U.S. Securities and Exchange Commission

                              Washington, Dc 20549

                                   Form 10-KSB


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


                   For the fiscal year ended December 31, 2001
                                             -----------------

                        Commission file number 000-27959

                             LAREDO INVESTMENT CORP.
                 (Name of small business issuer in its charter)


              Nevada                                     77-0517964
----------------------------------          ------------------------------------
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
 of incorporation or organization)

        Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3
             (Address of principal executive office) Zip/Postal Code

                    Issuer's telephone number: (604) 460-8440
                                               --------------

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

Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                                (Title of Class)


        Check whether the issuer (1) has filed all reports  required to be filed
by Section 13 or 15(d) of the  Exchange  Act 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. Yes (
X ) NO ( ).

        Check here if there is no disclosure of delinquent filers in response to
Item 405 of  Regulation  S-B 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. ( )

        Issuer's revenues for its most recent fiscal year, were $3,045,883.

                                        1

<PAGE>



        Issuer's Common Shares outstanding at March 19, 2002 was 32,200,000. The
aggregate  market  value  of  voting  and  non-voting   common  equity  held  by
non-affiliates as of March 19, 2002 was $510,000,  computed based on the average
bid and asked price of such common equity as of March 19, 2002.

        Except for the historical  information contained herein, the matters set
forth in this Form 10- KSB are forward looking  statements within the meaning of
the "Safe Harbor" provision of the Private  Securities  Litigation Reform Act of
1995.  These  forward-looking  statements are subject to risk and  uncertainties
that may cause  actual  results  to  differ  materially.  These  forward-looking
statements  speak  only  as of the  date  hereof  and  Laredo  Investment  Corp.
disclaims any intent or obligation to update these forward-looking statements.

Documents Incorporated by Reference:  Certain exhibits



                                        2

<PAGE>



Item 1.        Description of Business.

Business Development

Laredo Investment Corp.  ("Laredo") was incorporated under the laws of the State
of Nevada on December 18, 1996.  Laredo ceased all operating  activities  during
the period from December 18, 1996 to July 9, 1999 and was considered dormant. On
July 9, 1999, Laredo obtained a Certificate of renewal from the State of Nevada.
From July 9, 1999 to January 21, 2000, Laredo was in the development stage.

On January 21, 2000,  Laredo  entered  into an  Acquisition  Agreement  with GFR
Nutritionals,  Ltd., a British Columbia  corporation,  (GFR), Richard Pierce and
Lucretia  Schanfarber  (the GFR Majority  Shareholders)  to acquire their shares
representing  100%  of the  outstanding  common  stock  of GFR in  exchange  for
19,000,000  newly issued shares of Laredo's  restricted  common  stock.  GFR was
incorporated in March 1997 as Helm  Developments  Ltd. In June 1998, the Company
formally  changed its name to GFR  Nutritionals  Ltd.  GFR was 100% owned by the
President and CEO,  Richard Pierce from inception until January 17, 2000, when a
10% interest was acquired by Lucretia Schanfarber.  Business operations began in
October  1998  after   acquiring   manufacturing   equipment  and  arranging  to
manufacture nutritional supplements under a private label contract.

On June 21, 2000, Laredo entered into an Acquisition Agreement with Nutritionals
(USA)  Direct.Com,  a  Washington  corporation,  (NDC),  to acquire  100% of the
outstanding common stock of NDC in exchange for $1,000.

On July 12, 2000,  Laredo  entered into an  Acquisition  Agreement  with WST Web
Search Technologies, Inc., a Saskatchewan corporation, (WST), to acquire 100% of
the  outstanding  common  stock of WST in exchange for  10,000,000  newly issued
shares of Laredo's restricted common stock.

On November 1, 2000, Laredo entered into an Acquisition Agreement with Prohealth
Nutritionals Ltd., a British Columbia corporation, (PHN), to acquire 100% of the
outstanding common stock of PHN in exchange for $0.01.

Narrative Description of the Business

Laredo, through its wholly owned subsidiary GFR, is an established  manufacturer
of quality  nutritional  supplement  products.  Laredo  operates a full  service
manufacturing  facility  that  produces  natural-source  nutritional,   vitamin,
mineral,  herbal and sports nutrition products which are sold on a private label
basis to wholesale distributors.

Nutritional  supplements  are being  increasingly  recognized by the medical and
scientific communities as an integral component of a healthy lifestyle.  Much of
the growth in this industry is driven by six key factors:

         o        Positive  publicity - For several years,  medical journals and
                  news reports have widely

                                        3

<PAGE>



                  and   consistently   publicized   the   positive   effects  of
                  nutritional  supplements.  Many of these  reports focus on the
                  correlation   between  consumed   nutrients  and  the  reduced
                  incidence of certain  diseases.  As a result,  the nutritional
                  supplement  industry has  experienced  greater  acceptance and
                  popularity.

         o        Increased research - The more the scientific  community learns
                  about the human body, more is proved that an individual's diet
                  and health are  undoubtedly  connected.  Government  agencies,
                  universities,  and  private  companies  are  increasing  their
                  sponsorship of research  assessing the benefits of nutritional
                  supplements and herbs.

         o        Favorable  regulatory  environment - The US Dietary Supplement
                  Health and Education  Act (DSHEA)  created a set of guidelines
                  specific  to  the  supplement   industry  and   established  a
                  regulatory  environment  which  allows  responsible  nutrition
                  companies to thrive and allows the industry to regulate itself
                  with  supervision by the FDA.  Health Canada has followed suit
                  and  defined   Good   Manufacturing   Practices,   with  which
                  compliance in the industry is voluntary.

         o        Mass market distribution - Nutritional supplements,  including
                  all-natural  products,   vitamins,  minerals  and  herbs,  are
                  increasingly  sold in mass volume retail  stores.  Due to this
                  new market channel,  millions of shoppers are exposed to these
                  products as they are introduced into the mainstream.

         o        Ageing of the  population - The largest  demographic  group in
                  the history of North America is now turning 50 years old. Over
                  the  next  15  years,  approximately  80  million  more  "baby
                  boomers" will join this group of individuals who are concerned
                  with preserving their health and fitness,  directly increasing
                  the demand for nutritional supplements.

         o        Trend  toward   preventative  care  -  The  collective  health
                  consciousness  of the population  that began over 20 years ago
                  is gaining  momentum  and,  along with  regular  exercise,  it
                  embraces nutritional supplements.

According to the Nutrition Business Journal,  the US nutrition  industry,  which
includes natural foods, dietary supplements, and natural personal care products,
has grown  14-16%  annually  over the past two years and is  expected to sustain
double digit growth for the near future.  The Nutrition  Business Journal states
that the US nutrition  industry  generated  $23.3  billion of consumer  sales in
1997. Canadian sales tend to approximate 10% of the US market.

Principal  Products:  Laredo  currently  manufactures  70 different  products by
formulation and capsule size. Principal products that Laredo manufactures are:

        -      Multiple vitamin/mineral product - 90/180 and 360 caps
        -      Methyl sulfonyl methane caps or powder
        -      Glucosamine  sulfate

                                        4

<PAGE>


        -      Devil's claw root extract
        -      St.  John's Wort extract
        -      Kava Kava
        -      Ginkgo Biloba leaf extract
        -      Coenzyme Q10
        -      Echinacea
        -      L-Glutamine
        -      Grapeseed extract
        -      Vitamin C
        -      Garlic Ginseng

Markets:  Established  market  channels  for  nutritional  products  within  the
industry  include  distribution  through health food retail stores,  mass market
retail through department and grocery stores, multi-level marketing, mail order,
health practitioners, and the Internet.

Currently,  Laredo only manufactures nutritional supplements under private label
contracts with wholesale  distributors.  During 2001 and 2000, one private label
customer has comprised 45% and 64%, respectively of Laredo's sales.

Laredo's  primary goal is to achieve a level of annual revenues in excess of $20
million by the fiscal year ended 2003 resulting from expanded  marketing efforts
and vertical  integration  through  acquisitions and expansion into new markets.
Laredo is also pursing opportunities to market direct sales to consumers through
the Internet.

Competition:  The  main  competitors  in the  Canadian  natural  health  product
industry are privately  owned  corporations.  A couple of larger  companies that
manufacture their products for retail distribution are Jamieson Laboratories and
Stanley  Pharmaceuticals.  There are also many companies which  manufacture only
for private label sales.  Many smaller  manufacturers  have their  products sold
strictly in specialty health food and nutrition stores.

Natural health product manufacturing has significant cost barriers for new start
up companies.  Start up costs include set up of manufacturing facilities through
purchase of equipment,  acquiring skilled labor and research and  implementation
of processes acceptable to government standards.

Regulation:  In both the US and Canada,  the natural health products industry is
self  regulating.  In Canada,  products are not required to be approved prior to
introduction to the market, however Health Canada has defined Good Manufacturing
Practices, with which compliance is voluntary.  Health Canada has indicated that
stricter  regulations  for  natural  health  products  will be enacted in future
years.

In 1996,  US Congress  enacted the Dietary  Supplement  Health and Education Act
(DSHEA) which included a set of guidelines  specific to the supplement  industry
and established a self regulatory environment for the industry.




                                        5

<PAGE>



Employees:  Laredo currently has 25 employees.  Executive  management and office
administration personnel are comprised of 7 individuals. Operations personnel is
made up of 18 individuals, including the Quality Control Director and Production
Manager.  Future  employees  will be hired as dictated by  increases in business
volume.


Item 2.        Description of Property.

Laredo's  operations  are  located  in a  building  that  is  owned  by a  major
shareholder  and his parents.  The lease agreement is for a two year term ending
December  31,  2003.  Under the terms of the lease  agreement,  the monthly rent
charge is approximately  $3,140 ($5,000  Canadian) and Laredo is responsible for
paying  the  property  taxes,  utility  charges,  and any  costs of  repair  and
maintenance.  Any repairs and maintenance expenses paid for by the landlords are
required  to be  reimbursed  by Laredo at cost  plus  15%.  All other  terms are
consistent with those standard to lease agreements.

Both Laredo's administration office and manufacturing  operations are located in
the same premises.  The total square footage of the building is 10,000. The area
used by manufacturing  currently  comprises 3,625 of that total. In management's
opinion,  the space leased is sufficient to support  operational  growth for the
foreseeable future.  Currently,  production is only run on one shift per day for
five days each week.  Production  shifts can be  increased to a maximum of three
shifts  per day for seven  days each week and still be  accommodated  within the
current space.  The only potential  requirement for additional space could arise
due to stock held on hand as business volumes increase.


Item 3.        Legal Proceedings.

None


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

No matters were  submitted  for a vote of security  holders of Laredo during the
fourth quarter of the fiscal year ended December 31, 2001.



                                        6

<PAGE>



                                     Part II


Item 5.        Market for Common Equity and Related Stockholder Matter.

Market Information

Since  December  17,  1999  Laredo's  stock has been  listed for sale on the OTC
Electronic  Bulletin Board under the symbol LRDI. The high and low bid prices of
the Common Stock of Laredo have been as follows:


          Period                                High             Low
-----------------------------              ---------------  --------------
        1st Qtr 2000                       $         4.750  $        1.125
        2nd Qtr 2000                                 2.188           0.875
        3rd Qtr 2000                                 1.750           0.550
        4th Qtr 2000                                 0.490           0.063

        1st Qtr 2001                       $         0.266  $        0.093
        2nd Qtr 2001                                 0.150           0.050
        3rd Qtr 2001                                 0.080           0.020
        4th Qtr 2001                                 0.070           0.020

The above  quotations  reflect  inter-dealer  prices,  without  retail  mark-up,
markdown, or commission and may not necessarily represent actual transactions.

Holders

There were  approximately  65 holders of  Laredo's  32,200,000  shares of common
stock outstanding as of March 19, 2002.

Dividends

Laredo  has not  declared  any  dividends  since  inception,  and has no present
intention of paying any cash  dividends  on its common stock in the  foreseeable
future. The payment by Laredo of dividends,  if any, in the future, rests within
the  discretion of its Board of Directors  and will depend,  among other things,
upon Laredo's earnings, its capital requirements and its financial condition, as
well as other relevant factors.


Item 6.        Management's Discussion and Analysis.

Plan of Operations

The  Company  is  currently  working  on  securing   additional   private  label
manufacturing  contracts.  The key target for private  label sales are wholesale
distributors of health food nutrition

                                        7

<PAGE>



products.  Laredo is also pursuing  opportunities  for direct sales to consumers
through the Internet.

Liquidity and Capital Resources

Laredo's working capital ratio was 0.70 at December 31, 2001 compared to 0.74 at
December 31, 2000. Key contributing factors for this change were the approximate
$69,000  increase  in current  assets,  which  included a decrease  in  accounts
receivable of approximately  $77,000 and an increase  inventory of approximately
$144,000,  and  the  increase  in  accounts  payable  and  accrued  expenses  of
approximately $352,000.

Current liabilities include a $73,502 promissory note payable to a party related
to the major shareholder,  which bears interest at 12% annually. These funds are
repayable on demand however, the request for repayment occurring at this time is
not expected.

Laredo has a small  business  loan  outstanding  with a balance of $89,642 as at
December 31, 2001.  This loan bears  interest at 10.15% and matures on March 15,
2004.

Laredo anticipates  acquiring an additional $300,000 of manufacturing  equipment
in 2002 in order to meet demands for new private label sales.  Plant renovations
costing  $20,000 are also expected to be completed in 2002.  These  expenditures
may be financed  through  private  placement of shares.  Increased sales volumes
will also necessitate  hiring additional  operations,  sales and  administrative
personnel.

Results of Operations


                                                      2001             2000
                                                ---------------  --------------
Sales                                           $     3,045,883  $    2,309,461
Cost of Sales                                         2,346,659       1,559,820
Gross Profit                                            699,224         749,641
Gross Profit Margin                                      22.96%          32.46%
Administrative Expenses                                 654,010         699,994
Administrative Expenses as a % of sales                  21.47%          30.31%

For the year ended December 31, 2001,  sales were $736,000  higher than 2000 and
are expected to continue to grow during  2002.  During 2001 and 2000 55% and 83%
of sales,  respectively  were to Prairie Naturals Inc., a wholesale  distributor
for which  Laredo  manufactures  private  label  products.  Laredo  has a verbal
arrangement to manufacture,  on an as-ordered basis, private label products that
Prairie Naturals Inc.  distributes  under the Prairie Naturals Inc. name. Laredo
also has an exclusive  written  contract to manufacture one product that Prairie
Naturals Inc, distributes for a third party private label.

Operating  margins in 2001 were 22.96% of sales revenue,  9.5% higher than 2000.
Cost of  Sales  includes  the  cost  of raw  materials  used  in  manufacturing,
production labor costs and an applicable share of overhead expenses. General and
administrative  expenses  were  21.47% of sales in 2001,  8.84% lower than 2000.
Management attributes the increases in costs of sales to manufacturing

                                        8

<PAGE>



equipment  downtime  and a  markdown  on  inventory  during  2001.  General  and
administrative cost decreases are due to professional fees relating acquisitions
artificially inflating 2000 expenses.

Laredo anticipates  realizing economies of scale as production volumes increase.
Administrative expenses include advertising expenses which decreased during 2001
but are expected to increase due to Laredo's plan to expand marketing efforts.

Effect of Inflation

Laredo  does  not  anticipate  any  financial  impact,   whether  beneficial  or
detrimental, as a result of inflation.


Item 7.        Financial Statements.

The following financial statements of Laredo are filed under this Item.

Contents                                                                  Page

Independent Auditor's Report..............................................F - 1

Consolidated Balance Sheets
  December 31, 2001 and 2000..............................................F - 2

Consolidated Statements of Operations for the
  Years Ended December 31, 2001 and 2000..................................F - 4

Consolidated Statement of Stockholders' Equity for the
  Years Ended December 31, 2001 and 2000..................................F - 5

Consolidated Statements of Cash Flows for the
  Years Ended December 31, 2001 and 2000..................................F - 6

Notes to Consolidated Financial Statements................................F - 7


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

There have been no  disagreements  with  accountants on accounting and financial
disclosure.


                                        9

<PAGE>



                                    Part III


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

Business Experience Of Management

Richard Pierce, Age 41, President and CEO

Mr. Pierce is the President and Chief Executive Officer of Laredo In his role he
oversees all aspects of operations, administration and financing of Laredo.

Mr. Pierce has almost 16 years experience in the natural health  industry.  From
1997 to 1998,  prior to founding GFR  Nutritionals  Ltd., Mr. Pierce worked as a
Business  Development  Coordinator  for  Integrated  Equity  Management.  He was
involved in marketing bridge financing arrangements to private corporations. For
one year spanning 1996 and 1997, Mr. Pierce worked as an Industry Consultant for
Natraceuticals  Inc. He  specialized  in the  development  and  marketing of new
sports nutrition products.

For ten years prior to joining  Natraceuticals Inc, Mr. Pierce founded and acted
as President  and CEO of NHF  (Nutrion  Health and Fitness  Inc.).  This company
researched,   designed,  formulated,   manufactured  and  marketed  four  sports
nutrition product lines throughout Canada.

In 1983, Mr. Pierce founded  Natural Health  Products and acted as President and
CEO. Natural Health Products designed, formulated, manufactured and marketed the
first sports nutrition line in Atlantic Canada.

Lucretia Schanfarber, Age 49, Director

Ms  Schanfarber  has  served as Vice  President  of Sales and  Marketing  of GFR
Nutritionals since inception.  She has over 26 years of marketing  experience in
all sectors of the Natural Health Products Industry.  She is the host and writer
of the Healthy Stuff with Lucretia  Radio Show and the host and writer of Health
Experts On Call Radio Show of CFUN 1410 AM Vancouver,  British Columbia.  She is
also a contributing  editor to the Encyclopedia of Natural Healing  published by
Alive Books in 1998 and is a regular  contributing  writer to Alive Magazine and
Healthy  Living Guide  Magazine.  From 1993 to 1996,  Ms  Schanfarber  served as
National  Director of Sales and Marketing of Nutrion  Health and Fitness,  Maple
Ridge, British Columbia.

RoseMarie Pierce, Age 52, Director

Ms. Pierce has been owner  operator of  Sunstreams  Health Foods in Calgary ALTA
since 1998,  and from 1995 to 1998 worked as a pharmacist  at various  locations
for Coop Super Markets in Calgary ALTA.


                                       10

<PAGE>



Dr. Mengchi Liu, Director

Dr. Liu has served as Director since July 12, 2000. He is a tenured professor of
computer science at the University of Regina, Saskatchewan, Canada, with over 10
years  experience with 4 universities.  Dr. Liu has a Ph.D and M.Sc in Deductive
Databases  from  the  university  of  Calgary,   Alberta  Canada,  an  M.Eng  in
Distributed  Databases and a B.Sc in Computer  Software.  from Wuhan University,
Hubei, China.

Dr. Tok Wang Ling, Director

Dr. Ling has served as Director  since July 12, 2000. He is a tenured  professor
of computer  science at the National  University  of Singapore  and is also Vice
Dean of Research of the University.  Dr Ling received his Ph.D and M.Math., both
in computer science from Waterloo Unversity (Canada) and B.Sc (First Class Hons)
in mathematics  from Nanyang  Unversity  (Singapore).  He serves on the steering
committee of 3  international  database  conferences,  and has published over 80
papers in international journals and conferences.

Aileen Hongbo Liang, Director

Ms.  Liang has served as Director  since July 12,  2000.  She is  currently  the
Director and General Manager of WST Web Search Technologies, Inc. She has served
as a programmer  analyst,  as a Sessional  Instructor teaching java programming,
and as an Instructor teaching discrete mathematics, at the University of Regina,
Saskatchewan,  Canada.  She has a Masters of Computer Science and a Bachelors of
Computer Science from the University of Regina.

Item 10.       Executive Compensation.

Summary Compensation Table

For the year ended  December 31, 2001 and 2000,  the  President and CEO received
$60,278  ($96,000  Canadian) in  compensation  and $6,028  ($9,600  Canadian) in
Automobile allowance pursuant to an oral agreement.

Laredo has not granted any options to Directors, Officers, or Key Personnel.

Compensation Of Directors

The members of Laredo's Board of Directors are  reimbursed  for actual  expenses
incurred in attending Board meetings.


                                       11

<PAGE>



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

Security  Ownership of Management  and Certain  Beneficial  Owners  holding five
percent or greater of the  32,200,000  shares of common stock  outstanding as of
December 31, 2001.
<TABLE>
<CAPTION>
    Title of            Name and Address               Amount and Nature             % of
      Class            of Beneficial Owner          of Beneficial Ownership         Class
----------------- -----------------------------  -----------------------------  --------------
<S>               <C>                            <C>                            <C>
Common            Richard Pierce (1)                                10,100,000          31.37%
                  President, CEO, Director

                  Mengchi Liu (1)                                   10,000,000          31.06%
                  Director

                  Lucretia Schanfarber (1)                           1,900,000           5.90%
                  Director

                  All officers and Directors                        22,000,000          68.32%
                  as a Group (6 persons)
</TABLE>
(1) c/o Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3

Compliance with Section 16 Reporting:

The above named Executive  Officers and Directors  failed to timely file Forms 3
Initial Statement of Ownership and Form 5 Annual Statement of Ownership. None of
the above named Executive Officers have entered into transactions  requiring the
filing  of a Form 4 Changes  in  Ownership.  All  holdings  of common  stock and
options to acquire common stock are accurately reported herein.

Item 12.       Certain Relationships and Related Transactions.

        As at December 31, 2001 and 2000, accounts payable include approximately
$8,322  ($13,254  Canadian)  and  $40,096  ($60,151  Canadian)  owing to a major
shareholder.

Current liabilities include a $73,502 promissory note payable to a party related
to the major shareholder,  which bears interest at 12% annually. These funds are
repayable on demand however, the request for repayment occurring at this time is
not expected.

Laredo's  operations  are  located  in a  building  that  is  owned  by a  major
shareholder  and his parents.  The lease agreement is for a two year term ending
December  31,  2003.  Under the terms of the lease  agreement,  the monthly rent
charge  is  approximately  $37,674  ($60,000  Canadian)  per year and  Laredo is
responsible for paying the property  taxes,  utility  charges,  and any costs of
repair and  maintenance.  Any repairs and  maintenance  expenses paid for by the
landlords  are required to be  reimbursed  by Laredo at cost plus 15%. All other
terms are consistent with those standard to lease agreements.


                                       12

<PAGE>



Laredo  has  also  entered  into a lease  agreement  for  certain  manufacturing
equipment with the Company's  major  shareholder  and other parties.  The rental
charges are approximately  $31,160 ($49,625  Canadian) per year and expires June
30, 2005.

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

The following documents are filed as part of this report under Part II, Item 8:

Exhibits as required by Item 601 of Regulation S-B

Exhibit Number        Description

        3.1           Articles of Incorporation as amended (1)

        3.2           Bylaws (1)


(1)  Incorporated by reference to Laredo's report on Form 10SB12G dated November
     5, 1999

(b) Reports of Form 8-K

No report on Form 8-K was filed during the quarter ended December 31, 2001.



                                       13

<PAGE>


                                   SIGNATURES

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

LAREDO INVESTMENT CORP.


Dated: March 28, 2002



/s/ RICHARD PIERCE
------------------
Richard Pierce, President and C.E.O.



/s/ LUCRETIA SCHANFARBER
------------------------
Lucretia Schanfarber, Director



/s/ ROSEMARI PIERCE
-------------------
RoseMari Pierce, Director

                                       14

<PAGE>

                             LAREDO INVESTMENT CORP.
                                AND SUBSIDIARIES

                                       -:-

                          INDEPENDENT AUDITOR'S REPORT

                           DECEMBER 31, 2001 AND 2000





<PAGE>






                                    CONTENTS


                                                                           Page

Independent Auditor's Report..............................................F - 1

Consolidated Balance Sheets
  December 31, 2001and 2000...............................................F - 2

Consolidated Statements of Operations for the
  Years Ended December 31, 2001 and 2000..................................F - 4

Consolidated Statement of Stockholders' Equity for the
  Years Ended December 31, 2001 and 2000..................................F - 5

Consolidated Statements of Cash Flows for the
  Years Ended December 31, 2001 and 2000..................................F - 6

Notes to Consolidated Financial Statements................................F - 7



<PAGE>









                          INDEPENDENT AUDITOR'S REPORT


Laredo Investment Corp. And Subsidiaries


        We have audited the accompanying  consolidated  balance sheets of Laredo
Investment  Corp.  and  Subsidiaries  as of December 31, 2001 and 2000,  and the
related  consolidated  statements of operations,  cash flows, and  stockholders'
equity for the two years ended December 31, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

        In our  opinion,  the  financial  statements  referred to above  present
fairly, in all material  respects,  the financial  position of Laredo Investment
Corp. and  Subsidiaries as of December 31, 2001 and 2000, and the results of its
operations  and its cash  flows for the two years  ended  December  31,  2001 in
conformity with accounting principles generally accepted in the United States of
America.

                                                   Respectfully submitted



                                                   /S/ ROISON, HILL & CO.
                                                   Certified Public Accountants

Salt Lake City, Utah
March 19, 2002


                                      F - 1

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                        December 31,
                                                               -------------------------------
                                                                    2001             2000
                                                               ---------------  --------------
ASSETS
Current Assets:
<S>                                                            <C>              <C>
Cash and cash equivalents                                      $             -  $            -
Receivables                                                            581,672         658,834
Inventory                                                              576,050         432,276
Prepaid expense                                                          3,956           1,664
                                                               ---------------  --------------

     Total Current Assets                                            1,161,678       1,092,774
                                                               ---------------  --------------

Fixed Assets:
Manufacturing Equipment                                                577,204         456,025
Office Equipment                                                        21,095          16,747
Furniture & Fixtures                                                     3,525           2,752
Leasehold improvements                                                  41,814          41,814
                                                               ---------------  --------------
                                                                       643,638         517,338
Less Accumulated Depreciation                                         (105,882)        (69,332)
                                                               ---------------  --------------
                                                                       537,756         448,006
                                                               ---------------  --------------

Other Assets:
Intangible Assets, Net                                                  11,667          21,667
                                                               ---------------  --------------

     TOTAL ASSETS                                              $     1,711,101  $    1,562,447
                                                               ===============  ==============
</TABLE>


                                      F - 2

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)
<TABLE>
<CAPTION>
                                                                        December 31,
                                                               -------------------------------
                                                                    2001             2000
                                                               ---------------  --------------
LIABILITIES
Current Liabilities:
<S>                                                            <C>              <C>
Accounts Payable and Accrued Liabilities                       $       808,641  $      456,171
Bank Overdraft                                                          71,071         289,943
Bank Line                                                               43,953          43,328
Short-Term Loans & Notes Payable                                       615,011         553,802
Related Party Loans                                                     73,502          69,248
Shareholder Payables                                                     8,322          40,096
Current Portion Long-Term Debt                                          41,068          20,951
                                                               ---------------  --------------

     Total Current Liabilities                                       1,661,568       1,473,539
                                                               ---------------  --------------

Long-Term Debt                                                          67,808          95,655
Lease Obligations                                                       63,859               -
                                                               ---------------  --------------

     Total Liabilities                                               1,793,235       1,569,194
                                                               ---------------  --------------

STOCKHOLDERS EQUITY
Common Stock - $0.001 par value, 100,000,000
   shares authorized, 100 and 32,200,000 shares
   issued and outstanding at December 31, 2001 and 2000.                32,200          32,200
Additional Paid-in Capital                                              28,150          28,150
Currency Translation Adjustment                                         28,262           5,155
Retained Earnings (Deficit)                                           (170,746)        (72,252)
                                                               ---------------  --------------

     Total Stockholders' Equity                                        (82,134)         (6,747)
                                                               ---------------  --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $     1,711,101  $    1,562,447
                                                               ===============  ==============
</TABLE>




          The  accompanying  notes  are an  integral  part  of  these  financial
statements.

                                      F - 3

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                     For The Year Ended
                                                                        December 31,
                                                               -------------------------------
                                                                    2001             2000
                                                               ---------------  --------------
REVENUES
<S>                                                            <C>              <C>
Sales                                                          $     3,045,883  $    2,309,461
Cost of Sales                                                        2,346,659       1,559,820
                                                               ---------------  --------------
Gross Margin                                                           699,224         749,641

EXPENSES
   Selling & Marketing                                                  39,396          47,656
   General & Administrative                                            614,614         652,338
                                                               ---------------  --------------
                                                                       654,010         699,994
                                                               ---------------  --------------

Net Income from Operations                                              45,214          49,647
                                                               ---------------  --------------

Other Income (Expense)
   Interest, Net                                                       (85,400)        (66,658)
   Write Down of Assets                                                      -         (20,350)
   Currency Exchange, Net                                              (60,039)        (50,021)
                                                               ---------------  --------------

Net Income (Loss) Before Income Taxes                                 (100,225)        (87,382)
Income Tax Expense                                                       1,731         (11,588)
                                                               ---------------  --------------

NET INCOME (LOSS)                                              $       (98,494) $      (98,970)
                                                               ===============  ==============
</TABLE>










          The  accompanying  notes  are an  integral  part  of  these  financial
statements.

                                      F - 4

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                                     Cumulative        Retained
                                                            Common Stock               Paid-In       Translation      Earnings /
                                                        Shares       Par Value         Capital       Adjustment       (Deficit)
                                                    -------------- --------------  --------------- ---------------  --------------
<S>                                                 <C>            <C>             <C>             <C>              <C>
Balance at December 31, 1999                                     1 $            1  $             - $             -  $       26,718

January 17, 2000, Shares issued for cash                        99              -                -               -               -
January 21, 2000, Shares Cancelled and
   Shares issued to Acquire GFR Nutritionals, Ltd.      28,999,900         28,999            1,350               -               -

February 15, 2000, Shares issued for intangibles           200,000            200           19,800               -               -

July 12, 2001, Shares Cancelled and                                                                              -               -
Shares issued to Acquire WST Web Search
Technologies, Inc.                                       3,000,000          3,000            7,000               -               -

Currency Translation Adjustment                                  -              -                -           5,155               -

Net Loss                                                         -              -                -               -         (98,970)
                                                    -------------- --------------  --------------- ---------------  --------------

Balance at December 31, 2001                            32,200,000         32,200           28,150           5,155         (72,252)
                                                    ============== ==============  =============== ===============  ==============

Currency Translation Adjustment                                  -              -                -          23,107               -

Net Loss                                                         -              -                -               -         (98,494)
                                                    -------------- --------------  --------------- ---------------  --------------

Balance at December 31, 2001                            32,200,000 $       32,200  $        28,150 $        28,262  $     (170,746)
                                                    ============== ==============  =============== ===============  ==============
</TABLE>

          The  accompanying  notes  are an  integral  part  of  these  financial
statements.

                                      F - 5

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                     For The Year Ended
                                                                        December 31,
                                                               -------------------------------
                                                                    2001             2000
                                                               ---------------  --------------
<S>                                                            <C>              <C>
Cash Flows From Operating Activities
   Net income (loss) for the period                            $       (98,494) $      (98,970)
Adjustments to reconcile net loss to net cash
   Provided by operating activities
     Currency Translation Adjustment                                    23,106           5,155
     Depreciation and Amortization                                      46,550          18,741
     Write Down of Assets                                                    -          20,350
     Decrease (Increase) in Receivables                                 77,162        (466,495)
     Decrease (Increase) in Inventory                                 (143,774)       (292,256)
     Decrease (Increase) in Prepaid Expense                             (2,292)           (807)
     Increase in Accounts Payable & Accrued Liabilities                394,079         356,132
     Increase (Decrease) in Bank Overdraft                            (218,873)        270,764
                                                               ---------------  --------------
Net Cash Provided by (Used in) Operating Activities                     77,464        (187,386)
                                                               ---------------  --------------

Cash Flows From Investing Activities
   Purchase of Property and Equipment                                  (33,454)       (289,614)
                                                               ---------------  --------------
Net Cash Used by Investing Activities                                  (33,454)       (289,614)
                                                               ---------------  --------------

Cash Flows From Financing Activities
   Proceeds/Payments on Bank Line                                          625          43,328
   Payments on Shareholder Payables                                    (31,774)        (61,224)
   Proceeds from Short-term Notes Payable                               16,625         514,162
   Principle Payment on Long-term Debt                                 (19,735)        (19,266)
   Principle Payment on Capital Lease Obligations                       (9,751)              -
                                                               ---------------  --------------
Net Cash Provided by (Used in) Financing Activities                    (44,010)        477,000
                                                               ---------------  --------------

Increase (Decrease) in Cash                                                  -               -
Cash at beginning of period                                                  -               -
                                                               ---------------  --------------
Cash at End of Period                                          $             -  $            -
                                                               ===============  ==============


Supplemental Disclosure of Interest and Income Taxes Paid
   Interest paid during the period                             $        53,643  $       19,257
                                                               ===============  ==============
   Income taxes paid during the period                         $             -  $        2,781
                                                               ===============  ==============

Supplemental Disclosure of Non-cash Investing and Financing Activities:
   Equipment acquired through Capital Lease                    $        92,845  $            -
   Stock issued for Intangible Assets                          $             -  $       30,000
                                                               ===============  ==============
</TABLE>

          The  accompanying  notes  are an  integral  part  of  these  financial
statements.

                                      F - 6

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        This summary of  accounting  policies for Laredo  Investment  Corp.  and
Subsidiaries  ( the  "Company")  is  presented  to assist in  understanding  the
Company's  financial  statements.  The accounting  policies conform to generally
accepted  accounting  principles  and  have  been  consistently  applied  in the
preparation of the financial statements.

Organization and Basis of Presentation

        The  Company was  incorporated  under the laws of the State of Nevada on
December 18, 1996. The Company ceased all operating activities during the period
from December 18, 1996 to July 9, 1999 and was  considered  dormant.  On July 9,
1999,  the Company  obtained a Certificate  of renewal from the State of Nevada.
From July 9, 1999 to January 21, 2000, the Company was in the development stage.

        On January 21,  2000,  the  CompanyLaredo  entered  into an  Acquisition
Agreement with GFR Nutritionals,  Ltd., a British Columbia  corporation,  (GFR),
Richard  Pierce and  Lucretia  Schanfarber  (the GFR Majority  Shareholders)  to
acquire their shares representing 100% of the outstanding common stock of GFR in
exchange for 19,000,000 newly issued shares of Laredo's restricted common stock.
The transaction was recorded as a reverse  acquisition.  GFR was incorporated in
March 1997 as Helm  Developments Ltd. In June 1998, the Company formally changed
its name to GFR  Nutritionals  Ltd. GFR was 100% owned by the President and CEO,
Richard  Pierce from inception  until January 17, 2000,  when a 10% interest was
acquired by Lucretia  Schanfarber.  Business  operations  began in October  1998
after acquiring manufacturing equipment and arranging to manufacture nutritional
supplements under a private label contract.

        On June 21, 2000, the Company entered into an Acquisition Agreement with
Nutritionals (USA) Direct.Com, a Washington corporation,  (NDC), to acquire 100%
of the outstanding  common stock of NDC in exchange for $1,000.  The transaction
has been recorded as a purchase.

        On July 12, 2000, the Company entered into an Acquisition Agreement with
WST Web Search Technologies, Inc., a Saskatchewan corporation, (WST), to acquire
100% of the  outstanding  common stock of WST in exchange for  10,000,000  newly
issued shares of the Company's restricted common stock. The transaction has been
recorded as a purchase.

         On November 1, 2000, the Company entered into an Acquisition  Agreement
with R & L  Health,  Inc.  (formerly  Prohealth  Nutritionals  Ltd.),  a British
Columbia corporation,  (R&L), to acquire 100% of the outstanding common stock of
R&L in exchange for $0.01. The transaction has been recorded as a purchase.

                                      F - 7

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Principles of Consolidation

        The consolidated financial statements for December 31, 2001 and the year
ended include the accounts of Laredo  Investment  Corp. and the following wholly
owned subsidiaries:

*       GFR Nutritionals, Ltd., a British Columbia corporation
*       Nutritionals(USA) Direct.com, a Washington corporation
*       WST Web Search Technologies, Inc., a Sasketchewan corporation
*       R & L Health, Inc.,  a British Columbia corporation

Nature of Business

        The Company  specializes in  formulating,  blending,  encapsulating  and
packing  nutritional  products.  The  Company's  operations  are  located in the
province of British Columbia, Canada.

Cash and Cash Equivalents

        For purposes of the statement of cash flows,  the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Inventories

        Raw  materials  inventory is stated at a lower of weighted  average cost
and replacement value. Inventories of work in progress is stated at the lower of
weighted average cost and net realizable value.


                                      F - 8

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Depreciation

        Fixed  assets  are  stated at cost.  Depreciation  and  amortization  is
calculated  on a  straight-line  basis over the  estimated  useful  lives of the
assets as follows:


                 Asset                        Rate
---------------------------------------  --------------

Manufacturing equipment                     10-20 years
Furniture and fixtures                        5-7 years
Office equipment                              3-5 years
Leasehold improvements                    Term of lease

        Maintenance  and  repairs  are charged to  operations;  betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated  depreciation  thereon are eliminated  from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

        The Company has adopted the Financial  Accounting  Standards  Board SFAS
No., 121,  "Accounting  for the  Impairment of Long-lived  Assets." SFAS No. 121
addresses  the  accounting  for (i)  impairment of  long-lived  assets,  certain
identified  intangibles and goodwill  related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable  intangibles to be disposed
of.  SFAS No. 121  requires  that  long-lived  assets and  certain  identifiable
intangibles  be held and used by an entity be reviewed for  impairment  whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be  recoverable.  If the sum of the expected  future cash flows from the
used of the  asset  and its  eventual  disposition  (un-discounted  and  without
interest  charges) is less than the carrying  amount of the asset, an impairment
loss is recognized.

Revenue recognition

Revenue  is  recognized  from  sales  of  product  at the  time of  shipment  to
customers.


                                      F - 9

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Foreign currency remeasureent/translation

        The  Company's  primary  functional  currency  is the  Canadian  dollar.
Monetary  assets  and  liabilities  resulting  from  transactions  with  foreign
suppliers and customers are  remeasured at year-end  exchange  rates.  All other
assets,  liabilities,  and  stockholders'  equity are  remeasured  at historical
exchange rates for past  transactions and at year-end exchange rates for current
and future  transactions.  Revenue and expense  accounts are  remeasured  at the
average exchange rates in effect during the year, except those related to assets
and   liabilities,   which  are   remeasured  at  historical   exchange   rates.
Remeasurement gains and losses are included in income.

        The  Company's  reporting  currency is the U.S.  dollar.  Balance  sheet
accounts  are  translated  at  year-end  exchange  rates and revenue and expense
accounts are translated at the average exchange rates in effect during the year.
Translation   gains  and  losses  are  included  as  a  separate   component  of
stockholders' equity.

Pervasiveness of Estimates

        The  preparation  of financial  statements in conformity  with generally
accepted  accounting  principles  required  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.

Concentrations of Credit Risk

        The  Company  has no  significant  off-balance-sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.

Income Taxes

        The Company  accounts for income taxes under the  provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income  tax  assets  and   liabilities   for  the  expected  future  income  tax
consequences,  based on enacted tax laws, of temporary  differences  between the
financial reporting and tax bases of assets and liabilities.


                                     F - 10

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Reclassifications

        Certain   reclassifications   have  been  made  in  the  2000  financial
statements to conform with the 2001 presentation.

Earnings (Loss) per Share

        The  reconciliations  of the  numerators and  denominators  of the basic
income (loss) per share computations are as follows:
<TABLE>
<CAPTION>
                                                                                  Per-Share
                                                   Income          Shares           Amount
                                                   ------          ------           ------
                                                 (Numerator)    (Denominator)

                                                    For the year ended December 30, 2000
Basic & Diluted Loss per Share
<S>                                            <C>                  <C>         <C>
Income to common shareholders                  $       (98,970)     29,008,224  $            -
                                               =============== ===============  ==============

                                                    For the year ended December 30, 2001
Basic & Diluted Income per Share
Loss to common shareholders                    $       (98,494)     32,200,000  $            -
                                               =============== ===============  ==============
</TABLE>
        The effect of outstanding common stock equivalents are anti-dilutive for
December 31, 2001 and are thus not considered.

Stock Compensation for Non-Employees

        The Company accounts for the fair value of its stock compensation grants
for  non-employees in accordance with FASB Statement 123. The fair value of each
grant is equal to the market price of the  Company's  stock on the date of grant
if an  active  market  exists  or  at a  value  determined  in  an  arms  length
negotiation between the Company and the non-employee.





                                     F - 11

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 2 - INVENTORY

        As of December 31, 2001 and December 31, 2000, Inventory consists of the
following:


                                        2001            2000
                                   --------------  --------------
Raw materials                      $      491,764  $      414,010
Work in process                            84,286          18,266
                                   --------------  --------------
Total Inventory                    $      576,050  $      432,276
                                   ==============  ==============


NOTE 3 - INCOME TAXES

        As  of  December  31,  2001,  the  Company  had  a  net  operating  loss
carryforward for income tax reporting  purposes of  approximately  $150,000 that
may be offset against future taxable income through 2021. Current tax laws limit
the amount of loss  available to be offset  against future taxable income when a
substantial  change in  ownership  occurs.  Therefore,  the amount  available to
offset future taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a 50% or greater
chance the  carryforwards  will expire  unused.  Accordingly,  the potential tax
benefits of the loss  carryforwards  are offset by a valuation  allowance of the
same amount.

NOTE 4 - RELATED PARTY TRANSACTIONS

        As  at  December  31,  2001  and  2000,   shareholder  payables  include
approximately  $8,322 ($13,254 Canadian) and $40,096 ($60,151 Canadian) owing to
a major shareholder.

NOTE 5 - SHORT-TERM OBLIGATIONS
<TABLE>
<CAPTION>
                                                                December 31,     December 31,
                                                                    2001             2000
                                                               ---------------  --------------
<S>                                                            <C>              <C>
Promissory note, repayable to related parties upon
   demand, including interest at 12%                           $        73,502  $       69,248
Working Capital Loans, repayable in stock or options upon
    demand including interest at 1% over prime (9.5%)                  615,011         553,802
                                                               ---------------  --------------

Total                                                          $       688,513  $      623,050
                                                               ===============  ==============
</TABLE>


                                     F - 12

<PAGE>



                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 5 - SHORT-TERM OBLIGATIONS (Continued)

        The Company has a line of credit with a bank with a total  amount  owing
of $43,953 and $43,328 as of December 31, 2001 and 2000 respectively.  This line
carries  an  interest  rate of Prime  Plus 1  (approximately  5.5%)  and a total
available credit of $94,185  ($150,000  Canadian) at December 31, 2001. The line
is secured by certain manufacturing equipment of the Company.

NOTE 6 - LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                December 31,     December 31,
                                                                    2001             2000
                                                               ---------------  --------------
<S>                                                            <C>              <C>
TDBank Small  Business  loan,  repayable
  in monthly  instalments  $2,495 ($3,973 Canadian),
  including interest at 10.15%,
  maturing March 15, 2004, secured by certain
  manufacturing  equipment of the Company                      $        89,642  $      116,606

Less current portion of long-term debt                                  21,834          20,951
                                                               ---------------  --------------

                                                               $        67,808  $       95,655
                                                               ===============  ==============
</TABLE>
        Principal  payments  due on  long-term  debt for each of the five  years
subsequent to December 31, 2001 and thereafter are as follows:


     Year ending:           Amount
----------------------  --------------

         2002           $       21,834
         2003                   24,156
         2004                   26,725
         2005                   16,927
         2006                        -
      Thereafter                     -
                        --------------
        Total           $       89,642
                        ==============






                                     F - 13

<PAGE>


                    LAREDO INVESTMENT CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (Continued)


NOTE 7 - ECONOMIC DEPENDENCE

        The Company sells a substantial  portion of its product to one customer.
During  2001  and  2000,  sales  to  that  customer   aggregated  55%  and  83%,
respectively.  As of December 31, 2001,  amounts due from that customer included
in accounts receivable were 45% and 64%, respectively.  Future operations of the
Company  depend  on  continuation  of the  manufacturing  arrangement  with that
customer.

NOTE 8 - COMMITMENTS

        The Company has entered into a lease agreement for its manufacturing and
office facilities and certain  manufacturing  equipment with the Company's major
shareholder  and other  parties.  The rental charges are  approximately  $37,674
($60,000 Canadian) per year for real property and $31,160 ($49,625 Canadian) per
year for equipment.  The real property lease expires  December 31, 2003, and the
equipment lease expires June 30, 2005.

        The minimum  future lease  payments under these leases for the next five
years are:


   Twelve Months                                 Real Property      Equipment
   Ended June 30:
--------------------                             -------------------------------
        2002                                     $       37,674  $        31,160
        2003                                             37,674           31,160
        2004                                                  -           31,160
        2005                                                  -           15,580
        2006                                                  -                -
                                                 --------------  ---------------
        Total minimum future lease payments      $       75,348  $       109,060
                                                 ===============================

        The  leases  generally  provides  that  insurance,  maintenance  and tax
expenses  are  obligations  of the  Company.  It is expected  that in the normal
course of business,  leases that expire will be renewed or replaced by leases on
other properties.

NOTE 9 - STOCK INCENTIVE PLAN

        The Board of Directors has  authorized  and the Company has  established
the 2000  Incentive  and  Non-qualified  Stock Option  Plan.  Under the plan the
Company is authorized to issued up to 6,000,000  shares of the Company's  common
stock with such  exercise  price and vesting  periods as the Board of  Directors
deems to be in the best  interest of the Company.  As of December  31, 2001,  no
option have been granted.

                                     F - 14