<PAGE>


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



                                   FORM 10-KSB


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

                   For the fiscal year ended February 28, 2001

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

          For the transition period from _____________ to _____________
                        Commission file number 000-26553

                          HEALTHNET INTERNATIONAL INC.
                 (Name of small business issuer in its charter)

               COLORADO                                98-0206627
      (State or other jurisdiction                  (I.R.S. Employer
     of incorporation or organization)              Identification No.)

   Suite 100 - 1255 WEST PENDER STREET,
        VANCOUVER, BRITISH COLUMBIA                            V6E 2V1
 (Address of principal executive offices)                     (Zip Code)

Issuer's telephone number (604) 678-9101

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

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


Please note the 10KSB is being filed unaudited. Accordingly, ????s are entered
where audited entries are required. These will be replaced when audited entries
are available, as an amended version. Please see letter from the President at
end of filing as Exhibit to 10K

                                  COMMON STOCK
                                (Title of class)

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

State issuer's revenues for its most recent fiscal year:  None

         The aggregate market value of the voting stock held by nonaffiliates of
the Registrant, based upon the closing sale price of the Common Stock on July
12, 2001, as reported by the Nasdaq Over-the-Counter Bulletin Board, was
approximately $?????????? Shares of Common Stock held by each executive officer
and director have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

         As of July 12, 2001, the Registrant had 19,639,204 shares of Common
Stock outstanding.

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


<PAGE>



                          HEALTHNET INTERNATIONAL INC.

                                   FORM 10-KSB

                                TABLE OF CONTENTS

PART I
 1         Description of Business
 2         Description of Properties
 3         Legal Proceedings
 4         Submission of Matters to a Vote of Security Holders

PART II
 5         Market for Registrant's Common Stock and Related Stockholder Matters
 6         Management's Discussion and Analysis and Results of Operations
 7         Financial Statements
 8         Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure

PART III
 9         Directors and Executive Officers of the Registrant
10         Executive Compensation
11         Security Ownership of Certain Beneficial Owners and Management
12         Certain Relationships and Related Transactions
13         Exhibits, Financial Statement Schedules and Reports on Form 8-K




<PAGE>

                           FORWARD LOOKING STATEMENTS

      HEALTHNET INTERNATIONAL INC. (THE "COMPANY" OR "HEALTHNET") CAUTIONS
READERS THAT CERTAIN IMPORTANT FACTORS MAY AFFECT THE COMPANY'S ACTUAL RESULTS
AND COULD CAUSE SUCH RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS THAT MAY BE DEEMED TO HAVE BEEN MADE IN THIS FORM 10-KSB, OR THAT IS
OTHERWISE MADE BY OR ON BEHALF OF THE COMPANY. SUCH FACTORS INCLUDE, AMONG
OTHERS, THE SPECULATIVE NATURE OF THE INDUSTRY IN WHICH THE COMPANY OPERATES,
TECHNOLOGY FAILURES, ENVIRONMENTAL OR GOVERNMENT REGULATIONS, AVAILABILITY OF
FINANCING, FORCE MAJEURE EVENTS, AND OTHER RISK FACTORS AS DESCRIBED FROM TIME
TO TIME IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
MANY OF THESE FACTORS ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT.
FOR THIS PURPOSE, ANY STATEMENTS CONTAINED IN THE REGISTRATION STATEMENT THAT
ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING
STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, WORDS SUCH AS
"MAY", "EXPECT", BELIEVE", "ANTICIPATE", "INTEND", "COULD", "ESTIMATE" OR
"CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS OF COMPARABLE TERMINOLOGY, ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY
INTENT OR OBLIGATION TO UPDATE ITS FORWARD-LOOKING STATEMENTS, WHETHER AS A
RESULT OF RECEIVING NEW INFORMATION, THE OCCURRENCE OF FUTURE EVENTS, OR
OTHERWISE.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

I.  BUSINESS DEVELOPMENT
    --------------------

      A. HEALTHNET INTERNATIONAL INC.
         ----------------------------

      Healthnet International Inc. ("Healthnet" or the "Company") was
incorporated in January 1999 in the state of Colorado. In March 1999, the
Company incorporated a wholly owned subsidiary in the state of Nevada namely
Healthnet (USA) Inc., which is intended to act as the operating company for all
USA based business activities of the Company. In May, 1999 the Company
incorporated a wholly owned subsidiary in the province of British Columbia,
Canada namely HNI Healthnet (Canada) Inc., which is intended to act as the
operating company for all Canada based business activities of the Company. The
Company incorporated a wholly owned European subsidiary in Guernsey in January,
2000, which is intended to act as the operating company for all of Healthnet's
European based business.

      The intent of the Company is to partner with others in the healthcare
industry so consumers are better served. One of the Company's primary goals is
to arm "brick and mortar" health focused businesses and professionals with the
power of the Internet so consumers have easy access to the information, products
and tools they need to participate in their health management. The Company has
created the "eHealthstore" concept to further this objective. eHealthstores are
arrangements whereby the Company licenses a complete suite of e-commerce
software to Licensees including existing bricks and mortar retailers. It is
anticipated that revenue will be generated from the software licensing fees,
custom web site design and development fees, and sale of health related products
through the eHealthstores brand of web sites. On February 2, 2000 eHealthstores
signed their first licensee Seattle Super Supplements, whose web site went live
April 1, 2000. Revenue was derived from the software licensing fees in April
2000.

      Shortly after the Company launched the eHealthstores model in North
America, a replicate plan was set for the launch in the United Kingdom.

<PAGE>

      Effective February 29, 2000 the Company also expanded their expertise by
acquiring the creative design company Varcom Internet Communications and
Commerce Solutions Inc. ("Varcom"). This creative Web design specialist is
expected to help provide a wide range of cutting edge interactive products,
services, consultation, world-class graphic design, navigational design and
online presentation. Varcom brings to the Healthnet family established clients
such as Digital Commerce Inc., Hagen's Travel, Uniglobe Seymour Travel and
International Metals Research.

      The Company, including its subsidiaries, employed 47 persons as of Feb.28,
2001, of whom 43 were employed on a full-time basis and one employed on a part
time basis. The majority of these individuals either develop and produce the
content for the Web sites, sell eHealthstores, pursue alliances with
manufacturers of health related products for sale on the website, or provide
technological support to the Company's Information Technology Department. As of
the 12th of July, 2001, 13 persons were employed on a full-time basis. The
reduction in staff reflects downsizing and cost cutting measures implemented by
the company as it strives for profitability.

      B. HEALTHNET INTERNATIONAL INC. CORPORATE HISTORY
         ----------------------------------------------

      In January 1999, the Company filed its Articles of Incorporation with the
Secretary of State of Colorado in which, among other things, the Board of
Directors was elected as follows: Grant Johnson, S. Ross Johnson, Mark Dohlen
and Doug Bolen. The authorized capital of the Company consists of 100,000,000
Common Shares and 50,000,000 Preferred Shares. On January 22, 1999, Grant
Johnson was appointed to the office of Chief Executive Officer/President and S.
Ross Johnson to the office of Chairman of the Board of Directors.

      On April 9, 1999, a Board of Directors Meeting was held at which the
number of the Board members was increased to seven and the following additional
members were elected to the Board:

      HARTLAND M. MACDOUGALL, CVO, OC, is a former chairman of the Royal Trust
Company and previously was Vice Chairman and Director of the Bank of Montreal
with which he was associated with for more than thirty years.

      RAYMOND G. HARRIS, FCA, was a partner with Deloitte and Touche and its
predecessor firms from 1955.

      DR. R. DEAN LINDEN, PhD, serves as the Company's Chairman of the Medical
Advisory Board. He is the Associate Professor of Neurosurgery at the University
of Louisville.

      On August 20, 1999 Mark Dohlen resigned from the Board of Directors. On
November 19, 1999 Douglas Bolen resigned as a Director and Secretary of the
Company.

      On November 19, 1999 JOSEPH HARKINS, HBA, CA, was appointed Chief
Financial Officer (CFO) of the Company. Mr. Harkins worked in international
investment banking with two major Canadian banks and brings his experience from
being the CFO of a US based multinational, publicly traded company. In December,
2000 Mr. Harkins resigned and Raymond Harris assumed the role of acting CFO.

      Early the next year two additional directors were added to the board on
Jan 24, 2000 and February 4, 2000 respectively:

      ROGER JOHNSON, CPA, CLU is the past Executive Vice President of Corporate
Marketing and Distribution Services at the Aid Association for Lutherans (AAL),
one of the nation's leading fraternal benefit societies.

      RICHARD O. PAINTER, CLU, ChFC, CFP, is the past President of Prudential
Insurance and Financial Services, the largest sales unit of the Prudential
Insurance Company of America.

      BRET CONKIN, BCOMM, was appointed Chief Operating Officer (COO) on
February 25, 2000 bringing with him over 13 years of management experience with
companies such as Procter and Gamble and the British Columbia Lottery
Corporation.


<PAGE>

II. BUSINESS OF THE ISSUER
    ----------------------

      The Company, in its own right and through its wholly owned subsidiaries,
has to established itself as a "turn-key" e-commerce solution for existing
Vitamin/Mineral/Supplement(VMS)retailers. These operators have become part of
the eHealthstore or Express network that provides health and health related
products as well as an online source of health related information for the
general public.

      The Company combines the advantages of online commerce with a superior
customer focus in order to be the authoritative source for business-to-business
and business-to-customer health information and products. The Company offers a
broad selection of health related products, informative content, easy to use
navigation and search capabilities, a high level of customer service,
competitive pricing and personalized merchandising and recommendations.
The Company provides a selection of readily available products that is five to
ten times that of a typical, store-based, health products retailer.
eHealthstores operators' stores may be open 24 hours a day, seven days a week
and the Company offers its customers convenient and timely product fulfillment,
with an overnight delivery option.

      To address product fulfillment and shipping, the Company has engaged Super
Nutrition Distributors Inc. in the United States. Super Nutrition is a national
VMS distributor servicing over 12,000 brick and mortar retail clients, carrying
over 14,000 natural product SKUs in two regional warehouses.

      The Company has developed a backend technical architecture specific to the
EHealthstores and Express business models, inclusive of hardware and software.
The software framework is provided by Interworld Corporation and is the
integration of e-commerce applications, online shopping tools and database Web
site development. The Interworld software has the capacity to facilitate every
aspect of the Company's business in respect of the eHealthstores and Express
programs, including, order taking, credit card processing, order fulfillment,
distribution, data collection, accounting and the provision of information of
users.

In addition to ehealthstores the company provides web development services for
various companies and interest groups. The company has a staff of graphic
artists, programmers and IT professionals who combine to build websites for
corporate clients. Clients range from organizations such as the British Colombia
Center for Disease Control, www.bccdc.org to innovative software companies such
as Softcare, www.softcare.com. Client websites range in depth and complexity
from basic pages of text and information to larger storages of data and code
requiring advanced navigation.


III. INDUSTRY OVERVIEW, COMPETITION AND RISKS
     ----------------------------------------

      The Internet is the largest and most widely used computer network in the
world and provides access to an incredible volume of information and data.
Management of the Company believes that hundreds of billions of private and
public dollars will be invested over the next decade to weave together the
global information systems, including the hardware and software necessary to
navigate the Internet.

      The Company has positioned itself for an early entry into the
online VMS business-to-business market. The Company is aligning itself with the
brick and mortar retail sector,thus empowering the brick and mortar operators
with an effective Internet presence.The eHealthstores network is intended to
harness an established, loyal customer base.

<PAGE>

      The Company's prospects must be considered in light of the risks, expenses
and difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
online commerce. Such risks include, but are not limited to, possible inability
to sell a sufficient number of eHealthstores and Express to be viable, to
respond promptly to changes in a rapidly evolving,unpredictable business
environment, the risk of inability to manage growth, the inability to attract
and retain qualified personnel, the risk that the Internet may not become a
viable commercial market place, the risk of the availability of future
financing, and the risks associated with government regulation of the Internet.

      To address these risks, the Company must, among other things, develop and
expand its customer base, successfully implement its business and marketing
strategies, continue to develop and upgrade its website and transaction
processing systems, provide superior customer service, respond to competitive
developments, attract and retain qualified personnel, raise additional debt
financing from private arm's length lenders and/or equity financing through
private placements of the Company's common stock, and monitor government
regulation of the Internet. If the Company is not successful in addressing such
risks, it may be materially and adversely affected.

IV. REGULATORY BACKGROUND
    ---------------------

      The Company may be subject, both directly and indirectly, to various laws
and regulations relating to its business, although there are few laws or
regulations directly applicable to access the Internet. However, due to the
increasing popularity and use of the Internet, it is possible that a number of
laws and regulations may be adopted with respect to the Internet and the use
thereof. Such laws and regulations may cover issues such as user privacy,
pricing, copyrights, taxation, distribution and characteristics and quality of
products and services. Furthermore, the growth and development of the market for
online commerce may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies conducting business
online.

V. DISCLOSURE
   ----------

      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 and/or
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. In addition, the Company intends to be an electronic
filer and as such, all items filed by the Company are available through an
Internet site maintained by the SEC which contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC, which site is available at http://www.sec.gov. The
Company also maintains an Internet site which contains information about the
Company. This site is available at http://www.hlnt.net.

      The company estimates there will be no costs associated with complying
with environmental regulations.

ITEM 2.  DESCRIPTION OF PROPERTIES   BRET

      The Company and its subsidiaries lease a 13,000 square foot facility in
Vancouver, Canada under two separate leases in the same building. One lease is
for a 7,000 square foot facility for a 1-year term, expiring on 30 April, 2000,
at a monthly rate of $8,700. The lease has been extended on a month-by-month
basis until a more suitable premises is located. Another lease is for a 6,000
square foot facility for a 5-year term expiring on 30 April 2004, cancelable
after 3 years with 6 months' notice, at a monthly rate of $6,600. The building
in which the Company has leased space is in the heart of downtown Vancouver and
is home to several other Technology and Internet based companies. This
arrangement and proximity to other similar companies is expected to lend itself
well to promoting the Company as being in the right area and on the leading edge
of technology.

ITEM 3.  LEGAL PROCEEDINGS

      The Company is not aware of any material pending legal proceedings
involving the Company.


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

      None.





<PAGE>
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company's common stock is reported by the NASD Over-The-Counter
Bulletin Board under the symbol "HLNT".

      The following table sets forth the range of high and low bid quotations
for the Company's common stock for each of the periods indicated as reported by
the NASD Over-The-Counter Bulletin Board. Bid quotations reflect inter-dealer
prices, without retail markup, markdown or commission and may not necessarily
represent actual transactions.


Quarter Ended              High              Low
-------------              ----              ----

May 31, 2000               $7.75            $1.12
August 31, 2000            $2.25            $1.09
November 30, 2000          $1.72            $0.44
February 28, 2001          $0.97            $0.20


SECURITY HOLDERS

      The approximate number of recorded holders of shares of the common stock
of the Company outstanding as of February 28, 2001 was 59

DIVIDENDS

      No dividends have been declared or paid on the Company's common stock.





<PAGE>

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

FORWARD LOOKING INFORMATION

         HEALTHNET INTERNATIONAL INC. (THE "COMPANY" OR "HEALTHNET") CAUTIONS
READERS THAT CERTAIN IMPORTANT FACTORS MAY AFFECT THE COMPANY'S ACTUAL RESULTS
AND COULD CAUSE SUCH RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS THAT MAY BE DEEMED TO HAVE BEEN MADE IN THIS FORM 10-KSB, OR THAT IS
OTHERWISE MADE BY OR ON BEHALF OF THE COMPANY. SUCH FACTORS INCLUDE, AMONG
OTHERS, THE SPECULATIVE NATURE OF THE INDUSTRY IN WHICH THE COMPANY OPERATES,
TECHNOLOGY FAILURES, ENVIRONMENTAL OR GOVERNMENT REGULATIONS, AVAILABILITY OF
FINANCING, FORCE MAJEURE EVENTS, AND OTHER RISK FACTORS AS DESCRIBED FROM TIME
TO TIME IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
MANY OF THESE FACTORS ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT.
FOR THIS PURPOSE, ANY STATEMENTS CONTAINED IN THE REGISTRATION STATEMENT THAT
ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING
STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, WORDS SUCH AS
"MAY", "EXPECT", BELIEVE", "ANTICIPATE", "INTEND", "COULD", "ESTIMATE" OR
"CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS OF COMPARABLE TERMINOLOGY, ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY
INTENT OR OBLIGATION TO UPDATE ITS FORWARD-LOOKING STATEMENTS, WHETHER AS A
RESULT OF RECEIVING NEW INFORMATION, THE OCCURRENCE OF FUTURE EVENTS, OR
OTHERWISE.

General
-------
The Company's current plan of operation is to derive its revenues from website
development and the sale of health related products via the Internet. Additional
revenues are expected to be generated through software licensing, website
development services, major sponsorships on the Company's websites, internet
marketing services, and sales of demographic data obtained through the Company's
website. On February 2, 2000, the Company announced that it had licensed its
website technology to Seattle Super Supplements, a retail chain of stores in the
Seattle area. The website went live on April 1, 2000 and revenues were generated
through software licensing fees in April 2000. This prototype license is
comprised of a complete e-commerce website with extensive health information and
content, and full customer support. The company continued to license its website
technology and has licensed to # additional clients.

The Company has been funded to date through debt financing from private arms
length lenders. The Company has secured approximately $???????? through debt
financing. E No assurance can be given that revenues from sales of health
products and/or advertising and/or sponsorships will enable the Company to meet
its financial obligations. The Company may consider raising additional equity
financing through the sale of common stock of the Company through private
placements to sophisticated investors. The combination of expected revenues and
additional debt and/or equity financing is intended to provide the Company with
sufficient operating capital for a period of approximately two years.




<PAGE>

RESULTS OF OPERATIONS
---------------------

Losses for the year ended February 28th, 2001 amounted To????????.

Website development revenues were ??????? for the year ended February 28th,
2001, reflecting nject Website development fees and customized design work for
some ehealthstore clients. Website development revenue was generated from
several new nject clients including the Air Canada Championship, Infotouch
Technlogies, Healthcheck, Softcare, Imoom and the Canadian Liver Foundation The
Company provided website development services in exchange for promotional
consideration which have not been reflected on the financial statements Software
license revenues were ????????? for the year, reflecting new ehealthstore
licensees. Three additional licensees were completed and launched during the
period, bringing the total number to.

Internet marketing revenues were ???????? for the year reflecting demand from
our client base for search engine registration, online advertising, email
campaigns and other marketing activity. Advertising and sponsorship fees have
been nominal to date as the networks build critical mass.

Monthly service fees revenue were ??????? for the fiscal quarter reflecting the
initial prorated monthly charge for ehealthstore express clients launched by the
end of the quarter

Royalty income was ?????? reflecting royalties on product sales growth on our
ehealthstore client sites.

Product sales revenues were ????????? for sales for medicinecabinet.com and
medicinecabinet.co.uk reflecting the sale of the former. and the closure of the
latter due to corporate focus on the North American Market.

The Company cautions readers that the future magnitude of these revenue streams
is uncertain due to the fact that both Healthnet and the Internet itself are in
the early stages at this time.

Expenses for the fiscal quarter increased to ???????? from ??????????? in the
prior year Salaries and Benefits expenses were ???????? reflecting increased
staffing as the company

General and administrative expenses were ????? reflecting an increase from
comparative periods a year ago due to the company's growth.

Professional fees were ??????  and are mainly as a result of receipt of
billings from the Company's legal firm for services provided to the Company.

Revenue streams will continue to be generated through software licensing and
renewal fees (eHealthstores), monthly Web site service fees (eHealthstores
Express), website development services (nject), royalties (eHealthstores) and
profit share (eHealthstores Express) from the sale of natural products on
licensee sites, , and Internet marketing services including advertising and
sponsorships on Websites. The Internet marketing revenue is added value
services, which is generated across all of our clients, whether or not they have
purchased nject, ehealthstores or Express services. These services supplement
the development of websites by generating traffic to these sites via
professional services or the resale of services at a markup.




<PAGE>


It is anticipated that the Internet will continue to become a more effective
medium and the market opportunities for the Company are expected to continue to
expand. This growth is expected to attract potential new competitors. In order
to rapidly move to profitability while maintaining sales growth, the Company
intends to focus extensively on reseller sales networks where the sales and
marketing costs are not directly incurred, improve the services on its network
of Websites, continue to aggressively achieve operational efficiencies as well
as researching and developing other projects that are expected to utilize its
existing facilities and expertise.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

      Cash flow used in operations for the year ended February 28, 2001 was
?????. No assurance can be given that revenues from sales will initially meet
expenses and as such, the Company may finance operations through existing and
additional debt and/or equity financing from arm's length private lenders until
such time as revenues from sales meet or exceed expenses. Once achieved, the
Company intends to begin repaying the private arm's length lenders.

      The $?????? used in investing activities consisted primarily of
acquisition of computer software and equipment.

      Net cash provided by financing activities for the year ended February 29,
2001 was ??????????? from the proceeds of the note payable and ?????? from the
issuance of common shares under the employee stock option plan. Up to July 12,
2001, the Company received a further ????????? in the form of promissory notes.

      Net cash on hand at February 28, 2001 decreased ????to from ??????????

Outlook

As of year end a total of 10 full ehealthstores were in operation in addition to
25 Express sites. At the time of filing 5 ehealthstores were operating with a
total of 30 Express sites in operation. This change reflects a transition in the
direction of the Express program which the company deems to be a more effective
and efficient program to run. The combined presence represents over 80 bricks
and mortar stores. Healthnet is particulary encouraged by the subsequent event
signing of UNFI, the world's largest health products distributor, as a
fulfilment partner and as a reseller of Express to its 7000 retail customers.
Healthnet's ability to expand revenue increases with each new client that joins
the network, as the Company generates revenue from licensing, marketing
services, advertising, royalties and profits from online sales.

As of September 2000, Healthnet International's shares were listed on the Berlin
Stock Exchange. The "FreeBroker" German Securities Firm of Berliner Freiverkehr
(Aktien) Handel AG sponsored the listing of Healthnet International's shares. It
is common practice for a German Securities Firm to Sponsor the listing
application for a US public company, independent of the company's participation.
The Company believes the dual listing of its shares will increase its exposure
to European investors.

During the quarter, the Company entered into negotiations with WorldPathway
Technologies Inc. (WPW), a company specializing in the sale of home medical
products, to discuss the potential of a merger. Following the end of the period,
the Company signed a letter of intent and agreed to acquire 100% of WPW in a
one-for-one share exchange after WPW raises $1,500,000 from the sale of its
shares. WPW was not able to complete its part of the agreement. A settlement is
being negotiated at the time of filing.




<PAGE>

The Company has identified significant opportunities in other market verticals
for its turnkey e-commerce solution. The Company will investigate these
opportunities, while continuing to expand operations within the health market
vertical, such as the health and fitness industry. Management is also committed
to improving operational efficiencies, while exploring other industries that
demonstrate synergistic features, for both of its business units.

ITEM 7. FINANCIAL STATEMENTS


                                 EXHIBIT TO 10K
                                  Annual Report
                            HLNT International, Inc.

HLNT International, Inc. engaged Grant Thornton, LLP, Chartered Accountants,
1055 West Georgia Street, Vancouver, British Columbia on June 1st, 2001 to
perform the annual audit for the Company for the fiscal year end February 28th,
2001. The partner in charge of the audit informed the Company they expect to
have the audit completed on or before Monday, July 30, 2001. The Company will
immediately file the audit with the SEC on the day it is completed and signed
off by Grant Thornton and the Board of Directors, HLNT International, Inc.

The Company is working very closely with the partner in charge of the audit, Mr.
Mark J. Zastre, C.A. of Grant Thornton to complete and file the audit with the
SEC in a timely manner. The delay in filing of the audit is a result of the
Company changing auditors and the late start by Grant Thornton in performing of
the audit. The Company does not foresee, at this time, any issues that might
extend the period of filing beyond July 30, 2001 as projected by the auditors.

If there are any questions in respect to the information contained herein,
please contact Mr. Grant Johnson, President and CEO, HLNT International, Inc.


HLNT International, Inc.



/s/ Grant Johnson

Grant Johnson, President & CEO

Date:  July 10, 2001





<PAGE>



                        Consolidated Financial Statements

                          HEALTHNET INTERNATIONAL INC.
                         (A development-stage company)
                                February 28, 2001


INDEPENDENT AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS





<PAGE>


REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)



<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)




                           CONSOLIDATED BALANCE SHEETS
                           (IN UNITED STATES DOLLARS)
                           (Going Concern see NOTE 1)

<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)



                            CONSOLIDATED STATEMENT OF
                           LOSS AND COMPREHENSIVE LOSS
                           (IN UNITED STATES DOLLARS)


<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)





                            CONSOLIDATED STATEMENT OF
                            SHAREHOLDERS' DEFICIENCY
                           (IN UNITED STATES DOLLARS)

SEE ACCOMPANYING NOTES



<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)





                      CONSOLIDATED STATEMENT OF CASH FLOWS
                           (IN UNITED STATES DOLLARS)




SEE ACCOMPANYING NOTES




<PAGE>
Non-cash investing and financing
Transactions not included in
Cash flows






<PAGE>



HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)

February 28, 2001



1.  Nature of Business and Going Concern

Healthnet International Inc. has two business units, ehealthstores and nject.
ehealthstores licenses applicable software, builds and maintains customized
e-commerce Web sites and provides marketing services for retailers and health
care providers who wish to sell vitamins, minerals and supplements (VMS)
products on the Internet. nject Creative(formerly Varcom), provides Internet
design, graphic and marketing services for clients. The Company's early
prototype retail operations (medicinecabinet.com, medicinecabinet.co.uk) were
sold and discontinued, respectively, during the year to focus efforts on
ehealthstores and nject and on the North American market, in the latter case.

Through its ehealthstores business unit, Healthnet is a provider of
comprehensive turnkey Web solutions and services to "brick & mortar" retailers,
fitness clubs and healthcare associations. ehealthstores effectively converts
these businesses into "click & mortar" hybrids - each with a built-in regional
customer base and brand-name recognition. ehealthstores comprises two product
lines: ehealthstores is the original comprehensive Web solution, and
ehealthstores Express is a streamlined version for customers requiring less
customization.

nject Creative (nject) was acquired on February 29, 2000 to meet a growing
demand for Web site design among partners, clients and other companies looking
to expand their business onto the Internet.

Healthnet International Inc. has four wholly owned subsidiaries; Healthnet
U.S.A. Inc., HNI Healthnet (Canada) Inc., Healthnet Europe Limited, and nject
Creative Inc.

Healthnet U.S.A. Inc. was incorporated on March 8, 1999. It was incorporated in
the state of Nevada and is intended to function as the operating company for the
United States market. Its name was changed on December 1, 2000, to HLNT Networks
(USA) Inc. Subsequently, on the 10th of July, 2001 Healthnet International Inc.
entered into a Letter of Intent agreement to sell HLNT Networks (USA) Inc. to
Equity Technologies & Resources Acquisitions Inc., a wholly owned subsidiary of
Equity Technologies & Resources Inc, a Deleware corporation. Terms provide for a
combination Of cash and stock.

HNI Healthnet (Canada) Inc. was incorporated on May 18, 1999. It was
incorporated in the Province of British Columbia and is intended to function as
the operating company for the Canadian market. Its name was changed on December
1, 2000, to HLNT Networks (Canada) Inc.

Healthnet Europe Limited was incorporated on January 11, 2000. It was
incorporated in the Island of Guernsey and is intended to function as the
operating company for the European market. Its name was changed on December 15,
2000, to HLNT Networks (Europe) Limited.

On February 29, 2000, the Company acquired Varcom Internet Communications and
Commerce Solutions Inc. a British Columbia company (VARCOM). Varcom subsequently
changed its company's name to nject Creative Inc. in June 2000.

The Company intends change its name to HLNT Networks, pending shareholder
approval at the next AGM.


<PAGE>

Going Concern

As at February 28, 2001, the Company had a working capital deficit of ????
including notes payable on April 30, 2001 and May 31, 2001 in the total amount
of ??????(NOTE 11) and interest accrued thereon in the total amount of (NOTE
11). These conditions raise substantial doubt about the Company's ability to
continue as a going concern. The ability of the Company to continue its
operations is dependent upon its success in its present efforts to secure
additional debt financing and/or raise additional equity financing through the
sale of common stock by means of private placement to sophisticated
investors./or renegotiate the terms of settlement of notes payable and/or
successfully conclude certain large Web site licensing agreements. There is, of
course, no assurance that these present efforts will be successful.

These financial statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary should the
company be unable to continue as a going concern.

2.SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States. The following is
a summary of the significant accounting policies used in the preparation of
these financial statements.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
all its subsidiaries. All intercompany balances and transactions have been
eliminated.

CASH AND CASH EQUIVALENTS

Cash equivalents comprise highly liquid investments with original maturities of
90 days or less. Cash equivalents are carried at cost which approximates their
fair value.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in the financial statements and
related notes to the financial statements. Actual results may differ from those
estimates.






<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 28, 2001

2.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

CAPITAL ASSETS

Capital assets are recorded at cost and are depreciated or amortized over the
estimated useful life of the assets at the following rates and methods:

   Computer hardware and equipment                         3 years straight-line
   Furniture and fixtures                                 10 years straight-line
   Computer software                                       2 years straight-line
   Domain name                                             2 years straight-line

Costs incurred in connection with the Company's website application and
infrastructure development have been capitalized and are being amortized on a
straight line basis over a two year period. Costs incurred to operate and
maintain the website application and infrastructure are expensed.

GOODWILL

The purchase price in excess of the fair market value of the acquired company is
recorded as Goodwill. Goodwill is amortized using the straight-line method over
two years from the date of acquisition. Annual reviews are undertaken to
evaluate the carrying value of goodwill. Estimated undiscounted future net cash
flows are calculated using estimated revenues and estimated costs. If it is
determined that the future cash flows are less than the carrying value of
goodwill, a write-down to the estimated fair value would be made with a charge
to earnings.

DEFERRED INCOME TAXES

Deferred income taxes are provided for significant carryforwards and temporary
differences between the tax basis of an asset or liability and its reported
amount in the financial statements that will result in taxable or deductible
amounts in future periods. Deferred tax assets or liabilities are determined by
applying presently enacted tax rates and laws.

A valuation allowance is required when it is more likely than not that some
portion or all of the deferred tax asset will not be realized.

Accounting for STOCK OPTIONS


In October 1995, the FASB issued Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation ("SFAS NO. 123"), which requires
entities to calculate the fair value of stock awards granted to employees. This
statement provides entities with the option of electing either to expense the
fair value of employee stock-based compensation or to continue to recognize
compensation expense under previously existing accounting pronouncements set out
in APB 25 and to provide pro-forma disclosures of net earnings (loss) and, if
presented, earnings (loss) per share, as if the above-referenced fair value
method of accounting was used in determining compensation expense.

The company has elected to account for stock-based employee or director
compensation arrangements in accordance with Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees ("APB NO. 25").

Stock options issued to non-employees are recorded at the fair value of the
services received or at the fair value of the options issued, whichever is more
reliably measurable. Compensation is charged to expense over the shorter of the
term of service or the vesting period. Unearned amounts are shown as deferred
compensation in shareholders' equity.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options and warrants which have no vesting restrictions and
are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions, including the expected stock price volatility.
Because the company's employee stock options and warrants have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.




<PAGE>

REVENUE RECOGNITION

eHEALTHSTORES AND eHEALTHSHOPS

Ninety percent of the initial software license, production and setup fee
relating to Web site development is recognized as revenue when the Web site is
made available for access by customers of the Licensee. The remaining ten
percent, which represents the operation and maintenance fee for the first year
of the license agreement, is recognized as revenue in equal amounts monthly over
that year.

The annual renewal fee, which is ten percent of the initial software license,
production and setup fee, is recognized as revenue in equal amounts monthly over
the year to which it applies.

Earned royalty income and Internet marketing fees on product sales to customers
of the Licensee are recognized as revenue in the month during which the product
is delivered to the customer.

eHEALTHSTORES EXPRESS

The monthly service fee covering operation and maintenance is recognized as
revenue in the month for which the charge is made.

Product sales revenue is recognized as revenue in the month during which the
product is delivered to the customer.


OTHER REVENUE

Charges for advertising on the Web sites are shared equally with the licensees.
The Company's share is recognized as revenue in equal monthly installments over
the period for which the charges are levied.

Charges for professional and other services are made in accordance with the fee
schedules contained in the contracts with the Licensees and other clients. These
charges are recognized as revenue when the results of the assignment are
delivered to, and accepted by the licensee or client.


TRANSLATION OF FOREIGN CURRENCIES

Monetary assets and liabilities denominated in foreign currencies are translated
into United States dollars at the year end rates of exchange. Foreign currency
revenue and expense items are translated at average monthly rates of exchange.
Exchange gains or losses are included in the statements of loss.

LEASES

Leases which transfer substantially all of the benefits and risks of ownership
are recorded as the acquisition of assets and incurrence of obligations. Under
this method of accounting, both assets and obligations, including interest
thereon, are amortized over the life of the lease.

ADVERTISING

The Company expenses the costs of advertising as incurred.


FINANCIAL INSTRUMENTS

The company has financial instruments that include cash, receivables and
Payables, bank indebtedness, notes payable, obligations under capital lease and
shareholder loans. It was not practicable to estimate the fair value of the
amounts due to a shareholder.

The fair value of all other financial instruments approximates their recorded
amounts.



<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

SFAS Nos. 133 and 138

The Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and certain Hedging Activities, an amendment of
FASB Statement No. 133", effective for fiscal years beginning after June 15,
2000. These Statements establish accounting and reporting standards for
derivative instruments and hedging activities, including certain derivative
instruments embedded in other contracts, and requires that an entity recognize
all derivatives as assets or liabilities in the balance sheet and measure them
at fair value. If certain conditions are met, an entity may elect to designate a
derivative as follows: (a) a hedge of the exposure to changes in the fair value
of a recognized asset or liability or an unrecognized firm commitment, (b) a
hedge of the exposure to variable cash flows of a forecasted transaction, or (c)
a hedge of the foreign currency exposure of an unrecognized firm commitment, an
available-for-sale security, a foreign currency denominated forecasted
transaction, or a net investment in a foreign operation. The statements
generally provide for matching the timing of the recognition of the gain or loss
on derivatives designated as hedging instruments with the recognition of the
changes in the fair value of the item being hedged. Depending on the type of
hedge, such recognition will be in either net income or other comprehensive
income. For a derivative not designated as a hedging instrument, changes in fair
value will be recognized in net income in the period of change. Management is
currently evaluating the impact of adopting SFAS Nos. 133 and 138 on the
financial statements, but does not anticipate that they will have a material
impact.

SFAS No. 140

The Financial Accounting Standards Board issued SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
which replaces SFAS 125. The new Statement revises some of the standards for
accounting for collateral and for securitizations and other transfers of
financial assets. It is based on the financial-components approach used in SFAS
125 and carries over most of that Statement's accounting provisions without
change. The revised accounting provisions apply to transfers of financial assets
occurring after March 31, 2001. SFAS 140 also requires expanded disclosures
about securitized and pledged financial assets, which are effective for fiscal
years ending after December 15, 2000. Management is evaluating the impact of
adopting SFAS No. 140 on the financial statements, but does not anticipate that
it will have a material impact.

SAB No. 101

The United States Securities and Exchange Commission has issued Staff Accounting
Bulletin 101 "revenue recognition in Financial Statements" (SAB 101) for
application effective December 1, 2000. The Company is of the opinion that it
has complied with the requirements of SAB 101 in these financial statements and
in the comparative financial statements for prior periods.

                                                                         $
--------------------------------------------------------------------------------

Fair value of assets acquired
Fair value of liabilities acquired                                    190,266
--------------------------------------------------------------------------------
Purchase price
================================================================================

The following unaudited pro forma consolidated information for the year ended
February 29, 2000 gives effect to the transaction as if it had occurred at the
beginning of the prior fiscal year. The unaudited pro forma consolidated
information is presented for informational purposes only and is not necessarily
indicative of the results of operations that would have been achieved had the
transaction been completed as of the beginning of the year, nor is it indicative
of the Company's future results of operations.
                                                                     YEAR ENDED
                                                                    FEBRUARY, 28
                                                                            2001
                                                                          $
--------------------------------------------------------------------------------
                                                                     (UNAUDITED)

Revenues                                                               ?????
Net loss                                                             ???????
Net loss per common share                                              ?????
================================================================================




<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)

February 28, 2001


4.  ACCOUNTS RECEIVABLE
                                                February 28,        February 29,
                                                   2001                2000
                                                     $                  $
--------------------------------------------------------------------------------
Amounts due from trade customers                  ???????           ????????
Other                                              ?????            ???????
GST receivable                                        --              ????
Less: allowance for bad debts                     ??????                --
--------------------------------------------------------------------------------
                                                  ??????            ??????
================================================================================


5.  PREPAID EXPENSES AND DEPOSITS

Prepaid expenses and deposits comprise:
                                                 February 28,       February 29,
                                                     2001                2000
                                                      $                    $
--------------------------------------------------------------------------------
Equipment lease deposits                            ??????            ???????
Deposits paid to suppliers on portions of work
completed                                              --              ?????
Deposits held by merchant bank                         --
Other                                                  --             ?????
Prepaid expenses                                   ?????               ????
--------------------------------------------------------------------------------
                                                   ?????             ???????698
================================================================================

6.  RESTRICTED CASH

                                                February 28,        February 29,
                                                  2001                 2000
                                                    $                    $
--------------------------------------------------------------------------------
Term deposits                                    ??????               ????????

================================================================================

The above term deposits are held by Canadian Western Bank and Canadian Imperial
Bank of Commerce as security for computer leases [NOTE 12].



<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 28, 2001

7.  CAPITAL ASSETS

Capital assets are recorded at cost less accumulated depreciation and comprise:




9. BANK INDEBTEDNESS

The company entered into a $250,000 (in Canadian dollars) revolving demand
operating facility agreement with the Toronto Dominion Bank on August 23, 2000.
The interest rate is prime rate plus 1.25% per annum. On January 26, 2001 the
Company entered into an additional secured facility agreement (the Bulge loan)
for $250,000 (in Canadian dollars) with an interest rate of prime plus 1.25% per
annum. The facilities were collateralized by personal guarantees from the
Chairman of the Board and the President of the Company.

Responsibility for the guarantee for the Bulge loan of $250,000 (in Canadian
dollars) has been assumed by the President of the Company.



<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 28, 2001


10.  ACCOUNTS PAYABLE AND ACCRUALS

Accounts payable and accrued liabilities comprise:

                                                  February 28,      February 29,
                                                     2001               2000
                                                     $                  $
--------------------------------------------------------------------------------



================================================================================

NOTES PAYABLE

11. Notes payable comprise:

                                            February 28,      February 29,
                               RATE OF          2001               2000
              DUE DATE         INTEREST           $                  $
--------------------------------------------------------------------------------




================================================================================


Notes payable continuity schedule


          March 1,                                                  February 28,
           2000             Additions       exchange for shares        2001
            $                                                           $
--------------------------------------------------------------------------------



================================================================================


Accrued interest on notes payable

                      March 1,                            February 28,
                       2000             Additions            2001
                         $                                     $
------------------------------------------------------------------------

=========================================================================


<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 28, 2001

The note payable 1 is unsecured. During the forth quarter period, the Company
incurred $??????? of interest, which is due within the next twelve months.

The note payable 2 is collateralized by a personal guarantee of a principal
shareholder of 300,000 shares of Healthnet International Inc. Subsequent to the
quarter the payment date has been extended a further Ninety (90) days with an
annualized interest rate of 60%.

The note payable 3 is . . .non-interest bearing SH loan? -

Note payable 4 is . . . interest bearing SH loan of $250,000? -

On September 28, 2000, the Company entered into agreement with the note payable
1 holders to convert $1,000,000 of the note payable 1 into 1,000,000 common
shares at $1.00 per share, which was the market value of the shares on that
date. The shares were issued on November 30, 2000.

On April 5, 2001, the Company entered into agreement with the note payable 1
holders to convert $3,173,700 of the note payable 1 into restricted 144-treasury
stock at $0.60 per share.

12.  CAPITAL LEASE OBLIGATIONS

The Company has entered into capital leases for equipment. The future payments
for 12 months ended February 28 are:

                                                                         $
--------------------------------------------------------------------------------




================================================================================


Three of the equipment leases require the Company to pledge term deposits for a
total of $?????? (NOTE 4). The term deposits are interest bearing and will be
returned upon the expiry of the respective lease.


13. SHAREHOLDER LOANS

Amounts due to shareholders bear interest at ?%, are unsecured and are repayable
?.



<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 28, 2001

14.  SHARE CAPITAL

AUTHORIZED
     100,000,000  Common shares, no par value
     50,000,000  Preferred shares, no par value

[a]  STOCK OPTIONS



                          2000                             1999
               ---------------------------------  -----------------------------
                WEIGHTED                          WEIGHTED
                OPTIONS           AVERAGE         OPTIONS            AVERAGE
                  #            EXERCISE PRICE        #           EXERCISE PRICE
--------------------------------------------------------------------------------




<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 29, 2000

14.  SHARE CAPITAL (CONT'D.)

     At February 29, 2000, options outstanding were as follows:

<TABLE>
<CAPTION>

                                     OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                           ------------------------------------------   --------------------------
                                         WEIGHTED AVERAGE
                                            REMAINING       WEIGHTED                       WEIGHTED
                            OPTIONS      CONTRACTUAL LIFE   AVERAGE        OPTIONS          AVERAGE
RANGE OF EXERCISE PRICES       #             (YEARS)     EXERCISE PRICE       #         EXERCISE PRICE
------------------------------------------------------------------------------------------------------
<S>       <C>
</TABLE>

[b]  ACCOUNTING FOR STOCK BASED COMPENSATION

     The Company has adopted the disclosure-only provisions of SFAS123,
     Accounting for "Stock-Based Compensation" for stock based awards to
     employees and directors. Had compensation cost for the Company's stock
     option plan been determined based on the fair value at the grant date for
     awards in 2000 and 1999 consistent with the provisions of SFAS No. 123, the
     Company's loss and loss per share would have been increased to the pro
     forma amounts indicated below:

                                                        2000               1999
                                                         $                  $
--------------------------------------------------------------------------------






<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 29, 2000

14.  SHARE CAPITAL (CONT'D.)

     The fair value of option grants is estimated on the date of grant using the
     Black-Scholes option-pricing model discounted for lack of liquidity with
     the following weighted-average assumptions:

                                                 $                  $
-------------------------------------------------------------------------


     The weighted average fair value per share of stock options granted during
     fiscal 2000 is $?????. A volatility of ???? was used.


RETAINER STOCK PLAN

On September 18, 2000, the Board of Directors of the Company approved the
adoption of a stock plan and allotted 500,000 shares thereto, for the purpose of
compensating non-employee directors and consultants for services to the Company
(the "Plan"). The Plan was filed by way of an S-8 Registration Statement with
the United States Securities and Exchange Commission. On December 11, 2000, the
Board of Directors approved an amendment to the Plan, increasing the number of
shares allotted to the Plan to 1,000,000. On January 30, 2001, the Board of
Directors approved further amendment adding employees of the Company to the
class of persons entitled to benefit under the Plan.

During the 3rd quarter of fiscal 2001, the Company issued 430,908 shares under
the retainer stock plan in connection with payment of certain advertising,
marketing and promotion expenses as well as certain professional fees. The
shares were valued at the quoted market share price on the date the services
were provided and totaled $415,298.


15.  COMMITMENTS

         [i]      At February 28, 2001, the Company has entered into commitments
                  for leases of premises. The future payments for 12 months
                  ended February 28 are:

                                                                    $
-------------------------------------------------------------------------




=========================================================================

     Rent expense for the quarter ended February 28, 2001 was $????? On Apr
15, 2001, the Company entered into commitment for lease of new premises. The
Term of the lease is for three years with a two year renewal option.

There is currently a dispute with prior landlords, resulting in the Company
moving To new premises. Subsequent event - note required. Future lease payments
with Wicklow -



<PAGE>

HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 29, 2000

15.  COMMITMENTS (CONT'D.)

         [ii]     The Company has signed an agreement with a company which
                  publishes and distributes a health related database. The
                  agreement allows the Company and its customers to use the
                  database. The Company is committed to pay a further $52,500 in
                  the next year in connection with this agreement. The company
                  is of the opinion that no further payment will be required
                  sincethe supplier was in breach of a favoured nations pricing
                  clause. The outcome being that the company would be paid in
                  full for the agreement (thomas?)

         [iii]    The Company has entered into an agreement with a company which
                  provides marketing services to the Company. The Company is
                  committed to pay the greater of $2,000 per month or 2% of
                  monthly net sales generated through marketing services
                  provided to the Company for the period August 30th, 2001
                  (check with Steph). Trevor, this was extended.

         [iv]     The Company has entered into an investor relation's agreement
                  which provides internet marketing and information services.
                  The Company is committed to pay $9,000 per month beginning
                  September 1, 2000 for a period of twelve months. This
                  commitment may be cancelled with 30 days notice.

         [v]      The Company acquired nject (formerly known as VARCOM) on
                  February 29, 2000. While there was contingent consideration
                  associated with this acquisition for reaching certain revenue
                  targets, the VARCOM principals receiving this contingent
                  consideration were terminated with cause on January 4, 2001
                  thereby nulling the contingency. Furthermore, the agreed
                  thresholds for this consideration were not met.

<TABLE>
<CAPTION>

16. Change in non-cash operating
    working capital                      For year ended     For year ended     For the period from
                                         Feb. 28, 2001      Feb. 29, 2000      Jan. 19, 1999 to
                                                                               Feb. 28,2001
<S>       <C>
======================================================================================================
</TABLE>


17.  INCOME TAXES

Deferred income taxes arise from temporary differences in the recognition of
income and expenses for financial reporting and tax purposes. The source of
temporary differences in operations and the related deferred income tax amounts
are as follows:

                                            2001         2000             1999
                                              $           $                $
--------------------------------------------------------------------------------

Total deferred tax assets                    --           --               --


================================================================================


At February 29, 2000, the Company had $1,700,000 capitalized start-up
expenditures. These expenditures are deductible for tax purposes over a period
of 5 years commencing in the month that Healthnet International Inc. commences
an active trade or business.



<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                           (IN UNITED STATES DOLLARS)
February 29, 2000

18.  SUBSEQUENT EVENTS

On June x , 2001, the Company and Supplements On-line (SOL), a Canadian company
offering a similar Solution to Ehealthstores Express, signed a letter of intent
concerning the acquisition of SOL. Following the end of the period, February
28th, 2001, the Company agreed to acquire 100% of the shares, with assets
including $200,000 in cash, of SOL for $100,000 and $320,000 in the Company's
shares. The transaction is under revieew and has not been completed at the time
of filing.

Subsequent to the year end, the Company signed a letter of intent to acquire
100% of the shares of Supplements On-line which will grow the Express network by
the 20 retailers operating or under contract to SOL. This effectively provides
the Company with the largest network of health retailers in Canada, representing
over 40 bricks and mortar locations, to complement its US Express network. The
transaction is under review and has not been completed at the time of filing.

On June x, 2001, the Company and Verida Internet Corp (VERY), an Internet
company offering marketplace exchange software and technology, signed a letter
of intent concerning the acquisition of 10%, with a further option of an
additional 10%, of the assets of the VERY subsidiary, Triad Inc (Triad). Triad
(www.triadinc.com) is a marketing services agency specializing in the technology
and financial services categories and operating out of the San Francisco area.
Triad has operated profitably for 18 years in the areas of branding, design,
strategy, and public relations with clients including Apple, Novell, Visa USA,
Wells Fargo Bank, GTE Financial and Bank of America. The transaction is under
review and has not been completed at the time of filing.

On July 10th it was announced that Hartland MacDougall, Raymond Harris, Roger
Johnson, and Richard Painter would transition to the Board of Advisors allowing
for additional members at the Director level to join the company allowing it to
pursue industry specific goals.

On April 25th, 2001, the Company added United Natural Foods (UNFI) as an
additional fulfilment provider and reseller of the Company's Express Products to
its 7000 retail customers. Revenues for UNFI were $908 million for the past
year.



<PAGE>

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

        None

                                    PART III

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

The Directors and Executive Officers of the Company as of February 29, 2000 are
as follows:

Name                      Age                  Title
----                      ---                  -----
Grant Johnson             41                   CEO/President/Director
S. Ross Johnson           72                   Director/Chair of Board
Raymond G. Harris         72                   Director/Acting CFO
Hartland M. MacDougall    70                   Director
Dr. R. Dean Linden        45                   Director
Roger Johnson             64                   Director
Richard Painter           53                   Director
Bret Conkin               37                   Chief Operating Officer

All directors have been elected to serve until their successor is duly elected
and qualifies.

       Mr. Grant R. Johnson has been appointed as the Director, President, and
Chief Executive Officer of the Company since its inception in January 1999. Mr.
Johnson also serves on the Compensation Committee of the Company. From 1997 to
1999, Mr. Johnson served as the Vice President of Corporate Development of
Softec Systems Inc. From 1995 to 1997, Mr. Johnson was the President of G & J
Sales Consulting, an independent sales consulting company based in Toronto,
Canada. From 1994 to 1996, Mr. Johnson owned and operated Cable Direct Satellite
Sales & Service, an electronics company.

      Mr. S. Ross Johnson was appointed as a director and Chairman of the Board
since the Company's inception in January, 1999. From 1995 to present, Ross
Johnson has been involved with Section Testing as the President of People Count
Inc. Also, over the past five years Mr. Johnson has been involved in three other
directorships. The first two on which he currently serves as a director are
World Earth Day and the Board of Advisors at the Scarborough Campus of the
University of Toronto. The third one was a directorship on Board of Advisors of
Stokes Seed, on which Mr. Johnson served from 1989 to 1996.

       Mr. Raymond G. Harris was appointed as a Director of the Company in
April, 1999. Mr. Harris is the Chairman of the Audit Committee and also serves
on the Compensation Committee of the Company. Mr. Harris was a partner with
Deloitte & Touche and its predecessor firms from 1955 until his retirement in
1992. In the latter years in the firm, he advanced through the positions of
Edmonton Office Managing Partner, National Administrative Partner, Executive
Director and finally, Chair of the Firm. From 1993 to 1996, Mr. Harris was
resident in Beijing, managing a team of consultants providing advice to the
Ministry of Finance of the People's Republic of China on a World Bank-financed
project dealing with the establishment of a program of continuing professional
education for Chinese Certified Public Accountants and the setting of accounting
standards that meet the needs of China's socialist market. Mr. Harris is
currently a financial consultant. Mr. Harris has served as a Director and as the
Chairman of the Audit Committee of The Bank of China (Canada) since 1996. Since
1997, Mr. Harris has served as a Director and member of the Audit, Corporate
Governance and Compensation Committees of Circuit World Corporation. From 1997
to 1999 he served as Chairman of the Audit Committee and since 1999 he has
served as Chairman of the Board of Circuit World Corporation Mr. Harris served
on the Collingwood General & Marine Hospital as a member of the Board of
Trustees and Treasurer from 1998 - 1999. Since 1999, Mr. Harris has served as a
Director, Chairman of the Audit Committee and member of the Compensation
Committee of International Road Dynamics Inc. Mr. Harris also served a director
of the Board and as Chairman of the Audit Committee of LEF McLean Bros.
International Inc. from October 1996 until his resignation in March 1999.
Mr. Harris was appointed as acting CFO of the Company in December, 2000.



<PAGE>

       Mr. Hartland M. MacDougall was appointed as a director of the Company in
April, 1999. Mr. MacDougall serves on both the Audit and Governance Committees
of the Company. Mr. MacDougall was appointed a director of Conros Corporation (a
private company) in late 1998 (this company was acquired by Great-West Insurance
Company). Mr. MacDougall was appointed to the Board for London Insurance Group
in March 1985 and served as the Deputy Chairman from 1985 - 1997. During this
time he also served as an officer of London Insurance Group from 1984 to 1996.
Mr. MacDougall was appointed to the Board of Trilon Financial Corporation in
March of 1985 and served until November 1997 at which time he retired from the
Board. Mr. MacDougall also served on the Board of International Murex
Technologies Inc. (this company was acquired by Abbott Laboratories)from January
of 1997 and resigned in April 1998.

       Dr. R. Dean Linden was appointed as a director of the Company in April,
1999. Mr. Linden also serves as the Chairman of the Medical Advisory Board and
is a member of the Audit Committee of the Company. Since 1999, Dr. Linden serves
as the Chairman of the Board, Chief Executive Officer and President of
HealthChek.net., a specialized debt prevention and credit reporting company for
health care providers. Dr. Linden was the Associate Professor of Neurosurgery at
the University of Louisville from 1989 to 1999.

      Mr. Roger Johnson was appointed as a director of the Company in January,
2000. Mr. Johnson is also involved in two of the Company's committees, as the
Chair of the Compensation Committee and also as a member of the Governance
Committee. Mr. Johnson was the past Executive Vice President of Aid Association
for Lutherans from 1997 until his retirement in March, 1999, and was the Chief
Financial Officer and Treasurer of the Association from 1992 to 1997. There are
three other directorships that Mr. Johnson is involved in: the first with Crane
Engineering from 1992 to present; the second with Wisconsin Lutheran College
from 1994 to present and the third with First Business bank of the Fox River
Valley, from April, 1999 to present.

       Mr. Richard O. Painter was appointed as a director of the Company in
February 4, 2000. Mr. Painter also the Chairman of the Compensation Committee.
Mr. Painter was the President of Insurance and Financial Services at Prudential
Life Insurance Company from December 1995 to his retirement in January 1999.
Prior to this, Mr. Painter served as the Senior Vice President at New Your Life
Insurance Company from June 1971 to November 1995. Mr. Painter has been involved
in two other directorships over the past five years. The first directorship was
with Prudential Property and Casualty from October 1996 to January 1999. The
second was directorship with Prudential Services and Life Insurance from March
1996 to January 1999.

       Mr. G. Bret Conkin joined the Company in September 1999 as the Vice
President of Marketing. In November 1999, Mr. Conkin's role changed to that of
the Executive Vice President and he was appointed Chief Operating Officer in
February, 2000. Prior to joining the Company, Mr. Conkin worked with Softec
Systems Inc. as the Vice President of Marketing from December 1998 to August
1999. Previous to this, Mr. Conkin was employed with the B.C. Lottery
Corporation from early 1992 through to November 1996 as the Products Manager,
and from November 1996 to November 1998, and as an Advertising Manager from
early 1992 to June 1995.


<PAGE>

FAMILY RELATIONSHIPS.

      Chairman of the Board of Directors, Mr. Ross Johnson is the father of
Director, President and Chief Executive Officer, Mr. Grant Johnson. Other than
stated above, there are no other family relationships among directors,
Executive officers or other persons nominated or chosen by the Company to become
officers or executive officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS. The Company is not aware of any
material legal proceedings involving any director, director nominee, promoter or
control person including criminal convictions, pending criminal matters, pending
or concluded administrative or civil proceedings limiting one's participation in
the securities or banking industries, or findings of securities or commodities
law violations.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

      Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

      Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended February 29, 2000 all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.



<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the compensation paid
to the Chief Executive Officer, for all services rendered in all capacities to
the Company, for the fiscal year ended 29 February 2000:

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                               Long Term Compensation
                                                 ---------------------------------------------------
                        Annual Compensation             Awards                      Payouts
                      -------------------------- ------------------------     -------------------
                                       Other     Restricted    Securities
Name &                                Annual      Stock        Underlying      LTIP         Other
Principal             Salary  Bonus  Compensation  Award      Options/SAR     Payouts
Position    Year      ($)      ($)       ($)       ($)            (#)          ($)          ($)
--------    ----      ---      ---       ---       ---            ---          ---          ---
<S>         <C>      <C>        <C>      <C>        <C>         <C>            <C>          <C>
Grant       1999        --      --       --         --              --         --            --
 Johnson,

Chief       2000     59,849     --       --         --          ????? check  --            --
 Executive
 Officer    2001     78,480     --       --

</TABLE>

Option Grants in Last Fiscal Year. The following table sets forth each stock
option grant made during fiscal 2000 to the Chief Executive Officer named in the
Summary Compensation Table above:

<TABLE>
                           OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                     Individual Grants
<CAPTION>

         Number of Securities    # of Total Options/SARs    Exercise or
         Underlying Options/     Granted to Employees in     Base Price   Expiration
Name     SARs Granted (#)           Fiscal Year                ($/Sh)         Date
----     ----------------           -----------                ------         ----
<S>      <C>                       <C>                       <C>        <C>
Grant    ???????                  ?????                       $????      December 31, 2009
 Johnson

</TABLE>

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values. The
following table sets forth, for the Chief Executive Officer named in the Summary
Compensation Table above, stock options exercised during fiscal 2000 and the
fiscal year-end value of unexercised options:

  AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR & FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>

                                Number of Securities Underlying   Value of Unexercised
       Shares        Value      Unexercised Options/SARs at       In-the-money Options/
       Acquired on   Realized   FY-End (#)                        SARs at FY-End ($)
Name   Exercise (#)   ($)       Exercisable/Unexercisable         Exercisable/Unexercisable
----   ------------   ---       -------------------------         -------------------------
<S>      <C>           <C>          <C>                             <C>
Grant    --            --           ?????????? Johnson

</TABLE>


<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below sets forth information, as of July 12,2001 with respect to
beneficial ownership of the Company's Common Stock by each person known by the
Company to be the beneficial owner of more than 5% of its outstanding Common
Stock, by each director of the Company, by each Named Executive Officer and by
all officers and directors of the Company as a group. Unless otherwise noted,
each shareholder has sole investment and voting power over the shares owned.

Name and Address               Amount and nature       Approximate Percentage of
Of Beneficial Owner            of Beneficial Owner      Outstanding Common Stock
-------------------            -------------------      ------------------------

Grant Johnson                       ???????????? (1)         ????????
(CEO/President/Director)
1521 Chartwell Drive
Vancouver, British Columbia
Canada, V7S 2R9

S. Ross Johnson                       ??????? (2)                     ????
Director/Chair of Board
1312 Cleaver Drive
Oakville, Ontario
Canada L6J 1W4

Raymond G. Harris                     ???????? (3)                     ?????
Director/Acting CFO
116 Bartlett Blvd.
Princeton Shores
P.O. Box 3331, RR #3
Collingwood, Ontario
Canada, L9Y 3Z2

Hartland M. MacDougall                ??????(4)                     ?????
Director
Suite 2360, 100 King St. W.
Toronto, Ontario
Canada, M5X 1C7

Dr. R. Dean Linden                    ?????? (5)                     ????
Director
5413 Pueblo Road
Louisville, Kentucky
U.S.A. 40207

Roger Johnson                          ??????? (6)                    ??????
Director
177 Pine Court
Appleton, Wisconsin
U.S.A. 54914

Richard O. Painter                     ??????? (7)                     ?????
Director
134 Mosslane
Madison, Mississippi
U.S.A. 39110

All current directors and           ???????? (8)                    ?????
executive officers as a group
(9 persons)

(1)   The Grant Johnson Family Trust, of which Grant Johnson is a beneficiary,
      enjoys legal ownership of ???????? of said securities. Includes ??????
      shares subject to options exercisable within 60 days after ????? at
      an exercise price of $????? per share.

(2)   The S. Ross Johnson Family Trust, of which Ross Johnson is a beneficiary,
      enjoys legal ownership of ???????? of said securities. Includes ??????
      shares subject to options exercisable within 60 days after May 17, 2000 at
      an exercise price of $????? per share.




<PAGE>

      None.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits and Index of Exhibits (all exhibits except as otherwise noted are
incorporated by reference; Exhibit 3.1 and 3.2 were filed as exhibits to the
Company's September 03, 1999 amended Form 10-SB.).

No. 1    Description

3.1    Articles of Incorporation.
3.2    By-laws of the Company.
21.1*  Subsidiaries of the Company
23.1*  Consent of Ernst & Young LLP.

---------------
*      filed herewith

(b)    Reports on Form 8-K. None.




<PAGE>
                                   SIGNATURES

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.

Healthnet International Inc.
----------------------------
 (Registrant)

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.