FORM 10-KSB
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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



                         Commission file number 001-14873

                               PNW Capital, Inc.
                               -----------------
                 (Name of small business issuer in its charter)

        Delaware                                    06-1474412
        --------                                    ----------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

One Dundas Street West, Suite 2500, Toronto, Ontario, Canada M5G 1Z3
--------------------------------------------------------------------
(Address of principal executive offices)

Issuer's telephone number:             (416) 999-3188
                                      -----------------
Securities registered under Section 12(b) of the Exchange Act: None
                                                               -----

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
no par value

(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 issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days.

        Yes X     No
           ----       ----

Check 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 issuer'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: $0 ---

As of December 31, 2001, 39,268,800 shares of the Company's Common Stock, no par
value per share, were held by  non-affiliates,  which, based upon market closing
price on December 31, 2001, of $.0055 had a value of $215,978.

The  number  of  shares  of Common  Stock of the  registrant  outstanding  as of
December  31, 2001,  were  100,000,000.  A reverse  split of one for one hundred
common shares became effective on January 7, 2002.

                                       1


<PAGE>


                                TABLE OF CONTENTS

PART I                                                                     PAGE

     Item 1.   Description of Business                                         3
     Item 2.   Description of Property                                         5
     Item 3.   Legal Proceedings                                               5
     Item 4.   Submission of Matters to a Vote of Security Holders             6


PART II

     Item 5.   Market for Common Equity and Related Stockholder Matters        6
     Item 6.   Management's Discussion and Analysis or Plan of Operation       7
     Item 7.   Financial Statements                                            8
     Item 8.   Changes in and Disagreements With Accountants on Accounting     8
               and Financial Disclosure


PART III

     Item 9.   Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act               9
     Item 10.  Executive Compensation                                         11
     Item 11.  Security Ownership of Certain Beneficial Owners and Management 13
     Item 12.  Certain Relationships and Related Transactions                 13
     Item 13.  Exhibits and Reports on Form 8-K                               15


SIGNATURES                                                                    16

                                       2


<PAGE>


PART I

Item 1 - Description of Business

Background

     The Company is a successor  registrant  pursuant to Section  12(g) 3 of the
Securities  Exchange Act of 1934, by virtue of a statutory merger of the Parent,
Winchester  Mining  Corp.,  a  Delaware   corporation,   and  its  wholly  owned
subsidiary,  Hi-Plains  Energy Corp.,  a Wyoming  corporation,  with  Winchester
Mining  Corporation  being the  survivor.  There was no change to the issued and
outstanding shares of Winchester mIning corporation, and all shares of Hi-Plains
Energy Corp. were retired by virtue of the merger.

     On May 15,  2000,  Winchester  Mining  Corp.  completed  a  Share  Purchase
Agreement  with  shareholders  of Hi-Plains  Energy Corp.  in  which  Winchester
Mining Corp., a Delaware corporation, acquired all 780,000 shares outstanding of
the Registrant for the purposes of  accomplishing  a Merger of Hi-Plains  Energy
Corp. and Winchester Mining Corp. The Merger was completed on May 15, 2000.

     In 1996 the Company was listed on the OTCBB with the symbol WNCR. The prior
management raised funds for a mining property in the Northwest Territories.  The
budget was spent and the  Company  remained  inactive  until  March of 1999.  In
September of 1999, the Company raised several hunderd thousand dollars to invest
in online gambling.  The Company has since divested itself of these  acquistions
due to the questionable nature of the online gambling industry.  In September of
1999,  Wayne Miller became  president of Winchester  Mining,  Corp.  The Company
commissioned Digicorp of Vancouver British Columbia,  Canada to develop websites
for the Company:  Hollwoodmall.net and Pacificnorthwestmall.net.  They have been
under development since October of 1999. Radiant  Communication of Vancouver was
developing and managing these websites until work was terminated in late 2000.

     Bullseye Communication Group was hired to develop an overall marketing plan
for the Company and the two "mall" websites.  All website and "mall" development
work was  terminated in the fall fo 2000,  due to lack of capital and difficulty
of attacting business.

     In fall of 2000 the  Company  acquired  100% of the issued and  outstanding
stock of PB&J, a newly formed Colorado  Corporation upon issuance of 47,460,000
shares of common stock to the  principals of PB&J, who became the management and
Directors of PNWC.

                                       3

<PAGE>

     PB&J, the now wholly owned  subsidiary had no prior business  operations in
the prior two years,  although the  management did develope the concept and test
market the product on a limited  local basis.  The product has never been placed
in production for significant marketing effort due to lack of capital.

     PB&J had developed an innovative magnetized packaging and dispensing system
for  plastic  bags and dryer  sheets for locaton on kitchen  refrigerators.  The
products offer enhanced  convenience and managemnet  believes represent a timely
innovation for the industry.

On January 31, 2002, PNW Capital, Inc. ("PNW " or the "Company"), entered into a
definitive  acquisition  agreement to acquire Industrial  Minerals  Incorporated
("IMI"), a private Nevada  corporation,  owner of certain mineral leases located
in the  Townships  of Head,  Clara and Maria in the  County of  Renfrew  and the
Province of Ontario, Canada.

Under the  terms of the  acquisition  agreement,  PNW will  exchange  a total of
31,500,000 of its common stock for 90% of the issued and  outstanding  shares of
IMI. On  February  20, 2002 the Company  received  executed  documents  from the
participating  shareholders of IMI representing  31,511,750  common shares (90%)
for the  exchange of shares  ofr common  shares of the  Company on a one for one
basis.

IMI will become a wholly owned  subsidiary  of PNW, PNW currently has no revenue
producing  operations.  The stockholders of IMI will become stockholders of PNW,
and  their  rights as  stockholders  will be  governed  by the PNW  articles  of
incorporation and bylaws,  as currently in effect,  and the laws of the State of
Delaware.  Following the  acquisition,  PNW intends to carry on IMI's operations
under  the  name  Industrial  Minerals  Incorporated.  PNW's  current  board  of
directors will resign and a new board of directors will be appointed  subject to
Section 14f Notice Shareholders.

The PNW board of  directors  approved  the  acquisition  agreement  with IMI and
authorized  the  issuance  of the  exchange  shares  totalling  31,511,750  in a
transaction  exempt from registration  under Section 4(2), 4(6) and Regulation S
as applicable because the board of directors believes that this acquisition will
be to the benefit of shareholders.


                                       4
<PAGE>

Certain Risks

        The Company's  business is subject to numerous  risk factors,  including
the following:

     No Operating History or Revenue and Minimal Assets.  The Company has had no
operating history nor any revenues or earnings from operations.  The Company has
no  significant  assets  or  financial  resources.  The  Company  will,  in  all
likelihood,  incur operating expenses without  corresponding  revenues, at least
until the consummation of a business combination. This may result in the Company
incurring  a net  operating  loss which  will  increase  continuously  until the
Company  can  consummate  a  business  combination  with a  profitable  business
opportunity.  There is no assurance that the Company can successfully  carry any
business plan.

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

        The  Company has no  properties  and at this time has no  agreements  to
acquire any  properties.  The Company  intends to attempt to acquire assets or a
business in exchange for its  securities  which assets or business is determined
to be desirable for its objectives.

     The Company's  mailing  address is 12925 W.  Arlington Rd.,  Littleton,  CO
80217.

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

        The Company is not a party to any legal proceedings, nor does management
believe that any such proceedings are contemplated.

                                       5
<PAGE>

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

     No  matters  were  submitted  by the  Company  to a vote  of the  Company's
shareholders through the solicitation of proxies or otherwise, during the fiscal
year  covered by this  report,  except  that in  December  2001,  a majority  of
shareholders  of issued  and  outstanding  shares  executed  a written  consent,
pursuant to Delaware  General  Corporation Law, by which approval was given to a
one for 100 share reverse split  (consolidation)  of the issued and  outstanding
stock of the Company.  Effective  date of reverse  split was January 7, 2002. No
shareholder was reduced to less than fifty shares.

PART II

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

               (a)    The Registrant's common stock is traded in the over-the-
counter  market under the symbol PNWC (OTC  Bulletin  Board  Symbol).  The table
below sets forth the high and low bid prices of the  Registrant's  common  stock
for the periods indicated. Such prices are inter-dealer prices, without mark-up,
mark-down or commissions and do not necessarily represent actual sales.


             2000                                  High Bid      Low Bid
             ----                                  --------      -------
          1st quarter                                 .31          .13
          2nd quarter                                 .23          .07
          3rd quarter                                 .22          .12
          4th quarter                                 .087         .015


             2001                                  High Bid      Low Bid
             ----                                  --------      -------
          1st quarter                                 .31          .13
          2nd quarter                                 .23          .07
          3rd quarter                                 .14          .04
          4th quarter                                 .095         .0055


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

        The Company has not  declared or paid any cash  dividends  on its common
stock and does not anticipate paying dividends for the foreseeable future.

     (b) As of December 31, 2001,  there were 81  shareholders  of record of the
Registrant's common stock.

     (c) The Registrant has neither  declared nor paid any cash dividends on its
common stock,  and it is not anticipated that any such dividend will be declared
or paid in the foreseeable future.

                                       6
<PAGE>

        Effective  August 11, 1993, the Securities and Exchange Commission  (the
"Commission")  adopted Rule 15g-9,  which established the definition of a "penny
stock," for purposes relevant to the Company,  as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions.  For any transaction involving a
penny  stock,  unless  exempt,  the rules  require:  (i) that a broker or dealer
approve a person's account for transactions in penny stocks;  and (ii) that the
broker  or  dealer  receive  from  the  investor  a  written  agreement  to  the
transaction,  setting  forth the  identity and quantity of the penny stock to be
purchased.  In order to approve a person's  account for  transactions  in penny
stocks,  the  broker  or  dealer  must  (i)  obtain  financial  information  and
investment  experience and objectives of the person;  and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient  knowledge and experience in financial matters to
be capable of evaluating the risks of transactions  in penny stocks.  The broker
or dealer  must also  deliver,  prior to any  transaction  in a penny  stock,  a
disclosure  schedule  prepared  by the  Commission  relating  to the penny stock
market,  which,  in highlight form, (i) sets forth the basis on which the broker
or dealer made the suitability determination; and (ii) states that the broker or
dealer  received a signed,  written  agreement  from the  investor  prior to the
transaction.  Disclosure  also has to be made  about the risks of  investing  in
penny  stock in both  public  offerings  and in  secondary  trading,  and  about
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.

Holders

        There are approximately 81 record holders of the Company's Common Stock,
not including shares held in "street" name.

Dividends

        The Company has not paid any  dividends to date,  and has no plans to do
so in the immediate future.

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

RESULTS OF OPERATIONS FOR 2001 COMPARED TO 2000

The Company had no revenues in 2001 and 2000.  The Company  incurred  operations
expenses  totaling $67,371 in 2001 compared to $695,538 in 2000 of which $60,000
in 2001 and $293,003 in 2000 were consulting fees. In 2000, $306,196 was written
off as impaired assets due to non-functional website investments.  The loss from

                                       7
<PAGE>

operations  was ($67,251) in 2001 and ($694,758) in 2000. The loss per share was
nominal in 2001 and ($1.31) in 2000.

The  Company's  primary  elements  of  expenses  in 2001  were  management  and
consulting  fees of $60,000 compared to $293,003   in 2000;  impairment  of long
term assets  (website  development)  of $306,176  compared to none in 2001;  and
gereral and administrative expenses of $7,371 compard to $113,606 in 2000.

The  Company  had no  established  business  at year end and  needed  capital to
commence its business  plan to produce and market  dispensers.  Until and unless
the Company  obtains  sufficient  capital to commence  and  establish a business
generating signigficant revenues, the Company will continue to experience losses
in the future, comoparable to or greater than losses for 2001 and 2000.

     Subsequent to year end, the Company entered into a Share Exchange Agreement
with  shareholders  of  Industrial  Minerals,  Inc.  (IMI)  whereby  the Company
acquired  90% of the stock  ownership  of IMI in  consideration  of  Issuance of
31,570,000  shares of common  stock.  IMI became a subsidiary  of the Company at
such time.


LIQUIDITY AND CAPITAL RESOURCES

At year end,  the company had minimal  cash and needed cash  infusions  or loans
from  shareholders  for even  limited  operations.  The  Company  has no capital
resources other than its stock with which to seek capital.

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

        The  response to this item is  submitted  as a separate  section of this
report beginning on page F-1.

Item 8 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
------------------------------------------------------------------------------
Financial Disclosure
----------------------

     In  January  2001,  the  Company  engaged  Michael  Johnson & Co.,  Denver,
Colorado,  as its new  principal  independent  accountant to audit the Company's
financial statements.  The prior accountant was James E. Scheifley & Associates,
P.C.  There  has  been  no  disagreement   between  accountants   regarding  the
application of accounting  principles to any specific  completed or contemplated
transaction, or as to policies as to accounting.

                                       8

<PAGE>

                                    PART III

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

 The current  Executive officers of Registrant at December 31, 2001 are:

         Daniel C. Silva                President
         Joseph L. McFarland, Jr.       Secretary

The persons who are directors of the Registrant Registrant at December 31, 2001
are:

         Name                               Age
         ----                               ---
         Daniel Silva                        39
         Joseph L. McFarland Jr.             41


         Business Experience

         The following is a brief account of the business  experience  during at
least the past five years of the  persons  designated  to be new  directors  and
officers of the Registrant,  indicating the principal  occupation and employment
during  that  period  by  each,  and the  name  and  principal  business  of the
organizations by which they were employed.

      Joseph L. McFarland, Jr.
     ------------------------

     Joseph L.  McFarland,  age 41 received  an  education  at Denver  Technical
College  1983-87  in  Design  Engineering.  From 1998 to  present  he has been a
Principal  Manufacturing Engineer for Exabyte Corp. In 2000 he became a director
and principal  shareholder of Peanut Butter & Jelly, Inc. and was a principal in
a  company  with the same name from  1993 to 1996,  which  was  dissolved.  From
1996-98 he was a Consulting  Process  Engineer for Medtronic  Blood  Management.
From 1992-93 Mr. McFarland was Operations Manager for Ram-Line, Inc.

     Daniel C. Silva
     ---------------

     Mr. Silva, age 39 has been Broker/Owner of Silva Realty from October 1991 -
Present. He was  President/Marketing  Director and a major shareholder of Peanut
Butter + Jelly, Inc. June 1995 - 1996 when it was dissolved. He was President of

                                       9
<PAGE>

Board of Directors/Chief  Marketing Officer Water Enhancement Technologies (WET
TEK)  September  1993 - June 1995. He attended  Colorado Real Estate  College in
1991. He has a Bachelor of Science,  Business  Management at Metro State College
in 1989.  Mr. Silva was appointed a director and president in October of 2000.

         No  appointee  for a director  position  has been  subject of any civil
regulatory proceeding or any criminal proceeding.

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

     The  following  persons  failed to file forms on a timely  basis during the
past two fiscal years as required under Section 16(a) as follows:

                                   Form 3         Form 4         Form 5
                                   ----------     ----------     --------
1.   Dan Silva                     1 in 2000*     1 in 2001*     2000
                                                                 2001

2.   Joseph L. McFarland, Jr.      1 in 2000*     1 in 2001*     2000
                                                                 2001

3.   Europark Holdings, Inc.       1 in 2000      1 in 2001      2000
                                                                 2001

* For a single transaction in each instance


Compliance with Section 16(a) of the Exchange Act

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


                                       10

<PAGE>

Conflicts of Interest

        Members of the  Company's  management  are  associated  with other firms
involved in a range of business  activities.  Consequently,  there are potential
inherent  conflicts of interest in their acting as officers and directors of the
Company.  Insofar as the officers and  directors  are engaged in other  business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.


        The  Company's  Board of Directors has adopted a policy that the Company
will not seek a merger with, or acquisition  of, any entity in which any officer
or director  serves as an officer or  director or in which they or their  family
members own or hold a  controlling  ownership  interest.  Although  the Board of
Directors  could  elect to change this  policy,  the Board of  Directors  has no
present intention to do so.

        There can be no assurance that  management will resolve all conflicts of
interest in favor of the Company.

                                       11
<PAGE>

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

                             EXECUTIVE COMPENSATION

Cash Compensation.

     Compensation  paid for all services provided up to December 31, 2001 (1) to
each of our executive officers and (2) to all officer as a group.

<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE OF EXECUTIVES

                                    Cash Compensation                  Security Grants
<S>               <C>       <C>          <C>        <C>              <C>         <C>               <C>
NAME AND          YEAR      SALARY       BONUS      CONSULTING       NUMBER OF   SECURITIES        LONG TERM
PRINCIPAL                                           FEES/OTHER       SHARES      UNDERLYING        COMPENSATION/OPTION
POSITION                                            FEES ($)                     OPTIONS/
                                                                                 SARS (#)
================= ========= ============ ========== ================ =========== ================= ================
Daneil C          1999      0            0          0                0           0                 0
Silva,            2000      0            0          0                0           0                 0
President         2001      0            0          0                750,000*    0                 0
------------------------------------------------------------------------------------------------------------
Joseph L.         1999      0            0          0                0           0                 0
McFarland Jr.     2000      0            0          0                0           0                 0
Secretary         2001      0            0          0                750,000*    0                 0
------------------------------------------------------------------------------------------------------------
Gary Burnie,      1998      0            0          0                      0     0                 0
Secretary         1999      0            0          0                550,000*    0                 0
(Resigned 2000)   2000      0            0          0                      0     0                 0
------------------------------------------------------------------------------------------------------------
Officers as a     1999      0            0          0                0           0                 0
Group             2000      0            0          0                0           0                 0
                  2001      0            0          0                1,500,000*  0                 0
------------------------------------------------------------------------------------------------------------
</TABLE>

* Shares issued in December 2001 for services rendered, valued at $15,000 for
each 750,000 shares.

                                       12
<PAGE>

                     SUMMARY COMPENSATION TABLE OF DIRECTORS
<TABLE>
<CAPTION>

                             (TO DECEMBER 31, 2001)
<S>                       <C>       <C>           <C>          <C>                <C>           <C>
NAME AND PRINCIPAL        YEAR      ANNUAL        MEETING      CONSULTING         NUMBER OF     SECURITIES
                                    RETAINER      FEES ($)     FEES/OTHER FEES    OPTION        UNDERLYING OPTIONS/
POSITION                            FEES ($)                   ($)                SHARES        SARS (#)
                                                                                  EXERCISED
===============================================================================================================
Daniel C. Silva           2000          0             0            0                  0             0
                          2001          0             0            0                  0             0
---------------------------------------------------------------------------------------------------------------
Joseph L. McFarland, Jr.  2000          0             0            0                  0             0
                          2001          0             0            0                  0             0
---------------------------------------------------------------------------------------------------------------
Gary Burnie, Secretary    1998          0             0            0                  0             0
(Resigned 2000)           1999          0             0            0                  0       550,000
                          2000          0             0            0                  0             0
---------------------------------------------------------------------------------------------------------------
Gary Burnie               2000    100,000             0            0                  0     2,000,000
(Resigned 2000)
---------------------------------------------------------------------------------------------------------------
Wayne Miller              2000    100,000             0            0                  0     2,000,000
(Resigned 2000)
---------------------------------------------------------------------------------------------------------------
Barry Miller              2000     25,000             0            0                  0       500,000
(Resigned 2000)
---------------------------------------------------------------------------------------------------------------
Directors as a            1999          0             0            0                  0             0
Group                     2000          0             0            0                  0             0
                          2001          0             0            0                  0             0
===============================================================================================================
</TABLE>


On September 20, 2000, the company  granted  options to officers,  directors and
consultants to purchase  7,000,000 shares of the Company's common stock at $0.05
per share under thwe Plan. The options were  immediately  exercised,  and shares
wre issued in satisfaction of the Company's  obligation to the four  individuals
for consulting services rendered through September 30, 2000. The transaction was
recorded by a charge to expense for  $257,035,  and a charge of $92,965  against
amounts previously accrued for such services, for a total value of $350,000.

Also, on September 20, 2000,  the Company  granted  options to five  consultants
(0ne of whom is also a director) to purchase 2,200,000 shares at $0.05 per share
under the Plan.  The options are  exercisable  at any time before ten years from
the date the Plan was adopted.  At December 31, 2000,  none of these options had
been exercised.

In August,  2000, the Company adopted the 2000  Nonqualified  Stock Option Plan.
The Plan sets aside  10,000,000  shares of common  stock  option for issuance to
employees,  directors, officers, attorneys, accounts, consultants or advisors to
the company. The Plan has a ten year term.

                                       13

<PAGE>

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

The following table shows the share  ownership of officers,  directors and 5% or
greater shareholders.


Name and Address of                         Number of           Percent of
Beneficial Owner                          Shares Owned          Shares Owned
                                          Beneficially
                                          and of Record
-------------------                       -------------         ------------

Joseph McFarland, Director & Secretary    130,896*                13%
Europark Holdings, Inc.                   130,896*                13%
Daniel C. Silva, President & Director     130,896*                13%

Officers and Directors as a Group         392,688*                39%

*  Post reverse split one for 100 effective January 7, 2002.


Item 12.  Certain Relationships and Related Transactions

Acquisition of Peanut Butter and Jelly, Inc.
--------------------------------------------

On September 25, 2000,  the Company  authorized  the  acquisition of 100% of the
outstanding  stock of Peanut Butter and Jelly,  Inc. in exchange for  47,460,000
restricted common shares of the Company. Peanut Butter and Jelly, Inc. is also a
development   stage  company  the  acquisition  has  been  completed  after  the
acquisition the following  shows the share ownership of officers,  directors and
5% or greater shareholders.

The  following  shares  were issued to the  persons in the amunts  indicated  in
consideration  for 100% of the  outstanding  shares of Peanut  Butter and Jelly,
Inc.:

Joseph McFarland                        12,339,600              12.7%
Europark Holdings, Inc.                 12,339,600              12.7%
Daniel C. Silva, President & Director   12,339,600              12.7%
Maya Investment Corporation              4,460,000               4.5%
Robert Alan Kitsmiller                   3,322,200               3.4%
Daniel Enright                           2,373,000               2.4%

                                       14
<PAGE>

On September 20, 2000, the company  granted  options to officers,  directors and
consultants to purchase  7,000,000 shares of the Company's common stock at $0.05
per share under thwe Plan. The options were  immediately  exercised,  and shares
wre issued in satisfaction of the Company's  obligation to the four  individuals
for consulting services rendered through September 30, 2000. The transaction was
recorded by a charge to expense for  $257,035,  and a charge of $92,965  against
amounts previously accrued for such services, for a total value of $350,000.

On May 9, 2000, the Company acquired all the outstanding stock of Hi-Plains
Energy Corp., a Wyoming corporation that was also in the development stage, for
$15,600. Concurrently therewith, the Company paid consulting and legal fees of
$134,420 to facilitate the merger of Hi-Plains into Winchester, and the filing
of related forms with the Securities and Exchange Commission. The total of
$150,020 deemed to be the cost of the Hi-Plains shares.

Effective May 13, 2000, Hi-Plains was merged into Winchester, Winchester changed
its name to PNW Capital, Inc., and each share issued and outstanding immediately
prior to the effective date remained as issued and outstanding common stock in
Winchester (renamed PNW) without change.

On December 1, 2001,  the Company  issued  750,000 shares each valued at $15,000
each for services rendered to the following persons:

        1.  Daniel Silva, President and Director
        2.  Joseph McFarland, Secretary and Director
        3.  Robert Kitsmiller
        4.  Europark Holdings, Inc.

                                       15

<PAGE>


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

(a)     No Exhibits are filed with this Annual Report.

(b)     Reports on Form 8-K

        The  Company  filed reports on Form 8k's in 2000 as follows:

        8-K filed 12/20/01

                                       16

<PAGE>


                                   Signatures

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                          PNW Capital, Inc.



Date: March 29, 2002                      By: /s/ Edward V. Verby
                                              -----------------------------
                                              Edward V. Verby, President


        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


Date:  March 29, 2002          By: Edward V. Verby
       --------------          ----------------------------------------
                               Edward V. Verby, President, Chairman and Director


Date:  March 29, 2002          /s/ John Melynk
       --------------          -----------------------------------------
                                John Melnyk, Secretary



                                DIRECTORS:


                                Edward V. Verby
                                -------------------------------------------
                                Edward V. Verby



                                /s/ John Melynk
                                -------------------------------------------
                                John Melnyk


                                /s/ Stephen Weathers
                                -------------------------------------------
                                Stephen Weathers



                                       17
<PAGE>

                                PNW CAPITAL, INC.
                    (Formerly Winchester Mining Corporation)
                          (A Development Stage Company)
                              FINANCIAL STATEMENTS
                                December 31, 2001





<PAGE>


                           Michael Johnson & Co., LLC
                          Certified Public Accountants
                        9175 East Kenyon Ave., Suite 100
                             Denver, Colorado 80237


Michael B. Johnson C.P.A.                             Telephone:  (303) 796-0099
Member:  A.I.C.P.A.                                         Fax:  (303) 796-0137
Colorado Society of C.P.A.s





                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
PNW Capital, Inc.
Denver, CO


We have audited the accompanying balance sheets of PNW Capital, Inc., (A
Development Stage Company) as of December 31, 2001 and the related statements of
operations, stockholders' equity, and cash flows for the year ended December 31,
2001, and for the period November 6, 1996 (Inception) to December 31, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PNW Capital, Inc., as of
December 31, 2001, and the results of their operations and their cash flows for
the year ended December 31, 2001, and the period November 6, 1996 (Inception) to
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.

The financial statements for the year ended December 31, 2000 and for the period
November 6, 1996 (Inception) to December 31, 2000, were audited by other
accountants, whose report dated May 4, 2001, expressed an unqualified opinion on
those statements. They have not performed any auditing procedures since that
date.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company is in the development stage, conditions exist
which raise substantial doubt about the Company's ability to continue as a going
concern unless it is able to generate sufficient cash flows to meet its
obligations and sustain its operations. The Company lost $67,251 from operations
in the year ended December 31, 2001. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Michael Johnson & Co., LLC
Michael Johnson & Co., LLC
Denver, Colorado
February 13, 2002

                                       F-1

<PAGE>

<TABLE>
<CAPTION>

                                       PNW CAPITAL, INC.
                               (Formerly Winchester Mining Corp.)
                                 (A Development Stage Company)
                                         Balance Sheets
                                          December 31,


                                                                                  2001                      2000
                                                                            -----------------         ------------------
<S>                                                                               <C>                        <C>
ASSETS:
Current Assets:
   Cash                                                                                 $ 21                      $ 102
                                                                            -----------------         ------------------

      Total current assets                                                                21                        102
                                                                            -----------------         ------------------

TOTAL ASSETS                                                                            $ 21                      $ 102
                                                                            =================         ==================


LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
   Accounts Payable and Accrued Expenses                                            $ 17,629                   $ 10,459
                                                                            -----------------         ------------------

     Total Current Liabilities                                                        17,629                     10,459
                                                                            -----------------         ------------------

Stockholders' Equity:
Preferred Stock, par value $0.01 per share; 50,000,000
 shares authorized; no shares issued and outstanding                                       -                          -
Common Stock, par value $.0001; 100,000,000 shares authorized;
   1,000,863 shares issued and outstanding for 2001,                                  10,000                      9,700
   and 970,000 shares issued and outstanding for 2000
Additional paid-in Capital                                                         1,744,635                  1,684,935
Deficit accumulated during the development stage                                  (1,772,243)                (1,704,992)
                                                                            -----------------         ------------------

Total Stockholders' Equity                                                           (17,608)                   (10,357)
                                                                            -----------------         ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $ 21                      $ 102
                                                                            =================         ==================


</TABLE>


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

                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                                          PNW CAPITAL, INC.
                                  (Formerly Winchester Mining Corp.)
                                    (A Development Stage Company)
                                       Statements of Operations

                                                                                                   November 6, 1996
                                                                   Year Ended                      (Inception) to
                                                                  December 31,                     December 31,
                                                              2001             2000                2001
                                                             ------           ------               ----------------
<S>                                                           <C>              <C>                 <C>
Revenue
    Sales                                                           $ -              $ -               $ 15,537
    Cost of Goods Sold                                                -                -                 76,201
                                                          --------------   --------------     ------------------
Gross Profit                                                          -                -                (60,664)
                                                          --------------   --------------     ------------------
Expenses:
   Consulting and management fees                                60,000          293,003                933,529
   Depreciation and amortization                                      -            7,753                  8,292
   Impairment of long-lived assets                                    -          306,176                582,176
   Other general and administrative                               7,371           88,606                190,900
                                                          --------------   --------------     ------------------
Total Expenses                                                   67,371          695,538              1,714,897
                                                          --------------   --------------     ------------------
Other Income
   Interest income                                                    -              419                  2,724
   Foreign exchange                                                   -              474                    474
   Other income                                                     120              113                    594
                                                          --------------   --------------     ------------------
 Total Other Income                                                 120              780                  3,318
                                                          --------------   --------------     ------------------
Net Loss                                                      $ (67,251)       $(694,758)          $ (1,772,243)
                                                          ==============   ==============     ==================

Per Share Information:

   Weighted average number of
     common shares outstanding                                  970,863          530,554

Net Loss per Common Share                                         (0.07)           (1.31)
                                                          ==============   ==============


</TABLE>


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

                                      F-3

<PAGE>

<TABLE>
<CAPTION>

                                   PNW CAPITAL, INC.
                           (Formerly Winchester Mining Corp.)
                             (A Development Stage Company)
                                Statements of Cash Flows

                                    Indirect Method


                                                                                         November 6, 1996
                                                            Year Ended                   (Inception) to
                                                           December 31,                     December 31,
                                                             2001            2000             2001
                                                          ------------    -----------   -----------------
<S>                                                         <C>            <C>              <C>
Cash Flows from Operating Activities:
Net Loss                                                    $ (67,251)     $(694,758)       $ (1,772,243)
  Adjustments to reconcile net loss to cash used in
    operating activities:
   Provision for bad debts                                          -          4,169              49,676
   Issuance of common stock for services                       60,000        354,696             414,606
   Impairment of long-lived assets                                  -        306,174             306,174
   Increase in accounts payable                                 7,170        (40,778)             17,629
   (Increase) in accounts receivable                                -         (4,169)             (4,169)
   Decrease (increase) in prepaid expenses                          -            970                (539)
   Decrease (increase) due to related parties                       -        (36,332)            595,000
   (Increase) in inventory                                          -         (2,592)             (5,527)
                                                          ------------    -----------   -----------------
Net Cash Used for Operations                                      (81)      (112,620)           (399,393)
                                                          ------------    -----------   -----------------
Cash Flows from Investing Activities:
   Purchase of equipment                                            -         (4,699)             (4,160)
   Investment in Multiplex                                          -        (75,000)            (75,000)
   Website development costs                                        -        (71,861)            (71,861)
   Acquisition of goodwill                                          -       (149,057)           (149,057)
   Loan to related parties                                          -              -             (50,000)
   Loan repayments                                                  -              -               4,493
                                                          ------------    -----------   -----------------
Net Cash Used for Investing Activities                              -       (300,617)           (345,585)

Cash Flows from Financing Activities:
   Acquisition of Peanut Butter & Jelly, Inc.                       -             50                 140
   Issuance of common stock                                         -        413,070             744,859
                                                          ------------    -----------   -----------------
Net Cash Provided by Financing Activities                           -        413,120             744,999

Net Increase (decrease) in cash and cash equivalents              (81)          (117)                 21
                                                          ------------    -----------   -----------------
Cash and cash equivalents - Beginning of period                   102            219                   -
                                                          ------------    -----------   -----------------
Cash and cash equivalents - End of period                        $ 21          $ 102                $ 21
                                                          ============    ===========   =================

Supplemental Disclosure of Cash Flow Information
   Cash Paid During the Year for:
      Interest                                                    $ -            $ -               $ 113
                                                          ============    ===========   =================
      Income Taxes                                                $ -            $ -                 $ -
                                                          ============    ===========   =================

NON-CASH TRANSACTIONS
    Common stock issued in exchange for services             $ 60,000      $ 354,696             414,646
                                                          ============    ===========   =================
    Common stock issued for debt                                  $ -            $ -           $ 595,000
                                                          ============    ===========   =================
    Common stock issued for investment                            $ -            $ -                $ 30
                                                          ============    ===========   =================

</TABLE>


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

                                      F-4

<PAGE>

<TABLE>
<CAPTION>

                                               PNW CAPITAL, INC.
                                       (Formerly Winchester Mining Corp.)
                                         (A Development Stage Company)
                                  Statement of Stockholders' Equity (Deficit)
                                               December 31, 2001


                                                                                                       Deficit
                                                                                                     Accumulated
                                                                                  Additional         During the
                                                      Common Stock                  Paid-In          Development
                                            # of Shares          Amount             Capital             Stage             Totals
                                          ---------------    --------------     --------------     --------------     --------------
<S>                                             <C>                 <C>            <C>                <C>                <C>
Inception  - November 6, 1996                           -               $ -                $ -                $ -              $ -

Balance -  December 31, 1998                   25,250,000              2525            502,643           (750,830)        (245,662)
Issuance of stock for cash                      3,000,000               300            146,321                  -          146,621
Issuance of stock for services                  5,500,000               550            274,450                  -          275,000
Net Loss                                                -                 -                  -           (259,404)        (259,404)
                                           ---------------    --------------     --------------     --------------   --------------
Balance - December 31, 1999                    35,750,000             3,375            923,414         (1,010,234)         (83,445)
                                           ---------------    --------------     --------------     --------------   --------------
Issuance of stock for cash                      8,490,000               849            412,221                  -          413,070
Issuance of stock for services                    700,000               700            349,300                  -          350,000
Issuance of stock for Multiplex Stock             300,000                30                  -                  -               30
Issuance of stock for acquisition              47,460,000             4,746                  -                  -            4,746
Net Loss for year                                       -                 -                  -           (694,758)        (694,758)
                                           ---------------    --------------     --------------     --------------   --------------
Balance - December 31, 2000                       970,863                97          1,684,935         (1,704,992)         (10,357)
                                           ---------------    --------------     --------------     --------------   --------------
Issuance of stock for compensation              3,000,000               300             59,700                  -           60,000
Net Loss for year                                       -                 -                  -            (67,251)         (67,251)
                                           ---------------    --------------     --------------     --------------   --------------
Balance - December 31, 2001                   100,000,000           $10,000        $ 1,744,635        $(1,772,243)       $ (17,608)
                                           ===============    ==============     ==============     ==============   ==============

</TABLE>

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

                                      F-5

<PAGE>


                                PNW CAPITAL, INC.
                    (Formerly Winchester Mining Corporation)
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2001


Note 1 - Organization and Summary of Significant Accounting Policies:
         ------------------------------------------------------------

Organization:
------------

The Company was incorporated on November 6, 1996, as Winchester Mining
Corporation in the state of Delaware. The Company is in the development stage
and was organized for the purpose of raising capital in organizing and
developing internet business. On May 13, 2000, in connection with its merger
with Hi-Plains Energy Corp. the Company changed its name from Winchester Mining
Corporation to PNW Capital, Inc.. The Company's fiscal year end is December 31.

Basis of Presentation - Development Stage Company:
-------------------------------------------------

The Company has not earned significant revenues from limited principal
operations. Accordingly, the Company" activities have been accounted for as
those of a "Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by
SFAS 7 are that the Company's financial statements be identified as those of a
development stage company, and that the statements of operations, stockholders'
equity (deficit) and cash flows disclose activity since the date of the
Company's inception.

Basis of Accounting:
-------------------

The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.

Cash and Cash Equivalents:
-------------------------

The Company considers all highly liquid debt instruments, purchased with an
original maturity of three months or less, to be cash equivalents.

Use of Estimates:
----------------

The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect 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 revenue and
expenses during the reporting period. Actual results could differ from those
estimates.

Net Loss Per Share:
------------------

Net loss per share is based on the weighted average number of common shares and
common shares equivalents outstanding during the period.


                                      F-6

<PAGE>


                                PNW CAPITAL, INC.
                    (Formerly Winchester Mining Corporation)
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2001



Other Comprehensive Income
--------------------------

The Company has no material components of other comprehensive income (loss), and
accordingly, net loss is equal to comprehensive loss in all periods.

Note 2 - Federal Income Taxes:
         --------------------

The Company has made no provision for income taxes because the Company has
incurred operating losses in all periods and for all jurisdictions.

The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS 109"). "Accounting for Income
Taxes", which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities.

Deferred tax assets
         Net operating loss carryforwards                $   1,722,243
         Valuation allowance                                (1,722,243)
                                                         --------------
         Net deferred tax assets                         $           0
                                                         ==============

At December 31, 2001, the Company had net operating loss carryforwards of
approximately $1,772,243 for federal income tax purposes. These carryforwards if
not utilized to offset taxable income will begin to expire in 2008.

Note 3 - Capital Stock Transactions:
         --------------------------

The authorized capital stock of the Company is 100,000,000 shares of common
stock at $.0001 par value.  During the period ended December 31, 2001, the
Company issued 3,000,000 shares of common stock for services.




                                      F-7

<PAGE>


                                PNW CAPITAL, INC.
                    (Formerly Winchester Mining Corporation)
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2001




Note 4 - Going Concern:
         -------------

The Company's financial statements have been presented on the basis that it is a
going concern.

The Company is in the development stage and has not earned any revenues from
operations. The Company's current liabilities exceed current assets by $17,608
and the Company recorded a loss of $67,251 in the current year. The Company's
ability to continue as a going concern is dependent upon its ability to develop
additional sources of capital or locate a merger candidate and ultimately,
achieve profitable operations. The accompanying financial statements do not
include any adjustments that might result from the outcome of these
uncertainties. Management's plan is to obtain sufficient additional debt or
equity financing to finance operations, capital improvements and other necessary
activities or to acquire a profitable business.

Note 5 - Prior Period Restatement
         ------------------------

On March 18, 1999, the Company entered into an Internet casino license agreement
for a period of three years. Under the license agreement the Company was
committed to make fee payments over the next three years in the amount of
$25,000. In 1999 the Company accrued a provision of $25,000 to provide for these
payments, as of December 31, 2001 these payments are no longer due. Consulting
fees and Accounts Payable in the amount of $52,492 were overstated in the year
ended 2000.

Note 6 - Related Party Transactions:
         --------------------------

The Company paid  Management and Consulting fees of $146,078 in 2000 and $31,663
in 1999, to current or former officers and directors or companies controlled by
current or former officers and directors.  The current and former officers and
directors were issued 7,000,000 shares of common stock valued at $.05 per share
in September 2000 for compensation.  In December 2001, an issuance of 3,000,000
shares of common stock, having a stipulated value of $.02 per share were issued
for consulting fees to directors and officers of the company.

Note 7 - Segment Information
         -------------------

PNW Capital,  Inc. operates primarily in a single operating segment, the capital
raising business.





                                      F-8