---

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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

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**FORM 10-KSB**

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(MARK ONE)

**[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2002**

**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 number 000-33033**

**PEOPLENET INTERNATIONAL CORPORATION**(Name of small business issuer in its charter)



|**Delaware**                                                   | **02-0575232**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**1600 Adams DriveMenlo
Park, California 94025**(Address of Principal Executive Offices including Zip Code)

**(650) 323-6688**(Registrant's Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(g) of
the Act:**Title of the class**
    **Name of each exchange on which
      registered**Common Stock, $ .0001 par value
    None

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]     No [     ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not 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]

Revenues for its most recent fiscal year:
$41,864

Aggregate market value of common stock held by
non-affiliates at March 31, 2003:  0

Number of shares of common stock outstanding
at March 31, 2003: 15,749,999

DOCUMENTS INCORPORATED BY REFERENCE:      None.

Transitional Small Business Disclosure Format (check one):    Yes [     ]    No     [X]

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**PEOPLENET INTERNATIONAL  INCORPORATION2002 ANNUAL
REPORT ON FORM 10-KSB INDEX**



|Part I.        |                                                                                             | Page
|-------------- | ------------------------------------------------------------------------------------------- | ----
|Item 1.        | Descriptions of Business                                                                    | 4   
|Item 2.        | Descriptions of Property                                                                    | 9   
|Item 3.        | Legal Proceedings                                                                           | 10  
|Item 4.        | Submission of Matters to a Vote of Security Holders                                         | 10  
|Part II.       |                                                                                             |     
|Item 5.        | Market for the Registrant's Common Equity and Related Stockholder
      Matters             | 10  
|Item 6.        | Management's Discussion and Analysis of Financial Condition and Results
      of Operations | 11  
|Item 7.        | Financial Statements                                                                        | 14  
|Item 8.        | Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosures | 14  
|Part III.      |                                                                                             |     
|Item 9.        | Directors and Executive Officers of the Registrant                                          | 15  
|Item 10.       | Executive Compensation                                                                      | 16  
|Item 11.       | Security Ownership of Certain Beneficial Owners and Management                              | 17  
|Item 12.       | Certain Relationships and Related Transactions                                              | 18  
|Part IV.       |                                                                                             |     
|Item 13.       | Exhibits and Reports on Form 8-K                                                            | 18  
|Item 14.       | Controls and Procedures                                                                     | 19  
|Signatures     |                                                                                             | 19  
|Exhibits Index |                                                                                             | 40  



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PART I

Our disclosure and analysis in this report contains forward-looking statements. When used in this discussion, the words
"believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the
absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include,
but are not limited to, statements about our expansion plans, objectives, expectations, intentions, and target markets, and
are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these
forward-looking statements for may reasons, including the factors described under "Risk Factors Affecting Future Performance,"
"Description of Business" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to
time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Item 1. Description of Business

General

PeopleNet, formerly known as American Champion Media, Inc., is a Delaware corporation headquartered in Redwood Shores,
California and incorporated on February 5, 1997. PeopleNet was formed by, and has been, a wholly owned subsidiary of
Pacific Systems Control Technology, Inc., formerly known as American Champion Entertainment, Inc., a Delaware corporation.
Pacific Systems Control Technology has been a publicly traded company since July 31, 1997, and its common stock currently
trades on the OTC Bulletin Board under the symbol PFSY.  Pacific Systems recently changed the focus of its business to
concentrate on the distribution and sale of remote access electric meters and related products.  Since this new line of
business is not complementary to the business conducted by PeopleNet, the board of directors of Pacific Systems
determined that it was in the shareholders' best interest to separate the two companies and allow them to operate
independently.  In particular, the boards of directors of both companies believes that matters related to public market
valuations, capital raising, public relations and marketing are better served when a company is focused on related business.
In addition, the boards believe that shareholder value would be increased by the ownership of two public companies rather than one.

On February 8, 2002, Pacific Systems distributed its shares of PeopleNet to the shareholders of Pacific Systems as of the record
date of January 16, 2002. The securities of PeopleNet are not currently traded on any market.

ChiBrow

In June 2001, we signed an agreement with ECapital Group, Inc. to purchase the exclusive licensing and marketing
rights to ChiBrow, a safe web browser software for children.  Under the terms of the agreement, upon the effectiveness
of the spin-off of PeopleNet from Pacific Systems, we issued 374,587 shares of our common stock on February 8, 2002
to ECapital in exchange for the worldwide exclusive rights to market and distribute ChiBrow for three years.

On March 21, 2002, we purchased all rights relating to the intellectual property of ChiBrow, including the source codes,
trademarks, copyright, domain name and website, from ECapital. The total purchase price paid was the issuance to ECapital
of 3,799,999 shares of our common stock.  It is expected that the basis of
the acquired intellectual property will be based upon the cost basis of ECapital.

We believe that ChiBrow, the safe web browser for children, greatly compliments our non-violent action-filled
Kanga Roddy TV program.  We further believe that the combination of an Internet property and a TV program
strengthens our position as a media content provider with an Internet strategy.  The following is a description of
our business plan regarding ChiBrow.

ChiBrow, once installed on personal computers, allows children to browse the World Wide Web by accessing sites
from a pre-selected list of approved sites known as the Safe-Sites List.  Selection criteria include age-appropriateness,
educational value, balance in social issues, and meaningful content.  Through password control, parents can access and
modify the Safe-Sites List as well as set a time limit for browsing after which the computer automatically shuts down.
ChiBrow also incorporates a search engine called CoolNetwork which allows young web surfers a safe and educational
environment on the Internet.  It organizes information based on age-appropriateness and functionality, and provides a
feature-filled online experience including safe e-mail, public chat rooms and forums, plus a wide variety of children
friendly programs such as art gallery, contests, games and community service activities.

Through ChiBrow, children can use the Internet safely to explore and learn, absent of "inappropriate" adult
contents such as violence, pornography, hate speeches, and profanity, while giving parents and educators the ability
to define where their children can venture.  ChiBrow is a browser, not a filtering software. Consequently, ChiBrow
circumvents many of the issues filtering technologies have difficulties addressing:

- alcohol and tobacco marketing;
- unsafe privacy practices;
- "inappropriate" adult images and sounds; and
- sophisticated use of language in which the words themselves are harmless, but the content is not.

ChiBrow avoids these problems and simplifies security management by giving parents complete control.  Parents
define what is appropriate for their children by determining what Web sites they can access.  They can create or
build on an existing list of safe Web sites called the Safe-Sites List, restrict access to a Safe-Sites Search Engine
containing 10,000+ safe Web sites, and/or open access to sites based on domains realms (.edu, .gov and .org).  
Because parents have complete control over the browser, and hence the content that is displayed, they can be certain that
sites they allow their children to visit meet their safety standards.

Children browse the Web by selecting a site from ChiBrow's Safe-Sites List, by clicking on links within an approved
site, or through the Safe-Sites Search Engine (when allowed).  Sites in either the Safe-Sites List or Search Engine
have been screened to meet our safety criteria.  Each link a child visit is checked against the list approved sites
(Safe-Sites List), Search Engine, and/or domain realms before it is opened.  If the site belongs to the same domain
and/or is located within a domain/site in the Safe-Sites List or security options, ChiBrow displays the Web page.
If it isn't, ChiBrow ignores the click and sends an alert at the bottom of the screen.  In order to visit that site,
the child must have permission from the parent.  Because parental approval is required for each new site added,
parents can rest assured that their child will only visit the sites they determined to be safe.

Today's generation of children embraces the Internet and the personal computer with the same enthusiasm that
previous generations embraced television.  According to Computer Economics, the number of children using the Internet
will grow from 26 million worldwide in 2001, to 77 million by 2005. Although the U.S. remains the dominant Internet
market, this is truly a global phenomenon and the growth rate in Asia and Europe is expected by many to surpass that
of the U.S.

Through the testing period of the past 12 months, we have given away without charge over 30,000 copies of the
basic ChiBrow software via download from our server.  Although registration by the user is not required, over 10,000
users have voluntarily registered. Based on feedback from our users worldwide, and with added functionalities such as a
secure email system, we believe most of the users will not object to a paid subscription upon the coming official launch
of the complete ChiBrow system.  We have also conducted negotiations with governmental agencies in China that have indicated
interest in ChiBrow.  We expect the conversion of free users into paying subscribers will
gradually allow us to receive revenue from this property
beginning in 2003.

There have been several unsolicited reviews of ChiBrow by publications and journals including the recent September 2001
issue of "Yahoo Internet Life" and the April 2001 issue of "Family PC Magazine".  The conclusions have been in our favor
stating that ChiBrow is the only truly safe portal for children available today and that ChiBrow does not engage in
filtering technology that has been proven to fall short of fail safe.  We have received 5-star ratings from "GuardCentral"
- a computer security and news publication, and "Tucows.com" - a rating system for children software, the highest rating
for our browser from these organizations. Utilizing such endorsements, we intend to seek corporate sponsorship and
advertisement from companies engaged in products for children.  We have been approached by several multi-national
organizations, governments and corporations expressing strong interest in sponsoring ChiBrow upon our official launch.
We will employ marketing personnel specialized in seeking such corporate sponsorship and advertisement.  However there are no
assurances that we will receive sponsorship for the official launch, in which case we may have to rely on debt financing to
fund the launch activities.  ECapital Group, Inc. has expressed the possibility of extending a loan to us for our
short-term needs if necessary, however, there can be no assurances that this or
any other financing will be available when needed.

PeopleNet Communication Solution

On March 21, 2002, we purchased all rights relating to the intellectual property of a communication software package from
PeopleNet Corporation, called the PeopleNet Communication Solution, in exchange for 9,620,000 shares of our common stock.

The PeopleNet Communication Solution is a scalable, robust, and fully customizable communication infrastructure software. Its
tightly integrated platform offers users seamless access to their productivity and communication tools, and the ability to
actively engage in their interactive communication functions.  Multilingual support and theme options are built into all
components, so users can completely control language and theme preferences. Among the many modules of our communication
package are:

Web-based emailEnables secure, confidential communication, external mail retrieval and direct marketing. Includes
integrated address book with multiple lists, POP3, IMAP, mail search, folders, and filtering. Users can make the most out of
their webmail with the ability to centralize emails and to access it through another mail agent when necessary. POP3 enables
mail retrieval from three other accounts, while IMAP enables mail to be retrieved from mail agents such as Microsoft Outlook
and Eudora.

Web Publishing / Homepage BuilderAllows users to express themselves in a communication context. Key features
include web folder for advanced web publishing, file upload, image and video integration and powerful tools for easy
homepage building.

CalendarEnables users to schedule events and tasks, send reminders, and integrate events organized by other users.

File ManagerAllow users to securely work on and manage their documents and small programs in their own private
folder.  Files stores in the private folder are only accessible by the account owner, but can easily be moved to the public
area (web folder) for outside viewing.  Being a completely web-based application, users can access their files from anywhere at
any time.  File Manager together with web publishing can increase users' productivity by allowing them to work on, organize
and control access to their files.

Our target market is comprised of:

- ISPs
- Corporate Intranet and Portals
- e-Government
- Educational Institutions
- Vertical Hubs
- Companies supplementing "Brick and Mortar" with "Click and Mortar"
- Content Providers
- Non-Profit organizations

Our PeopleNet Communication Solution can be easily customized for small businesses to large user bases, in the scope of
enterprises, institutions and governments that wish to create a robust "interactive communication environment" in facilitating
the entity's purchasing and selling, as well as managing the suppliers, distributors and clients. Beginning in mid-year 2002,
we plan to offer our solution in three different packages:

Standard PackageA compact version that readily serves 500 users.  Contains complete web-based email package with
one default language support, banner and ftp control, and complete branding.  Ideal for small business and ISPs.

Professional PackageServes up to 5,000 clients.  Includes all features in the Standard package plus homepage,
calendar, and productivity tools.  Greater language support and theme options.  Ideal for medium size businesses and portals.

Enterprise PackageA robust package for communications with a large user base (greater than 5,000 users).  Combines
features in the Professional package with ultimate customization, from theme and language development to multiple domains
customization.  Ideal for corporation and portals with sub-communications.

Existing Business

Between the years 1997 and 2000, we developed and produced 29 half-hour episodes of the Kanga Roddy series
which features a six-foot tall kangaroo character named Kanga Roddy who is a martial arts expert. Unlike other
martial arts programs which feature violent content, Kanga Roddy never fights because he understands that conflict
can always be resolved through traditional martial arts values such as knowledge, compassion, humility, discipline,
respect and an open mind. The show merges these values, which are the core subjects in the field of emotional
intelligence, with contemporary music, dance, vibrant colors and exciting movements designed to capture the attention
of its target audience consisting primarily of pre-school and primary school children.

From 1997 through 2000, we and KTEH, the public broadcasting station serving the San Jose, California area,
collaborated
on the production of 29 half-hour episodes of the Kanga Roddy series.  We funded the production costs of the series and
we own all of the intellectual property to the series.  KTEH was granted the exclusive domestic (U.S.) broadcasting rights
to the series, and KTEH, through their connection to the network of public television, caused the show to be aired by
public TV stations across the country.  The exclusive broadcasting rights granted to KTEH ended on April 1, 2001.

In December 2000, we signed a licensing agreement with World Channel, Inc. of South San Francisco, California,
for a five-year worldwide licensing and distribution of the Kanga Roddy TV program and its related video and audio
products.  Pursuant to terms of the agreement, World Channel has the exclusive right to license such products of the
Kanga Roddy program and shall pay PeopleNet $600,000 in licensing fees per year from 2001 through 2005, or a total of
$3 million.  Royalties under pre-existing agreements are assigned to World Channel.  In connection with the distribution of
our stock by Pacific Systems Control Technology, we entered into an agreement with Pacific Systems pursuant to which we agreed
that all future cashflow related to the Kanga Roddy series and its intellectual property that will be generated from the
licensing agreement with World Channel shall be allocated between the two companies on a 50/50 basis.  Pursuant to this agreement,
PeopleNet will pay Pacific Systems 50% of the cash we receive in the future from World Channel.  All revenue under this agreement
will be earned and recorded by PeopleNet, with 50% of the cash received used as repayment of the note payable to Pacific Systems.
Since only partial payment from World Channel was received during the year 2001 and that the collectibility of
additional payments are not assured, we have determined to record only $450,000 in revenues at that end of the year 2001 and we
may not recognized any additional revenues from this licensing agreement in the future until payments are actually received.

We plan to retain worldwide rights to the characters and images developed in the Kanga Roddy series, to protect
our rights to such characters and images through appropriate registration, and to license their use to manufactures
for specific products. There is no assurance that we will be able to do so. If the Kanga Roddy series does not attain
and maintain widespread television distribution, or widespread popularity, it is unlikely that any significant
licensing or merchandising opportunities or revenue will arise or be maintained.

Discontinued Business Activities

In the year 2000, we received revenues from a one-time promotion and production of a professional boxing event in
China.  Our previous investments in exercise videos have been completely written off as of December 31, 2000.  Our
management has decided not to engage in the businesses of sporting events promotion and exercise videos in the future.

Competition

Each of the industries in which we compete is highly competitive and most of the companies with which we compete
have greater financial and other resources than us.  Other approaches to safety for children browsing the Internet
involve filtering technology that is subject to
attack by de-filtering software and interference with other programs on the host computer.   Examples of such filtering
software currently on the market are NetNanny, SurfMonkey, SurfControl, InternetGuard, CyberSitter and others.
However since there is no previous commercial launch of a children's portal using similar approaches to ours, we cannot
gauge how users may react to our offer of software and services.  We may have difficulty converting the currently
free users of ChiBrow into paying subscribers, or securing advertisers and corporate sponsors.

The number of businesses that compete against us in the area of communication solutions may reach several hundred,
as many appear to offer services such as e-mail and homepages. To differentiate ourselves, we will need to provide a
comprehensive line of application suites, and establish a quasi-first-mover advantage. The following is a partial listing
of some competitors:

- Commtouch
- Bluetie.com
- Urbanite
- Bigfoot
- Epicentric
- Plum Tree
- Linq
- B2sb.com

For our children media related business, we face intense competition from other
larger entities such as Disney, Universal, Cartoon Network, etc., which also seek to attract the children's and
family audiences segment with their services. In addition, there is a strong trend toward vertical integration in the
business, with more companies owning content, making it more difficult for smaller, independent companies such as us
to obtain favorable financing and distribution terms.

Risk Factors Affecting Future Performance

Reliance On Technological Edge
Our products, ChiBrow and PeopleNet Communication Solution, are highly technologically dependent.  Our success is reliant on
maintaining a lead on the competition.  We may quickly fall behind if we lose technical skills through employee departure, or
due to unexpected breakthrough in technology by our competitors.

Product Acceptance and Customer Expectation
In the fast moving industry which we operate, there is potentially a sudden, rapid and wholesale change in customer demands for
functionality that we may not be ready to provide.

Government Regulatory Procedures
Especially applicable for ChiBrow - the browser for children, future governmental regulations may grossly effect our ability to
conduct our business in a commercially viable manner.

Conversion of Free Users of ChiBrow into Paying Customers
Our current users base of ChiBrow may not willingly convert into payment customers at the official launch since these users
have been accustomed to enjoying ChiBrow free-of-charge.

Dependency On Marketing Efforts
In light of the competition that we may be facing, effective and efficient
marketing efforts will be the key to the survival of our software business.
Our current management has little experience in the marketing of software either for children or for professional usage.

Employees

As of March 31, 2003, we employed two employees on a full-time basis, both of which are management.  We intend to
employ a total of ten persons in order to be able to handle our existing business and the marketing of ChiBrow
and the PeopleNet Communication Solution.

Item 2. Description of Property

We lease approximately 1,200 square feet of space for our
Menlo Park, California, headquarters pursuant to a one-year
lease expiring in May 2003, at approximately $4,000 per month.

Item 3. Legal Proceedings

As of December 31, 2001, while PeopleNet International Corporation was still a subsidiary of Pacific Systems Control Technology,
the following cases were either filed against Pacific Systems naming all of its subsidiaries including PeopleNet as the
defendants, or Pacific Systems' initiated complaint resulted in a cross-complaint by the defendant naming Pacific Systems and
all of its subsidiaries including PeopleNet as the defendants in the cross-complaint.  Pacific Systems has agreed to indemnify
all of its subsidiaries including PeopleNet from the liabilities of the following cases including expenses, fees or judgment.

In February 2001, a complaint was filed by Chuck Nelson in Court of Common Pleas, Mahoning County in Youngstown, Ohio against Pacific Systems for a percentage of the total purse amounts paid to boxers involved in the boxing event in China in April 2000, and for a percentage of the television revenue generated thereof. The plaintiff is claiming for incidental damages in excess of $2,500 and consequential damages in excess of $100,000. Pacific Systems denies all of the rights claimed by Chuck Nelson and will vigorously defend against all of Mr. Nelson's claims. In May 2002 Pacific Systems submitted answers to interrogatories from the plaintiff and such answers demonstrate contradictions to the plaintiff's claims. As of December 31, 2002, Pacific Systems' counsel is negotiating with the plaintiff regarding a settlement.

In October 2001, Pacific Systems filed a complaint against a
former employee in licensing and marketing activities for breach of contract,
breach of fiduciary duty and unjust enrichment, among other causes of action,
seeking declaratory relief from the court.  A counter claim from the
employee was filed in April 2002 against Pacific Systems and its subsidiaries.
On April 15, 2002, judgment was entered against Pacific Systems and its
subsidiaries in the amount of $70,527. As of December 31, 2002, $56,727 was
still outstanding on the judgment. On February 11, 2003, Pacific Systems and its
subsidiaries entered into a global settlement and mutual release of all claims
with the former employee. Under the agreement, the cross-defendants, including
the Company, will pay to the former employee a total sum of $100,000 plus
interest at the rate of 10% per year, payable in installments at the rate of
$3,000 per month. As of March 31, 2003, the outstanding balance under the
settlement agreement was $84,000.

With the exception of the foregoing, no lawsuits or proceedings are currently
pending against PeopleNet International Corporation.

Item 4. Submission of Matters to Vote of Security Holders

Not applicable.

**PART II**

Item 5. Market for Common Equity and Related Stockholder Matters

Market for Securities

There is currently no active market for our securities.

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

The following section discusses the significant operating
changes, business trends, financial condition, earnings and liquidity that have
occurred in the one-year period ended December 31, 2002. This discussion should
be read in conjunction with the Company's consolidated financial statements and
notes appearing elsewhere in this report.

The following discussion may contain forward-looking statements that are
subject to risks and uncertainties. When used in this discussion, the words
"believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the
absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include,
but are not limited to, statements about our expansion plans, objectives, expectations, intentions, and target markets, and
are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these
forward-looking statements for may reasons, including the factors described under "Risk Factors Affecting Future Performance,"
"Description of Business" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to
time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations".
SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement
of tangible long-lived assets and the associated asset retirement costs. This Statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.



SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning after December 15,
2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business.



The adoption of above pronouncements, did not materially impact the Company's
financial position or results of operations.



In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS 145"). SFAS 145
rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary
unless they meet the criteria for extraordinary items as outlined in APB Opinion No. 30,
Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS 145
also requires sale-leaseback accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions and makes various technical corrections
to existing pronouncements. The provisions of SFAS 145 related to the rescission of FASB
Statement 4 are effective for fiscal years beginning after May 15, 2002, with early adoption
encouraged. All other provisions of SFAS 145 are effective for transactions occurring after May
15, 2002, with early adoption encouraged. The Company does not anticipate that adoption of SFAS
145 will have a material effect on our earnings or financial position.



In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with exit or Disposal Activities." This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under Issue 94-3 a liability for
an exit cost as defined, was recognized at the date of an entity's commitment to an exit plan.
This statement will not have a material impact on the Company's financial statements.



In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and Interpretation 9
thereto, to recognize and amortize any excess of the fair value of liabilities assumed over the
fair value of tangible and identifiable intangible assets acquired as an unidentifiable
intangible asset. This statement requires that those transactions be accounted for in accordance
with SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets."  In addition, this statement amends SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," to include certain financial institution-related intangible
assets.  The Company does not expect adoption of SFAS No. 147 would have a material impact, if
any, on its financial position, results of operations or cash flows.



In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor
must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45
also requires additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The recognition provisions
of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of FIN45 is not expected to have a material effect
on the Company's financial position, results of operations, or cash flows.



In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based
Compensation-Transition and Disclosure".  SFAS No. 148 amends SFAS No. 123, "Accounting for
Stock Based Compensation", to provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee compensation.  In addition,
this Statement amends the disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used, on reported results.  The
Statement is effective for the Companies' interim reporting period ending January 31, 2003.  The
Companies do not expect the adoption of SFAS No. 148 would have a material impact on its
financial position or results of operations or cash flows.

Critical Accounting Policies

In the ordinary course of business, the company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results. The Company constantly re-evaluates these significant factors and makes adjustments where facts and circumstances dictate. Although historically, actual results have not significantly deviated from those determined using the necessary estimates inherent in the preparation of financial statements, future actual results may vary significantly. Estimates and assumptions include, but are not limited to, customer receivables, long-term asset lives, contingencies and litigation. The Company has also chosen certain accounting policies when options were available, including:

- The intrinsic value method, or APB Opinion No. 25, to account for our common stock incentive awards; and
- We record an allowance for credit losses based on estimates of customers' ability to pay. If the financial condition of our customers were to deteriorate, additional allowances may be required.
- The Company expects to apply the provisions of Statement of Position 97-2 as well as SAB 101, to account for the sales of software and related services that may be bundled with the software license.

These accounting policies are applied consistently for all years presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the footnotes to our consolidated financial statements.



Results of Operation

PeopleNet was formed in February 1997, under the name American Champion Media, as a wholly owned subsidiary of
Pacific Systems Control Technology, formerly known as American Champion Entertainment.

Revenues

During the year ended December 31, 2002, we recognized $41,864 from software
licensing and hosting activities. We intend to continue with our marketing
efforts for our software products in the U.S. and in the United Kingdom. The
revenue from licensing in 2001 amounted to $451,190.

Costs and Expenses

Our intangible assets include ChiBrow - the safe browser for children and an
office communication product that we acquired both in March 2002 with our common
stock valued at $300,000 and $759,500 respectively. We believe that the
technology of ChiBrow remains to be unique while the office communication
solution may be more prone to competition, and thus we have set up straight-line
amortization schedules for these two assets at 36 months and 18 months. These
amortization schedules have been arrived based upon valuation of the intangibles
at December 31, 2002. For the
nine months that we owned these assets in the year 2002, the amounts of
amortization were $75,000 and $379,750 respectively, totaling $454,750.

Our expenses for salaries and payroll taxes were increased to $296,910 for the year 2002
from $141,230 for 2001. We had twelve employees during part of the year but we
reduced to two management staff on pro-bono basis at the year's end. Professional
fees of $546,362 and general and administrative expenses of $3,585,660 included
non-cash payments as compensation and for services, via the issuance of common
stock and options, valued at $3,593,137. Professional fees amounted to $21,389
and General and Administrative expenses amounted to $204,552 in 2001. The
increase is due to the issuance of common stock options for compensation and
services amounting to $3,915,930.

As a result of foregoing factors, our net loss was ($5,066,747) for the year ended December 31, 2002,
as compared to ($4,378,902) for the year ended December 31, 2001. Net loss per share decreased to ($0.40) in 2002
from ($2.18) in 2001, while weighted average number of shares outstanding
increase to 12,745,561 shares
from 2,010,000 in 2001.

Liquidity and Capital Resources

Cash flow from operations for the twelve months ended December 31, 2002 was a
negative ($386,148) which was offset by positive cash flow from
financing activities in the amount of $390,189. Cash flow from operations for
the twelve months ended December 31, 2001 was a negative ($68,000) which was
offset by positive cash flow from financing activities in the amount of $53,000.
Cash flows from operations were negative due to losses incurred by the Company.

Major source of cash flow in 2002 from financing activities included sale of
shares for $120,000 and from related parties amounting to $260,189. Major source
of cash flow in 2001 from financing activities was from notes payable of
$50,000.

We historically financed our operating and capital outlays from funds received from our parent company
and from loans from shareholders. We estimate that our burn rate for the next twelve months  should not exceed $1 million.  However, there is no assurance that we will be successful in
raising capital from private placement or continually from shareholders.  We
will rely on revenues generated from the ChiBrow project, if any, plus debt financing to fund operations on a short-term basis.
ECapital Group, Inc. has expressed the possibility of extending
loans to us for our operational needs if any private placement is not successful.  However, there are no assurances that such
debt financing from ECapital Group is available to us for our operational needs.  Management has a reasonable belief that
we can fund our operations by the above mentioned means through the end of year
2003.

Recently, we have signed an OEM distribution agreement with a distributor in
the United Kingdom for the marketing of ChiBrow in the U.K. and in Europe.

The Company expects to continue to grow by exploring acquisition of other
companies.  However, given our current financial status and also that our
securities are not currently traded on any exchange, there is no assurance that
we will be able to make more acquisitions.

Item 7. Financial Statements

The financial statements of the Company and independent auditors' reports are filed herewith on pages
21 through
40 of this report.

Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

The Company dismissed its independent public accountant, Moss Adams LLP, effective
as of February 14, 2003.  The Company's Board of Directors approved such decision.  Moss Adams LLP's report for the 12-month
period ended December 31, 2001 did not contain any adverse opinion or disclaimer of opinion, except for going concern, nor
was it qualified or modified as to uncertainty, audit scope or accounting principles.  Furthermore, during such period and
the subsequent interim period preceding February 14, 2003, there were no disagreements with Moss Adams LLP within the meaning
of Instruction 4 to Item 304 of Regulation S-B under the Securities Exchange Act of 1934 on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Moss Adams LLP, would have caused him to make reference in connection with his opinion to the subject matter
of the disagreement in connection with any report he might have issued.

On February 14, 2003, The Company engaged Kabani & Company, Inc. as its independent public accountants.
The Company has
not previously consulted with Kabani & Company, Inc. regarding any matter, including but not limited to:

* the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Company's financial statements; or

* any matter that was either the subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-B and
the related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-B).

PART III

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

As of December 31, 2002 the directors, executive officers and
controlling persons of the Company are:



|Name            | Age | Position with the Company                        | Director Since
|--------------- | --- | ------------------------------------------------ | --------------
|Benedict Van    | 42  | Chief Executive Officer, Chairman and Director   | 2002          
|Anthony K. Chan | 48  | President, Chief Operating Officer, and Director | 1997          

Benedict Van.

Anthony K. Chan. Mr. Chan has served as President, Chief Operating
Officer and Director since February 2002, and has been serving as our Chairman and CEO since 1997. He also served as the CEO of
Pacific Systems Control Technology, the former parent company of PeopleNet International, from 1997 to February 2003.
From 1985 to 1990, Mr. Chan served as the Director of Chinese Affairs for the Eisenberg Group of Companies, a diversified
business enterprise, where Mr. Chan's principal duty was to negotiate contracts in the People's Republic of China.
Prior to 1985, Mr. Chan was employed by the Bank of America as an economic forecaster. Mr. Chan received his MBA from
the University of California at Berkeley.

Item 10. Executive Compensation

The following table sets forth certain summary information with respect to the compensation paid to our Chief Executive Officer and President, and our Chairman of the Board, for services rendered in all capacities for the period through December 31, 2002. We had no other executive officers whose total annual salary and bonus exceeded $100,000 for that fiscal year:





|Name         | Position                                                    | Year      | Salary       | Other Compensation | Bonus    | Long-Term Compensation       
|------------ | ----------------------------------------------------------- | --------- | ------------ | ------------------ | -------- | -----------------------------
|             |                                                             |           |              |                    |          | Awards                       
|             |                                                             |           |              |                    |          | Restricted Stock Award(s) ($)
|Benedict Van | Chief Executive Officer &  Chairman of the Board & Director | 2002
2001 | $23,500n.a.  | Nonen.a.           | Nonen.a. | Nonen.a.                     
|Anthony Chan | President & Chief Operating Officer and Director            | 2002
2001 | None
$12,350 | NoneNone           | NoneNone | 200,000None                  









STOCK OPTIONS GRANTS AND EXERCISES

Option/SAR Grants within 2002

Option/SAR Grants in Last Fiscal Year

|Individual Grants
|-----------------
|Name             
|Benedict Van     
|Anthony Chan     







The following table shows the value at December
31, 2002 of unexercised options held by the
named executive officers:





|                                                                       |                                 |                    | Number of securities underlying unexercised options at fiscal year-end (#) | Value of unexercised in-the-money options at fiscal year-end ($)
|---------------------------------------------------------------------- | ------------------------------- | ------------------ | -------------------------------------------------------------------------- | ----------------------------------------------------------------
|Name                                                                   | Shares acquired on exercise (#) | Value Realized ($) | Exercisable/ unexercisable                                                 | Exercisable/ unexercisable                                      
|Benedict Van, Chief Executive Officer, Chair or the Board and
Director | None                            | None               | 2,699,999 / 0                                                              | 0 / 0                                                           
|Anthony Chan, President, Chief Operating Officer and Director          | None                            | None               | 600,000 / 0                                                                | 0 / 0                                                           



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

The compensation for our key management will be evaluated from time to time by the Board. The Board
may, in its discretion, award these individuals cash bonuses, options to purchase shares of common stock under our
Equity Incentive Plan and such other compensation, including equity-based compensation, as the Board, or a committee
thereof, shall approve from time to time.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of December 31, 2002, certain information with respect to stock ownership of:

- all persons known by us to be beneficial owners of 5% or more of
our outstanding shares of Common Stock;
- each director and officer; and
- all directors and officers as a group.



|Name and Address of Beneficial Owner (1)            | Number of Shares of Common Stock | Percentage of Common Stock Ownership*
|--------------------------------------------------- | -------------------------------- | -------------------------------------
|ECapital Group, Inc.                                | 4,869,999                        | 30.9%                                
|PeopleWeb Communications                            | 3,184,479                        | 20.2%                                
|Kevin Le                                            | 1,100,000                        | 7.0%                                 
|Norman Boether                                      | 850,000                          | 5.4%                                 
|Anthony Chan (director and officer)                 | 249,146                          | 1.6%                                 
|Benedict Van (director and officer) *               | 186,359                          | 1.2%                                 
|All Directors and Officers as a group (two persons) | 435,505                          | 2.8%                                 

* Mr. Van is also the controlling
person of ECapital Group, Inc. and PeopleWeb Communications.

_______________________



1    The address for the directors and executive officers,
Mr. Le and Mr. Boether, is c/o PeopleNet International Corporation,
1600 Adams Drive, Menlo Park, California 94025.

The address for ECapital Group is
2001 Gateway Place, Suite 270 West, San Jose,
CA 95110.

The address for PeopleWeb
Communications is 2001 Gateway Place, Suite 270 West, San Jose, CA 95110.



Item 12. Certain Relationships and Related Transactions

We had an unsecured loan in the amount of $54,000 from our director and Chief Executive Officer,
Anthony Chan.  On February 8, 2002 the entire amount of this loan was converted
into 27,000 shares of our common stock.

On June 20, 2001, we acquired the exclusive marketing rights to ChiBrow from ECapital and issued 374,587 shares of the Company's common stock to ECapital.
On March 21, 2002, we entered into an Agreement For Sale of Assets with ECapital for the purchase by the Company from ECapital of the
entire intellectual property to ChiBrow.  As consideration for the purchase,
we issued 3,799,999 shares of our common stock to ECapital.

On March 21, 2002, we entered into an Agreement For Sale of Assets with PeopleNet Corporation ("PC") for the purchase by the Company from PC of the intellectual property rights for a software bundle including web-based email and office
communication solutions.  As consideration for the purchase, we issued 9,620,000 shares of
our common stock to PC.

Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

See Index to Exhibits on pages 40 to 41 of this Form 10-KSB.

(b) Reports on Form 8-K

The Company filed on Form 8-K, dated March 21, 2002, to report on the change of
control and the acquisitions of the intellectual properties of ChiBrow and a
communication software solution.

The Company filed on Form 8-K, dated February 19, 2003, to report on the change of independent auditors.

Item 14. Controls and Procedures

Based on their most recent review, which was completed within 90 days of the filing of this report, the Company's principal
executive officer and principal financial officer has concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure and are effective to ensure that such information is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms.  There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls subsequent to the date of their evaluation.

---

**SIGNATURES**

In accordance with Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: April 15, 2003

In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



|Signature                              | Title                                                                    | Date          
|-------------------------------------- | ------------------------------------------------------------------------ | --------------
|By: /s/ Benedict Van
    Benedict Van  | Chief Executive Officer
      (Principal Executive Officer) and Director | April 15, 2003
|By: /s/ Anthony K. ChanAnthony K. Chan | Director                                                                 | April 15, 2003

---

CERTIFICATIONS

We, Benedict Van, Chief Executive Officer and Anthony K. Chan, Chief Financial Officer of PeopleNet
International Corporation, certify that:

1. We have reviewed this annual report on Form 10-KSB of PeopleNet
International Corporation;

2. Based on our knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
annual report;

3. Based on our knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying Officers and we are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as pf the Evaluation Date;

5. The registrant's other certifying officers and we have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function);

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and we have indicated in this
annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 15, 2003

/s/ Benedict Van
Benedict Van
Chief Executive Officer

/s/ Anthony K. Chan
Anthony K. Chan
Chief Financial Officer

---

INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
PeopleNet International Corporation:

We have audited the accompanying balance sheet of PeopleNet International Corporation, a Delaware Corporation (the "Company") as of December 31, 2002 and the related statements of operations, stockholders' deficit and cash flows for the year then ended. 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 audit.



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



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PeopleNet International Corporation as of December 31, 2002 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.



The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has accumulated deficit of $17,866,742 and the Company's total liabilities exceeded the total assets by $153,647 as of December 31, 2002. These factors as discussed in Note 14 to the financial statements, raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 14. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





KABANI & COMPANY, INC.CERTIFIED PUBLIC ACCOUNTANTS

/s/ Kabani & Company, Inc.

Fountain Valley, CaliforniaMarch 7, 2003

---

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
PeopleNet International Corporation:

We have audited the accompanying balance sheet of PeopleNet International Corporation (the "Company"), a wholly owned subsidiary of Pacific Systems Control Technology, Inc., as of December 31, 2001, and the related statements operations, stockholders' equity and cash flows for the year ended December 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 audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audits 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.  We believe that our audit provide a reasonable basis for our opinion.

In our opinion, based on our audit, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2001 and the results of its operations and cash flows for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.  We have not audited the financial statements of PeopleNet International Corporation for any period subsequent to December 31, 2001.

The accompanying financial statements have not been prepared assuming that the Company will continue as a going concern.  The Company had limited cash reserves at December 31, 2001 and based on management's current cash flow estimates, will not have sufficient cash to meet obligations over the next twelve months without additional sources of capital.  These factors raise substantial doubt about the Company's ability to continue as a going concern.    The financial statements do not include any adjustments that may result from the outcome of this uncertainty.

MOSS ADAMS LLP

/s/ Moss Adams LLP

San Francisco, California
March 6, 2002

---

PEOPLENET INTERNATIONAL CORPORATIONBALANCE SHEET

`December 31
                                              -----------
                                                  2002
                                              -----------
ASSETS
  Cash                                        $     1,394
  Property and equipment, net                      15,314
  Intangible assets, net                          605,780
                                              -----------
    Total assets                              $   622,488
                                              ===========

LIABILITIES
  Accounts payable and accrued expenses       $   342,181
  Payroll taxes payable                           128,454
  Advances from related parties                   245,500
  Notes payable - related party                    60,000
                                              -----------
    Total current liabilities                     776,135
                                              -----------

COMMITMENTS

STOCKHOLDERS' EQUITY
  Preferred stock, $0.0001 par value;
    10,000,000 shares authorized              $       -
  Common stock, $0.0001 par value;
    100,000,000 shares authorized;
    15,749,999 shares issued and
    outstanding at December 31, 2002                1,575
  Additional paid-in capital                   19,080,371
  Deferred compensation charges                (1,053,060)
  Related party receivable                       (315,791)
  Accumulated deficit                         (17,866,742)
                                              -----------
    Total stockholders' equity                   (153,647)
                                              -----------
                                              $   622,488
                                              ===========`

See accompanying notes.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF OPERATIONS

`Year Ended December 31,
                                              -------------------------
                                                  2002          2001
                                              -----------   -----------
REVENUE
  Licensing income - film                     $       -         450,000
  Licensing fee - software                         14,060         1,140
  Hosting & other                                  27,804            50
                                              -----------   -----------
    Total revenue                                  41,864       451,190
                                              -----------   -----------

COSTS AND EXPENSES
  Film cost and reserves                              -       3,946,803
  Bad debts                                       137,990       317,333
  Inter-company interest                              -         120,000
  Amortization of intangibles                     454,750           -
  Loss on investment                               10,000           -
  Selling                                             -          39,050
  Salaries and payroll taxes                      296,910       141,230
  Rent                                             47,100           -
  Professional fees                               546,362        21,389
  General and administrative                    3,585,660       204,552
                                              -----------   -----------
    Total costs and expenses                    5,078,772     4,790,357

                                              -----------   -----------
LOSS FROM OPERATIONS                           (5,036,908)   (4,339,167)

OTHER INCOME (EXPENSE)
  Interest expense                                (16,208)         (474)
  Loss on sale of equipment                       (12,731)      (38,361)
                                              -----------   -----------
                                                  (28,939)      (38,835)

LOSS BEFORE INCOME TAXES                       (5,065,847)   (4,378,002)

PROVISION FOR INCOME TAXES                            900           900
                                              -----------   -----------
NET LOSS                                      $(5,066,747)   (4,378,902)
                                              ===========   ===========

Basic & diluted weighted average number
  of common stock outstanding                  12,745,561     2,010,000
                                              ===========   ===========

Basic and diluted net loss per share          $     (0.40)  $     (2.18)
                                              ===========   ===========`

See accompanying notes.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF STOCKHOLDERS' EQUITY

`Common Stock
                                ------------------                   Deferred      Related                       Total
                                 Number                Paid-In     Compensation     Party       Accumulated    Stockholders'
                                of shares   Amount     Capital       Charges      Receivable      Deficit        Equity
                                ---------   ------   -----------   ------------   ----------   -------------   -------------

Balance,
December 31, 1999               2,010,000   $  201   $   678,680   $       -      $     -      $ (1,701,615)   $ (1,022,734)

Net loss                              -        -             -             -            -        (6,719,478)     (6,719,478)
                                ---------   ------   -----------   ------------   ----------   -------------   -------------
Balance,
December 31, 2000               2,010,000      201       678,680           -            -        (8,421,093)     (7,742,212)

Net loss                              -        -             -             -            -        (4,378,902)     (4,378,902)
                                ---------   ------   -----------   ------------   ---------    -------------   -------------
Balance,
December 31, 2001               2,010,000      201       678,680           -            -       (12,799,995)    (12,121,114)
                                ---------   ------   -----------   ------------   ---------    -------------   -------------
Conversion of related party
  balances to equity upon
  spin-off                            -        -      12,238,785           -            -               -        12,238,785

Issuance of common stock
  for cash                        120,000       12       119,988           -            -               -           120,000

Issuance of common stock options
  for compensation                    -        -       4,484,048    (1,053,060)         -               -         3,430,988

Issuance of common stock options
  for services                        -        -         484,942           -            -               -           484,942

Issuance of common stock
  for services                    200,000       20        15,770           -            -               -            15,790

Issuance of common stock for
  acquisition of intangibles   13,419,999    1,342     1,058,158           -            -               -         1,059,500

Related party receivable              -        -             -             -       (315,791)            -          (315,791)

Net loss for the year                 -        -             -             -            -        (5,066,747)     (5,066,747)
                               ----------   ------   -----------   ------------   ----------   -------------   -------------
Balance,
December 31, 2002              15,749,999   $1,575   $19,080,371   $(1,053,060)   $(315,791)   $(17,866,742)   $   (153,647)
                               ==========   ======   ===========   ============   ==========   =============   =============`

See accompanying notes.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF CASH FLOWS

`Year Ended December 31,
                                                           ---------------------------
                                                               2002          2001
                                                           ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                                 $(5,066,747)   $(4,378,902)
  Adjustments to reconcile net loss to net cash
    used in operating activities
      Allowance for doubtful accounts                              -          128,500
      Amortization and reserve of film costs                       -        3,945,000
      Depreciation and amortization                            512,913         70,966
      Loss on sale of equipment                                 12,731         38,361
      Bad debts                                                137,990        188,833
      Common stock issued in lieu of compensation               15,790            -
      Common stock options issued in lieu of compensation    3,092,405            -
      Common stock options issued in lieu of services          484,942            -
      Write-off of inventory                                       -           15,412
      Amortization of deferred compensation charges            338,482            -
      (Increase) / decrease in current assets:
          Accounts receivable                                   (4,990)      (262,605)
          Inter-company accounts                                   -          108,327
          Inventory                                                -              255
      Increase / (decrease) in current liabilities:
          Accrued expenses                                     162,964         77,853
          Other                                                (72,628)           -
                                                           ------------   ------------
      Net cash used in operating activities                   (386,148)       (68,000)
                                                           ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of property & equipment                           (2,647)           -
  Proceeds from sale of equipment                                  -           15,000
                                                           ------------   ------------
  Net cash provided by (used in) investing activities           (2,647)        15,000
                                                           ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds on notes payable                                     10,000         50,000
  Proceeds from (payment to) related parties                   260,189          3,000
  Cash received for shares issued                              120,000            -
                                                           ------------   ------------
      Net cash provided by financing activities                390,189         53,000
                                                           ------------   ------------

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS               1,394            -

CASH & CASH EQUIVALENTS, beginning balance                         -              -
                                                           ------------   ------------
CASH & CASH EQUIVALENTS, end balance                       $     1,394    $       -
                                                           ============   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for
    Foreign and state income taxes                         $       900    $       900
                                                           ============   ============`

See accompanying notes.

---

NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDEDDECEMBER 31, 2002

Note 1 - Nature of Operations, Stock Split, and Spin-off

Nature of Operations - PeopleNet International Corporation (the "Company") was incorporated on February 5, 1997in the state of Delaware. The Company focuses on development and sales of communication software solutions and management of media-related programs. The software solutions include a controlled and safe Internet browser for children and a multiple-module web-based email and office automation bundle. The media-related programs consist of production of educational television programs for children, which emphasize moral values and fun. The Company had been a wholly owned subsidiary of Pacific Systems Control Technology, Inc. ("PSCT") until February 8, 2002 when the Company completed its spin-off transaction from PSCT and became an independent entity.

Stock Split, Spin-off, and Business Agreements - On July 24, 2001 the Company changed its name from American Champion Media, Inc. to PeopleNet International Corporation. The name change was made to more accurately reflect changes in the Company's core business.

On July 23, 2001 the Company declared a 20,100 for 1 stock split. The accompanying financial statements reflect the effect of this split. The Company also increased the authorized shares of common stock to 100,000,000 and provided for the issuance of up to 10,000,000 shares of preferred stock. The preferred stock can be issued by the Board of Directors and may include voting rights, preferences as to dividends and liquidation, conversion rights, redemption and sinking fund provisions. All share and per share data in the accompanying notes have been adjusted to reflect the effect of this split.

In July 2001 the Company adopted the 2001 Stock Option Plan. The plan provides for the issuances of up to 1,500,000 options to purchase common stock of the company. In April 2002, the Board of Directors increased the plan to 8,000,000 shares.  As of December 31, 2002, 6,790,620 stock options have been issued under the plan.

In July 2001 the Company adopted the Non-Employee Directors Stock Option Plan. The plan provides for the issuances of up to 500,000 options to purchase common stock of the company. In April 2002, the Board of Directors increased the plan to 1,000,000 shares. No options have been issued under the plan.

In July 2001 the Company adopted the 2001 Stock Incentive Plan. The plan provides for the issuances of up to 500,000 shares of common stock of the company. No shares have been issued under the plan.

On June 22, 2001, PSCT approved a plan to spin-off the Company to the shareholders as a tax-free distribution. Under the plan, each stockholder of PSCT received one share of PeopleNet stock for every 17 shares of PSCT stock held as of the record date of January 16, 2002. Subsequent to and as part of the spin-off, the Company issued 374,587 shares of common stock, with registration rights to ECapital, in exchange for the worldwide exclusive rights to market and distribute ChiBrow, a safe web browser software for children for three years. The related party note payable was converted to common stock. The spin-off became effective in January 2002 and all shares were distributed to the above parties on February 8, 2002.

As part of this plan, inter-company advances were offset against the amounts due to PSCT and the net amount was converted to additional paid-in-capital.
Also, as a part of the transaction, PSCT agreed to pay to the Company $314,000
since liabilities incurred by PSCT for the same amount, were recorded by the
Company.

Note 2 - Summary of Significant Accounting Policies

Use of Estimates, Risks and Uncertainties - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates. Significant estimates used in these financial statements include the recovery of intangible assets and film costs, which have a direct relationship to the net realizable value of the related asset. It is at least reasonably possible that management's estimate of revenue from licensing and films could change in the near term, which could have a material adverse effect on the Company's financial condition and results of operations.

Cash and cash equivalents - The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Property and Equipment - Property and equipment is stated at cost. Depreciation for property and equipment is computed using the straight-line method over an estimated useful life of five years.

Film Costs - Film costs consist of the capitalized costs related to the production of original film masters for videos and television programs. Film costs are amortized using the individual-film-forecast-computation method. The net film costs are presented on the balance sheet at the net realizable value for each master. During 2001 the Company established a reserve against the capitalized film costs to reduce the carrying amount to the estimated net realizable value, which is zero.

Software development costs - The Company has adopted Statement of Position 98-1 ("SOP 98-1") "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", as its accounting policy for internally developed computer software costs.  Under SOP 98-1, computer software costs incurred in the preliminary development stage are expensed as incurred.  Computer software costs incurred during the application development stage are capitalized and amortized over the software's estimated useful life.

Revenue Recognition - Revenue from certain licensing programs is recorded when license agreement has been executed, the software has been delivered or shipped, the fee is determined and the customer is invoiced. The Company has adopted the provisions of Statements of Position 97-2 and 98-4 and SEC Staff Accounting Bulletin 101. Revenue from licensing agreements is not significant for the year ended December 31, 2002.

Revenue from films is recognized on delivery of each master. Film costs are amortized using the individual-film-forecast-computation method, which amortizes costs in the ratio that current gross revenues bear to anticipated total gross revenues from all sources. Management periodically reviews its estimates of future revenues for each master and if necessary a revision is made to amortization rates and a write down to net realizable value may occur. There is no revenue from films for the year ended December 31, 2002.

Revenue from hosting services is recognized in the period in which the service is provided when the amount of revenue is determinable and collectability is reasonably assured. Subsequent to the year ended December 31, 2002, the Company discontinued the hosting operations.

Research and Development - Expenditures for software development costs during the preliminary stage and research are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such software has been short. Consequently, costs otherwise capitalizable after technological feasibility is achieved are generally expensed because they are insignificant.



Income Taxes - Income taxes are accounted for using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between financial statement and tax basis of assets and liabilities at the applicable enacted tax rates. Accounting principles generally accepted in the United States of America require a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.



Stock-based compensation - SFAS No. 123 prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense to be recorded (i) using the new fair value method or (ii) using the existing accounting rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and related interpretations with proforma disclosure of what net income and earnings per share would have been had the Company adopted the new fair value method. The Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and has adopted the disclosure only provisions of SFAS 123.  Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.



The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Valuation of shares for services is based on the estimated fair market value of the services performed.



Basic and diluted net loss per share - Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.



Fair value of financial instruments - Statement of financial accounting standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.



Segment Reporting - Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Currently, SFAS 131 has no effect on the Company's consolidated financial statements as substantially all of the Company's operations are conducted in one industry segment.

Concentrations of Risk - Financial instruments which potentially subject the Company to concentrations of credit risk are cash and accounts receivable. The Company places its cash with financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk.

Recent pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations". SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002.



SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of a segment of a business.



The adoption of above pronouncements, did not materially impact the Company's financial position or results of operations.



In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS 145"). SFAS 145 rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary unless they meet the criteria for extraordinary items as outlined in APB Opinion No. 30, Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions and makes various technical corrections to existing pronouncements. The provisions of SFAS 145 related to the rescission of FASB Statement 4 are effective for fiscal years beginning after May 15, 2002, with early adoption encouraged. All other provisions of SFAS 145 are effective for transactions occurring after May 15, 2002, with early adoption encouraged. The Company does not anticipate that adoption of SFAS 145 will have a material effect on our earnings or financial position.



In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with exit or Disposal Activities." This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under Issue 94-3 a liability for an exit cost as defined, was recognized at the date of an entity's commitment to an exit plan. This statement will not have a material impact on the Company's financial statements.



In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and Interpretation 9 thereto, to recognize and amortize any excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired as an unidentifiable intangible asset. This statement requires that those transactions be accounted for in accordance with SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets."  In addition, this statement amends SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," to include certain financial institution-related intangible assets.  The Company does not expect adoption of SFAS No. 147 would have a material impact, if any, on its financial position, results of operations or cash flows.



In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of FIN45 is not expected to have a material effect on the Company's financial position, results of operations, or cash flows.



In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based Compensation-Transition and Disclosure".  SFAS No. 148 amends SFAS No. 123, "Accounting for Stock Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used, on reported results.  The Statement is effective for the Companies' interim reporting period ending January 31, 2003.  The Companies do not expect the adoption of SFAS No. 148 would have a material impact on its financial position or results of operations or cash flows.



Reclassifications - Certain comparative amounts have been reclassified to conform to the current year's presentation.



Note 3 - Property and Equipment

The property & equipment comprised of the following at December 31, 2002:

`Equipment                                $  49,820
     Production equipment                       290,389
                                              ---------
                                                340,209
     Less accumulated depreciation
       and amortization                         324,895
                                              ---------
                                              $  15,314
                                              =========

Depreciation expense was $58,163 and $70,966 for the years ended December 31, 2002 and 2001, respectively.`

Note 4 - Film Costs

Film costs consist of the capitalized costs related to the production of programs for television and videos as follows:

`Television program
       The Adventures With Kanga Roddy, net of
         reserve of $7,032,260 at December 31, 2002 and 2001    $1,165,557
     Videos
       Montana Exercise Video, net of
         reserves of $148,253 at December 31, 2002 and 2001            -
       Strong Mind Fit Body, net of
         reserves of $18,042 at December 31, 2002 and 2001             -
                                                                ----------
                                                                 1,165,557

     Less accumulated amortization                               1,165,557
                                                                ----------
                                                                $      -
                                                                ==========`

All three investments:The Adventures With Kanga Roddy,Montana Exercise Video and the videos of the Strong Mind Fit Body were fully reserved, as management believes these investments would not generate future revenues for the Company. (See Note 10)

Note 5 - Intangible Assets

Intangible assets include two intellectual properties: "The Children's Browser" and an office communication program and associates modules. Acquired in March 2002, a total of 13,419,999 shares of common stock were issued for the acquisition. Intangible assets are amortized on a straight-line basis over the estimated economic life. In the second and third quarters of 2002, the estimated economic life was 36 months for both assets. Due to the fact that the office communication solution may be more prone to competition, the estimated economic life of this asset was revised to 18 months. Amortization expenses for the year ended December 31, 2002 are $454,750 based upon valuation of the intangibles by the Company on December 31, 2002.

Intangible assets and their related accumulated amortization as of December 31, 2002 are as follows:

`ChiBrow                                  $  300,000
     Office Communication                        759,500
     Domain name                                   1,030
                                              ----------
                                               1,060,530

     Less accumulated amortization               454,750
                                              ----------
                                              $  605,780
                                              ==========`

ChiBrow is acquired from ECapital Group, Inc., a related party who owns approximately 19% of our Company prior to the acquisitions. The office communication software is acquired from PeopleNet Corporation whose certain owners indirectly own our shares through their ownership of ECapital Group, Inc. The values of the acquisitions were determined by mutually agreed prices of the software products from the sellers and the value of our common stock at $0.08 per share.

Note 6 - Investment

In October 2002, the Company acquired certain assets including an Internet web site and copyrights and trademark attached to the site for $10,000. The Company sold the right to use the assets to the seller for 13,900,000 shares of common stock of $.0001 par value of the seller. At December 31, 2002, the Company wrote off the value of the assets and the shares to zero since the viability of the assets was not certain through December 31, 2002.

Note 7 - Advances from Related Parties

The advances from related parties are due on demand, non-interest bearing and unsecured.

Note 8 - Notes Payable - related party

At December 31, 2002, the Company has an unsecured note payable of $60,000 from a related party, related to the president of the Company. The note is due on demand and bears interest at 9% per annum.

Note 9 - Income Taxes

Reconciliation of the federal statutory tax rate of 34% and state tax rate of 8.8% to the recorded amounts are as follows:

`2002           2001
                                                  ------------   ------------
     Federal tax benefit at statutory rates       $(1,722,400)   $(1,389,000)
     State tax benefit at statutory rates            (445,795)      (220,100)
     Increase in valuation allowance                2,167,295      1,610,000
                                                  ------------   ------------
                                                  $       900    $       900
                                                  ============   ============`

The Company used to file a consolidated income tax return with PSCT. The Company had net operating loss (NOL) carry forwards for federal and state income tax purposes of approximately $18,000,000 and $16,000,000, the benefits of which was to expire in 2012 through 2020 for federal purposes and through 2005 for state purposes. Because of changes in ownership of the Company and PSCT, the utilization of NOLs in any one-year will be limited by Section 382 of the Internal Revenue Code.

Through December 31, 2002, the Company incurred net operating losses, after spin-off, for income tax purposes of $5,000,000. The net operating loss carryforward may be used to reduce taxable income through the year 2017. Net operating loss for carry forwards for the State of California are generally available to reduce taxable income through the year 2007. The provision for income tax consists of the state minimum taxes imposed on corporations.

Significant components of the Company's deferred tax assets and liabilities as of December 31, 2002 are as follows:

`DEFERRED TAX ASSETS
         NOL carryforward               $10,000,000
         Valuation allowance             (9,985,000)
                                        ------------
                                             15,000
                                        ------------

    DEFERRED TAX LIABILITIES
        Depreciation                         15,000
                                        ------------
                                             15,000
                                        ------------
                                        $       -
                                        ============`

Due to the uncertainty of future taxable income and limitations related to Section 382 of the Internal Revenue Code, a valuation allowance for the net amount of the deferred tax assets and liabilities before the spin off has been recorded at December 31, 2002.

Note 10 - Commitments and Contingencies

In September 1999 the Company signed a licensing agreement with Brighter Child of Westerville, Ohio, for the licensing of the Kanga Roddy story and all related characters for use in interactive CD-Rom games. In October 1999, the Company signed a licensing agreement with Prestige Toys of New York, New York, for the licensing of the Kanga Roddy character and all related characters for use and manufacturing of plush toy items in all sizes. The agreement with Brighter Child expired on December 31, 2002.

On December 27, 2000, the Company entered into a worldwide distribution agreement with respect to The Adventures with Kanga Roddytelevision program with World Channel, Inc. Under the agreement, World Channel will have the exclusive rights for exhibition, distribution, process and reproduction and all commercial exploitation of the program for a period of five years. The agreement requires World Channel to make five annual installments of $600,000 on or before the end of each of the years 2001 through 2005. For the year ended December 31, 2001, the Company recognized $450,000 film income in relation to this distribution agreement, $193,000 of which was collected before year-end. The Company did not earn any revenue from the films in 2002. . A 100% reserve on the remaining receivable was also established as of June 30, 2002. Because collection activity through December 31, 2001 raises substantial doubt with respect to amounts due in future years under this agreement and because there are currently no other agreements in place, the Company has reserved the remaining unamortized film costs for "The Adventures With Kanga Roddy" television program.

In June 2001 the Company signed an agreement with ECapital Group, Inc. ("ECapital") to purchase the exclusive licensing and marketing rights to ChiBrow, a safe web browser software for children. Under the terms of the agreement and upon the effectiveness of the spin-off of the Company from PSCT, the Company issued 374,587 shares of common stock, with registration rights, to ECapital in exchange for the worldwide exclusive rights to market and distribute ChiBrow for three years (see Note 1). The Company intends to file a registration statement for such shares immediately after the effectiveness of the spin-off transaction. Pursuant to the terms of the agreement, the Company shall retain 35% of all revenues generated from such marketing efforts and the balance shall be paid to ECapital. The registration for the 374,587 shares of PeopleNet common stock issued to ECapital has not yet been filed as of December 31, 2002.

Through December 31, 2001, the Company was still a subsidiary of Pacific Systems Control Technology, the following cases were either filed against Pacific Systems naming all of its subsidiaries including PeopleNet as the defendants, or Pacific Systems' initiated complaint resulted in a cross-complaint by the defendant naming Pacific Systems and all of its subsidiaries including PeopleNet as the defendants in the cross-complaint. Pacific Systems has agreed to indemnify all of its subsidiaries including PeopleNet from the liabilities of the following cases including expenses, fees or judgment.

As of December 31, 2001, while still a wholly owned subsidiary of Pacific Systems Control Technology, Inc., the Company accrued approximately $57,000 in payroll taxes payable. Such taxes are still outstanding as of December 31, 2002 and Pacific Systems Control Technology agrees to be responsible for such taxes and will make arrangement for payment with the tax authority.

In February 2001, a complaint was filed by Chuck Nelson in Court of Common Pleas, Mahoning County in Youngstown, Ohio against Pacific Systems for a percentage of the total purse amounts paid to boxers involved in the boxing event in China in April 2000, and for a percentage of the television revenue generated thereof. The plaintiff is claiming for incidental damages in excess of $2,500 and consequential damages in excess of $100,000. Pacific Systems denies all of the rights claimed by Chuck Nelson and will vigorously defend against all of Mr. Nelson's claims. In May 2002 Pacific Systems submitted answers to interrogatories from the plaintiff and such answers demonstrate contradictions to the plaintiff's claims. As of December 31, 2002, Pacific Systems' counsel is negotiating with the plaintiff regarding a settlement.

In October 2001, Pacific Systems filed a complaint against a former employee in licensing and marketing activities for breach of contract, breach of fiduciary duty and unjust enrichment, among other causes of action, seeking declaratory relief from the court.  A counter claim from the employee was filed in April 2002 against Pacific Systems and its subsidiaries. On April 15, 2002, judgment was entered against Pacific Systems and its subsidiaries in the amount of $70,527. As of December 31, 2002, $56,727 was still outstanding on the judgment. On February 11, 2003, Pacific Systems and its subsidiaries entered into a global settlement and mutual release of all claims with the former employee. Under the agreement, the cross-defendants, including the Company, will pay to the former employee a total sum of $100,000 plus interest at the rate of 10% per year, payable in installments at the rate of $3,000 per month. As of March 31, 2003, the outstanding balance under the settlement agreement was $84,000.

On April 9, 2002, the Company entered into a stock exchange agreement with MarketRoot Corporation where the Company intends to acquire all of the outstanding shares of MarketRoot for 1,740,000 shares of the Company's common stock.  MarketRoot has developed and owned an e-commerce software product.  The agreement is subject to the submission of audited financial statements of MarketRoot for the years ended December 31, 2001 and 2000 and the acceptance of such financial statements by the Company. As of December 31, 2002, audited financial statements of MarketRoot have not yet been submitted to the Company.

Note 11 - Related Party Transactions

Certain financing transactions of the Company and management oversight duties have been provided by PSCT. Although PeopleNet employees have provided management of the operations of the Company, the ability of the Company to obtain financing has been dependent upon its relationship with PSCT. Had the relationship between the Company and PSCT not been in place, the results of operations and financial position of the Company may have been different.

The Company has received advances from PSCT to fund its operations. It has been the policy of PSCT and the consolidated group to not charge interest on inter-company advances. Interest has been imputed on $1,500,000 of the balance at a rate of 8%. This interest has been accrued as PSCT intends to charge interest on this amount in future periods. At December 31, 2001 accrued interest payable on these advances amounted to $540,000 and is included in the outstanding balance of the note. Upon the effectiveness of the spin-off of the Company, the net balance of the advances and all accrued interest except $1,500,000 were converted to additional paid-in-capital. Subsequently in the quarter ended March 31, 2002, the remaining $1,500,000 was also converted to additional paid-in capital. (See Note 1).

The Company has also made advances to ABK (a subsidiary of Pacific). These advances are also non-interest bearing. Interest income has not been accrued on these advances as it is not expected that this interest will ever be charge or collected. Upon the effectiveness of the spin-off of the Company, the amounts due under this advance were offset against the amounts due to PSCT (see note 1).

In March 2002, the Company acquired ChiBrow from ECapital Group, Inc., which is a related party who owns approximately 19% of our Company prior to the acquisition. The Company also acquired an office communication software from PeopleNet Corporation whose certain owners indirectly own our shares through their ownership of ECapital Group, Inc.

Note 12 - Common Stock / Options

Between April and May 2002, the Company issued a total of 6,680,620 stock options with exercise prices ranging from $0.08 to $0.12 per share and with gradual vesting arrangements. Due to the difference in valuation between certain intangible assets the Company acquired in March 2002 with the Company's common stock at $0.08 per share and common stock the Company sold to an investor in June 2002 at the price of $1.00 per share, the Company valued these options at a total of approximately $4.5 million. During the year ended December 31, 2002, the Company recognized $3,915,930 in non-cash expenses for the stock options vested as of December 31, 2002. The remaining unvested options are deferred and will be amortized over the vesting period.

Stock Options

The Company applies the intrinsic value based method prescribed by Accounting Principals Board Opinion No. 25 "Accounting for Stock Issued to Employees," in accounting for employee stock options and non-employee directors. Accordingly, compensation expense is recognized only when options are granted with a discounted exercise price. Any such compensation expense is recognized ratably over the associated service period, which is generally the vesting term.

Stock options granted to non-employees for services provided to the Company are accounted for under Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." During the year , the Company granted 6,790,620 options and recorded compensation expense of $ 3,915,930.



Pro forma net earnings and earnings per share information, as required by SFAS 123, has been determined as if the Company had accounted for employee and non-employee director stock options under SFAS 123's fair value method. The fair value of these options was estimated at grant date using a Black-Scholes option pricing model with the following weighted average assumptions for fiscal 2002: risk free interest rate of 5.00% ; dividend yield of 0%; expected weighted average option life of 4.47 years; and volatility of 0%.



The weighted average grant date fair value and the weighted average exercise price of options issued during the year were $0.95 and $0.10, respectively, all of which were issued at an exercise price below the stock price at the grant date.



For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. Adjustments are made for options forfeited prior to vesting. The effects on compensation expense and net income had compensation costs for the Company's stock option plans been determined based on a fair value at the date of grant consistent with the provisions of SFAS 123, for the year ended December 31, 2002 are as follows:

`2002
                                                         ------------
Net loss, as reported                                    $(5,066,747)
  Adjustment to compensation expense
  under SFAS 123:
    Recorded by the Company under the
      provision of APB 25                   3,915,930
    Based on a fair value at the date of
      grant consistent with the
      provisions of SFAS 123                4,877,122
                                            ---------
                                                             961,192
                                                         ------------
Net loss, pro forma                                      $(6,027,939)
                                                         ============

Loss per share, pro forma                                $      (.47)
                                                         ============`

The following summary presents the incentive and non-qualified options under the plan granted, exercised, expired and outstanding at December 31, 2002 and 2001:

`Weighted
                                                   Average
                                                   Exercise
                                    Under Plan     Price
                                    ----------     --------
Balance, December 31, 2000                 -
  Granted                                  -
                                    ----------     --------
Balance, December 31, 2001                 -
  Granted                            6,680,620        $0.10
  Exercised or lapsed                      -
                                    ----------     --------
Balance, December 31, 2002           6,680,620        $0.10
                                    ==========     ========`

The following summary presents the weighted average exercise prices, number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options at December 31, 2002:

`Options Outstanding               Options Exercisable
            ------------------------------------     ----------------------
                          Weighted
                          Average       Weighted                   Weighted
                          Remaining     Average                    Average
            Number        Contractual   Exercise     Number        Exercise
            Outstanding   Life          Price        Exercisable   Price
            -----------   -----------   --------     -----------   --------
2002:
Options       6,680,620       4.47        $0.10        4,903,063     $0.10`

Note 13 - Supplemental disclosure of cash flows

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.

The Company paid $900 for income taxes in the years ended December 31, 2002 and 2001. The Company paid $0 for interest during the year ended December 31, 2002 and 2001.

The Cash flow statements do not include effect of the non-cash investing and financing activities of issuance of 13,419,999 shares of common stock for acquisition of intangible assets amounting $1,059,500.

Note 14 - Going concern

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated deficit of $17,866,742 at December 31, 2002. The Company's total liabilities exceeded the total assets by $153,647 as of December 31, 2002. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management's plans and the ongoing operations of the Company are expected to require additional working capital in year 2003. The Company has historically financed operating and capital cash requirements from funds received from the parent company PSCT. The Company is attempting to raise additional capital through a private placement in the amount of $1,000,000. However, there can be no assurance that this placement could be successfully executed due to the current adverse investment climate. During each of the quarters going forward, the Company intends to make smaller private sale of stock to accredited individuals and to obtain loans from ECapital Group, Inc. or other individuals for operation cash needs.





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INDEX TO EXHIBITS

Exhibit No.       Exhibit Description

3.1(1)     Certificate of Incorporation, as amended on July 24, 2001
3.2(1)     By-laws
4.1(1)     2001 Stock Option Plan
4.2(1)     2001 Non-Employee Director Stock Option Plan
4.3(1)     2001 Stock Incentive Plan
10.1(1)   Agreement between American Champion Media & American Champion Entertainment dated as of July 10, 2001
10.2(1)   Agreement among ACEI, American Champion Media, ECapital Group & Anthony Chan, dated as
of June 20, 2001
10.3(1)   Agreement between American Champion Media & World Channel dated as of December 27, 2000
10.4(1)   Agreement between American Champion Media & Brighter Child Interactive dated as of September 30, 1999
10.5(1)   Agreement between American Champion Media & Prestige Toys Corp dated as of October 13, 1999
10.6(2)   Agreement - Sale of Assets between ECapital Group & PeopleNet International dated March 21, 2002
10.7(2)   Agreement - Sale of Assets between PeopleNet Corporation & PeopleNet International dated March 21, 2002
23.1        Consent of Independent Auditors
99.1        Certification pursuant to the Sarbanes-Oxley Act of 2002

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1. Filed as an exhibit to the Company's Form 10-SB/A dated as of December 3,
2001
2. Filed as an exhibit to the Company's Form 8-K dated as of March 21, 2002

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