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

                                   FORM 10-KSB





(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 For the fiscal year ended December 31, 2001
                                      -----------------

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
    For the transition period from                       to
                                    --------------------    --------------------

Commission File Number: 000-33313

                             SZM Distributors, Inc.
                             ----------------------
             (Exact name of registrant as specified in its charter)
Nevada                                                               95-4868287
------                                                               ----------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

5109 River Avenue, Suite A, Newport Beach, California                     92663
-------------------------------------------------------------- -----------------
(Address of principal executive offices)                             (Zip Code)

                                 (714) 473.0803
                                 ---------------
              (Registrant's Telephone Number, Including Area Code)



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


 Title of each class registered:      Name of each exchange on which registered:
 -------------------------------      ------------------------------------------

               None                                      None
               ----                                      ----

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

                  Common Stock, Par Value $.001
                  ------------------------------
                         (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. (X) Yes  ( ) No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of 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. ( )


State issuer's revenues for its most recent fiscal year. $4,000.00

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of March 29, 2002, approximately $0.

As of March 29, 2002, there were 3,852,000 shares of the issuer's $.001 par
value common stock issued and outstanding.

Documents incorporated by reference. There are no annual reports to security
holders, proxy information statements, or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.

Transitional Small Business Disclosure format (check one):

                            ( ) Yes    (X)  No



                                       1
<PAGE>


                                     PART I

Item 1. Description of Business.
--------------------------------

Our Background. We were incorporated in Nevada on May 25, 2001.

Our Business. Our principal business activities include the distribution and
sale of novelty products, which are developed and manufactured by third parties.
We currently sell and distribute plush toys, disposable pocket binoculars and
bobblehead dolls. We believe that our primary target market will consist of
corporate, professional and collegiate entities that engage in the promotion,
coordination or sponsorship of various events. We have recently generated some
revenues from the sale of plush toys and bobblehead dolls and we hope that we
will begin to generate significant revenues.

To effectuate our business plan during the next three to six months, we must
market our products. We believe that we will use some of the proceeds generated
from this offering as well as revenues generated from sales of our products to
pay for our proposed marketing activities. If we are unable to generate revenues
necessary or obtain additional working capital to pay for our development, we
anticipate that our president, director and principal shareholder, Nicole
Sherman, will contribute funds to pay our expenses. Our belief that Ms. Sherman
will pay our expenses is based on the fact that Ms. Sherman has a significant
equity interest in us. We believe that Ms. Sherman will continue to pay our
expenses as long as she maintains a significant equity interest in us. We do not
have any agreement, understanding or arrangement with Ms. Sherman to pay our
expenses.

Any revenues generated will be used to develop sales and promotional materials
as well as marketing expenses related to meeting with potential customers. Our
management has recently begun marketing and promoting our novelty products by
attempting to schedule in person meetings with potential customers to display
those products and demonstrate their capabilities.

If we are unable to raise capital or generate revenues to pay for our proposed
marketing activities, we hope that we will continue to market our novelty
products by in person meetings with event coordinators of various sporting
activities. Our failure to pay for our marketing activities could result in our
inability to meet the objectives of our business plan within the next six
months.

Our Products. We currently sell and distribute disposable pocket binoculars,
plush toys and bobblehead dolls. To date we have sold approximately 5,000 plush
toys for approximately $.0.30 per toy, or $1,500, and 625 bobblehead dolls for
approximately $4.00 per doll, or $2,500. We have not had any sales of our
disposable pocket binoculars to date.

Binoculars are typically identified by two numerical specifications. The first
number signifies the magnification power and the second identifies the objective
lens diameter in millimeters. The products that we sell and distribute include
disposable binocular products. These compact binoculars can easily fit into your
palm or pocket and provide crisp and true colored images. Our disposable
binoculars are significantly less costly to manufacture because they are
unusually constructed from paper or plastic materials and low-grade optics. The
cost of manufacturing one unit of our disposable binoculars is approximately
$0.18, therefore enabling us to wholesale the product at approximately $2.00 to
$1.60 per unit. Our disposable binoculars range from 3x21 to 4x25 and are
constructed from plastic or card paper. Our disposable binoculars are offered in
a variety of designs and typically adjustable and collapsible.

Pocket and disposable binocular products are to be used at various sightseeing
and sporting events, including but not limited to football, baseball and
basketball games. We intend to market our products to corporations, professional
and collegiate athletic teams and stadiums as well as other interested parties.
Our products are intended for occasional use and designed to be lightweight and
inexpensive.



                                       2
<PAGE>


We purchase and distribute small plush "beanie" type bears and resell them to
crane amusement game operators. Crane amusement games, which are placed in
arcades and bowling alleys, are coin-operated games that consist of a metallic
claw suspended in a glass enclosure above a pile of various plush toys. The game
operator manipulates the claw over the plush toys to grab as many toys as
possible within a given time frame.

We recently increased our product offerings by selling and distributing
bobblehead dolls. We intend to market our line of bobblehead "sport figure"
dolls to various sports arenas, football stadiums, baseball parts, and
racetracks as a promotional giveaway. Our other lines of bobblehead dolls are
expected to be marketed through various regional food chains stores, retail
craft stores and selected gift shops. In early November 2001, we intend to offer
the "American Christmas Collection" which will feature bobblehead Rudolph,
Frosty, and Santa Claus dolls. In late November 2001, we intend to offer the
"NFL Quarterback Series" which includes bobblehead Joe Montana, and Dan Marino
figures. Our Joe Montana figure will be manufactured for promotional use only
and is part of our limited edition bobblehead collection. Therefore, production
of our Joe Montana will be restricted to only 3,000 figures.

In light of the terrorists' acts on September 11, 2001, we also intend to offer
a "Patriotic Series" of bobblehead dolls. We intend to donate a portion of the
proceeds to the families of the victims of the New York City, Washington D.C.
and Pennsylvania tragedies. This series is currently under development and is
expected to include figures of President George W. Bush, the Statute of Liberty,
Uncle Sam, FDNY firefighter, and NYPD police officer. We have not yet
established an anticipated release date for this product because it is currently
under development.

Distribution. Our current method of distribution is direct sales by Nicole
Sherman, our president, and Jeff Hoss, our treasurer. Any orders that we receive
currently are shipped via U.S. mail. We also may use major shipping companies,
such as Federal Express or United Parcel Service. We believe that we can
distribute our products at various sporting events, food chain stores and retail
craft and gift locations.

Our Website www.szmdistributors.com. Our current website is under development
and provides general information about the company and our address, telephone
number and e-mail address. We intend to develop our website to display pictures
of the pocket and disposable binocular products that we sell and distribute. If
we generate revenues, we intend to further develop the website to market the
products that we sell.

Our Target Markets and Marketing Strategy. We believe that our primary target
market will consist of corporate, professional and collegiate entities that
engage in the promotion, coordination or sponsorship of various musical,
sporting or other related activities that may permit for the magnification of
distant objects. For example, sporting events such as football, baseball, and
basketball games, as well as horseracing, automotive racing events and musical
concerts are activities that promote the use of binoculars.

We intend to target corporate, professional and collegiate entities that desire
to purchase and resell our compact binoculars for use general purposes, as well
as specialty promotional products or gifts. Higher quality, power and cost
binoculars have typically been marketed and distributed through camera stores,
discount department stores, and sports/hunting stores, however, we believe that
the unique compact, disposable and low cost features of our product would be
unsuccessful in such traditional channels. We believe that the relative quality
and cost of our products will entice spectators who attend these events to
purchase our products. Depending on the success of our products, we may target
discount retail mass merchandisers and distributors, such as Wal-Mart, Target
and K-Mart.

Our initial market strategy for sales of our plush toys will focus on the crane
amusement game industry. We may, however, expand our distribution to allow for
our plush products to be marketed as a promotional product. We believe that
corporate, professional and collegiate entities may purchase our plush toys with
their respective logo or crest to be used as promotional products for their
organizations. We intend to market our plush toys together with our binoculars
and bobblehead dolls to those potential customers.



                                       3
<PAGE>


We believe that in-stadium give-away bobblehead dolls become instant
collectibles and often show up in online auctions within hours after teams give
them away. We intend to target corporate, professional and collegiate entities
that desire to purchase our bobblehead dolls as promotional items. We intend to
market our bobblehead dolls to those potential customers by showing how value
for collectibles can be achieved by:

        o      creating a limited number of each figure;
        o      distributing each toy exclusively on a single day during an
               in-stadium promotion; and
        o      custom-packaging many of the dolls with a game date.

Growth Strategy. Our objective is to become a dominant provider of low cost
pocket and disposable binoculars, plush toys and bobblehead dolls. Our strategy
is to continue providing clients with exceptional personal service and low cost
pocket and disposable binocular products, plush toys and bobblehead dolls. Key
elements of our strategy include:

        o      negotiate distribution agreements with third party manufacturers
               for compact pocket and disposable binoculars, plush toys and
               bobblehead dolls;
        o      increase our relationships with businesses;
        o      increase our relationships with third party providers of pocket
               and disposable binoculars, plush toys and bobblehead dolls;
        o      provide additional services for businesses and consumers; and
        o      pursue relationships with joint venture candidates. We will
               attempt to establish joint ventures with companies that will
               support our business development. For example, a potential joint
               venture candidate could include a manufacturer of optical lens
               because pocket and disposable binoculars use various grades of
               optics for magnification purposes.

Our Supplier. The disposable binoculars and plush toys that we sell and
distribute are supplied by USA Sports Marketing, Inc. and PBI, Inc. Dreams, Inc.
supplies the bobblehead dolls that we sell and distribute. Dreams, Inc.
manufactures licensed merchandise of the National Football League, National
Basketball Association, Major League Baseball and the National Hockey League. We
do not currently have a written agreement with any of those suppliers. Those
suppliers have no obligation to supply disposable binoculars, plush toys or
bobblehead dolls to us and, therefore, they may terminate our relationship at
any time. We do not currently have any other relationships with additional
suppliers of disposable binoculars, plush toys or bobblehead dolls. If we
generate significant revenues, we anticipate that we will be able to develop
relationships with additional suppliers so that we will have alternative
suppliers in the event that our current suppliers do not desire or are unable to
supply a sufficient amount of products to meet our anticipated customer's
requirements. We also plan to enter arrangements with other suppliers to
diversify our product offerings.

Our operations to date have been focused on developing relationships with
various suppliers and manufacturers of disposable binoculars, plush toys and
bobblehead dolls. As a result of developing those relationships, we believe that
we will enter into written distribution agreements and generate revenues in the
next twelve months.

Our Competition. Competition in the novelty products industry is intense. Our
target markets primarily consists of sponsors, promoters and coordinators of
spectator events who may desire to sell our products to spectators or give them
away as promotional items. We compete directly with other companies and
businesses that have developed and are in the process of developing similar
products which are functionally equivalent or similar to the our products. For
example, other larger competitors' have entry-level compact binoculars which are
similar to the compact binoculars that we sell. Those binoculars are
inexpensive, yet still provide the user the ability to magnify images by three
to four times greater than the human eye could see without the assistance of
binoculars. Those binoculars are designed to be sold at low cost, yet still
provide quality optics. We expect that these competitors who have developed
similar compact binocular and optical products will market those products to our
target customers, which will significantly affect our ability to compete.

In the binocular market, we compete with Tasco, Bushnell, Nikon Inc., Canon
Inc., Minolta Camera, Co., Ltd., Pentax Corporation and various smaller
manufacturers and resellers, including KentVision, Inc., Sino Sourcing Inc.,
Vastfame Camera Ltd. (H.K.), and Fuzhou Fuhua Optics Ltd. Many of these
competitors in the binocular market have significantly greater brand name
recognition and financial and technical resources than we do, and many have
long-standing positions, customer relationships and established brand names in
their respective markets. In addition, some of our current and potential
competitors in the binocular market may possess greater financial or technical
resources and competitive cost advantages due to a number of factors, including,
without limitation, lower taxes and substantially lower costs of labor
associated with manufacturing.



                                       4
<PAGE>


We currently have no market share in our primary target markets of sponsors,
promoters and coordinators of spectator events who may desire to sell our
compact binoculars products to spectators or who may desire to distribute our
products as promotional or specialty products. We believe we can gain shares in
these markets as a low cost competitor.

We compete in a discrete area of the plush toy market and principally market our
services to crane amusement game suppliers and distributors. In this market we
compete with King Plush, which specializes in the design, manufacturing,
importing, exporting and distribution of high quality plush toys. King Plush is
known worldwide and provides quality, licensed and non-licensed stuffed toys. We
also compete with Plush Appeal, LLC, a manufacturer and direct importer of
quality plush toys, including stuffed animals, customized plush prepacks, key
chains and novelties for crane amusement games of all sizes. In addition to
supplying crane operators with plush toys, Plush Appeal supplies licensed and
sports merchandise, as well as promotional plush toys.

In 1999, the revival of the bobbing-head figures from the 1960s caught hold in
baseball stadiums. Spearheading the bobblehead doll trend was Bensussen Deutsch
& Associates, or BD&A, the largest sports promotion agency in the United States.
BD&A is our largest competitor and now the leading designer, creator and
supplier of in-stadium bobblehead collectibles and promotions for various Major
League Baseball teams.

Our Intellectual Property. We do not presently own any patents, trademarks,
licenses, concessions or royalties. Our success may depend in part upon our
ability to preserve our trade secrets, obtain and maintain patent protection for
our technologies, products and processes, and operate without infringing the
proprietary rights of other parties. However, we may rely on certain proprietary
technologies, trade secrets, and know-how that are not patentable. Although we
may take action to protect our unpatented trade secrets and our proprietary
information, in part, by the use of confidentiality agreements with our
employees, consultants and certain of our contractors, we cannot guaranty that:

        o      these agreements will not be breached;
        o      we would have adequate remedies for any breach; or
        o      our proprietary trade secrets and know-how will not otherwise
               become known or be independently developed or discovered by
               competitors.

We cannot guaranty that our actions will be sufficient to prevent imitation or
duplication of either our products and services by others or prevent others from
claiming violations of their trade secrets and proprietary rights.

We own the Internet domain name www.szmdistributors.com. Under current domain
name registration practices, no one else can obtain an identical domain name,
but someone might obtain a similar name, or the identical name with a different
suffix, such as ".org", or with a country designation. The regulation of domain
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise decrease the value of our domain names.

Our Research and Development. We are not currently conducting any research and
development activities other than our website. We do not anticipate conducting
such activities in the near future. If we generate significant revenues, we may
expand our product line by entering into distribution relationships with third
party manufacturers.

Government Regulation. We do not believe that we need any governmental approval
for our disposable binocular products, plush toys and bobblehead dolls. Our
business is subject to Federal Trade Commission regulation and other federal and
state laws relating to the promotion, advertising, labeling and packaging of
binocular products, plush toys and bobblehead dolls. We believe that we are in
compliance with all laws, rules and regulations material to our operations.

Employees. As of March 29, 2002, we have two employees. We anticipate that we
will not hire any employees in the next six months, unless we generate
significant revenues. We believe our future success depends in large part upon
the continued service of our key senior management personnel and our ability to
attract and retain managerial personnel.



                                       5
<PAGE>


Facilities. Our executive, administrative and operating offices are located 5109
River Avenue, Suite A, Newport Beach, California 92663, and are provided to us,
at no charge, by Jeffrey Hoss.

Item 2.  Description of Property.
---------------------------------

Property held by us. As of the date specified in the following table, we held
the following property:

====================================== ==============================
            Property                          December 31, 2001
-------------------------------------- ------------------------------
             Cash                                $23,051
====================================== ==============================

Our facilities. Our executive, administrative and operating offices are
approximately 200 square feet and are located at 5109 River Avenue, Suite A,
Newport Beach California 92663. Mr. Hoss, our treasurer and one of our
directors, currently provides office space to us at no charge. We do not have a
written lease or sublease agreement and Mr. Hoss does not expect to be paid or
reimbursed for providing office facilities. We believe that our current offices
are sufficient to meet our current and future needs.

Item 3.  Legal Proceedings.
---------------------------

There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.

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

Not applicable.

                                     PART II

Item 5.  Market Price for Common Equity and Related Stockholder Matters.
------------------------------------------------------------------------

Reports to Security Holders. We are a reporting company with the Securities and
Exchange Commission, or SEC. The public may read and copy any materials filed
with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, D.C. 20549. The public may also obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov.

Our securities are not listed for trading on any exchange or quotation service.
We are not required to comply with the timely disclosure policies of any
exchange or quotation service. The requirements to which we would be subject if
our securities were so listed typically include the timely disclosure of a
material change or fact with respect to our affairs and the making of required
filings. Although we are not required to deliver an annual report to security
holders, we intend to provide an annual report to our security holders, which
will include audited financial statements.

In November 2001, our registration statement on Form SB-2 to register 3,000,000
shares of common stock we offered for sale was declared effective by the SEC.
The approximate number of holders of record of shares of our common stock is
thirty eight. There are no outstanding options or warrants to purchase, or
securities convertible into, shares of our common stock.

There are no shares that can be sold pursuant to Rule 144 promulgated pursuant
to the Securities Act of 1933. There have been no cash dividends declared on our
common stock. Dividends are declared at the sole discretion of our Board of
Directors.



                                       6
<PAGE>


Penny Stock Regulation. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:

        o      a description of the nature and level of risk in the market for
               penny stocks in both public offerings and secondary trading;
        o      a description of the broker's or dealer's duties to the customer
               and of the rights and remedies available to the customer with
               respect to violation to such duties or other requirements of
               securities' laws;
        o      a brief, clear, narrative description of a dealer market,
               including "bid" and "ask" prices for penny stocks and the
               significance of the spread between the "bid" and "ask" price;
        o      a toll-free telephone number for inquiries on disciplinary
               actions;
        o      definitions of significant terms in the disclosure document or in
               the conduct of trading in penny stocks; and
        o      such other information and is in such form (including language,
               type, size and format), as the Securities and Exchange Commission
               shall require by rule or regulation.

Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:

        o      the bid and offer quotations for the penny stock;
        o      the compensation of the broker-dealer and its salesperson in the
               transaction;
        o      the number of shares to which such bid and ask prices apply, or
               other comparable information relating to the depth and liquidity
               of the market for such stock; and
        o      monthly account statements showing the market value of each penny
               stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.

Item 6.  Management's Discussion and Analysis of Financial Condition or Plan
of Operation.
----------------------------------------------------------------------------

This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.



                                       7
<PAGE>


Liquidity and Capital Resources.

Our total assets were approximately $62,651 at December 31, 2001. Of those
assets, cash was approximately $23,051. On August 31, 2001, we filed a
registration statement on Form SB-2 with the SEC to register 3,000,000 shares of
our common stock for sale by us. That registration statement was declared
effective by the SEC on November 9, 2001. On December 15, 2001, we authorized
for issuance 852,000 shares of our common stock at $0.05 per share pursuant to
our registration statement. As of December 31, 2001, we had received cash of
$31,000 in connection with this issuance and thus had $11,600 remaining due from
the various stock subscribers. Subsequently on January 16, 2002, we received the
receivable entire balance due of $11,600.

During December 2001, we received $28,000 cash from certain stock subscribers
for 560,000 shares of our common stock at $0.05 per share pursuant to our
registration statement on Form SB-2. Prior to issuance of the common stock, and
after further review of the subscriptions agreements by our management and our
outside legal counsel, we subsequently rejected and cancelled the related
subscription agreements and returned the entire $28,000 of stock subscribed on
January 15, 2002.

Results of Operations.

Revenues. From May 25, 2001, our date of inception, to December 31, 2001, we
realized revenues of approximately $4,000 from net sales. We anticipate that we
will generate more revenues as we expand customer base and our product
offerings.

Operating Expenses. For the period from May 25, 2001, our date of inception, to
December 31, 2001, our total operating expenses were approximately $35,483.
Those operating expenses were represented by $1,000 in consulting expenses,
$25,651 in legal and professional fees, and $8,832 in office expense. For the
period from May 25, 2001, our date of inception, through December 31, 2001, we
experienced a net loss of $31,483.

Our Plan of Operation for the Next Twelve Months. We have recently generated
revenues from the sale of our products and we hope to additional revenues in the
next twelve months. To effectuate our business plan during the next twelve
months, we must increase our product offerings and market and promote our
products. We anticipate that we will use the revenues generated to fund
marketing activities and for working capital. Our failure to expand our product
offerings and products will harm our business and future financial performance.

Our plan of operation is materially dependent on our ability to generate
revenues. Our operations to date have been focused on developing relationships
with various suppliers and manufacturers of disposable binoculars, plush toys
and bobblehead dolls. As a result of developing those relationships, we believe
that we will enter into written distribution agreements and generate revenues in
the next twelve months. Any revenues generated will be used to increase our
product offerings as well as expand our operations.

We had cash of $23,051 as at December 31, 2001. In our opinion, available funds
will satisfy our working capital requirements through the next twelve months.
Our forecast for the period for which our financial resources will be adequate
to support our operations involves risks and uncertainties and actual results
could fail as a result of a number of factors. We anticipate that we may need to
raise additional capital to expand our operations. Such additional capital may
be raised through public or private financing as well as borrowings and other
sources. We cannot guaranty that additional funding will be available on
favorable terms, if at all. If adequate funds are not available, then our
ability to expand our operations may be adversely affected. If adequate funds
are not available, we believe that our officers and directors will contribute
funds to pay for our expenses. Therefore, we have not contemplated any plan of
liquidation in the event that we do not generate revenues.

We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future. In the event that we expand our product offerings
and customer base, then we may need to hire additional employees or independent
contractors.


                                       8
<PAGE>


Item 7.  Financial Statements
------------------------------

The financial statements required by Item 7 are presented in the following
order:



                                    CONTENTS





                                                                         PAGE
                                                                        ------

Independent Auditor's Report                                              1

Financial Statements

     Balance Sheet                                                        2

     Statement of Operations                                              3

     Statement of Changes in Stockholders' Equity                         4

     Statement of Cash Flows                                              5

     Notes to Financial Statements                                        6







                                       9
<PAGE>




                          Independent Auditor's Report



To the Stockholders of
SZM Distributors, Inc.


         I have audited the accompanying balance sheet of SZM Distributors, Inc.
as of December 31, 2001, and the related statements of operations, changes in
stockholders' equity, and cash flows for the period May 25, 2001 (inception)
through December 31, 2001. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.

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

         In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SZM Distributors,
Inc. as of December 31, 2001, and the results of its operations and its cash
flows for the period May 25, 2001 (inception) through December 31, 2001 in
conformity with generally accepted accounting principles in the United States.




                                      /s/ Quintanilla
                                      A Professional Accountancy Corporation
                                      Irvine, California


                                      February 14, 2002





                                       10
<PAGE>






                             SZM DISTRIBUTORS, INC.


                                  BALANCE SHEET

                                DECEMBER 31, 2001



                                     ASSETS
                                     ------
Current assets
    Cash                                                        $        23,051
    Stock subscriptions receivable                                       11,600
    Due from officer                                                     28,000
                                                                ---------------

       Total current assets                                              62,651

Other assets                                                                ---
                                                                ---------------

          Total assets                                          $        62,651
                                                                ===============



                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities
    Accounts payable and accrued expenses                        $        2,500
    Stock subscriptions payable                                          28,000
                                                                 --------------

       Total current liabilities                                         30,500

Contingencies

Stockholders' Equity
    Preferred stock, $.001 par value;
       Authorized shares-- 5,000,000
       Issued and outstanding shares-- 0                                    ---
    Common stock, $.001 par value;
       Authorized shares-- 50,000,000
       Issued and outstanding shares-- 3,852,000                          3,852
    Additional paid-in capital                                           59,782
    Accumulated deficit                                                 (31,483)
                                                                 --------------

       Total stockholders' equity                                        32,151
                                                                 --------------

          Total liabilities and stockholders' equity             $       62,651
                                                                 ==============






                 See accompanying notes to financial statements.

                                       11
<PAGE>






                             SZM DISTRIBUTORS, INC.


                             STATEMENT OF OPERATIONS

               MAY 25, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001





Net sales                                                        $        4,000


Operating expenses
    Consulting services                                                   1,000
    Legal and professional fees                                          25,651
    Office expense                                                        8,832
                                                                 --------------

       Total operating expenses                                          35,483
                                                                 --------------

Loss from operations                                                    (31,483)
                                                                 ---------------

Provision for income tax expense (benefit)                                  ---
                                                                 --------------

Net loss/Comprehensive loss                                      $      (31,483)
                                                                 ===============

Net loss/comprehensive loss per common share-- basic
and diluted                                                      $        (0.01)
                                                                 ===============

Weighted average of common shares-- basic and diluted                 2,777,000
                                                                 ==============





                 See accompanying notes to financial statements.

                                       12
<PAGE>




                             SZM DISTRIBUTORS, INC.


                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

               MAY 25, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                             Common Stock              Additional
                                      ---------------------------       Paid-In        Accumulated
                                         Shares          Amount         Capital          DEFICIT             Total
                                      ------------    -----------     -----------     ---------------     ------------
<S>                                       <C>             <C>             <C>               <C>               <C>
Balance, May 25, 2001                          ---    $       ---     $       ---     $          ---      $       ---

Issuance of common stock,
  May 27, 2001                           1,000,000          1,000             ---                ---            1,000

Issuance of common stock,
  June 27, 2001                          2,000,000          2,000           8,000                ---           10,000

Issuance of common stock,
  December 15, 2001                        852,000            852          41,748                ---           42,600

Legal expenses paid and
  contributed by officer                       ---            ---          10,034                ---           10,034

Net loss/Comprehensive loss                    ---            ---             ---            (31,483)         (31,483)
                                      ------------    -----------     -----------     ---------------     ------------

Balance, December 31, 2001               3,852,000    $     3,852     $    59,782     $      (31,483)     $    32,151
                                     =============   ============    ============    ================    ============
</TABLE>




                 See accompanying notes to financial statements.

                                       13
<PAGE>



                             SZM DISTRIBUTORS, INC.


                             STATEMENT OF CASH FLOWS

               MAY 25, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001


<TABLE>
<CAPTION>
<S>                                                                                            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                                             $      (31,483)
    Adjustments to reconcile net loss to net cash used in operating activities
      Cost of consulting services paid with common stock                                          1,000
      Cost of legal fees advanced by stockholder                                                 10,034
      Changes in operating assets and liabilities
       Increase in accounts payable and accrued expenses                                          2,500
                                                                                         --------------

              Net cash used in operating activities                                             (17,949)
                                                                                         --------------

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

              Net cash provided by investing activities                                             ---
                                                                                         --------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from issuance of common stock                                                       52,600
    Advances to officer                                                                         (28,000)
    Stock subscriptions receivable                                                              (11,600)
    Stock subscriptions payable                                                                  28,000
                                                                                         --------------

              Net cash provided by financing activities                                          41,000
                                                                                         --------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                        23,051

CASH AND CASH EQUIVALENTS, beginning of period                                                     ---
                                                                                         --------------

CASH AND CASH EQUIVALENTS, end of period                                                 $       23,051
                                                                                         ==============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Income taxes paid                                                                    $          ---
                                                                                         ==============
    Interest paid                                                                        $          ---
                                                                                         ==============
</TABLE>





                 See accompanying notes to financial statements.

                                       14
<PAGE>



                             SZM DISTRIBUTORS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

         Business Description - SZM Distributors, Inc. (the "Company") was
incorporated in the state of Nevada on May 25, 2001. The Company sells and
distributes novelty products for the promotion and marketing of corporate,
professional, and collegiate entities. The Company is headquartered in Newport
Beach, California.

         Cash and Cash Equivalents - For purposes of the balance sheet and
statement of cash flows, the Company considers all highly liquid debt
instruments purchased with maturity of three months or less to be cash
equivalents.

         Fair Value of Financial Instruments - The carrying amount of the
Company's financial instruments, which includes cash and accounts payable and
accrued expenses approximate their fair value due to the short period to
maturity of these instruments.

         Recognition of Revenues - The Company records revenues of its services
when they are complete, fee is fixed or determinable and collectibility is
reasonably assured.

         Income Taxes - The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax bases
of assets and liabilities using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to be recovered. The Company
provides a valuation allowance for deferred tax assets for which it does not
consider realization of such assets to be more likely than not.

         Net Loss per Common Share - The Company has adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 requires the reporting of basic and diluted earnings/loss per
share. Basic loss per share is calculated by dividing net loss by the weighted
average number of outstanding common shares during the period.

         Comprehensive Income/Loss - The Company applies Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for the reporting and display of comprehensive
income or loss, requiring its components to be reported in a financial statement
that is displayed with the same prominence as other financial statements. For
the period ended December 31, 2001, the Company had no other components of its
comprehensive income other than net loss as reported on the statement of
operations.

         Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.



                                       15
<PAGE>


                             SZM DISTRIBUTORS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



NOTE 2 - CONTINGENCIES

         As shown in the accompanying financial statements, the Company has
incurred a net operating loss of $31,483 since May 25, 2001 (inception) through
December 31, 2001. As such, there is no assurance that rapid technological
changes, changing customer needs and evolving industry standards will enable the
Company to introduce new services on a continual and timely basis so that
profitable operations can be attained.

         Management's plans to mitigate its losses in the near term through the
significant reduction of legal and professional fees that were incurred upon
incorporation; for the preparation of the Company's registration statement; and
for the performance of audit and review services. By having completed its
registration process over the last six months, the Company has positioned itself
to focus on securing its revenues sources, and management currently expects to
meet its revenue targets for the remainder of 2002. In addition, should
management determine it necessary, the Company will seek to obtain additional
financing through the issuance of common stock and increase of ownership equity.


NOTE 3 - DUE FROM OFFICER

         Periodically during the period from May 25, 2001 (inception) through
December 31, 2001, the Company advanced cash to an officer. These advances are
due on demand and are to be paid as cash becomes available. At December 31,
2001, the Company had net advances to an officer in the amount of $28,000. These
advances were not made in connection with an issuance of common stock to the
officer.


NOTE 4  - STOCK SUBSCRIPTIONS RECEIVABLE

         On December 15, 2001, the Company authorized for issuance 852,000
shares of its common stock at $0.05 per share pursuant to its registration
statement on Form SB-2. As of December 31, 2001, the Company had received cash
of $31,000 in connection with this issuance and thus had $11,600 remaining
outstanding from the various stock subscribers. Subsequently on January 16,
2002, the Company received the receivable entire balance due of $11,600.


NOTE 5 - ACCRUED EXPENSES

         Accrued Wages and Compensated Absences - The Company currently does not
have any employees. The majority of development costs and services have been
provided to the Company by its founder and outside, third party vendors. As
such, there is no accrual for wages or compensated absences as of December 31,
2001.



                                       16
<PAGE>


                             SZM DISTRIBUTORS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



NOTE 6  - STOCK SUBSCRIPTIONS PAYABLE

         During December 2001, the Company received $28,000 cash from certain
stock subscribers for 560,000 shares of its common stock at $0.05 per share
pursuant to its registration statement on Form SB-2. Prior to issuance of the
common stock, and after further review of the subscriptions agreements by the
Company's management and its outside legal counsel, the Company subsequently
rejected and cancelled the related subscription agreements and returned the
entire $28,000 of stock subscribed on January 16, 2002.


NOTE 7 - COMMON STOCK

         On May 27, 2001, the Company issued 1,000,000 shares of its common
stock to its founder for consulting services rendered in connection with the
organization costs incurred. Since there was no readily available market value
at the services were rendered, par value of $0.001 per share was considered as a
reasonable estimate of fair value between the Company and its founder.

         On June 27, 2001, the Company issued 2,000,000 shares of its common
stock to an officer for cash of $10,000. Although there was no readily available
market value at the time of issuance, the value of $0.005 per share was
considered as a reasonable estimate of fair value between the Company and the
officer.

         On December 15, 2001, the Company authorized for issuance 852,000
shares of its common stock at $0.05 per share pursuant to its registration
statement on Form SB-2 as amended and dated October 31, 2001. As of December 31,
2001, the Company had received cash of $31,000 in connection with this issuance
and subsequently received the remaining $11,600 on January 16, 2002 as
previously described in Note 4.


NOTE 8 - INCOME TAXES

         At December 31, 2001, the Company has available for federal income tax
purposes a net operating loss carryforward of approximately $31,483, expiring
2016, that may be used to offset future taxable income. Therefore, no provision
for income taxes has been provided.

         In addition, the Company has deferred tax assets of approximately
$1,200 at December 31, 2001. The Company has not recorded a benefit from its net
operating loss carryforward because realization of the benefit is uncertain.


NOTE 9 - RELATED PARTY TRANSACTIONS

         On May 25, 2001 and June 27, 2001, the Company issued 1,000,000 shares
of its common stock to its founder for consulting services and 2,000,000 shares
of its common stock to its current officer for cash as previously detailed in
Note 7.





                                       17
<PAGE>



Item 8.  Changes in and Disagreements with Accountants.
-------------------------------------------------------

There have been no changes in or disagreements with our accountants since our
formation required to be disclosed pursuant to Item 304 of Regulation S-B.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons.
-----------------------------------------------------------------------

Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could disrupt our operations and limit profits and future
development, if suitable replacements are not promptly obtained. We anticipate
that we will enter into employment agreements with each of our key executives.
We cannot guaranty that each executive will remain with us during or after the
term of his or her employment agreement. In addition, our success depends, in
part, upon our ability to attract and retain other talented personnel. Although
we believe that our relations with our personnel are good and that we will
continue to be successful in attracting and retaining qualified personnel, we
cannot guaranty that we will be able to continue to do so. Our officers and
directors will hold office until their resignations or removal. The terms of the
directors expire at the next annual shareholder's meeting following their
election.

Our directors and principal executive officers are as specified on the following
table:

========================= ========== =========================================
Name                         Age     Position
------------------------- ---------- -----------------------------------------
Nicole Sherman               28      president, secretary and a director
------------------------- ---------- -----------------------------------------
Jeffrey Hoss                 32      treasurer and a director
========================= ========== =========================================

Nicole M. Sherman. Ms. Sherman is our president, secretary and one of our
directors since our inception in May 2001. Ms. Sherman is responsible for our
day-to-day operations, including the development of our marketing and
distribution channels. Ms. Sherman currently devotes approximately ten hours per
week, but anticipates devoting significantly more hours if we generate more
significant revenues. From 1997 to the present, Ms. Sherman has been an employee
of Walt Disney Imagineering and is currently the senior financial analyst of the
Tokyo DisneySea Park project. Ms. Sherman's major responsibilities for the
project include tracking project budgets, analyzing costs and spending trends,
recognizing financial needs, and identifying potential problems. In 1994, Ms.
Sherman received her Bachelor of Arts in business administration from the
University of San Diego. Ms. Sherman has not been a director of any other
reporting company.

Jeffrey M. Hoss. Mr. Hoss is our treasurer and one of our directors since our
inception in May 2001. Mr. Hoss is our principal financial officer and currently
manages our finances and markets our products. Mr. Hoss currently devotes
approximately ten hours per week, but anticipates devoting significantly more
hours if we generate more significant revenues. Since September 1997, Mr. Hoss
has been a regional sales manager at Lebherz Insurance Services, where he is
responsible for sales throughout the southern California region. In 1992, Mr.
Hoss earned his Bachelor of Science degree in business administration from
California State University, Long Beach. Mr. Hoss is not an officer or director
of any other reporting company.

Ms. Sherman is the sister in law of Mr. Hoss. There are no orders, judgments, or
decrees of any governmental agency or administrator, or of any court of
competent jurisdiction, revoking or suspending for cause any license, permit or
other authority to engage in the securities business or in the sale of a
particular security or temporarily or permanently restraining any of our
officers or directors from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
such person of any felony or misdemeanor involving a security, or any aspect of
the securities business or of theft or of any felony, nor are any of the
officers or directors of any corporation or entity affiliated with us so
enjoined.



                                       18
<PAGE>


Our directors will serve until the next annual meeting of stockholders. Our
executive officers are appointed by our Board of Directors and serve at the
discretion of the Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance. We believe that our
officers, directors, and principal shareholders have filed all reports required
to be filed on, respectively, a Form 3 (Initial Statement of Beneficial
Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership
of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of
Securities).

Item 10.  Executive Compensation
---------------------------------

Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.

Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers during the year ending
December 31, 2001. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
<TABLE>
<CAPTION>
============================================ ======= ============= ============= ===================== =========================
<S>                                            <C>       <C>            <C>              <C>                     <C>
Name and Principal Position                   Year      Annual      Bonus ($)        Other Annual       All Other Compensation
                                                      Salary ($)                   Compensation ($)
-------------------------------------------- ------- ------------- ------------- --------------------- -------------------------
Nicole Sherman - president, secretary        2001        None          None              None                    None
-------------------------------------------- ------- ------------- ------------- --------------------- -------------------------
Jeffrey Hoss - treasurer                     2001        None          None              None                    None
============================================ ======= ============= ============= ===================== =========================
</TABLE>

Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our Board of Directors.

Compensation of Officers. As of December 31, 2001, our officers have received no
compensation for their services provided to us.

Employment Contracts. We anticipate that we will enter into an employment
agreement with Nicole Sherman.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 29, 2002 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
<TABLE>
<CAPTION>
Title of Class             Name and Address of Beneficial Owner       Amount and Nature of Beneficial           Percent of Class
                                                                      Owner
-----------------------    --------------------------------------     ------------------------------------    --------------------
<S>                              <C>                                              <C>                                   <C>
Common Stock               Nicole Sherman                             1,000,000 shares, president,                     25.96%
                           1241 N. Central Avenue, Suite 7            secretary, director
                           Glendale, California 91202

Common Stock               Jeffrey Hoss                               2,000,000 shares, treasurer,                     51.97%
                           5109 River Avenue, Suite A                 director
                           Newport Beach, California 92663

Common Stock               All directors and named executive          3,000,000 shares                                 77.88%
                           officers as a group
</TABLE>


                                       19
<PAGE>



Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.

Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.

Item 12.  Certain Relationships and Related Transactions.
----------------------------------------------------------

Related Party Transactions. There have been no related party transactions,
except for the following:

Mr. Hoss, our treasurer and one of our directors, currently provides office
space to us at no charge. Mr. Hoss does not expect to be paid or reimbursed for
providing office facilities.

As of December 31, 2001, we had net advances of approximately $28,000 to Nicole
Sherman, one of our officers and directors. These advances are due on demand and
were not related to a stock issuance.

With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:

        o      disclosing such transactions in prospectuses where required;
        o      disclosing in any and all filings with the Securities and
               Exchange Commission, where required;
        o      obtaining disinterested directors consent; and
        o      obtaining shareholder consent where required.

Item 13.  Exhibits and Reports on Form 8-K
------------------------------------------

(a) Exhibit No.
---------------

3.1                        Articles of Incorporation*

3.2                        Bylaws*

* Included in the registration statement on Form SB-2 filed on August 31, 2001.

(b) Reports on Form 8-K
------------------------

No reports on Form 8-K were filed during the last quarter of the period covered
by this annual report on Form 10-KSB.




                                       20
<PAGE>




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned in the City of Newport Beach, California, on March 29, 2002.

                                  SZM Distributors, Inc.
                                  a Nevada corporation


                                  By:      /s/ Nicole Sherman
                                           -------------------------------------
                                           Nicole Sherman
                                  Its:     principal executive officer
                                           president, secretary, and a director


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



By:      /s/ Nicole Sherman                                      March 29, 2002
         --------------------------------------------
         Nicole Sherman
Its:     principal executive officer
         president, secretary and a director


By:      /s/ Jeffrey Hoss                                        March 29, 2002
         --------------------------------------------
         Jeffrey Hoss
Its:     principal accounting officer
         treasurer and a director