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

                                   FORM 10-KSB






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

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

Commission File Number: 000-33231

                               SRM Networks, Inc.
                               ------------------
             (Exact name of registrant as specified in its charter)

Nevada                                                               95-4868120
------                                                               ----------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

1241 North Central Avenue, Suite 7, Glendale, California                  91202
-------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

                                 (818) 243.1181
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

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


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

                None                                    None
                ----                                    ----

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

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

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

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

State issuer's revenues for its most recent fiscal year. $2,253.00

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of April 11, 2002, approximately $0.

As of April 11, 2002, there were 35,475,000 shares of the issuer's $.001 par
value common stock issued and outstanding.

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

Transitional Small Business Disclosure format (check one):

                        [ ] Yes         [X] No



                                       1
<PAGE>


                                     PART I

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

Our Background.  We were incorporated in Nevada on June 8, 2001.

Our Business. We are an Internet solutions company that specializes in website
hosting and development services. Website hosting encompasses a broad range of
possible services, including basic services, such as simply posting a customer's
website on the Internet using the hosting company's computer hardware and
software, and enhanced services such as enabling financial transactions over the
Internet, email, audio and video capabilities. Enhanced services may be
developed internally by the web hosting company or purchased from external
sources and resold by the web hosting company. We focus on meeting the needs of
small and medium-sized businesses and individuals who are establishing a
commercial or informational presence on the Internet.

Our Products and Services. We offer, on a resale basis, a range of basic and
enhanced web hosting services to businesses wishing to place their website on
the Internet. These businesses often decide to use a web hosting company in
order to avoid the financial cost, time and expertise requirements of hosting
the website and obtaining enhanced services themselves.

We also offer website design and development services. Website design and
development may include such features as graphics, text, color, typestyle, audio
and video. The person or company typically responsible for assisting in the
design and maintenance of a website is called a webmaster. This function is
labor intensive and would involve significant human resources and time to
service a broad customer base. Consequently, webmaster functions are typically
performed by specialized companies servicing a number of customers. These
customers may also rely upon their webmasters to direct them to suitable hosting
or Internet service provider company.

We also provide server co-location services. Server co-location services involve
a customer physically placing their computer hardware, referred to as a server,
on our premises. The customer gains access to our Internet support and
maintenance services, high-speed Internet connections, security systems and
appropriate physical environment for the server, such as static free and
air-conditioned.

Our Target Markets and Marketing Strategy. We believe that our primary target
market will consist of small and medium sized businesses that wish to have a
website on the Internet without incurring the costs and time delays involved
with developing, maintaining and updating a web presence on their own. The
website is an informational or an informational/ commercial tool for these
customers. In addition to small and medium sized businesses, reseller web
hosting services may be purchased by entities, such as value added resellers, or
VARs, and original equipment manufacturers, or OEMs, that will resell the
services in connection with their own web related services.

Our marketing strategy is to promote our services and products and attract
businesses to our website. Our marketing initiatives include:

    o    utilizing direct response print advertisements placed primarily in
         small business, entrepreneurial, and special interest magazines;
    o    links to industry focused websites;
    o    advertising by television, radio, banners, affiliated marketing and
         direct mail; and
    o    presence at industry tradeshows.

Growth Strategy. Our objective is to become a dominant provider of web hosting
and development services. Our strategy is to provide clients with exceptional
personal service and high quality web design. Key elements of our strategy
include:

    o    increase our relationships with businesses;
    o    increase our relationships with third party providers of web products
         and services;


                                       2
<PAGE>


    o    continue and expand our website;
    o    provide additional services for businesses and consumers; and
    o    pursue relationships with joint venture candidates. We will attempt to
         establish joint ventures with companies that will support our business
         development.

Competition. The markets for web hosting and development are very competitive.
Our current and potential competitors include:

    o    other web hosting and Internet services companies;
    o    regional and national ISPs;
    o    regional and national telecommunications companies; and
    o    large information technology outsourcing firms.

We believe that most web-hosting competitors fit into two major groupings, each
having our own set of competitive strengths and weaknesses. The first grouping,
and most obvious of direct competition, are the big telephone and cable
companies. We believe that because of their large corporate size, it takes these
competitors much longer to develop and incorporate new features into their
hosting services and to offer those services at a competitive price without
subsidizing the pricing. As a result, we believe that by careful attention to
our cost structure and rapid response to market demand for new features we can
effectively compete with larger and more financially secure companies, both in
services provided and on price.

The second major type of competitors is the pure website hosting companies. We
believe that many of these companies have insufficient resources, inadequate
infrastructure, insufficient Internet connectivity, and/or inadequate technical
support. These companies may have congested network servers and slow Internet
connectivity causing delays in website access and upload. This can result in
lost customers visiting and exploring a website through abandoned connections.
The smaller of these companies the less they are able to scale and respond
quickly to their customers' growth requirements and may not be capable of
supporting large numbers of new customers. While some of these pure website
hosting companies may face these competitive deficiencies, there are a number of
website hosting companies that have shown the ability to compete effectively.
Our ability to compete with these companies over time is unproven.

Many of these competitors have greater financial resources than we have,
enabling them to finance acquisition and development opportunities, to pay
higher prices for the same opportunities or to develop and support their own
operations. In addition, many of these companies can offer bundled, value-added
or additional services not provided by us, and may have greater name
recognition. These companies might be willing to sacrifice profitability to
capture a greater portion of the market for web hosting or related web hosting
activities, or pay higher prices than we would for the same expansion and
development opportunities. Consequently, we may encounter significant
competition in our efforts to achieve our internal growth objectives.

Our Website www.srmnetworks.com. Our current website displays our corporate logo
and contact information and provides a general description of the services that
we provide as well as prices of those services.

Our Intellectual Property. We do not presently own any patents, trademarks,
licenses, concessions or royalties.

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

Government Regulation. Internet access and online services are not subject to
direct regulation in the United States. Changes in the laws and regulations
relating to the telecommunications and media industry, however, could impact our
business. For example, the Federal Communications Commission could begin to
regulate the Internet and online services industry, which could result in
increased costs for us. The laws and regulations applicable to the Internet and
to our services are evolving and unclear and could damage our business. There
are currently few laws or regulations directly applicable to access to, or


                                       3
<PAGE>


commerce on, the Internet. Due to the increasing popularity and use of the
Internet, it is possible that laws and regulations may be adopted, covering
issues such as user privacy, defamation, pricing, taxation, content regulation,
quality of products and services, and intellectual property ownership and
infringement. Such legislation could expose us to substantial liability as well
as dampen the growth in use of the Internet, decrease the acceptance of the
Internet as a communications and commercial medium, or require us to incur
significant expenses in complying with any new regulations. The European Union
has recently adopted privacy and copyright directives that may impose additional
burdens and costs on international operations.

Our Research and Development. We are not currently conducting any research and
development activities, other than the development of our website. We do not
anticipate conducting such activities in the near future.

Employees. As of April 11, 2002, we have two part time employees. We anticipate
that we will not hire any employees in the next six months, unless we generate
significant revenues. From time-to-time, we anticipate that we will use the
services of independent contractors and consultants to for website design and
development.

Facilities. Our executive, administrative and operating offices are located 1241
North Central Avenue, Suite 7, Glendale, California 91202. We do not own our
offices. Scott Sherman, our former officer and director, currently provides
office space to us at no charge. We do not have a written lease or sublease
agreement and Mr. Sherman does not expect to be paid or reimbursed for providing
office facilities.

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

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

         ============================= ===========================
         Property                          December 31, 2001
         ----------------------------- ---------------------------
         Cash                                             $24,382
         ============================= ===========================

Our facilities. Our executive, administrative and operating offices are located
at 1241 North Central Avenue, Suite 7, Glendale, California 91202. Scott
Sherman, our former officer and director, currently provides office space to us
at no charge. We do not have a written lease or sublease agreement and Mr.
Sherman does not expect to be paid or reimbursed for providing office
facilities.

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

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

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

Not applicable.

                                     PART II

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

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

Prices of Common Stock. Since February 2002, we have been eligible to
participate in the OTC Bulletin Board, an electronic quotation medium for
securities traded outside of the Nasdaq Stock Market, and prices for our common
stock are published on the OTC Bulletin Board under the trading symbol "SRMW".
This market is extremely limited and the prices quoted are not a reliable
indication of the value of our common stock. Since February 2002, our common
stock has not traded. The price per share is currently $0.00 per share.


                                       4
<PAGE>


No shares of our common stock can be sold pursuant to Rule 144 promulgated
pursuant to the Securities Act of 1933. Rule 144 provides, among other things,
that persons holding restricted securities for a period of one year may each
sell, assuming all of the conditions of Rule 144 are satisfied, in brokerage
transactions every three (3) months an amount of restricted securities equal to
one percent (1%) of our outstanding shares of common stock, or the average
weekly reported volume of trading during the four calendar weeks preceding the
filing of a notice of proposed sale, which ever is more. Rule 144 also provides
that, after holding such securities for a period of two (2) years, a
nonaffiliate of the company may sell those securities without restriction, other
than the requirement that we are current with respect to our information
reporting requirements.

On August 7, 2001, we filed a registration statement on Form SB-2 with the SEC
to register 3,000,000 shares of our common stock for sale by us. That
registration statement was declared effective by the SEC on October 9, 2001.

There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that we have agreed to register under the Securities Act for
sale by security holders. As of December 31, 2001, the approximate number of
holders of record of shares of our common stock is thirty.

There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.

On February 8, 2002, our Board of Directors authorized a forward split of all of
our issued and outstanding shares of common stock on an eleven to one (11:1)
basis. Such split was effectuated through a dividend of ten (10) shares of
common stock for each share of common stock then held of record by such holder.
The record date for that declared dividend was February 14, 2002. The pay date
for that declared dividend was February 15, 2002.

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

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

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

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


                                       5
<PAGE>


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

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

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

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

Liquidity and Capital Resources. Our total current assets are $44,422 as of
December 31, 2001. Of those assets, approximately $24,382 was cash, $40 was
accounts receivable and $20,000 was due to us from advances to stockholders. As
of March 21, 2002, those stockholders had repaid us in full. On August 7, 2001,
we filed a registration statement on Form SB-2 with the SEC to register
3,000,000 shares of our common stock for sale by us. That registration statement
was declared effective by the SEC on October 9, 2001. On November 1, 2001, we
sold 725,000 pursuant to our registration statement on Form SB-2 at $0.05 per
share for a total of $36,250.

Our total current liabilities were approximately $26,806 as of December 31,
2001, of which $8,171 are represented by accounts payable and accrued expenses.
$4,635 of those liabilities is represented by advances from a stockholder. As of
March 21, 2002, we have repaid that advance by the stockholder. $14,000 of those
liabilities is represented by stock subscriptions payable. During December 2001,
we received $14,000 cash from certain subscribers for 280,000 shares of our
common stock at $0.05 per share pursuant to our registration statement on Form
SB-2. Prior to issuance of the common stock, and after further review of the
subscriptions agreements by our management and our legal counsel, we
subsequently rejected and cancelled the related subscription agreements and
returned the entire $14,000 of stock subscribed on January 27, 2002.

Results of Operations.

Revenues. From our inception on June 8, 2001 through December 31, 2001, we
realized revenues of approximately $2,253 from providing web hosting and
development services. We hope to generate more revenues as we expand our
customer base and service menu.

Operating Expenses. For the period from inception on June 8, 2001 through
December 31, 2001, our total expenses were approximately $38,189. The majority
of those expenses were represented by consulting services of $8,396, and legal
and professional fees of $21,269. We also had expenses for occupying our
offices, in the amount of $1,335, and for office supplies in the amount of
$7,189. For the period from inception on June 8, 2001 through December 31, 2001,
we experienced a net loss of approximately $35,936.


                                       6
<PAGE>


Our Plan of Operation for the Next Twelve Months. To effectuate our business
plan during the next twelve months, we must increase our current customer base.
We must also effectively market our services. We anticipate that we will use the
revenues generated to fund marketing activities and for working capital. Our
failure to market and promote our services will harm our business and future
financial performance.

We had cash of $24,382 as at December 31, 2001. In the opinion of management,
available funds will satisfy our working capital requirements through the next
twelve months Our forecast for the period for which our financial resources will
be adequate to support our operations involves risks and uncertainties and
actual results could fail as a result of a number of factors. We anticipate that
we may need to raise additional capital to expand our operations, although we
have not made any efforts to obtain additional capital. Such additional capital
may be raised through public or private financing as well as borrowings and
other sources. We cannot guaranty that additional funding will be available on
favorable terms, if at all. If adequate funds are not available, then our
ability to expand our operations may be adversely affected. If adequate funds
are not available, we believe that our officer and director will contribute
funds to pay for our expenses. Our belief that our officer and director will pay
our expenses is based on the fact that our officer and director owns 27,500,000
shares of our common stock, which represents approximately 77.52% of our common
stock. We believe that our officer and director will continue to pay our
expenses as long as he maintains his ownership of our common stock. Therefore,
we have not contemplated any plan of liquidation in the event that we do not
generate revenues.

We have also contemplated acquiring a third party, merging with a third party or
pursuing a joint venture with a third party in order to support our development.
We have conducted informal discussions with potential acquisition or merger
candidates, although we have not conducted any formal negotiations. We cannot
guaranty that we will acquire or merge with a third party, or that in the event
we acquire or merge with a third party, such acquisition or merger will increase
the value of our common stock.

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



                                       7
<PAGE>



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








                               SRM NETWORKS, INC.


                         REPORT AND FINANCIAL STATEMENTS

                                DECEMBER 31, 2001




                                       8
<PAGE>



                               SRM NETWORKS, INC.


                                    CONTENTS





                                                                           PAGE
                                                                           ----

Independent Auditor's Report                                                10

Financial Statements:

     Balance Sheet                                                          11

     Statement of Operations                                                12

     Statement of Changes in Stockholders' Equity                           13

     Statement of Cash Flows                                                14

     Notes to Financial Statements                                          15




                                       9
<PAGE>




                          Independent Auditors' Report



To the Stockholders of
SRM Networks, Inc.


         I have audited the accompanying balance sheet of SRM Networks, Inc. as
of December 31, 2001, and the related statements of operations, changes in
stockholders' equity, and cash flows for the period June 8, 2001 (inception)
through December 31, 2001. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.

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

         In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SRM Networks, Inc.
as of December 31, 2001, and the results of its operations and its cash flows
for the period June 8, 2001 (inception) through December 31, 2001 in conformity
with generally accepted accounting principles in the United States.




                                       /s/ Quintanilla
                                       A Professional Accountancy Corporation
                                       Irvine, California


                                       February 14, 2002


                                       10
<PAGE>


                               SRM NETWORKS, INC.


                                  BALANCE SHEET

                                DECEMBER 31, 2001



                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
       <S>                                                                       <C>
Current assets
    Cash                                                                   $     24,382
    Accounts receivable, net of allowance for doubtful accounts of $-0-              40
    Advances to stockholders                                                     20,000
                                                                             ----------
       Total current assets                                                      44,422

Other assets                                                                        ---
                                                                             ----------
          Total assets                                                     $     44,422
                                                                            ===========



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

Current liabilities
    Accounts payable and accrued expenses                                  $      8,171
    Advances from stockholder                                                     4,635
    Stock subscriptions payable                                                  14,000
                                                                             ----------
       Total current liabilities                                                 26,806

Contingencies

Stockholders' Equity
    Preferred stock, $.001 par value;
       Authorized shares-- 5,000,000
       Issued and outstanding shares-- 0
    Common stock, $.001 par value;
       Authorized shares-- 50,000,000
       Issued and outstanding shares-- 3,225,000                                  3,225
    Additional paid-in capital                                                   50,327
    Accumulated deficit                                                         (35,936)
                                                                             ----------
       Total stockholders' equity                                                17,616
                                                                             ----------
          Total liabilities and stockholders' equity                       $     44,422
                                                                             ==========
</TABLE>


                 See accompanying notes to financial statements.

                                       11
<PAGE>


                               SRM NETWORKS, INC.


                             STATEMENT OF OPERATIONS

               JUNE 8, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001



Revenues
    Website hosting                                               $       1,660
    Website development                                                     593
     Less: returns and allowances                                           ---
                                                                   ------------
       Net revenues                                                       2,253

Operating expenses
    Consulting services                                                   8,396
    Legal and professional fees                                          21,269
     Occupancy
                                                                          1,335
     Office supplies and expense                                          7,189
                                                                   ------------
       Total operating expenses                                          38,189
                                                                   ------------
Loss from operations                                                    (35,936)

Provision for income tax expense (benefit)                                  ---
                                                                   ------------
Net loss/comprehensive loss                                       $     (35,936)
                                                                   ============
Net loss/comprehensive loss per common share-- basic and diluted  $        (---)
                                                                   ============
Weighted average of common shares-- basic and diluted                 2,718,700
                                                                   ============





                 See accompanying notes to financial statements.

                                       12
<PAGE>


                               SRM NETWORKS, INC.


                  STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

               JUNE 8, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                         Common Stock               Additional
                                         ------------                Paid-In        Accumulated
                                     Shares          Amount          Capital          Deficit             Total
                                  ------------     -----------     -----------     -----------         -----------
      <S>                             <C>               <C>             <C>             <C>                <C>
Balance, June 8, 2001                      ---    $       ---     $       ---     $        ---        $        ---

Issuance of common stock,
  June 9, 2001                       2,500,000           2,500           7,500             ---              10,000

Issuance of common stock,
  October 30, 2001                     523,000             523          25,627             ---              26,150

Issuance of common stock,
  November 1, 2001                     202,000             202           9,898             ---              10,100

Registration expenses                      ---             ---           5,967             ---               5,967

Cost of occupancy
  contributed by officer                   ---             ---           1,335             ---               1,335

Net loss/comprehensive loss                ---             ---             ---         (35,936)            (35,936)
                                  ------------     -----------     -----------     -----------         -----------
Balance, December 31, 2001           3,225,000    $       3,225   $     50,327    $    (35,936)       $    (17,616)
                                  ============     ============    ===========     ===========          ==========
</TABLE>




                 See accompanying notes to financial statements.

                                       13
<PAGE>



                               SRM NETWORKS, INC.


                             STATEMENT OF CASH FLOWS

               JUNE 8, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001



Cash flows from operating activities
    Net loss                                                    $      (35,936)
    Adjustments to reconcile net loss to net cash
    used in operating activities
       Registration expenses paid by officer                             5,967
       Occupancy cost contributed by officer                             1,335
       Changes in operating assets and liabilities
          (Increase) in accounts receivable                                (40)
          Increase in accounts payable and accrued expenses              8,171
                                                                  ------------
              Net cash used by operating activities                    (20,503)

Cash flows from investing activities                                       ---
                                                                  ------------
              Net cash provided by investing activities                    ---

Cash flows from financing activities
    Cash advances (to) stockholders                                    (20,000)
    Cash advances from stockholders                                      4,635
    Stock subscriptions payable                                         14,000
    Proceeds from issuance of common stock                              46,250
                                                                  ------------
              Net cash provided by financing activities                 44,885
                                                                  ------------
Net increase in cash                                                    24,382

Cash, beginning of period                                                  ---
                                                                  ------------
Cash, end of period                                             $       24,382
                                                                 =============

Supplemental disclosure of cash flow information
    Income taxes paid                                           $          ---
                                                                 =============
    Interest paid                                               $          ---
                                                                 =============




                 See accompanying notes to financial statements.

                                       14
<PAGE>



                               SRM NETWORKS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

         Business Description - SRM Networks, Inc. (the "Company") was
incorporated in the state of Nevada on June 8, 2001. The Company is an Internet
solutions company that specializes in website hosting and development services.
The Company is headquartered in Glendale, California.

         Cash Equivalents - For purposes of the balance sheet and statement of
cash flows, the Company considers all highly liquid debt instruments purchased
with maturity of three months or less to be cash equivalents. At December 31,
2001, the Company had no cash equivalents.

         Accounts Receivable - Accounts receivable represent valid claims
against debtors for sales or other charges arising on or before the balance
sheet date and are reduced to their estimated net realizable value. An allowance
for doubtful accounts will be computed as a percentage (%) of sales when
experienced is established. As of December 31, 2001, the Company considered all
receivables fully collectible.

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

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

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

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

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

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


                                       15
<PAGE>


                               SRM NETWORKS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



NOTE 2 - CONTINGENCIES

         As shown in the accompanying financial statements, the Company has
incurred a net operating loss of $35,936 since inception for the year ended
December 31, 2001. As such, there is no assurance that rapid technological
changes, changing customer needs and evolving Internet and e-commerce standards
will enable the Company to introduce new services on a continual and timely
basis so that profitable operations can be attained.

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


NOTE 3 - ADVANCES TO/FROM STOCKHOLDERS

         Periodically during the period from May 25, 2001 (inception) through
December 31, 2001, the Company advanced and received cash from various officers.
These advances are due on demand and are to be paid as cash becomes available.
At December 31, 2001, the Company had advances to stockholders in the amount of
$20,0000 and an advance from an unrelated stockholder in the amount of $4,635.
These advances were not made in connection with an issuance of common stock to
any of the stockholders. Subsequently, all advances to or from stockholders had
been paid in full as of March 21, 2002.


NOTE 4 - ACCRUED EXPENSES

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




                                       16
<PAGE>


                               SRM NETWORKS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



NOTE 5 - STOCKHOLDERS' EQUITY

         Common Stock Issued - On June 9, 2001, the Company issued 2,500,000
shares of its common stock to its officers for cash of $10,000. Since there was
no readily available market value at the time of issuance, the value of $0.004
per share was considered as a reasonable estimate of fair value between the
Company and the officers.

         On October 30 and November 1, 2001, the Company issued 725,000 shares
of its common stock to various individuals and an entity pursuant to its
registration statement filing on Form SB-2 under the Securities Act of 1933. Per
the registration statement, the Company issued the shares at $0.05 per share for
a total of $36,250.

         Stock Subscriptions Payable - During December 2001, the Company
received $14,000 cash from certain stock subscribers for 280,000 shares of its
common stock at $0.05 per share pursuant to its registration statement on Form
SB-2. Prior to issuance of the common stock, and after further review of the
subscriptions agreements by the Company's management and its outside legal
counsel, the Company subsequently rejected and cancelled the related
subscription agreements and returned the entire $14,000 of stock subscribed on
January 27, 2002.


NOTE 6 - INCOME TAXES

         At December 31, 2001, the Company has available for federal income tax
purposes a net operating loss carryforward of approximately $35,936, expiring
2016, that may be used to offset future taxable income. Therefore, no provision
for income taxes has been provided.

         In addition, the Company has deferred tax assets of approximately
$5,400 at December 31, 2001. The Company has not recorded a benefit from its net
operating loss carryforward because realization of the benefit is uncertain and,
therefore, a valuation allowance of ($5,400) has been provided for the deferred
tax assets.


Note 7 - RELATED PARTY TRANSACTIONS

         On June 9, 2001, the Company issued 2,500,000 shares of its common
stock to it current officers for cash as described in Note 3.

         On August 31, 2001, legal and professional expenses related to the
Company's registration statement were paid by its officer in the amount of
$5,967. The payment of the fees was considered an additional contribution to
capital by the officer and the Company.

         The Company occupies office space provided by its officer. Accordingly,
occupancy costs have been allocated to the Company based on the square foot
percentage assumed multiplied by the officer's total monthly costs. These
amounts are shown in the accompanying statement of operations for the period
June 8, 2001 (inception) through June 30, 2001 and are considered additional
contributions of capital by the officer and the Company.



                                       17
<PAGE>

                               SRM NETWORKS, INC.


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



Note 8 - SUBSEQUENT EVENTS

         Stock Subscriptions Payable - On January 27, 2002, the Company returned
cash of $14,000 to various individuals whose stock subscription agreements were
rejected by the Company as previously detailed in Note 4.

         Stock Split - On February 8, 2002, the Company's Board of Directors
authorized the splitting of the Company's common stock on an eleven-to-one
(11:1) basis for stockholders of record on February 14, 2002 and the resulting
shares from the split were distributed on February 15, 2002. On February 15,
2002, there were 35,475,000 shares issued and outstanding. There was no proforma
effect on net loss per common share for the period ended December 31, 2001.

         Change of Control - On February 15, 2002, the Company's President and
Treasurer sold their respective shares totaling 27,500,000 of common stock to an
individual for $55,000. In connection with the sale, the President and Treasurer
resigned from their positions as officers and as Directors of the Company on
February 21, 2002. For further information, also see the Company's current
report on Form 8-K filed on February 19, 2002.

         Advances to/from stockholders - On March 21, 2002, all advances to or
from stockholders had been paid as previously disclosed in Note 3.



                                       18
<PAGE>



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

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

                                    PART III

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

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

======================= ======= ===============================================
Name                       Age   Position
----------------------- ------- -----------------------------------------------
Jan C. Barcikowski         47    president, secretary, treasurer and a director
======================= ======= ===============================================

Jan C. Barcikowski. Mr. Barcikowski has been our president, secretary, treasurer
and a director since February 2002. Mr. Barcikowski is responsible for
developing our growth strategy and evaluating financing opportunities for
corporate expansion and growth. For the past 20 years, Mr. Barcikowski has
practiced as attorney in Europe and has worked with several investment banking
and brokers during that time. Mr. Barcikowski is not an officer or director of
any other reporting company.





                                       19
<PAGE>




Key Personnel:

On February 21, 2002, Scott Sherman resigned as the president, secretary and one
of our directors. Also on February 21, 2002, Brad Thompson resigned as the
treasurer, chief financial officer and one of our directors. Their resignations
were reported on Form 8-K which was filed with the SEC on February 25, 2002, and
were not the result of any disagreement with us on any matter relating to our
operations, policies or practices. Mr. Sherman and Mr. Thompson have agreed to
remain with us as employees. We hope to enter into employment agreements with
Mr. Sherman and Mr. Thompson, although we have not entered into any negotiations
with them, nor do we know what the terms will be of any proposed agreements.

Scott J. Sherman. Mr. Sherman manages all aspects of our operations, including
web development and marketing and sales of our products. From January 2001 to
May 2001, Mr. Sherman worked, as a Sr. Account Manager for Speedera Networks,
Inc. Speedera Networks, Inc. provides managed services for global load
balancing, failover, content delivery, and streaming media to improve the
quality of the Internet experience for users worldwide. From January 2000 to
January 2001, Mr. Sherman was the western USA regional manager for Adero, Inc.
which provides website performance services for companies worldwide. From 1998
to January 2000, Mr. Sherman worked was the director of western operations for
Lynxus, Inc., a national internet service provider. From 1996 to August 1998,
Mr. Sherman worked for Log-On Data Corp., Inc., a California corporation, as a
regional sales manager where he was responsible for all Internet Service
Provider sales. Mr. Sherman earned his Bachelor of Arts Degree in Economics from
California State University Long Beach in 1996.

Brad W. Thompson. Since 1998, Mr. Thompson has worked as a computer consultant,
which includes the design, setup, implementation, and management of local area
networks for businesses. Mr. Thompson possesses a certification with Microsoft
as a Microsoft Certified Systems Engineer and works primarily in the Microsoft
Windows family of software products including Windows NT, 2000, ME, 95 and 98.
Mr. Thompson has also set up primary and backup domain controllers, proxy
servers, web servers, exchange servers, print servers, file servers, and
application servers. Mr. Thompson also has significant experience in developing
and implementing web sites. In addition to Mr. Thompson's software knowledge and
experience, Mr. Thompson has worked extensive with computer hardware including
hubs, switches, printers and wiring and hardware issues within a computer such
as motherboards, hard drives, cd writers and readers, monitors and power
sources. During the past three years, Mr. Thompson has worked approximately
thirty hours per week as a computer consultant and generated approximately
$70,000 per year. From 1996 to 1998, Mr. Thompson handled the day-to-day
operations of Medical2000, in which he was one of the two partners. He managed
all the back office work while his partner worked out in the field making sales
calls. Mr. Thompson earned his Bachelor of Science Degree in Agricultural and
Managerial Economics from the University of California at Davis in 1992.

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

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

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


                                       20
<PAGE>




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

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

Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services payable to our former officers during the
year ending December 31, 2001 and our current officer for the year ending
December 31, 2002. Our board of directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.

<TABLE>
<CAPTION>
============================================ ======= ============= ============= ===================== =========================
Name and Principal Position                   Year      Annual      Bonus ($)        Other Annual       All Other Compensation
                                                      Salary ($)                   Compensation ($)
-------------------------------------------- ------- ------------- ------------- --------------------- -------------------------
                <S>                            <C>       <C>           <C>                <C>                    <C>
Scott Sherman - former president and         2001        None          None              None                    None
former secretary
-------------------------------------------- ------- ------------- ------------- --------------------- -------------------------
Brad Thompson - former treasurer             2001        None          None              None                    None
-------------------------------------------- ------- ------------- ------------- --------------------- -------------------------
Jan C. Barcikowski - president, secretary,   2002        None          None              None                    None
treasurer and director
============================================ ======= ============= ============= ===================== =========================
</TABLE>

Compensation of Directors. Our director receives no compensation for his service
on our board of directors.

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

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of April 11, 2002, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.

<TABLE>
<CAPTION>
======================= ========================================== ====================================== ========================
    Title of Class                  Name and Address                        Amount and Nature                 Percent of Class
                                  of Beneficial Owner                       of Beneficial Owner
----------------------- ------------------------------------------ -------------------------------------- ------------------------
       <S>                                 <C>                                     <C>                              <C>
Common Stock            Jan H. Barcikowski                            27,500,000 shares, director                  77.52%
                        Hegibach Strasse 22
                        8032 Zurich, Switzerland
----------------------- ------------------------------------------ -------------------------------------- ------------------------
Common Stock            All directors and named executive                   27,500,000 shares                      77.52%
                        officers as a group
======================= ========================================== ====================================== ========================
</TABLE>

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

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

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

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

Scott Sherman, our former officer and director, currently provides office space
to us at no charge. Mr. Sherman does not expect to be paid or reimbursed for
providing office facilities. We do not have a written lease or sublease
agreement with Mr. Sherman.



                                       21
<PAGE>



In December 2001, we advanced $20,000 to stockholders. As of March 21, 2002,
those stockholders had repaid us in full.

In December 2001, we borrowed $4,635 from one of our shareholders. As of March
21, 2002, we repaid that shareholder in full.

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

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

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

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

3.1          Articles of Incorporation*

3.2          Bylaws*

* Included in the registration statement on Form SB-2 filed on August 7, 2001.

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

No reports on Form 8-K were filed during the last quarter of the period covered
by this annual report on Form 10-KSB. However, a report was Form 8-K was filed
with the SEC on February 25, 2002, which specified that Messrs. Sherman and
Thompson resigned as officers and directors and sold their shares of common
stock to Jan C. Barcikowski, our new officer and director.




                                       22
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned in the City of Zurich, Switzerland, on April 11, 2002.


SRM Networks, Inc.,
a Nevada corporation


By:     /s/ Jan C. Barcikowski
        ------------------------------------
        Jan C. Barcikowski
Its:    principal executive, financial and accounting officer
        president, secretary, treasurer, director


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


By:     /s/ Jan C. Barcikowski                       April 11, 2002
        ------------------------------------
        Jan C. Barcikowski
Its:    principal executive, financial and accounting officer
        president, secretary, treasurer, director