SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                  SECOND AMENDED
                                  FORM 10-KSB/A

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

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

          For the transition period from _______________ to _______________.

                         COMMISSION FILE NUMBER O-27319

                                   E-REX, INC.
             (Exact name of registrant as specified in its charter)

                   NEVADA                              88-0292890
      (State or other jurisdiction of               (I.R.S. Employer
       incorporation or organization)              Identification No.)

         11645 BISCAYNE BOULEVARD, SUITE 210
                    MIAMI, FLORIDA                       33181
       (Address of principal executive offices)        (Zip Code)


      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE    (305) 895-3350


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

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

     State  issuer's  revenues  for  its  most recent fiscal year.       $87,185

     State  the  aggregate  market  value of voting and non-voting common equity
held  by  non-affiliates  computed by reference to the price at which the common
equity  was  sold, or the average bid and asked prices of such common equity, as
of  a  specified  date within the past 60 days.  (See definition of affiliate in
rule  12b-2  of  the Exchange Act.)  $469,762, based on the closing bid price of
$0.00675  for  the  common  stock  on  April  9,  2002.

     Indicate  the  number of shares outstanding of each of the issuer's classes
of  common stock, as of the latest practicable date.  As of April 5, 2002, there
were  71,777,424  shares  of  common  stock,  par  value  $0.001,  issued  and
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     If  the following documents are incorporated by reference, briefly describe
them and identify the part of the form 10-KSB (e.g., Part I, Part II, etc.) into
which  the  document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").  The listed
documents  should be clearly described for identification purposes (e.g., annual
report  to  security  holders  for  fiscal year ended December 24, 1990).  None.

                     Transitional Small Business Disclosure
                               Format (check one):

                             Yes _____     No __X__


<PAGE>
                                   E-REX, INC.

                                TABLE OF CONTENTS
                                -----------------


                                     PART I

Item  1          Description  of  Business

Item  2          Description  of  Property

Item  3          Legal  Proceedings

Item  4          Submission  of  Matters  to  a  Vote  of  Security  Holders


                                     PART II

Item  5          Market  for  Common  Equity  and  Related  Stockholder  Matters

Item  6          Management's  Discussion  and  Analysis  or  Plan of Operations

Item  7          Financial  Statements

Item  8          Changes In and Disagreements With Accountants on Accounting and
                 Financial Disclosure


                                    PART III

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

Item  10         Executive  Compensation

Item  11         Security Ownership of Certain Beneficial Owners and Management.

Item  12         Certain  Relationships  and  Related  Transactions.

Item  13         Exhibits  and  Reports  on  Form  8-K.


                                        2
<PAGE>
                                     PART I


EXPLANATORY  NOTE

E-Rex, Inc. has restated its Annual Report on Form 10-KSB. This Annual Report is
for  the  year ended December 31, 2001, was originally filed with the Commission
on  April 12, 2002, and was amended on July 16, 2002. References throughout this
Annual  Report are accurate as of the date originally filed. The Company has not
undertaken  to  update all of the information in this Annual Report, but instead
has  updated  only  those areas where changes were deemed necessary. Please read
all of the Company's filings with the Commission in conjunction with this Annual
Report.

The  financial  statements  have  been  revised to present the ongoing financial
information  as  a development stage enterprise as well as provide more detailed
information  regarding the Swartz funding agreement and the inclusion of related
charges,  policies  regarding  revenue recognition, and the policies, treatment,
and  charges related to investments the Company holds to better comply with U.S.
GAAP  standards.

This Annual Report includes forward-looking statements within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based
on  management's beliefs and assumptions, and on information currently available
to  management.  Forward-looking  statements  include the information concerning
possible  or assumed future results of operations of the Company set forth under
the  heading  "Management's  Discussion  and  Analysis of Financial Condition or
Plan  of Operation." Forward-looking statements also include statements in which
words  such as "expect," "anticipate,"  "intend," "plan," "believe," "estimate,"
"consider"  or  similar  expressions  are  used.

Forward-looking  statements  are  not  guarantees  of  future performance.  They
involve  risks, uncertainties and assumptions.  The Company's future results and
shareholder  values  may  differ  materially  from  those  expressed  in  these
forward-looking  statements.  Readers are cautioned not to put undue reliance on
any  forward-looking  statements.

ITEM  1  -  DESCRIPTION  OF  BUSINESS

ABOUT  OUR  COMPANY

     We  were  incorporated  in  Nevada  on August 26, 1986 as P.R. Stocks, Inc.
Since  that  time,  we  have  had  three  name  changes  and  been the surviving
corporation  in  one  merger:

-    On  February  26,  1992,  we  changed our name to National Health  & Safety
Corporation;

-    On  November  12,  1992,  we  changed  our  name  to Medgain  International
Corporation;

-    On  June  20,  1994,  we  changed  our  name  to  E-Rex,  Inc.;  and

-    On  February  20,  1999,  we  merged  with Plantech Communications Systems,
Inc.,  a British Columbia, Canada corporation.  Plantech was a development stage
company  in  the software, computer, and Internet business that had no revenues.

                                        3
<PAGE>

     In  January  2000, our management believed that our financial condition had
deteriorated  to  the point where it was going to discontinue operations.  In an
attempt  to  salvage  the  value  of  the technology, management entered into an
agreement  with International Investment Banking, Inc. (IIBI) whereby IIBI would
provide consulting services, introduce management personnel to us, and assist us
in raising necessary capital.  In January 2000, our founder, Dr. Bauer, resigned
and  was  replaced  with  our  current  management.

     We  have  a  $12,817,663 accumulated deficit as of December 31, 2001. We do
not  have  any  significant  operating  history or revenues, and our independent
accountant  has  qualified  his report, noting that our significant losses raise
substantial  doubt  about  our  ability  to  continue  in  business.

     Our  primary  product  is  the  Dragonfly, a portable, multi-function color
printer,  copier, fax and scanner with Internet and e-mail capabilities.  We are
presently  completing  the  initial  prototypes  of  the  Dragonfly.  We are not
currently generating any revenues from the sale of the Dragonfly product, and do
not  expect  to  generate  any  revenues  from  it  during this fiscal year.  We
currently  generate  a  limited  amount  of  income from our Internet consulting
business,  which  is  not  our  primary  business.

     Our  executive  offices are located at 11645 Biscayne Boulevard, Suite 210,
Miami,  Florida  33181.  Our  telephone number is (305) 895-3350 and our website
address  is www.e-rex.net.  Information contained on our website or on any other
website  does  not  constitute  a  part  of  this  filing.

OUR  PRIMARY  PRODUCT

     We  intend  to  market  the  Dragonfly,  a  portable,  multi-function color
printer,  copier,  fax  and  scanner with Internet and e-mail capabilities.  The
Dragonfly  incorporates Microsoft's Windows CE operating system which supports a
variety  of  connectivity options, ranging from satellite uplink to ordinary and
cellular modems and Ethernet networks.  Pricing of this product has not yet been
determined.

     We  are  presently completing the initial prototype of the Dragonfly. It is
anticipated  that  following completion of the prototype, production could begin
within  six  months  of  obtaining  the necessary capital and/or entering into a
relationship  with a third party for manufacturing. We have not entered into any
agreements  for  the manufacture of the Dragonfly. We anticipate that as soon as
the  initial  prototypes  are  fully  operational, demonstrations with potential
manufacturers  can  be  arranged.

     The  Dragonfly  is  designed  so  that  is  can  be  integrated  with other
information  appliances  and computers including digital cameras, photo-printers
and  network  servers.  When  bundled  with  these  items,  the  unit provides a
complete  solution  for  the  small,  home  or  mobile  office  market.

     The  Dragonfly  operating  system  can  be  enhanced  with related products
designed  by third parties.  For example, a software enhancement for drawing and
handwriting could permit stored documents to be annotated on-screen using a pen.
These  would  appeal  to students, and homemakers. The addition of a card reader
could  permit the unit to act as a point of sale terminal that manages purchases
in a portable kiosk.  We have not entered into any agreements with third parties
regarding  the  design  or  production  of  any  related  products.

                                        4
<PAGE>

E-REX  CONSULTING

     Our  only  current  source  of  revenue,  on  a  very limited scale, is our
consulting business, E-Rex Consulting, which formerly operated as E-tech Design.
This  division  of  E-Rex  provides  services to approximately 25 clients in the
areas  of Internet website design and development, online advertising, and video
marketing.

     We have one internal employee who handles sales for this division, and then
independent  contractors  perform  services  directly  for  the  clients.  E-Rex
Consulting  maintains  a  web  site  at  www.erexconsulting.com.

     Once  the  Dragonfly  product is ready to market, we do not anticipate that
our  consulting  business will constitute a material part of our operations, but
will support and develop applications and customized services for the Dragonfly.


MARKETING  AND  SALES

     We  anticipate  that the Dragonfly will be most desirable to current laptop
users  that  require  access  to  several  communication  mechanisms in a mobile
environment,  and  will  purchase  the  unit  for  its portability, ease of use,
convenience,  and  power.  We  also  anticipate  that  the  Dragonfly  will  be
attractive  to  current  non-computer  users who, once they decide to purchase a
computer,  will  want  an  all-in-one  piece  of  equipment  rather than several
difference products.  Finally, we anticipate that older users who desire a range
of  functions without the necessity and complication of using a fully functional
computer  will  be  potential  users  of  the  Dragonfly.

     We  have not yet fully developed our marketing plan.  We anticipate that we
will  initially sell the Dragonfly in the United States and Canada, and over the
Internet.  We  anticipate  that  the product will be offered directly by us, and
through  electronics  distributors and marketing representatives.  After initial
sales  begin  in  the  United  States  and Canada, we anticipate expanding sales
worldwide  within  a  year.

MANUFACTURING

     The  Dragonfly  uses  products  commonly  manufactured by Intel, Microsoft,
Fujitsu  and  Cannon,  among  others.  We  do  not  intend  to establish our own
manufacturing  plant,  but  instead  intend  to  contract  with  third  party
manufacturers.  We  have  not  entered  into  any  agreements with any potential
manufacturers.

RESEARCH  AND  DEVELOPMENT

     Our  Dragonfly  product was originally created by Plantech, and we acquired
all of the rights to the product and its technology when we acquired Plantech in
1999.  Plantech  utilized  the  research  and  testing facilities at the British
Columbia  Institute  of  Technology  to  produce  our  mock-prototype.

     Since  that  time,  we have contracted with Valcom, Ltd. of Guelph Ontario,
Canada,  to  produce  our first prototype, including the associated software and
hardware.  Valcom  has estimated that the cost of producing the production-ready
prototype  will  be  approximately  $395,000,  of  which  we  still  need to pay
approximately  $75,000  before  the  prototype  can  be  completed and ready for
manufacture.

                                        5
<PAGE>

COMPETITION

     There  is  significant  competition  in  the computer peripheral, software,
hardware  and  Internet industries. Computer peripheral and print-scan equipment
manufacturers  such as Hewlett-Packard, Cannon, Xerox, Epson, Palm Computing and
others  have  the  engineering, manufacturing and marketing expertise to produce
similar  devices  and the financial resources to design and distribute a product
similar  in  functionality  to  the  Dragonfly.  At  present these manufacturers
produce  products that we believe offer some but not all of the functionality of
the  Dragonfly,  but  with appropriate engineering and licensing could produce a
similar  product.  Any  new  developments  in  printing,  scanning  or  document
handling  technology  could  cause  the  obsolescence  of  the  product  to  be
accelerated.  Almost  all  of  the  companies  with  which  we  will compete are
substantially  larger,  have more substantial histories, backgrounds, experience
and  records  of  successful operations, greater financial, technical, marketing
and  other  resources, more employees and more extensive facilities than us.  It
is  also  likely that other competitors offering similar products will emerge in
the  near  future.  There is no assurance that we will compete successfully with
other  established computer software and Internet companies.  We hope to compete
on  the  basis  of  functionality,  quality  and  price.

INTELLECTUAL  PROPERTY

     We  regard  our  copyrights,  service  marks, trademarks, trade secrets and
similar intellectual property as important to our success, and rely on trademark
and  copyright  law,  trade secret protection and confidentiality and/or license
agreements  with  our  employees,  customers, partners and others to protect our
proprietary  rights.  We have no registered trademarks or service marks to date,
but  have submitted an application for a trademark on the Dragonfly name with no
response  from  the  U.S.  Patent  and Trademark office.  It may be possible for
unauthorized  third  parties to copy certain portions of our products or reverse
engineer or obtain and use information that we regard as proprietary.  There can
be  no  assurance  that  our  means  of protecting our proprietary rights in the
United  States  or  abroad  will  be  adequate.

     Other  parties  may  assert, from time to time, infringement claims against
us.  We may also be subject to legal proceedings and claims from time to time in
the ordinary course of our business, including claims of alleged infringement of
the trademarks and other intellectual property rights of third parties by us and
our  licensees,  if  any.  Such claims, even if not meritorious, could result in
the  expenditure  of  significant  financial  and  managerial  resources.

     We  do  not  own  and  have  not  applied  for any patents on our products.

WEBULATE

     In  August  2000,  we  acquired  the assets of Webulate, LLC.  These assets
include  an Internet service provider located at the Denver Technology Center, a
suite  of  proprietary  e-commerce and business-to-business application software
systems,  rights  to  a  developmental stage peripheral computer device, and the
ongoing  client  base  of Webulate, LLC.  Our management is currently evaluating
the  compatibility  of  these  operations  with  our  Dragonfly  product.

EMPLOYEES

     We currently have three full-time employees, one of which is an officer and
director and one of which serves in a marketing and sales capacity.  Each of our
full-time  employees  devotes  all  of  their  time to the company.  The Company
currently  subcontracts  research  and development as required for production of
the  Dragonfly  prototype.  The  Company  intends to add full-time executives in
sales  and  marketing, finance and distribution as it moves closer to production
of  the  Dragonfly.  In  the  E-Rex  Consulting  division there is one full time
employee  and  it  is  anticipated  that  several staff will be added later this
fiscal  year  in  the areas of project management, sales and web site design and
programming.

                                        6
<PAGE>

ITEM  2  -  DESCRIPTION  OF  PROPERTY

     We  currently lease office space located at 11645 Biscayne Boulevard, Suite
210,  Miami,  Florida  33181-3138.  This space covers approximately 1,050 square
feet  and is leased under an agreement that expires January 1, 2003 and requires
us  to  pay  $1,441.00  per  month  in  rent.

     We  believe that the current facilities are adequate to meet our needs into
the  forseeable  future,  even  when  we  have begun manufacturing the Dragonfly
because  we  will  contract  with  outside  manufacturers.

ITEM  3  -  LEGAL  PROCEEDINGS

     In  February 2002, the Company was served with a lawsuit brought by a group
of ten (10) plaintiffs, namely Carol Gamble Trust 86, June L. Blackwell, June L.
Blackwell and Christopher Ford, as joint tenants, Terry Shores, Steve Rigg, Karl
Weinacker,  Ressoyia  Anderson,  Mel  Goodman,  Slawomir  Kownacki,  and  John
Bussjeager,  in  the  United  States  District  Court,  District of Nevada.  The
defendants  in  the  action  are  the  Company, its Board of Directors, a former
Director,  the  Company's  legal  counsel,  and  two  corporate  entities.

     The  Complaint  alleges,  among  other  things,  that  the  plaintiffs  are
shareholders  of  the  Company, that they acquired stock of the Company based on
misrepresentations, that management of the Company misappropriated assets of the
Company,  and  further  alleges violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934. The Complaint requests an unspecified amount of
damages, that the Board of Directors and officers of the Company be removed, and
that  a receiver or custodian be appointed to operate the business, as well as a
judicial  determination  that  the  action  be maintained as a class action. The
Court  has  appointed a Special Master to gather certain factual data alleged in
the  Complaint, and a hearing has been set on plaintiff's motion for appointment
of  a  receiver  and/or  custodian,  or in the alternative for call of a special
meeting  of  shareholders.

     The  Company  is  vigorously  defending  this  lawsuit although the Company
believes  that the action lacks merit. The case is at a stage where no discovery
has  been  taken  and  no prediction can be made as to the outcome of this case.

     In  the  ordinary  course  of  business,  the  Company is from time to time
involved in various pending or threatened legal actions.  The litigation process
is  inherently  uncertain and it is possible that the resolution of such matters
might have a material adverse effect upon the financial condition and/or results
of  operations  of  the  Company.  However,  in  the  opinion  of  the Company's
management,  matters currently pending or threatened against the Company are not
expected  to have a material adverse effect on the financial position or results
of  operations  of  the  Company.

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

     No  matters  were  submitted  to  a vote of the security holders during the
quarter  ended  December  31,  2001.

                                        7
<PAGE>
                                     PART II

ITEM  5  -  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

     Our common stock is traded on the OTC Bulletin Board under the symbol EREX.
Our common stock is only traded on a limited or sporadic basis and should not be
deemed  to  constitute  an  established  public  trading  market.  There  is  no
assurance  that  there  will  be  liquidity  in  the  common  stock.

     Below is a table indicating the range of high and low transaction price for
the  common  stock  for  each quarterly period within the most recent two fiscal
years.  The  information  reflects  inter-dealer prices, without retail, markup,
markdown  or  commission  and  may  not  represent  actual  transactions.

                                             PRICES
     YEAR     PERIOD                     HIGH      LOW
     ----     ------                     ----     ----
     2002     First  Quarter             0.03     0.006

     2001     First  Quarter             0.53     0.16
              Second  Quarter            0.56     0.03
              Third  Quarter             0.44     0.03
              Fourth  Quarter            0.07     0.01

     2000     First  Quarter             2.44     0.15
              Second  Quarter            1.56     0.38
              Third  Quarter             1.25     0.34
              Fourth  Quarter            0.91     0.25

HOLDERS

     As  of April 5, 2002, there were approximately 230 holders of record of the
common  stock.

DIVIDEND  POLICY

     We  have  never  declared  or  paid  cash dividends on the common stock and
anticipate  that  all  future  earnings  will be retained as working capital and
business  expansion.  The  payment  of  any future dividends will be at the sole
discretion  of  the board of directors and will depend upon, among other things,
future  earnings,  capital  requirements,  our  financial  condition and general
business conditions.  Therefore, there can be no assurance that any dividends on
the  common  stock  will  be  paid  in  the  future.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

     There  were no recent sales of unregistered securities of the type required
to  be  disclosed.

                                        8
<PAGE>

ITEM  6  -  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

QUALIFIED  REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS

     Our  independent  accountant has qualified his report.  They state that the
audited  financial  statements of E-Rex, Inc. for the period ending December 31,
2001  have  been prepared assuming the company will continue as a going concern.
They  note  that  the  significant losses of our company as of December 31, 2001
raise  substantial  doubt  about  our  ability  to  continue  in  business.

YEARS  ENDED  DECEMBER  31,  2001  AND  2000

Results  of  Operations

     We  had  significant  losses of  $3,535,831 for the year ended December 31,
2001.  We  have  funded  losses  by  the  sale  of additional securities and the
issuance  of  stock for services.  We expect losses to continue.  Other than the
Swartz financing, we have no sources of long-term capital.  To the extent losses
continue  and  we are unable to fund them, we may have to curtail aspects of our
operations  or  cease  operations  altogether.

     The  Company  intends  to  pursue  its business plan and meet its reporting
requirements  utilizing  cash  made available from the private and future public
sale of its securities as well as income for the Internet consulting division of
the  Company.  The  Company's  management is aggressively pursuing relationships
and markets for this division and is of the opinion that revenues from the sales
of  its  securities  will  be  sufficient to pay its expenses until its business
operations  create  positive  cash  flow.  The  Company  does not currently have
sufficient  capital  to  continue operations for the next twelve months and will
have to raise additional capital to meet its business objectives as well as 1934
Act  reporting  requirements.

     On  a  long-term  basis,  the  Company's  liquidity is dependent on revenue
generation,  additional  infusions  of  capital  and  potential  debt financing.
Company  management  believes  that additional capital and debt financing in the
short  term  will allow it to pursue it's business plan and thereafter result in
revenue  and  greater liquidity in the long term.  However, we currently have no
arrangements  for  such financing and there can be no assurance that the Company
will  be  able  to  obtain the needed additional equity or debt financing in the
future.

Revenue

     The  Company's  total  revenue  for  the  year  ended December 31, 2001 was
$87,185,  all  of  which was earned from web site design and consulting services
rendered  by  the  Company.  The  cost  of  sales  for  this period was $79,837,
resulting in gross profit of $7,348 for the year.  The Company had total revenue
for  the year ended December 31, 2000 of  $35,976, all of which were earned from
web  site  design  and consulting services rendered by the Company.  The cost of
sales  for  this  period  was $10,607, resulting in gross profit of $25,369. The
company  did  not  have  any  revenues  for  the  year  ended December 31, 1999.

General  and  Administrative

     The  Company's  general  and administrative expenses totaled $3,334,639 for
the  year  ended  December  31, 2001, as compared to $8,350,075 for the previous
year,  a decrease of approximately 40%.  Of the total general and administrative
expenses,  $1,104,108, or 33.1%, is attributable to stock issued for services to
various  consultants, advisors, employees, and service providers to the Company.
Because  the  Company does not have sufficient revenues or current assets to pay
these  providers  in  cash, it has continued to issue common stock for services,
and  anticipates  that  this pattern will continue throughout the current fiscal
year.  The  Company  also recorded $146,261 in research and development expenses
related  to  its  Dragonfly  product.

                                        9
<PAGE>

Net  Losses

     Net  losses  for  the  year  ended  December  31,  2001 were $3,535,831, as
compared  to $8,492,853 for the prior year, a decrease of approximately 40%.  As
described in General and Administrative, above, the primary component of the net
loss  was  stock  issued for services ($1,104,108).  The Company expects that it
will  continue  to  incur  large  operating  and  net  losses as a result of its
insufficient  revenue  and  continued  issuance  of  stock  for  services.

     The  loss  per  share,  based  on  a  weighted  average number of shares of
29,649,570,  was $0.12 per share, a substantial decrease from the loss per share
of  $0.45  for  the  previous  year.

Liquidity  and  Capital  Requirements

     The  Company  requires  substantial  capital  in  order to meet its ongoing
corporate  obligations  and  in  order  to  continue  and expand its current and
strategic  business  plans.  Working capital has been primarily obtained through
the  private  placement  of  common stock and loan advances.  The web design and
hosting  business  of  the  Company is in its infancy and is a minor part of the
overall  business.  It  is  not  expected  that  revenues  from this area of the
business  will  be  sufficient  in  the near term to fund ongoing operations and
development  and  the  bringing  to  market  of  the  Dragonfly.

     The  Company's  plans  for  manufacturing,  sales  and  distribution of the
Dragonfly  are  focused  on  establishing an OEM licensing agreement with one or
more  electronics  manufacturers  who have the available resources and wholesale
and  retail distribution channels to satisfactorily bring the product to market.
The  Company  will  therefore  need  available capital to complete the Dragonfly
prototypes  estimated  at  approximately  $75,000  and  an  estimated additional
$325,000  for  product  testing,  packaging  and  consumer  research  prior  to
manufacturing.  Capital  to  promote  the  product  and accomplish the sales and
marketing  to  the  OEM  entities  is  estimated  at $1,000,000 over the next 12
months.  Head  office  and  corporate  operations  including  salaries,  rent,
miscellaneous  office expenses, investor relations, legal and accounting for the
next  12  months  is  estimated  at  $650,000.  The total capital requirement is
therefore  estimated  at  $2,050,000.

     It  is  anticipated  that  the equity line from Swartz Private Equity, LLC,
will  be sufficient to meet those needs, however, there can be no assurance that
the  Company  will  be  able  to  obtain  the  needed  additional equity or debt
financing  in  the  future.  In  addition, the Swartz line of credit can only be
utilized by the Company upon the effectiveness of a registration statement filed
with the SEC, and then only if certain conditions are met and certain conditions
precedent  exist.  For example, at the current market price of our common stock,
the  amount  of money we can raise through the Swartz agreement is very limited,
and  we  cannot be sure how much money we can raise through the Swartz agreement
in  the future.  It is possible that the company may not have sufficient capital
to  meet its short term requirements prior to the funding from the Swartz equity
line becoming available and there is the potential due to market conditions that
the  amount  of  funding  available  under the Swartz financing agreement may be
limited  and  not  necessarily  cover all operating and research and development
expenses.  In  such an event, the company may raise additional operating capital
through  private placements of equity and/or debt securities.  However there can
be  no  assurances  that  it  will  be  successful  in  its  endeavors.

                                       10
<PAGE>

     The Company received proceeds from the sale of common stock of $136,100 and
loan  advances of $187,157 for the year ended December 31, 2001 resulting in net
cash  provided  by  financing  activities  of  $323,257.  The  Company  received
proceeds  from  the  sale  of common stock of $329,000, $40,000 from the sale of
convertible  debentures and net loan advances of $188,654 less $150,000 utilized
in  the  purchase  and  retirement of 6,977,616 shares of treasury stock for the
year  ended  December  31,  2000  resulting  in  net  cash provided by financing
activities  of  $517,654.

     The  Company  purchased fixed assets of $703 during the twelve months ended
December  31,  2001.

                                       11
<PAGE>

ITEM  7  -  FINANCIAL  STATEMENTS

     Index  to  Consolidated  Financial  Statements

     E-Rex,  Inc.

     Report  of  Parks,  Tschopp,  Whitcomb  &  Orr,  P.A.,
          Certified  Public  Accountants                                F-1

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

     Consolidated  Statements  of  Operations for the years ended
          December 31, 2000  and  2001  and  from  Inception            F-3

     Consolidated  Statements  of  Cash  Flows  for  the  years
          ended December  31,  2000  and  2001  and  from  Inception    F-4

     Consolidated  Statements  of  Stockholder's  Equity  from
          Inception (August  26,  1986  to  December  31,  2001         F-5

     Notes  to  the  Consolidated  Financial  Statements            F-7 to F-20

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

     On  May  17,  2001,  Gately & Associates, LLC, Independent Certified Public
Accountants,  the  independent  accountant  previously  engaged as the principal
accountant  to  audit  the  financial  statements  of  E-Rex,  Inc., resigned as
auditors  for the Company. As Gately & Associates, LLC resigned, the decision to
change  accountants was not approved by the Board of Directors of the Company or
by  any  audit  or  similar  committee  thereof.

     The audit report of Gately & Associates, LLC on the financial statements of
E-Rex,  Inc.  as of December 31, 2000 and the related consolidated statements of
operations,  shareholders' equity and cash flows for the year ended December 31,
2000,  as  well  as  the  audit  report of Varma and Associates on the financial
statements  of  E-Rex, Inc. for the year ended December 31, 1999, the year ended
December  31,  1998,  the  year  ended December 31, 1997 and for the period from
inception  (August  26,  1986) to December 31, 1999 (the "Audit Period") did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified  as  to  audit  scope or accounting principles, except the reports were
modified  to include an explanatory paragraph wherein they expressed substantial
doubt  about  the  Company's  ability to continue as a going concern. During the
Audit  Period,  and  the  period  up  to  their  resignation,  there  were  no
disagreements  with the former accountant on any matter of accounting principles
or  practices,  financial  statement disclosure, or auditing scope or procedure,
which  disagreements,  if  not  resolved  to  the  satisfaction  of  the  former
accountant,  would have caused it to make reference to the subject matter of the
disagreements  in connection with its report. E-Rex, Inc. has provided a copy of
this  disclosure  to  its  former  accountants,  and  requested  that the former
accountants  furnish  them with letters addressed to the Securities and Exchange
Commission  stating  whether  they  agree  with  the  statements  made  by  the
Registrant, and, if not, stating the respects in which they do not agree. A copy
of  the  former  accountants'  responses  indicating  agreement  is  included as
exhibits  to  this  report.

     Upon  Gately  &  Associates,  LLC's  resignation,  the  board  of directors
approved the engagement of Perez-Abreu, Aguerrebere, Sueiro LLC as the principal
accountant  to  audit  the  financial  statements  of  the  Company.


                                       12
<PAGE>
                                    PART III

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

Directors  and  Executive  Officers
-----------------------------------

     The  following table sets forth the names and ages of the current directors
and  executive officers of the Company, the principal offices and positions with
the  Company  held  by each person and the date such person became a director or
executive  officer  of  the  Company.  The executive officers of the Company are
elected  annually by the Board of Directors.  The directors serve one-year terms
until  their  successors are elected.  The executive officers serve terms of one
year  or  until  their  death, resignation or removal by the Board of Directors.
Unless  described  below,  there  are  no  family relationships among any of the
directors  and  officers.


Name                    AGE     POSITION(S)
----                    ---     -----------

Donald  A.  Mitchell    67      Chairman  of  the  Board  (2000)

Carl  E.  Dilley        46      Chief  Executive  Officer,  President,
                                Secretary and Director  (2000)

Joseph  Pacheco         42      Director  (2001)

     DONALD  A.  MITCHELL  has  served  as Chairman of the Board since March 15,
2000.  Mr.  Mitchell  has  served as the Chairman and President of International
Investment  Banking,  Inc.  since  its  inception in June 1999.  Mr. Mitchell is
also  the Chairman of the Board and CEO of Grant Douglas Acquisition Corp, Inc.,
an Idaho corporation engaged in the publication of various print media.  For the
past  25  years,  Mr.  Mitchell  has  been  engaged  as  a private consultant to
numerous  companies  in  the  areas  of  corporate  finance  and marketing.  Mr.
Mitchell  attended  Bridgewater  College  in  Bridgewater, Virginia and advanced
study  programs  at  New  York  University  and  Columbia  University.

     CARL  E.  DILLEY  has  served as CEO and as a director of the Company since
April 1, 2000, and has been with the Company since 1999.  From 1997 to 1999, Mr.
Dilley  served  as  President  and CEO of DiveDepot.com, Inc.  Prior to that Mr.
Dilley  served  in  management  positions  with the Canadian Investment Firm RBC
Dominion  Securities,  and a variety of other executive and consulting positions
in  several  industries  including  chemical,  timber,  transportation,  trust
company,  and  dot.com  enterprises.  Mr.  Dilley  attended college in Canada at
Fraser  Valley College and College of New Caledonia, specializing in finance and
business  management.  He  is  a fellow of the Canadian Securities Institute and
has  completed  the  first  year  CFA  program.

     JOSEPH  PACHECO joined the Board of Directors on October 9, 2001. From 1987
through  the present, Mr. Pacheco has been the principal of Financial Management
Services,  an accounting and tax business management firm. From 1984 to 1987, he
was  Controller, and later Chief Financial Officer, of Sarabande and Company and
CFW and Company. Mr. Pacheco received his Bachelor of Science in Accounting from
California  Business College, his Bachelor of Science in Business Administration
from the University of Redlands, and has completed some post-graduate studies in
Federal  taxation.

                                       13
<PAGE>

Compliance  with  Section  16(a)  of  the  Securities  Exchange  Act  of  1934
------------------------------------------------------------------------------

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

     To  the Company's knowledge, none of the required parties are delinquent in
their  16(a)  filings.

Board  Meetings  and  Committees
--------------------------------

     During  the fiscal year ended December 31, 2001, the Board of Directors met
on  4  occasions  and  took written action on numerous other occasions.  All the
members  of  the  Board  attended  the  meetings.  The  written  actions were by
unanimous  consent.

     There  are  no  committees  of  the  Board  of  Directors.

ITEM  10  -  EXECUTIVE  COMPENSATION

Executive  Officers  and  Directors
-----------------------------------

     For the year ended December 31, 2001, the executive officers of the Company
received salaries, in aggregate, equal to approximately $152,000.00 and received
the  benefit  of  automobile  allowances  and  health Insurance for an aggregate
$9,287.00

     As  of  December 31, 2001, Donald A. Mitchell was compensated pursuant to a
management  engagement  agreement dated January 21, 2000 between the Company and
International  Investment  Banking,  Inc., a company controlled by Mr. Mitchell.
Total  amounts payable to International Investment Banking, Inc. during the year
2001 are $69,832.00.  Pursuant to the agreement, IIBI receives $10,000 per month
in  addition  to  other miscellaneous fees for services.  This service agreement
was  terminated  by  mutual  agreement  on  June  30,  2001.

     As  of  November  16,  2001,  Donald  A. Mitchell was compensated $3,000.00
pursuant  to  a  management engagement agreement dated November 16, 2000 between
the  Company  and  Mr.  Mitchell.

     Jeffrey  M. Harvey was hired as General Counsel for the Company on March 1,
2001,  at  an annual salary of $60,000. This service agreement was terminated by
mutual  agreement  on  Sept  31,  2001.

     On  September 30, 2001, the Board of Directors of the Company issued to Mr.
Dilley, as compensation for tax liabilities arising out of the Company's payment
of  his  compensation  in  stock  rather  than  cash,  warrants to acquire up to
$128,000  in  Company  common  stock  at a price equal to 50% of the closing bid
price  on the date immediately before the exercise of any warrants.  The Company
booked  this  compensation  expense  at  $64,500.

     On  November  26, 2001, the Board of Directors of the Company issued to Mr.
Harvey,  in  lieu  of  salary compensation, warrants to acquire up to $25,000 in
Company  common  stock  at  a price equal to 50% of the closing bid price on the
date  immediately  before the exercise of any warrants.  The Company booked this
compensation  expense  at  $12,500.

                                       14
<PAGE>

     All  officers  and directors are reimbursed for expenses incurred on behalf
of  Company.

     Members  of  the  Board  of  Directors  may  receive  an  amount  yet to be
determined  annually  for  their  participation and will be required to attend a
minimum  of  four meetings per fiscal year.  All expenses for meeting attendance
or  out  of  pocket  expenses connected directly with their Board representation
will  be  reimbursed  by  the  Corporation.  Director liability insurance may be
provided  to  all members of the Board of Directors.  No differentiation is made
in the compensation of "outside directors" and those officers of the Corporation
serving  in  that  capacity.

     There  is  no  plan or arrangement with respect to compensation received or
that  may  be  received by the executive officers in the event of termination of
employment or in the event of a change in responsibilities following a change in
control.

                                       15
<PAGE>

Summary  Compensation  Table
----------------------------

     The  Summary  Compensation Table shows certain compensation information for
services rendered in all capacities for the fiscal years ended December 31, 2001
and  2000.  Other  than  as  set forth herein, no executive officer's salary and
bonus  exceeded  $120,000  in  any  of  the  applicable  years.  The  following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.

<TABLE>
<CAPTION>

                                                  SUMMARY COMPENSATION TABLE

                             Annual  Compensation                       Long  Term  Compensation
                            --------------------------------   ------------------------------------
                                                                         Awards              Payouts
                                                               --------------------------------------

                                                OTHER ANNUAL   RESTRICTED   SECURITIES         LTIP          ALL OTHER
NAME AND PRINCIPAL              SALARY   BONUS  COMPENSATION   STOCK        UNDERLYING        Payouts     COMPENSATION
POSITION                YEAR     ($)      ($)       ($)        AWARDS($)    OPTIONS SARS(#)    ($)             ($)

<S>                     <C>      <C>      <C>       <C>          <C>          <C>              <C>             <C>

Donald A. Mitchell
(Chairman) . . . . . .  2000     -0-      -0-     $126,850     2,000,000      200,000          -0-             -0-

Donald A. Mitchell      2001    $3,000    -0-     $ 69,832        -0-         200,000          -0-             -0-
(Chairman)

Carl E. Dilley
(CEO, Director). . . .  2000  $51,017  $27,000     $ 4,500      276,786       200,000          -0-             -0-

Carl E. Dilley          2001  $114,000    -0-      $ 9,287        -0-         200,000          -0-           $64,500
(CEO, Director)

Kenneth Blake
(President, Director,.  2000     -0-      -0-        -0-         -0-            -0-            -0-             -0-
Resigned April 2000) .

Jeffrey M.  Harvey
(Treasurer, Director).  2000     -0-      -0-        -0-        80,000        200,000          -0-             -0-

Jeffrey M. Harvey
(Treasurer, Director)   2001  $35,000     -0-        -0-         -0-          200,000          -0-           $12,500

Ronald K. Gooding
(Director, . . . . . .  2000     -0-      -0-        -0-         -0-            -0-            -0-             -0-
Resigned April 2000)

Joseph Pacheco          2001     -0-      -0-        -0-         -0-            -0-            -0-             -0-
(Director)

</TABLE>

                                       16
<PAGE>

<TABLE>
<CAPTION>

                                    OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                              (INDIVIDUAL GRANTS)


                NUMBER OF SECURITIES       PERCENT OF TOTAL
                    UNDERLYING           OPTIONS/SAR'S GRANTED
                OPTIONS/SAR'S GRANTED    TO EMPLOYEES IN FISCAL     EXERCISE OF
                      (#)                      YEAR                 BASE PRICE
                                                                       ($/SH)           EXPIRATION DATE

NAME
<S>                   <C>                       <C>                     <C>                 <C>

Donald A. Mitchell  100,000                     6.4                    $0.40               7/07/03

                    100,000                     6.4                    $0.15               7/07/03

Carl E. Dilley . .  100,000                     6.4                    $0.40               7/07/03

                    100,000                     6.4                    $0.15               7/07/03

                     (1)                        (1)                     (1)                9/30/03

Jeffrey M. Harvey.  100,000                     6.4                    $0.40               7/07/03

                    100,000                     6.4                    $0.15               7/07/03

                     (2)                        (2)                     (2)               11/26/03

Joseph Pacheco       -0-                        -0-                     -0-                 -0-
</TABLE>

(1)     On  September  30, 2001, the Board of Directors of the Company issued to
Mr.  Dilley,  as  compensation  for tax liabilities arising out of the Company's
payment of his compensation in stock rather than cash, warrants to acquire up to
$128,000  in  Company  common  stock  at a price equal to 50% of the closing bid
price  on the date immediately before the exercise of any warrants.  The Company
booked  this  compensation  expense  at  $64,500.

(2)     On  November  26,  2001, the Board of Directors of the Company issued to
Mr. Harvey, in lieu of salary compensation, warrants to acquire up to $25,000 in
Company  common  stock  at  a price equal to 50% of the closing bid price on the
date  immediately  before the exercise of any warrants.  The Company booked this
compensation  expense  at  $12,500.


<TABLE>
<CAPTION>

                                      AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                              AND FY-END OPTION/SAR VALUES

                                                              NUMBER OF UNEXERCISED            VALUE OF UNEXERCISED IN-THE-
                                                              SECURITIES UNDERLYING                  MONEY OPTION/SARs
             SHARES ACQUIRED ON                              OPTIONS/SARS AT FY-END(#)                  AT FY-END ($)
NAME            EXERCISE(#)        VALUE REALIZED($)         EXERCISABLE/UNEXERCISABLE           EXERCISABLE/UNEXERCISABLE

<S>                 <C>                  <C>                           <C>                                  <C>

Donald A. Mitchell  -0-                  -0-                           -0-                                  -0-

Carl E. Dilley . .  -0-                  -0-                           -0-                                  -0-

Jeffrey M. Harvey.  -0-                  -0-                           -0-                                  -0-

Joseph Pacheco      -0-                  -0-                           -0-                                  -0-

</TABLE>

                                       17
<PAGE>

ITEM  11  -  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS AND MANAGEMENT

     The  following  table  sets forth, as of April 5, 2002, certain information
with  respect to our common stock owned of record or beneficially by (i) each of
our  officers  and  directors;  (ii) each person known to us to beneficially own
more than 5% of each class of our stock; and (iii) all directors and officers as
a  group.  Except  as  otherwise  noted,  each  person  listed below is the sole
beneficial  owner  of  the  shares and has sole investment and voting power over
such  shares.  Unless  otherwise indicated, the address of each named beneficial
owner  is  the  same as that of our principal executive offices located at 11645
Biscayne  Boulevard,  Suite  210,  Miami,  Florida  33181.

<TABLE>
<CAPTION>


<S>                                      <C>                                         <C>
Name and Address of
Beneficial Owner. . . . . . . . . . . .  Amount and Nature of Beneficial Ownership   Percentage of Class (1)
---------------------------------------  ------------------------------------------  -----------------------


Donald A. Mitchell. . . . . . . . . . .                            1,280,000 (2)(3)                     1.8%

Carl E. Dilley. . . . . . . . . . . . .                            1,112,986 (2)(6)                     1.5%

Joseph Pacheco. . . . . . . . . . . . .                                 340,000 (4)                       *

Swartz Private Equity, LLC
300 Colonial Center Parkway, Suite 300
Roswell, Georgia  30076 . . . . . . . .                               2,700,000 (5)                     3.6%


All directors and officers                                                                              3.8%
as a group (3 persons). . . . . . . . .                         2,732,986 (2)(3)(4)
</TABLE>

*     Represents  less  than  1%.

(1)     Based  on  71,777,424  shares  outstanding.

(2)     Includes  options  issued  to  each  of  Mr.  Dilley and Mr. Mitchell to
acquire  200,000  shares  of  common stock at $0.40, 100,000 shares at $0.75 per
share,  and  100,000  shares  at  $0.15  per  share.

(3)     Includes  600,000  shares  held  of  record  by International Investment
Banking,  Inc.,  of  which  Mr.  Mitchell  is  the  Chairman  and  controlling
shareholder.

(4)     Includes  140,000  shares  held  of  record by Capricorn Investments, of
which  Mr.  Pacheco  is  the  controlling  member.

(5)     Includes  2,700,000  shares  issuable  upon  exercise of the outstanding
warrant  issued  to  Swartz in connection with the investment agreement.  Swartz
has  the  right  to  acquire up to an additional 30,000,000 shares of our common
stock  under  certain  circumstances.  It  is  expected that Swartz will not own
beneficially  more  than  9.99% of our outstanding common stock at any one time.
The  beneficial  owners  of  Swartz  Private  Equity, LLC are Eric S. Swartz and
Michael  C.  Kendrick.

(6)     Does  not  include  an  undetermined  number  of  shares of common stock
underlying  warrants to acquire up to $128,000 in common stock of the Company at
a  price  equal  to  50%  of  the  closing bid price on the day before exercise.

                                       18
<PAGE>

ITEM  12  -  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

Certain  Relationships  and  Related  Transactions
--------------------------------------------------

     In  May,  2000  the  Company  entered  into an oral contract for design and
integration  work  with Valcom, Ltd., a West Vancouver, British Columbia company
controlled  by  Paul R. MacPherson, a former Director of the Company.  Under the
terms  of  this  agreement,  Valcom,  Ltd.  will  supply  six  prototypes of the
Dragonfly  for the approximate sum of $268,000, including work done prior to May
2000.  The work is to be done on an ongoing basis. To date, the Company has paid
Valcom,  Ltd.  the sum of U.S. $250,093 on account, and the estimated total cost
has  been  revised  to  $395,000,  leaving  a  balance  due  of  $145,000.

     The  Company  entered  into  an  agreement  on  January  21,  2000  with
International  Investment  Banking,  Inc.  ("IIBI")  whereby  IIBI,  among other
things,  was to serve as senior management of the Company for an initial term of
two years unless further extended by mutual agreement of the parties (management
is  now  the  responsibility  of  Carl  E. Dilley, President and Chief Executive
Officer  of  the  Company).  Donald  A.  Mitchell,  the Chairman of the Company,
controls  IIBI.  Pursuant  to the agreement, IIBI received $10,000 per month and
reimbursement  of  normal  business  expenses  that  it  incurs on behalf of the
Company  and  certain expenses of individual consultants assigned to the Company
by  IIBI.  Thereafter  the  annual  compensation  increased at a rate of 20% per
year.  In addition to monthly compensation, IIBI or Mr. Mitchell was entitled to
receive  an  annual  bonus  as  determined  by  the Company's Board of Directors
payable  in  common stock or cash.  Mr. Mitchell was granted 2,000,000 shares of
common  stock  representing  1,000,000  common  shares  for  each year of IIBI's
engagement.  The agreement was terminated on June 30, 2001, and we do not intend
to  renew  it.

     IIBI  has  also  loaned  the  Company  money from time to time to cover the
Company's  short-term  cash flow needs.  The amounts borrowed accrue interest at
the rate of the Wall Street Journal "Money Rates" Prime plus 4% per annum and is
due and payable on demand.  Currently, the outstanding balance due to IIBI under
this  arrangement  is  approximately  $381,000,  after  giving  effect  to  the
conversion  of  $120,000  in  principal amount into 600,000 shares of our common
stock  in  February  2001.  This  amount remains outstanding notwithstanding the
termination  of  our  agreement  with  IIBI.

     In September 2000, the Company purchased certain assets from Webulate, LLC.
The  assets  included  software, equipment, and stock in DiveDepot.com, Inc. The
transaction  was  completed  with  $40,000 cash and $200,000 in convertible note
payables  valued  for  a  total  of  $240,000. The President of the Company, Mr.
Dilley, was at the time a Director of DiveDepot.com, Inc., and our Chairman, Mr.
Mitchell,  is  the  Chairman  of  DiveDepot.com,  Inc.

     In  March  2000,  the  Company  issued  2,000,000 shares of common stock to
Donald  A.  Mitchell  for  services  rendered  to the Company.  The issuance was
registered  on  Form  S-8.

     In  August  and  November  2000, the Company issued 20,000 shares of common
stock  to  Jeffrey  M.  Harvey  and  200,000  to  Carl  E. Dilley, restricted in
accordance  with  Rule 144, for services rendered to the Company.  The issuances
were  exempt from registration pursuant to Section 4(2) of the Securities Act of
1933  and  the  shareholders  were  accredited.

     In  November 2000, the Company issued 76,786 shares of common stock to Carl
E.  Dilley for services rendered to the Company.  The issuance was registered on
Form  S-8.

                                       19
<PAGE>

     In  August  2000, the Company issued options to acquire 3,000,000 shares of
common stock to Ultimate Franchise Systems, Inc.  The options expire on July 27,
2002.  The issuance was exempt from registration pursuant to Section 4(2) of the
Securities  Act  of  1933  and  the  shareholder  was  accredited.

     In  September  2000, the Company issued 1,000,000 shares of common stock to
Ultimate  Franchise  Systems,  Inc.,  restricted in accordance with Rule 144, as
part of a stock exchange.  The issuance was exempt from registration pursuant to
Section  4(2)  of the Securities Act of 1933 and the shareholder was accredited.

     In  November  2000,  the  Company  issued  80,000 shares of common stock to
Jeffrey  M.  Harvey  for  services  rendered  to  the Company.  The issuance was
registered  on  Form  S-8.

     In  November 2000, the Company issued options to acquire a total of 650,000
shares of common stock to Donald A. Mitchell, Jeffrey M. Harvey, Carl E. Dilley,
and  Janet  Williams in exchange for services rendered to the Company.  One-half
of  the  options  have  an exercise price of $0.40 per share, and the other half
have  an  exercise price of $0.75 per share.  All options expire on November 21,
2002.  The  issuances  were exempt from registration pursuant to Section 4(2) of
the  Securities  Act  of  1933  and  the  shareholders  were  accredited.

     In  February  2001,  the  Company  issued  75,000 shares of common stock to
Jeffrey  M.  Harvey,  142,500  shares of common stock to Carl E. Dilley, 119,720
shares to Ben Grocock, 61,935 shares to Byron Rambo, 53,958 shares to J. Knigin,
53,958  shares  to  S.  Niakan,  and  53,958  shares to A. Sikorski for services
rendered  to  the  Company.  The  issuances  were  registered  on  Form  S-8.

     In  May and June 2001, the Company issued 185,714 shares of common stock to
Jeffrey  M.  Harvey,  162,857  shares  of common stock to Carl E. Dilley, 58,824
shares to Ben Grocock, 70,000 shares to Byron Rambo, 57,143 shares to J. Knigin,
57,143  shares  to  S.  Niakan,  57,143 shares to A. Sikorski, 115,000 shares to
Brian A. Lebrecht, 77,143 shares to J. Keane, and 77,143 shares to P. Storti for
services  rendered  to  the  Company. The issuances were registered on Form S-8.

     In  August  2001,  the  Company  issued  166,667  shares of common stock to
Jeffrey  M. Harvey, 166,667 shares to Donald A. Mitchell, 279,167 shares to Carl
E.  Dilley,  107,812  shares  to A. Balduzzi, 78,125 shares to J. Knigin, 78,125
shares  to  S. Niakan, 78,125 shares to A. Sikorski, 125,000 to S. Marinkovitch,
280,000  shares  to  F.  Horwich,  and  250,000  shares to Brian A. Lebrecht for
services  rendered  to  the Company.  The issuances were registered on Form S-8.

     In November 2001, the Company issued 390,000 shares of common stock to Carl
E. Dilley, 300,000 shares to Donald A. Mitchell, and 50,000 shares to Jeffrey M.
Harvey  for  services rendered to the Company.  The issuances were registered on
Form  S-8.

     In  all  instances,  in  the  opinion  of  management,  the  terms  of  the
transactions with affiliates or related parties are no less favorable than could
be  obtained  from  non-affiliates.

                                       20
<PAGE>

ITEM  13  -  EXHIBITS  AND  REPORTS  ON  FORM  8-K

     (A)     EXHIBITS


     EXHIBIT  NO.           DESCRIPTION
     ------------           -----------

     3.1  (1)               Certificate  of Incorporation, as amended, of E-Rex,
                            Inc.

     3.2  (1)               By-laws  of  the  Registrant

     4.1  (1)               Form  of  common  stock  certificate  of E-Rex, Inc.

     23.1                   Consent of Parks, Tschopp, Whitcomb & Orr, P.A.

     99.1                   Certification Pursuant to 18 U.S.C. Section 1350, As
                            Adopted  Pursuant  to  Section  906  of  the
                            Sarbanes-Oxley Act of 2002.
______________

(1)     Incorporated  by  reference  from Registrant's Registration Statement on
        Form 10-SB  filed  on  September  13,  1999.


        (B)     REPORTS  ON  FORM  8-K

     On  October  10, 2001, the Company filed a Current Report on Form 8-K dated
October  1,  2001  regarding  the  resignation of Mr. Jeffrey M. Harvey from the
Company's  Board  of  Directors.

     On  June 1, 2001, the Company filed a Form 8-K dated May 18, 2001 reporting
Item  4,  Change  in  Registrants'  Certifying  Accountant.


                                       21
<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.



Dated:  August 26,  2002                          E-Rex,  Inc.

                                                  /s/ Carl E. Dilley
                                                  ______________________________

                                                  By:  Carl  E.  Dilley
                                                  Its: President  and  Chief
                                                       Financial  Officer



                                                  /s/ Donald A. Mitchell
Dated:  August 26,  2002                          ______________________________

                                                  By:  Donald  A.  Mitchell
                                                  Its: Director



                                                  /s/ Joseph Pacheco
Dated:  August 26,  2002                          ______________________________

                                                  By:  Joseph  Pacheco
                                                  Its: Director


                                       22
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

The Board of Directors
E-Rex, Inc.:

We  have  audited  the  accompanying balance sheet of E-Rex, Inc. (a development
stage  company)  as  of  December  31,  2001,  and  the  related  statements  of
operations,  stockholders'  equity,  and cash flows for the year then ended, and
cumulative  period from August 26, 1986 (date of inception) through 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. The 2000 financial statements were audited by
other auditors whose report dated May 11, 2001 expressed a qualified opinion for
going  concern  reasons.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audits  to obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An  audit also includes assesing 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 E-Rex, Inc. (a development
stage  company)  as  of December 31, 2001, and the results of its operations and
its  cash  flows  for the year then ended, and the cumulative period from August
26,  1986  (date  of  inception)  through  December 31, 2001, in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in note 2 to the
financial  statements,  the  Company  has  experienced net operating losses of $
(3,535,831)  and  $  (8,492,953) for the years ended December 31, 2001 and 2000,
respectively.  At  December  31,  2001,  the  Company  continues to experience a
working  capital  deficit  and  also has a stockholders' deficit of $ (701,545).
These matters raise substantial doubt about the Company's ability to continue as
a  going concern. Management's plans in regard to these matters are described in
note  2.  The  accompanying  financial statements do not include any adjustments
relating  to  the recoverability and classification of asset carrying amounts or
the  amount  and  classification  of  liabilities  that  might result should the
Company  be  unable  to  continue  as  a  going  concern.

/s/ Parks, Tschopp, Whitcomb & Orr, P.A.
________________________________________
Parks, Tschopp, Whitcomb & Orr P.A.
Certified Public Accountants
Maitland, Florida

April 7, 2002

                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                                                             E-REX, INC.
                                                            BALANCE SHEET
                                              AS OF DECEMBER 31, 2001 AND DEC 31, 2000.
                                                     (A Development Stage Company)

                                                              ASSETS
                                                              ------

                                                                                                      Dec 31          Dec 31
                                                                                                       2001            2000
                                                                                                      -------         -------

<S>                                                                                                     <C>             <C>
CURRENT ASSETS
--------------

Cash                                                                                                        7,454        19,948
Prepaid Expense                                                                                            20,938             -
Accounts receivable from related parties                                                                      135           298
Accounts receivable                                                                                         6,969        22,757
                                                                                                      ------------  ------------

     Total Current Assets                                                                             $    35,496   $    43,003
                                                                                                      ------------  ------------


PROPERTY AND EQUIPMENT
----------------------

Furniture, equipment and software                                                                         126,212        92,792
Less: accumulated depreciation                                                                            (41,651)       (7,800)
                                                                                                      ------------  ------------

     Total Other Assets                                                                               $    84,561   $    84,992
                                                                                                      ------------  ------------

OTHER ASSETS
------------

Investments                                                                                           $    12,601   $    62,600
                                                                                                      ------------  ------------


     TOTAL ASSETS                                                                                     $   132,658   $   190,595
                                                                                                      ============  ============

                                                    LIABILITIES AND STOCKHOLDERS' DEFECIT
                                                   --------------------------------------

CURRENT LIABILITIES
-------------------

Accounts payable                                                                                          181,734        95,440
Accounts payable to related parties                                                                         2,837       155,467
Accrued liabilities                                                                                        37,813        10,838
Accrued interest on bonds                                                                                  26,008         7,460
Demand Note Payable-related party                                                                         485,811       298,654
Convertible debenture bonds                                                                               100,000       240,000
                                                                                                      ------------  ------------

     Total current liabilities                                                                        $   834,203   $   807,859
                                                                                                      ------------  ------------

             TOTAL LIABILITIES                                                                        $   834,203   $   807,859
                                                                                                      ------------  ------------

                                                            STOCKHOLDERS' DEFECIT
                                                            --------------------


STOCKHOLDERS' DEFICIT
----------------------

Common stock, $.001 par value, 100,000,000 authorized
Shares issued and outstanding as of December 31, 2000      23,808,816                                                    23,809
Shares issued and outstanding as of December 31, 2001      54,524,223                                      54,524             -
Additional paid in capital                                                                             12,621,494    10,386,204
Accrued Stock Compensation                                                                                (22,500)   (1,258,045)
Accumulated Other Comprehensive Income, net of tax
Net unrealized gains (losses) on marketable equity securities                                            (537,400)     (487,400)
Deficit accumulated during the development stage                                                      (12,817,663)   (9,281,832)

     Total stockholders' deficit                                                                      $  (701,545)  $  (617,264)
                                                                                                      ------------  ------------

             TOTAL LIABILITIES AND DEFICIT                                                            $   132,658   $   190,595
                                                                                                      ============  ============

                                   See accompanying notes to the financial statements
</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                                                     E-REX, INC.
                                              STATEMENT OF OPERATIONS
                      FOR THE YEARS ENDING DECEMBER 31, 2001 AND 2000 AND FROM INCEPTION
                                            (A Development Stage Company)


                                                        Year           Year
                                                       Ended          Ended
                                                       31-Dec         31-Dec        FROM
                                                        2001           2000       INCEPTION
                                                     ------------  ------------  ------------

<S>                                                       <C>          <C>           <C>

REVENUE                                              $    87,185   $    35,976   $   123,161
-------

COST OF SALES                                            (79,837)      (10,607)      (90,444)
-------------                                        ------------  ------------  ------------

GROSS PROFIT                                               7,348        25,369        32,717
-------------                                        ------------  ------------  ------------

EXPENSES
--------

  General and administrative                          (3,334,639)   (8,350,075)  (12,595,858)
  Research and development                              (146,261)     (151,729)     (297,990)
                                                     ------------  ------------  ------------

  Total expenses                                      (3,480,900)   (8,501,804)  (12,893,848)
                                                     ------------  ------------  ------------

LOSS FROM OPERATIONS                                  (3,473,552)   (8,476,435)  (12,861,131)
--------------------                                 ------------  ------------  ------------

OTHER INCOME
------------

  Interest income                                                                      1,439
  Interest Expense                                       (62,279)      (16,418)      (78,697)
  Recovery from lawsuit                                        -             -       120,726
                                                     ------------  ------------  ------------

INCOME (LOSS) BEFORE INCOME TAXES                    $(3,535,831) $ (8,492,853) $(12,817,663)
---------------------------------
  Income Taxes                                                 -             -             -
                                                     ------------  ------------  ------------

NET INCOME (LOSS)                                    $(3,535,831) $ (8,492,853) $(12,817,663)
-----------------                                    ============  ============  ============

  Weighted average
  Number of shares                                    29,649,570    18,841,966

Basic EPS                                            $     (0.12)  $     (0.45)
</TABLE>
                             See accompanying notes to the financial statements

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                                                      E-REX, INC.
                                               STATEMENT OF CASH FLOWS
                      FOR THE YEARS ENDING DECEMBER 31, 1999 DECEMBER 31, 2000 AND DECEMBER 31, 2001
                                            (A Development Stage Company)

                                                         Year           Year
                                                        Ended          Ended          FROM
                                                        31-Dec         31-Dec      INCEPTION
                                                         2001           2000        TO DATE
                                                     -----------   ------------  --------------

<S>                                                       <C>          <C>           <C>
CASH FLOWS FROM (FOR)
OPERATING ACTIVITIES
---------------------

Net Loss                                            $ (3,535,831)   (8,492,853)  (12,817,663)

Adjustments to reconcile net loss
to net cash provided by
operating activities:

Stock issued for Services                              1,104,108     7,273,872     8,568,656
Stock issued for Research and Development                      -       124,595       124,595
Stock issued in conversion of Accts Payable              120,000             -       120,000
Warrants issued for Services                             731,673       450,000     1,181,673
Amortization of stock issued for services
in prior period                                        1,235,545             -     1,235,545
Depreciation expense                                      33,851         4,904        41,651
(Increase) Decrease in
  Accounts receivable                                     15,788       (22,757)       (6,969)
  Accounts receivable from related parties                  (135)         (298)         (135)
  Prepaid professional Fees and Expenses                 (19,196)            -       (19,494)
  Deposits and Retainers                                  (1,444)            -        (1,444)
(Increase) Decrease in
  Accounts payable                                        96,054       162,382       181,734
  Accounts payable to related parties                   (162,390)            -         2,837
  Accrued liabilities                                     26,975        18,298        37,813
  Accrued Bond Interest                                   18,548             -        26,008
Other                                                          -             -             -
                                                     ------------  ------------  --------------

Total adjustments to net income (loss)                 3,199,377     8,010,996    11,492,470

Net cash used in
operating activities                                    (336,454)     (481,857)   (1,325,193)
                                                     ------------  ------------  --------------
CASH FLOWS FROM (FOR)
INVESTING ACTIVITIES
---------------------

Purchase or Disposal of Furniture,
Equipment and Software                                       703       (37,855)      (33,951)


Net cash flows used in
investing activities                                         703       (37,855)      (33,951)
                                                     ------------  ------------  --------------




CASH FLOWS FROM (FOR
FINANCING ACTIVITIES
--------------------

Proceeds from loan from related party                    187,157       623,654       810,811
Proceeds from issuance of stock                          136,100       329,000       990,787
Payment on loan                                                -      (325,000)     (325,000)
Purchase of treasury stock                                     -      (150,000)     (150,000)
Proceeds from issuance of Conv Debentures                      -        40,000        40,000
                                                     -----------   ------------  --------------
Net cash provided by
 financing activities                                    323,257       517,654     1,366,598


CASH RECONCILIATION
-------------------

Net increase (decrease) in cash                          (12,494)       (2,058)        7,454
Cash at beginning of period                               19,948        22,006             0
                                                     ------------  ------------  --------------

CASH BALANCE AT END OF YEAR                          $     7,454   $    19,948   $     7,454
---------------------------------                    ============  ============  ==============
</TABLE>

                           See accompanying notes to the financial statements

                                      F-4
<PAGE>


<TABLE>
<CAPTION>

                                                          E-REX, INC.
                                       STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                          FOR THE PERIOD FROM INCEPTION (AUGUST 26, 1986) TO DECEMBER 31, 2001
                                                (A Development Stage Company)

                                                                                                      DEFECIT
                                                                         ACCRUED       ADDITIONAL    ACCUMULATED
                                                COMMON       STOCK        STOCK         PAID-IN        DURING
                                                SHARES       AMOUNT    COMPENSATION     CAPITAL      DEV. STAGE      TOTAL
                                             -----------    --------   ------------   -----------   -----------   -----------

<S>                                          <C>            <C>        <C>            <C>           <C>           <C>
Issuance of shares of common
stock on Aug. 1986, for
$.044 per share                                 250,000        $250             -        $10,750             -        11,000

Net (loss) from inception on
Aug. 26, 1986, through Dec.
31, 1986                                                                                               (15,354)      (15,354)
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance December 31, 1986                       250,000         250             -         10,750       (15,354)       (4,354)

Issuance of shares of common
stock to the public for
$1.00 per share                                  93,215          93             -         93,122                      93,215

Deferred offering cost offset
against additional paid-in capital                                                        (7,663)                     (7,663)

Net (loss) for the year ended
Dec. 31, 1987                                                                                          (80,103)      (80,103)
                                             -----------    --------   ------------   -----------   -----------   -----------
Balance, December 31, 1987                      343,215         343             -         96,209       (95,457)        1,095

Net (loss) for the four year period
ended Dec. 31, 1991                                                                                     (4,072)       (4,072)
                                             -----------    --------   ------------   -----------   -----------   -----------
Balance, December 31, 1991                      343,215         343             -         96,209       (99,529)       (2,977)

Issuance of shares of stock on
Feb. 4, 1992 for $1.00 per share                166,716         167                      166,549                     166,716

Deferred offering cost offset
against additional paid-in capital                                                       (26,125)                    (26,125)

Common stock issued on
Feb. 4, 1992 for services                       136,785         137                       27,220                      27,357

Net (loss) for the year ended
Dec. 31, 1992                                                                                         (179,027)     (179,027)
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance, December 31, 1992                      646,716         647               -      263,853      (278,556)      (14,056)


Issuance of shares of common
stock to the public on Feb. 3,
1933 for $4.00 per share                         32,000          32                      127,968                     128,000

Deferred offering cost offset
against additional paid-in capital                                                       (74,239)                    (74,239)

Common stock issued for legal
services on April 29, 1993                      110,000         110                       21,890                      22,000

Net (loss) for the year ended
Dec. 31, 1993                                                                                          (39,703)      (39,703)
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance, December 31, 1993                      788,716         789               -      339,472      (318,259)       22,002

Net (loss) for the year ended
Dec. 31, 1994                                                                                           (8,357)       (8,357)
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance, December 31, 1994                      788,716         789               -      339,472      (326,616)       13,645

Net (loss) for the year ended
Dec. 31, 1995                                                                                          (19,185)      (19,185)
                                             -----------    --------   ------------   -----------   -----------   -----------
Balance, December 31, 1995                      788,716         789               -      339,472      (345,801)       (5,540)

                                      F-5
<PAGE>

Balance, December 31, 1995                      788,716         789               -      339,472      (345,801)       (5,540)

Net (loss) for the year ended
Dec. 31, 1996                                                                                           (4,500)       (4,500)
                                             -----------    --------   ------------   -----------   -----------   -----------
Balance, December 31, 1996                      788,716         789               -      339,472      (350,301)      (10,040)

Common stock issued for
services Sep. , 1997                             30,000          30                                                       30

Net income for the year
ended Dec. 31, 1997                                                                                     52,251        52,251
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance, December 31, 1997                      818,716         819               -      339,472      (298,050)       42,241

Common stock issued for
services Sep. , 1998                          1,682,000       1,682                        1,000                       2,682

Common shares issued
in Reg D-504 exempt offering
Nov. and Dec., 1998                           1,539,500       1,539                      152,410                     153,949

Common stock issued for
services Dec., 1998                             100,000         100                        9,900                      10,000

Net (loss) for the year
ended Dec. 31, 1998                                                                                    (26,493)      (26,493)
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance, December 31, 1998                    4,140,216       4,140              -       502,782      (324,543)       182,379

Common shares issued
for cash                                        424,000         424                      113,076                     113,500

Common shares issued
for acquisition                               8,137,616       8,138                                                    8,138

Common shares issued
for services                                  3,000,000       3,000                       92,941                      95,941

Net loss for the period                                                                               (464,436)     (464,436)
                                             -----------    --------   ------------   -----------   -----------   -----------

Balance, December 31, 1999                   15,701,832      15,702              -       708,799      (788,979)      (64,478)

Common shares issued
for cash                                      3,290,000       3,290                      325,710                     329,000

Common shares issued
for services and compensation                 9,386,667       9,387                    8,069,873                   8,079,260

Common shares issued
for consulting services                         311,263         311                      127,307                     127,618

Common shares issued
as Settlement Agreement                       1,096,670       1,097                      448,537                     449,634

Accrued stock compensation                                              (1,258,045)                               (1,258,045)

Common shares issued in
exchange of shares as
an investment                                 1,000,000       1,000                      399,000                     400,000

Common share purchased
as treasury stock                            (6,977,616)     (6,978)                    (143,022)                   (150,000)

Beneficial Conversion feature of Warrants                                                450,000                     450,000

Accumulated Other Comprehensive losses, net of tax
Net unrealized gains (losses) on marketable equity securities                                                       (487,400)

Net loss for the period                                                                             (8,492,853)   (8,492,853)
                                             -----------    --------   ------------   -----------   -----------   -----------
Balance, December 31, 2000                   23,808,816      23,809     (1,258,045)   10,386,204    (9,281,832)     (617,264)

Common shares issued
for consulting services                      15,616,949      15,617                    1,088,491                   1,104,108

Common shares issued
for Software Development Investment             127,373         127                       33,997                      34,124

Accrued Stock Compensation                                               1,235,545                                 1,235,545

Common shares issued
in Conversion of accounts payable               600,000         600                      119,400                     120,000

Common shares issued
in Conversion of Convertible Debentures         280,000         280                      139,720                     140,000

Common shares issued
for Cash                                     14,091,085      14,091                      122,009                     136,100

Beneficial Conversion feature of Warrants                                                731,673                     731,673

Accumulated Other Comprehensive losses, net of tax
Net unrealized gains (losses) on marketable equity securities                                                        (50,000)

Net loss for the period                                                                             (3,535,831)   (3,535,831)
                                             -----------    --------   ------------   -----------   -----------   -----------
Balance, December 31, 2001                   54,524,223    $ 54,524       ($22,500)  $12,621,494  ($12,817,663)    ($701,545)
                                             ===========    ========   ============   ===========   ===========   ===========

                                        See accompanying notes to the financial statements
</TABLE>

                                      F-6
<PAGE>


                                   E-REX,  INC.
                                   FORM  10-K

                                    NOTES  TO
                              FINANCIAL  STATEMENTS

                               DECEMBER  31,  2001

1.     Summary  of  Significant  Accounting  Policies:

Nature  of Operations  -  E-Rex, Inc. (the "Company"), a Nevada corporation, was
incorporated  on August 26, 1986 as P.R. Stocks, Inc.  On February 26, 1992, the
Company  changed  its name to National Health & Safety Corporation.  On November
12, 1992, the Company changed its name to Medgain International Corporation.  On
June  20,  1994  the  Company  changed  its name to E-Rex, Inc.  On February 20,
1999  the  Company  entered  into  a  business  combination (see Note 5).  Until
September  of  the  year  2000,  the  Company  had  no material revenues and is
considered to be in the development stage.  The Company now operates an Internet
web hosting service.  The Company continues its development of computer hardware
and  software  products  that  it  intends  to  sell.

Cash  Equivalents  -  The Company considers all highly liquid investments with a
maturity  of  three  months  or  less  when  purchased  to  be cash equivalents.

Earnings  (Loss)  Per  Share  -  Basic earnings per share ("EPS") is computed by
dividing  earnings  available  to  common  shareholders  by the weighted-average
number  of common shares outstanding for the period as required by the Financial
Accounting Standards Board (FASB) under Statement No. 128, "Earnings per Share".
Diluted  EPS  reflects  the potential dilution of securities that could share in
the  earnings.

Basis  of  Accounting  -  The  Company's  financial  statements  are prepared in
accordance  with  generally  accepted  accounting  principles.

Revenue  Recognition -The Company performs all services or delivers all products
prior  to  recognizing  revenue. Monthly services are considered to be performed
ratably  over  the term of the arrangement. Professional consulting services are
considered  to  be  performed  when  the services are complete. Fees for certain
monthly  services,  including  certain  portions of networking, web hosting, and
e-mail  services,  are variable based on an objectively determinable factor such
as  usage.  Such  factors  are  included  in  the written contract such that the
customer's  fee  is determinable. The customer's fee is negotiated at the outset
of  the arrangement and is not subject to refund or subject to adjustment during
the  initial  term  of  the  arrangement.

The  Company  determines  that  collectibility  is  reasonably  assured prior to
recognizing  revenue. Collectibility is assessed on a customer by customer basis
based  on criteria outlined by management. New customers are subject to a credit
review process, which evaluates the customer's financial position and ultimately
its  ability  to  pay.  The  Company  does  not  enter  into arrangements unless
collectibility  is  reasonably  assured  at  the  outset. Existing customers are
subject  to  ongoing  credit  evaluations  based  on  payment  history and other
factors.  If  it is determined during the arrangement that collectibility is not
reasonably  assured,  revenue  is  recognized  on  a  cash  basis.

Use  of Estimates  -  The preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying  notes.  Actual  results  could  differ  from  those  estimates.

Income Taxes  -  The Company records its income tax provision in accordance with
Statement  of  Financial  Accounting  Standard  No.  109, "Accounting for Income
Taxes."

                                      F-7
<PAGE>

Functional  Currency  -  All  amounts  in the Company's financial statements and
related  footnotes  are  stated in U.S. dollars.  The Company had no significant
gain  or  losses  from foreign currency conversions.  The Company has closed its
foreign bank accounts during the year 2000 and now operates using U.S. currency.

Property  and  Equipment  -  Depreciation  and  amortization  is computed by the
straight  line  method  with  the  following  recovery  periods:

         Office  equipment  and  software             3-5  Years
         Furniture                                    5-7  Years

Maintenance  and  repairs  are  charged  to expense as incurred; betterments and
renewals  are capitalized in plant and equipment accounts.  Cost and accumulated
depreciation  applicable  to  items  replaced or retired are eliminated from the
related accounts; gain or loss on the disposition thereof is included as income.
No  depreciation  is  recorded  on  property  and  plant  left  idle.

The  Company  accounts for marketable securities in accordance with Statement of
Financial  Accounting  Standards No. 115, "Accounting for Certain Investments in
Debt  and  Equity  Securities."  This  statement  requires  securities which are
available-for-sale  to  be  carried  at  fair  value, with changes in fair value
recognized  as  a  separate  component  of  stockholders'  equity.

Realized  gains  and  losses  are  determined  on  the  basis  of  specific
identification.  Declines  in  the  fair  value of individual available-for-sale
securities  below their cost that are other than temporary result in write-downs
of  the  individual  securities to their fair value. The related write-downs are
included  in  earnings  as  realized  losses.

Non-marketable  securities-The  Company  accounts  for investments for which the
Company does not have the ability to exercise significant influence or for which
there  is  not  a  readily  determinable  market value, under the cost method of
accounting.  Additionally,  certain  securities  are  restricted  and  are  not
transferable.

The  Company  periodically  evaluates  the  carrying  value  of  its investments
accounted  for  under the cost method of accounting and as of December 31, 2001,
such  investments were recorded at the lower of cost or estimated net realizable
value.

2.     Basis  of  Presentation  as  a  Going  Concern:

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of  liabilities in the normal course of business. The Company has incurred a net
loss from inception (August 26, 1986) and is considered to be in its development
stage).  The  Company continues to operate at a loss. This factor, among others,
raises  substantial  doubt  as  to  the Company's ability to continue as a going
concern.

The  Company's  management  intends  to raise additional operating funds through
equity and/or debt offerings and revenue from its new operation.  However, there
can  be  no  assurance  management  will  be  successful  in  its  endeavors.

E-Rex  has  entered into an investment agreement with Swartz Private Equity, LLC
to  raise  up  to $15 million through a series of sales of our common stock. The
dollar  amount  of  each  sale  is  limited by our common stock's price, trading
volume,  and a minimum period of time that must elapse between each sale. At the
current  market  price  of  our  common  stock, the amount of money we can raise
through  the  Swartz  agreement  is very limited, and we cannot be sure how much
money we can raise through the Swartz agreement in the future. Each sale will be
to Swartz. In turn, Swartz will either hold our stock in its own portfolio, sell
our stock in the open market, or place our stock through negotiated transactions
with  other  investors.  The  investment  agreement  provides,  in  summary:

                                      F-8
<PAGE>

From  time  to  time at our request, Swartz will purchase from us that number of
shares  of  our  common stock equal to 15% of the number of shares traded in the
market  in  the  20  business  days immediately before the date of the requested
purchase,  excluding certain block trades, or 15% of the number of shares traded
in  the  20  business  days  preceding the date of our advance notice of our put
right,  excluding  certain  block  trades,  whichever  is  less;

The  purchase  price  per  share  is the lesser of 91% of the lowest closing bid
price  per  share during the 20 Business days after our request, or that closing
bid price minus $0.075, but in no event will the purchase price be less than the
minimum  price  we select in our sole discretion; Swartz will not be required to
purchase  at  any  one  time  shares  having  a  value  in excess of $2,000,000;

We  may  make  additional  requests  at  intervals  of  approximately  30  days;
as  a  commitment  fee,  we  granted  to  Swartz commitment warrants to purchase
2,700,000  shares  of our common stock, which warrants can be exercised at $0.04
per  share  (subject to potential future adjustment) through September 22, 2007.

The  commitment  warrants exercise price is reset to the lowest closing price of
our  common  stock  during  the  five  trading  days  ending  on  the  six month
anniversary  of the warrant issuance date, if the lowest price is lower than the
then-current  exercise  price;

Swartz  can  only  exercise  its  commitment  warrants to the extent that, after
exercise,  Swartz  does  not  own  more  than  4.99%  of our outstanding shares;

the  commitment  warrants are subject to antidilution provisions, in the case of
stock  splits.

Our  agreement with Swartz is not a convertible debenture, convertible preferred
stock,  or  similar  type  of  investment  instrument.  In  addition, we are not
borrowing  from  Swartz  as  with  a  conventional cash line of credit.  Rather,
subject to the limitations set forth above, our agreement with Swartz permits us
to  decide,  in  our sole discretion (subject to penalties for non-use), whether
and  the  extent  to  which  we  wish to require that Swartz purchase our stock.
Until our registration statement is declared effective, we have no plans to sell
shares  to  Swartz,  and  we  are  currently in compliance with the terms of the
investment  agreement.

3.     Income  Taxes:

The  Company  records  its  income tax provision in accordance with Statement of
Financial  Accounting  Standards  No.  109,  "Accounting for Income Taxes" which
requires  the  use  of  the  liability  method of accounting for deferred income
taxes.

Since  the  Company has not generated cumulative taxable income since inception,
no  provision for income taxes has been provided.  At Dec 31, 2001, the  Company
did  not  have  significant  tax net operating loss carry forwards (tax benefits
resulting  from  losses  for  tax  purposes  have been fully reserved due to the
uncertainty  of a going concern).  At December 31, 2001 the Company did not have
any  significant  deferred  tax  liabilities  or  deferred  tax  assets.

4.     Development  Stage  Company:

The  Company  is a development stage company. A development stage company is one
for  which  principal operations have not commenced or principal operations have
generated  an insignificant amount of revenue. Management of a development stage
company devotes most of its activities to establishing a new business. Operating
losses  have  been incurred through December 31, 2001, and the company continues
to  use,  rather  than  provide,  working  capital  in  this operation. Although
management  believes  that  it  is pursuing a course of action that will provide
successful  future  operations,  the  outcome  of  these  matters  is uncertain.

                                      F-9
<PAGE>

5.     Business  Combination:

On  February  20, 1999 the Company entered into a merger agreement with Plantech
Communications  Systems,  Inc.  ("Plantech"), a privately held British Columbia,
Canada,  Corporation.  Plantech  is  a  development  stage  enterprise  in  the
software,  computer  and internet area.  From inception in 1992 to date Plantech
has  had  no  revenues.

Under  the  terms  of  the  merger agreement, Plantech shareholders received one
share  of  the  Company's  common  stock  for each outstanding share of Plantech
stock.  The  Company issued 8,137,616 shares of its common stock in exchange for
all  the  Plantech  common  shares  outstanding  as  of  February  20,  1999.

The  above  business  combination  was  accounted for under the purchase method.
There was no significant difference between the purchase cost and the fair value
of  net  assets/liabilities acquired, thus no goodwill was recorded.  Plantech's
results of operations are included in the Company's statement of operations from
the  date  of  merger, February 20, 1999. The following table sets forth certain
results  of  operations  for  the  periods presented as if the Plantech business
combination  had been consummated on the same terms at the Plantech inception in
1992.

                                                                      Inception
                                    Jan.  1,  1999                     (8/26/86)
                                     To Feb. 20,                     To Dec. 31,
                                        1999                            1999
                                    -------------                  -------------

     Revenues                       $       --                   $       --
     Net  (Loss)                    $   (230,954)                $   (616,086)

6.     Litigation:

On  August  4,  2000, Crusader Capital Group, Inc. filed a complaint against the
company  in  civil  action number CV-N-411-DWH-RAM in the United States District
Court  for  the district of Nevada.  A settlement agreement has been reached and
the Company has issued a total of 166,667 shares of restricted common stock that
was  delivered  to  Crusader  Capital  Group, Inc. in conjunction with the final
settlement  agreement.

In  January,  2000  the Board of Directors resolved to settle a British Columbia
Supreme  Court  action brought against the Company for an unpaid vendor bill for
$25,000.  The  Company  also  accepted  from  the same vendor a return of 50,000
shares  of  the  Company  stock  that  the  vendor  held.

In  February  2002,  the Company was served with a lawsuit brought by a group of
ten  (10)  plaintiffs,  namely Carol Gamble Trust 86, June L. Blackwell, June L.
Blackwell and Christopher Ford, as joint tenants, Terry Shores, Steve Rigg, Karl
Weinacker,  Ressoyia  Anderson,  Mel  Goodman,  Slawomir  Kownacki,  and  John
Bussjeager,  in  the  United  States  District  Court,  District of Nevada.  The
defendants  in  the  action  are  the  Company, its Board of Directors, a former
Director,  the  Company's  legal  counsel,  and  two  corporate  entities.

The  Complaint alleges, among other things, that the plaintiffs are shareholders
of  the  Company,  that  they  acquired  stock  of  the  Company  based  on
misrepresentations, that management of the Company misappropriated assets of the
Company,  and  further  alleges violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934. The Complaint requests an unspecified amount of
damages, that the Board of Directors and officers of the Company be removed, and
that  a receiver or custodian be appointed to operate the business, as well as a
judicial  determination  that  the  action  be  maintained  as a class action. A
hearing  has  been set for April 22, 2002, on plaintiff's motion for appointment
of  a  receiver  and/or  custodian,  or in the alternative for call of a special
meeting  of  shareholders.

                                      F-10
<PAGE>

The  Company  is vigorously defending this lawsuit although the Company believes
that the action lacks merit.  The case is at a stage where no discovery has been
taken  and  no  prediction  can  be  made  as  to  the  outcome  of  this  case.

7.     Related  Party  Transactions:

The  company  purchased software, equipment and 100,000 shares of DiveDepot.com,
Inc. stock from Webulate LLC. The transaction was completed with cash of $40,000
and  convertible notes payable valued at $200,000. The President of the Company,
Mr.  Dilley, was on the Board of Directors of DiveDepot.Com, Inc. at the time of
the transaction and the director Mr. Mitchell, is also on the Board of Directors
of  DiveDepot.Com,  Inc.

The  Company  entered  into  an agreement on January 21, 2000 with International
Investment  Banking,  Inc. ("IIBI") whereby IIBI will serve as senior management
of  the  Company  for  an  initial  term of two years unless further extended by
mutual  agreement  of  the  parties.  The  Chairman  of  the  Company, Donald A.
Mitchell,  also controls IIBI.  Pursuant to the agreement, IIBI receives $10,000
per month and reimbursement of normal business expenses that it incurs on behalf
of  the Company and certain expenses of individual consultants that IIBI assigns
to  carry  out  the  duties and responsibilities of IIBI.  Thereafter the annual
compensation  shall  increase at a rate of 20% per year.  In addition to monthly
compensation, IIBI or Mr. Mitchell may be entitled to receive an annual bonus as
determined  by the Company's Board of Directors payable in common stock or cash.
Mr. Mitchell was granted 2,000,000 shares of common stock representing 1,000,000
common  shares  for  each  year  of  IIBI's  engagement.  As an addendum to this
agreement,  IIBI  was directed on the Company's behalf to execute the following:
Purchase  8,237,616  shares  of stock from two of the Company's former directors
for $250,000; issue 6,000,000 shares of stock to Stockbroker Relations, Inc. per
an  investor  relations  contract; and issue IIBI 1,000,000 shares of restricted
common  stock.  On  February  28,  2001  the  board  of Directors issued 600,000
restricted  shares  under Regulation D to IIBI in satisfaction of an outstanding
debt  of  $120,000. This service agreement was terminated by mutual agreement on
June  30,  2001.

The  Company  entered into an agreement on September 11, 2000 with International
Investment  Banking,  Inc.  ("IIBI")  whereby  IIBI  provides the company with a
credit  line  financing  on  a demand basis with interest accruing at prime rate
plus  4%.  The  total  of  loan  advances,  services  invoices  outstanding  and
interest  has been assigned to designees of IIBI. This demand loan has a balance
including  interest  of  $485,811 at December 31, 2001 and $298,654 at  December
31,  2000  respectively.

The  Company  made  an  investment in Ultimate Franchise Systems, Inc. (USFI) on
August  1, 2000 in an exchange of 1,000,000 shares of the Company's stock valued
at  $400,000  for  1,000,000  shares  of  common  stock  in  USFI  and  other
consideration,  valued  at  $400,000.  Further to the agreement the Company will
develop a home delivery web site and on-line ordering system for a fee of $75.00
per  unit  per  month  in approximately 300 restaurants, plus a royalty of 5% of
on-line  gross  sales.

On February 22, 2001 the Company issued 75,000 shares of common stock to Jeffrey
Harvey, a director and officer, for legal services valued at $15,000, and 75,000
shares  of  common  stock  to  Carl  Dilley,  for  management services valued at
$28,500.   The  issuances  were  registered  on  Form  S-8.

On  June  12,  2001  the Company issued 85,714 shares of common stock to Jeffrey
Harvey,  a  director  and  officer,  for  legal  services valued at $36,857, and
162,857 shares of common stock to Carl Dilley, for management services valued at
$70,029, and 115, 000 shares of common stock to Brian Lebrecht, the attorney for
the  corporation,  for  legal  services  valued at $49,450.   The issuances were
registered  on  Form  S-8.

                                      F-11
<PAGE>

On  August 13, 2001 the Company issued 166,667 shares of common stock to Jeffrey
Harvey,  a  director  and  officer,  for  legal  services valued at $26,667, and
279,167 shares of common stock to Carl Dilley, for management services valued at
$70,029,  and 250,000 shares of common stock to Brian Lebrecht, the attorney for
the  corporation,  for  legal  services  valued at $40,000.   The issuances were
registered  on  Form  S-8.

On  November  16,  2001  the  Company  issued  300,000 shares of common stock to
Donald  A. Mitchell,  a  director  and  officer,  for management services valued
at$3,000.

The  Company  assumed a promissory note payable to Valcom Ltd, a West Vancouver,
British  Columbia  Company, dated March 15, 1997 in the amount of $6,450 with no
interest  stated.  This  note  was  assumed  by  the  Company from the merger as
described  in  footnote  5.  The  Company has also entered into an agreement for
design  and  integration  work  with  Valcom  Ltd,  an  entity  controlled  by a
shareholder  of  the Company, Paul R. MacPherson, who was also a director of the
Company  at  the  time the agreement was entered into.  The Company continues an
ongoing  relationship  with  Valcom Ltd. in that the Company uses Valcom Ltd. as
its  resource for research and development of its computer hardware and software
product  development  along  with  the  company  Riotech  LLC.

On  September 30, 2000 the Board of Directors extended and modified the terms of
the  employment  agreement  with  Carl  Dilley president and CEO, a director and
officer  as  follows.

Term.  The  term of the Employment Agreement shall be extended for an additional
two  year period, such that the Employment Agreement shall now expire at the end
of  the  day  on  May  30,  2004.

Compensation and Benefits.  Effective as of  the date hereof, in addition to any
compensation due Employee under the Employment Agreement or otherwise and except
as  otherwise  provided  herein,  Employee  shall  be  entitled to the following
compensation  and  benefits:

Employee's  salary shall increase by 15% over the prior year's salary, effective
April  1,  2002  and  each  April  1  thereafter.

Company  shall  provide to Employee, without cost, or reimburse Employee 100% of
the  cost,  of  health  insurance,  effective  April  1,  2002.

Employee  shall  be entitled to an annual bonus to be determined by the Board of
Directors,  which bonus may be paid either in cash or common stock registered on
Form  S-8.

The  amount  of Employee's vacation shall increase by one (1) week for each year
of completed service, effective April 1, 2002 and each April 1 thereafter, up to
a  maximum  of  six  (6)  weeks  of  paid  vacation.

Employee shall be entitled to participate in any bonus, profit sharing or 401(K)
program sponsored by Company and in any other benefit or perquisite that Company
may  offer  to  its  employees.

The Company shall issue to
Employee  warrants  to purchase a number of shares of its common stock having an
aggregate  market  value  based  on  the  bid  price  at the time of exercise of
$128,700.00  to supplement the depreciation of the stock compensation previously
paid  to  Employee  (as  provided by the Employment Agreement) and as additional
compensation  in  order to cover the tax liabilities generated by the payment in
stock  rather than cash required by Company.  The warrants shall have a two year
term and be exercisable upon written notice to Company setting forth an exercise
effective  date, at a price that is 50% of the average closing bid price for the
five  trading  days immediately preceding the exercise effective date (the fifth
day  in  the  average  calculation  being  one  day prior to the exercise date).

                                      F-12
<PAGE>

The  Company  shall  issue  to  Employee  90,000  shares  of its common stock as
additional  compensation  in  order  to  account  for the dilution of Employee's
original  stock  position  (as  contemplated  by  the Employment Agreement). The
foregoing  shares  of  stock  shall  be immediately, or shall have been prior to
delivery,  registered with the Securities and Exchange Commission on Form S-8 or
otherwise,  so that such shares shall be immediately free trading and able to be
sold  on  the  open  market  upon  receipt.

Share  Adjustment  in  the  Event  of  Devaluation.  To the extent not otherwise
addressed  in  the Employment Agreement, in the event the aggregate market value
of  any shares issued pursuant to the Employment Agreement, as amended, declines
after  issuance,  then Company shall from time-to-time as reasonably appropriate
(but  in no event less frequently than is necessary to provide periodic payments
equal to the salary and other sums then due) issue to Employee additional shares
of  its  common  stock,  registered  or to be registered on Form S-8 as provided
above,  to  compensate  Employee  for  any  lost  value.

8.     Convertible  Debenture  Bonds:

Refer  to  Footnote  7  with  regard  to bonds issued to related parties.  These
convertible  debentures  mature  July  1,  2002  are  convertible anytime at the
holders  option  on  the  basis of 1 common share for each $.50 of debenture par
value converted. The debentures accrue interest at the rate of 10% per annum. On
August  1,  2001  $140,000  principal of convertible debentures was converted to
280,000  common  shares  of  E-Rex,  Inc. At December 31, 2001 there was a total
of  $100,000  principal  convertible  debentures and accrued interest of $26,008
outstanding.

9.     Stockholders'  Equity:

Refer  to  Footnote  7  with  regard  to  equity  changes  with related parties.

On  November  20,  2000,  the  board  of directors declared 1,096,670 restricted
common  shares  to  be  issued, a value of $449,537, for the purpose of settling
with  shareholders  that had asserted that the Company had originally issued the
shareholders  stock  that was stated to be free trading shares.  The shares were
issued  under  a  Regulation  D  section  144 filing.  In addition to the shares
issued  were  3,290,000 options to purchase shares of the Company's common stock
at  an  exercise price of $1.00 that expire on November 21, 2002.  The Company's
management disagreed with the assertion, but decided to settle with the relevant
shareholders  through  the  issuance  of  additional shares and options as noted
above.  As  noted  in  Footnote  6,  Crusader  Capital  Group, Inc., accepted as
settlement  the  166,667  shares,  which  have  been  issued  and accounted for.

                                      F-13
<PAGE>

Stock options have been granted by the Company to directors and officers with an
expiration date of November 21, 2002. The stock options were issued November 21,
2000  with  325,000  options  excercisable at $.40 per share and 325,000 options
excercisable  at  $.75  per  share.

Stock options have been granted by the Company to directors and officers with an
expiration  date of August 7, 2003. The stock options were issued August 7, 2001
with  300,000  options  excercisable  at  $.15  per  share  and  300,000 options
excercisable  at  $.40  per  share.

Stock  options  have  been  granted by the Company to Ultimate Franchise Systems
Inc.,  to  purchase  3,000,000 shares of E-Rex common stock at an exercise price
equal  to  the average of the closing ask price plus $.01, as quoted on the NASD
over-the  counter bulletin.

700,000  options were issued to Corporate Service Providers Inc. for the purpose
of providing investment banking services to the company.  Terms as per corporate
resolution  dated  8/1/00  as  follows:

     Exercisable  at  $1.00  during  the  1st  12  months  from  date  of issue.
     Exercisable  at  $1.50  during  the  2nd  12  months  from  date  of issue.

Options  are  callable  with  a  21 day notification by the company if the stock
trades  for 20 consecutive business days at a 50% premium to the exercise price.

500,000 options were issued to Crusader Capital Group as an inducement to settle
the  suit  detailed  in Footnote 6.  The options are exercisable at $1.00 during
the  24  months  from  date  of  issue.

E-Rex  has also offered $1,000,000 in units of the company's securities pursuant
to  its  Memorandum of terms dated June 21, 2000.  The units consist of either a
Series  A  10%  Convertible  Debenture  or  a Series B 10% Convertible Debenture
together  with  50,000 attached warrants to purchase common stock at an exercise
price  of  $1.00  per  share  and a two year expiration.  The Company has issued
$240,000 of these bonds, $200,000 of which were in exchange for assets purchased
in  the  Webulate  LLC transaction.  The transaction is not a public offering as
defined  in  section  4(2)  of  the Securities Act of 1933, and accordingly, the
units  will  not  be registered under the Act or laws of any state but are being
offered  pursuant  to  exemptions  from  registration.

On  February  28,  2001  the board of Directors issued 600,000 restricted shares
under  Regulation  D  to  IIBI  in  satisfaction  of  debt  valued  at $120,000.

Per  a  one  year  investor  relations  contract dated March 23, 2000, 6,000,000
shares of stock were issued to Stockbroker Relations, Inc.  At December 31, 2000
an  unexpensed  balance of $1,258,045 in prepaid stock compensation for services
was  carried  in the equity of the company.  This amount was expensed during the
first  quarter  of 2001 and subsequently removed from the stockholders equity of
the  company.

On  April  2,  2001  the  board of Directors issued 346,153 restricted shares to
Action  Stocks,  Inc  and  James  Williams  under  Regulation  D in exchange for
investor  relations  services  valued  at  $58,846.  Under terms of the 12 month
agreement  Action  Stocks,  Inc.  will provide services to the company including
website  marketing, email services, direct client promotion, investor relations,
affiliate  promotions,  research  reports, and promotional spots on radio shows.

                                      F-14
<PAGE>

On  May  1st,  2001 the board of Directors issued 1,100,000 restricted shares to
Big  Apple  Consulting  U.S.A., Inc. under Regulation D in exchange for investor
relations services valued at $209,000.  The agreement requires a further 100,000
restricted shares to be issued on the first of every month for the next 5 months
of  the  agreement.  Under  terms  of the 6 month agreement Big Apple Consulting
U.S.A.,  Inc.  will  provide  stock  broker  relations  services  to the company
including,  direct  broker  promotion,  investor  relations including conference
calls,  and  investor  lead management. In addition to the compensation provided
for  the  agreement,  throughout  the term of this Agreement, Big Apple shall be
eligible  to  receive  a  bonus  in  the  form of callable warrants based on its
performance  in the 90 day period beginning on the Effective Date and in each 90
day  period  thereafter  (each,  a  "Bonus Period").  Big Apple's eligibility to
                                     ------------
receive  warrants, if any, shall be based on the Average Closing Share Bid Price
(the  "ACSBP")  for  the  twenty-one (21) trading days ending on the last day of
       -----
each Bonus Period.  The number of warrants, if any, to be issued to Promoter for
a  Bonus  Period  shall  be  determined  as  follows:

If the ACSBP equals or exceeds:     Promoter shall receive:      Exercisable at:
------------------------------      ----------------------       --------------

     $0.25  per  share                    175,000              $0.17  per  share
     $0.40  per  share                    100,000              $0.25  per  share
     $0.50  per  share                    100,000              $0.40  per  share


On May 25th the board of Directors issued 195,000 restricted shares to Big Apple
Consulting  U.S.A.,  Inc.  under Regulation D in exchange for marketing services
valued  at  $39,000.  Under  terms of the 6 month agreement Big Apple Consulting
U.S.A.,  Inc.  will  provide  marketing  services  to  the  company  in order to
introduce the Dragonfly product into the Northern European Market.  The services
rendered  will  include  a  market  study  and  analysis,  introduction to major
wireless  and  other  telecom  entities that may have an interest in purchasing,
distributing  manufacturing  the Dragonfly.  The agreement calls for the payment
of  pre-approved  expenses  and  a  5%  commission  on  sales  effected  by  the
consultant.  This  agreement  was  terminated  on  August  23,  2001.

On June 1st, 2001 the board of Directors issued 100,000 restricted shares to Big
Apple  Consulting  U.S.A.,  Inc.  under  Regulation  D  in exchange for investor
relations  services valued at $20,000 as part of the services agreement executed
May  1,  2001.

On  July  30th,  2001 the board of Directors issued 200,000 restricted shares to
Big  Apple  Consulting  U.S.A., Inc. under Regulation D in exchange for investor
relations  services valued at $38,000 as part of the services agreement executed
May  1,  2001.

On August 7th, 2001 the board of Directors issued 40,000 restricted shares under
Regulation  S  in exchange for advisory board member services valued at $66,343.

On  August  14th, 2001 the board of Directors issued 280,000 free trading shares
in  conversion  of  the  principle amount of $140,000 in convertible debentures.

On  August 23, 2001 E-Rex, Inc. terminated the services and marketing agreements
with  Big  Apple  Consulting  U.S.A.,  Inc.  for  breach  of  contract.

On  September  9th, 2001 the board of Directors issued 928,572 restricted shares
to  Mr.  Terry  Shores  for  $65,000  in  cash.

On  September  28th,  2001  the  board  of Directors issued 200,000 free trading
shares  under  Regulation S in exchange for marketing and stock exchange listing
services  valued at $16,000. On October 28th, 2001 the board of Directors issued
400,000  free  trading  shares  and  warrants  exercisable into $150,000 of Free
trading  shares  under  Regulation  S  in  exchange  for  consulting services as
follows.

                                      F-15
<PAGE>

Duties  of  Consultant,  The Consultant will provide such services and advice to
the  Company  so  as  to advise the Company in business development, mergers and
acquisitions,  business  strategy  and  corporate  image.  Without  limiting the
generality  of  the  foregoing,  Consultant  will  also  assist  the  Company in
developing,  studying  and evaluating acquisition proposals, prepare reports and
studies  thereon when advisable, and assist in matters of executive compensation
and  discussions  pertaining  thereof.  Nothing  contained  herein constitutes a
commitment  on  the part of the Consultant to find an acquisition target for the
Company  or,  if  such  target is found, that any transaction will be completed.
This  Agreement  is  not  a  contract  for listing services, and nothing in this
Agreement will require the Consultant to negotiate on behalf of the Company with
corporations  that  are  involved  with listings or making a market in corporate
securities  in  the  OTC markets. Consultant would undertake such services under
the  direction  of  Carl  Dilley,  Company  President  and CEO. Duties Expressly
Excluded. This Agreement expressly excludes the Consultant from providing public
relation  services  to the Company inclusive of but not limited to (i) direct or
indirect  promotion  of the Company's securities; (ii) assistance in making of a
market  in  the Company's securities. The Consultant shall not have the power of
authority  to  bind  the  Company to any transaction without the Company's prior
written  consent.

The  Company  shall  compensate  the  Consultant with free trading shares of the
Company's  Common Stock, and warrants for shares of Company's Common Stock.  The
Company  shall issue the Consultant 400,000 free trading shares of the Company's
Common  Stock  upon  execution of this agreement.  In addition, the Company will
issue  warrants  to  purchase $150,000 in freely trading shares of the Company's
Common  Stock  according  to  the  schedule  below.

The  warrants  will  expire  90  days  from  the  date of issue according to the
schedule  below,  and  Consultant  may  exercise  any  available warrants in any
increments  of  100,000 or more at any time prior to expiration according to the
schedule  below.  The  aforementioned warrants shall be executable at a "Market"
price  determined  by  taking  the  average closing price per share for ten days
previous  to  execution  of  the  warrants  and  multiplying  by  65%.   The
aforementioned  warrants  shall  be  considered  earned  upon  execution  of the
agreement.  The  Company  shall  immediately  file an S-8 registration including
these  shares.  The  Company  agrees  to  file  additional  S-8 registrations if
necessary  to  fulfill  the  terms  of  the  contract.

Schedule  For  Compensation

       Date          Description                         Amount/Number
1.     Execution     Issue  Shares                          400,000
2.     Execution     Warrants  at  65%  of  Market          $30,000
3.     11/01/01      Warrants  at  65%  of  Market          $40,000
4.     12/01/01      Warrants  at  65%  of  Market          $40,000
5.     1/01/02       Warrants  at  65%  of  Market          $40,000

During  the  year  ended December 31, 2001 the board of Directors issued 131,935
free  trading  shares  under  Regulation S in exchange for professional services
valued  at  $24,637.

During  the year ended December 31, 2001 the board of Directors issued 8,196,745
free  trading  shares  to  Mark  Wilson,  Jonathan  Knigin,  Sepher Niakan, Andy
Sikorski,  Paul  Storti,  Anne Balduzzi, Steve Marinkovitch, Jonathan Keane, and
Mitch  Ackles  under Regulation S in exchange for consulting services valued  at
$258,852.

During  the  year  ended December 31, 2001 the board of Directors issued 127,373
free  trading  shares under  Regulation  S in exchange for Software Research and
development  valued  at  $31,124.

During  the year ended December 31, 2001 the board of Directors issued 3,665,925
free  trading  shares  under  Regulation  S  in  exchange  for  legal  services
valued  at  $213,984.

                                      F-16
<PAGE>

During  the  year  ended  December  31,  2001  the Company issued 1,441,191 free
trading  shares  under  Regulation  S  to Donald A. Mitchell and Carl E. Dilley,
directors  and  officers,  for  management  services  valued  at$146,933.

During the year ended December 31, 2001 the board of Directors issued 13,162,333
free  trading  shares under  Regulation  S  pursuant to the exercise of warrants
for  cash  of  $71,100.

10.    Other  Agreements

On  March 1, 2001 the Company entered into an engagement agreement with Riotech,
LLC  to  provide  internet  website  development,  on-line  marketing  services,
e-commerce  services  and back office systems services to third-party clients of
the  Company.  Under  the terms of this 24-month agreement, Riotech, LLC will be
compensated  at  the rate of 70% of the gross amount of any services provided to
end  customers of the Company.  Riotech will manage and provide project managers
and  development  staff on an exclusive basis for all projects undertaken during
the  term  of  the agreement, and will also supply 300 hours of work towards the
development  of  the  Company's  proprietary  websites  and  systems.

E-Rex  has  entered  into  an investment financing agreement with Swartz private
equity LLC. As part of this agreement the company has issued 900,000 warrants to
acquire  the  common  stock of E-Rex at the exercisable for seven (7) years at a
price  of $.50 per share. The agreement also provides for the repricing of these
warrants  as  per  the  following  formula:

The  Exercise  Price  per  share  ("Exercise  Price") shall initially equal (the
"Initial Exercise Price") the lowest Closing Price for the five (5) trading days
immediately preceding September 22, 2000, which is $0.50.  If the lowest Closing
                                                   -----
Price  of  the  Company's Common Stock for the five (5) trading days immediately
preceding  the  date,  if  any,  that  Swartz  Private  Equity,  LLC executes an
Investment  Agreement  pursuant  to the Letter of Agreement (the "Closing Market
Price")  is  less  than  the Initial Exercise Price, the Exercise Price shall be
reset  to  equal  the  Closing Market Price, or, if the Date of Exercise is more
than  six  (6)  months  after  the Date of Issuance, the Exercise Price shall be
reset  to equal the lesser of (i) the Exercise Price then in effect, or (ii) the
"Lowest  Reset  Price,"  as  that  term  is  defined  below.  The  Company shall
calculate  a  "Reset  Price"  on  each six-month anniversary date of the Date of
Issuance  which  shall  equal  the  lowest Closing Price of the Company's Common
Stock for the five (5) trading days ending on such six-month anniversary date of
the  Date  of  Issuance.  The  "Lowest Reset Price" shall equal the lowest Reset
Price  determined  on  any  six-month  anniversary  date of the Date of Issuance
preceding  the  Date  of  Exercise,  taking  into  account,  as appropriate, any
adjustments made pursuant to Section 5 hereof.  Notwithstanding the above if all
of  the  following are true on the date of an Exercise of this Warrant, then the
Exercise  Price with respect to that Exercise only shall be $.50 (subject to any
adjustments required under Section 5 of this Warrant), notwithstanding any price
resets  that  would  otherwise apply pursuant to this Section 3: (A) the Company
has  not  completed  a  reverse  stock  split anytime after the Date of Issuance
through and including the date of such Exercise, (B) the lowest Closing Price of
the  Company's  Common Stock for the five (5) trading days immediately preceding
the  date  of  such  Exercise  is  $3.00  or  greater.

For  purposes  hereof,  the term "Closing Price" shall mean the closing price on
the  Nasdaq  Small  Cap Market, the National Market System ("NMS"), the New York
Stock  Exchange,  or  the  O.T.C.  Bulletin Board, or if no longer traded on the
Nasdaq  Small Cap Market, the National Market System ("NMS"), the New York Stock
Exchange,  or  the  O.T.C.  Bulletin  Board, the "Closing Price" shall equal the
closing  price  on  the  principal  national  securities  exchange  or  the
over-the-counter  system  on  which  the  Common  Stock is so traded and, if not
available,  the  mean  of  the  high  and  low  prices on the principal national
securities  exchange  on  which  the  Common  Stock  is  so  traded.

On  June  15,  2001  the company entered into an agreement with Anne Balduzzi to
develop  a  sales  and  marketing  plan  for  the  Dragonfly  and  strategy  for
introducing  the  Dragonfly  into  the  marketplace.  The  study  will  include
researching  overall consumer sales and distribution markets (wholesale, retail,
OEM  and  otherwise)  for  the Dragonfly, and preparing a report of its research
results and a strategic plan for introducing and distributing the Dragonfly into
and throughout appropriate markets and market segments.  The agreement calls for
the  payment  of  pre-approved  expenses.

                                      F-17
<PAGE>

On  August  2, 2001 the company entered into an agreement with Steve Marinkovich
to act as a Senior Technology and Network Systems Consultant for Erex and assist
them with the following:  Designing their network architecture for wireless data
flow  to  and  from  mobile  Dragonfly units to Erex hosted back-end or customer
centric  systems  as  required. Designing and recommending complete "end-to-end"
solutions  where  Erex  fully  hosts  the  connectivity and back-end systems for
Dragonfly  connectivity  and  document transfer, hosts a wireless gateway to the
Internet and a customer's back-end system or provides recommendation on software
that  allows  customers  to  host  in-house systems for data transfer. Recommend
software  required  to  create  the  "end-to-end"  solutions  for  each  of  the
transmission  scenarios above. This will include mobile software, as well as any
required backend, middleware, transaction, and portal server software. Recommend
a  Security  Infrastructure  for  their  network as well as security options for
secure  data  transmission  from  the  Dragonfly.  Assist  Erex  in choosing the
necessary hardware infrastructure components and suitable configurations. Assist
Erex  in  providing  technical  explanations  to  its  customers  and  investors
regarding  the potential uses of the Dragonfly and the Erex network as required.


11.    Concentrations  of  risk:

Other  than  capital  financing,  the  Company  relies  principally on operating
revenue from internet web hosting, design, and consulting services.  Development
of  computer  hardware and software products continues, but is not funded by the
Company's  current  operations.

12.    Investments

The Company holds two investments in marketable Securities. The first investment
was  in  Ultimate  Franchise Systems, Inc. in an exchange of 1,000,000 shares of
the  Company's stock valued at $400,000. The second investment was a purchase of
software,  equipment  and  100,000  shares  of  DiveDepot.com,  Inc.  stock from
Webulate LLC. The transaction was completed with cash of $40,000 and convertible
notes  payable valued at $200,000. The President of the Company, Mr. Dilley, and
the  director Mr. Mitchell, are also on the Board of Directors of DiveDepot.Com,
Inc.

The  company  has written down the value of the investment in Ultimate Franchise
Systems,  Inc. to $12,500 reflecting the closing market price of the stock at as
of  December  31,  2001.

DiveDepot.Com,  Inc  has  restated  it's  earnings  for this period reflecting a
substantial  write off of it's investment in internet related projects resulting
in  negative  shareholders equity as of Sept 30, 2000. DiveDepot.com, Inc is not
publicly  traded  and  therefore  the  company has written down the value of the
investment in DiveDepot.Com, Inc. to $100 reflecting the fair value of the stock
as  of  Sept  30,  2000.

The  write-downs  in  investments  in  DiveDepot.Com, Inc and Ultimate Franchise
Systems,  Inc.  resulted  in a decline in the book value of investment assets of
$49,999  for  the period ending Dec 31, 2001.

13.    Required  Cash  Flow  Disclosure:

The  Company  had interest expense of $314 and no income taxes paid for the year
ended  December  31,  2001.

                                      F-18
<PAGE>

For  the  year  ended  December  31,  2001,  the  Company  entered  into
agreements  for  non-cash  exchanges  of stock for services totaling $1,104,108.

For  the  year  ended  December  31,  2001,  the  Company  entered  into
agreements  for  non-cash exchanges of free trading shares of stock for software
research  and  development  valued  at  $34,124.

For  the  year  ended  December  31,  2001,  the  Company  converted  $140,000
principle  of  convertible  debentures  to 280,000 free trading common shares of
E-Rex,  Inc.

For  the  year  ended  December  31,  2001,  the  Company  entered  into
agreements  for  non-cash  exchanges  of stock for accounts payable satisfaction
totaling  $120,000.

For  the  year  ended  December  31,  2001,  the  Company  issued stock for cash
totaling  $136,100.

For  the  year ended December  31,  2001,  the Company had a balance outstanding
for  accrued  stock  compensation  of  $22,500.

14.    SUMMARIZED  QUARTERLY  DATA  (UNAUDITED)

Following  is  a  summary  of  the quarterly results of operations for the years
ended  December  31,  2001  and  2000:

<TABLE>
<CAPTION>

<S>                                    <C>




                                       March                June              September           December
   2001                                 31                   30                  30                  31                Total
                                  -------------        -------------        ------------        ------------        ------------
Net revenue                       $       7,966        $      29,072        $     31,975        $     18,172        $     87,185
Loss from Operations                 (1,723,389)            (400,344)           (938,729)           (411,090)         (3,473,552)
Net income (loss)                    (1,738,409)            (416,216)           (953,860)           (427,346)         (3,535,831)
Basic earnings (loss)
  per share                               (0.07)               (0.02)              (0.03)              (0.01)              (0.12)
Diluted earnings (loss)
  per share                               (0.07)               (0.02)              (0.03)              (0.01)              (0.12)
Weighted average shares
  Outstanding                        24,122,005           26,425,681          29,098,552          39,082,212          29,649,570


   2000

Net revenue                                   -                    -        $      7,524        $     28,452        $     35,976
Loss from Operations                   (175,084)          (2,023,162)         (2,501,898)         (3,776,291)         (8,476,435)
Net income (loss)                      (175,084)          (2,023,162)         (2,501,898)         (3,792,709)         (8,492,853)
Basic earnings (loss)
  per share                               (0.01)               (0.11)              (0.13)              (0.16)              (0.45)
Diluted earnings (loss)
  per share                               (0.01)               (0.11)              (0.13)              (0.16)              (0.45)
Weighted average shares
  Outstanding                        13,276,859           17,973,048          18,607,310          23,025,226          18,841,966

</TABLE>

                                      F-19
<PAGE>

15.    Recent  Accounting  Pronouncements

In  July  2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  No.  141,  "Business  Combinations".  Statement 141 requires that the
purchase  method  of  accounting be used for all business combinations initiated
after  June  30,  2001.  Statement  141  also specifies criteria that intangible
assets  acquired  in  a  purchase  method  business  combination must meet to be
recognized  and  reported  apart  from  goodwill, noting that any purchase price
allocable  to  an assembled workforce may not be accounted for separately. Based
upon  our initial assessment, we do not expect the adoption of this statement to
have  a  significant impact on our financial condition or results of operations.

In  June  2001,  the  FASB  approved  SFAS  No.  142,  "Goodwill  and  Other
Intangible Assets." SFAS No. 142 requires companies to cease amortizing goodwill
and  other intangible assets with indefinite lives after December 31, 2001. SFAS
No.  142  also establishes a new method of testing goodwill for impairment on an
annual  basis  or on an interim basis if an event occurs or circumstances change
that  would  reduce the fair value of a reporting unit below its carrying value.
We expect that the impact to 2002 net income associated with the discontinuation
of  the  amortization  of  goodwill  to  be  a pre-tax increase of approximately
$174,000.  We  have not completed our initial assessment of goodwill impairment.
Upon  adoption  of  this standard, any resulting impairment charges recorded may
have  a  material  impact  on  our  results  of  operations.

In  June  2001,  the  FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations."  The  statement  provides  accounting  and reporting standards for
recognizing  the  cost  associated with obligations related to the retirement of
tangible  long-lived  assets. Under this statement, legal obligations associated
with  the  retirement  of  long-lived  assets are to be recognized at their fair
value  in the period in which they are incurred if a reasonable estimate of fair
value  can  be made. The fair value of the asset retirement costs is capitalized
as  part  of  the  carrying  amount of the long-lived asset and expensed using a
systematic  and  rational  method  over  the asset's useful life. Any subsequent
changes to the fair value of the liability will be expensed. We will be required
to  adopt  this  statement  no  later than January 1, 2003. Based on our initial
assessment,  we  do  not  expect  the  adoption  of  this  statement  to  have a
significant  impact  on  our  financial  condition  or  results  of  operations.

In  October  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for  the
Impairment  or  Disposal  of  Long-Lived  Assets," which is effective for fiscal
years  beginning  after  December  15,  2001.  This  statement  supersedes  FASB
Statement  No.  121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," and replaces the provisions of APB Opinion
No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal
of Segments of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events  and  Transactions," for the disposal of segments of a business. SFAS No.
144  retains  the fundamental provisions of SFAS No. 121 for the recognition and
measurement  of  the impairment of long-lived assets to be held and used and the
measurement  of  long-lived  assets  to  be  disposed  of by sale. Impairment of
goodwill  is  not  included  in the scope of SFAS No. 144 and will be treated in
accordance with SFAS No. 142. Under SFAS No. 144, long-lived assets are measured
at the lower of carrying amount or fair value less cost to sell. We are required
to  adopt  this  statement  no  later than January 1, 2002. Based on our current
assessment,  we  do  not  expect  the  adoption  of  this  statement  to  have a
significant  impact  on  our  financial  condition  or  results  of  operations.

16.   Correction  of  Error

E-Rex,  Inc.  has restated its Annual Report on Form 10-KSB.  This Annual Report
is  for  the  year  ended  December  31, 2001, and was originally filed with the
Commission  on  April  12,  2002.  References  throughout this Annual Report are
accurate  as  of  the  date originally filed.  The Company has not undertaken to
update  all  of  the  information in this Annual Report, but instead has updated
only  those  areas  where changes were deemed necessary.  Please read all of the
Company's  filings  with  the Commission in conjunction with this Annual Report.

The  financial statements have been revised to provide more detailed information
regarding  the  Swartz  funding  agreement and the inclusion of related charges,
policies regarding revenue recognition, and the policies, treatment, and charges
related  to  investments  the  Company  holds  to  better  comply with U.S. GAAP
standards.

<TABLE>
<CAPTION>



<S>                                          <C>          <C>
 Effect of Correction On Earnings, Net Income and Loss Per Share

                       E-REX, INC.
                STATEMENT OF OPERATIONS
          FOR THE PERIOD ENDED DECEMBER 31, 2000
               (A DEVELOPMENT STAGE COMPANY)


                                              (RESTATED)
                                                 2000          2000
                                             ------------  ------------

REVENUE                                       $    35,976   $    35,976
--------------                               ------------

COST OF SALES                                      10,607        10,607
--------------                               ------------

GROSS PROFIT                                       25,369        25,369
--------------                               ------------

EXPENSES
--------------

   General and administrative                   8,350,075     7,900,075
   Research and development                       151,729       151,729
                                             ------------  ------------

   Total expenses                               8,501,804     8,051,804

LOSS FROM OPERATIONS                           (8,476,435)   (8,026,435)
---------------------

OTHER INCOME
---------------------

   Interest income                                      -             -
   Interest Expense                               (16,418)      (16,418)
   Recovery from lawsuit

INCOME (LOSS) BEFORE INCOME TAXES              (8,492,853)   (8,042,853)
----------------------------------

   Income Taxes                                         -             -
                                             ------------  ------------

NET INCOME (LOSS)                             $(8,492,853)  $(8,042,853)
------------------                           ============  ============


   Weighted average
   Number of shares                            18,841,966    18,841,966

   Basic EPS                                  $     (0.45)  $     (0.43)


</TABLE>





                                      F-20
<PAGE>