, chicken and fish treated with our
seasoning sheets was less than on untreated meats, which extends
the shelf-life of the product.  Our smoke-curing sheet uses
liquid smoke to flavor the food product, so it eliminates harmful
carcinogens that result when natural smoke is used to flavor the
product.  The matrix does not contain any known carcinogens or
allergens.  Another test conducted by The Food Chain Ltd. shows a
reduction in water loss from chicken treated with our seasoning
sheets.  We believe reducing water loss improves the flavor
quality of meat products.  As a result of these characteristics,
we believe our seasoning sheets improve product safety, quality,
and shelf life.

    Our production machinery is able to apply from 50 to 450
milligrams of seasoning or curing agent per square inch of
seasoning sheet.  When the sheets are applied to a food product,
the matrix dissolves in a cold or refrigerated climate
transferring the seasoning or curing agent to the product up to
one millimeter deep assuring that the agent will stay with the
product during freezing, thawing, and cooking processes.  These
elements of our product manufacturing and application result in a
high level of consistency and efficiency in the production and
use of our seasoning sheets.

     We spent several years developing our product and began
marketing efforts in 1995.  In the past year we have moved from
relying on others to market our product to developing our own
marketing capability.  We believe this change is beginning to
show results, as revenue increased from CDN $327,643 for the year
ended May 31, 2000, to CDN $442,917 for the year ended May 31,
2001. Although our revenue has increased, we continue to
recognize losses from operations and we expect that will continue
until we achieve market acceptance of our product and a much
higher sales volume.

     For the years ended May 31, 2001 and 2000 we recognized net
losses of CDN $864,432 and CDN $462,207, respectively.  At May
31, 2001, Transform Pack had a working capital deficit of CDN
$684,542.  We are attempting to reduce our operating losses by
implementing marketing strategies

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designed to introduce our
seasoning sheet product to potential customers in North America
and Europe, which we believe will ultimately be successful.
However, these marketing strategies have not yet generated sales
in amounts to cover our operating expenses.  Operating expenses
as a percentage of revenue for the year ended May 31, 2001 was
204%, and was 165% for the year ended May 31, 2000. We generated
negative cash flow from operations of CDN $484,677 for the year
ended May 31, 2001, and CDN $471,921 for the year ended May 31,
2000.  Transform Pack is seeking additional debt or equity
financing to fund its operations, but has not identified any
sources for such financing and has no arrangements for additional
financing at this time.  The foregoing factors led our
independent auditors to express substantial doubt about the
ability of Transform Pack to continue as a going concern.

The Meat Seasoning Industry

     In the past several years, consumer demand for spicy or more
flavorful foods had grown substantially.  The American Spice
Trade Association, 1998 Report, shows that US spice consumption
increased from 750 million pounds in 1990 to 970 million pounds
in 1998, an increase of 29%.  We believe this increase in spice
consumption is a direct result of consumer demand for greater
variety in their food.  The American palate has expanded so that
now barbeque, Cajun, fajita, lemon pepper, and smoke are
commonplace flavorings for food products.

     The US Department of Agriculture Report, 1995, states that
the industrial food processing sector is a major user of spices
in meat preparation, soups, bakery products and other food items,
and the trend is toward greater use of spices prepared to meet
the specifications of food processing companies.  The report
further states that 60% of total spice consumption is
attributable to the foodservice sector as compared to 40% a
decade ago, and the largest users of spices in food processing
are packers of meat products.  Meat processors certainly include
meatpacking companies, but also include grocery stores,
restaurant chains, and specialty retail outlets that produce
prepared meat entrees for their customers.

Our Product

    Transform Pack manufactures seasoning sheets - a food
contact approved plastic film coated with a food grade adhesive.
The adhesive consists of a corn syrup, maltodextrin, cornstarch,
citric acid, pectin, water and xanthan gum.  Spices and other
additives are applied to the adhesive.  This film is placed in
contact with meat, poultry or fish products.  The adhesive
dissolves in the presence of moisture at low temperature and the
flavor from or properties of the spices or additives are
transferred to the meat products.  The raw materials required for
our product are available from a number of sources at similar
prices.  We believe our product complies with applicable food
safety and manufacturing requirements of Canada and the United
States, and that ongoing government approvals are not required
other than routine periodic safety inspection of our
manufacturing facilities.

    Our unique cold-dissolvable adhesive matrix lets us
calibrate seasoning and additive formulas anywhere from 50 mg to
450 mg per square inch, depending on the density of the spice
mixture.  This allows the meat processor to season meat, apply a
decorative and flavorful spice crust to the meat product, or
produce a sauce-in-the-bag product.

    The meat processor specifies the spice mixture.  Proprietary
mixes with exotic and exciting flavors seem to be the trend in
today's market.  Our system lets the meat processor develop its
own flavor, or select from one of the many flavors currently
available on the market.

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    The consistent and precise application quality of our
seasoning sheets enables us to equip our sheets with additional
functions.  Adding tenderizing agents such as papain enables the
meat processor to tenderize some of the tougher cuts, such as
inside round and eye of round.  Adding tenderizing agents also
makes it possible for the meat processor to avoid dry aging to
tenderize meat - a process that removes moisture from the meat
product and reduces the sale price of products sold by weight.
Shelf life-extending additives and other preservative products
that must be added in minimum quantities can now be applied with
precision and consistency.  Smoke flavors and other hard-to-apply
liquid concentrates can also be added as special flavor effects.

    After the meat processor decides on the spice mixture or
additives, Transform Pack applies the additives uniformly to
seasoning sheets with our adhesive technology.  Seasoning sheets
are produced in a variety of sizes depending on the meat
application.  The meat processor simply applies the sheet to the
top and bottom or on one side of the mat product, depending on
the thickness of the meat and the concentration of the spice or
additive mixture.  If the meat product is vacuum packed, the
transfer of spice or seasoning to the meat will occur within an
hour.  For the marinating process to take place, a period of
approximately eight hours is needed for beef and less than one
hour for fish, poultry and pork.

    We believe our seasoning sheets offer significant benefits
to the meat processor.

    Lower costs

  *  Cost of spices and seasonings is substantially less than
      conventional methods, because you use only what you need for each
      piece of meat.
  *  Reduced labor, because there is no mixing or clean up.
  *  The addition of natural tenderizers (Papain) allows
      increased use of cheaper cuts.

    Quick, easy and uniform preparation

  *  Flavor distribution is even, so there is no seasoning
      variation by location or user.
  *  Our seasoning sheets are easy to use
  *  Transfer of flavors and additives can occur quickly, in one
      hour, if the meat product is vacuum packed.
  *  The adhesive dissolves completely leaving only a food grade
      film that is removed before shipping or cooking.
  *  The food products can be shipped, frozen or stored with the
      seasoning sheet in place.

    Improved product safety

  *  No cross contamination since sheets are discarded and not
      reused.
  *  Seasoning sheets are gas flushed to eliminate the growth of
      airborne mould spores and coliforms.
  *  Our seasoning sheets can eliminates extensive marinating,
      aging and curing processes where bacteria and other agents can
      grow in the product.

    Increased shelf life

  *  Flavor sheets inhibit bacterial growth.  In some cases,
      bacteria counts are actually reduced.
  *  Reduced odors in vacuum pack and modified atmosphere
      packaging.

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<PAGE>

    Better tasting product

  *  Reduced moisture loss.
  *  Leaves the internal structure of the meat intact.
  *  Flavor profiles do not change over time.

Our Technology

    Transform Pack's method of transferring additives through
seasoning sheets is the subject of patents issued in Canada,
Canadian patent number 2,135,416 issued February 10, 1998, New
Zealand, New Zealand patent number 294802 issued April 20, 2000,
Australia, Australian patent number 712248 issued February 17,
2000, and China, Chinese patent number 95197105.0 issued June 16,
2001.  We filed applications in the United States, Iceland,
Brazil, Japan, and Mexico, all of which are pending and we cannot
predict when any final action will be taken on these
applications.  We have not received notice from any of the
agencies where we filed applications of any preliminary action
that would indicate whether the patents will or will not be
issued.  We are not aware of any infringing use of our patented
technology and we do not believe our patent infringes on the
proprietary rights of any other person.

    Transform Pack developed the equipment we use for applying
spice mixtures to seasoning sheets internally and we are unaware
of any similar equipment being constructed or sold by any other
person.  During the two fiscal years ended May 31, 2001 and 2000,
we spent CDN $85,466 and CDN $93,959, respectively, on developing
and perfecting our proprietary equipment.  Based on our
experience in developing the equipment, we estimate that it would
require at least one year and CDN $163,000 for another company to
design similar equipment.  In addition, there would be the time
and expense, which we cannot estimate, to develop a technology
that does not conflict with our patent.  We believe our
proprietary equipment is unique and the time and expense required
of someone else to develop equipment that performs the same
function gives us a competitive advantage over anyone who would
seek to develop a product that competes with us directly.

    Our success depends significantly on our ability to protect
our proprietary rights to the seasoning sheet.  In the event we
discover an infringing use of our patents, we may be required to
incur substantial cost to protect our intellectual property
rights.  Even if we prosecute our intellectual property claims,
there is no assurance that a court will ultimately determine that
our intellectual property is patentable and protected under
applicable statutes.

    Patents in certain jurisdictions provide limited
protections.  Similar processes could be developed that do not
infringe on our patents rights, but that are similar enough to
compete against our product.  Moreover, it is possible that an
unpatented but prior existing process may exist that has never
been made public and therefore is not known to the industry or us
in general.  Such a process could be introduced into the market
without infringing on our current patents.  If any such competing
non-infringing processes were developed, our profit potential
would be adversely impacted, which would seriously impair our
viability.

    Also, our present and future products may be found to
infringe upon the patents of others.  If our products are found
to infringe on the patents, or otherwise impermissibly utilize
the intellectual property of others, our development, manufacture
and sale of such products could be severely restricted or
prohibited.  We may be required to obtain licenses to utilize
such patents or proprietary

                                     6
<PAGE>

rights of others and acceptable terms
may be unavailable.  If we do not obtain such licenses, the
development, manufacture or sale of products requiring such
licenses could be materially adversely affected.

Marketing Our Product

    We believe there is a well-established and growing market
among consumers for flavored meats that can be purchased ready to
cook.  The July 1997 issue of Food Product Design magazine
identifies the trend toward increased spice consumption and
attributes this to consumer demand for greater variety in their
foods.  Meat processors are pursuing this market, and are seeking
effective solutions for producing flavored meat products.

    Building recognition and acceptance of our product is
critical to the future success of Transform Pack.  Our failure to
promote and our product successfully may result in stunted growth
and loss of customers.  Accordingly, we intend to pursue an
aggressive product marketing strategy, which includes direct
selling to meat processors and public relations activities.  We
intend to make significant expenditures in the next year on these
marketing and advertising programs, while other food product
companies with much greater resources are doing the same.  Since
our product has not gained broad acceptance among meat processors
as an alternative to traditional seasoning methods and a
meaningful market for our seasoning sheets has not been
established, we cannot assure you that our marketing efforts will
be successful and enable us to increase our sales revenue.

    Transform Pack is focusing its direct marketing effort on
meat processors, including meat packers, grocery stores,
restaurant chains and specialty retail outlets.  Our product was
originally developed as a simple and economic method for meat
processors to apply seasoning without additional processing or
packaging machinery based on management's belief that there is a
meaningful market for such a product.  Accordingly, we position
our product as an alternative to manual seasoning systems and as
an improvement over manual systems due to the added benefits of
ease of use, cost-effectiveness, and product quality and safety
control.

    Transform Pack is also working directly with the spice
manufacturers to inform them on the use and benefits of our
seasoning sheets.  We believe that as the seasoning sheet system
grows in acceptance and use, spice manufacturers will want to
offer our seasoning sheets directly to meat processors.
Ultimately our goal is to effect most of our product sales to
spice companies that provide to us seasoning formulations we
apply to spice sheets that are resold by the spice companies
under private label to meat processors and consumers.  We employ
a sales person to pursue these marketing initiatives.  We also
plan to advertise in trade journals and other industry
periodicals.  We have participated in market evaluations and
product testing with the spice manufacturers, which has required
the production of free sample product for the spice manufacturers
to work with.

    Two international spice and seasoning companies, Lawry's
Foods, Inc., and McCormick & Co., Inc., are test marketing our
seasoning sheets with their spice formulations affixed to meat
processing and food service customers.  Three meat-processing
companies, each with large regional distribution, are testing
marketing meat products seasoned with our product.  Transform
Pack is now working with Stop & Shop/ Ahold, a large grocery
store chain based in the eastern United States, to develop a plan
for introducing our seasoning sheets into its meat processing
operations.  We do not have any contracts with these parties, and
it is likely that any purchases that may occur in the future
would be made under purchase orders.

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    In April 2001 we entered into an exclusive supply contract
with Tilia International, Inc.  Tilia International manufactures
and distributes the Food Saver vacuum storage system through
infomercials and retailers.  It was listed in the October 2000
issue of Inc. magazine as number 357 on its annual list of the
500 fastest growing private companies in the United States with
annual sales in excess of $80,000,000.  Our seasoning sheets are
being packaged and sold as an add-on with the Food Saver.  The
supply contract is for a term of three years and grants to Tilia
International the exclusive right to sell worldwide our seasoning
sheets in a retail package.  Tilia International is required to
make minimum annual purchases of our products in the amount of
USD $1,750,000 in year one of the supply agreement, USD
$3,500,000 in year two, and USD $5,500,000 in year three.  If
Tilia International fails to meet its annual minimum in any given
year, it loses its exclusive rights unless it makes a cash
payment of 25 percent of the difference between the amount
purchased during the year and the annual minimum purchase amount
for that year.  Tilia International accounted for 64 percent of
our sales revenue in fiscal year 2001.

    We have agreed to pay to Plus Marketing Corporation for the
consulting services and other marketing support of Greg Phillips,
a director of Transform Pack, USD $25,000 per month over a term
of four months commencing after we are able to obtain additional
financing for our operations.  Mr. Phillips will provide through
Plus Marketing his consulting services in developing and
implementing marketing programs for our product and office and
clerical support for our marketing efforts originating from his
office in New Jersey.

    In October 1999, Transform Pack granted to Compass Rose
Ltd., an exclusive license to distribute seasoning sheets to food
processors in Western Canada.  Under the license Compass Rose
purchases seasoning sheets from Transform Pack at the contract
price for resale.  The contract price represents a discount from
the suggested selling price to food processors.  The license is
for a term of five years, with an option to renew for two
additional five-year terms.  In the year ended May 31, 2000,
Compass Rose Ltd., accounted for 56 percent of our sales revenue,
and there were no sales to Compass Rose in 2001.

    In December 1997, Transform Pack granted to Elias Brothers
Restaurant Inc., an exclusive license to manufacture and sell
seasoning sheets with equipment supplied by Transform Pack in the
continental United States.  In exchange for this license, Elias
Brothers:

  *  agreed to purchase all adhesive matrix from Transform Pack,
     and
  *  agreed to pay a royalty to Transform Pack equal to
      CD$0.000875 per square inch of product sold.

    Elias Brothers accounted for approximately 59 percent of our
sales during the year ended May 31, 1999, but subsequently
curtailed its operations.  Due to this substantial reduction in
business and, as a result, sales of our products, Transform Pack
notified Elias Brothers in September 2000 that we are terminating
the license agreement for failure to promote and market our
products as provided in the license agreement.  On October 20,
2000, a chapter 11 bankruptcy case concerning Elias Brothers was
filed and Elias Brothers is now in the process of liquidating its
assets.  Elias Brothers cannot assign the license to unrelated
parties, and bankruptcy is an event of termination of the license
agreement.

    When Transform Pack first developed its product, it entered
into a Master License Agreement with Transform Pack GmbH Europe
in July 1995.  Under the agreement, Transform Pack granted to
Transform Pack Europe the right to manufacture its proprietary
equipment to produce seasoning sheets and to market seasoning
sheets, either directly or through sublicensees, in Europe,
Southeast Asia,

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South America, and Japan.  Transform Pack further
agreed to purchase at cost from Transform Pack Europe all
production equipment sold by Transform Pack to other persons
outside of Transform Pack Europe's territory, and pay to
Transform Pack Europe 45% of the net profit from sale of such
equipment.  In exchange for this license, Transform Pack Europe:

  *  granted to Transform Pack a 2% ownership interest in
      Transform Pack Europe,
  *  agreed to purchase for itself and sublicensees all adhesive
      matrix from Transform Pack, and
  *  agreed to pay a royalty to Transform Pack equal to 10% of
      gross revenue from seasoning sheet sales.

    The Master License Agreement with Transform Pack Europe was
for an initial term of five years, which expired in July 2000.
Upon expiration of the Master License Agreement, Transform Pack
acquired certain production equipment from Transform Pack Europe
for CDN $100,000 and all marketing rights of Transform Pack
Europe terminated.

    We have registered the trademark "Transform Pack" in Canada
(registration number 513,791) and the United States (registration
number 2,264,190).  We have also registered the trademark "Insta
Chef" in Canada under registration number 513,099, but we are not
currently promoting this mark in our marketing program.  We are
not aware of any infringing use of our trademarks and we do not
believe our patent infringes on the proprietary rights of any
other person.

Competition

    The largest competitor is that of substitution since no
other spice application systems are available in the market place
other than manual internal processes that meat processors may
have in place.  These processes are problematic since they depend
on the operator for accuracy and repeatability of the spice
application.  Accordingly, we believe we can compete with
traditional methods of manual application on the basis of the
ease of use and uniformity offered by our seasoning sheets.

    Transform Pack also believes we can compete effectively with
manual application systems for meat products on the basis of
price and economic benefits of using our system.  By using our
seasoning sheets, the cost of spices and other additives actually
used to process a meat product are reduced, since there are no
wasted spices or additives in the process.  The ease with which
spices and additives are applied to meat products with our
seasoning sheets reduces labor costs for the meat processor.
Furthermore, the use of our product, particularly to tenderize
meat products without aging or curing, reduces substantially the
loss of moisture in the meat product, which improves flavor and
increases weight of the meat products and the price a which meats
products are ultimately sold to consumers.

    Transform Pack's principal competitors are the spice
manufacturers who sell spices to meat processors for application
through traditional manual processes.  There are a substantial
number of spice manufacturers that have greater financial and
business resources than Transform Pack.  Spice manufacturers
could seek to develop technology that competes directly with our
product, and there is no assurance that any patents we have on
our product would prevent the spice manufacturers from doing so.
However, we are not aware of any effort to develop competing
technology and we are working to mitigate that possibility by
establishing strategic alliances with spice manufacturers in
which our seasoning sheets become an accepted method of applying,
and therefore selling, their spice and additive products to meat
processors.

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<PAGE>

Government Regulation

    Transform Pack is subject to a host of national, state, and
local regulations affecting health, sanitation and safety
standards for production of food products.  If we fail to comply
with these standards, we could be required to recall our
products, suspend operations until we are in compliance, or be
penalized through fines or criminal charges.  We believe our
manufacturing processes comply with applicable regulations.
However, differing interpretations of existing regulations or new
regulations could result in Transform Pack being non-compliant
and place additional operational burdens and costs on us.

Employees

    At May 31, 2001, we employed 15 persons, of which four
occupy executive or managerial positions and 11 hold
manufacturing positions.  None of our employees are represented
by a labor union.  We consider our relations with our employees
to be good and have not experienced any interruption of
operations due to labor disputes.

About Transform Pack

     We acquired Transform Pack, Inc., our operating subsidiary,
in January 2000, through a reverse acquisition.  Transform Pack,
Inc., was formed in October 1994 under the laws of New Brunswick,
Canada to develop, manufacture and distribute our current
seasoning sheet product.  Transform Pack, Inc., began developing
the product for sale to local meat packinghouses in October 1994.
It took one year to develop the calibration matrix and obtain all
necessary regulatory approvals for commercial use of the product
in Canada and the United States.  In late 1995, two restaurant
chains in the United States began to use and order substantial
amounts of the seasoning sheets.  The production machinery used
by Transform Pack, Inc., at that time was inadequate for meeting
the new demand for product.  As a result, Transform Pack, Inc.,
suspended its marketing activities in 1996 and redesigned its
production machinery.  The new production machinery was
operational and in place by the end of 1999, and Transform Pack,
Inc., developed new marketing plans that it implemented from the
first quarter of 2000 through the present.

     Transform Pack International, Inc., the parent of Transform
Pack, Inc., was formed as a Minnesota corporation in February
1975, under the name of Automated Multiple Systems, Inc.  It
subsequently changed its name to Stylus, Inc., and was engaged in
the business of developing a minicomputer word processor.  This
business was unsuccessful and the corporation was inactive until
December 1997, when it changed its name to Cybernetics, Inc., and
acquired Cybernetics Medical Systems Corporation, a privately
held Minnesota corporation, in exchange for 2,000,000 shares of
common stock and warrants to purchase 300,000 additional shares.
Cybernetics Medical was engaged in the business of developing
medical products.  Delays in product development and increased
competition impaired its ability to raise capital to fund product
development.  In March 1999, Cybernetics Medical was sold to
certain stockholders for assumption of all liabilities and
cancellation of the 300,000 warrants issued in the original
acquisition.  We were inactive until January 2000, when we
acquired Transform Pack, Inc., for seven million shares of common
stock and changed our name to Transform Pack International, Inc.
Any references you see to "Transform Pack" in this report are
references to both the parent and subsidiary companies.

    In February 2000 we sold 1,000,957 shares of common stock
for CDN $712,715.  This financing was completed following the
reverse acquisition of Transform Pack, Inc. in January 2000.
Transform

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<PAGE>

Pack, Inc. found the investors in the last quarter of
1999, but the new investors were unwilling to proceed with the
investment unless they could acquire shares that would have the
potential for liquidity in the public market in the future.  In
order to obtain the financing and facilitate future financings,
Transform Pack, Inc., negotiated for and effected the reverse
acquisition to become a publicly held company.  We do not have
any additional financing arrangements pending at this time.

               ITEM 2.  DESCRIPTION OF PROPERTIES

    Transform Pack leases approximately 6,000 square feet of
space in Moncton, New Brunswick, Canada, which serves as our
business office and manufacturing facility.  The monthly lease
rate is CDN $3,672 under a lease that expires in March 2004.  Our
facility is adequate to accommodate one production line for
seasoning sheets, which is capable of producing 10,000,000
seasoning sheets per month.  We are currently selling on average
4,200,000 seasoning sheets per month, so our current facility is
adequate for a 58 percent increase in our current sales volume.
We believe this facility will be adequate for our needs for the
next year.  Our principal executive office and manufacturing
facility are located at 310 Baig Blvd., Moncton, NB, Canada E1C
8T6.  Our telephone number is (506) 854-9211.

                   ITEM 3.  LEGAL PROCEEDINGS

    Transform Pack is not a party to any material pending legal
proceedings, and to the best of its knowledge, no such
proceedings by or against Transform Pack have been threatened.

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

     No matter was submitted to a vote of security holders in the
fiscal quarter ended of May 31, 2001.

                             PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    There is no established trading market for the Transform
Pack's common stock.  In August 2001, quotations for our common
stock were first listed on the OTC Bulletin Board under the
symbol TPII.

    Since its inception, no dividends have been paid on our
common stock.  Transform Pack intends to retain any earnings for
use in its business activities, so it is not expected that any
dividends on the common stock will be declared and paid in the
foreseeable future.

    At August 15, 2001, there were approximately 210 holders of
record of the Company's Common Stock.

     In September 2000, Transform Pack obtained a loan from Bruce
Weitz, a director, in the amount of $154,230.  In February 2001,
Mr. Weitz contributed an additional $153,736 to acquire common
stock and warrants of the Company.  As a result, Mr. Weitz
contributed a total of CDN $307,966 to Transform Pack to acquire
408,000 shares of the Company's common stock and a warrant to
purchase an additional 408,000 shares of common stock at an
exercise price of USD $0.50 per share that expires February 15,
2004.  No broker was involved in the transaction and

                                     11
<PAGE>

no commission was paid to any person.  The transaction was effected
in reliance on the exemption from registration set forth in Section
4(2) of the Securities Act of 1933.

     In April 2001, Transform Pack issued to Greg Phillips, a
director, 100,000 shares of common stock and 100,000 warrants to
purchase common stock, all valued at $75,500, as compensation for
services to Transform Pack.  The warrant is exercisable at a
price of USD $0.50 per share and expires February 15, 2004.  No
broker was involved in the transaction and no commission was paid
to any person.  The transaction was effected in reliance on the
exemption from registration set forth in Section 4(2) of the
Securities Act of 1933.

   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS

     Transform Pack International, Inc. (the "Company" or
"Transform Pack") is a development stage company that has
developed a cold dissolvable calibrating matrix that makes it
possible to apply seasoning and curing formulas onto roll-stock
plastic food packaging materials that are cut into sheets for the
final application to the food product.  All dollar figures in the
following discussion are in Canadian dollars.

Results of Operations

Three and Twelve Months Ended May 31, 2001 and May 31, 2000

     Transform Pack had net sales of $270,235 and $104,873 for
the three months ended May 31, 2001 and May 31, 2000,
respectively; which represents a 158% increase from 2000.  This
increase is mainly due to sales made to new customers.  We have
begun a new contract with Tilia in the fourth quarter.  Net sales
for the twelve months ended May 31, 2001 were $442,917, a 35%
increase from $327,643 for the same period in 2000.  This
increase is primarily a result of higher sales to new customers
in the period ending on May 31, 2001.

     Cost of sales for the three-months ended May 31, 2001 and
May 31, 2000 were $188,520 and $34,994 respectively.  Such costs,
as a percentage of net sales for the three months ended May 31,
2001 and May 31, 2000, were 70% and 33% respectively.  Cost of
net sales for the twelve months ended May 31, 2001 and May 31,
2000 were $306,980 and $131,739, respectively.  Such costs, as a
percentage of net sales for the twelve months ended May 31, 2001
and May 31, 2000 were 69% and 40%, respectively.  This percentage
increase is directly attributed, in part, to the training of new
personnel in anticipation of the large orders with our new
customers.  The new personnel were needed to enable us to begin
ramping up our production.  This increase is also attributable to
the production of a substantial amount of free sample product as
part of our new marketing effort, a practice we have followed in
the past and expect to continue because we believe it is a
customary marketing technique in the industry to provide samples
of food related products so that potential customers can evaluate
taste, consistency, use, and quality.  Potential customers
provide the seasoning for the sample product, but we must absorb
the remaining cost of plastic film and adhesive required to
produce the samples given to potential customers for evaluation.
There is no assurance any of these potential customers will
ultimately elect to purchase our product.  Should they decide to
purchase, sales will be made under our standard pricing policy,
which is full price for orders up to 100,000 seasoning sheets and
a volume discount of 10% for orders over 100,000 sheets.  When
management makes a determination that a sale is not imminent
based on communication with the potential customer, the Company
discontinues providing free samples and charges its regular price
for any additional samples requested.  Providing

                                     12
<PAGE>

sample product resulted in sales of $442,917 during the twelve
months ended May 31, 2001.  Furthermore, we incurred additional
cost associated with re-packaging and re-labeling product
previously approved by our customer (our customer changed some
of the information on the labels that required us to re-package
and re-label product).

     Selling, general and administrative expenses for the three-
month period ended May 31, 2001 and May 31, 2000 were $241,552
and $283,701 respectively.  Operating expenses for the twelve
months ended May 31, 2001 and May 31, 2000 were $901,569 and
$541,713, respectively, a 66.4% increase.  The increase in
operating expenses for the twelve months ended May 31, 2001 is
attributable to the increase of $118,000 in bad debts, $75,500
in stock based compensation, $22,000 increase in head office
wages, $38,000 in accounting cost associated with becoming a
reporting company, $35,000 in legal cost associated with
becoming a reporting company, $56,000 increase in rent expenses
due to a credit received last year and $23,000 increase in
marketing expenses for the Canadian and United Kingdom market
development.

     Interest expense for the three months ended May 31, 2001 and
May 31, 2000 were $14,222 and $6,430, respectively.  Interest
expense for the twelve months ended May 31, 2001 and May 31, 2000
were $42,094 and $ 38,059, respectively.

     Due to the foregoing, Transform Pack suffered net losses of
$180,883 and $243,235 for the three months ended May 31, 2001 and
May 31, 2000, respectively.  As for the twelve months ended May
31, 2001 and May 31, 2000, Transform Pack suffered net losses of
$864,432 and $462,207, respectively.  The increase in net losses
is attributable an increase in marketing expenses for new
marketing efforts, increase in the cost of ramping up production
capability without a similar increase in sales, increase in costs
associated with re-packaging product, increase in rent expense
and the creation of a $118,000 allowance for doubtful account.

Liquidity and Capital Resources

     At May 31, 2001, Transform Pack had a working capital
deficit of $684,542 as compared to a working capital deficit of
$213,749 at May 31, 2000.

     Cash used in operations for the twelve-month period ended
May 31, 2001 totaled $484,677 compared to cash use of $471,921 in
the twelve-month period ended May 31, 2000.  Cash use consisted
$22,641 in inventory based on management's evaluation of
potential demand for the Company's product, which was offset by a
decrease of $88,561 in receivables and an increase of $324,981 in
payables.

     Our financing activities provided the Company with $27,657
for the twelve-month period ended May 31, 2001, compared to
$28,762 for the twelve-month period ended May 31, 2000.  The
majority of the financing consisted of a short term loan from
Hans Meier, one of our directors, in the amount of $12,000, to be
repaid in the first quarter of the fiscal year ending May 31,
2002.

     Capital expenditures for the twelve months ended May 31,
2001 were $21,880 compared to an inflow of $614,092 for the
twelve months ended May 31, 2000.  Furthermore, the company
received a $307,965 investment from Mr. Bruce Weitz, a director.
Mr. Weitz received 408,000 common shares at USD $0.50 a share
along with the same number of warrants at $0.50 USD each, which
expire in February 2004.  Mr. Weitz converted his USD $100,000
loan from September and invested a further

                                     13
<PAGE>

USD $100,000 in the form of a private placement.  The company
received $712,714 in proceeds from the reverse takeover during
the twelve-month period ended May 31, 2000.

     The company is in need of additional financing in order to
pay outstanding obligations, finance current operations and
expand operations over the next year.  It is not likely that we
will be able to take advantage of the opportunity to increase our
product sales unless we obtain additional capital to fund
operations.  If we cannot find more funding, we will be forced to
substantially reduce our operations and it will take a much
longer period for our business to develop.  We have not
identified any sources for future funding.  Consequently, we may
be subject to enforcement actions by our creditors and may not be
able to take advantage of the opportunity to expand our business.
If we are unable to generate working capital from our internal
operations or outside sources, our ability to continue in
business will be seriously impaired.

     However, we have recently signed a three-year contract with
one of our customers to develop the retail aspect of our
business.  The value of the first year of this contract is for a
minimum USD $1,750,000.  We are currently trying to finalize the
details of the first order from this contract for one million
spice sheets to be delivered on or around September 1, 2001.

     Furthermore, we have shipped product to one of our customers
in the United Kingdome in June 2001, for a value of approximately
CND $150,000.  This customer is in the process of finalizing the
details of a follow-up order to be placed shortly.

Forward-Looking Statement Notice

     When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect our future plans of operations, business strategy,
operating results, and financial position.  Persons reviewing
this report are cautioned that any forward-looking statements are
not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from
those included within the forward-looking statements as a result
of various factors.  Such factors are discussed under the
headings "Item 1.  Description of Business," and "Item 6.
Management's Discussion and Analysis of Financial Condition and
Results of Operations," and also include general economic factors
and conditions that may directly or indirectly impact Transform
Pack's financial condition or results of operations.

                  ITEM 7.  FINANCIAL STATEMENTS

     The financial statements of the Company appear at the end of
this report beginning with the Index to Financial Statements on
page F-1.

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

     Not applicable.

                                     14
<PAGE>

                            PART III

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

Directors and Officers

     The following table sets forth the names, ages, and
positions with the Company for each of the directors and officers
of the Company.

Name              Age   Position                         Since

Hans Meier        56   President and Director           February 2000
Daniel Sham       48   Vice Chairman and Director       February 2000
Greg Phillips     51   Vice President Sales &           February 2000
                       Marketing and Director
Nathalie Cormier  30   Secretary, Treasurer and         February 2000
                       Director
Bruce Weitz       53   Director                         February 2000

    Each director serves until the next annual meeting of
stockholders and until his or her successor is elected and
qualified.  Executive officers serve at the discretion of the
board of directors.  The following is biographical information on
each of our officers and directors.

    Hans Meier served from November 1994 to February 2000 as
Transform Pack, Inc.'s Vice President of Research and Development
where he was responsible for developing our seasoning sheet.  He
became President in February 2000.  For the past 15 years Mr.
Meier has owned and operated Meier Food Service Consulting
Limited, a private company engaged in the business of consulting
on food processing and delivery systems.  He became president and
a director of Transform Pack in February 2000.

    Daniel Sham has been the owner and operator of Scarboro Meat
Packers, Inc., based in Toronto from 1991 to the present.  From,
April 1998 to the present he has served as Vice President of
Operations for Med Mira Laboratories, Inc., of Toronto, a public
company engaged in the business of manufacturing medical devices.
For the past 15 years he has served as the President of dTree &
Associates, Inc., based in Toronto, which is a private computer
consulting business.  He became vice chairman and a director of
Transform Pack in February 2000.

    Greg Phillips has owned and operated Plus Marketing
Corporation, a marketing and consulting firm based in New Jersey,
New Jersey, for 19 years.  He became Vice President Sales &
Marketing of Transform Pack, Inc., in April 1999, and a director
of Transform Pack in February 2000.

    Nathalie Cormier has been employed as an executive assistant
and manager of Transform Pack, Inc., from December 1997 to
February 2000, when she was appointed Secretary and Treasurer.
For six years prior to December 1997 she was employed as an
administrative assistant with Gemini Investments Ltd., of
Moncton, New Brunswick.  She became a director of Transform Pack
in February 2000.

    Bruce Weitz is the president and chief executive officer of
Today's Man, Inc., a menswear retailer in the Northeast United
States, since August 2000.  Mr. Weitz was retired during the four-
year period prior to August 2000.  For three years prior to
December 1995, Mr. Weitz was the Chairman,

                                     15
<PAGE>

President and Chief Executive Officer of Duane Reade Drug Stores,
a drug store chain based in New York City.  He became a director
of Transform Pack in February 2000.

                ITEM 10.  EXECUTIVE COMPENSATION

    The following table sets forth certain information regarding
the annual and long-term compensation for services in all
capacities to Transform Pack for the prior fiscal years ended May
31, 2001, 2000 and 1999, of those persons who were either the
chief executive officer during the last completed fiscal year or
one of the other four most highly compensated executive officers
as of the end of the last completed fiscal year whose annual
salary and bonuses exceeded US$100,000.

                                          Annual
                                       Compensation
Name and Principal Position   Year       Salary (CND)

Hans Meier, President (1)     2001         82,800
                              2000         56,350
                              1999         36,754

(1) Transform Pack pays CDN $6,900 per month to Meier Food
    Service Consulting Limited, a private company owned by Hans
    Meier, for his services rendered to the Company.  The
    figures for Mr. Meier's salary are the total of payments
    made to Meier Food Service Consulting Limited in the three
    fiscal years.

Other Compensation Arrangements

    We have agreed to pay to Plus Marketing Corporation for the
consulting services of Greg Phillips and other marketing support
USD $25,000 per month over a term of four months commencing after
Transform Pack obtains additional financing for its operations.
Mr. Phillips will provide through Plus Marketing his consulting
services in developing and implementing marketing programs for
our product and office and clerical support for our marketing
efforts originating from his office in New Jersey.

Employee Options

    In February 2000, Transform Pack granted to Nathalie Cormier
an option to purchase 40,000 shares of common stock at an
exercise price of USD $0.50 per share exercisable for a term of
three years.  No trading market for our common stock existed then
or at the end of our fiscal year on May 31, 2001.  The option
price is the same price at which Transform Pack sold common stock
privately to unrelated parties in February 2000.  The option
issued to Ms. Cormier represents 80% of all options issued to
employees of Transform Pack in fiscal year 2000.

  ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                           MANAGEMENT

     The following table sets forth as of August 15, 2001, the
number and percentage of the 11,418,957 shares of outstanding
common stock which, according to the information supplied to the
Company, were beneficially owned by (i) each person who is
currently a director of the Company, (ii) each executive officer,
(iii) all current directors and executive officers of the Company
as a group and (iv) each person who, to the knowledge of the
Company, is the beneficial owner of more than 5% of the

                                     16
<PAGE>

outstanding common stock.  Except as otherwise indicated, the
persons named in the table have sole voting and dispositive power
with respect to all shares beneficially owned, subject to
community property laws where applicable.

 Name and Address             Common       Percent
                              Shares      of Class
 Principal stockholder

 Franz Schedlbauer (1)       3,382,977      29.6
 Muhlenstrasse 15
 Graz-Raaba, Austria

 Christian Schedlbauer (1)   3,382,977      29.6
 Muhlenstrasse 15
 Graz-Raaba, Austria

 #503485 NB Ltd. (1)         2,254,857      19.7
 Muhlenstrasse 15
 Graz-Raaba, Austria

(1) #503485 NB Ltd., is a private New Brunswick, Canada
    corporation owned and controlled by Franz and Christian
    Schedlbauer.  Accordingly, these persons may be deemed to
    have voting and investment control over the 2,254,857 shares
    of common stock held of record by #503485 NB Ltd.  Franz and
    Christian Schedlbauer each individually hold 1,128,120
    shares of common stock of record.

                                     17
<PAGE>


                                    Common       Percent
                                    Shares      of Class (1)

 Officers and directors

 Hans Meier                        2,346,103        20.5
 310 Baig Blvd.
 Moncton, NB, Canada E1C 8T6

 Daniel Sham                         87,500         0.8
 39 Glen Watford Dr.
 Scarborough, ON, Canada  M1S 2C2

 Greg Phillips                      200,000         1.7
 160 Chestnut Street
 Englewood Cliffs, NJ 07632

 Nathalie Cormeir (1)               40,000          0.3
 310 Baig Blvd.
 Moncton, NB, Canada E1C 8T6

 Bruce Weitz (1)                 1,016,000          8.4
 37 McGrath Drive
 Cressill, NJ 07626

 All Executive officers          3,689,603         30.3
 and Directors as a Group (5
 persons) (2)

(1)  The figures for each of these persons represent only options
     to purchase common shares that are vested or will vest
     within 60 days from the date as of which information is
     presented in the table.  These figures represent the
     percentage of ownership of the named individuals assuming
     each of them alone has exercised his or her options, and
     percentage ownership of all officers and directors as a
     group assuming all purchase rights held by such individuals
     are exercised.

    ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    In October 1999, Transform Pack granted to Compass Rose
Ltd., a company owned by Richard Middleton, a former director, an
exclusive license to distribute seasoning sheets to food
processors in Western Canada.  Under the license we sell
seasoning sheets to Compass Rose at a discount from the suggested
selling price to food processors.  The license is for a term of
five years, with an option to renew for two additional five-year
terms.  This contract was entered into before Mr. Middleton
became a director.  Consequently, we believe the contract was the
result of arms' length negotiations between unrelated parties.

    Franz and Christian Schedlbauer are principal stockholders
of Transform Pack and are also the controlling stockholders of
Transform Pack GmbH Europe.  We had a Master License Agreement
Transform Pack Europe, which we entered into in July 1995, and
hold a 2% ownership interest in Transform Pack Europe.  Under the
license agreement, Transform Pack Europe had the exclusive right

                                     18
<PAGE>

to manufacture our proprietary equipment to produce seasoning
sheets and to market seasoning sheets in Europe, Southeast Asia,
South America, and Japan.  Transform Pack further agreed to
purchase at cost from Transform Pack Europe all production
equipment sold by Transform Pack to other persons outside of
Transform Pack Europe's territory, and pay to Transform Pack
Europe 45% of the net profit from sale of such equipment.
Transform Pack Europe was required to purchase all adhesive
matrix used in the seasoning sheets from us, and pay us a royalty
equal to 10% of gross revenue from seasoning sheet sales. The
Master License Agreement with Transform Pack Europe was for an
initial term of five years, which expired in July 2000.  Upon
expiration of the Master License Agreement, Transform Pack
purchased certain production equipment from Transform Pack Europe
for CDN $100,000, and all marketing rights of Transform Pack
Europe terminated.

     We have agreed to pay to Plus Marketing Corporation for the
consulting services of Greg Phillips and other marketing support
USD $25,000 per month over a term of four months commencing after
Transform Pack obtains additional financing for its operations.
Mr. Phillips will provide through Plus Marketing his consulting
services in developing and implementing marketing programs for
our product and office and clerical support for our marketing
efforts originating from his office in New Jersey. In April 2001,
Transform Pack issued to Greg Phillips 100,000 shares of common
stock and 100,000 warrants to purchase common stock, all valued
at $75,500, as compensation for services to Transform Pack.  The
warrant is exercisable at a price of USD $0.50 per share and
expires February 15, 2004.  This is in addition the compensation
otherwise payable to Plus Marketing Corporation.

    In March 2000, Transform Pack granted to Bruce Weitz options
to purchase 200,000 shares of common stock at an exercise price
of USD $1.00 per share exercisable for a term of three years.  No
trading market for our common stock existed then.  The option
price was based on Transform Pack's determination that the
exercise price is equal to or greater than the fair value of its
common stock.

     In September 2000, Transform Pack obtained a loan from Bruce
Weitz, a director, in the amount of $154,230.  In February 2001,
Mr. Weitz converted the loan and contributed an additional
$153,736 to acquire common stock and warrants of the Company.
As a result, Mr. Weitz contributed a total of CDN $307,966 to
Transform Pack to acquire 408,000 shares of the Company's
common stock and a warrant to purchase an additional 408,000
shares of common stock at an exercise price of USD $0.50 per
share that expires February 15, 2004.

                            ITEM 13.
                EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

     Copies of the following documents are included as exhibits
to this report.

 Exhibit  Item 601    Title of Document
  No.     Ref. No.
 1         2.1*      Exchange Agreement dated January 28, 2000,
                     between Cybernetics, Inc., and Transform Pack, Inc.

 2         3.1*      Articles of Incorporation, as amended

 3         3.2*      By-Laws

                                     19
<PAGE>

 4        10.1*      License Agreement dated October 5, 1999, with
                     Compass Rose Ltd.

 5        10.2*      License Agreement dated December 29, 1997,
                     with Elias Brothers Restaurant Inc.

 6        10.3*      Master License Agreement dated July 24, 1995,
                     with Transform Pack Europe GmbH

 7        10.4*     Form of Stock Option issued to officers and
                    directors

 8        10.5*     Consulting agreement with Greg Phillips dated
                    May 23, 2000

 9        10.6*     Loan Conversion and Preferred Stock
                    Redemption Agreement
                    dated February 2, 1999 between Transform
                    Pack, Inc., and New Brunswick

 10       10.7*     Lease Agreement for Property at 310 Baig
                    Blvd., Moncton, NB

 11       10.8      Tilia / Transform Pack Exclusive Supply
                    Agreement dated April 1, 2001

 12       10.9     Warrant for purchase of common stock issued
                   to Bruce Weitz, dated February 15, 2001

 13       10.10    Warrant for purchase of common stock issued
                   to Greg Phillips, dated February 15, 2001

 13       99.1     List of Foreign Patents

*    Each of these documents are incorporated herein by this
reference from the Registration Statement on Form 10-SB as filed
by the Company with the Securities and Exchange Commission on
October 10, 2000, as amended on December 20, 2000, February 8,
2001 and February 16, 2001.

FORM 8-K FILINGS

     No reports on Form 8-K were filed during the fiscal quarter
ended May 31, 2001.

                                     20
<PAGE>
                           SIGNATURES

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

                             Transform Pack International, Inc.

Date: August 24, 2001        By: /s/ Hans Meier, President

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


Dated: August 24, 2001      /s/ Hans Meier, Chief Executive
                            Officer and Director


Dated: August 28, 2001      /s/ Daniel Sham, Director


Dated: August 27, 2001      /s/ Greg Phillips, Director


Dated: August 27, 2001      /s/ Nathalie Cormier, Chief
                            Financial Officer
                            and Director


Dated: August 27, 2001      /s/ Bruce Weitz, Director

                                     21
<PAGE>


               TRANSFORM PACK INTERNATIONAL, INC.

                      Financial Statements

                      May 31, 2001 and 2000

                              INDEX

                                                         Page

Independent Auditors' Report                              F-2

Consolidated Balance Sheets                               F-3
  As At May 31, 2001 and 2000

Consolidate Statements of Operations                      F-4
  Years Ended May 31, 2001 and 2000
  and the Period From October 31, 1994
  (Date of Incorporation) To May 31, 2001

Consolidate Statements Of Shareholders'                   F-5
  Deficiency Years Ended May 31, 2001 and 2000
  and the Period From October 31, 1994
  (Date of Incorporation) To May 31, 2001

Consolidate Statements of Cash Flows                      F-6
  Years Ended May 31, 2001 and 2000
  and the Period From October 31, 1994
  (Date of Incorporation) To May 31, 2001

Notes to the Consolidated Financial Statements            F-7

                                     F-1
<PAGE>


                 Deloitte & Touche LLP


          P.O. Box 2087                   Telephone:(902) 422-8541
          5161 George Street, Suite 800   Facsimile:(902) 423-5820
          Halifax, Nova Scotia B3J 3B7


                  INDEPENDENT AUDITORS' REPORT


To the Shareholders of
Transform Pack International Inc.
(formerly Cybernetics Inc.)
(a development stage company)


We have audited the consolidated balance sheets of Transform Pack
International  Inc.  (formerly Cybernetics Inc.)  (a  development
stage  company)  as  at  May 31, 2001 and 2000  and  the  related
consolidated  statements of operations, shareholders'  deficiency
and  cash flows for the years then ended, and for the period from
October 31, 1994 (date of incorporation) to May 31, 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 an  audit  to  obtain
reasonable assurance whether the financial statements are free of
material  misstatement.  An audit includes examining, on  a  test
basis,  evidence  supporting the amounts and disclosures  in  the
financial  statements.   An  audit also  includes  assessing  the
accounting  principles  used and significant  estimates  made  by
management, as well as evaluating the overall financial statement
presentation.   We believe that our audits provide  a  reasonable
basis for our opinion.

In  our  opinion, these consolidated financial statements present
fairly, in all material respects, the financial position  of  the
Company  as  at  May  31, 2001 and 2000 and the  results  of  its
operations and its cash flows for the years then ended,  and  for
the  period  from October 31, 1994 to May 31, 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
is  a  development stage enterprise engaged in the  manufacturing
and  marketing  of spice sheets for seasoning of meat,  fish  and
poultry  products.   As  discussed in Note  1  to  the  financial
statements, the deficiency in working capital at May 31, 2001 and
the Company's operating losses since inception, raise substantial
doubt   about  its  ability  to  continue  as  a  going  concern.
Management's plans concerning these matters are also described in
Note  1.  The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.




                                          Deloitte & Touche LLP


June 22, 2001                              Chartered Accountants
Halifax, Nova Scotia, Canada

                                     F-2
<PAGE>



              TRANSFORM PACK INTERNATIONAL INC.
                (a development stage company)
                 CONSOLIDATED BALANCE SHEETS
                 AS AT MAY 31, 2001 AND 2000

                    (in Canadian Dollars)
<TABLE>
<CAPTION>
                                                          2001         2000
-----------------------------------------------------------------------------
<S>                                                   <C>          <C>
              ASSETS
Current
  Cash and cash equivalents                           $        -   $  170,933
  Accounts receivable (Note 3)                           269,031      180,470
  Inventory                                              149,950      127,309
  Prepaid expense                                          2,336        2,729
                                                      ----------   ----------
                                                         421,317      481,441
Capital assets (Note 4)                                  458,444      526,651
Investment in affiliate (Note 5)                           2,000        2,000
                                                      ----------   ----------
                                                      $  881,761   $1,010,092
                                                      ==========   ==========
            LIABILITIES
Current
  Bank indebtedness (Note 6)                          $  406,328   $  313,500
  Accounts payable and accrued liabilities (Note 7)      551,744      226,763
  Current portion of long-term debt (Note 8)              87,787       94,927
  Current portion of redeemable
    preferred shares (Note 9)                             60,000       60,000
                                                      ----------   ----------
                                                       1,105,859      695,190

Long-term debt (Note 8)                                  398,964      468,997
Non-controlling interest in
  preferred equity of a
  subsidiary (Note 9)                                    506,250      506,250
Due to shareholders (Note 10)                            139,077      127,077
                                                      ----------   ----------
                                                       2,150,150    1,797,514
                                                      ----------   ----------
     SHAREHOLDERS' DEFICIENCY

Share capital and warrants (Note 11)                   1,523,312    1,139,847
Deficit accumulated during the
 development stage                                    (2,791,701)  (1,927,269)
                                                      ----------   ----------
                                                      (1,268,389)    (787,422)
                                                      ----------   ----------
                                                      $  881,761   $1,010,092
                                                      ==========   ==========
</TABLE>
                                     F-3
<PAGE>


                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
              CONSOLIDATED STATEMENTS OF OPERATIONS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian Dollars)
<TABLE>
<CAPTION>
                                                                           Period From
                                                                           October 31
                                                                          1994 (Date of
                                                                          Incorporation)
                                                 May 31        May 31       to May 31
                                                  2001          2000           2001
--------------------------------------------------------------------------------------
<S>                                         <C>             <C>            <C>
Revenue                                     $    442,917    $   327,643    $ 1,285,848
                                             ----------     ----------     -----------
Cost of sales                                    306,980        131,739        746,744
Selling, general and administrative expenses
 (includes $75,500 (2000-$24,349) in stock-
  based compensation)                            901,569        541,713      2,638,997
Research and  development expense                 85,466         93,959        773,979
Other income                                     (28,760)       (15,620)      (266,803)
                                             -----------    -----------    -----------
                                                 751,791      1,265,255      3,892,917
                                             -----------    -----------    -----------
Loss before interest expense                    (822,338)      (424,148)    (2,607,069)
Interest expense - long-term                       9,583         11,574         68,536
                 - other                          32,511         26,485        116,096
                                             -----------    -----------    -----------
Net loss                                    $   (864,432)   $  (462,207)   $(2,791,701)
                                             ===========    ===========    ===========
 Basic and diluted net loss per share       $      (0.08)   $     (0.06)
                                             ===========    ===========
Weighted average number of common shares
  outstanding                                 11,164,957      8,220,239
                                             ===========    ===========
</TABLE>

                                     F-4
<PAGE>

                      TRANSFORM PACK INTERNATIONAL INC.
                        (a development stage company)
             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
            YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
           OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                            (in Canadian Dollars)
<TABLE>
<CAPTION>
                                                                                               Deficit
                                                                                             Accumulated
                                             Warrants               Share Capital               During
                                      ----------------------    -------------------------    Development
                                         Shares     Amount       Shares          Amount         Stage          Total
------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>          <C>            <C>           <C>            <C>
Transform Pack Inc.
 Balance - June  1, 1994                      -    $       -    $         -    $        -    $         -    $          -
 Issue of common stock                        -            -            200        10,000              -          10,000
 Net loss                                     -            -              -             -       (199,797)       (199,797)
                                      ---------    ---------    -----------    ----------    -----------    ------------
 Balance - May 31, 1995                       -            -            200        10,000       (199,797)       (189,797)
 Net loss                                     -            -              -             -        (56,303)        (56,303)
                                      ---------    ---------    -----------    ----------    -----------    ------------
 Balance - May 31, 1996                       -            -            200        10,000       (256,100)       (246,100)
 Issue of common stock                        -            -      1,999,800       400,000              -         400,000
 Net loss                                     -            -              -             -       (285,156)       (285,156)
                                      ---------    ---------    -----------    ----------    -----------    ------------
 Balance - May 31, 1997                       -            -      2,000,000       410,000       (541,256)       (131,256)
 Net loss                                     -            -              -             -       (445,697)       (445,697)
                                      ---------    ---------    -----------    ----------    -----------    ------------
 Balance - May 31, 1998                       -            -      2,000,000       410,000       (986,953)       (576,953)
 Net loss                                     -            -              -             -       (478,109)       (478,109)
                                      ---------    ---------    -----------    ----------    -----------    ------------
 Balance - May 31, 1999                       -            -      2,000,000       410,000     (1,465,062)     (1,055,062)
                                      ---------                 -----------
Transform Pack International Inc.
 Balance May 31, 1999                         -            -      2,910,000       221,155       (221,155)              -
 Net loss from June 1,1999 to
  January 28, 2000                            -            -              -             -         (7,217)         (7,217)

Impact of reverse acquisition of
 Transform Pack Inc. (Note 1)
 Recapitalization of common shares            -            -              -      (228,372)       228,372               -
 Common share issued to acquire
  Transform Pack Inc.                         -            -      7,000,000             -              -               -

Fair value of stock options granted to
  non-employees                               -            -              -        24,349              -          24,349

Net loss                                      -            -              -             -       (462,207)       (462,207)

Issue of common stock by Transform
 Pack International Inc.                      -            -      1,000,957       712,715              -         712,715
                                      ---------    ---------    -----------    ----------    -----------    ------------
Balance - May 31, 2000                        -            -     10,910,957     1,139,847     (1,927,269)       (787,422)
Net loss                                      -            -              -             -       (864,432)       (864,432)
Issue of common stock by Transform
 Pack International Inc. to employee    100,000            -        100,000        75,500              -          75,500
Issue of common stock by Transform
 Pack International Inc.                408,000       48,545        408,000       259,420              -         307,965
                                      ---------    ---------    -----------    ----------    -----------    ------------
Balance - May 31, 2001                  508,000    $  48,545     11,418,957    $1,474,767    $(2,791,701)   $ (1,268,389)
                                      =========    =========    ===========    ==========    ===========    ============
</TABLE>

                                     F-5
<PAGE>

               TRANSFORM PACK INTERNATIONAL INC.
                 (a development stage company)
             CONSOLIDATED STATEMENTS OF CASH FLOWS
     YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                     (in Canadian Dollars)
<TABLE>
<CAPTION>
                                                                               Period From
                                                                               October 31
                                                                              1994 (Date of
                                                                              Incorporation)
                                                       May 31       May 31      to May 31
                                                        2001         2000          2001
-------------------------------------------------------------------------------------------
<S>                                                 <C>           <C>           <C>
Net inflow (outflow) of cash and cash equivalents
related to the following activities:

Operating
Net loss                                            $ (864,432)   $ (462,207)   $(2,791,701)
  Items not affecting cash
     Amortization                                       90,083        81,968        401,892
     Fair value of stock options granted to
       non-employees                                         -        24,349         24,349
     Fair value of stock granted to employee            75,500             -         75,500
  Changes in non-cash working capital items
     Accounts receivable                               (88,561)     (138,989)      (269,030)
     Inventory                                         (22,641)      (64,832)      (149,950)
     Prepaid expenses                                      393        (1,415)        (2,336)
     Accounts payable                                  324,981        89,205        544,529
                                                    ----------    ----------    -----------
                                                      (484,677)     (471,921)    (2,166,747)
                                                    ----------    ----------    -----------
Financing
  Proceeds on long-term debt                             5,362       112,531      1,082,317
  Repayment of long-term debt                          (82,534)      (39,872)      (295,563)
  Due to related parties                               166,231             -        293,308
  Proceeds  from  (repayment of bank indebtedness       92,828       (43,897)       406,328
                                                    ----------    ----------    -----------
                                                       181,887        28,762      1,486,390
                                                    ----------    ----------    -----------
Investing
  Proceeds from issuance of captial stock              153,735       712,715      1,524,700
  Acquisition of capital assets, net of government
    assistance relieved                                (21,878)      (98,623)      (867,343)
  Proceeds on disposal of capital assets                     -             -          5,000
                                                    ----------    ----------    -----------
                                                       131,857       614,092        680,357
                                                    ----------    ----------    -----------
Net inflow (outflow) of cash and cash equivalents     (170,933)      170,933              -
Cash and cash equivalents, beginning of year           170,933             -              -
                                                    ----------    ----------    -----------
Cash and cash equivalents, end of year              $        -    $  170,933    $         -
                                                    ==========    ==========    ===========
</TABLE>

                                     F-6
<PAGE>


                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)





1.   BASIS OF PRESENTATION

   Transform   Pack  International  Inc.  (a  development   stage
   company)  (formerly  Cybernetics  Inc.)  (the  "Company")   is
   incorporated  under the laws of the State  of  Minnesota,  and
   was  until  January 2000, a non-operating shell  company.   On
   January  28,  2000,  the Company and its shareholders  entered
   into  an exchange agreement with the shareholders of Transform
   Pack  Inc.,  whereby the shareholders of Transform  Pack  Inc.
   acquired   control  of  the  Company  by  way  of  a   reverse
   acquisition.   The acquisition was effected by  the  issue  of
   7,000,000  shares of the Company in exchange for 100%  of  the
   outstanding  common shares of Transform Pack  Inc.   Transform
   Pack  Inc.  is a development stage company incorporated  under
   the  laws  of  the  Canadian province of New Brunswick,  whose
   operations  include the manufacturing and marketing  of  spice
   sheets for seasoning of meat, fish and poultry products.   The
   Company  remains in the development stage as  it  is  actively
   developing the market for its product.

   The accompanying financial statements have been prepared on  a
   going-concern  basis, which contemplates  the  realization  of
   assets  and  the  satisfaction of liabilities  in  the  normal
   course  of  business.   As shown in the financial  statements,
   during  the  years  ended May 31, 2001 and 2000,  the  Company
   incurred  significant net losses and negative cash flows  from
   operations;  also,  as of May 31, 2001 and 2000,  the  Company
   had  a  net shareholders' deficiency in assets. These factors,
   among  others,  indicated that the Company may  be  unable  to
   continue as a going concern.  The financial statements do  not
   include  any  adjustments relating to the  recoverability  and
   classification  of recorded asset amounts, or  the  amount  of
   and  classification  of liabilities, that might  be  necessary
   should  the Company be unable to continue as a going  concern.
   The  Company's  continuation as a going concern  is  dependent
   upon  its  ability to ultimately obtain profitable operations,
   generate  sufficient  cash flow to meet its  obligations,  and
   obtain additional financing as may be required.

    Management's Plans

   As   shown  in  the  consolidated  financial  statements,  the
   Company  has  incurred losses from operations of $864,432  and
   $462,207 for the years ended May 31, 2001 and 2000, and a  net
   shareholders'  deficiency in assets at year  end.   Since  its
   inception,  the Company has devoted substantially all  of  its
   efforts  to  developing  the  products,  obtaining  financing,
   assessing   market  demand,  and  obtaining  customers.    The
   success  of  the  Company's operations  and,  ultimately,  the
   attainment   of   profitable  operations  are   dependent   on
   achieving  a level of sales adequate to support the  Company's
   cost structure.

   The   Company   intends  to  increase  sales  through   market
   penetration  strategies designed to introduce the products  to
   numerous  North American and European customers.  The  Company
   is  currently  working on obtaining additional  funding  which
   will  satisfy its working capital needs and allow the  Company
   to increase its production.

                                     F-7
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

2.   ACCOUNTING POLICIES

   The  financial  statements have been  prepared  in  accordance
   with  accounting principles generally accepted in  the  United
   States  of  America  and  include  the  following  significant
   accounting policies:

   a)   Government Assistance

     Government  assistance  received as  a  reimbursement  of  a
     capital cost acquisition is recorded as a reduction  of  the
     capital  cost  and  is amortized on the same  basis  as  the
     asset.   Contributions received for the development  of  the
     technology of spice sheets is recorded as a reduction of the
     related research and development expense.

   b)   Inventory

     Inventory consists only of raw materials and is recorded  at
     the  lower of cost (on a first-in, first-out basis) and  net
     realizable value.

   c)   Capital Assets

     Capital   assets  are  recorded  at  cost  less   government
     assistance.   Amortization is computed using  the  following
     rates and methods:

         Machinery and equipment           10 years straight-line
         Leasehold improvement              5 years straight-line
         Office furniture and equipment   20%   declining-balance
         Lab equipment                    20%   declining-balance
         Patents                           10 years straight-line

   d)   Use of Estimates

     The  preparation of financial statements in conformity  with
     accounting  principles  generally  accepted  in  the  United
     States  of America require management to make estimates  and
     assumptions  that  affect the reported  amounts  of  assets,
     liabilities,  revenues  and  expenses,  and  disclosure   of
     contingent   liabilities  in  these  financial   statements.
     Actual results could differ from those estimates.

   e)   Research and Development

     Research and development costs are charged to expenses  when
     incurred.

                                     F-8
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

2. ACCOUNTING POLICIES (continued)

    f)  Income Taxes

     Income  taxes  are  provided for current  taxes  payable  or
     refundable,  and  temporary  differences  arising  from  the
     future  tax consequences of events that have been recognized
     in the Company's financial statements or income tax returns.
     The  effect  of income taxes is measured based on  currently
     enacted  tax  laws  and  rates.  A  valuation  allowance  is
     provided for deferred tax assets when it is more likely than
     not that some or all of such assets will not be realized.

   g)  Comprehensive Income

     There  are no differences between the Company's net earnings
     as  reported  and its comprehensive income.  Accordingly,  a
     separate  statement  of comprehensive income  has  not  been
     presented.

   h)   Cash and Cash Equivalents

     The   Company   considers   investments   in   highly-liquid
     investment instruments with maturities of 90 days or less at
     the  date  of purchase to be cash equivalents.  The carrying
     amount  reported  in the balance sheets for  cash  and  cash
     equivalents approximates their fair value.  Cash equivalents
     consist  principally  of  investments  in  certificates   of
     deposit with financial institutions.

   i)   Derivative Instruments and Hedging Activities

     In  June  2000,  the  Financial Accounting  Standards  Board
     issued SFAS 133, "Accounting for Derivative Instruments  and
     Hedging  Activities",  which  will  be  effective  for   the
     Company's   2002  fiscal  year.   Under  the  new  standard,
     companies  will  be  required to record derivatives  on  the
     balance  sheet  as  assets or liabilities measured  at  fair
     value.   Management  has  determined  that  the  impact   of
     adopting SFAS 133 is not material.

                                     F-9
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

2.   ACCOUNTING POLICIES (continued)

   j)  Basic and Diluted Net Loss per Share

     Basic  net  loss per common share is based on  the  weighted
     average  number  of  common shares outstanding  during  each
     period.   Diluted net loss per share has not been  presented
     as it would be anti-dilutive.

       Loss per share

     The  following table sets forth the computation of  earnings
     per share:

                                         Year Ended      Year Ended
                                            May 31,         May 31,
                                              2001             2000
     --------------------------------------------------------------
     Numerator:

     Net Loss                          $  (864,432)   $    (462,207)

     Denominator:

     Weighted average number of shares
        outstanding during the period   11,164,957        8,220,239

     Loss per share                    $     (0.08)   $       (0.06)
     --------------------------------------------------------------
   k)   Revenue Recognition

     Transform  Pack International Inc. recognizes  revenue  from
     spice  sheet manufacturing after a purchase order  has  been
     received, the sheets have been completed and shipped to  the
     customer, as this is the point of title transfer.

                                     F-10
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

3. ACCOUNTS RECEIVABLE

                                             2001        2000

   Accounts receivable - trade          $  270,751    $ 186,836
   Allowance for doubtful accounts          (9,653)     (23,600)
   Sales tax receivable                      7,933       17,234
                                          --------     --------
                                        $  269,031    $ 180,470
                                          ========     ========

4.   CAPITAL ASSETS
<TABLE>
<CAPTION>
                                        2001                                 2000
                                     Accumulated   Net Book             Accumulated    Net Book
                            Cost     Amortization    Value      Cost    Amortization     Value
                          ---------   ---------   ---------   ---------   ---------   ---------
<S>                      <C>         <C>          <C>         <C>       <C>          <C>
Machinery and equipment   $ 720,007   $ 302,329   $ 417,678   $ 700,427   $ 231,351   $ 469,076
Leasehold  improvements      51,802      42,502       9,300      51,802      32,022      19,780
Office furniture and
  equipment                  62,492      43,149      19,343      61,937      38,383      23,554
Lab equipment                23,718      14,816       8,902      23,718      12,591      11,127
Patents                      60,414      30,596      29,818      60,414      24,554      35,860
                            -------    --------    --------    --------    --------    --------
                            918,433     433,392     485,041     898,298     338,901     559,397
Government assistance       (64,972)    (38,375)    (26,597)    (64,972)    (32,226)    (32,746)
                            -------    --------    --------    --------    --------    --------
                          $ 853,461   $ 395,017   $ 458,444   $ 833,326   $ 306,675   $ 526,651
</TABLE>


5.   INVESTMENT IN AFFILIATE

   Transform Pack Inc. owns 10,000 shares of Transform Pack  GmbH
   Europe  which  represents a 2% ownership of the  total  common
   shares  issued.   This investment has been  accounted  for  at
   cost.

                                     F-11
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

6.   BANK INDEBTEDNESS

   Transform  Pack  Inc.  has  an  approved  line  of  credit  of
   $298,500  bearing interest at prime (6.75% at  May  31,  2001)
   plus  1  1/8%, which is guaranteed by certain shareholders  of
   the  Company.  At May 31, 2001, the full amount of  this  line
   of  credit had been drawn (2000 - $298,500).  The company also
   has  $207,000  in approved line of credit facilities,  bearing
   interest  at rates between prime (6.75% at May 31, 2001)  plus
   1 1/2% and prime plus 2%, secured by general assignment of book
   debts,  inventory  and a guarantee from the  Province  of  New
   Brunswick  in  the  amount  of $132,000.   At  May  31,  2001,
   $25,000 had been drawn under this facility (2000 - $15,000).


7.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

                                            2001         2000

   Accounts payable - trade             $  453,240   $  174,254
   Payroll deductions payable               29,277        2,207
   Accrued liabilities                      54,227       50,302
   Employee loan payable                    15,000            -
                                          --------     --------
                                        $  551,744   $  226,763
                                          ========     ========

8. LONG-TERM DEBT

                                                          2001      2000

Bank loan, repayable in monthly principal payments
of $1,167 plus interest at prime (7.5% at May 31, 2001)
plus 1.75%, through the Small Business Loan Act,
secured by a chattel mortgage on a specific piece of
equipment.                                             $      -   $ 10,591

Bank loan, repayable in monthly principal payments
of $1,667 plus interest at prime (7.5% at May 31,
2001) plus 1.75%, through the Small Business Loan
Act, secured by a chattel mortgage on specific
machinery and equipment.                                 90,000    108,333

                                     F-12
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

8. LONG-TERM DEBT (continued)

                                                 2001         2000

ACOA loan, repayable in 82 consecutive monthly
installments of $5,361, followed by one final
installment of $5,398 commencing June 1, 2000
non-interest bearing.                          $ 396,751   $ 445,000
                                                --------    --------
                                                 486,751     563,924
   Less:  Current portion                         87,787      94,927
                                                --------    --------
                                               $ 398,964   $ 468,997
                                                ========    ========
    Principal amounts due in the next five years are as follows:

         2002         2003        2004         2005         2006

      $87,787      $86,120     $86,120      $86,120      $74,453


9.   REDEEMABLE PREFERRED SHARES OF TRANSFORM PACK INC.

   Authorized:
     Class  A  preferred shares, $10 par value, non-voting,  non-
     cumulative  10% dividend rate, redeemable at par,  unlimited
     number

                                              2001         2000

   Issued:
       56,625 Class A preferred shares   $ 566,250   $ 566,250
       Current portion                     (60,000)    (60,000)
                                           -------     -------
                                         $ 506,250   $ 506,250
                                           =======    ========

                                     F-13
<PAGE>


                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

9.     REDEEMABLE  PREFERRED  SHARES  OF  TRANSFORM   PACK   INC.
   (continued)

   The  Province  of  New  Brunswick  received  30,000  Class   A
   preferred  shares  during the year  ended  May  31,  2000  for
   $300,000.   The proceeds were the conversion of  the  Province
   of  New  Brunswick loans.  Transform Pack Inc. has  agreed  to
   redeem  no  less than 20% of the $300,000 of preferred  shares
   issued  to the Province of New Brunswick on August 31 of  each
   year,  commencing on August 31, 2000 and ending on August  31,
   2002,  at  which time all remaining preferred shares shall  be
   redeemed.

   The  Company did not make its first redemption and is  now  in
   default  under  its  agreement  with  the  Province   of   New
   Brunswick.   The  Province  has  provided  the  Company   with
   written  documentation  that they have  agreed  to  defer  the
   redemption of preferred shares to August 31, 2001.

   On  January 28, 2000, after the transaction described in  Note
   1,  Transform  Pack Inc. became a subsidiary  of  the  Company
   and,  as  a result, its preferred equity is presented as  non-
   controlling interest in a subsidiary.


10.  DUE TO SHAREHOLDERS

   The  amount due to shareholders is interest-free with no fixed
   terms of repayment.


11.     SHARE CAPITAL

 Authorized:
  Unlimited common shares of Transform Pack  Inc. no par value
   5,000,000 preferred stock of the Company, $.01 par value, none
   issued or outstanding 40,000,000 common stock of the Company,
   $.004 par value

                                                2001         2000

Issued and fully paid:
    11,418,957 common stock of the Company   $   13,916   $   11,680

   Additional paid-in capital of the Company  1,460,851    1,128,167
                                             ----------    ---------
                                             $1,474,767   $1,139,847
                                             ==========   ==========

                                     F-14
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

11.     SHARE CAPITAL (continued)

   In September 2000, the Company received $154,230 from a related
   party as a loan.  In February 2001, the Company issued 408,000
   new common  shares to this related party at $.50 US per share,
   receiving gross  cash  proceeds  of $153,735, plus conversion
   of this loan to share capital. In conjunction with this equity
   investment,  the  Company  issued  408,000  warrants  with  an
   exercise  price of $.50  US per share that can be exercised at
   any time and which expire in  2004. These warrants were valued
   at  $48,545.  Accordingly,  such  amount  has  been  accounted
   for as a reduction in share capital and allocated to warrants.

   In  April  2001,  the  Company issued  100,000  shares  to  an
   employee, valued at $.50 US per share, in return for  services
   rendered.   In  conjunction with this equity  investment,  the
   Company  issued  100,000 warrants with an  exercise  price  of
   $.50  US per share that can be exercised at any time and which
   expire  in  2004.  No intrinsic value was allocated  to  these
   warrants,  to  be  consistent  with  the  accounting treatment
   adopted by the Company concerning employee stock options.

   Stock Option Plan

   The  Company  follows Accounting Principles Board  Option  No.
   25,  "Accounting for Stock Issued to Employees" (APB  25)  and
   related  interpretations in accounting for its employee  stock
   options.   The exercise price of the Company's employee  stock
   options  equals  or  is greater than the  fair  value  of  the
   underlying  stock  on the date the options were  granted,  and
   accordingly  no  compensation expense has been  recognized  in
   the  accompanying financial statements in any of  the  periods
   presented.

   The  Company  has  fixed stock options  granted  to  specified
   employees  by  resolution  of  the  board  of  directors.   An
   aggregate of 670,000 common shares have been reserved for  the
   granting of such options.

   On  February 29, 2000, the Company established a stock  option
   plan   for   its   officers,  directors  and  employees.    In
   accordance  with  the  plan, an aggregate  of  670,000  common
   shares  have  been reserved for the granting of such  options.
   The  exercise price of each option is to be determined by  the
   board  of  directors.  All options issued under the plan  will
   expire two or three years after the date of granting.

                                     F-15
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

11.     SHARE CAPITAL (continued)

   The  following table presents information concerning all stock
   options granted to the Company's employees:

                                   Year ended                 Year ended
                                  May 31, 2001                May 31, 2000
                                     Weighted Average          Weighted Average
                           Number of  Exercise Price  Number of  Exercise Price
                            Options     per Share     Options    per Share
Outstanding, beginning of
 period                     670,000   $0.67 US          -
Granted during the period         -               670,000      $0.67 US
Forfeited during the period(220,000)                    -
                            --------              -------
Outstanding, end of period  450,000   $0.73 US    670,000      $0.67 US
                            ========              =======
Exercisable, end of period  450,000   $0.73 US    670,000      $0.67 US
                            ========               =======


   The above options vested immediately on grant.

   The  range of exercise prices for stock options granted during
   the  period was from $0.50 US to $1.00 US.  The life remaining
   on  stock  options outstanding as at May 31, 2001 was  one  to
   two years.

   Had   compensation  cost  for  the  Corporation's  stock-based
   compensation  been determined based on the fair value  at  the
   grant  dates consistent with SFAS 123, "Accounting for  Stock-
   Based  Compensation", the Company's proforma  net  loss  would
   have been as follows:

                                            May 31       May 31
                                              2001         2000

   Net loss
       As reported                        $864,432     $462,207
       Pro-forma                          $882,398     $491,500

   Loss per share
       As reported                        $   0.08     $   0.08
       Pro-forma                          $   0.08     $   0.09

                                     F-16
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

11.     SHARE CAPITAL (continued)

                                           Weighted Average   Weighted Average
                                 Number of    Fair Value       Exercise Price
                                  Options      per Share          per Share
Exercise price above fair value  210,000    $      -          $1.54 ($1.00 US)
Exercise  price at fair value    340,000    $   0.12 US       $0.77 ($0.50 US)
                                 -------
                                 550,000    $   0.07 US       $1.03 ($0.67 US)
                                 =======

   The  fair  value is estimated at the date of grant  using  the
   Black-Scholes   option  pricing  model  with   the   following
   weighted average assumptions:

                                            May 31      May 31
                                              2001        2000

   Dividend yield                                -           -
   Expected volatility                           -           -
   Risk-free interest rates                  5.06%       6.07%
   Expected life                           3 years     3 years


12.  INCOME TAXES

   Deferred tax assets and liabilities reflect the future  income
   tax  effects  of temporary differences between  the  financial
   statement  carrying amounts of existing assets and liabilities
   and  their respective tax bases and are measured using enacted
   tax  rates that apply to taxable income in the years in  which
   those  temporary differences are expected to be  recovered  or
   settled.  As at May 31, 2001, the deferred income tax  balance
   was comprised of the following:

                                               2001         2000

   Deferred tax assets
       Loss carryforwards                    $  748,398   $  465,241
       Research and development expenditures
         carried forward                         88,078       88,078
       Valuation allowance                     (649,069)    (401,044)
                                              ---------    ---------
       Total deferred tax assets                187,407      152,275
                                              ---------    ---------

                                     F-17
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

12.  INCOME TAXES (continued)

                                               2001         2000

   Deferred tax liabilities
       Amortization of capital assets        $ 176,203  $ 141,071
        Research and development tax credits    11,204     11,204
                                              --------   --------
       Total deferred tax liabilities          187,407    152,275
                                              --------   --------

   Net deferred tax assets                   $       -  $       -
                                              ========   ========

   Since  the Company has been in a developmental stage,  it  has
   not  yet generated any income subject to income taxes.  Losses
   carried  forward  of  $1,011,394, which  will  expire  if  not
   utilized against future taxable income, are as follows:

      2003       2004      2005      2006       2007       2008

  $ 212,110  $ 131,716  $ 275,566  $ 352,900  $ 39,102  $ 713,223

   The  Company  also has a scientific research  and  expenditure
   pool  balance  of $191,474 which can also be  used  to  reduce
   future  taxable  income.   There is no  expiry  date  on  this
   future   tax   benefit.    The  Company   has   provided   for
   amortization  of its capital assets in excess of capital  cost
   allowances  claimed for income tax purposes of $395,018  (2000
   -  $306,675).   This  excess is available  to  reduce  taxable
   income of future years.

   The  Company has available investment tax credits  which  will
   reduce  future  federal  income  taxes  by  $11,204  (2000   -
   $11,204).

   None  of the above future benefits have been recorded  in  the
   financial  statements  since they are  dependent  upon  future
   income.

                                     F-18
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

13.  ADDITIONAL INFORMATION TO THE STATEMENT OF CASH FLOWS

   During  the  2000  year,  Transform Pack  Inc.  issued  30,000
   preferred   shares  to  the  Province  of  New  Brunswick   as
   repayment for $300,000 of outstanding loans.

                                               2001         2000

    Interest paid                       $    42,094    $    38,059
                                         ==========     ==========

14.  COMMITMENTS

   As  at  May  31,  2001,  the  Company  had  commitments  under
   operating  leases  for premises, maturing  at  various  dates.
   Rent  expense  in  2001  totalled $48,231  (2000  -  $44,064).
   Future minimum lease payments are as follows:

                  2002             $50,004
                  2003             $50,004
                  2004             $41,670

   During  the  2000  year, the Company entered into  a  contract
   wherein  the  Company has agreed to pay $25,000  US  for  four
   consecutive  months for marketing services,  if  and/or  when,
   the  company  is successful in completing its second  issuance
   of shares worth $1,000,000 US.


15.  FINANCIAL INSTRUMENTS

   a)   Fair value of financial instruments

     The  book values of the financial assets and liabilities  of
     the  Company approximate their estimated fair values  as  at
     May  31,  2001 and 2000 because of either the short maturity
     of  these  instruments or their relationship  with  floating
     interest rates.

     The fair value of shareholder advances cannot be determined,
     as they do not include any terms of repayment.

                                     F-19
<PAGE>

                TRANSFORM PACK INTERNATIONAL INC.
                  (a development stage company)
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED MAY 31, 2001 AND 2000 AND THE PERIOD FROM
    OCTOBER 31, 1994 (DATE OF INCORPORATION) TO MAY 31, 2001

                      (in Canadian dollars)

15.               FINANCIAL INSTRUMENTS (continued)

   b)   Credit risk concentration

     Credit risk concentration exists due to the small number  of
     customers that make up the majority of trade accounts.   The
     balance for one customer accounts for approximately  90%  of
     the  Company's accounts receivable (2000 - another  customer
     for approximately 70%).

   c)   Interest rate risk

     The   Company   is  exposed  to  market  risk   related   to
     fluctuations  in  interest  rates  on  long-term  debt.   It
     currently does not hold any financial instruments that might
     mitigate this risk.


16.  REVENUE FROM MAIN CUSTOMERS

   In  2001,  approximately 64% (2000 -  56%)  of  the  Company's
   total   revenue  is  derived  from  one  customer   (different
   customer in 2000).

                                     F-20
<PAGE>